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

MONACO — (Marketwired) — 02/24/14 — Scorpio Tankers Inc. (NYSE: STNG) (“Scorpio Tankers,” or the “Company”) today reported its results for the three months and year ended December 31, 2013 and increased its quarterly dividend to $0.08 per share.

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

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

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

Results for the year ended December 31, 2013 and 2012

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

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

Declaration of Dividend

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

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

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

Summary of Recent and Fourth Quarter Significant Events:

  • Took delivery of two MR tankers under the Company’s Newbuilding Program, STI Opera and STI Duchessa, in January 2014. After delivery, each vessel began a time charter for up to 120 days at approximately $19,000 per day.
  • Reached agreements to sell three of the Company’s older vessels, Noemi, Senatore, and STI Spirit, for an aggregate selling price of $74.2 million, further emphasizing the Company’s commitment to a modern fuel efficient fleet.
  • Reached agreements with Hyundai Samho Heavy Industries (“HSHI”) and Daewoo Shipbuilding and Marine Engineering Co., Ltd. (“DSME”) for the construction of a total of seven Very Large Crude Carriers (VLCCs) for aggregate consideration of approximately $662.2 million, with deliveries in 2015 and 2016.
  • Closed on the previously announced transaction with Dorian, acquiring 30% of Dorian’s outstanding shares in exchange for the contribution of 11 Very Large Gas Carrier (‘VLGC’) newbuilding contracts, together with a cash payment of $1.9 million. The Company also closed on the purchase of 24,121,621 new shares of Dorian’s common stock as part of a private placement of shares for total consideration of $75.0 million. The Company currently owns approximately 26% of Dorian’s outstanding shares after Dorian’s equity offering in February 2014.
  • Acquired four MR product tankers currently under construction in South Korea from an unaffiliated third party. Approximately 26% of the aggregate purchase price of $153.9 million consisted of newly issued common shares of the Company. One vessel is expected to be delivered in the third quarter of 2014, one is expected to be delivered in the first quarter of 2015 and the remaining two are expected to be delivered in the second quarter of 2015.
  • Received loan commitments from a group of financial institutions led by DNB Bank ASA and Skandinaviska Enskilda Banken AB (publ) and from the Export-Import Bank of Korea (“KEXIM”) for a total loan facility of up to $429.6 million (the “KEXIM Financing”). The KEXIM Financing incorporates an optional guarantee from KEXIM for the issuance by the Company, at the option of the Company, of a five year $125.3 million amortizing bond facility; the proceeds of which will reduce KEXIM’s direct loan commitment in the KEXIM Financing.
  • Received an Acceptance of Insurance Agreement (“Insurance Agreement”) from Korea Trade Insurance Corporation (“KSURE”) covering 95% of an up to $358.3 million KSURE tranche as part of a credit facility of up to $458.3 million (the “KSURE Financing”).
  • Declared and paid a quarterly cash dividend on the Company’s common stock of $0.07 per share in December 2013.

Vessel sales

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

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

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

VLCC Newbuildings

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

MR Product Tanker Newbuildings

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

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

Investment in Dorian LPG Ltd.

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

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

KSURE Credit Facility

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

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

KEXIM Financing

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

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

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

Time charter-in update

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

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

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

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

Conference Call

The Company will have a conference call on February 24, 2014 at 11:00 AM Eastern Standard Time and 5:00 PM Central European Time.

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1(888)-765-5576 (U.S.) or 1(913)-312-1520 (International). The conference participant passcode is 9755351. The information provided on the teleconference is only accurate at the time of the conference call, and the Company will take no responsibility for providing updated information.

Slides and Audio Webcast:

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

Webcast URL:http://www.visualwebcaster.com/event.asp?id=98195

Current Liquidity

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

Debt

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

In January 2014, the Company drew down $52.0 million from the 2011 Credit Facility. In connection with this draw down, STI Duchessa, STI Le Rocher and STI Larvotto were provided as collateral under the facility.

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

In December 2013, the Company made a $1.4 million prepayment into the STI Spirit Credit Facility in order to maintain compliance with that facility’s collateral maintenance ratio (which requires that the charter-free market value of STI Spirit be no less than 140% of the then outstanding loan balance).

