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Scorpio Tankers Inc. Announces Financial Results for the Third Quarter of 2014 and Newbuilding Vessel Deliveries
MONACO — (Marketwired) — 10/27/14 — Scorpio Tankers Inc. (NYSE: STNG) (“Scorpio Tankers,” or the “Company”) today reported its results for the three and nine months ended September 30, 2014.
Results for the three months ended September 30, 2014 and 2013
For the three months ended September 30, 2014, the Company had a net loss of $1.2 million, or $0.01 basic and diluted loss per share. The Company’s adjusted net loss was $1.2 million (see Non-GAAP Measure section below), or $0.01 basic and diluted loss per share, excluding a $0.1 million, or $0.00 per share unrealized gain on derivative financial instruments.
For the three months ended September 30, 2013, the Company had net income of $0.7 million, or $0.00 basic and diluted earnings per share. The Company’s adjusted net income was $0.6 million (see Non-GAAP Measure section below), or $0.00 basic and diluted earnings per share, excluding a $0.1 million, or $0.00 per share unrealized gain on derivative financial instruments.
Results for the nine months ended September 30, 2014 and 2013
For the nine months ended September 30, 2014, the Company had net income of $51.6 million, or $0.29 basic and $0.28 diluted earnings per share. The Company’s adjusted net loss was $10.6 million (see Non-GAAP Measure section below), or $0.06 basic and diluted loss per share, which excludes (i) a gain of $51.4 million, or $0.29 per share, resulting from the previously announced sales of seven Very Large Crude Carriers (‘VLCCs’) under construction, (ii) a gain of $10.9 million, or $0.06 per share, resulting from the previously announced acquisition of 7,500,000 common shares of the Company in exchange for 3,422,665 shares of Dorian, (iii) a write-off of $0.3 million, or $0.00 per share, for deferred financing fees relating to the repayment of the STI Spirit Credit Facility in April 2014 and (iv) an unrealized gain on derivative financial instruments of $0.2 million or $0.00 per share.
For the nine months ended September 30, 2013, the Company had net income of $11.2 million or $0.08 basic and diluted earnings per share. The Company’s adjusted net income was $10.8 million (see Non-GAAP Measure section below), or $0.08 basic and diluted earnings per share, excluding a $0.5 million, or $0.00 per share unrealized gain on derivative financial instruments.
Stock Buyback Program
Since July 28, 2014, the Company has acquired $67.5 million of its common shares that are being held as treasury shares, in the open market at an average price of $8.64 per share.
During 2014, the Company has acquired an aggregate of 36,729,136 of its common shares that are being held as treasury shares, which include (i) 19,101,536 common shares that were purchased in the open market at an average price of $9.06 per share, (ii) 7,500,000 common shares that were acquired in exchange for 3,422,665 shares in Dorian and (iii) 10,127,600 common shares that were acquired in conjunction with the Company’s offering of $360 million of Convertible Senior Notes due 2019 in June 2014. There are currently 164,436,411 shares outstanding.
The Company has $82.5 million remaining under its stock buyback program as of the date of this press release. The Company expects to repurchase these shares in the open market, at times and prices that are considered to be appropriate by the Company, but is not obligated under the terms of the program to repurchase any shares.
Summary of Recent and Third Quarter Significant Events:
- Recently took delivery of two ice-class 1A Handymax tankers, STI Wembley and STI Battersea, from Hyundai Mipo Dockyard Co. Ltd. (“HMD”). Including the previously announced deliveries of STI Mayfair and STI Yorkville, the Company has taken delivery of four product tankers in October 2014.
- Took delivery of 17 vessels (four LR2, eight MR, and five ice-class 1A Handymax) during the third quarter of 2014, including STI St. Charles, a newbuilding MR product tanker that we purchased in August 2014 and was delivered from SPP in September 2014.
- Participated in the previously announced offering of $125,250,000 in aggregate principal amount of floating rate guaranteed notes due 2019 (the “KEXIM Notes”) in July 2014. The KEXIM Notes reduced KEXIM’s funding obligations under the Company’s KEXIM Credit Facility, and will reduce the Company’s borrowing costs under such facility by 1.55% per year
- Paid a quarterly cash dividend on the Company’s common stock of $0.10 per share in September 2014.
Vessel deliveries
In October 2014, the Company took delivery of four product tankers. STI Yorkville and STI Mayfair, MR product tankers, were delivered from HMD and SPP, respectively and STI Wembley and STI Battersea, ice-class 1A Handymax product tankers, were delivered from HMD. Upon delivery, STI Yorkville and STI Mayfair each commenced a time charter for up to 120 days at approximately $18,000 per day and STI Wembley and STI Battersea each commenced a time charter for up to 120 days at approximately $15,000 per day.
