SOURCE: Scorpio Tankers Inc.

Scorpio Tankers Inc.

October 27, 2014 07:47 ET

Scorpio Tankers Inc. Announces Financial Results for the Third Quarter of 2014 and Newbuilding Vessel Deliveries

MONACO--(Marketwired - Oct 27, 2014) - Scorpio Tankers Inc. (NYSE: STNG) ("Scorpio Tankers," or the "Company") today reported its results for the three and nine months ended September 30, 2014.

Results for the three months ended September 30, 2014 and 2013

For the three months ended September 30, 2014, the Company had a net loss of $1.2 million, or $0.01 basic and diluted loss per share. The Company's adjusted net loss was $1.2 million (see Non-GAAP Measure section below), or $0.01 basic and diluted loss per share, excluding a $0.1 million, or $0.00 per share unrealized gain on derivative financial instruments.

For the three months ended September 30, 2013, the Company had net income of $0.7 million, or $0.00 basic and diluted earnings per share. The Company's adjusted net income was $0.6 million (see Non-GAAP Measure section below), or $0.00 basic and diluted earnings per share, excluding a $0.1 million, or $0.00 per share unrealized gain on derivative financial instruments.

Results for the nine months ended September 30, 2014 and 2013

For the nine months ended September 30, 2014, the Company had net income of $51.6 million, or $0.29 basic and $0.28 diluted earnings per share. The Company's adjusted net loss was $10.6 million (see Non-GAAP Measure section below), or $0.06 basic and diluted loss per share, which excludes (i) a gain of $51.4 million, or $0.29 per share, resulting from the previously announced sales of seven Very Large Crude Carriers ('VLCCs') under construction, (ii) a gain of $10.9 million, or $0.06 per share, resulting from the previously announced acquisition of 7,500,000 common shares of the Company in exchange for 3,422,665 shares of Dorian, (iii) a write-off of $0.3 million, or $0.00 per share, for deferred financing fees relating to the repayment of the STI Spirit Credit Facility in April 2014 and (iv) an unrealized gain on derivative financial instruments of $0.2 million or $0.00 per share. 

For the nine months ended September 30, 2013, the Company had net income of $11.2 million or $0.08 basic and diluted earnings per share. The Company's adjusted net income was $10.8 million (see Non-GAAP Measure section below), or $0.08 basic and diluted earnings per share, excluding a $0.5 million, or $0.00 per share unrealized gain on derivative financial instruments.

Stock Buyback Program

Since July 28, 2014, the Company has acquired $67.5 million of its common shares that are being held as treasury shares, in the open market at an average price of $8.64 per share. 

During 2014, the Company has acquired an aggregate of 36,729,136 of its common shares that are being held as treasury shares, which include (i) 19,101,536 common shares that were purchased in the open market at an average price of $9.06 per share, (ii) 7,500,000 common shares that were acquired in exchange for 3,422,665 shares in Dorian and (iii) 10,127,600 common shares that were acquired in conjunction with the Company's offering of $360 million of Convertible Senior Notes due 2019 in June 2014. There are currently 164,436,411 shares outstanding. 

The Company has $82.5 million remaining under its stock buyback program as of the date of this press release. The Company expects to repurchase these shares in the open market, at times and prices that are considered to be appropriate by the Company, but is not obligated under the terms of the program to repurchase any shares.

Summary of Recent and Third Quarter Significant Events:

  • Recently took delivery of two ice-class 1A Handymax tankers, STI Wembley and STI Battersea, from Hyundai Mipo Dockyard Co. Ltd. ("HMD"). Including the previously announced deliveries of STI Mayfair and STI Yorkville, the Company has taken delivery of four product tankers in October 2014. 
  • Took delivery of 17 vessels (four LR2, eight MR, and five ice-class 1A Handymax) during the third quarter of 2014, including STI St. Charles, a newbuilding MR product tanker that we purchased in August 2014 and was delivered from SPP in September 2014. 
  • Participated in the previously announced offering of $125,250,000 in aggregate principal amount of floating rate guaranteed notes due 2019 (the "KEXIM Notes") in July 2014. The KEXIM Notes reduced KEXIM's funding obligations under the Company's KEXIM Credit Facility, and will reduce the Company's borrowing costs under such facility by 1.55% per year
  • Paid a quarterly cash dividend on the Company's common stock of $0.10 per share in September 2014.

Vessel deliveries

In October 2014, the Company took delivery of four product tankers. STI Yorkville and STI Mayfair, MR product tankers, were delivered from HMD and SPP, respectively and STI Wembley and STI Battersea, ice-class 1A Handymax product tankers, were delivered from HMD. Upon delivery, STI Yorkville and STI Mayfair each commenced a time charter for up to 120 days at approximately $18,000 per day and STI Wembley and STI Battersea each commenced a time charter for up to 120 days at approximately $15,000 per day. 