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

 

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

 

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

 

Q1 2014                              223.4  million**
Q2 2014                              400.9  million
Q3 2014                              431.4  million
Q4 2014                              310.9  million
Q1 2015                              205.5  million
Q2 2015                              205.9  million
Q3 2015                               80.3  million
Q4 2015                              103.5  million
Q1 2016                              105.1  million
Q2 2016                               56.7  million
Q3 2016                               56.7  million

                               -----------
Total                          $   2,180.3  million

 

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

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

For the three months ended December 31, 2013, the Company recorded net income of $5.8 million compared to a net loss of $4.9 million in the three months ended December 31, 2012. The following were the significant changes between the two periods:

  • Time charter equivalent, or TCE revenue, a non-IFRS measure, is vessel revenues less voyage expenses (including bunkers and port charges). TCE revenue is included herein because it is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company’s performance irrespective of changes in the mix of charter types (i.e., spot charters, time charters, and pool charters), and it provides useful information to investors and management. The following table depicts TCE revenue for the three months ended December 31, 2013 and 2012:

 

                                                     For the three months
                                                      ended December 31,
                                                   ------------------------
In thousands of U.S. dollars                           2013         2012
                                                   -----------  -----------
  Vessel revenue                                   $    53,367$    30,104
  Voyage expenses                                       (1,064)      (1,794)
                                                   -----------  -----------
  TCE revenue                                      $    52,303$    28,310
                                                   ===========  ===========

 

  • TCE revenue increased $24.0 million to $52.3 million. This increase was primarily driven by an increase in the average number of operating vessels (owned and time chartered-in) to 47.2 from 23.8 for the three months ended December 31, 2013 and 2012, respectively. This increase was offset by an overall decrease in time charter equivalent revenue per day to $12,080 per day from $13,392 per day for the three months ended December 31, 2013 and 2012, respectively (see the breakdown of daily TCE averages below).
  • Vessel operating costs increased $4.4 million to $12.6 million from $8.2 million for the three months ended December 31, 2013 and 2012, respectively. This increase was primarily driven by an increase in the Company’s owned fleet to an average of 19.0 vessels from 12.0 vessels for the three months ended December 31, 2013 and 2012, respectively. The increase was offset by an overall decrease in vessel operating costs per day to $7,071 per day from $7,348 per day for the three months ended December 31, 2013 and 2012, respectively (see the breakdown of daily TCE averages below). The overall decrease was driven by the growth in the fleet of newbuilding MRs, which realized improved operating performance when compared to the Company’s older vessels.
  • Charterhire expense increased $22.0 million to $36.2 million as a result of an increase in the average number of vessels time chartered-in to 28.2 from 11.8 for the three months ended December 31, 2013 and 2012, respectively. See the Company’s Fleet List below for the terms of these agreements.
  • Depreciation expense increased $2.3 million to $6.9 million primarily as a result of an increase in the average number of owned vessels to 19.0 from 12.0 for the three months ended December 31, 2013 and 2012.
  • General and administrative expenses increased $8.1 million to $11.2 million. This increase was driven by a $5.5 million increase in the amortization of restricted stock (non-cash) and an overall increase in other general and administrative expenses due to the significant growth in the Company’s fleet and Newbuilding program.
  • Write-down of vessels held for sale of $21.2 million relates to the designation of certain vessels as held-for-sale at December 31, 2013 and the corresponding write-down to their estimated selling prices.
  • Gain on sale of VLGCs of $41.4 million relates to the gain recorded as a result of our contribution of 11 VLGCs under construction and $1.9 million in cash, to Dorian in exchange for 30% of Dorian’s outstanding shares.

 

                   Scorpio Tankers Inc. and Subsidiaries
             Condensed Consolidated Statement of Profit or Loss
                                (unaudited)

                                 For the three months   For the year ended
                                  ended December 31,       December 31,
                                 --------------------  --------------------
In thousands of U.S. dollars
 except per share and share data    2013       2012       2013       2012
                                 ---------  ---------  ---------  ---------
Revenue
  Vessel revenue                 $  53,367$  30,104$ 207,580$ 115,381

