SOURCE: Scorpio Tankers Inc.

Scorpio Tankers Inc.

February 24, 2014 08:55 ET

Scorpio Tankers Inc. Announces Financial Results for the Fourth Quarter of 2013 and Increases Its Quarterly Dividend

MONACO--(Marketwired - Feb 24, 2014) - Scorpio Tankers Inc. (NYSE: STNG) ("Scorpio Tankers," or the "Company") today reported its results for the three months and year ended December 31, 2013 and increased its quarterly dividend to $0.08 per share.

Results for the three months ended December 31, 2013 and 2012

For the three months ended December 31, 2013, the Company had net income of $5.8 million, or $0.03 basic and diluted earnings per share. The Company's adjusted net loss was $14.5 million (see Non-GAAP Measure section below), or $0.08 basic and diluted loss per share, which excludes (i) a $41.4 million, or $0.23 per share gain resulting from the previously announced investment in Dorian LPG Ltd. ('Dorian'), (ii) a $21.2 million, or $0.12 per share write-down resulting from the designation of certain older vessels as 'held for sale' and (iii) an unrealized gain on derivative financial instruments of $0.1 million or $0.00 per share. 

For the three months ended December 31, 2012, the Company had a net loss of $4.9 million, or $0.11 basic and diluted loss per share. The Company's adjusted net loss was $3.6 million (see Non-GAAP Measure section below), or $0.08 basic and diluted loss per share, which excludes a $1.3 million, or $0.03 per share, unrealized loss on derivative financial instruments. 

Results for the year ended December 31, 2013 and 2012

For the year ended December 31, 2013, the Company had net income of $17.0 million, or $0.12 basic and $0.11 diluted earnings per share. The Company's adjusted net loss was $3.7 million (see Non-GAAP Measure section below), or $0.03 basic and diluted loss per share, which excludes (i) a $41.4 million, or $0.28 per share gain resulting from the previously announced investment in Dorian, (ii) a $21.2 million, or $0.14 per share write-down resulting from the designation of certain older vessels as 'held for sale' and (iii) an unrealized gain on derivative financial instruments of $0.6 million, or $0.00 per share. 

For the year ended December 31, 2012, the Company had a net loss of $26.5 million or $0.64 basic and diluted loss per share. The Company's adjusted net loss was $11.9 million (see Non-GAAP Measure section below), or $0.29 basic and diluted loss per share, which excludes (i) a $10.4 million, or $0.25 per share, loss from sales of vessels, (ii) a $3.0 million, or $0.07 per share, write-off of deferred financing fees, and (iii) a $1.2 million, or $0.03 per share, unrealized loss on derivative financial instruments. 

Declaration of Dividend

On February 21, 2014, the Scorpio Tankers' board of directors declared a quarterly cash dividend of $0.08 per share, payable on March 26, 2014 to all shareholders as of March 11, 2014 (the record date). There are currently 198,791,502 shares outstanding.

Emanuele Lauro, chief executive officer and chairman of the board commented, "Although our fourth quarter 2013 results reflect the deleterious effects of prolonged turnarounds of existing refineries and delays of commissioning the new refining assets, we remain confident in the underlying demand and supply thesis. Already in the first quarter, all of our vessel classes are experiencing higher returns than they did in the final quarter of 2013. We expect to be profitable this quarter; additionally, we have increased our quarterly  dividend to $0.08 per share. 

"As for the remainder of 2014, both new emissions regulations and customer preferences will leave us very well-positioned.  By the end of the year, we will have a modern fuel-efficient fleet, which has significant commercial and technical benefits. Even though we expect the overall product market to continue to improve, we also expect there to be a bifurcation of returns between modern fuel-efficient and older vessels."

Summary of Recent and Fourth Quarter Significant Events:

