Dire dry cargo markets in the first quarter have caused Scorpio Bulkers to post a loss that more than wipes out the net profit it recorded for 2019 overall.
For the first three months of 2020, the New York-listed bulker owner recorded a $108m adjusted net loss, equivalent to a $15.65 loss per share, compared to $4.0m in profit a year earlier.
The adjusted result excludes a $17m asset write-down on two ultramax bulkers and one kamsarmax vessel, which is held for sale.
The quarterly loss undoes much of the progress made by the company during 2019, for which it booked a year-end profit of $82.6m.
Shareholders had been due to receive a dividend of $0.20 per share, but since Scorpio effected its reverse stock split this has been adjusted to $0.05 per share.
Scorpio Bulkers saw its share price tank during the first quarter, which the company took steps to remedy by effecting a one-for-ten reverse stock split of its shares on 7 April.
Scorpio booked an $89.1m non-cash loss from the company's equity investment in its affiliate Scorpio Tankers during the first quarter, which includes changes in the fair value of its stake in the tanker owner.
Cash dividend income from the Scorpio Tankers investment totalled $500,000 during the quarter.
Time-charter equivalent (TCE) revenue during the first quarter totalled $39.5m, a reduction on the $50.4m earned in the same period in 2019.
Liquidity shot
Scorpio had $101m in cash as of Friday and has been taking steps to raise its liquidity through refinancing transactions and share sales.
It has also delayed major capital expenditures including scrubber installations.
As TradeWinds reported on Friday, Scorpio Bulkers last week raised around $42.7m by selling 2.25m shares in Scorpio Tankers, which has roughly halved its stake in the company.
It also completed sale leasebacks for two ultramaxes and a panamax bulker with Ocean Yield for a combined $62.8m in March and April.
The en-bloc translation unlocked $33.6m in liquidity for Scorpio after repaying the vessels' outstanding debt.
However, the sale of two ultramaxes in April — the 63,700-dwt SBI Taurus (built 2015) and SBI Jaguar (built 2014) — for a combined $53.5m resulted in a $17.0m impairment for the first quarter.
The refinancing transaction, however, has allowed Scorpio to make an $18.8m saving by repaying the vessels' outstanding debt.
Scorpio said it has postponed the installation of scrubbers on 13 of its bulkers until 2021, which will delay the payment of between $20.0m to $25.0m of expenses.
Selling Scorpio Tankers shares but no more ships
Analysts on Scorpio Bulkers' first-quarter earnings call questioned why the firm's board of directors sold the Scorpio Tankers shares last week at $19 each, compared to a price of $27 in late January.
The company's president Robert Bugbee chalked the decision up to "20-20 hindsight" on Covid-19's impact on the market, pointing out that the $100m investment in Scorpio Tankers made a 30% profit over 18 months.
"Even the president of the United States thought the coronavirus was going to go away," he said.
He also said the company is limited as to when it can sell shares and is still holding on to half of its Scorpio Tankers investment.
Chief executive Emanuele Lauro said the divestment was done simply "to put cash on the balance sheet" at this time.
The company is holding off on selling more ships, having already agreed to sell three for $53.5m, while cash buyers look to take advantage of asset prices hurt by Covid-19, Bugbee said.
"That's been a big change," he said.