Operating expenses
  Vessel operating costs           (12,569)    (8,195)   (40,204)   (30,353)
  Voyage expenses                   (1,064)    (1,794)    (4,846)   (21,744)
  Charterhire                      (36,197)   (14,222)  (115,543)   (43,701)
  Depreciation                      (6,930)    (4,605)   (23,595)   (14,818)
  General and administrative
   expenses                        (11,216)    (3,132)   (25,788)   (11,536)
  Write down of vessels held for
   sale and loss from sales of
   vessels                         (21,187)         -    (21,187)   (10,404)
  Gain on sale of VLGCs             41,375          -     41,375          -
                                 ---------  ---------  ---------  ---------
  Total operating expenses         (47,788)   (31,948)  (189,788)  (132,556)
                                 ---------  ---------  ---------  ---------
Operating income / (loss)            5,579     (1,844)    17,792    (17,175)
                                 ---------  ---------  ---------  ---------
Other (expense) and income, net
  Financial expenses                  (383)    (1,929)    (2,705)    (8,512)
  Realized gain/(loss) on
   derivative financial
   instruments                         (22)       157          3        443
  Unrealized gain/(loss) on
   derivative financial
   instruments                          82     (1,269)       567     (1,231)
  Financial income                     197         29      1,147         35
  Share of profit from associate       369          -        369          -
  Other expenses, net                  (51)       (24)      (158)       (97)
                                 ---------  ---------  ---------  ---------
  Total other income/(expense),
   net                                 192     (3,036)      (777)    (9,362)
                                 ---------  ---------  ---------  ---------
Net income / (loss)              $   5,771$  (4,880)$  17,015$ (26,537)
                                 =========  =========  =========  =========

Earnings / (loss) per share

  Basic                          $    0.03$   (0.11)$    0.12$   (0.64)
  Diluted                        $    0.03$   (0.11)$    0.11$   (0.64)


                   Scorpio Tankers Inc. and Subsidiaries
                    Condensed Consolidated Balance Sheet
                                (unaudited)

                                                           As of
                                               ----------------------------
In thousands of U.S. dollars                    December 31,   December 31,
                                                    2013           2012
                                               -------------  -------------
Assets
Current assets
Cash and cash equivalents                      $      78,845$      87,165
Accounts receivable                                   72,542         36,438
Prepaid expenses and other current assets              2,277            956
Inventories                                            2,857          2,169
Vessels held for sale                                 82,649              -
                                               -------------  -------------
Total current assets                                 239,170        126,728
                                               -------------  -------------
Non-current assets
Vessels and drydock                                  530,270        395,412
Vessels under construction                           649,526         50,251
Other assets                                          17,907            889
Investment in associate                              209,803              -
                                               -------------  -------------
Total non-current assets                           1,407,506        446,552
                                               -------------  -------------
Total assets                                   $   1,646,676$     573,280
                                               =============  =============

Current liabilities
Bank loans                                            31,850          7,475
Accounts payable                                      20,696         11,387
Accrued expenses                                       7,251          3,057
Derivative financial instruments                         689            844
                                               -------------  -------------
Total current liabilities                             60,486         22,763
                                               -------------  -------------
Non-current liabilities
Bank loans                                           135,279        134,984
Derivative financial instruments                         188            743
                                               -------------  -------------
Total non-current liabilities                        135,467        135,727
                                               -------------  -------------
Total liabilities                                    195,953        158,490
                                               -------------  -------------

Shareholders' equity
Issued, authorized and fully paid in share
 capital:
  Share capital                                        1,999            650
  Additional paid in capital                       1,536,945        519,493
Treasury shares                                       (7,938)        (7,938)
Hedging reserve                                         (212)          (329)
Accumulated deficit                                  (80,071)       (97,086)
                                               -------------  -------------
Total shareholders' equity                         1,450,723        414,790
                                               -------------  -------------
Total liabilities and shareholders' equity     $   1,646,676$     573,280
                                               =============  =============


                   Scorpio Tankers Inc. and Subsidiaries
               Condensed Consolidated Statement of Cash Flows
                                (unaudited)