  • Took delivery of two MR tankers under the Company's Newbuilding Program, STI Opera and STI Duchessa, in January 2014. After delivery, each vessel began a time charter for up to 120 days at approximately $19,000 per day.
  • Reached agreements to sell 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. 
  • Reached agreements with Hyundai Samho Heavy Industries ("HSHI") and Daewoo Shipbuilding and Marine Engineering Co., Ltd. ("DSME") for the construction of a total of seven Very Large Crude Carriers (VLCCs) for aggregate consideration of approximately $662.2 million, with deliveries in 2015 and 2016. 
  • Closed on the previously announced transaction with Dorian, acquiring 30% of Dorian's outstanding shares in exchange for the contribution of 11 Very Large Gas Carrier ('VLGC') newbuilding contracts, together with a cash payment of $1.9 million. The Company also closed on the purchase of 24,121,621 new shares of Dorian's common stock as part of a private placement of shares for total consideration of $75.0 million. The Company currently owns approximately 26% of Dorian's outstanding shares after Dorian's equity offering in February 2014. 
  • Acquired four MR product tankers currently under construction in South Korea from an unaffiliated third party. Approximately 26% of the aggregate purchase price of $153.9 million consisted of newly issued common shares of the Company. One vessel is expected to be delivered in the third quarter of 2014, one is expected to be delivered in the first quarter of 2015 and the remaining two are expected to be delivered in the second quarter of 2015. 
  • Received loan commitments from a group of financial institutions led by DNB Bank ASA and Skandinaviska Enskilda Banken AB (publ) and from the Export-Import Bank of Korea ("KEXIM") for a total loan facility of up to $429.6 million (the "KEXIM Financing"). The KEXIM Financing incorporates an optional guarantee from KEXIM for the issuance by the Company, at the option of the Company, of a five year $125.3 million amortizing bond facility; the proceeds of which will reduce KEXIM's direct loan commitment in the KEXIM Financing.
  • Received an Acceptance of Insurance Agreement ("Insurance Agreement") from Korea Trade Insurance Corporation ("KSURE") covering 95% of an up to $358.3 million KSURE tranche as part of a credit facility of up to $458.3 million (the "KSURE Financing").
  • Declared and paid a quarterly cash dividend on the Company's common stock of $0.07 per share in December 2013.

Vessel sales

As part of the Company's commitment to a modern fuel efficient fleet, the Company designated certain older vessels as 'held for sale' in December 2013. This designation resulted in a write-down of the book value of these vessels of $21.2 million in aggregate. As part of this commitment, the Company reached agreements for the following in the first quarter of 2014:

  • The sale of two, 2004 built, LR1 product tankers, Noemi and Senatore, for an aggregate selling price of $44.0 million. These sales are expected to close in March and April 2014. 
  • The sale of the 2008 built LR2 product tanker, STI Spirit, for $30.2 million. This sale is expected to close in April 2014. 

The Company will also make repayments of the debt associated with these three vessels upon the closing of each sale for $44.4 million in aggregate. 

VLCC Newbuildings

In December 2013, the Company reached agreements with DSME and HSHI for the construction of seven VLCCs for an aggregate purchase price of approximately $662.2 million. One vessel is scheduled for delivery in the third quarter of 2015, two in the fourth quarter of 2015, two in the first quarter of 2016, one in the second quarter of 2016 and one in the third quarter of 2016. 

MR Product Tanker Newbuildings

In December 2013, the Company closed on an agreement with an unaffiliated third party to issue shares in exchange for the transfer of ownership to the Company of four MR product tankers currently under construction in South Korea. The purchase price of the four vessels, in aggregate, is approximately $153.9 million. Approximately 26% of the total purchase price for the vessels consisted of newly issued common shares of the Company having a valuation based on the fair market value of the shares at the time of issuance. The new common shares, in addition to a payment of $4.4 million, were issued to affiliates of York Capital and the remainder of the purchase price will be paid to the shipyard from cash-on-hand and bank debt.

One vessel is expected to be delivered in the third quarter of 2014, one in the first quarter of 2015 and the remaining two are expected to be delivered in the second quarter of 2015. These vessels are similar to the Company's newbuildings that are also under construction at the same shipyard.

Investment in Dorian LPG Ltd.

In November 2013, the Company contributed 11 VLGC newbuilding contracts, together with a cash payment of $1.9 million, to Dorian in exchange for newly issued shares representing 30% of Dorian's outstanding shares at that time. As of the closing date of the transaction, the Company paid $83.1 million in installment payments under these 11 VLGC contracts. Additionally, in November 2013, the Company purchased 24,121,621 new shares of Dorian's common stock as part of a private placement of shares for total consideration of $75.0 million.

The Company currently owns 64,073,744 shares or approximately 26% of the outstanding shares of Dorian. As of February 21, 2014, these Dorian shares, which are traded on the Norwegian Over the Counter exchange, were worth approximately $234.2 million using the closing price of NOK 22.25 per share or approximately $3.65 per share.

KSURE Credit Facility

In October 2013, the Company received an Acceptance of Insurance Agreement from KSURE covering 95% of an up to $358.3 million KSURE Tranche which is a component of a credit facility of up to $458.3 million. The KSURE Financing also includes a commercial tranche (the "Commercial Tranche") of $100.0 million. 

The KSURE Financing will be used to finance up to 60% of the contract price of up to 21 newbuilding product tankers upon delivery. The covenants are similar to those in the Company's existing credit facilities, and other terms and conditions of the loan are in accordance with OECD Guidelines. The facility is expected to close before the end of the first quarter of 2014.