The Company has taken delivery of 21 vessels under its Newbuilding Program with HMD, SPP, Daewoo Shipbuilding & Marine Engineering Co. Ltd. (“DSME”) and Hyundai Samho Heavy Industries Co. Ltd. (“HSHI”) since June 30, 2014. These deliveries are summarized as follows:
Month
Name delivered Type Shipyard
------------------ ---------------------- ---------- ----------
1 STI Powai July 2014 MR HMD
2 STI Aqua July 2014 MR SPP
3 STI Pimlico July 2014 Handymax HMD
4 STI Elysees July 2014 LR2 HSHI
5 STI Dama August 2014 MR SPP
6 STI Olivia August 2014 MR HMD
7 STI Mythos August 2014 MR HMD
8 STI Hackney August 2014 Handymax HMD
9 STI Acton September 2014 Handymax HMD
10 STI Fulham September 2014 Handymax HMD
11 STI Camden September 2014 Handymax HMD
12 STI Benicia(1) September 2014 MR SPP
13 STI Regina September 2014 MR SPP
14 STI St. Charles September 2014 MR SPP
15 STI Madison September 2014 LR2 HSHI
16 STI Park September 2014 LR2 HSHI
17 STI Orchard September 2014 LR2 DSME
18 STI Mayfair October 2014 MR SPP
19 STI Yorkville October 2014 MR HMD
20 STI Wembley October 2014 Handymax HMD
21 STI Battersea October 2014 Handymax HMD
(1) After delivery, this vessel began a one year time charter at a rate
level consistent with current one year time charter contracts which
includes a profit sharing mechanism whereby earnings in excess of the
base time charter rate are split between the charterer and us.
Time charter-in update
In September 2014, we time chartered-in an LR2 tanker that is currently under construction in South Korea with delivery expected in January 2015. Upon delivery from the shipyard, the vessel will be chartered-in for one year at $21,050 per day. We also have an option to extend the charter for one year at $22,600 per day.
In September 2014, we extended the time charter on an LR1 tanker that is currently time chartered-in. The term of the agreement is for one year at $15,000 per day beginning in November 2014.
In September 2014, we extended the time charter on a Handymax tanker that is currently time chartered-in. The term of the agreement is for an additional year at $13,500 per day beginning in March 2015.
In August 2014, we extended the time charter on an LR2 tanker that is currently time chartered-in. The term of the agreement is for six months at $15,500 per day effective November 2014.
In August 2014, we extended the time charter on an LR2 tanker that is currently time chartered-in. The term of the agreement is for six months at $17,500 per day beginning in September 2014.
In July 2014, we extended the time charter on an LR2 tanker that is currently time chartered-in. The term of the agreement is for one year at $17,550 per day beginning in September 2014.
KEXIM Guaranteed Notes due 2019
On July 18, 2014, Seven and Seven Ltd., an exempted company incorporated with limited liability under the laws of the Cayman Islands (the “Issuer”), completed an offering of $125,250,000 in aggregate principal amount of floating rate guaranteed notes due 2019 (the “KEXIM Notes”) in a private offering to qualified institutional buyers pursuant to the Securities Act and in offshore transactions complying with Regulation S under the Securities Act. The KEXIM Notes were issued in connection with the Company’s KEXIM Credit Facility and will reduce KEXIM’s funding obligations and the Company’s borrowing costs under such facility by 1.55% per year.
Payment of 100% of all regularly scheduled installments of principal of, and interest on, the KEXIM Notes are guaranteed by The Export-Import Bank of Korea (“KEXIM”), a statutory juridical entity established under The Export-Import Bank of Korea Act of 1969, as amended, in the Republic of Korea.
The KEXIM Notes are currently listed on the Singapore Exchange Securities Trading Limited (the “SGX-ST”). The Notes will not be listed on any other securities exchange, listing authority or quotation system.
Current Liquidity
As of October 27, 2014, the Company had $84.0 million in cash.
Debt
We made the following drawdowns from our credit facilities in July, August, September and October 2014:
Drawdown amount
Credit facility (in $ millions) Collateral
---------------------- ---------------------- --------------------
1 2013 Credit Facility $ 19.8 STI Aqua
2 2013 Credit Facility 19.8 STI Dama
3 2013 Credit Facility 19.5 STI Mythos
4 2013 Credit Facility 19.5 STI Benicia
5 2013 Credit Facility 19.8 STI Regina
6 2013 Credit Facility 19.5 STI St. Charles
7 2013 Credit Facility 19.5 STI Yorkville
8 2013 Credit Facility 18.0 STI Wembley
9 KEXIM Credit Facility 18.8 STI Pimlico
10 KEXIM Credit Facility 30.3 STI Elysees
11 KEXIM Credit Facility 30.3 STI Madison
12 KEXIM Credit Facility 18.8 STI Hackney
13 KEXIM Credit Facility 19.0 STI Acton
14 KEXIM Credit Facility 18.8 STI Fulham
15 KEXIM Credit Facility 30.3 STI Park
16 KEXIM Credit Facility 29.7 STI Orchard
17 KEXIM Credit Facility 18.8 STI Camden
18 K-Sure Credit Facility 19.8 STI Powai
19 K-Sure Credit Facility 19.8 STI Olivia
20 K-Sure Credit Facility 20.4 STI Mayfair
21 K-Sure Credit Facility 18.9 STI Battersea
As of October 27, 2014, the Company’s outstanding debt balance, and amount available to draw, is as follows:
As of As of
September 30, 2014 October 27, 2014
------------------ ---------------------------
In thousands of U.S. Amount Amount Amount
dollars outstanding outstanding available
------------------ ------------- -------------
2010 Revolving Credit
Facility $ 43,562 $ 43,562 $ -
2011 Credit Facility 110,895 110,895 -
Newbuilding Credit
Facility 79,340 79,340 -
2013 Credit Facility 276,327 313,827 207,000 (1)
K-Sure Credit Facility 79,200 118,480 339,788 (2)
KEXIM Credit Facility 252,075 252,075 177,525 (3)
Senior Unsecured Notes 53,750 53,750 -
Convertible Senior Notes 360,000 360,000 - (4)
------------------ ------------- -------------
Total $ 1,255,149$ 1,331,929$ 724,313
================== ============= =============
(1) Availability can be used to finance the lesser of 60% of the contract
price for a qualifying newbuilding vessel or such vessel's fair market
value at the date of drawdown.
