SOURCE: Scorpio Tankers Inc.

Scorpio Tankers Inc.

July 28, 2016 08:00 ET

Scorpio Tankers Inc. Announces Financial Results for the Second Quarter of 2016 and Declaration of a Quarterly Dividend

MONACO--(Marketwired - July 28, 2016) - Scorpio Tankers Inc. (NYSE: STNG) ("Scorpio Tankers," or the "Company") today reported its results for the three and six months ended June 30, 2016 and declaration of a quarterly dividend.

Results for the three months ended June 30, 2016 and 2015

For the three months ended June 30, 2016, the Company's adjusted net income (see Non-IFRS Measures section below) was $6.6 million, or $0.04 basic and diluted earnings per share, which excludes from net income (i) a $3.7 million write-off of deferred financing fees, (ii) a $0.4 million unrealized gain on derivative financial instruments, (iii) a $0.4 million gain recorded on the repurchase of $5.0 million aggregate principal amount of the Company's Convertible Senior Notes due 2019 (the "Convertible Notes") and (iv) a $0.1 million gain on sales of vessels. The adjustments resulted in an aggregate increase of net income by $2.7 million or $0.02 basic and diluted earnings per share. For the three months ended June 30, 2016, the Company had net income of $3.8 million, or $0.02 basic and diluted earnings per share (see below for further information).

For the three months ended June 30, 2015, the Company's adjusted net income (see non-IFRS Measures section below) was $57.5 million, or $0.35 basic and $0.32 diluted earnings per share, which excludes an unrealized gain on derivative financial instruments of $0.1 million, or $0.00 per basic and diluted shares. For the three months ended June 30, 2015, the Company had net income of $57.6 million, or $0.35 basic and $0.32 diluted earnings per share.

Results for the six months ended June 30, 2016 and 2015

For the six months ended June 30, 2016, the Company's adjusted net income (see Non-IFRS Measures section below) was $37.0 million, or $0.23 basic and $0.22 diluted earnings per share, which excludes from net income (i) a $2.1 million loss on sales of vessels, (ii) a $5.5 million write-off of deferred financing fees, (iii) a $1.4 million unrealized gain on derivative financial instruments and (iv) a $1.0 million aggregate gain recorded on the repurchase of $10.0 million aggregate principal amount of the Company's Convertible Notes. The adjustments resulted in an aggregate increase of net income by $5.2 million or $0.03 basic and diluted earnings per share. For the six months ended June 30, 2016, the Company had net income of $31.9 million, or $0.20 basic and $0.19 diluted earnings per share.

For the six months ended June 30, 2015, the Company's adjusted net income (see non-IFRS Measures section below) was $96.8 million, or $0.62 basic and $0.55 diluted earnings per share, which excludes from net income a gain of $2.0 million related to the closing of the sales of three vessels and an unrealized loss on derivative financial instruments of $0.5 million. These adjustments aggregated to a decrease of net income by $1.5 million, or $0.01 per basic and diluted shares. For the six months ended June 30, 2015, the Company had net income of $98.3 million, or $0.63 basic and $0.56 diluted earnings per share.

Declaration of Dividend

On July 28, 2016, the Company's Board of Directors declared a quarterly cash dividend of $0.125 per share, payable on September 29, 2016 to all shareholders as of September 15, 2016 (the record date). As of July 27, 2016, there were 172,378,640 shares outstanding.

Diluted Weighted Number of Shares

Diluted earnings per share is determined using the if-converted method. Under this method, the Company assumes that the Convertible Notes (which were issued in June 2014) are converted into common shares at the beginning of each period and the interest and non-cash amortization expense associated with these notes of $5.4 million and $10.8 million during the three and six months ended June 30, 2016, respectively, are not incurred. Conversion is not assumed if the results of this calculation are anti-dilutive.

For the three and six months ended June 30, 2016, the Company's basic weighted average number of shares were 161,381,900 and 160,931,752, respectively. The Company's diluted weighted average number of shares for those periods were 165,943,795 and 166,306,290, respectively which excludes the impact of the Convertible Notes since the if-converted method was anti-dilutive. As of the date hereof, the Convertible Notes are not eligible for conversion.

Summary of Recent and Second Quarter Significant Events:

  • Below is a summary of the average daily TCE revenue and duration for voyages fixed thus far in the third quarter of 2016:
    • For the LR2s in the pool: approximately $17,000 per day for 47% of the days
    • For the LR1 in the pool: approximately $13,000 per day for 42% of the days
    • For the MRs in the pool: approximately $14,000 per day for 38% of the days
    • For the Handymaxes in the pool: approximately $11,000 per day for 32% of the days
  • Below is a summary of the average daily TCE revenue earned during the second quarter of 2016:
    • For the LR2s in the pool: $20,402 per revenue day
    • For the LR1 in the pool: $19,149 per revenue day
    • For the MRs in the pool: $16,405 per revenue day
    • For the Handymaxes in the pool: $12,924 per revenue day
  • Reduced the Company's outstanding debt by $95.1 million between April 1, 2016 and July 27, 2016.
  • Received a commitment for a credit facility of up to $300 million from ABN AMRO Bank N.V, Nordea Bank Finland plc, acting through its New York branch, and Skandinaviska Enskilda Banken AB, the proceeds of which are expected to be used to refinance the existing indebtedness on 16 MR product tankers.
  • Executed a credit facility with NIBC Bank N.V. in June 2016 to refinance the existing indebtedness on two 2013 built MR product tankers; the loan was fully drawn in July 2016.
  • Took delivery of STI Jermyn, an LR2 product tanker that was under construction, from Daehan Shipbuilding Co., Ltd ("DHSC") in June 2016.
  • Agreed to time charter-in three MR product tankers consisting of a 2013 built MR product tanker for one year at $15,800 per day (delivered in July 2016) and two 2011 built MR product tankers, each for two years at $15,250 per day (expected to be delivered in August 2016).
  • Repurchased $5.0 million aggregate principal amount of the Convertible Notes for $847.50 per $1,000 aggregate principal amount in May 2016.
  • Repurchased 657,154 common shares at an average price of $4.26 per share in July 2016. The repurchased shares are being held as treasury shares.
  • Paid a quarterly cash dividend on the Company's common stock of $0.125 per share in June 2016.