KEXIM Financing

In September 2013, the Company received loan commitments from a group of financial institutions led by DNB Bank ASA and Skandinaviska Enskilda Banken AB (publ) for loan commitments of up to $429.6 million, including a commitment from KEXIM for up to $300.6 million (the "KEXIM Tranche").

The KEXIM Financing will be used to finance up to 60% of the contract price of 18 newbuilding product tankers upon delivery. The covenants are similar to those in the Company's existing credit facilities, and other terms and conditions of the loan are in accordance with OECD Guidelines. The KEXIM Financing is expected to close before the end of the first quarter of 2014.

In addition to KEXIM's commitment of up to $300.6 million, KEXIM has also provided an optional guarantee for a five year amortizing note of $125.3 million (the "KEXIM Guaranteed Note") that may be issued by the Company at the Company's discretion in 2014; the proceeds of which will be used to reduce the $300.6 million KEXIM Tranche. 

Time charter-in update

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 December 2013, the Company declared options to extend the charter on a 2007 built LR1 product tanker for six months at $14,250 per day effective February 2014 and a 2012 built LR2 product tanker for six months at $15,250 per day effective January 2014.

In December 2013, the Company time chartered-in a 2008 built LR2 product tanker for one year at $15,700 per day and a 2003 built LR1 product tanker for one year at $13,600 per day. 

In October 2013, the Company declared an option to extend the charter on a 2007 built MR product tanker for one year at $14,500 per day effective January 2014.

Conference Call

The Company will have a conference call on February 24, 2014 at 11:00 AM Eastern Standard 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(888)-765-5576 (U.S.) or 1(913)-312-1520 (International). The conference participant passcode is 9755351. 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=98195

Current Liquidity

As of February 21, 2014, the Company had $123.3 million in cash. 

Debt

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

In January 2014, the Company drew down $52.0 million from the 2011 Credit Facility. In connection with this draw down, STI Duchessa, STI Le Rocher and STI Larvotto were provided as collateral under the 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 December 2013, the Company made a $1.4 million prepayment into the STI Spirit Credit Facility in order to maintain compliance with that facility's collateral maintenance ratio (which requires that the charter-free market value of STI Spirit be no less than 140% of the then outstanding loan balance). 

As of February 24, 2014, the Company's outstanding debt balance is as follows:

         
2010 Revolving Credit Facility   $ 72.4   million
2011 Credit Facility     116.0   million
STI Spirit Credit Facility     21.7   million
Newbuilding Credit Facility     83.8   million
2013 Credit Facility     64.2   million
Total   $ 358.1   million
           

Newbuilding Program
During the fourth quarter of 2013, the Company made $260.9 million of installment payments on its newbuilding vessels. The Company currently has 63 newbuilding vessel orders with HMD, SPP, HSHI and DSME (30 MRs, 14 Handymaxes, 12 LR2s and 7 VLCCs). The estimated future payment dates and amounts are as follows*:

         
Q1 2014     223.4   million**
Q2 2014     400.9   million
Q3 2014     431.4   million
Q4 2014     310.9   million
Q1 2015     205.5   million
Q2 2015     205.9   million
Q3 2015     80.3   million
Q4 2015     103.5   million
Q1 2016     105.1   million
Q2 2016     56.7   million
Q3 2016     56.7   million
           
Total   $ 2,180.3   million
           

*These are estimates only and are subject to change as construction progresses. 
**$127.2 million has been paid prior to the date of this press release. 

Explanation of Variances on the Fourth Quarter of 2013 Financial Results Compared to the Fourth Quarter of 2012

For the three months ended December 31, 2013, the Company recorded net income of $5.8 million compared to a net loss of $4.9 million in the three months ended December 31, 2012. 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 December 31, 2013 and 2012:
       
    For the three months ended December 31,  
In thousands of U.S. dollars   2013     2012  
  Vessel revenue   $ 53,367     $ 30,104  
  Voyage expenses     (1,064 )     (1,794 )
  TCE revenue   $ 52,303     $ 28,310  
                 