                                                       For the year ended
                                                          December 31,
                                                     ----------------------
In thousands of U.S. dollars                            2013        2012
                                                     ----------  ----------
Operating activities
Net income / (loss)                                  $   17,015$  (26,537)
Gain on sale of VLGCs                                   (41,375)          -
Write down of vessels held for sale and loss from
 sales of vessels                                        21,187      10,404
Depreciation                                             23,595      14,818
Amortization of restricted stock                         13,142       3,490
Amortization of deferred financing fees                     332       4,093
Straight-line adjustment for charterhire expense             53          41
Share of profit from associate                             (369)          -
Unrealized gain on derivative financial instruments        (567)      1,231
                                                     ----------  ----------
                                                         33,013       7,540
                                                     ----------  ----------
Changes in assets and liabilities:
Drydock payments                                         (1,469)     (1,702)
(Increase)/decrease in inventories                         (687)        526
Increase in accounts receivable                         (36,104)    (16,052)
(Increase)/decrease in prepaid expenses and other
 current assets                                            (823)        547
(Increase)/decrease in other assets                        (848)      2,443
(Decrease)/increase in accounts payable                  (2,021)      3,966
Increase in accrued expenses                              3,253         804
                                                     ----------  ----------
                                                        (38,699)     (9,468)
                                                     ----------  ----------
Net cash outflow from operating activities               (5,686)     (1,928)
                                                     ----------  ----------
Investing activities
Acquisition of vessels and payments for vessels
 under construction                                    (768,170)   (191,490)
Proceeds from disposal of vessels                             -     101,335
VLGC installment payments                               (83,070)          -
Investment in associate                                 (84,583)          -
                                                     ----------  ----------
Net cash outflow from investing activities             (935,823)    (90,155)
                                                     ----------  ----------
Financing activities
Bank loan repayment                                     (28,410)   (129,076)
Bank loan drawdown                                       52,050     124,172
Debt issuance costs                                     (13,940)     (3,293)
Gross proceeds from issuance of common stock            983,537     159,002
Equity issuance costs                                   (35,695)     (5,950)
Purchase of treasury shares                                   -      (2,440)
Dividends paid                                          (24,353)          -
                                                     ----------  ----------
Net cash inflow from financing activities               933,189     142,415
                                                     ----------  ----------
(Decrease)/increase in cash and cash equivalents         (8,320)     50,332
Cash and cash equivalents at January 1,                  87,165      36,833
                                                     ----------  ----------
Cash and cash equivalents at December 31,            $   78,845$   87,165
                                                     ==========  ==========


                    Scorpio Tankers Inc. and Subsidiaries
 Other operating data for the three months and year ended December 31, 2013
                                   and 2012
                                 (unaudited)


                                 For the three months    For the year ended
                                  ended December 31,        December 31,
                                ---------------------- ---------------------
                                   2013        2012       2013       2012
                                ----------  ---------- ---------- ----------
Adjusted EBITDA(1) (in
 thousands of U.S. dollars)     $     (681)$    3,786$   34,852$   11,883

Average Daily Results
Time charter equivalent per
 day(2)                         $   12,080$   13,392$   14,369$   12,960
Vessel operating costs per
 day(3)                              7,071       7,348      6,781      7,605

Aframax/LR2
TCE per revenue day (2)         $   12,582$    6,619$   12,718$   10,201
Vessel operating costs per
 day(3)                              9,402       7,884      8,203      8,436

Panamax/LR1
TCE per revenue day (2)         $   10,194$   13,389$   12,599$   14,264
Vessel operating costs per
 day(3)                              8,306       7,509      7,756      7,714

MR
TCE per revenue day (2)         $   13,784$   13,677$   16,546$   12,289
Vessel operating costs per
 day(3)                              6,340       5,994      6,069      6,770

Handymax
TCE per revenue day (2)         $    9,618$   13,821$   12,862$   13,069
Vessel operating costs per
 day(3)                              7,332       7,908      6,852      7,594

Fleet data
Average number of owned vessels       19.0        12.0       15.9       10.8
Average number of time
 chartered-in vessels                 28.2        11.8       22.9        9.2

Drydock
Expenditures for drydock (in
 thousands of U.S. dollars)              -  $    2,869          - $    2,869

 

(1) See Non-GAAP Measure section below
(2) Freight rates are commonly measured in the shipping industry in terms of time charter equivalent per day (or TCE per day), which is calculated by subtracting voyage expenses, including bunkers and port charges, from vessel revenue and dividing the net amount (time charter equivalent revenues) by the number of revenue days in the period. Revenue days are the number of days the vessel is owned less the number of days the vessel is off-hire for drydock and repairs.
(3) Vessel operating costs per day represent vessel operating costs excluding non-recurring expenses (for example insurance deductible expenses for repairs) divided by the number of days the vessel is owned during the period.

 

   Vessel Name       Year Built    DWT    Ice class Employment  Vessel type
   ----------------- ---------- --------- --------- ---------- -------------
   Owned vessels
 1 STI Highlander       2007       37,145     1A     SHTP (1)     Handymax
 2 STI Amber            2012       52,000     -       SMRP(4)        MR
 3 STI Topaz            2012       52,000     -       SMRP(4)        MR
 4 STI Ruby             2012       52,000     -       SMRP(4)        MR
 5 STI Garnet           2012       52,000     -       SMRP(4)        MR
 6 STI Onyx             2012       52,000     -       SMRP(4)        MR
 7 STI Sapphire         2013       52,000     -       SMRP(4)        MR
 8 STI Emerald          2013       52,000     -       SMRP(4)        MR
 9 STI Beryl            2013       52,000     -       SMRP(4)        MR
10 STI Le Rocher        2013       52,000     -       SMRP(4)        MR
11 STI Larvotto         2013       52,000     -       SMRP(4)        MR
12 STI Fontvieille      2013       52,000     -       SMRP(4)        MR
13 STI Ville            2013       52,000     -       SMRP(4)        MR
14 STI Duchessa         2014       52,000     -        Spot          MR
15 STI Opera            2014       52,000     -        Spot          MR
16 Noemi                2004       72,515     -        Spot         LR1
17 Senatore             2004       72,514     -        Spot         LR1
18 STI Harmony          2007       73,919     1A     SPTP (2)       LR1
19 STI Heritage         2008       73,919     1A     SPTP (2)       LR1
20 Venice               2001       81,408     1C       Spot     Post-Panamax
21 STI Spirit           2008      113,100     -      SLR2P (3)      LR2