(2) Availability can be used to finance the lesser of 60% of the newbuilding
contract price and 74% of the fair market value of the relevant vessel
specified in the agreement.
(3) Availability can be used to finance the lesser of 60% of the newbuilding
contract price and 74% of the fair market value of the relevant vessel
specified in the agreement. Includes $125.3 million of floating rate
guaranteed notes due 2019 issued by Seven and Seven Ltd. in July 2014.
(4) $61.3 million of this amount has been attributed to the conversion
feature of the Convertible Senior Notes and recorded within additional
paid in capital on the consolidated balance sheet as of September 30,
2014.
Newbuilding Program
During the third quarter of 2014, the Company made $451.2 million of installment payments on its newbuilding vessels. The Company currently has 27 newbuilding vessel orders with HMD, SPP, HSHI and DSME (14 MRs, five Handymax ice class 1-A tankers and eight LR2s). The estimated future payment dates and amounts are as follows*:
Q4 2014 $ 353.4 million**
Q1 2015 273.5
Q2 2015 139.4
-------
Total $ 766.3 million
=======
*These are estimates only and are subject to change as construction progresses.
**$83.4 million has been paid prior to the date of this press release.
Explanation of Variances on the Third Quarter of 2014 Financial Results Compared to the Third Quarter of 2013
For the three months ended September 30, 2014, the Company recorded a net loss of $1.2 million compared to net income of $0.7 million in the three months ended September 30, 2013. The following were the significant changes between the two periods:
- Time charter equivalent, or TCE revenue, a non-IFRS measure, is vessel revenues less voyage expenses (including bunkers and port charges). TCE revenue is included herein because it is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company’s performance irrespective of changes in the mix of charter types (i.e., spot charters, time charters, and pool charters), and it provides useful information to investors and management. The following table depicts TCE revenue for the three months ended September 30, 2014 and 2013:
For the three months ended
September 30,
----------------------------------
2014 2013
---------------- ----------------
In thousands of U.S. dollars
Vessel revenue $ 82,891 $ 57,756
Voyage expenses (902) (1,249)
---------------- ----------------
TCE revenue $ 81,989 $ 56,507
================ ================
- TCE revenue increased $25.5 million to $82.0 million. This increase was primarily driven by an increase in the average number of operating vessels (owned and time chartered-in) to 58.6 from 42.3 for the three months ended September 30, 2014 and 2013, respectively along with an increase in time charter equivalent revenue per day to $15,264 per day from $14,557 per day for the three months ended September 30, 2014 and 2013, respectively (see the breakdown of daily TCE averages below).
- Vessel operating costs increased $9.8 million to $20.9 million from $11.1 million for the three months ended September 30, 2014 and 2013, respectively. This increase was primarily driven by an increase in the Company’s owned fleet to an average of 33.7 vessels from 17.3 vessels for the three months ended September 30, 2014 and 2013, respectively. The increase was offset by an overall decrease in vessel operating costs per day to $6,705 per day from $6,851 per day for the three months ended September 30, 2014 and 2013, respectively (see the breakdown of daily TCE averages below).
- Charterhire expense increased $1.1 million to $32.9 million from $31.9 million for the three months ended September 30, 2014 and 2013, respectively. The increase is a result of a shift in the mix of time chartered-in vessels towards larger vessel classes (LR1 and LR2) offset by a reduction in exposure towards smaller vessel classes (Handymax and MR) for the three months ended September 30, 2014 and 2013, respectively. See the Company’s Fleet List below for the terms of these agreements.
- Depreciation expense increased $5.2 million to $11.6 million from $6.4 million for the three months ended September 30, 2014 and 2013, respectively. This increase was primarily the result of an increase in the average number of owned vessels to 33.7 from 17.3 for the three months ended September 30, 2014 and 2013, respectively.
- General and administrative expenses increased $5.2 million to $11.7 million from $6.5 million for the three months ended September 30, 2014 and 2013, respectively. This increase was driven by a $3.8 million increase in the amortization of restricted stock (non-cash) and an overall increase in other general and administrative expenses due to the significant growth in the Company’s fleet and Newbuilding Program.
- Financial expenses increased $6.2 million to $6.7 million from $0.5 million primarily as a result in an increase in the Company’s debt balance for the three months ended September 30, 2014 and 2013, respectively. Total debt outstanding, net of deferred financing fees, was $1.2 billion at September 30, 2014 compared to $171.3 million at September 30, 2013.
Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Statement of Profit or Loss
(unaudited)
For the three months For the nine months
ended September 30, ended September 30,
---------------------- ----------------------
In thousands of U.S. dollars
except per share and share
data 2014 2013 2014 2013
---------- ---------- ---------- ----------
Revenue
Vessel revenue $ 82,891$ 57,756$ 217,070$ 154,213
Operating expenses
Vessel operating costs (20,933) (11,137) (47,683) (27,635)
Voyage expenses (902) (1,249) (5,427) (3,782)
Charterhire (32,941) (31,877) (109,334) (79,345)
Depreciation (11,574) (6,377) (24,896) (16,665)
General and administrative
expenses (11,676) (6,522) (34,300) (14,571)
Gain on sale of VLCCs - - 51,419 -
Gain on sale of Dorian
shares - - 10,924 -
---------- ---------- ---------- ----------
Total operating expenses (78,026) (57,162) (159,297) (141,998)
---------- ---------- ---------- ----------
Operating income 4,865 594 57,773 12,215
---------- ---------- ---------- ----------
Other (expense) and income,
net
Financial expenses (6,683) (448) (7,554) (2,323)
Realized gain on
derivative financial
instruments - 3 17 25
Unrealized gain on
derivative financial
instruments 75 118 187 483
Financial income 103 400 172 950
Share of income from
associate 462 - 1,036 -
Other expenses, net 19 - (34) (106)
---------- ---------- ---------- ----------
Total other expense, net (6,024) 73 (6,176) (971)
---------- ---------- ---------- ----------
Net (loss) / income $ (1,159)$ 667$ 51,597$ 11,244
========== ========== ========== ==========
Earnings / (loss) per share
Basic $ (0.01)$ 0.00$ 0.29$ 0.08
Diluted $ (0.01)$ 0.00$ 0.28$ 0.08
Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
(unaudited)
As of
--------------------------------------
In thousands of U.S. dollars September 30, 2014 December 31, 2013
------------------ ------------------
Assets
Current assets
Cash and cash equivalents $ 140,541 $ 78,845
Accounts receivable 80,133 72,542
Prepaid expenses and other current
assets 4,040 2,277
Inventories 4,562 2,857
Vessels held for sale 11,980 82,649
------------------ ------------------
Total current assets 241,256 239,170
------------------ ------------------
Non-current assets
Vessels and drydock 1,496,572 530,270
Vessels under construction 484,704 649,526
Other assets 31,791 17,907
Investment in associate 154,714 209,803
------------------ ------------------
Total non-current assets 2,167,781 1,407,506
------------------ ------------------
Total assets $ 2,409,037$ 1,646,676
================== ==================
Current liabilities
Current portion of long-term debt 98,512 10,453
Debt related to vessels held for
sale 5,906 21,397
Accounts payable 14,263 20,696
Accrued expenses 12,321 7,251
Derivative financial instruments 321 689
------------------ ------------------
Total current liabilities 131,323 60,486
------------------ ------------------
Non-current liabilities
Long term debt 1,057,744 135,279
Derivative financial instruments - 188
------------------ ------------------
Total non-current liabilities 1,057,744 135,467
------------------ ------------------
Total liabilities 1,189,067 195,953
------------------ ------------------
Shareholders' equity
Issued, authorized and fully paid in
share capital:
Share capital 2,023 1,999
Additional paid in capital 1,563,056 1,536,945
Treasury shares (316,519) (7,938)
Hedging reserve (116) (212)
Accumulated deficit (28,474) (80,071)
------------------ ------------------
Total shareholders' equity 1,219,970 1,450,723
------------------ ------------------
Total liabilities and shareholders'
equity $ 2,409,037$ 1,646,676
================== ==================
Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(unaudited)
For the nine months ended
September 30,
----------------------------
In thousands of U.S. dollars 2014 2013
------------- -------------
Operating activities
Net income $ 51,597$ 11,244
Gain on sale of VLCCs (51,419) -
Gain on sale of Dorian shares (10,924) -
Depreciation 24,896 16,665
Amortization of restricted stock 22,068 6,738
Amortization of deferred financing fees 2,307 538
Straight-line adjustment for charterhire
expense 3 7
Share of income from associate (1,036) -
Unrealized gain on derivative financial
instruments (187) (483)
Amortization of acquired time charter
contracts 277 -
Accretion of convertible senior notes 2,680 -
------------- -------------
40,262 34,709
------------- -------------
Changes in assets and liabilities:
Drydock payments (1,290) (1,448)
Increase in inventories (1,705) (1,328)
Increase in accounts receivable (7,591) (37,523)
Increase in prepaid expenses and other current
assets (793) (2,942)