  • TCE revenue increased $24.0 million to $52.3 million. This increase was primarily driven by an increase in the average number of operating vessels (owned and time chartered-in) to 47.2 from 23.8 for the three months ended December 31, 2013 and 2012, respectively. This increase was offset by an overall decrease in time charter equivalent revenue per day to $12,080 per day from $13,392 per day for the three months ended December 31, 2013 and 2012, respectively (see the breakdown of daily TCE averages below). 
  • Vessel operating costs increased $4.4 million to $12.6 million from $8.2 million for the three months ended December 31, 2013 and 2012, respectively. This increase was primarily driven by an increase in the Company's owned fleet to an average of 19.0 vessels from 12.0 vessels for the three months ended December 31, 2013 and 2012, respectively. The increase was offset by an overall decrease in vessel operating costs per day to $7,071 per day from $7,348 per day for the three months ended December 31, 2013 and 2012, respectively (see the breakdown of daily TCE averages below). The overall decrease was driven by the growth in the fleet of newbuilding MRs, which realized improved operating performance when compared to the Company's older vessels. 
  • Charterhire expense increased $22.0 million to $36.2 million as a result of an increase in the average number of vessels time chartered-in to 28.2 from 11.8 for the three months ended December 31, 2013 and 2012, respectively. See the Company's Fleet List below for the terms of these agreements.
  • Depreciation expense increased $2.3 million to $6.9 million primarily as a result of an increase in the average number of owned vessels to 19.0 from 12.0 for the three months ended December 31, 2013 and 2012.
  • General and administrative expenses increased $8.1 million to $11.2 million. This increase was driven by a $5.5 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. 
  • Write-down of vessels held for sale of $21.2 million relates to the designation of certain vessels as held-for-sale at December 31, 2013 and the corresponding write-down to their estimated selling prices. 
  • Gain on sale of VLGCs of $41.4 million relates to the gain recorded as a result of our contribution of 11 VLGCs under construction and $1.9 million in cash, to Dorian in exchange for 30% of Dorian's outstanding shares. 
   
Scorpio Tankers Inc. and Subsidiaries  
Condensed Consolidated Statement of Profit or Loss  
(unaudited)  
   
    For the three months ended December 31,     For the year ended December 31,  
In thousands of U.S. dollars except per share and share data   2013     2012     2013     2012  
Revenue                                
  Vessel revenue   $ 53,367     $ 30,104     $ 207,580     $ 115,381  
                                 
Operating expenses                                
  Vessel operating costs     (12,569 )     (8,195 )     (40,204 )     (30,353 )
  Voyage expenses     (1,064 )     (1,794 )     (4,846 )     (21,744 )
  Charterhire     (36,197 )     (14,222 )     (115,543 )     (43,701 )
  Depreciation     (6,930 )     (4,605 )     (23,595 )     (14,818 )
  General and administrative expenses     (11,216 )     (3,132 )     (25,788 )     (11,536 )
  Write down of vessels held for sale and loss from sales of vessels     (21,187 )     -       (21,187 )     (10,404 )
  Gain on sale of VLGCs     41,375       -       41,375       -  
  Total operating expenses     (47,788 )     (31,948 )     (189,788 )     (132,556 )
Operating income / (loss)     5,579       (1,844 )     17,792       (17,175 )
Other (expense) and income, net                                
  Financial expenses     (383 )     (1,929 )     (2,705 )     (8,512 )
  Realized gain/(loss) on derivative financial instruments     (22 )     157       3       443  
  Unrealized gain/(loss) on derivative financial instruments     82       (1,269 )     567       (1,231 )
  Financial income     197       29       1,147       35  
  Share of profit from associate     369       -       369       -  
  Other expenses, net     (51 )     (24 )     (158 )     (97 )
  Total other income/(expense), net     192       (3,036 )     (777 )     (9,362 )
Net income / (loss)   $ 5,771     $ (4,880 )   $ 17,015     $ (26,537 )
                                 
Earnings / (loss) per share                                
                                 
  Basic   $ 0.03     $ (0.11 )   $ 0.12     $ (0.64 )
  Diluted   $ 0.03     $ (0.11 )   $ 0.11     $ (0.64 )
                                 
   
Scorpio Tankers Inc. and Subsidiaries  
Condensed Consolidated Balance Sheet  
(unaudited)  
   
    As of  
In thousands of U.S. dollars   December 31, 2013     December 31, 2012  
Assets                
Current assets                
Cash and cash equivalents   $ 78,845     $ 87,165  
Accounts receivable     72,542       36,438  
Prepaid expenses and other current assets     2,277       956  
Inventories     2,857       2,169  
Vessels held for sale     82,649       -  
Total current assets     239,170       126,728  
Non-current assets                
Vessels and drydock     530,270       395,412  
Vessels under construction     649,526       50,251  
Other assets     17,907       889  
Investment in associate     209,803       -  
Total non-current assets     1,407,506       446,552  
Total assets   $ 1,646,676     $ 573,280  
                 
