Slide 1: 2020 Bulkers Ltd. Investor Presentation
2020 Bulkers Ltd. Investor Presentation 29 August, 2019 |
Slide 2: Disclaimer
Disclaimer This presentation (the "Presentation") has been prepared by 2020 Bulkers Ltd. (the "Company") and is made 28 August, 2019 solely for information purposes. The Presentation does not constitute any recommendation to buy, sell or otherwise transact with any securities issued by the Company.
Slide 3: Our business model
Our business model Invest at attractive entry point Full alignment of interest as The right assets - 8 Scrubber founders & management are fitted Newcastlemax with largest shareholders proven premium vs Capesize Stop investing as asset values Low cost and risk increases corporate structure Free cash
Slide 4: Fleet status
Fleet status Earlier deliveries accellerates free cash flow generation - Bulk Sandefjord delivered on 7 August, entering 3-year index linked timecharter with rate at commencement ~USD 35,000 per day. Bi-weekly rate adjustement with current spot market implying TCE of USD ~43,000 per day1) - Eight mo
Slide 5: Robust Cash Breakeven
Robust Cash Breakeven Normalized cash break-even per vessel, per day Capesize historical rates(3) vs 2020 cash breakeven 165 Opex USD/d 4 750 160 155 G&A " 1 000 150 145 Capesize dayrate (USD'000/day) 140 80 Debt amortization " 4 566 70 Interest expense(1) " 3 822 60 2020 Bulkers Cash Breakeven (CBE
Slide 6: Potential free cash flow to equity per share
Potential free cash flow to equity per share NOK 80 FREE CASH FLOW TO EQUITY PER SHARE 70 60 50 40 30 20 10 2020 2021 - 10 000 15 000 20 000 25 000 30 000 35 000 40 000 45 000 50 000 STANDARD CAPESIZE RATE - Assumes open ships chartered at Baltic Capesize Index + 35% and 60% profit share of scrubber
Slide 7: Market update
Market update - Shipments of Iron ore are recovering after 1H disruptions: - 30 out of 92 million tons of production closed after dam accident in Brazil is already back, with another 30 million tons of production expected back by year end - Normalized production after weather related production issu
Slide 8: Key reasons for investing in 2020 Bulkers
Key reasons for investing in 2020 Bulkers - Assets with proven earnings premium at attractive point in the cycle - 2020 Bulkers´ vessels earn their cash breakeven when a standard Capesize earns ~USD 9,000 per day - Solid Balance sheet with <55% Loan to Value - Significant dividend yield capacity dri
Slide 9: Appendix
SBULKERS Appendix
Slide 10: Limited supply growth on the horizon
Limited supply growth on the horizon Dry bulk orderbook as % of fleet Dry bulk Newbuild contracts(1) Number of active shipyards(2) 120 80% 600 551 70% 100 500 484 60% 455 80 400 50% Number of shipyards 370 Orderbook as % of fleet USDbn 60 315 40% 300 283 249 248 30% 40 229 200 206 20% 161 20 100 10%
Slide 11: Impact of IMO 2020 regulations will reduce effective supply
Impact of IMO 2020 regulations will reduce effective supply Capesize scrubber retrofitting timeline Increased reports of delays for scrubber retrofits 300 ▪ Average retrofit times estimated around 40 days, with reports 250 of some retrofits taking up to 60 days 200 150 ▪ Some repair yards have overb
Slide 12: Trade growth for key commodities has been strong and stable
Trade growth for key commodities traded by Capesize and Newcastlemax has been strong and relatively stable historically World seaborne iron ore trade (28.2% of dry bulk trade in 2018) World seaborne coal trade (23.8% of dry bulk trade in 2018) 1,60 1,40 1,40 1,20 1,20 The iron ore trade has been The
Slide 13: China will eventually need to restock iron ore inventories
China will eventually need to restock iron ore inventories Chinese steel production remains strong… While Chinese mills have been destocking iron ore inventories 1) 100 0,8 90 0,7 80 0,6 70 0,5 Tons per month (million) 60 50 0,4 40 0,3 30 0,2 20 0,1 10 0 0 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 J
Slide 14: Iron ore shipments are recovering after 1H disruptions
Iron ore shipments are recovering after 1H disruptions Brazilian iron ore shipments Australian iron ore shipments Million tonnes, 3-week moving average Million tonnes, 3-week moving average 10 20 9 18 8 7 16 6 5 14 4 12 3 2 jan feb mar apr mai jun jul aug sep okt nov des 10 jan feb mar apr mai jun j
Slide 15: Brazilian production will eventually grow beyond 2018 levels
Brazilian production will eventually growt beyond 2018 levels Key Brazilian production impacts Vale iron ore shipments by system million tonnes, 3-week moving average Expected MTPA timing 4,5 Lost production after Brumadinho accident -93 1H 2019 4,0 Restarts and new capacity 3,5 Brucutu restart 30 2
Slide 16: China is stimulating infrastructure spending
China is stimulating infrastructure spending 16 |
Slide 17: Why Newcastlemax? Higher cargo intake gives higher earnings
Why Newcastlemax? Higher cargo intake gives higher earnings Greater cargo intake yields higher earnings Newcastlemax can perform all key Iron Ore trades Simplified Voyage economics Newcastlemax vs Capesize Additional cargo loaded (actual) MT 25 000 Freight rate for C5 (W Australia – China) $ 8,35 Ad
Slide 18: Newcastlemax are undervalued vs a standard Capesize
Newcastlemax are undervalued vs a standard Capesize Current newbuild prices undervalue the cash flow of a Newcastlemax relative to a standard Capesize Evident by Newcastlemax taking market share vs Capesize 70 120% Newcastlemax deliveries as a % of Total Newcastlemax + Capesize deliveries 60 100% 10
Slide 19: Scrubber investment expected to yield strong returns
Scrubber investment expected to yield strong returns IMO 2020 Sulphur regulations Simplified analysis of scrubber investment ▪ New IMO regulations with take effect on January 1st 2020 Illustrative scrubber savings, W Australia - China RV Tons HFO consumed 852 ▪ The regulation restricts maximum SOx (
Slide 20: Fuel efficiency, scrubber and cargo intake give superior earnings power
Fuel efficiency, scrubber and cargo intake gives superior earnings power versus standard Capesize Illustrative TCE Comparison Baltic type Capesize vs 2020 Bulkers Newcastlemax with scrubber trading on voyage charter Baltic C5 2020 C5 Delta Comment Key variables USD/ton (FFA for 2020 WA-China) 8,65 8
Slide 21: Financing
Financing Simplified Sources and uses Comments Uses of funds until delivery of first vessel USDm Uses: ▪ Total cost for 8 Newbuildings of USD 376m, including building 8 x Newbuildings, including building supervision 376 supervision (USD 47m per vessel) Working capital, stores, spares, bunkers, G&A 6
Slide 22: Shareholder alignment – Management and Board with significant equity exposure
Shareholder alignment – Management and Board with significant equity exposure Management Board of Directors • 1,531,968 shares Magnus Halvorsen | Chief Executive Officer Alexandra Kate Blankenship | Director • 75,000 options* • 400,000 options* • Chairman of 2020 Bulkers from September 2017 to Janua
Slide 23: SBULKERS
SBULKERS