The Company has taken delivery of 21 vessels under its Newbuilding Program with HMD, SPP, Daewoo Shipbuilding & Marine Engineering Co. Ltd. ("DSME") and Hyundai Samho Heavy Industries Co. Ltd. ("HSHI") since June 30, 2014. These deliveries are summarized as follows:

        Month        
    Name   delivered   Type   Shipyard
1   STI Powai   July 2014   MR   HMD
2   STI Aqua   July 2014   MR   SPP
3   STI Pimlico   July 2014   Handymax   HMD
4   STI Elysees   July 2014   LR2   HSHI
5   STI Dama   August 2014   MR   SPP
6   STI Olivia   August 2014   MR   HMD
7   STI Mythos   August 2014   MR   HMD
8   STI Hackney   August 2014   Handymax   HMD
9   STI Acton   September 2014   Handymax   HMD
10   STI Fulham   September 2014   Handymax   HMD
11   STI Camden   September 2014   Handymax   HMD
12   STI Benicia(1)   September 2014   MR   SPP
13   STI Regina   September 2014   MR   SPP
14   STI St. Charles   September 2014   MR   SPP
15   STI Madison   September 2014   LR2   HSHI
16   STI Park   September 2014   LR2   HSHI
17   STI Orchard   September 2014   LR2   DSME
18   STI Mayfair   October 2014   MR   SPP
19   STI Yorkville   October 2014   MR   HMD
20   STI Wembley   October 2014   Handymax   HMD
21   STI Battersea   October 2014   Handymax   HMD
                 
(1) After delivery, this vessel began a one year time charter at a rate level consistent with current one year time charter contracts which includes a profit sharing mechanism whereby earnings in excess of the base time charter rate are split between the charterer and us.
   

Time charter-in update

In September 2014, we time chartered-in an LR2 tanker that is currently under construction in South Korea with delivery expected in January 2015. Upon delivery from the shipyard, the vessel will be chartered-in for one year at $21,050 per day. We also have an option to extend the charter for one year at $22,600 per day. 

In September 2014, we extended the time charter on an LR1 tanker that is currently time chartered-in. The term of the agreement is for one year at $15,000 per day beginning in November 2014.

In September 2014, we extended the time charter on a Handymax tanker that is currently time chartered-in. The term of the agreement is for an additional year at $13,500 per day beginning in March 2015.

In August 2014, we extended the time charter on an LR2 tanker that is currently time chartered-in. The term of the agreement is for six months at $15,500 per day effective November 2014. 

In August 2014, we extended the time charter on an LR2 tanker that is currently time chartered-in. The term of the agreement is for six months at $17,500 per day beginning in September 2014.

In July 2014, we extended the time charter on an LR2 tanker that is currently time chartered-in. The term of the agreement is for one year at $17,550 per day beginning in September 2014.

KEXIM Guaranteed Notes due 2019

On July 18, 2014, Seven and Seven Ltd., an exempted company incorporated with limited liability under the laws of the Cayman Islands (the "Issuer"), completed an offering of $125,250,000 in aggregate principal amount of floating rate guaranteed notes due 2019 (the "KEXIM Notes") in a private offering to qualified institutional buyers pursuant to the Securities Act and in offshore transactions complying with Regulation S under the Securities Act. The KEXIM Notes were issued in connection with the Company's KEXIM Credit Facility and will reduce KEXIM's funding obligations and the Company's borrowing costs under such facility by 1.55% per year.

Payment of 100% of all regularly scheduled installments of principal of, and interest on, the KEXIM Notes are guaranteed by The Export-Import Bank of Korea ("KEXIM"), a statutory juridical entity established under The Export-Import Bank of Korea Act of 1969, as amended, in the Republic of Korea. 

The KEXIM Notes are currently listed on the Singapore Exchange Securities Trading Limited (the "SGX-ST"). The Notes will not be listed on any other securities exchange, listing authority or quotation system.

Current Liquidity

As of October 27, 2014, the Company had $84.0 million in cash. 

Debt

We made the following drawdowns from our credit facilities in July, August, September and October 2014:

          Drawdown amount    
    Credit facility     (in $ millions)   Collateral
1   2013 Credit Facility   $ 19.8   STI Aqua
2   2013 Credit Facility     19.8   STI Dama
3   2013 Credit Facility     19.5   STI Mythos
4   2013 Credit Facility     19.5   STI Benicia
5   2013 Credit Facility     19.8   STI Regina
6   2013 Credit Facility     19.5   STI St. Charles
7   2013 Credit Facility     19.5   STI Yorkville
8   2013 Credit Facility     18.0   STI Wembley
9   KEXIM Credit Facility     18.8   STI Pimlico
10   KEXIM Credit Facility     30.3   STI Elysees
11   KEXIM Credit Facility     30.3   STI Madison
12   KEXIM Credit Facility     18.8   STI Hackney
13   KEXIM Credit Facility     19.0   STI Acton
14   KEXIM Credit Facility     18.8   STI Fulham
15   KEXIM Credit Facility     30.3   STI Park
16   KEXIM Credit Facility     29.7   STI Orchard
17   KEXIM Credit Facility     18.8   STI Camden
18   K-Sure Credit Facility     19.8   STI Powai
19   K-Sure Credit Facility     19.8   STI Olivia
20   K-Sure Credit Facility     20.4   STI Mayfair
21   K-Sure Credit Facility     18.9   STI Battersea
               

As of October 27, 2014, the Company's outstanding debt balance, and amount available to draw, is as follows:

    As of
September 30, 2014
  As of
October 27, 2014
     
In thousands of U.S. dollars   Amount
outstanding
  Amount outstanding   Amount available      
2010 Revolving Credit Facility   $ 43,562   $ 43,562   $ -      
2011 Credit Facility     110,895     110,895     -      
Newbuilding Credit Facility     79,340     79,340     -      
2013 Credit Facility     276,327     313,827     207,000   (1 )
K-Sure Credit Facility     79,200     118,480     339,788   (2 )
KEXIM Credit Facility     252,075     252,075     177,525   (3 )
Senior Unsecured Notes     53,750     53,750     -      
Convertible Senior Notes     360,000     360,000     -   (4 )
Total   $ 1,255,149   $ 1,331,929   $ 724,313      
                         