Current liabilities                
Bank loans     31,850       7,475  
Accounts payable     20,696       11,387  
Accrued expenses     7,251       3,057  
Derivative financial instruments     689       844  
Total current liabilities     60,486       22,763  
Non-current liabilities                
Bank loans     135,279       134,984  
Derivative financial instruments     188       743  
Total non-current liabilities     135,467       135,727  
Total liabilities     195,953       158,490  
                 
Shareholders' equity                
Issued, authorized and fully paid in share capital:                
  Share capital     1,999       650  
  Additional paid in capital     1,536,945       519,493  
Treasury shares     (7,938 )     (7,938 )
Hedging reserve     (212 )     (329 )
Accumulated deficit     (80,071 )     (97,086 )
Total shareholders' equity     1,450,723       414,790  
Total liabilities and shareholders' equity   $ 1,646,676     $ 573,280  
                 
   
Scorpio Tankers Inc. and Subsidiaries  
Condensed Consolidated Statement of Cash Flows  
(unaudited)  
   
    For the year ended December 31,  
In thousands of U.S. dollars   2013     2012  
Operating activities                
Net income / (loss)   $ 17,015     $ (26,537 )
Gain on sale of VLGCs     (41,375 )     -  
Write down of vessels held for sale and loss from sales of vessels     21,187       10,404  
Depreciation     23,595       14,818  
Amortization of restricted stock     13,142       3,490  
Amortization of deferred financing fees     332       4,093  
Straight-line adjustment for charterhire expense     53       41  
Share of profit from associate     (369 )     -  
Unrealized gain on derivative financial instruments     (567 )     1,231  
      33,013       7,540  
Changes in assets and liabilities:                
Drydock payments     (1,469 )     (1,702 )
(Increase)/decrease in inventories     (687 )     526  
Increase in accounts receivable     (36,104 )     (16,052 )
(Increase)/decrease in prepaid expenses and other current assets     (823 )     547  
(Increase)/decrease in other assets     (848 )     2,443  
(Decrease)/increase in accounts payable     (2,021 )     3,966  
Increase in accrued expenses     3,253       804  
      (38,699 )     (9,468 )
Net cash outflow from operating activities     (5,686 )     (1,928 )
Investing activities                
Acquisition of vessels and payments for vessels under construction     (768,170 )     (191,490 )
Proceeds from disposal of vessels     -       101,335  
VLGC installment payments     (83,070 )     -  
Investment in associate     (84,583 )     -  
Net cash outflow from investing activities     (935,823 )     (90,155 )
Financing activities                
Bank loan repayment     (28,410 )     (129,076 )
Bank loan drawdown     52,050       124,172  
Debt issuance costs     (13,940 )     (3,293 )
Gross proceeds from issuance of common stock     983,537       159,002  
Equity issuance costs     (35,695 )     (5,950 )
Purchase of treasury shares     -       (2,440 )
Dividends paid     (24,353 )     -  
Net cash inflow from financing activities     933,189       142,415  
(Decrease)/increase in cash and cash equivalents     (8,320 )     50,332  
Cash and cash equivalents at January 1,     87,165       36,833  
Cash and cash equivalents at December 31,   $ 78,845     $ 87,165  
                 
 
Scorpio Tankers Inc. and Subsidiaries
Other operating data for the three months and year ended December 31, 2013 and 2012
(unaudited)
 
                   
    For the three months ended December 31,   For the year ended December 31,
    2013     2012   2013   2012
Adjusted EBITDA(1) (in thousands of U.S. dollars)   $ (681 )   $ 3,786   $ 34,852   $ 11,883
                           
Average Daily Results                          
Time charter equivalent per day(2)   $ 12,080     $ 13,392   $ 14,369   $ 12,960
Vessel operating costs per day(3)     7,071       7,348     6,781     7,605
                           
Aframax/LR2                          
TCE per revenue day (2)   $ 12,582     $ 6,619   $ 12,718   $ 10,201
Vessel operating costs per day(3)     9,402       7,884     8,203     8,436
                           
Panamax/LR1                          
TCE per revenue day (2)   $ 10,194     $ 13,389   $ 12,599   $ 14,264
Vessel operating costs per day(3)     8,306       7,509     7,756     7,714
                           
MR                          
TCE per revenue day (2)   $ 13,784     $ 13,677   $ 16,546   $ 12,289
Vessel operating costs per day(3)     6,340       5,994     6,069     6,770
                           
Handymax                          
TCE per revenue day (2)   $ 9,618     $ 13,821   $ 12,862   $ 13,069
Vessel operating costs per day(3)     7,332       7,908     6,852     7,594
                           
Fleet data                          
Average number of owned vessels     19.0       12.0     15.9     10.8
Average number of time chartered-in vessels     28.2       11.8     22.9     9.2
                           
Drydock                          
Expenditures for drydock (in thousands of U.S. dollars)     -     $ 2,869     -   $ 2,869
                           

(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.