                                ---------
   Total owned DWT              1,252,520
                                =========

                                                       Daily
     Vessel   Year            Ice             Vessel   Base    Expiry
      Name    Built   DWT    class Employment  type    Rate      (5)
   ---------- ---- --------- ----- --------- -------- ------- ---------
   Time chartered-in vessels
22 Freja
   Polaris    2004    37,217   1B   SHTP (1) Handymax $12,700 14-Apr-14 (6)
23 Kraslava   2007    37,258   1B   SHTP (1) Handymax $12,800 18-May-14 (7)
24 Krisjanis
   Valdemars  2007    37,266   1B   SHTP (1) Handymax $12,800 14-Apr-14 (8)
25 Jinan      2003    37,285   -    SHTP (1) Handymax $12,600 28-Apr-15
26 Iver
   Progress   2007    37,412   -    SHTP (1) Handymax $12,500 03-Mar-15 (9)
27 Iver
   Prosperity 2007    37,455   -    SHTP (1) Handymax $12,500 20-Oct-14 (10)
28 Histria
   Azure      2007    40,394   -    SHTP (1) Handymax $12,600 04-Apr-14 (11)
29 Histria
   Coral      2006    40,426   -    SHTP (1) Handymax $12,800 17-Jul-14 (12)
30 Histria
   Perla      2005    40,471   -    SHTP (1) Handymax $12,800 15-Jul-14 (12)
31 STX Ace 6  2007    46,161   -    SMRP(4)     MR    $14,150 17-May-14 (13)
32 Targale    2007    49,999   -    SMRP(4)     MR    $14,500 17-May-14 (14)
33 Gan-
   Triumph    2010    49,999   -    SMRP(4)     MR    $14,150 20-May-14
34 Nave Orion 2013    49,999   -    SMRP(4)     MR    $14,300 25-Mar-15 (15)
35 Hafnia
   Lupus      2012    50,385   -    SMRP(4)     MR    $14,760 26-Apr-14 (16)
36 Gan-Trust  2013    51,561   -    SMRP(4)     MR    $16,250 06-Jan-16 (17)
37 Usma       2007    52,684   1B   SMRP(4)     MR    $14,500 03-Jan-15
38 SN
   Federica   2003    72,344   -    SPTP (2)    LR1   $11,250 15-May-15 (18)
39 SN Azzura  2003    72,344   -    SPTP (2)    LR1   $13,600 25-Dec-14
40 King
   Douglas    2008    73,666   -    SPTP (2)    LR1   $14,000 08-Aug-14 (19)
41 Hellespont
   Promise    2007    73,669   -    SPTP (2)    LR1   $14,250 14-Aug-14
42 FPMC P
   Eagle      2009    73,800   -    SPTP (2)    LR1   $14,525 09-Sep-15
43 FPMC P
   Hero       2011    99,995   -   SLR2P (3)    LR2   $15,000 02-May-14 (20)
44 FPMC P
   Ideal      2012    99,993   -   SLR2P (3)    LR2   $15,250 09-Jul-14 (21)
45 Densa
   Alligator  2013   105,708   -   SLR2P (3)    LR2   $16,500 17-Sep-14 (22)
46 Khawr
   Aladid     2006   106,003   -   SLR2P (3)    LR2   $15,400 11-Jul-15
47 Fair Seas  2008   115,406       SLR2P (3)    LR2   $16,500 21-Aug-14
48 Southport  2008   115,462       SLR2P (3)    LR2   $15,700 10-Dec-14
49 Pink Stars 2010   115,592   -   SLR2P (3)    LR2   $16,125 10-Apr-14
50 Four Sky   2010   115,708   -   SLR2P (3)    LR2   $16,250 02-Sep-14
51 Orange
   Stars      2011   115,756   -   SLR2P (3)    LR2   $16,125 06-Apr-14
                   ---------