Increase in other assets (969) (395)
Increase in accounts payable 252 1,337
Increase / (decrease) in accrued expenses 6,140 (29)
Interest rate swap termination payment (274) -
------------- -------------
(6,230) (42,328)
------------- -------------
Net cash inflow / (outflow) from operating
activities 34,032 (7,619)
------------- -------------
Investing activities
Acquisition of vessels and payments for
vessels under construction (927,166) (585,182)
Proceeds from disposal of vessels 213,670 -
------------- -------------
Net cash outflow from investing activities (713,496) (585,182)
------------- -------------
Financing activities
Debt repayments (64,381) (24,102)
Issuance of debt 789,949 52,050
Debt issuance costs (41,104) (12,266)
Proceeds from issuance of convertible senior
notes 360,000 983,537
Convertible senior notes issuance costs (10,986) -
Equity issuance costs (42) (35,531)
Dividends paid (50,746) (10,684)
Repurchase of common stock (241,530) -
------------- -------------
Net cash inflow from financing activities 741,160 953,004
------------- -------------
Increase in cash and cash equivalents 61,696 360,203
Cash and cash equivalents at January 1, 78,845 87,165
------------- -------------
Cash and cash equivalents at September 30, $ 140,541$ 447,368
============= =============
Scorpio Tankers Inc. and Subsidiaries
Other operating data for the three and nine months ended September 30, 2014
and 2013
(unaudited)
For the three months For the nine months
ended September 30, ended September 30,
----------------------- -----------------------
2014 2013 2014 2013
----------- ----------- ----------- -----------
Adjusted EBITDA(1)(in
thousands of U.S. dollars) $ 25,077$ 10,830$ 45,282$ 35,537
Average Daily Results
Time charter equivalent per
day(2) 15,264 14,557 14,683 15,388
Vessel operating costs per
day(3) 6,705 6,851 6,956 6,656
Aframax/LR2
TCE per revenue day (2) 19,375 10,876 16,390 12,803
Vessel operating costs per
day(3) 6,594 9,112 7,419 7,799
Panamax/LR1
TCE per revenue day (2) 17,034 13,349 16,700 13,519
Vessel operating costs per
day(3) 7,928 8,174 8,739 7,570
MR
TCE per revenue day (2) 14,457 17,304 13,626 17,706
Vessel operating costs per
day(3) 6,673 5,956 6,592 5,930
Handymax
TCE per revenue day (2) 13,056 13,029 13,879 14,246
Vessel operating costs per
day(3) 6,122 7,157 6,969 6,690
Fleet data
Average number of owned
vessels 33.7 17.3 25.0 14.9
Average number of time
chartered-in vessels 24.9 25.0 27.7 21.1
Drydock
Expenditures for drydock (in
thousands of U.S. dollars) - - $ 1,290 -
(1) See Non-GAAP Measure section below
(2) Freight rates are commonly measured in the shipping industry in terms of
time charter equivalent per day (or TCE per day), which is calculated by
subtracting voyage expenses, including bunkers and port charges, from
vessel revenue and dividing the net amount (time charter equivalent
revenues) by the number of revenue days in the period. Revenue days are
the number of days the vessel is owned less the number of days the
vessel is off-hire for drydock and repairs.
(3) Vessel operating costs per day represent vessel operating costs
excluding non-recurring expenses (for example insurance deductible
expenses for repairs) divided by the number of days the vessel is owned
during the period.
Fleet List as of October 27, 2014
Year Ice
Vessel Name Built DWT class Employment Vessel type
------------------- ----- --------- ----- ---------------- ------------
Owned vessels
1 STI Highlander 2007 37,145 1A SHTP (1) Handymax
2 STI Brixton 2014 38,000 1A SHTP (1) Handymax
3 STI Comandante 2014 38,000 1A SHTP (1) Handymax
4 STI Pimlico 2014 38,000 1A Spot Handymax
5 STI Hackney 2014 38,000 1A SHTP (1) Handymax
6 STI Acton 2014 38,000 1A Spot Handymax
7 STI Fulham 2014 38,000 1A Spot Handymax
8 STI Camden 2014 38,000 1A Spot Handymax
9 STI Battersea 2014 38,000 1A Spot Handymax
10 STI Wembley 2014 38,000 1A Spot Handymax
11 STI Amber 2012 52,000 - SMRP(4) MR
12 STI Topaz 2012 52,000 - SMRP(4) MR
13 STI Ruby 2012 52,000 - SMRP(4) MR
14 STI Garnet 2012 52,000 - SMRP(4) MR
15 STI Onyx 2012 52,000 - SMRP(4) MR
16 STI Sapphire 2013 52,000 - SMRP(4) MR
17 STI Emerald 2013 52,000 - SMRP(4) MR
18 STI Beryl 2013 52,000 - SMRP(4) MR
19 STI Le Rocher 2013 52,000 - SMRP(4) MR
20 STI Larvotto 2013 52,000 - SMRP(4) MR
21 STI Fontvieille 2013 52,000 - SMRP(4) MR
22 STI Ville 2013 52,000 - SMRP(4) MR
23 STI Duchessa 2014 52,000 - SMRP(4) MR
24 STI Opera 2014 52,000 - SMRP(4) MR
25 STI Texas City 2014 52,000 - Time Charter (5) MR
26 STI Meraux 2014 52,000 - Time Charter (6) MR
27 STI Chelsea 2014 52,000 - SMRP(4) MR
28 STI Lexington 2014 52,000 - SMRP(4) MR
29 STI San Antonio 2014 52,000 - Time Charter (6) MR
30 STI Venere 2014 52,000 - SMRP(4) MR
31 STI Virtus 2014 52,000 - Spot MR
32 STI Powai 2014 52,000 - SMRP(4) MR
33 STI Aqua 2014 52,000 - Spot MR
34 STI Dama 2014 52,000 - SMRP(4) MR
35 STI Olivia 2014 52,000 - SMRP(4) MR
36 STI Mythos 2014 52,000 - Spot MR
37 STI Benicia 2014 52,000 - Time Charter (6) MR
38 STI Regina 2014 52,000 - Spot MR
39 STI St. Charles 2014 52,000 - Spot MR
40 STI Mayfair 2014 52,000 - Spot MR
41 STI Yorkville 2014 52,000 - Spot MR
42 STI Harmony 2007 73,919 1A SPTP (2) LR1
43 STI Heritage 2008 73,919 1A SPTP (2) LR1
44 Venice 2001 81,408 1C SPTP (2) Post-Panamax
45 STI Elysees 2014 109,999 - SLR2P (3) LR2
46 STI Madison 2014 109,999 - SLR2P (3) LR2
47 STI Park 2014 109,999 - SLR2P (3) LR2
48 STI Orchard 2014 109,999 - SLR2P (3) LR2
---------
Total owned DWT 2,660,387
=========
Daily
Vessel Name Year DWT Ice Employment Vessel Base Expiry
Built class type Rate (7)
----------- ----- --------- ----- ---------- -------- ------- ------
Time
chartered-
in vessels
18-
49 Kraslava 2007 37,258 1B SHTP (1) Handymax $13,650 May-15
Krisjanis 14-
50 Valdemars 2007 37,266 1B SHTP (1) Handymax $13,650 Apr-15 (8)
28-
51 Jinan 2003 37,285 - SHTP (1) Handymax $12,600 Apr-15
Iver 03-
52 Prosperity 2007 37,412 - SHTP (1) Handymax $12,500 Mar-16 (9)
Histria 04-
53 Azure 2007 40,394 - SHTP (1) Handymax $13,550 Apr-15
Histria 17-
54 Coral 2006 40,426 - SHTP (1) Handymax $13,550 Jul-15
Histria 15-
55 Perla 2005 40,471 - SHTP (1) Handymax $13,550 Jul-15
17-
56 Targale 2007 49,999 - SMRP(4) MR $14,850 May-15 (10)
25-
57 Nave Orion 2013 49,999 - SMRP(4) MR $14,300 Mar-15 (11)
06-
58 Gan-Trust 2013 51,561 - SMRP(4) MR $16,250 Jan-16 (12)
03-
59 Usma 2007 52,684 1B SMRP(4) MR $14,500 Jan-15
15-
60 SN Federica 2003 72,344 - SPTP (2) LR1 $11,250 May-15 (13)
25-
61 SN Azzura 2003 72,344 - SPTP (2) LR1 $13,600 Dec-14
King 08-
62 Douglas 2008 73,666 - SPTP (2) LR1 $14,000 Nov-15 (14)
Hellespont 18-
63 Progress 2006 73,728 - SPTP (2) LR1 $15,000 Mar-15 (15)
FPMC P 09-
64 Eagle 2009 73,800 - SPTP (2) LR1 $14,525 Sep-15
02-
65 FPMC P Hero 2011 99,995 - SLR2P (3) LR2 $15,250 May-15 (16)
FPMC P 09-
66 Ideal 2012 99,993 - SLR2P (3) LR2 $15,500 Jan-15
Swarna 11-
67 Jayanti 2010 104,895 - SLR2P (3) LR2 $15,000 Mar-15 (17)
TBN Densa 30-
68 Crocodile 2015 105,408 - SLR2P (3) LR2 $21,050 Jan-16 (18)
Densa 17-
69 Alligator 2013 105,708 - SLR2P (3) LR2 $17,550 Sep-15 (19)
Khawr 11-
70 Aladid 2006 106,003 - SLR2P (3) LR2 $15,400 Jul-15
10-
71 Fair Seas 2008 115,406 - SLR2P (3) LR2 $17,500 Mar-15
10-
72 Southport 2008 115,462 - SLR2P (3) LR2 $15,700 Dec-14
---------
Total time
chartered- 1,693,507
in DWT
=========
Newbuildings currently under
construction
Vessel
Vessel Name Yard DWT Ice class type
-------------------------------- ---- --------- --------- ----------
Product tankers
73 Hull 2477 - TBN STI Finchley HMD (20) 38,000 1A Handymax
74 Hull 2478 - TBN STI Clapham HMD (20) 38,000 1A Handymax
75 Hull 2479 - TBN STI Poplar HMD (20) 38,000 1A Handymax
76 Hull 2499 - TBN STI Hammersmith HMD (20) 38,000 1A Handymax
77 Hull 2500 - TBN STI Rotherhithe HMD (20) 38,000 1A Handymax
78 Hull 2445 - TBN STI Milwaukee HMD (20) 52,000 - MR
79 Hull 2461 - TBN STI Battery HMD (20) 52,000 - MR
80 Hull 2474 - TBN STI Pontiac HMD (20) 52,000 - MR
81 Hull 2490 - TBN STI Osceola HMD (20) 52,000 - MR
82 Hull 2492 - TBN STI Notting Hill HMD (20) 52,000 - MR
83 Hull 2493 - TBN STI Westminster HMD (20) 52,000 - MR
84 Hull 2475 - TBN STI Seneca HMD (20) 52,000 - MR
85 Hull S1143 - TBN STI Tribeca SPP (21) 52,000 - MR
86 Hull S1144 - TBN STI Soho SPP (21) 52,000 - MR
87 Hull S1169 - TBN STI Manhattan SPP (21) 52,000 - MR
88 Hull S1170 - TBN STI Queens SPP (21) 52,000 - MR
89 Hull S1145 - TBN STI Gramercy SPP (21) 52,000 - MR
90 Hull S1167 - TBN STI Bronx SPP (21) 52,000 - MR
91 Hull S1168 - TBN STI Brooklyn SPP (21) 52,000 - MR
92 Hull S706 - TBN STI Sloane HSHI (22) 109,999 - LR2
93 Hull S709 - TBN STI Condotti HSHI (22) 109,999 - LR2
94 Hull S710 - TBN STI Veneto HSHI (22) 109,999 - LR2
95 Hull S715 - TBN STI Oxford HSHI (22) 109,999 - LR2
96 Hull S716 - TBN STI Connaught HSHI (22) 109,999 - LR2
97 Hull 5395 - TBN STI Broadway DSME (23) 109,999 - LR2
98 Hull 5398 - TBN STI Winnie DSME (23) 109,999 - LR2
99 Hull 5399 - TBN STI Lauren DSME (23) 109,999 - LR2
---------
Total newbuilding product
tankers DWT 1,797,992
=========
---------
Total Fleet DWT 6,151,886
=========
(1) This vessel operates in or is expected to operate in the Scorpio
Handymax Tanker Pool (SHTP). SHTP is operated by Scorpio Commercial
Management (SCM). SHTP and SCM are related parties to the Company.