                         
    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   -   Spot   MR
15   STI Opera   2014   52,000   -   Spot   MR
16   Noemi   2004   72,515   -   Spot   LR1
17   Senatore   2004   72,514   -   Spot   LR1
18   STI Harmony   2007   73,919   1A   SPTP (2)   LR1
19   STI Heritage   2008   73,919   1A   SPTP (2)   LR1
20   Venice   2001   81,408   1C   Spot   Post-Panamax
21   STI Spirit   2008   113,100   -   SLR2P (3)   LR2
                         
    Total owned DWT       1,252,520            
                         
    Vessel Name   Year Built   DWT   Ice class   Employment   Vessel type   Daily Base Rate   Expiry (5)    
    Time chartered-in vessels                        
22   Freja Polaris   2004   37,217   1B   SHTP (1)   Handymax   $12,700   14-Apr-14   (6)
23   Kraslava   2007   37,258   1B   SHTP (1)   Handymax   $12,800   18-May-14   (7)
24   Krisjanis Valdemars   2007   37,266   1B   SHTP (1)   Handymax   $12,800   14-Apr-14   (8)
25   Jinan   2003   37,285   -   SHTP (1)   Handymax   $12,600   28-Apr-15    
26   Iver Progress   2007   37,412   -   SHTP (1)   Handymax   $12,500   03-Mar-15   (9)
27   Iver Prosperity   2007   37,455   -   SHTP (1)   Handymax   $12,500   20-Oct-14   (10)
28   Histria Azure   2007   40,394   -   SHTP (1)   Handymax   $12,600   04-Apr-14   (11)
29   Histria Coral   2006   40,426   -   SHTP (1)   Handymax   $12,800   17-Jul-14   (12)
30   Histria Perla   2005   40,471   -   SHTP (1)   Handymax   $12,800   15-Jul-14   (12)
31   STX Ace 6   2007   46,161   -   SMRP(4)   MR   $14,150   17-May-14   (13)
32   Targale   2007   49,999   -   SMRP(4)   MR   $14,500   17-May-14   (14)
33   Gan-Triumph   2010   49,999   -   SMRP(4)   MR   $14,150   20-May-14    
34   Nave Orion   2013   49,999   -   SMRP(4)   MR   $14,300   25-Mar-15   (15)
35   Hafnia Lupus   2012   50,385   -   SMRP(4)   MR   $14,760   26-Apr-14   (16)
36   Gan-Trust   2013   51,561   -   SMRP(4)   MR   $16,250   06-Jan-16   (17)
37   Usma   2007   52,684   1B   SMRP(4)   MR   $14,500   03-Jan-15    
38   SN Federica   2003   72,344   -   SPTP (2)   LR1   $11,250   15-May-15   (18)
39   SN Azzura   2003   72,344   -   SPTP (2)   LR1   $13,600   25-Dec-14    
40   King Douglas   2008   73,666   -   SPTP (2)   LR1   $14,000   08-Aug-14   (19)
41   Hellespont Promise   2007   73,669   -   SPTP (2)   LR1   $14,250   14-Aug-14    
42   FPMC P Eagle   2009   73,800   -   SPTP (2)   LR1   $14,525   09-Sep-15    
43   FPMC P Hero   2011   99,995   -   SLR2P (3)   LR2   $15,000   02-May-14   (20)
44   FPMC P Ideal   2012   99,993   -   SLR2P (3)   LR2   $15,250   09-Jul-14   (21)
45   Densa Alligator   2013   105,708   -   SLR2P (3)   LR2   $16,500   17-Sep-14   (22)
46   Khawr Aladid   2006   106,003   -   SLR2P (3)   LR2   $15,400   11-Jul-15    
47   Fair Seas   2008   115,406       SLR2P (3)   LR2   $16,500   21-Aug-14    
48   Southport   2008   115,462       SLR2P (3)   LR2   $15,700   10-Dec-14    
49   Pink Stars   2010   115,592   -   SLR2P (3)   LR2   $16,125   10-Apr-14    
50   Four Sky   2010   115,708   -   SLR2P (3)   LR2   $16,250   02-Sep-14    
51   Orange Stars   2011   115,756   -   SLR2P (3)   LR2   $16,125   06-Apr-14    
                                 