$300 Million Credit Facility Commitment

In July 2016, the Company received a commitment for a loan facility of up to $300 million from ABN AMRO Bank N.V, Nordea Bank Finland plc, acting through its New York branch, and Skandinaviska Enskilda Banken AB. The borrowings under the loan facility are expected to be used to refinance the existing indebtedness relating to 16 MR product tankers, and the loan facility has a final maturity of five years from the first drawdown date, and bears interest at LIBOR plus a margin of 2.50% per annum. The loan facility is expected to be comprised of a term loan up to $200 million and a revolver up to $100 million, and the availability may be used to finance up to 60% of the fair market value of the respective vessels at the time of delivery. The loan facility is subject to customary conditions precedent and the execution of definitive documentation.

NIBC Credit Facility

In June 2016, the Company executed a loan facility with NIBC Bank N.V. This facility was fully drawn in July 2016, and the proceeds of $40.8 million were used to refinance the existing indebtedness on two 2013 built MR product tankers. The loan facility has a final maturity of five years from the signing date and bears interest at LIBOR plus a margin of 2.50% per annum.

Vessel deliveries

In June 2016, the Company took delivery of STI Jermyn, an LR2 product tanker from DHSC. The Company drew down $26.0 million under its ING Credit Facility to partially finance the purchase price of this vessel.

In April 2016, the Company took delivery of STI Lombard, an LR2 product tanker that was previously bareboat chartered-in, and paid the remaining 90% of the purchase price, or $53.1 million, upon delivery. The Company drew down $26.5 million from its ING Credit Facility to partially finance this transaction.

$250 Million Securities Repurchase Program

In May 2015, the Company's Board of Directors authorized a Securities Repurchase Program to purchase up to an aggregate of $250 million of the Company's securities, which currently consist of its (i) Convertible Notes, which were issued in June 2014, (ii) Unsecured Senior Notes Due 2020 (NYSE: SBNA), which were issued in May 2014, and (iii) Unsecured Senior Notes Due 2017 (NYSE: SBNB), which were issued in October 2014. As of the date hereof, the Company has the authority to purchase up to an additional $153.3 million of its securities under its Securities Repurchase Program. The Company expects to repurchase its securities 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 Securities Repurchase Program to repurchase any of its securities.

Since April 1, 2016 through the date of this press release, the Company has repurchased its securities as follows:

  • an aggregate of 657,154 of its common shares at an average price of $4.26 per share; the repurchased shares are being held as treasury shares. There are 172,378,640 shares outstanding as of July 27, 2016.
  • $5.0 million aggregate principal amount of its Convertible Notes at an average price of $847.50 per $1,000 principal amount.

Time Charter-in Update

In July 2016, the Company agreed to time charter-in two 2011 built MR product tankers, each for two years at $15,250 per day. The Company also has an option to extend each charter for an additional year at $16,000 per day. These vessels are expected to be delivered in August 2016.

In July 2016, the Company time chartered-in a 2013 built MR product tanker for one year at $15,800 per day. The Company also has an option to extend the charter for an additional year at $17,000 per day. This vessel was delivered in July 2016.

In April 2016, the Company exercised its option to extend the charter on an MR product tanker that is currently time chartered-in for an additional year at $16,350 per day effective May 2016.

Conference Call

The Company will have a conference call on July 28, 2016 at 11:00 AM Eastern Daylight Time and 5:00 PM Central European Summer Time.

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 (888) 599-8658 (U.S.) or +1 (913) 312-0868 (International). The conference participant passcode is 2851242. 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: https://www.webcaster4.com/Webcast/Page/610/16297

Current Liquidity
As of July 27, 2016, the Company had $164.6 million in cash.

Debt
Set forth below is a summary of the Company's outstanding indebtedness as of the dates presented:

                   
In millions of U.S. dollars  Outstanding as of March 31, 2016  Activity: Drawdowns and (repayments), net  Outstanding as of June 30, 2016  Activity: Drawdowns and (repayments), net  Outstanding as of July 27, 2016  Availability as of July 27, 2016
2011 Credit Facility  $99.0  $(2.0 ) $97.0  $-   $97.0  $-
Newbuilding Credit Facility   70.3   (1.5 )  68.8   -    68.8   -
2013 Credit Facility (1)   385.0   (57.0 )  328.0   (36.9 )  291.1   -
K-Sure Credit Facility (2)   406.7   (58.4 )  348.3   (14.9 )  333.4   -
KEXIM Credit Facility   383.4   -    383.4   (4.3 )  379.1   -
ING Credit Facility (3)   60.1   68.6    128.7   (1.1 )  127.6   -
ABN AMRO Credit Facility   137.4   (2.4 )  135.0   (0.6 )  134.4   -
BNP Paribas Credit Facility   34.0   (0.6 )  33.4   -    33.4   -
Credit Suisse Credit Facility   -   -    -   -    -   61.2
Scotiabank Credit Facility (4)   -   33.3    33.3   -    33.3   -
NIBC Credit Facility (5)   -   -    -   40.8    40.8   -
Finance lease (6)   53.1   (53.1 )  -   -    -   -
2020 senior unsecured notes   53.8   -    53.8   -    53.8   -
2017 senior unsecured notes   51.8   -    51.8   -    51.8   -
Convertible Notes (7)   353.5   (5.0 )  348.5   -    348.5   -
2016 $300 million Credit Facility (8)   -   -    -   -    -   300.0
   $2,088.1  $(78.1 ) $2,010.0  $(17.0 ) $1,993.0  $361.2
(1) Activity for the 2013 Credit Facility includes the following repayments in connection with the refinancing of outstanding borrowings thereunder (i) $18.3 million related to STI Osceola, which was refinanced in April 2016, (ii) $32.5 million related to STI Rose, which was refinanced in June 2016, (iii) $18.4 million related to STI Fontvieille, which was refinanced in July 2016, and (iv) $18.5 million related to STI Ville, which was refinanced in July 2016. The Company also made a scheduled principal repayment of $6.2 million in June 2016.
   
(2) Activity for the K-Sure Credit Facility includes the aggregate repayment of $55.1 million in connection with the sales of STI Chelsea, STI Olivia and STI Powai in April 2016, April 2016 and May 2016, respectively. The Company also made a scheduled principal repayments of $3.3 million in June 2016 and $14.9 million in July 2016.
   
(3) Activity for the ING Credit Facility includes drawdowns of (i) $26.5 million to partially finance the purchase price of STI Lombard in April 2016, (ii) $17.1 million as part of the refinancing of the amounts borrowed for STI Osceola in April 2016 and (iii) $26.0 million to partially finance the purchase price of STI Jermyn in June 2016. These drawdowns were offset by scheduled principal repayments of $1.0 million during the second quarter of 2016 and $1.1 million in July 2016.
   
(4) Activity for the Scotiabank Credit Facility includes the drawdown of $33.3 million, which was used to refinance the outstanding borrowings relating to STI Rose in June 2016.
   
(5) The Company executed a loan facility with NIBC Bank N.V. in June 2016. The facility has a maturity of five years from the agreement date and bears interest at LIBOR plus a margin of 2.50% per annum. This facility was fully drawn in July 2016, and the proceeds were used to refinance the existing indebtedness on STI Ville and STI Fontvieille, which were previously financed under the 2013 Credit Facility.
   
(6) In April 2016, the Company took delivery of STI Lombard from its previously announced bareboat charter-in agreement and paid the remaining 90% of the purchase price, or $53.1 million, as part of this transaction.
   
(7) In May 2016, the Company repurchased $5.0 million aggregate principal amount of the Convertible Notes for $847.50 per $1,000 principal amount. $37.8 million and $41.2 million of the amounts outstanding have been attributed to the conversion feature of the Convertible Notes and recorded within additional paid in capital on the unaudited condensed consolidated balance sheet as of June 30, 2016 and March 31, 2016, respectively.
   
(8) In July 2016, the Company received a commitment for a loan facility of up to $300 million from ABN AMRO Bank N.V, Nordea Bank Finland plc, acting through its New York branch, and Skandinaviska Enskilda Banken AB. The borrowings under the loan facility are expected to be used to refinance the existing indebtedness on 16 MR product tankers and the loan facility bears interest at LIBOR plus a margin of 2.50% per annum. The loan facility is subject to customary conditions precedent and the execution of definitive documentation.
   

Newbuilding Program

During the second quarter of 2016, the Company made installment payments of $77.0 million relating to vessels under its Newbuilding Program.

The Company currently has 10 newbuilding vessel orders (eight MRs and two LR2s) with Hyundai Mipo Dockyard Co., Ltd. ("HMD") and Sungdong Shipbuilding and Marine Engineering Co., Ltd. ("SSME"). Set forth below are the installment payments that have been made and are expected to be made in the third quarter of 2016 and future installment payments *:

    
   In millions of U.S. dollars
Q3 2016 - installment payment made  $3.6
Q3 2016 - remaining installment payments   33.2
Q4 2016   42.0
Q1 2017   32.3
Q2 2017   50.2
Q3 2017   50.3
Q4 2017   46.9
Q1 2018   21.6
     
Total  $280.1
*These are estimates only and are subject to change as construction progresses.
 

Explanation of Variances on the Second Quarter of 2016 Financial Results Compared to the Second Quarter of 2015

For the three months ended June 30, 2016, the Company recorded net income of $3.8 million compared to net income of $57.6 million for the three months ended June 30, 2015. 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 June 30, 2016 and 2015:
    
   For the three months ended June 30,
In thousands of U.S. dollars  2016  2015
 Vessel revenue  $137,214   $188,464  
 Voyage expenses   (472 )  (1,112 )
 TCE revenue  $136,742   $187,352  
          
