Scorpio Bulkers announces Financial Results for Q4 2019

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(Image Courtesy: Scorpio Bulkers)

Scorpio Bulkers Inc. on Monday (January 27) reported its results for the three months ended December 31, 2019.

The Company also announced that on January 27, 2020, its Board of Directors declared a quarterly cash dividend of $0.02 per share on the Company’s common shares.

Results for the Three and Twelve Months Ended December 31, 2019 and 2018

For the fourth quarter of 2019, the Company’s GAAP net income was $15.1 million, or $0.21 per diluted share, including:

  • a non-cash gain of approximately $46.1 million and cash dividend income of $0.5 million, or $0.66 per diluted share, primarily from the Company’s equity investment in Scorpio Tankers Inc.;
  • a write-down of assets held for sale of approximately $25.2 million, or $0.36 per diluted share, related to the classification of four Ultramax vessels as held for sale; and
  • a write-off of approximately $0.2 million of deferred financing costs on the credit facility related to the SBI Puma and the SBI Cougar.

For the same period in 2018, the Company’s GAAP net loss was $7.4 million, or $0.11 per diluted share. These results include a non-cash loss of approximately $7.7 million and cash dividend income of $0.5 million, or $0.10 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc. and a write-off of deferred financing costs of $1.7 million, or $0.03 per diluted share, related to the refinancing of debt.

Total vessel revenues for the fourth quarter of 2019 were $60.3 million, compared to $65.2 million for the same period in 2018. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the fourth quarters of 2019 and 2018 were $41.5 million and $23.3 million, respectively.

For the fourth quarter of 2019, the Company’s adjusted net income was $40.6 million, or $0.57 adjusted per diluted share, which excludes the impact of the write-down of assets held for sale of approximately $25.2 million relating to the classification of four Ultramax vessels as held for sale and the write-off of approximately $0.2 million of deferred financing costs on the credit facility related to the SBI Puma and the SBI Cougar. Adjusted EBITDA for the fourth quarter of 2019 was $66.7 million. There were no such non-GAAP adjustments to net loss in the fourth quarter of 2018.

For the year ended December 31, 2019, the Company’s GAAP net income was $44.7 million, or $0.64 per diluted share, including:

  • a non-cash gain of approximately $114.7 million and cash dividend income of $2.2 million, or $1.68 per diluted share, primarily from the Company’s equity investment in Scorpio Tankers Inc.;
  • a write-down of assets either sold or held for sale of approximately $38.0 million, or $0.55 per diluted share, related to the classification of four vessels as held for sale, the sales of the SBI Electra, SBI Flamenco, SBI Cougar and SBI Puma and the write-off of deferred financing costs on the credit facilities related to the four vessels sold; and
  • the write-off of deferred financing costs of approximately $3.1 million, or $0.04 per diluted share, related to the refinancing of existing debt.

For the same period in 2018, the Company’s GAAP net loss was $12.7 million, or $0.18 per diluted share, including a non-cash loss of approximately $7.7 million and cash dividend income of $0.5 million, or $0.10 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc. and a write-off of deferred financing costs of $3.8 million, or $0.05 per diluted share, related to the refinancing of debt.

Total vessel revenues for the year ended December 31, 2019 were $224.6 million, compared to $242.5 million for the same period in 2018. EBITDA for the year ended December 31, 2019 and 2018 were $158.3 million and $100.6 million, respectively.

For the year ended December 31, 2019, the Company’s adjusted net income was $82.6 million, or $1.19 adjusted per diluted share, which excludes the impact of the write-down of assets either sold or held for sale of $37.3 million and the write-off of deferred financing costs on the credit facilities relating to the vessels sold of $0.7 million. Adjusted EBITDA for the year ended December 31, 2019 was $195.6 million. There were no such non-GAAP adjustments to net loss in the year ended December 31, 2018.

TCE Revenue

TCE Revenue Earned during the Fourth Quarter of 2019

Kamsarmax fleet earned an average of $11,934 per day

Ultramax fleet earned an average of $11,244 per day

Voyages Fixed thus far for the First Quarter of 2020, as of the date hereof

Kamsarmax fleet: approximately $12,242 per day on average for 57% of the days

Ultramax fleet: approximately $10,505 per day on average for 49% of the days

Vessel Sales

In October 2019, the Company completed the sale of the SBI Puma and SBI Cougar, 2014 and 2015 built Ultramax vessels, respectively, that the Company agreed to sell in September 2019, for approximately $37.9 million in aggregate to an unaffiliated third party. The Company recorded a loss of approximately $4.9 million in the second quarter of 2019 and wrote-off deferred financing costs of approximately $0.2 million in the fourth quarter of 2019 upon the repayment of $21.9 million of outstanding debt.