    Total time chartered-in DWT   2,051,418                        
                         
    Newbuildings currently under construction       
     
    Vessel Name   Yard       DWT   Ice class   Vessel type
    Product tankers                    
                         
52   Hull 2451   HMD   (23)   38,000   1A   Handymax
53   Hull 2452   HMD   (23)   38,000   1A   Handymax
54   Hull 2453   HMD   (23)   38,000   1A   Handymax
55   Hull 2454   HMD   (23)   38,000   1A   Handymax
56   Hull 2462   HMD   (23)   38,000   1A   Handymax
57   Hull 2463   HMD   (23)   38,000   1A   Handymax
58   Hull 2464   HMD   (23)   38,000   1A   Handymax
59   Hull 2465   HMD   (23)   38,000   1A   Handymax
60   Hull 2476   HMD   (23)   38,000   1A   Handymax
61   Hull 2477   HMD   (23)   38,000   1A   Handymax
62   Hull 2478   HMD   (23)   38,000   1A   Handymax
63   Hull 2479   HMD   (23)   38,000   1A   Handymax
64   Hull 2499   HMD   (23)   38,000   1A   Handymax
65   Hull 2500   HMD   (23)   38,000   1A   Handymax
66   Hull 2391   HMD   (23)   52,000       MR
67   Hull 2392   HMD   (23)   52,000       MR
68   Hull 2449   HMD   (23)   52,000       MR
69   Hull 2450   HMD   (23)   52,000       MR
70   Hull 2458   HMD   (23)   52,000       MR
71   Hull 2459   HMD   (23)   52,000       MR
72   Hull 2460   HMD   (23)   52,000       MR
73   Hull 2461   HMD   (23)   52,000       MR
74   Hull 2492   HMD   (23)   52,000       MR
75   Hull 2493   HMD   (23)   52,000       MR
76   Hull 2445   HMD   (23)   52,000       MR
77   Hull 2474   HMD   (23)   52,000       MR
78   Hull 2475   HMD   (23)   52,000       MR
79   Hull 2490   HMD   (23)   52,000       MR
80   Hull S1138   SPP   (24)   52,000       MR
81   Hull S1139   SPP   (24)   52,000       MR
82   Hull S1140   SPP   (24)   52,000       MR
83   Hull S1141   SPP   (24)   52,000       MR
84   Hull S1142   SPP   (24)   52,000       MR
85   Hull S1143   SPP   (24)   52,000       MR
86   Hull S1144   SPP   (24)   52,000       MR
87   Hull S1145   SPP   (24)   52,000       MR
88   Hull S1167   SPP   (24)   52,000       MR
89   Hull S1168   SPP   (24)   52,000       MR
90   Hull S1169   SPP   (24)   52,000       MR
91   Hull S1170   SPP   (24)   52,000       MR
92   Hull S5122   SPP   (24)   52,000       MR
93   Hull S5123   SPP   (24)   52,000       MR
94   Hull S5124   SPP   (24)   52,000       MR
95   Hull S5125   SPP   (24)   52,000       MR
96   Hull S703   HSHI   (25)   114,000       LR2
97   Hull S704   HSHI   (25)   114,000       LR2
98   Hull S705   HSHI   (25)   114,000       LR2
99   Hull S706   HSHI   (25)   114,000       LR2
100   Hull S709   HSHI   (25)   114,000       LR2
101   Hull S710   HSHI   (25)   114,000       LR2
102   Hull S715   HSHI   (25)   114,000       LR2
103   Hull S716   HSHI   (25)   114,000       LR2
104   Hull 5394   DSME   (26)   114,000       LR2
105   Hull 5395   DSME   (26)   114,000       LR2
106   Hull 5398   DSME   (26)   114,000       LR2
107   Hull 5399   DSME   (26)   114,000       LR2
                         
                         
    Total newbuilding product tankers DWT   3,460,000        
    VLCCs                    
108   Hull 5404   DSME   (27)   300,000       VLCC
109   Hull 5405   DSME   (27)   300,000       VLCC
110   Hull 5406   DSME   (27)   300,000       VLCC
111   Hull 5407   DSME   (27)   300,000       VLCC
112   Hull 5408   DSME   (27)   300,000       VLCC
113   Hull S777   HSHI   (28)   300,000       VLCC
114   Hull S778   HSHI   (28)   300,000       VLCC
                         