  • TCE revenue decreased $50.6 million to $136.7 million from $187.4 million for the three months ended June 30, 2016 and 2015, respectively. This decrease was driven by a decrease in time charter equivalent revenue per day to $16,903 per day from $23,469 per day for the three months ended June 30, 2016 and 2015, respectively (see the breakdown of daily TCE below). TCE revenue per day decreased across all of our operating segments. Global refining margins were robust in 2015, which led to a build-up of product inventories and the deferral of refinery maintenance. As a result, refinery utilization in the second quarter of 2016 decreased as overdue maintenance was performed, thus dampening global demand for product tankers.
  • Vessel operating costs increased $5.1 million to $46.2 million from $41.1 million for the three months ended June 30, 2016 and 2015, respectively. This increase was primarily driven by an increase in the Company's owned fleet to an average of 77.2 vessels from 69.6 vessels for the three months ended June 30, 2016 and 2015, respectively. Overall vessel operating costs per day remained consistent, increasing slightly to $6,585 per day from $6,487 per day for the three months ended June 30, 2016 and 2015, respectively (see the breakdown of daily vessel operating costs below).
  • Charterhire expense decreased $7.2 million to $18.7 million from $25.9 million for the three months ended June 30, 2016 and 2015, respectively. This decrease was primarily driven by a decrease in the Company's time chartered-in fleet to an average of 11.7 vessels from 18.6 vessels for the three months ended June 30, 2016 and 2015, respectively.
  • Depreciation expense increased $4.3 million to $29.9 million from $25.6 million for the three months ended June 30, 2016 and 2015, respectively. This increase was the result of an increase in the average number of owned vessels to 77.2 from 69.6 for the three months ended June 30, 2016 and 2015, respectively.
  • General and administrative expenses decreased $2.4 million to $13.1 million from $15.5 million for the three months ended June 30, 2016 and 2015, respectively. This decrease was primarily driven by reductions in compensation expense (which includes a reduction in restricted stock amortization), and legal and professional fees.
  • Financial expenses increased $4.2 million to $26.0 million from $21.8 million primarily as a result of:
    • an increase in average debt outstanding to $1.98 billion from $1.90 billion for the three months ended June 30, 2016 and 2015, respectively, accompanied by an increase in LIBOR rates over those same periods
    • an aggregate write-off of $3.7 million of deferred financing fees as a result of (i) the sales, and corresponding debt repayments on the amounts borrowed for STI Chelsea, STI Olivia and STI Powai, (ii) the refinancing of the amounts borrowed for STI Rose and STI Osceola and (iii) the repurchase of $5 million aggregate principal amount of the Convertible Notes in May 2016.
  • These increases were offset by an increase in the amount of interest capitalized of $0.5 million.
  • Unrealized gains and losses on derivative financial instruments relate to the change in the fair value of the profit or loss agreement on one of the Company's time chartered-in vessels with a third party who neither owns nor operates the vessel.
  • Financial income for the three months ended June 30, 2016 primarily consists of the gain recorded when the Company repurchased $5.0 million aggregate principal amount of the Company's Convertible Notes for $847.50 per $1,000 principal amount in May 2016.
 
Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Statement of Income
(unaudited)
 
   For the three months ended June 30,  For the six months ended June 30,
In thousands of U.S. dollars except per share and share data  2016  2015  2016  2015
Revenue            
 Vessel revenue  $137,214  $188,464  $302,342  $349,170
                 
Operating expenses                
 Vessel operating costs   (46,237)   (41,147)   (94,272)   (78,622)
 Voyage expenses   (472)   (1,112)   (828)   (3,206)
 Charterhire   (18,685)   (25,915)   (34,330)   (54,646)
 Depreciation   (29,885)   (25,550)   (60,089)   (46,958)
 General and administrative expenses   (13,085)   (15,451)   (30,102)   (29,153)
 Gain / (loss) on sales of vessels   137   11   (2,078)   2,019
 Total operating expenses   (108,227)   (109,164)   (221,699)   (210,566)
Operating income   28,987   79,300   80,643   138,604
Other (expense) and income, net                
 Financial expenses   (26,010)   (21,840)   (51,231)   (39,898)
 Realized gain on derivative financial instruments   -   15   -   55
 Unrealized gain / (loss) on derivative financial instruments   429   64   1,431   (542)
 Financial income   489   53   1,104   78
 Other income (expenses), net   (49)   (4)   (70)   (14)
 Total other expense, net   (25,141)   (21,712)   (48,766)   (40,321)
Net income  $3,846  $57,588  $31,877  $98,283
                 
                 
Earnings per share                
                 
 Basic  $0.02  $0.35  $0.20  $0.63
 Diluted  $0.02  $0.32  $0.19  $0.56
 Basic weighted average shares outstanding   161,381,900   162,457,319   160,931,752   157,177,056
 Diluted weighted average shares outstanding (1)   165,943,795   199,202,256   166,306,290   193,533,559
(1)  Diluted weighted average shares outstanding, assuming conversion of the Company's Convertible Notes, were 198,076,053 and 198,342,263 for the three and six months ended June 30, 2016, respectively. Earnings per share for these periods did not consider the effect of the Convertible Notes because the if-converted method was anti-dilutive.
   
Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(unaudited)
 
   As of
In thousands of U.S. dollars  June 30, 2016  December 31, 2015
Assets      
Current assets      
Cash and cash equivalents  $183,855  $200,970
Accounts receivable   53,812   69,017
Prepaid expenses and other current assets   8,399   3,585
Derivative financial instruments   175   -
Inventories   6,187   6,575
Total current assets   252,428   280,147
Non-current assets        
Vessels and drydock   2,974,596   3,087,753
Vessels under construction   113,921   132,218
Other assets   22,937   23,337
Total non-current assets   3,111,454   3,243,308
Total assets  $3,363,882  $3,523,455
Current liabilities        
Current portion of long-term debt  $217,287  $124,503
Finance lease liability   -   53,372
Accounts payable   10,941   25,683
Accrued expenses   22,848   32,643
Derivative financial instruments   -   1,175
Total current liabilities   251,076   237,376
Non-current liabilities        
Long-term debt   1,709,084   1,872,114
Derivative financial instruments   -   80
Total non-current liabilities   1,709,084   1,872,194
Total liabilities   1,960,160   2,109,570
Shareholders' equity        
Issued, authorized and fully paid-in share capital:        
Share capital   2,224   2,224
Additional paid-in capital   1,744,240   1,729,314
Treasury shares   (441,018)   (427,311)
Retained earnings   98,276   109,658
Total shareholders' equity   1,403,722   1,413,885
Total liabilities and shareholders' equity  $3,363,882  $3,523,455
         
Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(unaudited)
 
   For the six months ended June 30,
In thousands of U.S. dollars  2016  2015
Operating activities      
Net income  $31,877  $98,283
Loss / (gain) on sales of vessels   2,078   (2,019)
Depreciation   60,089   46,958
Amortization of restricted stock   15,488   15,140
Amortization of deferred financing fees   12,967   7,088
Unrealized (gain) / loss on derivative financial instruments   (1,431)   542
Amortization of acquired time charter contracts   65   346
Accretion of Convertible Notes   5,740   5,471
Gain on repurchase of Convertible Notes   (994)   -
    125,879   171,809
Changes in assets and liabilities:        
Drydock payments   -   -
Decrease / (increase) in inventories   498   (1,075)
Decrease / (increase) in accounts receivable   15,205   (3,626)
Increase in prepaid expenses and other current assets   (4,878)   (7,668)
Decrease / (increase) in other assets   310   (5,607)
(Decrease) / increase in accounts payable   (1,033)   7,481
Decrease in accrued expenses   (9,373)   (2,641)
Interest rate swap termination payment   -   (128)
    729   (13,264)
Net cash inflow from operating activities   126,608   158,545
Investing activities        
Acquisition of vessels and payments for vessels under construction   (102,872)   (575,467)
Proceeds from disposal of vessels   158,175   72,884
Net cash inflow / (outflow) from investing activities   55,303   (502,583)
Financing activities        
Debt repayments   (276,586)   (75,034)
Issuance of debt   146,191   429,600
Debt issuance costs   (3,248)   (3,969)
Repayment of Convertible Notes   (8,393)   -
Gross proceeds from issuance of common stock   -   159,747
Equity issuance costs   (24)   (7,394)
Dividends paid   (43,259)   (42,285)
Repurchase of common stock   (13,707)   (5,907)
Net cash (outflow) / inflow from financing activities   (199,026)   454,758
(Decrease) / increase in cash and cash equivalents   (17,115)   110,720
Cash and cash equivalents at January 1,   200,970   116,143
Cash and cash equivalents at June 30,  $183,855  $226,863
 
Scorpio Tankers Inc. and Subsidiaries
Other operating data for the three and six months ended June 30, 2016 and 2015
(unaudited)
 
   For the three months ended June 30,  For the six months ended June 30,
   2016  2015  2016  2015
Adjusted EBITDA(1)(in thousands of U.S. dollars)  $65,866  $112,314  $158,228  $198,724
                 
Average Daily Results                
Time charter equivalent per day(2)  $16,903  $23,469  $18,561  $22,331
Vessel operating costs per day(3)  $6,585  $6,487  $6,599  $6,534
                 
Aframax/LR2                
TCE per revenue day (2)  $20,688  $30,116  $23,963  $27,876
Vessel operating costs per day(3)  $6,562  $6,751  $6,681  $6,797
Average number of owned vessels   20.1   13.3   19.6   11.1
Average number of time chartered-in vessels   2.0   4.4   2.0   5.3
                 
Panamax/LR1                
TCE per revenue day (2)  $19,149  $23,243  $22,742  $22,317
Vessel operating costs per day(3)   -   *   -  $8,362
Average number of owned vessels   -   0.1   -   1.4
Average number of time chartered-in vessels   0.7   4.7   0.8   4.8
                 
MR                
TCE per revenue day (2)  $16,528  $22,599  $17,562  $21,402
Vessel operating costs per day(3)  $6,699  $6,352  $6,639  $6,375
Average number of owned vessels   43.1   41.2   44.9   38.9
Average number of time chartered-in vessels   4.0   3.2   4.0   3.3
                 
Handymax                
TCE per revenue day (2)  $13,382  $19,774  $14,616  $19,909
Vessel operating costs per day(3)  $6,226  $6,422  $6,336  $6,586
Average number of owned vessels   14.0   15.0   14.0   15.0
Average number of time chartered-in vessels   5.1   6.2   4.2   6.5
                 
Fleet data                
Average number of owned vessels   77.2   69.6   78.5   66.3
Average number of time chartered-in vessels   11.7   18.6   11.0   19.8
                 
* In early April 2015, the Company sold STI Harmony and STI Heritage, which were the last two owned LR1 tankers in this segment. Since there were only four total operating days in this segment in the period presented, operating costs per day were not a meaningful metric and thus not presented for the three months ended June 30, 2015.
(1)  See Non-IFRS Measures 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 July 27, 2016
 
