Second Quarter 2018 Earnings Presentation - July 23, 2018
Safe Harbor Statement This document may contain forward-looking statements that reflects management s expectations for the future. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words "believe," "anticipate," "intend," "estimate," "forecast," "project," "plan," "potential," "may," "should," "expect," "pending" and similar expressions identify forward-looking statements. The forward-looking statements in this document are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. In addition to these important factors, other important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the failure of counterparties to fully perform their contracts with us, the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for dry bulk vessel capacity, changes in our operating expenses, including bunker prices, drydocking and insurance costs, the market for our vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain financing and comply with covenants in such financing arrangements, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off-hires and other factors. Please see our filings with the Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties. 2
Q2 2018 Corporate and Financial Highlights Q2-2018 Financial Results TCE Liquidity Debt Fleet Development Stock Buyback Program and Dividend GAAP Net Income of.8 million / Earnings per Share of.01 EBITDA of $28.1 million and cash flow from operations of $32.2 million Ultramax TCE of $11,569 in Q2 2018 Ultramax TCE of $10,963 booked to date in Q3 18 Kamsarmax TCE of $12,823 in Q2 2018 Kamsarmax TCE of $13,974 booked to date in Q3 18 Liquidity position as of July 20, 2018 is $80.5 million in cash Closed the $19.0 million lease financing of the Ultramax bulk carrier, SBI Echo Closed the $19.0 million lease financing of the Ultramax bulk carrier, SBI Tango Agreed to a $30.0 million loan with ING to refinance two of the Company s Kamsarmax bulk carriers (SBI Zumba and SBI Parapara) Drew down on the $12.8 Million BNPP Credit Facility in full 1 Kamsarmax vessel, SBI Lynx, delivered in Q2 2018 no further vessels on order From April 1, 2018 to July 20, 2018, no shares were purchased by the Company under its share buyback program The Company announced a dividend of.02 per share for Q2 2018 3
Strengthening Market for Our Vessels The increase in reported TCE earnings over the last 2 plus years has defied traditional seasonality, and in the face of record newbuild deliveries, shows the underlying strength of the market and supports the continuation of the market recovery $14,000 $12,000 February 10, 2016 BDI hits 40 year low $12,605 $12,881 $12,823 $11,569 $13,974 $10,886 $10,963 $10,000 $9,164 $9,273 $9,211 $8,949 $9,757 $8,230 $8,360 $8,000 $7,083 $7,238 $7,401 $6,349 $6,000 $5,335 $5,263 $4,000 $3,462 $3,331 $2,000 Q3 18* Ultramax Kamsarmax * Projections based on 46% and 47% of the days for the Ultramax fleet and Kamsarmax fleet, respectively as of July 18, 2018. 4
Financial Performance Revenue EBITDA $70 $60 $50 $40 $30 $20 $10 $10.2 $17.4 $23.9 $26.8 $34.7 $37.7 $38.6 $51.1 $54.3 $60.6 $40 $30 $20 $10 -$10 -$20 $17.0 $5.8 $1.3.9 $7.3 $10.8 $12.4 $22.9 $20.4 $28.1 -$30 Operating Cash Flow EBIT $25 $15 $5 -$5 -$15 -$25 -$35 $21.1 $13.5 $11.1 $5.3 $2.5 -$2.1 -$1.7 -$4.5 -$18.1 -$27.5 $15 $10 $5 -$5 -$10 -$15 -$20 -$25 -$30 -$35 $10.6 $6.0 $2.9 -$4.1 -$6.2 -$9.9 -$14.1 -$16.2 -$19.2 -$28.8 Figures in $USD millions. 5
Overview of New Financings $30m Credit Facility $38m Lease Financing SBI Echo & SBI Tango ~$30 million credit facility from ING Bank N.V. to refinance two Kamsarmax bulk carriers (SBI Zumba and SBI Parapara) Two lease financings of $19m each for SBI Echo and SBI Tango with unaffiliated third parties 5 year term maturing Q3 2023, with a 13 year to zero repayment profile on SBI Zumba and a 14 year to zero repayment profile on SBI Parapara Pricing of L+2.20% 5 year lease tenor, with purchase options starting at end of year 3 Bareboat Hire rate of $5,400 per day (equates to pricing of L+1.97% at prevailing swap rates) SALT covenants (excl interest cover) + no restricted cash Minimum Tangible Net Worth covenant only + no restricted cash On balance sheet and considered as debt for accounting purposes 6
Company Highlights Youngest ECO dry bulk fleet High specification best-in-class fleet built at top tier yards with an average age of 2.4 years - by far the youngest fleet among publicly listed peers Attractive Position in Mid Size Segment Mid size cargo segment provides access to all types of dry cargo commodities Positive & Increasing EBITDA Reported $28.1 million in EBITDA in Q2 18, the 7th consecutive quarter of positive EBITDA Strong Balance Sheet Low leverage supports a very young fleet with liquidity and considerable future flexibility Early stage recovery with significant An increase in rates from $10,000 to $15,000 (50%) translates to a 120% increase in EBITDA, generating $2.5 in EBITDA per share. A $1,000 p.d. increase in rates is operating leverage $20.4m in additional cash per annum Significant trading liquidity and inside ownership One of the most liquid dry bulk stocks with over $3 million in trading liquidity per day and insider ownership of 23% Well prepared for Ballast Water & IMO 2020 regulation Fleet is 100% fitted with BWT systems with no capex required. Our 100% Eco fleet to benefit from fuel savings compared to older less efficient tonnage 7