During the fourth quarter of 2019, the Company’s Board of Directors made the decision to sell four Ultramax vessels and as such these vessels were classified as held for sale at December 31, 2019. The Company recorded a loss of approximately $25.2 million in the fourth quarter of 2019 and expects to write-off deferred financing costs of approximately $0.8 million upon closing of the sale and repaying the outstanding debt.

Debt

$38.7 Million Credit Facility

During October 2019, the Company prepaid $21.9 million of its $38.7 Million Credit Facility and wrote-off approximately $0.2 million of deferred financing costs as part of the sale of the SBI Puma and SBI Cougar.

IMO 2020

Through January 24, 2020, the Company has completed the installation of scrubbers on eight of its vessels.

Financial Results for the Three Months Ended December 31, 2019 Compared to the Three Months Ended December 31, 2018

For the fourth quarter of 2019, the Company’s GAAP net income was $15.1 million, or $0.21 per diluted share, compared to a net loss of $7.4 million, or $0.11 per diluted share, for the same period in 2018. Results for the fourth quarter of 2019 include: a non-cash gain of approximately $46.1 million and cash dividend income of $0.5 million, or $0.66 per diluted share, primarily from the Company’s equity investment in Scorpio Tankers Inc., charges of approximately $25.2 million related to the classification of four Ultramax vessels as held for sale and the write-off of deferred financing costs of approximately $0.2 million on the credit facility related to the SBI Puma and the SBI Cougar. Results for the fourth quarter of 2018 include a non-cash loss of approximately $7.7 million and cash dividend income of $0.5 million, or $0.10 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc. and a write-off of deferred financing costs of $1.7 million, or $0.03 per diluted share, related to the refinancing of debt.

EBITDA for the fourth quarters of 2019 and 2018 were $41.5 million and $23.3 million, respectively.

For the fourth quarter of 2019, the Company’s adjusted net income was $40.6 million, or $0.57 adjusted per diluted share, which excludes the impact of the write-down of assets held for sale of approximately $25.2 million and the write-off of deferred financing costs of approximately $0.2 million on the credit facility related to the SBI Puma and the SBI Cougar. Adjusted EBITDA for the fourth quarter of 2019 was $66.7 million. There were no such non-GAAP adjustments to net loss in the fourth quarter of 2018.

Total vessel revenues for the fourth quarter of 2019 were $60.3 million compared to $65.2 million in the fourth quarter of 2018. The Company’s TCE revenue for the fourth quarter of 2019 was $56.9 million, a decrease of $8.1 million from the prior year period.

Total operating expenses for the fourth quarter of 2019 were $80.9 million, including the charge related to the classification of four Ultramax vessels as held for sale of approximately $25.2 million and an increase in charterhire expense of approximately $5.4 million due to an increase in the number vessels time chartered-in, compared to $51.4 million in the fourth quarter of 2018.

Vessel revenue for the Company’s Ultramax Operations decreased to $35.2 million for the fourth quarter of 2019 from $42.4 million in the prior year period.

TCE revenue for the Company’s Ultramax Operations was $34.1 million for the fourth quarter of 2019 compared to $42.4 million for the prior year period.  The Company’s Ultramax fleet consisted of a day-weighted average of 35 vessels owned or finance leased and one time chartered-in during the fourth quarter of 2019 and 37 vessels owned or finance leased and one vessel time chartered-in during the fourth quarter of 2018. TCE revenue per day was $11,244 and $12,213 for the fourth quarters of 2019 and 2018, respectively.

Ultramax Operations:

The Company’s Ultramax Operations vessel operating costs were $16.3 million for the fourth quarter of 2019, including approximately $0.6 million of takeover costs and contingency expenses, compared with vessel operating costs of $17.8 million in the prior year period, relating to the 35 and 37 vessels owned or finance leased on average, respectively, during the periods. Daily operating costs excluding takeover costs and contingency expenses for the fourth quarters of 2019 and 2018 were $4,871 and $4,901, respectively. Daily operating costs for the fourth quarter of 2019 decreased from the fourth quarter of 2018 due primarily to the timing of repairs and the purchase of spares and stores.