   Vessel Name  Year Built  DWT  Ice class  Employment  Vessel type
   Owned vessels               
1  STI Brixton  2014  38,000  1A  SHTP (1)  Handymax
2  STI Comandante  2014  38,000  1A  SHTP (1)  Handymax
3  STI Pimlico  2014  38,000  1A  Time Charter (5)  Handymax
4  STI Hackney  2014  38,000  1A  SHTP (1)  Handymax
5  STI Acton  2014  38,000  1A  SHTP (1)  Handymax
6  STI Fulham  2014  38,000  1A  SHTP (1)  Handymax
7  STI Camden  2014  38,000  1A  SHTP (1)  Handymax
8  STI Battersea  2014  38,000  1A  SHTP (1)  Handymax
9  STI Wembley  2014  38,000  1A  SHTP (1)  Handymax
10  STI Finchley  2014  38,000  1A  SHTP (1)  Handymax
11  STI Clapham  2014  38,000  1A  SHTP (1)  Handymax
12  STI Poplar  2014  38,000  1A  Time Charter (5)  Handymax
13  STI Hammersmith  2015  38,000  1A  SHTP (1)  Handymax
14  STI Rotherhithe  2015  38,000  1A  SHTP (1)  Handymax
15  STI Amber  2012  52,000  -  SMRP(2)  MR
16  STI Topaz  2012  52,000  -  SMRP(2)  MR
17  STI Ruby  2012  52,000  -  SMRP(2)  MR
18  STI Garnet  2012  52,000  -  SMRP(2)  MR
19  STI Onyx  2012  52,000  -  SMRP(2)  MR
20  STI Sapphire  2013  52,000  -  SMRP(2)  MR
21  STI Emerald  2013  52,000  -  SMRP(2)  MR
22  STI Beryl  2013  52,000  -  SMRP(2)  MR
23  STI Le Rocher  2013  52,000  -  SMRP(2)  MR
24  STI Larvotto  2013  52,000  -  SMRP(2)  MR
25  STI Fontvieille  2013  52,000  -  SMRP(2)  MR
26  STI Ville  2013  52,000  -  SMRP(2)  MR
27  STI Duchessa  2014  52,000  -  SMRP(2)  MR
28  STI Opera  2014  52,000  -  SMRP(2)  MR
29  STI Texas City  2014  52,000  -  SMRP(2)  MR
30  STI Meraux  2014  52,000  -  SMRP(2)  MR
31  STI San Antonio  2014  52,000  -  SMRP(2)  MR
32  STI Venere  2014  52,000  -  SMRP(2)  MR
33  STI Virtus  2014  52,000  -  SMRP(2)  MR
34  STI Aqua  2014  52,000  -  SMRP(2)  MR
35  STI Dama  2014  52,000  -  SMRP(2)  MR
36  STI Benicia  2014  52,000  -  SMRP(2)  MR
37  STI Regina  2014  52,000  -  SMRP(2)  MR
38  STI St. Charles  2014  52,000  -  SMRP(2)  MR
39  STI Mayfair  2014  52,000  -  SMRP(2)  MR
40  STI Yorkville  2014  52,000  -  SMRP(2)  MR
41  STI Milwaukee  2014  52,000  -  SMRP(2)  MR
42  STI Battery  2014  52,000  -  SMRP(2)  MR
43  STI Soho  2014  52,000  -  SMRP(2)  MR
44  STI Memphis  2014  52,000  -  SMRP(2)  MR
45  STI Tribeca  2015  52,000  -  SMRP(2)  MR
46  STI Gramercy  2015  52,000  -  SMRP(2)  MR
47  STI Bronx  2015  52,000  -  SMRP(2)  MR
48  STI Pontiac  2015  52,000  -  SMRP(2)  MR
49  STI Manhattan  2015  52,000  -  SMRP(2)  MR
50  STI Queens  2015  52,000  -  SMRP(2)  MR
51  STI Osceola  2015  52,000  -  SMRP(2)  MR
52  STI Notting Hill  2015  52,000  1B  Time Charter (6)  MR
53  STI Seneca  2015  52,000  -  SMRP(2)  MR
54  STI Westminster  2015  52,000  1B  Time Charter (6)  MR
55  STI Brooklyn  2015  52,000  -  SMRP(2)  MR
56  STI Black Hawk  2015  52,000  -  SMRP(2)  MR
57  STI Elysees  2014  109,999  -  SLR2P (4)  LR2
58  STI Madison  2014  109,999  -  SLR2P (4)  LR2
59  STI Park  2014  109,999  -  SLR2P (4)  LR2
60  STI Orchard  2014  109,999  -  SLR2P (4)  LR2
61  STI Sloane  2014  109,999  -  SLR2P (4)  LR2
62  STI Broadway  2014  109,999  -  SLR2P (4)  LR2
63  STI Condotti  2014  109,999  -  SLR2P (4)  LR2
64  STI Rose  2015  109,999  -  Time Charter (7)  LR2
65  STI Veneto  2015  109,999  -  SLR2P (4)  LR2
66  STI Alexis  2015  109,999  -  SLR2P (4)  LR2
67  STI Winnie  2015  109,999  -  SLR2P (4)  LR2
68  STI Oxford  2015  109,999  -  SLR2P (4)  LR2
69  STI Lauren  2015  109,999  -  SLR2P (4)  LR2
70  STI Connaught  2015  109,999  -  SLR2P (4)  LR2
71  STI Spiga  2015  109,999  -  SLR2P (4)  LR2
72  STI Savile Row  2015  109,999  -  SLR2P (4)  LR2
73  STI Kingsway  2015  109,999  -  SLR2P (4)  LR2
74  STI Carnaby  2015  109,999  -  SLR2P (4)  LR2
75  STI Lombard  2015  109,999  -  SLR2P (4)  LR2
76  STI Grace  2016  109,999  -  SLR2P (4)  LR2
77  STI Jermyn  2016  109,999  -  SLR2P (4)  LR2
                   
   Total owned DWT     5,025,979         
             
                            
   Vessel Name  Year Built  DWT  Ice class  Employment  Vessel type  Daily Base Rate  Expiry (8)   
   Time chartered-in vessels                        
78  Kraslava  2007  37,258  1B  SHTP (1)  Handymax  $17,000  02-Jun-17  (9)
79  Krisjanis Valdemars  2007  37,266  1B  SHTP (1)  Handymax  $17,000  02-Apr-17  (10)
80  Silent  2007  37,847  1A  SHTP (1)  Handymax  $15,600  21-Mar-19  (11)
81  Single  2007  37,847  1A  SHTP (1)  Handymax  $15,600  24-Mar-19  (11)
82  Star I  2007  37,847  1A  SHTP (1)  Handymax  $15,600  27-Mar-19  (11)
83  Miss Mariarosaria  2011  47,499  -  SMRP(2)  MR  $16,350  26-May-17  (12)
84  Vukovar  2015  49,990  -  SMRP(2)  MR  $17,034  01-May-18   
85  Targale  2007  49,999  -  SMRP(2)  MR  $16,200  17-May-17  (13)
86  Zefyros  2013  49,999  -  SMRP(2)  MR  $15,800  08-Jul-17  (14)
87  Gan-Trust  2013  51,561  -  SMRP(2)  MR  $17,500  06-Jan-17  (15)
88  Hellespont Progress  2006  73,728  -  SPTP (3)  LR1  $17,250  14-Mar-17   
89  Densa Crocodile  2015  105,408  -  SLR2P (4)  LR2  $22,600  07-Feb-17  (16)
90  Densa Alligator  2013  105,708  -  SLR2P (4)  LR2  $24,875  17-Sep-16  (17)
                            
   Total time chartered-in DWT     721,957                  
                   
   Newbuildings currently under construction            
   Vessel Name  Yard     DWT  Vessel type
91  Hull 2601 - TBN STI Galata  HMD  (18)  52,000  MR
92  Hull 2602 - TBN STI Bosphorus  HMD  (18)  52,000  MR
93  Hull 2603 - TBN STI Leblon  HMD  (18)  52,000  MR
94  Hull 2604 - TBN STI La Boca  HMD  (18)  52,000  MR
95  Hull 2605 - TBN STI San Telmo  HMD  (18)  52,000  MR
96  Hull 2606 - TBN STI Jurere  HMD  (18)  52,000  MR
97  Hull 2607 - TBN STI Esles II  HMD  (18)  52,000  MR
98  Hull 2608 - TBN STI Jardins  HMD  (18)  52,000  MR
99  Hull S3120 - TBN STI Selatar  SSME  (19)  109,999  LR2
100  Hull S3121 - TBN STI Rambla  SSME  (19)  109,999  LR2
                
   Total newbuilding product tankers DWT        635,998   
                
   Total Fleet DWT        6,383,934   
                
(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 MR Pool (SMRP). SMRP is operated by SCM. SMRP is a related party to the Company.
(3)  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.
(4)  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
(5)  This vessel is currently time chartered-out to an unrelated third-party for three years at $18,000 per day. This time charter is scheduled to expire in January 2019.
(6)  This vessel is currently time chartered-out to an unrelated third-party for three years at $20,500 per day. This time charter is scheduled to expire in December 2018.
(7)  This vessel is currently time chartered-out to an unrelated third-party for three years at $28,000 per day. This time charter is scheduled to expire in February 2019.
(8)  Redelivery from the charterer is plus or minus 30 days from the expiry date.
(9)  In March 2016, we extended the charter for an additional year at $17,000 per day effective June 2016.
(10)  In March 2016, we extended the charter for an additional year at $17,000 per day effective April 2016.
(11)  We have options to extend this charter for two consecutive one year periods at $16,500 and $17,500 per day, respectively.
(12)  In April 2016, we declared the option to extend the charter for an additional year at $16,350 per day effective May 2016.
(13)  In March 2016, we extended the charter for an additional year at $16,200 per day effective May 2016.
(14)  We have an option to extend the charter for an additional year at $17,000 per day.
(15)  We have an option to extend the charter for an additional year at $18,000 per day.
(16)  We have entered into an agreement with a third party whereby we split all of the vessel's profits and losses above or below the daily base rate.
(17)  We have an option to extend the charter for an additional year at $26,925 per day.
(18)  These newbuilding vessels are being constructed at HMD (Hyundai Mipo Dockyard Co. Ltd. of South Korea). Seven vessels are expected to be delivered throughout 2017 and one vessel is expected to be delivered in the first quarter of 2018.
(19)  These newbuilding vessels are being constructed at SSME (Sungdong Shipbuilding & Marine Engineering Co., Ltd). One vessel is expected to be delivered in the third quarter of 2016 and one in the fourth quarter of 2016.
   

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.

The Company's dividends paid during 2015 and 2016 were as follows:

   
Date paid Dividends per
share
March 2015 $0.120
June 2015 $0.125
September 2015 $0.125
December 2015 $0.125
March 2016 $0.125
June 2016 $0.125
   

On July 28, 2016, the Scorpio Tankers' Board of Directors declared a quarterly cash dividend of $0.125 per share, payable on September 29, 2016 to all shareholders as of September 15, 2016 (the record date). As of July 27, 2016 there were 172,378,640 shares outstanding.