(1)   Availability can be used to finance the lesser of 60% of the contract price for a qualifying newbuilding vessel or such vessel's fair market value at the date of drawdown.
(2)   Availability can be used to finance the lesser of 60% of the newbuilding contract price and 74% of the fair market value of the relevant vessel specified in the agreement. 
(3)   Availability can be used to finance the lesser of 60% of the newbuilding contract price and 74% of the fair market value of the relevant vessel specified in the agreement.  Includes $125.3 million of floating rate guaranteed notes due 2019 issued by Seven and Seven Ltd. in July 2014. 
(4)   $61.3 million of this amount has been attributed to the conversion feature of the Convertible Senior Notes and recorded within additional paid in capital on the consolidated balance sheet as of September 30, 2014.
     

Newbuilding Program

During the third quarter of 2014, the Company made $451.2 million of installment payments on its newbuilding vessels. The Company currently has 27 newbuilding vessel orders with HMD, SPP, HSHI and DSME (14 MRs, five Handymax ice class 1-A tankers and eight LR2s). The estimated future payment dates and amounts are as follows*:

           
Q4 2014   $ 353.4   million**
Q1 2015     273.5    
Q2 2015     139.4    
Total   $ 766.3   million
           

*These are estimates only and are subject to change as construction progresses. 
**$83.4 million has been paid prior to the date of this press release. 

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

For the three months ended September 30, 2014, the Company recorded a net loss of $1.2 million compared to net income of $0.7 million in the three months ended September 30, 2013. The following were the significant changes between the two periods:

  • Time charter equivalent, or TCE revenue, a non-IFRS measure, is vessel revenues less voyage expenses (including bunkers and port charges). TCE revenue is included herein because it is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company's performance irrespective of changes in the mix of charter types (i.e., spot charters, time charters, and pool charters), and it provides useful information to investors and management. The following table depicts TCE revenue for the three months ended September 30, 2014 and 2013:

    For the three months ended September 30,  
    2014     2013  
In thousands of U.S. dollars                
Vessel revenue   $ 82,891     $ 57,756  
Voyage expenses     (902 )     (1,249 )
TCE revenue   $ 81,989     $ 56,507  
                 
  • TCE revenue increased $25.5 million to $82.0 million. This increase was primarily driven by an increase in the average number of operating vessels (owned and time chartered-in) to 58.6 from 42.3 for the three months ended September 30, 2014 and 2013, respectively along with an increase in time charter equivalent revenue per day to $15,264 per day from $14,557 per day for the three months ended September 30, 2014 and 2013, respectively (see the breakdown of daily TCE averages below). 

  • Vessel operating costs increased $9.8 million to $20.9 million from $11.1 million for the three months ended September 30, 2014 and 2013, respectively. This increase was primarily driven by an increase in the Company's owned fleet to an average of 33.7 vessels from 17.3 vessels for the three months ended September 30, 2014 and 2013, respectively. The increase was offset by an overall decrease in vessel operating costs per day to $6,705 per day from $6,851 per day for the three months ended September 30, 2014 and 2013, respectively (see the breakdown of daily TCE averages below).

  • Charterhire expense increased $1.1 million to $32.9 million from $31.9 million for the three months ended September 30, 2014 and 2013, respectively. The increase is a result of a shift in the mix of time chartered-in vessels towards larger vessel classes (LR1 and LR2) offset by a reduction in exposure towards smaller vessel classes (Handymax and MR) for the three months ended September 30, 2014 and 2013, respectively. See the Company's Fleet List below for the terms of these agreements.

  • Depreciation expense increased $5.2 million to $11.6 million from $6.4 million for the three months ended September 30, 2014 and 2013, respectively. This increase was primarily the result of an increase in the average number of owned vessels to 33.7 from 17.3 for the three months ended September 30, 2014 and 2013, respectively.

  • General and administrative expenses increased $5.2 million to $11.7 million from $6.5 million for the three months ended September 30, 2014 and 2013, respectively. This increase was driven by a $3.8 million increase in the amortization of restricted stock (non-cash) and an overall increase in other general and administrative expenses due to the significant growth in the Company's fleet and Newbuilding Program. 

  • Financial expenses increased $6.2 million to $6.7 million from $0.5 million primarily as a result in an increase in the Company's debt balance for the three months ended September 30, 2014 and 2013, respectively. Total debt outstanding, net of deferred financing fees, was $1.2 billion at September 30, 2014 compared to $171.3 million at September 30, 2013. 