Charterhire expense for the Company’s Ultramax Operations was approximately $1.0 million for both the fourth quarters of 2019 and 2018 and relates to the vessel the Company time chartered-in at $10,125 per day until September 2019, when the Company exercised its option to extend the time charter for one year at $10,885 per day.

Ultramax Operations depreciation decreased from $9.4 million to $8.8 million due primarily to the reduction in the size of the fleet by two vessels and the classification of four vessels as held for sale during the fourth quarter of 2019.

General and administrative expense for the Company’s Ultramax Operations, which consists primarily of administrative service fees, which are incurred on a per vessel per day basis, and bank charges, which are incurred based on the number of transactions, was approximately $1.0 million for the fourth quarter of 2019 and $1.1 million in the prior year period.

During the fourth quarter of 2019, the Company recorded a write-down on assets held for sale related to the classification of four Ultramax vessels as held for sale.

Kamsarmax Operations:

Vessel revenue for the Company’s Kamsarmax Operations increased to $25.1 million in the fourth quarter of 2019 from $22.8 million in the prior year period.

TCE revenue for the Company’s Kamsarmax Operations was $22.8 million for the fourth quarter of 2019 associated with a day-weighted average of 17 vessels owned or finance leased and five vessels time chartered-in, compared to $22.6 million for the prior year period associated with a day-weighted average of 19 vessels owned or finance leased. TCE revenue per day was $11,934 and $13,148 for the fourth quarters of 2019 and 2018, respectively.

Kamsarmax Operations vessel operating costs were $8.1 million for the fourth quarter of 2019, including approximately $0.3 million of takeover costs and contingency expenses, compared with vessel operating costs of $8.8 million in the prior year period, relating to 17 and 19 vessels owned or finance leased on average, respectively, during the periods. The year over year decrease is due to the reduction in fleet size. Daily operating costs excluding takeover costs and contingency expenses for the fourth quarter of 2019 increased to $4,967 from $4,857 in the prior year period due primarily to the timing of repairs and maintenance.

Kamsarmax Operations charter hire expense was $5.5 million in the fourth quarter of 2019, relating to five vessels the Company time chartered-in during the period. While the Company did not time charter-in any Kamsarmax vessels in the fourth quarter of 2018, it had a profit and loss sharing agreement with a third party related to one Kamsarmax vessel for which it recorded its residual share of the loss in the fourth quarter of 2018.

Kamsarmax Operations depreciation was $4.6 million and $5.0 million in the fourth quarters of 2019 and 2018, respectively, as the number of vessels owned or finance leased on average decreased to 17 in the fourth quarter of 2019 from 19 in the fourth quarter of 2018 due to the sale of the SBI Electra and SBI Flamenco.

General and administrative expense for the Company’s Kamsarmax Operations was $0.5 million for the fourth quarter of 2019 and $0.6 million in the fourth quarter of 2018.  The expense consists primarily of administrative services fees, which are incurred on a per vessel per day basis, and bank charges, which are incurred based on the number of transactions.

Financial Results for the Year Ended December 31, 2019 Compared to the Year Ended December 31, 2018

For the year ended December 31, 2019, the Company’s GAAP net income was $44.7 million, or $0.64 per diluted share, compared to a GAAP net loss of $12.7 million, or $0.18 per diluted share, for the same period in 2018. Results for 2019 include: a non-cash gain of approximately $114.7 million and cash dividend income of $2.2 million, or $1.68 per diluted share, primarily from the Company’s equity investment in Scorpio Tankers Inc., charges of approximately $38.0 million, or $0.55 per diluted share, related to the sales of the SBI Electra, SBI Flamenco, SBI Cougar and SBI Puma and the related write-off of deferred financing costs on the credit facilities related to those vessels, as well as the classification of four Ultramax vessels as held for sale, and the write-off of deferred financing costs of approximately $3.1 million, or $0.04 per diluted share, related to the refinancing of existing debt. EBITDA for 2019 and 2018 were $158.3 million and $100.6 million, respectively.

For 2019, the Company’s adjusted net income was $82.6 million, or $1.19 adjusted per diluted share, which excludes the impact of the write-down of assets either sold or held for sale and the write-off of related deferred financing costs totaling $38.0 million. Adjusted EBITDA for 2019 was $195.6 million. There were no such non-GAAP adjustments to net loss in 2018.