   Total time
   chartered-in
   DWT             2,051,418
                   =========

 

 

    Newbuildings currently under construction

    Vessel Name              Yard             DWT     Ice class  Vessel type
    --------------------- ----------      ---------- ---------- ------------
    Product tankers

 52 Hull 2451                 HMD    (23)     38,000     1A       Handymax
 53 Hull 2452                 HMD    (23)     38,000     1A       Handymax
 54 Hull 2453                 HMD    (23)     38,000     1A       Handymax
 55 Hull 2454                 HMD    (23)     38,000     1A       Handymax
 56 Hull 2462                 HMD    (23)     38,000     1A       Handymax
 57 Hull 2463                 HMD    (23)     38,000     1A       Handymax
 58 Hull 2464                 HMD    (23)     38,000     1A       Handymax
 59 Hull 2465                 HMD    (23)     38,000     1A       Handymax
 60 Hull 2476                 HMD    (23)     38,000     1A       Handymax
 61 Hull 2477                 HMD    (23)     38,000     1A       Handymax
 62 Hull 2478                 HMD    (23)     38,000     1A       Handymax
 63 Hull 2479                 HMD    (23)     38,000     1A       Handymax
 64 Hull 2499                 HMD    (23)     38,000     1A       Handymax
 65 Hull 2500                 HMD    (23)     38,000     1A       Handymax
 66 Hull 2391                 HMD    (23)     52,000                 MR
 67 Hull 2392                 HMD    (23)     52,000                 MR
 68 Hull 2449                 HMD    (23)     52,000                 MR
 69 Hull 2450                 HMD    (23)     52,000                 MR
 70 Hull 2458                 HMD    (23)     52,000                 MR
 71 Hull 2459                 HMD    (23)     52,000                 MR
 72 Hull 2460                 HMD    (23)     52,000                 MR
 73 Hull 2461                 HMD    (23)     52,000                 MR
 74 Hull 2492                 HMD    (23)     52,000                 MR
 75 Hull 2493                 HMD    (23)     52,000                 MR
 76 Hull 2445                 HMD    (23)     52,000                 MR
 77 Hull 2474                 HMD    (23)     52,000                 MR
 78 Hull 2475                 HMD    (23)     52,000                 MR
 79 Hull 2490                 HMD    (23)     52,000                 MR
 80 Hull S1138                SPP    (24)     52,000                 MR
 81 Hull S1139                SPP    (24)     52,000                 MR
 82 Hull S1140                SPP    (24)     52,000                 MR
 83 Hull S1141                SPP    (24)     52,000                 MR
 84 Hull S1142                SPP    (24)     52,000                 MR
 85 Hull S1143                SPP    (24)     52,000                 MR
 86 Hull S1144                SPP    (24)     52,000                 MR
 87 Hull S1145                SPP    (24)     52,000                 MR
 88 Hull S1167                SPP    (24)     52,000                 MR
 89 Hull S1168                SPP    (24)     52,000                 MR
 90 Hull S1169                SPP    (24)     52,000                 MR
 91 Hull S1170                SPP    (24)     52,000                 MR
 92 Hull S5122                SPP    (24)     52,000                 MR
 93 Hull S5123                SPP    (24)     52,000                 MR
 94 Hull S5124                SPP    (24)     52,000                 MR
 95 Hull S5125                SPP    (24)     52,000                 MR
 96 Hull S703                HSHI    (25)    114,000                 LR2
 97 Hull S704                HSHI    (25)    114,000                 LR2
 98 Hull S705                HSHI    (25)    114,000                 LR2
 99 Hull S706                HSHI    (25)    114,000                 LR2
100 Hull S709                HSHI    (25)    114,000                 LR2
101 Hull S710                HSHI    (25)    114,000                 LR2
102 Hull S715                HSHI    (25)    114,000                 LR2
103 Hull S716                HSHI    (25)    114,000                 LR2
104 Hull 5394                DSME    (26)    114,000                 LR2
105 Hull 5395                DSME    (26)    114,000                 LR2
106 Hull 5398                DSME    (26)    114,000                 LR2
107 Hull 5399                DSME    (26)    114,000                 LR2


                                          ----------
    Total newbuilding product tankers DWT  3,460,000
                                          ==========
    VLCCs
108 Hull 5404                DSME    (27)    300,000                VLCC
109 Hull 5405                DSME    (27)    300,000                VLCC
110 Hull 5406                DSME    (27)    300,000                VLCC
111 Hull 5407                DSME    (27)    300,000                VLCC
112 Hull 5408                DSME    (27)    300,000                VLCC
113 Hull S777                HSHI    (28)    300,000                VLCC
114 Hull S778                HSHI    (28)    300,000                VLCC