   
   
Scorpio Tankers Inc. and Subsidiaries  
Condensed Consolidated Statement of Profit or Loss  
(unaudited)  
   
    For the three months ended September 30,     For the nine months ended September 30,  
In thousands of U.S. dollars except per share and share data   2014     2013     2014     2013  
Revenue                                
  Vessel revenue   $ 82,891     $ 57,756     $ 217,070     $ 154,213  
                                 
Operating expenses                                
  Vessel operating costs     (20,933 )     (11,137 )     (47,683 )     (27,635 )
  Voyage expenses     (902 )     (1,249 )     (5,427 )     (3,782 )
  Charterhire     (32,941 )     (31,877 )     (109,334 )     (79,345 )
  Depreciation     (11,574 )     (6,377 )     (24,896 )     (16,665 )
  General and administrative expenses     (11,676 )     (6,522 )     (34,300 )     (14,571 )
  Gain on sale of VLCCs     -       -       51,419       -  
  Gain on sale of Dorian shares     -       -       10,924       -  
  Total operating expenses     (78,026 )     (57,162 )     (159,297 )     (141,998 )
Operating income     4,865       594       57,773       12,215  
Other (expense) and income, net                                
  Financial expenses     (6,683 )     (448 )     (7,554 )     (2,323 )
  Realized gain on derivative financial instruments     -       3       17       25  
  Unrealized gain on derivative financial instruments     75       118       187       483  
  Financial income     103       400       172       950  
  Share of income from associate     462       -       1,036       -  
  Other expenses, net     19       -       (34 )     (106 )
  Total other expense, net     (6,024 )     73       (6,176 )     (971 )
Net (loss) / income   $ (1,159 )   $ 667     $ 51,597     $ 11,244  
                                 
Earnings / (loss) per share                                
                                 
  Basic   $ (0.01 )   $ 0.00     $ 0.29     $ 0.08  
  Diluted   $ (0.01 )   $ 0.00     $ 0.28     $ 0.08  
                                   
                                   
                                   
Scorpio Tankers Inc. and Subsidiaries  
Condensed Consolidated Balance Sheet  
(unaudited)  
   
    As of  
In thousands of U.S. dollars   September 30, 2014     December 31, 2013  
Assets                
Current assets                
Cash and cash equivalents   $ 140,541     $ 78,845  
Accounts receivable     80,133       72,542  
Prepaid expenses and other current assets     4,040       2,277  
Inventories     4,562       2,857  
Vessels held for sale     11,980       82,649  
Total current assets     241,256       239,170  
Non-current assets                
Vessels and drydock     1,496,572       530,270  
Vessels under construction     484,704       649,526  
Other assets     31,791       17,907  
Investment in associate     154,714       209,803  
Total non-current assets     2,167,781       1,407,506  
Total assets   $ 2,409,037     $ 1,646,676  
                 
Current liabilities                
Current portion of long-term debt     98,512       10,453  
Debt related to vessels held for sale     5,906       21,397  
Accounts payable     14,263       20,696  
Accrued expenses     12,321       7,251  
Derivative financial instruments     321       689  
Total current liabilities     131,323       60,486  
Non-current liabilities                
Long term debt     1,057,744       135,279  
Derivative financial instruments     -       188  
Total non-current liabilities     1,057,744       135,467  
Total liabilities     1,189,067       195,953  
                 
Shareholders' equity                
Issued, authorized and fully paid in share capital:                
  Share capital     2,023       1,999  
  Additional paid in capital     1,563,056       1,536,945  
Treasury shares     (316,519 )     (7,938 )
Hedging reserve     (116 )     (212 )
Accumulated deficit     (28,474 )     (80,071 )
Total shareholders' equity     1,219,970       1,450,723  
Total liabilities and shareholders' equity   $ 2,409,037     $ 1,646,676  
                 
                 
                 
Scorpio Tankers Inc. and Subsidiaries  
Condensed Consolidated Statement of Cash Flows  
(unaudited)  
   
    For the nine months ended September 30,  
In thousands of U.S. dollars   2014     2013  
Operating activities                
Net income   $ 51,597     $ 11,244  
Gain on sale of VLCCs     (51,419 )     -  
Gain on sale of Dorian shares     (10,924 )     -  
Depreciation     24,896       16,665  
Amortization of restricted stock     22,068       6,738  
Amortization of deferred financing fees     2,307       538  
Straight-line adjustment for charterhire expense     3       7  
Share of income from associate     (1,036 )     -  
Unrealized gain on derivative financial instruments     (187 )     (483 )
Amortization of acquired time charter contracts     277       -  
Accretion of convertible senior notes     2,680       -  
      40,262       34,709  
Changes in assets and liabilities:                
Drydock payments     (1,290 )     (1,448 )
Increase in inventories     (1,705 )     (1,328 )
Increase in accounts receivable     (7,591 )     (37,523 )
Increase in prepaid expenses and other current assets     (793 )     (2,942 )
Increase in other assets     (969 )     (395 )
Increase in accounts payable     252       1,337  
Increase / (decrease) in accrued expenses     6,140       (29 )
Interest rate swap termination payment     (274 )     -  
      (6,230 )     (42,328 )
Net cash inflow / (outflow) from operating activities     34,032       (7,619 )
Investing activities                
Acquisition of vessels and payments for vessels under construction     (927,166 )     (585,182 )
Proceeds from disposal of vessels     213,670       -  
Net cash outflow from investing activities     (713,496 )     (585,182 )
Financing activities                
Debt repayments     (64,381 )     (24,102 )
Issuance of debt     789,949       52,050  
Debt issuance costs     (41,104 )     (12,266 )
Proceeds from issuance of convertible senior notes     360,000       983,537  
Convertible senior notes issuance costs     (10,986 )     -  
Equity issuance costs     (42 )     (35,531 )
Dividends paid     (50,746 )     (10,684 )
Repurchase of common stock     (241,530 )     -  
Net cash inflow from financing activities     741,160       953,004  
Increase in cash and cash equivalents     61,696       360,203  
Cash and cash equivalents at January 1,     78,845       87,165  
Cash and cash equivalents at September 30,   $ 140,541     $ 447,368  
                 