(2) This vessel operates in or is expected to operate in the Scorpio
Panamax Tanker Pool (SPTP). SPTP is operated by SCM. SPTP is a related
party to the Company.
(3) This vessel operates in or is expected to operate in the Scorpio LR2
Pool (SLR2P). SLR2P is operated by SCM. SLR2P is a related party to the
Company.
(4) This vessel operates in or is expected to operate in the Scorpio MR
Pool (SMRP). SMRP is operated by SCM. SMRP is a related party to the
Company.
(5) This vessel is on a time charter agreement for two years, which also
contains a 50% profit sharing provision whereby we split all of the
vessel's profits above the daily base rate with the charterer.
(6) This vessel is on a time charter agreement for one year, which also
contains a 50% profit sharing provision whereby we split all of the
vessel's profits above the daily base rate with the charterer.
(7) Redelivery from the charterer is plus or minus 30 days from the expiry
date.
(8) The agreement also contains a 50% profit and loss sharing provision
whereby we split all of the vessel's profits and losses above or below
the daily base rate with the vessel's owner.
(9) In September 2014, we declared an option to extend the charter for an
additional year at $13,500 per day effective March 3, 2015.
(10) We have options to extend the charter for up to two consecutive one
year periods at $15,200 per day and $16,200 per day, respectively.
(11) We have an option to extend the charter for an additional year at
$15,700 per day.
(12) The rate for the first year of this agreement was $15,750 per day, the
rate for the second year is $16,250 per day, and the rate for the third
year is $16,750 per day. We have options to extend the charter for up
to two consecutive one year periods at $17,500 per day and $18,000 per
day, respectively.
(13) We have an option to extend the charter for an additional year at
$12,500 per day. We have also entered into an agreement with the
vessel's owner whereby we split all of the vessel's profits above the
daily base rate.
(14) In September 2014, we declared an option to extend the charter for an
additional year at $15,000 per day effective November 8, 2014.
(15) We have options to extend the charter for up to two consecutive one
year periods at $16,250 per day and $17,250 per day, respectively.
(16) In September 2014, we declared an option to extend the charter for an
additional six months at $15,500 per day effective November 2, 2014.
(17) We have an option to extend the charter for an additional six months at
$16,250 per day.
(18) This vessel is currently under construction and is scheduled to be
delivered in January 2015. We have an option to extend the charter for
an additional year at $22,600 per day.
(19) In July 2014, we declared an option to extend the charter for an
additional twelve months at $17,550 per day effective September 17,
2014.
(20) These newbuilding vessels are being constructed at HMD (Hyundai Mipo
Dockyard Co. Ltd. of South Korea). Six vessels are expected to be
delivered in 2014 and six vessels in the first and second quarters of
2015.
(21) These newbuilding vessels are being constructed at SPP (SPP
Shipbuilding Co., Ltd. of South Korea). Three vessels are expected to
be delivered in 2014 and four vessels in the first and second quarters
of 2015.
(22) These newbuilding vessels are being constructed at HSHI (Hyundai Samho
Heavy Industries Co., Ltd). Three vessels are expected to be delivered
in 2014 and two vessels in the first quarter of 2015.
(23) These newbuilding vessels are being constructed at DSME (Daewoo
Shipbuilding and Marine Engineering). One vessel is expected to be
delivered in the fourth quarter of 2014 and two vessels in the second
quarter of 2015.
Business Strategy, Dividend Policy, and Stock Buyback Program
Business Strategy
The Company’s primary objectives are to profitably grow the business and emerge as a major operator of product tanker vessels. The Company intends to acquire modern, high-quality tankers through timely and selective acquisitions. The Company is currently concentrating on these sectors because of their attractive fundamentals which the Company believes includes:
- increasing demand for refined products.