                                          ----------
    Total VLCC DWT                         2,100,000
                                          ==========

                                          ----------
    Total Fleet DWT                        8,863,938
                                          ==========

(1)  This vessel operates in or is expected to operate in the Scorpio
     Handymax Tanker Pool (SHTP). SHTP is operated by Scorpio Commercial
     Management (SCM). SHTP and SCM are related parties to the Company.
(2)  This vessel operates in or is expected to operate in the Scorpio
     Panamax Tanker Pool (SPTP). SPTP is operated by SCM. SPTP is a related
     party to the Company.
(3)  This vessel operates in or is expected to operate in the Scorpio LR2
     Pool (SLR2P). SLR2P is operated by SCM. SLR2P is a related party to the
     Company.
(4)  This vessel operates in or is expected to operate in the Scorpio MR
     Pool (SMRP). SMRP is operated by SCM. SMRP is a related party to the
     Company.
(5)  Redelivery from the charterer is plus or minus 30 days from the expiry
     date.
(6)  We have an option to extend the charter for an additional year at
     $14,000 per day.
(7)  We have an option to extend the charter for an additional year at
     $13,650 per day.
(8)  We have an option to extend the charter for an additional year at
     $13,650 per day. The agreement also contains a 50% profit and loss
     sharing provision whereby we split all of the vessel's profits and
     losses above or below the daily base rate with the vessel's owner.
(9)  We have an option to extend the charter for an additional year at
     $13,500 per day.
(10) We have an option to extend the charter for an additional year at
     $13,250 per day.
(11) We have an option to extend the charter for an additional year at
     $13,550 per day.
(12) We have an option to extend the charter for an additional year at
     $13,550 per day.
(13) We have an option to extend the charter for an additional year at
     $15,150 per day.
(14) We have options to extend the charter for up to three consecutive one
     year periods at $14,850 per day, $15,200 per day and $16,200 per day,
     respectively.
(15) We have an option to extend the charter for an additional year at
     $15,700 per day.
(16) We have an option to extend the charter for an additional year at
     $16,000 per day.
(17) The daily base rate represents the average rate for the three year
     duration of the agreement. The rate for the first year is $15,750 per
     day, the rate for the second year is $16,250 per day, and the rate for
     the third year is $16,750 per day. We have options to extend the
     charter for up to two consecutive one year periods at $17,500 per day
     and $18,000 per day, respectively.
(18) We have an option to extend the charter for an additional year at
     $12,500 per day. We have also entered into an agreement with the
     vessel's owner whereby we split all of the vessel's profits above the
     daily base rate.
(19) We have an option to extend the charter for an additional year at
     $15,000 per day.
(20) We have options to extend the charter for two consecutive six month
     periods at $15,250 per day, and $15,500 per day respectively.
(21) We have an option to extend the charter for an additional six months at
     $15,500 per day.
(22) We have an option to extend the charter for one year at $17,550 per
     day.
(23) These newbuilding vessels are being constructed at HMD (Hyundai Mipo
     Dockyard Co. Ltd. of South Korea). 23 vessels are expected to be
     delivered in 2014 and five vessels in the first and second quarters of
     2015.
(24) These newbuilding vessels are being constructed at SPP (SPP
     Shipbuilding Co., Ltd. of South Korea ). 12 vessels are expected to be
     delivered in 2014 and four in the first and second quarters of 2015.
(25) These newbuilding vessels are being constructed at HSHI (Hyundai Samho
     Heavy Industries Co., Ltd.). Six vessels are expected to be delivered
     in the third and fourth quarters of 2014 and two in the first quarter
     of 2015.
(26) These newbuilding vessels are being constructed at DSME (Daewoo
     Shipbuilding and Marine Engineering). Two vessels are expected to be
     delivered in the fourth quarter of 2014 and two in the second quarter
     of 2015.
(27) These newbuilding VLCCs are being constructed at DSME. One vessel is
     expected to be delivered in the third quarter of 2015, two in the
     fourth quarter of 2015 and two in the first quarter of 2016.
(28) These two newbuilding VLCCs are being constructed at HSHI. These
     vessels are expected to be delivered in the second and third quarters
     of 2016.

 

Business Strategy, Dividend Policy, and Stock Buyback Program

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

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

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

On February 21, 2014, the Company’s board of directors declared a quarterly cash dividend of $0.08 per share, payable on March 26, 2014 to all shareholders as of March 11, 2014 (the record date). On December 18, 2013, the Company paid a quarterly cash dividend on its common stock of $0.07 per share to all shareholders as of December 3, 2013 (the record date).