                 
                 
Scorpio Tankers Inc. and Subsidiaries
Other operating data for the three and nine months ended September 30, 2014 and 2013
(unaudited)
 
    For the three months ended September 30,   For the nine months ended September 30,
    2014   2013   2014   2013
Adjusted EBITDA(1)(in thousands of U.S. dollars)   $ 25,077   $ 10,830   $ 45,282   $ 35,537
                         
Average Daily Results                        
Time charter equivalent per day(2)     15,264     14,557     14,683     15,388
Vessel operating costs per day(3)     6,705     6,851     6,956     6,656
                         
Aframax/LR2                        
TCE per revenue day (2)     19,375     10,876     16,390     12,803
Vessel operating costs per day(3)     6,594     9,112     7,419     7,799
                         
Panamax/LR1                        
TCE per revenue day (2)     17,034     13,349     16,700     13,519
Vessel operating costs per day(3)     7,928     8,174     8,739     7,570
                         
MR                        
TCE per revenue day (2)     14,457     17,304     13,626     17,706
Vessel operating costs per day(3)     6,673     5,956     6,592     5,930
                         
Handymax                        
TCE per revenue day (2)     13,056     13,029     13,879     14,246
Vessel operating costs per day(3)     6,122     7,157     6,969     6,690
                         
Fleet data                        
Average number of owned vessels     33.7     17.3     25.0     14.9
Average number of time chartered-in vessels     24.9     25.0     27.7     21.1
                         
Drydock                        
Expenditures for drydock (in thousands of U.S. dollars)     -     -   $ 1,290     -
                         
(1)    See Non-GAAP Measure section below 
(2)    Freight rates are commonly measured in the shipping industry in terms of time charter equivalent per day (or TCE per day), which is calculated by subtracting voyage expenses, including bunkers and port charges, from vessel revenue and dividing the net amount (time charter equivalent revenues) by the number of revenue days in the period. Revenue days are the number of days the vessel is owned less the number of days the vessel is off-hire for drydock and repairs.
(3)    Vessel operating costs per day represent vessel operating costs excluding non-recurring expenses (for example insurance deductible expenses for repairs) divided by the number of days the vessel is owned during the period. 
     
     
     
Fleet List as of October 27, 2014
 
    Vessel Name   Year Built   DWT   Ice class   Employment   Vessel type
    Owned vessels                    
1   STI Highlander   2007   37,145   1A   SHTP (1)   Handymax
2   STI Brixton   2014   38,000   1A   SHTP (1)   Handymax
3   STI Comandante   2014   38,000   1A   SHTP (1)   Handymax
4   STI Pimlico   2014   38,000   1A   Spot   Handymax
5   STI Hackney   2014   38,000   1A   SHTP (1)   Handymax
6   STI Acton   2014   38,000   1A   Spot   Handymax
7   STI Fulham   2014   38,000   1A   Spot   Handymax
8   STI Camden   2014   38,000   1A   Spot   Handymax
9   STI Battersea   2014   38,000   1A   Spot   Handymax
10   STI Wembley   2014   38,000   1A   Spot   Handymax
11   STI Amber   2012   52,000   -   SMRP(4)   MR
12   STI Topaz   2012   52,000   -   SMRP(4)   MR
13   STI Ruby   2012   52,000   -   SMRP(4)   MR
14   STI Garnet   2012   52,000   -   SMRP(4)   MR
15   STI Onyx   2012   52,000   -   SMRP(4)   MR
16   STI Sapphire   2013   52,000   -   SMRP(4)   MR
17   STI Emerald   2013   52,000   -   SMRP(4)   MR
18   STI Beryl   2013   52,000   -   SMRP(4)   MR
19   STI Le Rocher   2013   52,000   -   SMRP(4)   MR
20   STI Larvotto   2013   52,000   -   SMRP(4)   MR
21   STI Fontvieille   2013   52,000   -   SMRP(4)   MR
22   STI Ville   2013   52,000   -   SMRP(4)   MR
23   STI Duchessa   2014   52,000   -   SMRP(4)   MR
24   STI Opera   2014   52,000   -   SMRP(4)   MR
25   STI Texas City   2014   52,000   -   Time Charter (5)   MR
26   STI Meraux   2014   52,000   -   Time Charter (6)   MR
27   STI Chelsea   2014   52,000   -   SMRP(4)   MR
28   STI Lexington   2014   52,000   -   SMRP(4)   MR
29   STI San Antonio   2014   52,000   -   Time Charter (6)   MR
30   STI Venere   2014   52,000   -   SMRP(4)   MR
31   STI Virtus   2014   52,000   -   Spot   MR
32   STI Powai   2014   52,000   -   SMRP(4)   MR
33   STI Aqua   2014   52,000   -   Spot   MR
34   STI Dama   2014   52,000   -   SMRP(4)   MR
35   STI Olivia   2014   52,000   -   SMRP(4)   MR
36   STI Mythos   2014   52,000   -   Spot   MR
37   STI Benicia   2014   52,000   -   Time Charter (6)   MR
38   STI Regina   2014   52,000   -   Spot   MR
39   STI St. Charles   2014   52,000   -   Spot   MR
40   STI Mayfair   2014   52,000   -   Spot   MR
41   STI Yorkville   2014   52,000   -   Spot   MR
42   STI Harmony   2007   73,919   1A   SPTP (2)   LR1
43   STI Heritage   2008   73,919   1A   SPTP (2)   LR1
44   Venice   2001   81,408   1C   SPTP (2)   Post-Panamax
45   STI Elysees   2014   109,999   -   SLR2P (3)   LR2
46   STI Madison   2014   109,999   -   SLR2P (3)   LR2
47   STI Park   2014   109,999   -   SLR2P (3)   LR2
48   STI Orchard   2014   109,999   -   SLR2P (3)   LR2
                         
