SOURCE: Scorpio Tankers Inc.

Scorpio Tankers Inc.

April 28, 2014 09:20 ET

Scorpio Tankers Inc. Announces Financial Results for the First Quarter of 2014, a $100.0 Million Stock Buyback Program, and Increases Its Quarterly Dividend

MONACO--(Marketwired - Apr 28, 2014) - Scorpio Tankers Inc. (NYSE: STNG) ("Scorpio Tankers," or the "Company") today reported its results for the three months ended March 31, 2014.

Results for the three months ended March 31, 2014 and 2013

For the three months ended March 31, 2014, the Company had net income of $53.3 million, or $0.28 basic and diluted earnings per share. The Company's adjusted net income was $1.9 million (see Non-GAAP Measure section below), or $0.01 basic and diluted earnings per share, which excludes (i) a gain of $51.4 million, or $0.27 per share, resulting from the previously announced sales agreement of seven Very Large Crude Carriers ('VLCCs') under construction, and (ii) an unrealized gain on derivative financial instruments of $47,000 or $0.00 per share.

For the three months ended March 31, 2013, the Company had net income of $6.6 million, or $0.08 basic and diluted earnings per share.

Declaration of Dividend

On April 28, 2014, the Scorpio Tankers' board of directors declared a quarterly cash dividend of $0.09 per share, payable on June 12, 2014 to all shareholders as of May 27, 2014 (the record date). As of April 28, 2014, there are 199,718,567 shares outstanding.

Stock Buyback Program

Summary of Recent and First Quarter Significant Events:

  • Closed on the previously announced sales agreement of seven VLCCs under construction for a gain of $51.4 million.
  • Took delivery of three MR tankers under the Company's Newbuilding Program, STI Texas City, in March 2014, and STI Opera and STI Duchessa, in January 2014.
  • Converted the Newbuilding Credit Facility from a term loan into a reducing revolving credit facility giving the Company the ability to draw down and repay the available commitments under the facility when needed.
  • Sold three of the Company's older vessels, Noemi, Senatore, and STI Spirit for an aggregate selling price of $74.2 million, further emphasizing the Company's commitment to a modern, fuel efficient fleet.
  • Declared and paid a quarterly cash dividend on the Company's common stock of $0.08 per share in March 2014.

Newbuilding Credit Facility conversion to a Revolver

In March 2014, the Company converted its Newbuilding Credit Facility with Credit Agricole Corporate and Investment Bank and Skandinaviska Enskilda Banken AB from a term loan to a reducing revolving credit facility. This gives the Company the ability to draw down and repay the available commitments under the facility when needed. All other terms and definitions remain unchanged.

The amount available under this facility is $82.3 million and is fully drawn as of the date of this press release. The amount available will reduce by $1.5 million each quarter until the maturity date in June 2019.

Vessel sales
As part of the Company's commitment to a modern fuel efficient fleet, the Company recently sold three of its older vessels:

  • Two, 2004 built, LR1 product tankers, Noemi and Senatore, for an aggregate selling price of $44.0 million. These sales closed in March and April 2014, respectively.
  • The 2008 built LR2 product tanker, STI Spirit, for $30.2 million in April 2014.

The Company also made repayments of the debt associated with the three vessels sold for $43.9 million in aggregate. These repayments and their resultant impact on our credit facilities are further described below.

Time charter-in update

In April 2014, the Company extended the time charter on an MR tanker that is currently time chartered-in. The term of the agreement is for one year at $14,850 per day beginning in May 2014. The Company has options to extend the charter for up to two consecutive one year periods at $15,200 per day and $16,200 per day, respectively.

In April 2014, the Company extended the time charter on an LR2 that is currently time chartered-in. The term of the agreement is for six months at $15,250 per day beginning in May 2014. The Company has an option to extend the charter for up to six months at $15,500 per day.

In March 2014, the Company extended the time charter on a Handymax tanker that is currently time chartered-in. The term of the extension is for one year at $13,550 per day and began in April 2014.

In March 2014, the Company entered into a new time charter-in agreement on an LR1 vessel for one year at $15,000 per day. The Company has options to extend the charter for up to two consecutive one year periods at $16,250 per day and $17,250 per day, respectively. This vessel was delivered in March 2014.

In February 2014, the Company extended the time charters on two Handymax tankers that are currently time chartered-in. The terms of the agreements are for one year at $13,650 per day beginning in April and May 2014. The time charter beginning in April 2014 contains a 50% profit and loss sharing provision whereby the Company will split all of the vessel's profits and losses above or below the daily base rate with the vessel's owner.

In February 2014, the Company entered into a new time charter-in agreement on an LR2 vessel that is currently time chartered-in. The new agreement is for six months at $16,500 per day and commenced upon the expiration of the existing charter in February 2014.

In February 2014, the Company entered into a new time charter-in agreement on an LR2 vessel for one year at $15,000 per day. The Company has an option to extend the charter for an additional six months at $16,250 per day. This vessel was delivered in March 2014.

Conference Call

The Company will have a conference call on April 28, 2014 at 11:00 AM Eastern Daylight Time and 5:00 PM Central European Time.

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1(866)-675-4790 (U.S.) or 1(913)-312-0643 (International). The conference participant passcode is 3528758. The information provided on the teleconference is only accurate at the time of the conference call, and the Company will take no responsibility for providing updated information.

Slides and Audio Webcast:

There will also be a simultaneous live webcast over the internet, through the Scorpio Tankers Inc. website www.scorpiotankers.com. Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

Webcast URL: http://www.visualwebcaster.com/event.asp?id=99087

Current Liquidity

As of April 25, 2014, the Company had $151.7 million in cash.

Debt

2010 Credit Facility

In January 2014, the Company drew down $72.4 million from the 2010 Revolving Credit Facility.

In March 2014, the Company repaid $22.5 million into this facility as a result of the sales of Noemi and Senatore. Consequently, the availability of this facility reduced by such amount and the quarterly reduction reduced to $2.1 million from $3.1 million per quarter. Additionally, we wrote off $0.2 million of deferred financing fees as a result of this repayment in the first quarter of 2014.

The amount available under the facility is now $47.8 million and is fully drawn as of the date of this press release.

2011 Credit Facility

In January 2014, the Company drew down $52.0 million from the 2011 Credit Facility. In connection with this drawdown, STI Duchessa, STI Le Rocher and STI Larvotto were provided as collateral under the facility. There are no further amounts available to draw under this facility.

2013 Credit Facility

In February 2014, the Company drew down $64.2 million from the 2013 Credit Facility. In connection with this draw down, STI Opera, STI Fontvieille and STI Ville were provided as collateral under the facility.

In March 2014, the Company drew down $20.5 million from the 2013 Credit Facility to partially finance the delivery of STI Texas City.

STI Spirit Credit Facility

In April 2014, the Company repaid the outstanding balance under its STI Spirit Credit Facility of $21.4 million as a result of the sale of STI Spirit. $0.3 million of deferred financing fees will be written off as a result of this repayment in the second quarter of 2014.   

As of April 28, 2014, the Company's outstanding debt balance, and amount available to draw, is as follows:

       
    As of April 28, 2014  
In millions of U.S. dollars   Amount outstanding   Amount available  
2010 Revolving Credit Facility   $ 47.8   $ -  
STI Spirit Credit Facility     -     -  
2011 Credit Facility     114.9     -  
Newbuilding Credit Facility     82.3     -  
2013 Credit Facility     84.7     440.3 (1)
K-Sure Credit Facility     -     458.3 (2)
KEXIM Credit Facility     -     429.6 (2)
Total   $ 329.7   $ 1,328.2  
               
(1)   Availability can be used to finance the lesser of 60% of the contract price for a qualifying newbuilding vessel and 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.
     

Newbuilding Program

During the first quarter of 2014, the Company made $190.9 million of installment payments on its newbuilding vessels, which included an aggregate of $60.0 million for the delivery installment payments for STI Opera, STI Duchessa and STI Texas City. The Company currently has 55 newbuilding vessel orders with HMD, SPP, HSHI and DSME (29 MRs, 14 Handymaxes and 12 LR2s). The estimated future payment dates and amounts are as follows*:

           
Q2 2014   $ 347.9   million**
Q3 2014     477.4   million
Q4 2014     258.3   million
Q1 2015     186.8   million
Q2 2015     147.4   million
Total   $ 1,417.8   million
           

*These are estimates only and are subject to change as construction progresses.
**$22.8 million has been paid prior to the date of this press release.

Explanation of Variances on the First Quarter of 2014 Financial Results Compared to the First Quarter of 2013

For the three months ended March 31, 2014, the Company recorded net income of $53.3 million compared to net income of $6.6 million in the three months ended March 31, 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 March 31, 2014 and 2013:
         
      For the three months ended March 31,  
In thousands of U.S. dollars     2014     2013  
Vessel revenue       76,734     $ 44,924  
Voyage expenses       (3,974 )     (1,200 )
TCE revenue     $ 72,760     $ 43,724  
                   
  • TCE revenue increased $29.0 million to $72.8 million. This increase was primarily driven by an increase in the average number of operating vessels (owned and time chartered-in) to 50.7 from 29.6 for the three months ended March 31, 2014 and 2013, respectively. This increase was offset by an overall decrease in time charter equivalent revenue per day to $15,906 per day from $16,597 per day for the three months ended March 31, 2014 and 2013, respectively (see the breakdown of daily TCE averages below).

  • Vessel operating costs increased $5.1 million to $13.1 million from $8.0 million for the three months ended March 31, 2014 and 2013, respectively. This increase was primarily driven by an increase in the Company's owned fleet to an average of 20.2 vessels from 12.8 vessels for the three months ended March 31, 2014 and 2013, respectively. The increase was augmented by an overall decrease in vessel operating costs per day to $7,185 per day from $6,840 per day for the three months ended March 31, 2014 and 2013, respectively (see the breakdown of daily TCE averages below).

  • Charterhire expense increased $19.7 million to $40.2 million from $20.5 million as a result of an increase in the average number of vessels time chartered-in to 30.5 from 16.8 for the three months ended March 31, 2014 and 2013, respectively. See the Company's Fleet List below for the terms of these agreements.

  • Depreciation expense increased $1.2 million to $6.0 million from $4.8 million primarily as a result of an increase in the average number of owned vessels to 20.2 from 12.8 for the three months ended March 31, 2014 and 2013, respectively.

  • General and administrative expenses increased $8.2 million to $11.0 million from $2.8 million. This increase was driven by a $6.5 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.

  • Gain on sale of VLCCs of $51.4 million relates to the gain recorded as a result of the sale of our VLCCs under construction.
   
   
Scorpio Tankers Inc. and Subsidiaries  
Condensed Consolidated Statement of Profit or Loss  
(unaudited)  
   
    For the three months ended March 31,  
In thousands of U.S. dollars except per share and share data   2014     2013  
Revenue                
  Vessel revenue   $ 76,734     $ 44,924  
                 
Operating expenses                
  Vessel operating costs     (13,070 )     (7,971 )
  Voyage expenses     (3,974 )     (1,200 )
  Charterhire     (40,173 )     (20,496 )
  Depreciation     (5,953 )     (4,767 )
  General and administrative expenses     (10,966 )     (2,759 )
  Gain on sale of VLCCs     51,419       -  
  Total operating expenses     (22,717 )     (37,193 )
Operating income     54,017       7,731  
Other (expense) and income, net                
  Financial expenses     (399 )     (1,399 )
  Realized gain on derivative financial instruments     17       68  
  Unrealized gain on derivative financial instruments     47       44  
  Financial income     27       181  
  Share of loss from associate     (324 )     -  
  Other expenses, net     (47 )     (15 )
  Total other expenses, net     (679 )     (1,121 )
Net income   $ 53,338     $ 6,610  
                 
Earnings per share                
                 
  Basic and diluted   $ 0.28     $ 0.08  
                   
   
   
Scorpio Tankers Inc. and Subsidiaries  
Condensed Consolidated Balance Sheet  
(unaudited)  
   
    As of  
In thousands of U.S. dollars   March 31, 2014     December 31, 2013  
Assets                
Current assets                
Cash and cash equivalents   $ 194,987     $ 78,845  
Accounts receivable     84,448       72,542  
Prepaid expenses and other current assets     3,855       2,277  
Inventories     4,553       2,857  
Vessels held for sale     61,410       82,649  
Total current assets     349,253       239,170  
Non-current assets                
Vessels and drydock     631,385       530,270  
Vessels under construction     649,718       649,526  
Other assets     30,213       17,907  
Investment in associate     209,479       209,803  
Total non-current assets     1,520,795       1,407,506  
Total assets   $ 1,870,048     $ 1,646,676  
                 
Current liabilities                
Bank loans     27,744       10,453  
Accounts payable     21,977       20,696  
Accrued expenses     7,940       7,251  
Derivative financial instruments     482       689  
Bank loans related to vessels held for sale     27,617       21,397  
Total current liabilities     85,760       60,486  
Non-current liabilities                
Bank loans     289,273       135,279  
Derivative financial instruments     51       188  
Total non-current liabilities     289,324       135,467  
Total liabilities     375,084       195,953  
                 
Shareholders' equity                
Issued, authorized and fully paid in share capital:                
  Share capital     2,021       1,999  
  Additional paid in capital     1,527,802       1,536,945  
Treasury shares     (7,938 )     (7,938 )
Hedging reserve     (188 )     (212 )
Accumulated deficit     (26,733 )     (80,071 )
Total shareholders' equity     1,494,964       1,450,723  
Total liabilities and shareholders' equity   $ 1,870,048     $ 1,646,676  
   
   
   
Scorpio Tankers Inc. and Subsidiaries  
Condensed Consolidated Statement of Cash Flows  
(unaudited)  
   
    For the three months ended March 31,  
In thousands of U.S. dollars   2014     2013  
Operating activities                
Net income   $ 53,338     $ 6,610  
Gain on sale of VLCCs     (51,419 )     -  
Depreciation     5,953       4,767  
Amortization of restricted stock     6,955       500  
Amortization of deferred financing fees     155       255  
Straight-line adjustment for charterhire expense     3       (31 )
Share of loss from associate     324       -  
Unrealized gain on derivative financial instruments     (47 )     (44 )
      15,262       12,057  
Changes in assets and liabilities:                
Drydock payments     -       (1,202 )
Increase in inventories     (1,700 )     (719 )
Increase in accounts receivable     (11,906 )     (11,211 )
Increase in prepaid expenses and other current assets     (935 )     (1,006 )
Increase in other assets     (47 )     -  
Increase in accounts payable     3,125       593  
Increase / (decrease) in accrued expenses     1,759       (88 )
Interest rate swap termination payment     (274 )     -  
      (9,978 )     (13,633 )
Net cash inflow / (outflow) from operating activities     5,284       (1,576 )
Investing activities                
Acquisition of vessels and payments for vessels under construction     (199,055 )     (155,180 )
Proceeds from disposal of vessels     162,950       -  
Net cash outflow from investing activities     (36,105 )     (155,180 )
Financing activities                
Bank loan repayment     (27,674 )     (1,838 )
Bank loan drawdown     209,100       34,375  
Debt issuance costs     (18,345 )     (343 )
Gross proceeds from issuance of common stock     -       465,037  
Equity issuance costs     (42 )     (15,774 )
Dividends paid     (16,076 )     -  
Net cash inflow from financing activities     146,963       481,457  
Increase in cash and cash equivalents     116,142       324,701  
Cash and cash equivalents at January 1,     78,845       87,165  
Cash and cash equivalents at March 31,   $ 194,987     $ 411,866  
                 
 
 
Scorpio Tankers Inc. and Subsidiaries
Other operating data for the three months ended March 31, 2014 and 2013
(unaudited)
 
    For the three months ended March 31,
    2014   2013
Adjusted EBITDA(1)(in thousands of U.S. dollars)   $ 15,896   $ 13,051
             
Average Daily Results            
Time charter equivalent per day(2)   $ 15,906   $ 16,597
Vessel operating costs per day(3)     7,185     6,840
             
Aframax/LR2            
TCE per revenue day (2)   $ 14,342   $ 19,172
Vessel operating costs per day(3)     7,386     6,960
             
Panamax/LR1            
TCE per revenue day (2)   $ 20,063   $ 12,895
Vessel operating costs per day(3)     8,372     7,982
             
MR            
TCE per revenue day (2)   $ 14,262   $ 18,259
Vessel operating costs per day(3)     6,466     5,852
             
Handymax            
TCE per revenue day (2)   $ 16,736   $ 16,343
Vessel operating costs per day(3)     10,814     6,698
             
Fleet data            
Average number of owned vessels     20.2     12.8
Average number of time chartered-in vessels     30.5     16.8
     
(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 April 28, 2014
 
    Vessel Name   Year Built   DWT   Ice
class
  Employment   Vessel type
    Owned vessels                    
1   STI Highlander   2007   37,145   1A   SHTP (1)   Handymax
2   STI Amber   2012   52,000   -   SMRP(4)   MR
3   STI Topaz   2012   52,000   -   SMRP(4)   MR
4   STI Ruby   2012   52,000   -   SMRP(4)   MR
5   STI Garnet   2012   52,000   -   SMRP(4)   MR
6   STI Onyx   2012   52,000   -   SMRP(4)   MR
7   STI Sapphire   2013   52,000   -   SMRP(4)   MR
8   STI Emerald   2013   52,000   -   SMRP(4)   MR
9   STI Beryl   2013   52,000   -   SMRP(4)   MR
10   STI Le Rocher   2013   52,000   -   SMRP(4)   MR
11   STI Larvotto   2013   52,000   -   SMRP(4)   MR
12   STI Fontvieille   2013   52,000   -   SMRP(4)   MR
13   STI Ville   2013   52,000   -   SMRP(4)   MR
14   STI Duchessa   2014   52,000   -   SMRP(4)   MR
15   STI Opera   2014   52,000   -   Spot (5)   MR
16   STI Texas City   2014   52,000   -   Time Charter (6)   MR
17   STI Harmony   2007   73,919   1A   SPTP (2)   LR1
18   STI Heritage   2008   73,919   1A   SPTP (2)   LR1
19   Venice   2001   81,408   1C   Spot   Post-Panamax
                         
    Total owned DWT       1,046,391            
                                     
                                     
    Vessel Name   Year Built   DWT   Ice
class
  Employment   Vessel type   Daily
Base
Rate
  Expiry (7)    
    Time chartered-in vessels                         
20   Kraslava   2007   37,258   1B   SHTP (1)   Handymax   $12,800   18-May-15    
21   Krisjanis Valdemars   2007   37,266   1B   SHTP (1)   Handymax   $13,650   14-Apr-15   (8)
22   Jinan   2003   37,285   -   SHTP (1)   Handymax   $12,600   28-Apr-15    
23   Iver Progress   2007   37,412   -   SHTP (1)   Handymax   $12,500   03-Mar-15   (9)
24   Iver Prosperity   2007   37,455   -   SHTP (1)   Handymax   $12,500   20-Oct-14   (10)
25   Histria Azure   2007   40,394   -   SHTP (1)   Handymax   $13,550   04-Apr-15   (11)
26   Histria Coral   2006   40,426   -   SHTP (1)   Handymax   $12,800   17-Jul-14   (12)
27   Histria Perla   2005   40,471   -   SHTP (1)   Handymax   $12,800   15-Jul-14   (12)
28   STX Ace 6   2007   46,161   -   SMRP(4)   MR   $14,150   17-May-14   (13)
29   Targale   2007   49,999   -   SMRP(4)   MR   $14,500   17-May-15   (14)
30   Gan-Triumph   2010   49,999   -   SMRP(4)   MR   $14,150   20-May-14    
31   Nave Orion   2013   49,999   -   SMRP(4)   MR   $14,300   25-Mar-15   (15)
32   Gan-Trust   2013   51,561   -   SMRP(4)   MR   $16,250   06-Jan-16   (16)
33   Usma   2007   52,684   1B   SMRP(4)   MR   $14,500   03-Jan-15    
34   SN Federica   2003   72,344   -   SPTP (2)   LR1   $11,250   15-May-15   (17)
35   SN Azzura   2003   72,344   -   SPTP (2)   LR1   $13,600   25-Dec-14    
36   King Douglas   2008   73,666   -   SPTP (2)   LR1   $14,000   08-Aug-14   (18)
37   Hellespont Promise   2007   73,669   -   SPTP (2)   LR1   $14,250   14-Aug-14    
38   Hellespont Progress   2006   73,728   -   SPTP (2)   LR1   $15,000   18-Mar-15   (19)
39   FPMC P Eagle   2009   73,800   -   SPTP (2)   LR1   $14,525   09-Sep-15    
40   FPMC P Hero   2011   99,995   -   SLR2P (3)   LR2   $15,000   02-Nov-14   (20)
41   FPMC P Ideal   2012   99,993   -   SLR2P (3)   LR2   $15,250   09-Jul-14   (21)
42   Swarna Jayanti   2010   104,895       SLR2P (3)   LR2   $15,000   11-Mar-15   (22)
43   Densa Alligator   2013   105,708   -   SLR2P (3)   LR2   $16,500   17-Sep-14   (23)
44   Khawr Aladid   2006   106,003   -   SLR2P (3)   LR2   $15,400   11-Jul-15    
45   Fair Seas   2008   115,406   -   SLR2P (3)   LR2   $16,500   21-Aug-14    
46   Southport   2008   115,462       SLR2P (3)   LR2   $15,700   10-Dec-14    
47   Four Sky   2010   115,708   -   SLR2P (3)   LR2   $16,250   02-Sep-14    
                                     
    Total time chartered-in DWT   1,911,091                        
                         
    Newbuildings currently under construction      
    Vessel Name   Yard       DWT   Ice
class
  Vessel type
    Product tankers                    
                         
48   Hull 2451   HMD   (24)   38,000   1A   Handymax
49   Hull 2452   HMD   (24)   38,000   1A   Handymax
50   Hull 2453   HMD   (24)   38,000   1A   Handymax
51   Hull 2454   HMD   (24)   38,000   1A   Handymax
52   Hull 2462   HMD   (24)   38,000   1A   Handymax
53   Hull 2463   HMD   (24)   38,000   1A   Handymax
54   Hull 2464   HMD   (24)   38,000   1A   Handymax
55   Hull 2465   HMD   (24)   38,000   1A   Handymax
56   Hull 2476   HMD   (24)   38,000   1A   Handymax
57   Hull 2477   HMD   (24)   38,000   1A   Handymax
58   Hull 2478   HMD   (24)   38,000   1A   Handymax
59   Hull 2479   HMD   (24)   38,000   1A   Handymax
60   Hull 2499   HMD   (24)   38,000   1A   Handymax
61   Hull 2500   HMD   (24)   38,000   1A   Handymax
62   Hull 2391   HMD   (24)   52,000       MR
63   Hull 2392   HMD   (24)   52,000       MR
64   Hull 2449   HMD   (24)   52,000       MR
65   Hull 2450   HMD   (24)   52,000       MR
66   Hull 2458   HMD   (24)   52,000       MR
67   Hull 2459   HMD   (24)   52,000       MR
68   Hull 2460   HMD   (24)   52,000       MR
69   Hull 2461   HMD   (24)   52,000       MR
70   Hull 2492   HMD   (24)   52,000       MR
71   Hull 2493   HMD   (24)   52,000       MR
72   Hull 2445   HMD   (24)   52,000       MR
73   Hull 2474   HMD   (24)   52,000       MR
74   Hull 2475   HMD   (24)   52,000       MR
75   Hull 2490   HMD   (24)   52,000       MR
76   Hull S1138   SPP   (25)   52,000       MR
77   Hull S1139   SPP   (25)   52,000       MR
78   Hull S1140   SPP   (25)   52,000       MR
79   Hull S1141   SPP   (25)   52,000       MR
80   Hull S1142   SPP   (25)   52,000       MR
81   Hull S1143   SPP   (25)   52,000       MR
82   Hull S1144   SPP   (25)   52,000       MR
83   Hull S1145   SPP   (25)   52,000       MR
84   Hull S1167   SPP   (25)   52,000       MR
85   Hull S1168   SPP   (25)   52,000       MR
86   Hull S1169   SPP   (25)   52,000       MR
87   Hull S1170   SPP   (25)   52,000       MR
88   Hull S5123   SPP   (25)   52,000       MR
89   Hull S5124   SPP   (25)   52,000       MR
90   Hull S5125   SPP   (25)   52,000       MR
91   Hull S703   HSHI   (26)   114,000       LR2
92   Hull S704   HSHI   (26)   114,000       LR2
93   Hull S705   HSHI   (26)   114,000       LR2
94   Hull S706   HSHI   (26)   114,000       LR2
95   Hull S709   HSHI   (26)   114,000       LR2
96   Hull S710   HSHI   (26)   114,000       LR2
97   Hull S715   HSHI   (26)   114,000       LR2
98   Hull S716   HSHI   (26)   114,000       LR2
99   Hull 5394   DSME   (27)   114,000       LR2
100   Hull 5395   DSME   (27)   114,000       LR2
101   Hull 5398   DSME   (27)   114,000       LR2
102   Hull 5399   DSME   (27)   114,000       LR2
                         
                         
    Total newbuilding product tankers DWT   3,408,000        
                         
                         
    Total Fleet DWT           6,365,482        
                         
(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 short term time charter for up to 120 days at approximately $19,000 per day.
(6)   This vessel is on a time charter agreement for two years at $16,000 per day. The agreement 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)   We have an option to extend the charter for an additional year at $13,500 per day.
(10)   We have an option to extend the charter for an additional year at $13,250 per day.
(11)   We have an option to extend the charter for an additional year at $13,550 per day.
(12)   We have an option to extend the charter for an additional year at $13,550 per day.
(13)   We have an option to extend the charter for an additional year at $15,150 per day.
(14)   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.
(15)   We have an option to extend the charter for an additional year at $15,700 per day.
(16)   The daily base rate represents the average rate for the three year duration of the agreement. The rate for the first year is $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.
(17)   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.
(18)   We have an option to extend the charter for an additional year at $15,000 per day.
(19)   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.
(20)   We have an option to extend the charter for an additional six month at $15,500 per day.
(21)   We have an option to extend the charter for an additional six months at $15,500 per day.
(22)   We have an option to extend the charter for an additional six months at $16,250 per day.
(23)   We have an option to extend the charter for one year at $17,550 per day.
(24)   These newbuilding vessels are being constructed at HMD (Hyundai Mipo Dockyard Co. Ltd. of South Korea). 23 vessels are expected to be delivered in 2014 and five vessels in the first and second quarters of 2015.
(25)   These newbuilding vessels are being constructed at SPP (SPP Shipbuilding Co., Ltd. of South Korea). 11 vessels are expected to be delivered in 2014 and four in the first and second quarters of 2015.
(26)   These newbuilding vessels are being constructed at HSHI (Hyundai Samho Heavy Industries Co., Ltd.). Six vessels are expected to be delivered in the third and fourth quarters of 2014 and two in the first quarter of 2015.
(27)   These newbuilding vessels are being constructed at DSME (Daewoo Shipbuilding and Marine Engineering). Two vessels are expected to be delivered in the fourth quarter of 2014 and two 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 April 28, 2014, the Company's board of directors declared a quarterly cash dividend of $0.09 per share, payable on June 12, 2014 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 9, 2010, the Company's board of directors authorized a share buyback program of up to $20 million. 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.

As of April 28, 2014, the Company has purchased $18.9 million of shares in the open market at an average price of $7.80 and has authorization to purchase an additional $100 million of shares.

About Scorpio Tankers Inc.

Scorpio Tankers Inc. is a provider of marine transportation of petroleum products worldwide. Scorpio Tankers Inc. currently owns 19 tankers (two LR1 tankers, one Handymax tanker, 15 MR tankers, and one post-Panamax tanker) with an average age of 2.9 years, time charters-in 28 product tankers (eight LR2, six LR1, six MR and eight Handymax tankers), and has contracted for 55 newbuilding product tankers (29 MR, 12 LR2, and 14 Handymax ice class-1A product tankers), 42 are expected to be delivered to the Company throughout 2014 and 13 in 2015. The Company also owns approximately 26% 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 March 31, 2014  
In thousands of U.S. dollars except per share and share data     Amount       Per share  
Net income     $ 53,338       $ 0.28  
Adjustments:                    
Unrealized gain on derivative financial instruments       (47 )       (0.00 )
Gain on sale of VLCCs       (51,419 )       (0.27 )
Total adjustments       (51,466 )       (0.27 )
Adjusted net income     $ 1,872       $ 0.01  
                     

Adjusted EBITDA

       
    For the three months ended March 31,  
In thousands of U.S. dollars   2014     2013  
Net income   $ 53,338     $ 6,610  
Financial expenses     399       1,399  
Unrealized gain on derivative financial instruments     (47 )     (44 )
Financial income     (27 )     (181 )
Depreciation     5,953       4,767  
Depreciation component of our net loss from associate     744       -  
Amortization of restricted stock     6,955       500  
Gain on sale of VLCCs     (51,419 )     -  
Adjusted EBITDA   $ 15,896     $ 13,051  
                 
                 

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.