Share Buyback Program

On July 9, 2010, the Company’s board of directors authorized a share buyback program of up to $20 million. The Company expects to repurchase these shares in the open market, at times and prices that are considered to be appropriate by the Company, but is not obligated under the terms of the program to repurchase any shares.

As of February 21, 2014 the Company has purchased $7.9 million of shares in the open market at an average price of $6.78.

About Scorpio Tankers Inc.
Scorpio Tankers Inc. is a provider of marine transportation of petroleum products worldwide. Scorpio Tankers Inc. currently owns 21 tankers (one LR2 tanker, four LR1 tankers, one Handymax tanker, 14 MR tankers, and one post-Panamax tanker) with an average age of 3.9 years, time charters-in 30 product tankers (nine LR2, five LR1, seven MR and nine Handymax tankers), and has contracted for 63 newbuilding vessels (30 MR, 12 LR2, and 14 Handymax ice class-1A product tankers and seven VLCCs), 43 are expected to be delivered to the Company throughout 2014, 16 in 2015 and four in 2016. The Company also owns approximately 26% of Dorian LPG Ltd. Additional information about the Company is available at the Company’s website www.scorpiotankers.com, which is not a part of this press release.

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

Adjusted net income / (loss)

 

                                   For the three months ended December 31,
                                 ------------------------------------------
                                         2013                  2012
                                 --------------------  --------------------
In thousands of U.S. dollars
 except per share and share data   Amount   Per share    Amount   Per share
                                 ---------  ---------  ---------  ---------
  Net income / (loss)            $   5,771$    0.03$  (4,880)$   (0.11)
  Adjustments:
  Unrealized (gain)/loss on
   derivative financial
   instruments                         (82)     (0.00)     1,269       0.03
  Write down of vessels held for
   sale                             21,187       0.12          -       0.00
  Gain on sale of VLGCs            (41,375)     (0.23)         -       0.00
                                 ---------  ---------  ---------  ---------
  Total adjustments                (20,270)     (0.11)     1,269       0.03
                                 ---------  ---------  ---------  ---------
  Adjusted net loss              $ (14,499)$   (0.08)$  (3,611)$   (0.08)
                                 =========  =========  =========  =========


                                       For the year ended December 31,
                                 ------------------------------------------
                                         2013                  2012
                                 --------------------  --------------------
In thousands of U.S. dollars
 except per share and share data   Amount   Per share    Amount   Per share
                                 ---------  ---------  ---------  ---------
  Net income / (loss)            $  17,015$    0.12$ (26,537)$   (0.64)
  Adjustments:
  Write off of deferred
   financing fees                        -          -      2,978       0.07
  Unrealized (gain)/loss on
   derivative financial
   instruments                        (567)     (0.00)     1,231       0.03
  Write down of vessels held for
   sale and loss from sales of
   vessels                          21,187       0.14     10,404       0.25
  Gain on sale of VLGCs            (41,375)     (0.28)         -          -
                                 ---------  ---------  ---------  ---------
  Total adjustments              $ (20,755)     (0.14)    14,613       0.35
                                 ---------  ---------  ---------  ---------
  Adjusted net loss              $  (3,740)$   (0.03)$ (11,924)$   (0.29)
                                 =========  =========  =========  =========


                                 For the three months   For the year ended
                                  ended December 31,       December 31,
                                 --------------------  --------------------
In thousands of U.S. dollars        2013       2012       2013       2012
                                 ---------  ---------  ---------  ---------
  Net income / (loss)            $   5,771$  (4,880)    17,015  $ (26,537)
  Financial expenses                   383      1,929      2,705      8,512
  Unrealized (gain)/loss on
   derivative financial
   instruments                         (82)     1,269       (567)     1,231
  Financial income                    (197)       (29)    (1,147)       (35)
  Depreciation                       6,930      4,605     23,595     14,818
  Depreciation component of our
   net profit from associate           297          -        297          -
  Amortization of restricted
   stock                             6,405        892     13,142      3,490
  Write down of vessels held for
   sale                             21,187          -     21,187     10,404
  Gain on sale of VLGCs            (41,375)         -    (41,375)         -
                                 ---------  ---------  ---------  ---------
  Adjusted EBITDA                $    (681)$   3,786$  34,852$  11,883
                                 =========  =========  =========  =========

 

Forward-Looking Statements

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

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

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

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