                         
    Total owned DWT       2,660,387            
                         
    Vessel Name   Year Built   DWT   Ice class   Employment   Vessel type   Daily Base Rate   Expiry (7)    
    Time chartered-in vessels                                
49   Kraslava   2007   37,258   1B   SHTP (1)   Handymax   $13,650   18-May-15    
50   Krisjanis Valdemars   2007   37,266   1B   SHTP (1)   Handymax   $13,650   14-Apr-15   (8)
51   Jinan   2003   37,285   -   SHTP (1)   Handymax   $12,600   28-Apr-15    
52   Iver Prosperity   2007   37,412   -   SHTP (1)   Handymax   $12,500   03-Mar-16   (9)
53   Histria Azure   2007   40,394   -   SHTP (1)   Handymax   $13,550   04-Apr-15    
54   Histria Coral   2006   40,426   -   SHTP (1)   Handymax   $13,550   17-Jul-15    
55   Histria Perla   2005   40,471   -   SHTP (1)   Handymax   $13,550   15-Jul-15    
56   Targale   2007   49,999   -   SMRP(4)   MR   $14,850   17-May-15   (10)
57   Nave Orion   2013   49,999   -   SMRP(4)   MR   $14,300   25-Mar-15   (11)
58   Gan-Trust   2013   51,561   -   SMRP(4)   MR   $16,250   06-Jan-16   (12)
59   Usma   2007   52,684   1B   SMRP(4)   MR   $14,500   03-Jan-15    
60   SN Federica   2003   72,344   -   SPTP (2)   LR1   $11,250   15-May-15   (13)
61   SN Azzura   2003   72,344   -   SPTP (2)   LR1   $13,600   25-Dec-14    
62   King Douglas   2008   73,666   -   SPTP (2)   LR1   $14,000   08-Nov-15   (14)
63   Hellespont Progress   2006   73,728   -   SPTP (2)   LR1   $15,000   18-Mar-15   (15)
64   FPMC P Eagle   2009   73,800   -   SPTP (2)   LR1   $14,525   09-Sep-15    
65   FPMC P Hero   2011   99,995   -   SLR2P (3)   LR2   $15,250   02-May-15   (16)
66   FPMC P Ideal   2012   99,993   -   SLR2P (3)   LR2   $15,500   09-Jan-15    
67   Swarna Jayanti   2010   104,895   -   SLR2P (3)   LR2   $15,000   11-Mar-15   (17)
68   TBN Densa Crocodile   2015   105,408   -   SLR2P (3)   LR2   $21,050   30-Jan-16   (18)
69   Densa Alligator   2013   105,708   -   SLR2P (3)   LR2   $17,550   17-Sep-15   (19)
70   Khawr Aladid   2006   106,003   -   SLR2P (3)   LR2   $15,400   11-Jul-15    
71   Fair Seas   2008   115,406   -   SLR2P (3)   LR2   $17,500   10-Mar-15    
72   Southport   2008   115,462   -   SLR2P (3)   LR2   $15,700   10-Dec-14    
                                     
    Total time chartered-in DWT       1,693,507                        
                                     
    Newbuildings currently under construction                
                     
    Vessel Name   Yard       DWT   Ice class   Vessel type
    Product tankers                    
                         
73   Hull 2477 - TBN STI Finchley   HMD   (20)   38,000   1A   Handymax
74   Hull 2478 - TBN STI Clapham   HMD   (20)   38,000   1A   Handymax
75   Hull 2479 - TBN STI Poplar   HMD   (20)   38,000   1A   Handymax
76   Hull 2499 - TBN STI Hammersmith   HMD   (20)   38,000   1A   Handymax
77   Hull 2500 - TBN STI Rotherhithe   HMD   (20)   38,000   1A   Handymax
78   Hull 2445 - TBN STI Milwaukee   HMD   (20)   52,000   -   MR
79   Hull 2461 - TBN STI Battery   HMD   (20)   52,000   -   MR
80   Hull 2474 - TBN STI Pontiac   HMD   (20)   52,000   -   MR
81   Hull 2490 - TBN STI Osceola   HMD   (20)   52,000   -   MR
82   Hull 2492 - TBN STI Notting Hill   HMD   (20)   52,000   -   MR
83   Hull 2493 - TBN STI Westminster   HMD   (20)   52,000   -   MR
84   Hull 2475 - TBN STI Seneca   HMD   (20)   52,000   -   MR
85   Hull S1143 - TBN STI Tribeca   SPP   (21)   52,000   -   MR
86   Hull S1144 - TBN STI Soho   SPP   (21)   52,000   -   MR
87   Hull S1169 - TBN STI Manhattan   SPP   (21)   52,000   -   MR
88   Hull S1170 - TBN STI Queens   SPP   (21)   52,000   -   MR
89   Hull S1145 - TBN STI Gramercy   SPP   (21)   52,000   -   MR
90   Hull S1167 - TBN STI Bronx   SPP   (21)   52,000   -   MR
91   Hull S1168 - TBN STI Brooklyn   SPP   (21)   52,000   -   MR
92   Hull S706 - TBN STI Sloane   HSHI   (22)   109,999   -   LR2
93   Hull S709 - TBN STI Condotti   HSHI   (22)   109,999   -   LR2
94   Hull S710 - TBN STI Veneto   HSHI   (22)   109,999   -   LR2
95   Hull S715 - TBN STI Oxford   HSHI   (22)   109,999   -   LR2
96   Hull S716 - TBN STI Connaught   HSHI   (22)   109,999   -   LR2
97   Hull 5395 - TBN STI Broadway   DSME   (23)   109,999   -   LR2
98   Hull 5398 - TBN STI Winnie   DSME   (23)   109,999   -   LR2
99   Hull 5399 - TBN STI Lauren   DSME   (23)   109,999   -   LR2
                         