- increasing ton miles (distance between production and areas of demand), and
- reduced order book.
Dividend Policy
The declaration and payment of dividends is subject at all times to the discretion of the Company’s board of directors. The timing and amount of dividends, if any, depends on the Company’s earnings, financial condition, cash requirements and availability, fleet renewal and expansion, restrictions in the loan agreements, the provisions of Marshall Islands law affecting the payment of dividends and other factors.
On September 10, 2014, the Company paid a quarterly cash dividend on its common stock of $0.10 per share to all shareholders as of August 22, 2014 (the record date). On June 12, 2014, the Company paid a quarterly cash dividend on its common stock of $0.09 per share to all shareholders as of May 27, 2014 (the record date). On March 26, 2014, the Company paid a quarterly cash dividend on its common stock of $0.08 per share to all shareholders as of March 11, 2014 (the record date).
Share Buyback Program
On July 28, 2014, the Board of Directors of the Company approved a new stock buyback program with authorization to purchase up to $150 million of its common stock. This program replaced the stock buyback programs that were previously announced in July 2010, April 2014 and June 2014, which have been terminated.
The Company expects to repurchase these shares in the open market, at times and prices that are considered to be appropriate by the Company, but is not obligated under the terms of the program to repurchase any shares.
Since July 28, 2014, the Company has purchased an aggregate of $67.5 million of shares in the open market at an average price of $8.64 per share during 2014 and has $82.5 million remaining under its stock buyback program as of the date of this press release.
About Scorpio Tankers Inc.
Scorpio Tankers Inc. is a provider of marine transportation of petroleum products worldwide. Scorpio Tankers Inc. currently owns 48 tankers (four LR2 tankers, two LR1 tankers, 10 Handymax tankers, 31 MR tankers, and one post-Panamax tanker) with an average age of 1.5 years, time charters-in 24 product tankers (eight LR2, five LR1, four MR and seven Handymax tankers), and has contracted for 27 newbuilding product tankers (14 MR, eight LR2, and five Handymax ice class-1A product tankers), 13 are expected to be delivered to the Company throughout 2014 and 14 in 2015. The Company also owns approximately 16% of Dorian LPG Ltd. Additional information about the Company is available at the Company’s website www.scorpiotankers.com, which is not a part of this press release.
Non-GAAP Measures
This press release describes adjusted net income and Adjusted EBITDA, which are not measures prepared in accordance with IFRS (i.e. “Non-GAAP” measure). The Non-GAAP measures are presented in this press release as we believe that they provide investors with a means of evaluating and understanding how the Company’s management evaluates the Company’s operating performance. These Non-GAAP measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with IFRS.
Adjusted net income / (loss)
For the three months ended September 30,
------------------------------------------
2014 2013
-------------------- --------------------
In thousands of U.S. dollars
except per share and share data Amount Per share Amount Per share
--------- --------- --------- ---------
Net (loss) / income $ (1,159)$ (0.01)$ 667$ 0.00
Adjustments:
Unrealized gain on derivative
financial instruments (75) (0.00) (118) (0.00)
--------- --------- --------- ---------
Total adjustments (75) (0.00) (118) (0.00)
--------- --------- --------- ---------
Adjusted net (loss) / income $ (1,234)$ (0.01)$ 549$ 0.00
========= ========= ========= =========
For the nine months ended September 30,
------------------------------------------
2014 2013
-------------------- --------------------
Amount Per share Amount Per share
--------- --------- --------- ---------
Net income $ 51,597$ 0.29$ 11,244$ 0.08
Adjustments:
Deferred financing fees write-
off - STI Spirit 317 0.00 - -
Unrealized gain on derivative
financial instruments (187) (0.00) (483) (0.00)
Gain on sale of VLCCs (51,419) (0.29) - -
Gain on sale of Dorian shares (10,924) (0.06) - -
--------- --------- --------- ---------
Total adjustments (62,213) (0.35) (483) (0.00)
--------- --------- --------- ---------
Adjusted net (loss) / income $ (10,616)$ (0.06)$ 10,761$ 0.08
========= ========= ========= =========
Adjusted EBITDA
For the three months For the nine months
ended September 30, ended September 30,
-------------------- --------------------
In thousands of U.S. dollars 2014 2013 2014 2013
--------- --------- --------- ---------
Net (loss) / income $ (1,159)$ 667$ 51,597$ 11,244
Financial expenses 6,683 448 7,554 2,323
Unrealized gain on derivative
financial instruments (75) (118) (187) (483)
Financial income (103) (400) (172) (950)
Depreciation 11,574 6,377 24,896 16,665
Depreciation component of our
net profit from associate 526 - 1,869 -
Amortization of restricted
stock 7,631 3,856 22,068 6,738
Gain on sale of VLCCs - - (51,419) -
Gain on sale of Dorian shares - - (10,924) -
--------- --------- --------- ---------
Adjusted EBITDA $ 25,077$ 10,830$ 45,282$ 35,537
========= ========= ========= =========
Forward-Looking Statements
Matters discussed in this press release may constitute forward-looking statements. 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,” “intends,” “estimate,” “forecast,” “project,” “plan,” “potential,” “may,” “should,” “expect,” “pending” and similar expressions identify forward-looking statements.
The forward-looking statements in this press release 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 tanker 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.