                         
    Total VLCC DWT        2,100,000        
                     
    Total Fleet DWT        8,863,938        
                         
(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)   Redelivery from the charterer is plus or minus 30 days from the expiry date.
(6)   We have an option to extend the charter for an additional year at $14,000 per day.
(7)   We have an option to extend the charter for an additional year at $13,650 per day.
(8)   We have an option to extend the charter for an additional year at $13,650 per day. 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 three consecutive one year periods at $14,850 per day, $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)   We have an option to extend the charter for an additional year at $16,000 per day.
(17)   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.
(18)   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.
(19)   We have an option to extend the charter for an additional year at $15,000 per day.
(20)   We have options to extend the charter for two consecutive six month periods at $15,250 per day, and $15,500 per day respectively.
(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 one year at $17,550 per day.
(23)   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.
(24)   These newbuilding vessels are being constructed at SPP (SPP Shipbuilding Co., Ltd. of South Korea ). 12 vessels are expected to be delivered in 2014 and four in the first and second quarters of 2015.
(25)   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.
(26)   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.
(27)   These newbuilding VLCCs are being constructed at DSME. One vessel is expected to be delivered in the third quarter of 2015, two in the fourth quarter of 2015 and two in the first quarter of 2016.
(28)   These two newbuilding VLCCs are being constructed at HSHI. These vessels are expected to be delivered in the second and third quarters of 2016.
     

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 and very large crude carriers. 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, and crude oil.
  • 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 February 21, 2014, the Company's board of directors declared a quarterly cash dividend of $0.08 per share, payable on March 26, 2014 to all shareholders as of March 11, 2014 (the record date). On December 18, 2013, the Company paid a quarterly cash dividend on its common stock of $0.07 per share to all shareholders as of December 3, 2013 (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 February 21, 2014 the Company has purchased $7.9 million of shares in the open market at an average price of $6.78.

About Scorpio Tankers Inc.
Scorpio Tankers Inc. is a provider of marine transportation of petroleum products worldwide. Scorpio Tankers Inc. currently owns 21 tankers (one LR2 tanker, four LR1 tankers, one Handymax tanker, 14 MR tankers, and one post-Panamax tanker) with an average age of 3.9 years, time charters-in 30 product tankers (nine LR2, five LR1, seven MR and nine Handymax tankers), and has contracted for 63 newbuilding vessels (30 MR, 12 LR2, and 14 Handymax ice class-1A product tankers and seven VLCCs), 43 are expected to be delivered to the Company throughout 2014, 16 in 2015 and four in 2016. 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 December 31,  
    2013     2012  
In thousands of U.S. dollars except per share and share data   Amount     Per share     Amount     Per share  
  Net income / (loss)   $ 5,771     $ 0.03     $ (4,880 )   $ (0.11 )
  Adjustments:                                
  Unrealized (gain)/loss on derivative financial instruments     (82 )     (0.00 )     1,269       0.03  
  Write down of vessels held for sale     21,187       0.12       -       0.00  
  Gain on sale of VLGCs     (41,375 )     (0.23 )     -       0.00  
  Total adjustments     (20,270 )     (0.11 )     1,269       0.03  
  Adjusted net loss   $ (14,499 )   $ (0.08 )   $ (3,611 )   $ (0.08 )
                                 
       
    For the year ended December 31,  
    2013     2012  
In thousands of U.S. dollars except per share and share data   Amount     Per share     Amount     Per share  
  Net income / (loss)   $ 17,015     $ 0.12     $ (26,537 )   $ (0.64 )
  Adjustments:                                
  Write off of deferred financing fees     -       -       2,978       0.07  
  Unrealized (gain)/loss on derivative financial instruments     (567 )     (0.00 )     1,231       0.03  
  Write down of vessels held for sale and loss from sales of vessels     21,187       0.14       10,404       0.25  
  Gain on sale of VLGCs     (41,375 )     (0.28 )     -       -  
  Total adjustments   $ (20,755 )     (0.14 )     14,613       0.35  
  Adjusted net loss   $ (3,740 )   $ (0.03 )   $ (11,924 )   $ (0.29 )
                                 
             
    For the three months ended December 31,     For the year ended December 31,  
In thousands of U.S. dollars   2013     2012     2013     2012  
  Net income / (loss)   $ 5,771     $ (4,880 )     17,015     $ (26,537 )
  Financial expenses     383       1,929       2,705       8,512  
  Unrealized (gain)/loss on derivative financial instruments     (82 )     1,269       (567 )     1,231  
  Financial income     (197 )     (29 )     (1,147 )     (35 )
  Depreciation     6,930       4,605       23,595       14,818  
  Depreciation component of our net profit from associate     297       -       297       -  
  Amortization of restricted stock     6,405       892       13,142       3,490  
  Write down of vessels held for sale     21,187       -       21,187       10,404  
  Gain on sale of VLGCs     (41,375 )     -       (41,375 )     -  
  Adjusted EBITDA   $ (681 )   $ 3,786     $ 34,852     $ 11,883  
                                 

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.