                         
    Total newbuilding product tankers DWT           1,797,992        
                         
                         
    Total Fleet DWT           6,151,886        
                         
(1)   This vessel operates in or is expected to operate in the Scorpio Handymax Tanker Pool (SHTP). SHTP is operated by Scorpio Commercial Management (SCM). SHTP and SCM are related parties to the Company.
(2)   This vessel operates in or is expected to operate in the Scorpio Panamax Tanker Pool (SPTP). SPTP is operated by SCM. SPTP is a related party to the Company.
(3)   This vessel operates in or is expected to operate in the Scorpio LR2 Pool (SLR2P). SLR2P is operated by SCM. SLR2P is a related party to the Company.
(4)   This vessel operates in or is expected to operate in the Scorpio MR Pool (SMRP). SMRP is operated by SCM. SMRP is a related party to the Company.
(5)   This vessel is on a time charter agreement for two years, which also contains a 50% profit sharing provision whereby we split all of the vessel's profits above the daily base rate with the charterer.
(6)   This vessel is on a time charter agreement for one year, which also contains a 50% profit sharing provision whereby we split all of the vessel's profits above the daily base rate with the charterer.
(7)   Redelivery from the charterer is plus or minus 30 days from the expiry date.
(8)   The agreement also contains a 50% profit and loss sharing provision whereby we split all of the vessel's profits and losses above or below the daily base rate with the vessel's owner.
(9)   In September 2014, we declared an option to extend the charter for an additional year at $13,500 per day effective March 3, 2015.
(10)   We have options to extend the charter for up to two consecutive one year periods at $15,200 per day and $16,200 per day, respectively.
(11)   We have an option to extend the charter for an additional year at $15,700 per day.
(12)   The rate for the first year of this agreement was $15,750 per day, the rate for the second year is $16,250 per day, and the rate for the third year is $16,750 per day. We have options to extend the charter for up to two consecutive one year periods at $17,500 per day and $18,000 per day, respectively.
(13)   We have an option to extend the charter for an additional year at $12,500 per day. We have also entered into an agreement with the vessel's owner whereby we split all of the vessel's profits above the daily base rate.
(14)   In September 2014, we declared an option to extend the charter for an additional year at $15,000 per day effective November 8, 2014.
(15)   We have options to extend the charter for up to two consecutive one year periods at $16,250 per day and $17,250 per day, respectively.
(16)   In September 2014, we declared an option to extend the charter for an additional six months at $15,500 per day effective November 2, 2014.
(17)   We have an option to extend the charter for an additional six months at $16,250 per day.
(18)   This vessel is currently under construction and is scheduled to be delivered in January 2015. We have an option to extend the charter for an additional year at $22,600 per day.
(19)   In July 2014, we declared an option to extend the charter for an additional twelve months at $17,550 per day effective September 17, 2014.
(20)   These newbuilding vessels are being constructed at HMD (Hyundai Mipo Dockyard Co. Ltd. of South Korea). Six vessels are expected to be delivered in 2014 and six vessels in the first and second quarters of 2015.
(21)   These newbuilding vessels are being constructed at SPP (SPP Shipbuilding Co., Ltd. of South Korea). Three vessels are expected to be delivered in 2014 and four vessels in the first and second quarters of 2015.
(22)   These newbuilding vessels are being constructed at HSHI (Hyundai Samho Heavy Industries Co., Ltd). Three vessels are expected to be delivered in 2014 and two vessels in the first quarter of 2015.
(23)   These newbuilding vessels are being constructed at DSME (Daewoo Shipbuilding and Marine Engineering). One vessel is expected to be delivered in the fourth quarter of 2014 and two vessels in the second quarter of 2015.
     
     

Business Strategy, Dividend Policy, and Stock Buyback Program

Business Strategy
The Company's primary objectives are to profitably grow the business and emerge as a major operator of product tanker vessels. The Company intends to acquire modern, high-quality tankers through timely and selective acquisitions. The Company is currently concentrating on these sectors because of their attractive fundamentals which the Company believes includes:

  • increasing demand for refined products.
  • increasing ton miles (distance between production and areas of demand), and
  • reduced order book.