Total vessel revenues for 2019 were $224.6 million compared to $242.5 million in the prior year period. The Company’s TCE revenue for 2019 was $220.4 million, a decrease of $21.6 million from the prior year period.

Total operating expenses for 2019 were $246.0 million, including the write-down of assets either sold or held for sale of $37.3 million, compared to $199.2 million in 2018.  This increase is due primarily to the aforementioned write-downs and an increase in charterhire expense due to the increase in the number of vessels time chartered-in.

Ultramax Operations:

Vessel revenue for the Company’s Ultramax Operations decreased to $138.4 million for 2019 from $155.2 million in the prior year period.

TCE revenue for the Company’s Ultramax Operations was $136.9 million for 2019 compared to $154.9 million for the prior year period. During both periods, the Company’s Ultramax fleet consisted of a day-weighted average of 37 vessels owned or finance leased and one vessel time chartered-in. TCE revenue per day was $10,291 and $11,226 for 2019 and 2018, respectively.

The Company’s Ultramax Operations vessel operating costs were $67.3 million for 2019, including approximately $2.3 million of takeover costs and contingency expenses, compared with vessel operating costs of $71.2 million in the prior year period, relating to the 37 vessels owned or finance leased on average during both periods. Daily operating costs excluding takeover costs and contingency expenses for 2019 of $4,873 were down slightly from the prior year period of $4,962 due to the timing of repairs and the purchase of spares and stores.

Charterhire expense for the Company’s Ultramax Operations was approximately $3.7 million for 2019 and $3.8 million for the same period in 2018 and relates to the vessel the Company time chartered-in at $10,125 per day until September 2019, when the Company exercised its option to extend the time charter for one year at $10,885 per day.

Ultramax Operations depreciation decreased from $37.3 million in 2018 to $35.9 million in 2019 due to the sale or classification as held for sale of a total of six vessels during 2019.

General and administrative expense for the Company’s Ultramax Operations, which consists primarily of administrative service fees, which are incurred on a per vessel per day basis, and bank charges, which are incurred based on the number of transactions, was $4.2 million for 2019 and $4.3 million for 2018.

During 2019, the Company recorded a write-down on assets held for sale related to the classification of six vessels as held for sale.  The sale of the SBI Cougar and SBI Puma was completed in October 2019 and four vessels remained classified as held for sale at December 31, 2019.

Kamsarmax Operations:

Vessel revenue for the Company’s Kamsarmax Operations decreased slightly to $86.2 million in 2019 from $87.3 million in the prior year period.

TCE revenue for the Company’s Kamsarmax Operations was $83.5 million for 2019 associated with a day-weighted average of 18 vessels owned or finance leased and three vessels time chartered-in, compared to $87.1 million for the prior year period associated with a day-weighted average of 19 vessels owned or finance leased. TCE revenue per day was $11,671 and $13,127 for 2019 and 2018, respectively.

Kamsarmax Operations vessel operating costs were $33.8 million for 2019, including approximately $1.2 million of takeover costs and contingency expenses, compared with vessel operating costs of $34.3 million in the prior year period, relating to 18 and 19 vessels owned or finance leased on average, respectively, during the periods. Daily operating costs excluding takeover costs and contingency expenses increased for 2019 from 2018 at $4,986 and $4,940, respectively, due to the timing of spares and stores purchases as well as the timing of repairs and maintenance.

Kamsarmax Operations charterhire expense was $13.5 million in 2019, relating to five vessels the Company began time chartering-in during 2019. Prior to that, the Company had a profit and loss sharing agreement with a third party related to one Kamsarmax vessel for which the Company recorded its residual share of the profit or loss.

Kamsarmax Operations depreciation was $18.3 million and $19.3 million in 2019 and 2018, respectively reflecting the decrease in vessels owned or finance leased following the sale of the SBI Electra and SBI Flamenco.

General and administrative expense for the Company’s Kamsarmax Operations was $2.1 million for both 2019 and 2018.  The expense consists primarily of administrative services fees, which are incurred on a per vessel per day basis, and bank charges, which are incurred based on the number of transactions.

During 2019, the Company recorded write-downs of assets held for sale related to the sale of the SBI Electra and SBI Flamenco totaling approximately $7.4 million.

Sea News, January 28

Baibhav Mishra
Author: Baibhav Mishra