Securities Repurchase Program

In May 2015, the Company's Board of Directors authorized a new Securities Repurchase Program to purchase up to an aggregate of $250 million of the Company's securities, which currently consist of its (i) Convertible Notes, which were issued in June 2014, (ii) Unsecured Senior Notes Due 2020 (NYSE: SBNA), which were issued in May 2014, and (iii) Unsecured Senior Notes Due 2017 (NYSE: SBNB), which were issued in October 2014. As of the date hereof, the Company has the authority to purchase up to an additional $153.3 million of its securities under its Securities Repurchase Program. The Company expects to repurchase any securities 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 Securities Repurchase Program to repurchase any securities.

Since January 1, 2016 through the date of this press release, the Company has repurchased its securities as follows:

  • an aggregate of 2,956,760 of its common shares at an average price of $5.58 per share; the repurchased shares are being held as treasury shares. There are 172,378,640 shares outstanding as of July 27, 2016.
  • $10.0 million aggregate principal amount of its Convertible Notes at an average price of $839.28 per $1,000 principal amount.

About Scorpio Tankers Inc.

Scorpio Tankers Inc. is a provider of marine transportation of petroleum products worldwide. Scorpio Tankers Inc. currently owns 77 product tankers (21 LR2, 14 Handymax, and 42 MR tankers) with an average age of 1.8 years and time charters-in 13 product tankers (two LR2, one LR1, five MR and five Handymax tankers). The Company has contracted for 10 newbuilding product tankers (eight MR and two LR2 tankers). The two LR2s are expected to be delivered in the second half of 2016 (one per quarter), seven MRs are expected to be delivered throughout 2017 and one MR is expected to be delivered in the first quarter of 2018. 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-IFRS Measures

Reconciliation of IFRS Financial Information to Non-IFRS Financial Information

This press release describes adjusted net income and adjusted EBITDA, which are not measures prepared in accordance with IFRS (i.e. "Non-IFRS" measures). The Non-IFRS 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-IFRS measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with IFRS.

The Company believes that the presentation of adjusted net income with adjusted earnings per share, basic and diluted, and adjusted EBITDA are useful to investors because they facilitate the comparability and the evaluation of companies in the Company's industry. In addition, the Company believes that adjusted net income with adjusted earnings per share, basic and diluted, and adjusted EBITDA are useful in evaluating its operating performance compared to that of other companies in the Company's industry. The Company's definitions of adjusted net income with the adjusted earnings per share, basic and diluted, and adjusted EBITDA may not be the same as reported by other companies in the shipping industry or other industries.

 
Reconciliation of Net Income to Adjusted Net Income
   For the three months ended June 30, 2016
 
In thousands of U.S. dollars except per share data
 
 
 
Amount
 
 
Per share
basic
 
 
Per share
diluted
 Net income  $3,846  $0.02  $0.02
 Adjustments:            
  Deferred financing fees write-off   3,706   0.02   0.02
  Unrealized gain on derivative financial instruments   (429)   (0.00)   (0.00)
  Gain on repurchase of Convertible Notes   (413)   (0.00)   (0.00)
  Gain on sales of vessels   (137)   (0.00)   (0.00)
 Adjusted net income  $6,573  $0.04  $0.04
           
   For the three months ended June 30, 2015

In thousands of U.S. dollars except per share data
 
Amount
 Per share
basic
 Per share
diluted
 Net income  $57,588  $0.35  $0.32
 Adjustments:            
  Unrealized loss on derivative financial instruments   (64)   (0.00)   (0.00)
  Gain on sales of vessels   (11)   (0.00)   (0.00)
 Adjusted net income  $57,513  $0.35  $0.32
           
   For the six months ended June 30, 2016   
 
In thousands of U.S. dollars except per share data
 
 
 
Amount
 
 
Per share
basic
 
 
 
 
 
 
Per share
diluted
 
 
 
 
 Net income  $31,877  $0.20     $0.19   
 Adjustments:                  
  Deferred financing fees write-off   5,501   0.03      0.03   
  Unrealized gain on derivative financial instruments   (1,431)   (0.01)      (0.01)   
  Gain on repurchase of Convertible Notes   (994)   (0.01)      (0.01)   
  Loss on sale of vessels   2,078   0.01      0.01   
 Adjusted net income  $37,031  $0.23  (1)  $0.22  (1)
(1) Summation differences due to rounding
   
   For the six months ended June 30, 2015
 
In thousands of U.S. dollars except per share data
 
 
 
Amount
 
 
Per share
basic
 
 
Per share
diluted
 Net income  $98,283  $0.63  $0.56
 Adjustments:            
  Unrealized loss on derivative financial instruments   542   0.00   0.00
  Gain on sales of vessels   (2,019)   (0.01)   (0.01)
 Adjusted net income  $96,806  $0.62  $0.55
           
 
Reconciliation of Net Income to Adjusted EBITDA
   For the three months ended June 30,  For the six months ended June 30,
In thousands of U.S. dollars  2016  2015  2016  2015
Net income  $3,846  $57,588  $31,877  $98,283
 Financial expenses   26,010   21,840   51,231   39,898
 Unrealized (gain) / loss on derivative financial instruments   (429)   (64)   (1,431)   542
 Financial income   (76)   (53)   (110)   (78)
 Depreciation   29,885   25,550   60,089   46,958
 Amortization of restricted stock   7,180   7,464   15,488   15,140
 (Gain) / loss on sales of vessels   (137)   (11)   2,078   (2,019)
 Gain on repurchase of Convertible Notes   (413)   -   (994)   -
Adjusted EBITDA  $65,866  $112,314  $158,228  $198,724
             

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. We undertake no obligation, and specifically decline any obligation, except as required by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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.

Contact Information

  • Scorpio Tankers Inc.
    212-542-1616