Dividend Policy

The declaration and payment of dividends is subject at all times to the discretion of the Company's board of directors. The timing and amount of dividends, if any, depends on the Company's earnings, financial condition, cash requirements and availability, fleet renewal and expansion, restrictions in the loan agreements, the provisions of Marshall Islands law affecting the payment of dividends and other factors.

On September 10, 2014, the Company paid a quarterly cash dividend on its common stock of $0.10 per share to all shareholders as of August 22, 2014 (the record date). On June 12, 2014, the Company paid a quarterly cash dividend on its common stock of $0.09 per share to all shareholders as of May 27, 2014 (the record date). On March 26, 2014, the Company paid a quarterly cash dividend on its common stock of $0.08 per share to all shareholders as of March 11, 2014 (the record date).

Share Buyback Program

On July 28, 2014, the Board of Directors of the Company approved a new stock buyback program with authorization to purchase up to $150 million of its common stock. This program replaced the stock buyback programs that were previously announced in July 2010, April 2014 and June 2014, which have been terminated.

The Company expects to repurchase these shares in the open market, at times and prices that are considered to be appropriate by the Company, but is not obligated under the terms of the program to repurchase any shares. 

Since July 28, 2014, the Company has purchased an aggregate of $67.5 million of shares in the open market at an average price of $8.64 per share during 2014 and has $82.5 million remaining under its stock buyback program as of the date of this press release.

About Scorpio Tankers Inc.

Scorpio Tankers Inc. is a provider of marine transportation of petroleum products worldwide. Scorpio Tankers Inc. currently owns 48 tankers (four LR2 tankers, two LR1 tankers, 10 Handymax tankers, 31 MR tankers, and one post-Panamax tanker) with an average age of 1.5 years, time charters-in 24 product tankers (eight LR2, five LR1, four MR and seven Handymax tankers), and has contracted for 27 newbuilding product tankers (14 MR, eight LR2, and five Handymax ice class-1A product tankers), 13 are expected to be delivered to the Company throughout 2014 and 14 in 2015. The Company also owns approximately 16% of Dorian LPG Ltd. Additional information about the Company is available at the Company's website www.scorpiotankers.com, which is not a part of this press release.

Non-GAAP Measures
This press release describes adjusted net income and Adjusted EBITDA, which are not measures prepared in accordance with IFRS (i.e. "Non-GAAP" measure). The Non-GAAP measures are presented in this press release as we believe that they provide investors with a means of evaluating and understanding how the Company's management evaluates the Company's operating performance. These Non-GAAP measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with IFRS.

Adjusted net income / (loss)

    For the three months ended September 30,  
    2014     2013  
In thousands of U.S. dollars except per share and share data   Amount     Per share     Amount     Per share  
Net (loss) / income   $ (1,159 )   $ (0.01 )   $ 667     $ 0.00  
Adjustments:                                
  Unrealized gain on derivative financial instruments     (75 )     (0.00 )     (118 )     (0.00 )
Total adjustments     (75 )     (0.00 )     (118 )     (0.00 )
Adjusted net (loss) / income   $ (1,234 )   $ (0.01 )   $ 549     $ 0.00  
                                 
    For the nine months ended September 30,  
    2014     2013  
    Amount     Per share     Amount     Per share  
Net income   $ 51,597     $ 0.29     $ 11,244     $ 0.08  
Adjustments:                                
  Deferred financing fees write-off - STI Spirit     317       0.00       -       -  
  Unrealized gain on derivative financial instruments     (187 )     (0.00 )     (483 )     (0.00 )
  Gain on sale of VLCCs     (51,419 )     (0.29 )     -       -  
  Gain on sale of Dorian shares     (10,924 )     (0.06 )     -       -  
Total adjustments     (62,213 )     (0.35 )     (483 )     (0.00 )
Adjusted net (loss) / income   $ (10,616 )   $ (0.06 )   $ 10,761     $ 0.08  
                                 
                                 
                                 

Adjusted EBITDA

    For the three months ended September 30,     For the nine months ended September 30,  
In thousands of U.S. dollars   2014     2013     2014     2013  
  Net (loss) / income   $ (1,159 )   $ 667     $ 51,597     $ 11,244  
  Financial expenses     6,683       448       7,554       2,323  
  Unrealized gain on derivative financial instruments     (75 )     (118 )     (187 )     (483 )
  Financial income     (103 )     (400 )     (172 )     (950 )
  Depreciation     11,574       6,377       24,896       16,665  
  Depreciation component of our net profit from associate     526       -       1,869       -  
  Amortization of restricted stock     7,631       3,856       22,068       6,738  
  Gain on sale of VLCCs     -       -       (51,419 )     -  
  Gain on sale of Dorian shares     -       -       (10,924 )     -  
  Adjusted EBITDA   $ 25,077     $ 10,830     $ 45,282     $ 35,537  
                                   
                                   
                                   

Forward-Looking Statements

Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words "believe," "anticipate," "intends," "estimate," "forecast," "project," "plan," "potential," "may," "should," "expect," "pending" and similar expressions identify forward-looking statements.

The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.

In addition to these important factors, other important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the failure of counterparties to fully perform their contracts with us, the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for tanker vessel capacity, changes in our operating expenses, including bunker prices, drydocking and insurance costs, the market for our vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain financing and comply with covenants in such financing arrangements, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off-hires and other factors. Please see our filings with the Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties.