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Scorpio Tankers Inc. Announces Financial Results for the Third Quarter of 2013, Makes Further Progress on Financing, and Increases Its Quarterly Dividend

MONACO — (Marketwired) — 10/28/13 — Scorpio Tankers Inc. (NYSE: STNG) (“Scorpio Tankers,” or the “Company”) today reported its results for the three and nine months ended September 30, 2013.

Results for the three months ended September 30, 2013 and 2012

For the three months ended September 30, 2013, the Company had an adjusted net income of $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. Including the unrealized gain on derivative financial instruments, the Company had net income of $0.7 million, or $0.00 basic and diluted earnings per share.

For the three months ended September 30, 2012, the Company had an adjusted net loss of $3.7 million (see Non-GAAP Measure section below), or $0.09 basic and diluted loss per share, excluding a $5.9 million, or $0.14 per share, loss from sales of vessels and a $3.0 million, or $0.07 per share, write-off of deferred financing fees. Including the aforementioned adjustments, the Company had a net loss of $12.5 million, or $0.30 basic and diluted loss per share for the three months ended September 30, 2012.

Results for the nine months ended September 30, 2013 and 2012

For the nine months ended September 30, 2013, the Company had an adjusted net income of $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. Including the unrealized gain on derivative financial instruments, the Company had net income of $11.2 million or $0.08 basic and diluted earnings per share.

For the nine months ended September 30, 2012, the Company had an adjusted net loss of $8.3 million (see Non-GAAP Measure section below), or $0.21 basic and diluted loss per share, excluding a $10.4 million, or $0.26 per share, loss from sales of vessels and a $3.0 million, or $0.07 per share, write-off of deferred financing fees. Including the aforementioned adjustments, the Company recorded a net loss of $21.7 million, or $0.54 basic and diluted loss per share for the nine months ended September 30, 2012.

Declaration of Dividend

On October 28, 2013, the Scorpio Tankers’ board of directors declared a quarterly cash dividend of $0.07 per share, payable on December 18, 2013 to all shareholders as of December 3, 2013 (the record date). There are currently 191,656,422 shares outstanding.

Emanuele Lauro, chief executive officer and chairman of the board commented, “The past few months have been very exciting for us with the delivery of vessels and additional construction contracts for our Newbuilding Program, as well as a successful equity raising. I am pleased that we have made progress on financing our growth, having secured substantial commitments from KEXIM and KSURE.”

Summary of Recent and Third Quarter Significant Events:

  • 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 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”) that is currently being finalized with a group of financial institutions.
  • Exercised options with Hyundai Samho Heavy Industries (“HSHI”) for the construction of two Very Large Gas Carriers (“VLGC”) for approximately $75.0 million each, with deliveries scheduled in the first quarter of 2016.
  • Reached agreements with certain unaffiliated third parties to issue shares in exchange for the transfer of ownership of four MR product tankers currently under construction in South Korea. The aggregate purchase price of the four vessels is $151.0 million with approximately 30% of the consideration consisting of the newly issued common shares. Deliveries of vessels are scheduled in the first and second quarters of 2014.
  • Reached agreements with HSHI and Daewoo Shipbuilding and Marine Engineering Co., Ltd. (“DSME”) for the construction of a total of nine VLGC for approximately $75.6 million each with deliveries scheduled in the second, third and fourth quarters of 2015.
  • Reached an agreement with Hyundai Mipo Dockyard (“HMD”) to construct four product tankers consisting of two 52,000 dwt MR product tankers for approximately $35.0 million each (deliveries in the second quarter of 2015) and two Handymax ice class-1A (38,000 dwt) product tankers for approximately $32.0 million each (deliveries in the fourth quarter of 2014).
  • Closed on an underwritten offering of 23 million common shares in August 2013 which includes the full exercise of the underwriters’ overallotment of 3 million shares, raising aggregate net proceeds of $209.8 million.
  • Declared and paid a quarterly cash dividend on the Company’s common stock of $0.035 per share in September 2013.
  • Took delivery of four MR tankers under the Company’s Newbuilding Program, STI Le Rocher and STI Larvotto in July, STI Fontvieille in August and STI Ville in September 2013. After delivery, each vessel began a time charter for up to 120 days at approximately $19,000 per day.

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 a commitment of 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 subject to executed documentation and is expected to close within the fourth quarter of 2013.

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.

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 will be a component of a credit facility of up to $458.3 million that is in the process of being finalized. The KSURE Financing will also include a commercial tranche (the “Commercial Tranche”) of up to $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 subject to credit approval from participating financial institutions as well as executed documentation, and is expected to close within the fourth quarter of 2013.

Newbuilding agreements

In September 2013, the Company reached agreements with certain unaffiliated third parties to issue shares in exchange for the transfer of ownership of four MR product tankers that are currently under construction with SPP Shipbuilding Co., Ltd. of South Korea (“SPP”). The aggregate purchase price of the four vessels is $151.0 million with approximately 30% of the consideration consisting of the newly issued shares having a valuation based on the fair market value of the shares at the time of issuance. The new common shares will be issued to Ceres, Valero and a group of institutional investors advised by JP Morgan Asset Management; the remainder of the purchase price will be paid to the shipyard from cash on hand and bank debt. Deliveries of the vessels are scheduled in the first and the second quarters of 2014.

The transaction also includes a time charter-out agreement for each vessel for a fixed daily revenue amount at current market levels plus a profit sharing arrangement whereby earnings in excess of the base time charter rate will be split between the Company and charterer, Valero. The first vessel delivered will be time chartered-out for 24 months, and the remaining three will each be time chartered-out for 12 months. The transactions will be completed by way of novation of the existing shipbuilding agreements and remain subject to final documentation.

In August 2013, the Company reached an agreement with HMD to construct four product tankers consisting of two 52,000 dwt MR product tankers for approximately $35.0 million each and two Handymax ice class-1A (38,000 dwt) product tankers for approximately $32.0 million each. The MR tankers are scheduled to be delivered in the second quarter of 2015, and the Handymax ice class-1A tankers are scheduled to be delivered in the fourth quarter of 2014.

VLGC Newbuilding agreements

In October 2013, the Company exercised options with HSHI for the construction of two VLGC for approximately $75.0 million each. These vessels are expected to be delivered in the first quarter of 2016.

In July and August 2013, the Company reached agreements with HSHI and DSME for the construction of nine VLGC for approximately $75.6 million each. These vessels are expected to be delivered in the second, third and fourth quarters of 2015.

These vessels are 84,000 cubic meter tankers designed for the carriage of liquefied petroleum gas (“LPG”).

Underwritten offering and full exercise of underwriters’ over-allotment

In August 2013, the Company closed on the sale of 20 million shares of common stock at an offering price of $9.50 per share. The underwriters also fully exercised their over-allotment option to purchase 3 million additional common shares at the offering price. The Company received aggregate net proceeds of $209.8 million after deducting underwriters’ discounts and offering expenses.

Time charter-in update

In October 2013, the Company entered into a new time charter-in agreement on an LR1 vessel that is currently time chartered-in. The new agreement is for two years at $14,525 per day and commenced upon the expiration of the existing charter in September 2013.

In August 2013, the Company agreed to time charter-in and took delivery of two 2007 built Handymax product tankers (37,412 dwt and 37,455 dwt, respectively). The first vessel is time chartered-in for 18 months at $12,500 per day with an option for the Company to extend the charter for an additional year at $13,500 per day. The second vessel is time chartered-in for one year at $12,500 per day with an option for the Company to extend the charter for an additional year at $13,250 per day.

In August 2013, the Company declared an option on an LR2 vessel that is currently time chartered-in. The option period is for six months at $15,000 per day and commences upon the expiration of the existing charter in November 2013.

In July 2013, the Company agreed to time charter-in and took delivery of a 2008 built, 73,666 dwt LR1 product tanker for one year at $14,000 per day. This agreement contains an option for the Company to extend the charter for an additional year at $15,000 per day.

Conference Call

The Company will have a conference call on October 28, 2013 at 12:00 PM Eastern Daylight Time and 5:00 PM Central European Time.

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 (888)-215-7046 (U.S.) or 1 (913)-312-0659 (International). The conference participant passcode is 6328598. 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=96603

Current Liquidity

As of October 25, 2013, the Company had $381.9 million in cash and $75.5 million available to draw down from its 2010 Revolving Credit Facility.

Debt

As of October 28, 2013, the Company’s outstanding debt balance is as follows:

 

2010 Revolving Credit Facility      $                    -  million
2011 Credit Facility                                  65.2  million
STI Spirit Credit Facility                            23.4  million
Newbuilding Credit Facility                           85.3  million
2013 Credit Facility                                     -  million

                                    ----------------------
Total                               $                173.9  million
                                    ======================


 

Newbuilding Program

During the third quarter of 2013, the Company made $255.0 million of installment payments on its newbuilding vessels. The Company currently has 65 newbuilding vessel orders with HMD, SPP, HSHI and DSME (28 MRs, 14 Handymaxes, 12 LR2s and 11 VLGC). The estimated future payment dates and amounts are as follows*:

 

Q4 2013     $    215.7   million**
Q1 2014          250.3   million
Q2 2014          397.5   million
Q3 2014          394.8   million
Q4 2014          323.1   million
Q1 2015          134.6   million
Q2 2015          249.2   million
Q3 2015          151.1   million
Q4 2015          197.3   million
Q1 2016          105.0   million
            ----------
Total       $  2,418.6   million***


 

*These are estimates only and are subject to change as construction progresses.
**$47.0 million has been paid prior to the date of this press release.
***Excludes the consideration of newly issued common shares of approximately 30% of the purchase price for four MRs currently under construction with first and second quarter 2014 deliveries.

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

For the three months ended September 30, 2013, the Company recorded net income of $0.7 million compared to a net loss of $12.5 million in the three months ended September 30, 2012. The following were the significant changes between the two periods:

  • Time charter equivalent, or TCE revenues, a non-IFRS measure, is vessel revenues less voyage expenses (including bunkers and port charges). TCE revenue is also 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, 2013 and 2012:

 

                                               For the three months ended
                                                      September 30,
                                             ------------------------------
In thousands of U.S. dollars                      2013            2012
                                             --------------  --------------
Vessel revenue                               $       57,756$       28,667
Voyage expenses                                      (1,249)         (6,304)
                                             --------------  --------------
TCE revenue                                  $       56,507$       22,363
                                             ==============  ==============


 

  • TCE revenue increased by $34.1 million to $56.5 million as a result of an increase in the average number of operating vessels (owned and time chartered-in) to 42.3 from 20.4 for the three months ended September 30, 2013 and 2012, respectively. Additionally, the Company experienced an overall increase in time charter equivalent revenue per day to $14,557 per day from $11,926 per day for the three months ended September 30, 2013 and 2012, respectively (see the breakdown of daily TCE averages below).
  • Vessel operating costs increased $4.7 million to $11.1 million from $6.4 million for the three months ended September 30, 2013 and 2012, respectively. This increase was primarily driven by an increase in the Company’s owned fleet to an average of 17.3 vessels from 9.9 vessels for the three months ended September 30, 2013 and 2012, respectively.
  • Charterhire expense increased $19.3 million to $31.9 million as a result of an increase in the average number of time chartered-in vessels to 25.0 from 10.5 for the three months ended September 30, 2013 and 2012, respectively. See the Company’s Fleet List below for the terms of these agreements.
  • Depreciation expense increased $3.0 million to $6.4 million primarily as a result of an increase in the average number of owned vessels to 17.3 from 9.9 for the three months ended September 30, 2013 and 2012.
  • General and administrative expenses increased $3.7 million to $6.5 million. This increase was driven by (i) a $3.0 million increase in restricted stock amortization (non-cash) and (ii) an overall increase in other general and administrative expenses due to the significant growth in the Company’s fleet and Newbuilding program.
  • Financial expenses decreased $3.7 million to $0.4 million primarily as a result of the one-time write-off of deferred financing fees during the three months ended September 30, 2012 of $3.0 million relating to the amendment signed in July 2012 to extend the availability period of the 2011 Credit Facility to January 2014.

 

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



                                 For the three months   For the nine months
                                  ended September 30,   ended September 30,
                                 --------------------  --------------------
In thousands of U.S. dollars
 except per share and share data    2013       2012       2013       2012
                                 ---------  ---------  ---------  ---------
Revenue
  Vessel revenue                 $  57,756$  28,667$ 154,213$  85,278

Operating expenses:
  Vessel operating costs           (11,137)    (6,374)   (27,635)   (22,158)
  Voyage expenses                   (1,249)    (6,304)    (3,782)   (19,950)
  Charterhire                      (31,877)   (12,588)   (79,345)   (29,479)
  Depreciation                      (6,377)    (3,389)   (16,665)   (10,213)
  Loss from sale of vessels              -     (5,879)         -    (10,404)
  General and administrative
   expenses                         (6,522)    (2,815)   (14,572)    (8,404)
                                 ---------  ---------  ---------  ---------
  Total operating expenses         (57,162)   (37,349)  (141,999)  (100,608)
                                 ---------  ---------  ---------  ---------
Operating income / (loss)              594     (8,682)    12,214    (15,330)
                                 ---------  ---------  ---------  ---------
Other (expense) and income, net
  Financial expenses                  (448)    (4,108)    (2,323)    (6,583)
  Realized gain on derivative
   financial instruments                 3        286         25        286
  Unrealized gain on derivative
   financial instruments               118         38        483         38
  Financial income                     400          4        950          6
  Other expenses, net                    -        (49)      (106)       (73)
                                 ---------  ---------  ---------  ---------
  Total other expense, net              73     (3,829)      (971)    (6,326)
                                 ---------  ---------  ---------  ---------
Net income / (loss)              $     667$ (12,511)$  11,243$ (21,656)
                                 =========  =========  =========  =========

Earnings / (loss) per share

  Basic and diluted              $    0.00$   (0.30)$    0.08$   (0.54)



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



                                                        As of
                                         ----------------------------------
                                           September 30,     December 31,
In thousands of U.S. dollars                   2013              2012
                                         ----------------  ----------------
Assets
Current assets
Cash and cash equivalents                $        447,368  $         87,165
Accounts receivable                                73,961            36,438
Prepaid expenses and other current assets           3,871               956
Inventories                                         3,498             2,169
                                         ----------------  ----------------
Total current assets                              528,698           126,728
                                         ----------------  ----------------
Non-current assets
Vessels and drydock                               640,855           395,412
Vessels under construction                        371,236            50,251
Other assets                                       14,045               889
                                         ----------------  ----------------
Total non-current assets                        1,026,136           446,552
                                         ----------------  ----------------
Total assets                             $      1,554,834$        573,280
                                         ================  ================

Current liabilities
Bank loans                                         13,754             7,475
Accounts payable                                    9,194            11,387
Accrued expenses                                    3,254             3,057
Derivative financial instruments                      675               844
                                         ----------------  ----------------
Total current liabilities                          26,877            22,763
                                         ----------------  ----------------
Non-current liabilities
Bank loans                                        157,543           134,984
Derivative financial instruments                      309               743
                                         ----------------  ----------------
Total non-current liabilities                     157,852           135,727
                                         ----------------  ----------------
Total liabilities                                 184,729           158,490
                                         ----------------  ----------------

Shareholders' equity
Issued, authorized and fully paid in
 share capital:
  Share capital                                     1,888               650
  Additional paid in capital                    1,462,232           519,493
Treasury shares                                    (7,938)           (7,938)
Hedging reserve                                      (236)             (329)
Accumulated deficit                               (85,841)          (97,086)
                                         ----------------  ----------------
Total shareholders' equity                      1,370,105           414,790
                                         ----------------  ----------------
Total liabilities and shareholders'
 equity                                  $      1,554,834$        573,280
                                         ================  ================



                   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                   2013              2012
                                         ----------------  ----------------

Operating activities
Net income / (loss)                      $         11,243  $        (21,656)
Loss from sale of vessels                               -            10,404
Depreciation                                       16,665            10,213
Amortization of restricted stock                    6,738             2,598
Amortization of deferred financing fees               538             3,844
Straight-line adjustment for charterhire
 expense                                                7               225
Unrealized gain on derivative financial
 instruments                                         (483)              (38)
                                         ----------------  ----------------
                                                   34,708             5,590
                                         ----------------  ----------------
Changes in assets and liabilities:
Drydock payments                                   (1,448)             (150)
Increase in inventories                            (1,328)              (77)
Increase in accounts receivable                   (37,523)           (5,575)
(Increase)/decrease in prepaid expenses
 and other current assets                          (2,942)              129
(Increase)/decrease in other assets                  (394)            2,442
Increase in accounts payable                        1,337             4,413
(Decrease)/increase in accrued expenses               (29)              598
                                         ----------------  ----------------
                                                  (42,327)            1,780
                                         ----------------  ----------------
Net cash (outflow) / inflow from
 operating activities                              (7,169)            7,370
                                         ----------------  ----------------
Investing activities
Acquisition of vessels and payments for
 vessels under construction                      (585,182)         (176,556)
Proceeds from disposal of vessels                       -           101,335
                                         ----------------  ----------------
Net cash outflow from investing
 activities                                      (585,182)          (75,221)
                                         ----------------  ----------------
Financing activities
Bank loan repayment                               (24,102)          (75,989)
Bank loan drawdown                                 52,050           124,173
Debt issuance costs                               (12,266)           (2,944)
Gross proceeds from issuance of common
 stock                                            983,537            27,000
Equity issuance costs                             (35,531)           (1,137)
Purchase of treasury shares                             -            (2,440)
Dividends paid                                    (10,684)                -
                                         ----------------  ----------------
Net cash inflow from financing activities         953,004            68,663
                                         ----------------  ----------------
Increase in cash and cash equivalents             360,203               812
Cash and cash equivalents at January 1,            87,165            36,833
                                         ----------------  ----------------
Cash and cash equivalents at September
 30,                                     $        447,368  $         37,645
                                         ================  ================



                    Scorpio Tankers Inc. and Subsidiaries
 Other operating data for the three and nine months ended September 30, 2013
                                   and 2012
                                 (unaudited)



                                  For the three months  For the nine months
                                  ended September 30,   ended September 30,
                                 --------------------- ---------------------
                                    2013       2012       2013       2012
                                 ---------- ---------- ---------- ----------
Adjusted EBITDA(1) (in thousands
 of U.S. dollars)                $   10,830$    1,715$   35,536$    8,098

Average Daily Results
Time charter equivalent per
 day(2)                          $   14,557$   11,926$   15,388$   12,719
Vessel operating costs per
 day(3)                               6,851      6,935      6,656      7,690

Aframax/LR2
TCE per revenue day (2)          $   10,876$   15,809$   12,803$   10,940
Vessel operating costs per
 day(3)                               9,112      7,645      7,799      8,622

Panamax/LR1
TCE per revenue day (2)          $   13,349$   13,613$   13,519$   14,609
Vessel operating costs per
 day(3)                               8,174      7,271      7,570      7,783

MR
TCE per revenue day (2)          $   17,304$   10,972$   17,706$   11,195
Vessel operating costs per
 day(3)                               5,956      6,593      5,930      7,338

Handymax
TCE per revenue day (2)          $   13,029$   11,106$   14,246$   12,804
Vessel operating costs per
 day(3)                               7,157      5,524      6,690      7,414

Fleet data
Average number of owned vessels        17.3        9.9       14.9       10.4
Average number of time
 chartered-in vessels                  25.0       10.5       21.1        8.4

Drydock
Expenditures for drydock (in
 thousands of U.S. dollars)               -          -          -          -

(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 28, 2013


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

                              -------
    Total owned DWT           1,148,5
                                 20
                              =======

                                                             Daily  Exp
                    Year               Ice  Employ  Vessel    Base  iry
    Vessel Name    Built        DWT   class  ment    type     Rate  (5)
    -----------    -----      ------- ----- ------ -------- ------- ---
    Time Chartered-In
    vessels
20  Freja                                                           14-
    Polaris         2004       37,217   1B   SHTP  Handymax $12,700 Apr (6)
                                              (1)                   -14
21  Kraslava                                                        18-
                    2007       37,258   1B   SHTP  Handymax $12,800 May (7)
                                              (1)                   -14
22  Krisjanis                                                       14-
    Valdemars       2007       37,266   1B   SHTP  Handymax $12,800 Apr (8)
                                              (1)                   -14
23  Jinan                                                           28-
                    2003       37,285   -    SHTP  Handymax $12,600 Apr
                                              (1)                   -15
24  Iver                                                            03-
    Progress        2007       37,412   -    SHTP  Handymax $12,500 Mar (9)
                                              (1)                   -15
25  Iver                                                            20-
    Prosperity      2007       37,455   -    SHTP  Handymax $12,500 Oct (10)
                                              (1)                   -14
26  Histria                                                         04-
    Azure           2007       40,394   -    SHTP  Handymax $12,600 Apr (11)
                                              (1)                   -14
27  Histria                                                         17-
    Coral           2006       40,426   -    SHTP  Handymax $12,800 Jul (12)
                                              (1)                   -14
28  Histria                                                         15-
    Perla           2005       40,471   -    SHTP  Handymax $12,800 Jul (12)
                                              (1)                   -14
29  STX Ace 6                                                       17-
                    2007       46,161   -    SMRP     MR    $14,150 May (13)
                                              (4)                   -14
30  Targale                                                         17-
                    2007       49,999   -    SMRP     MR    $14,500 May (14)
                                              (4)                   -14
31  Ugale                                                           15-
                    2007       49,999   1B   SMRP     MR    $14,000 Jan (15)
                                              (4)                   -14
32  Gan Triumph                                                     20-
                    2010       49,999   -    SMRP     MR    $14,150 May
                                              (4)                   -14
33  Nave Orion                                                      25-
                    2013       49,999   -    SMRP     MR    $14,300 Mar (16)
                                              (4)                   -15
34  Freja Lupus                                                     26-
                    2012       50,385   -    SMRP     MR    $14,760 Apr (17)
                                              (4)                   -14
35  Gan-Trust                                                       06-
                    2013       51,561   -    SMRP     MR    $16,250 Jan (18)
                                              (4)                   -16
36  Usma                                                            03-
                    2007       52,684   1B   SMRP     MR    $13,500 Jan (19)
                                              (4)                   -14
37  SN Federica                                                     15-
                    2003       72,344   -    SPTP     LR1   $11,250 May (20)
                                              (2)                   -15
38  King                                                            08-
    Douglas         2008       73,666        Spot     LR1   $14,000 Aug (21)
                                                                    -14
39  Hellespont                                                      16-
    Promise         2007       73,669   -    SPTP     LR1   $12,500 Dec (22)
                                              (2)                   -13
40  FPMC P                                                          09-
    Eagle           2009       73,800   -    SPTP     LR1   $14,525 Sep
                                              (2)                   -15
41  FPMC P Hero                                                     02-
                    2011       99,995   -    SLR2P    LR2   $14,750 May (23)
                                              (3)                   -14
42  FPMC P                                                          09-
    Ideal           2012       99,993   -    SLR2P    LR2   $15,000 Jan (24)
                                              (3)                   -14
43  Densa                                                           17-
    Alligator       2013      105,708   -    SLR2P    LR2   $16,500 Sep (25)
                                              (3)                   -14
44  Khawr                                                           11-
    Aladid          2006      106,003   -    SLR2P    LR2   $15,400 Jul
                                              (3)                   -15
45  Fair Seas                                                       31-
                    2008      115,406   -    SLR2P    LR2   $16,250 Jan (26)
                                              (3)                   -14
46  Pink Stars                                                      10-
                    2010      115,592   -    SLR2P    LR2   $16,125 Apr
                                              (3)                   -14
47  Four Sky                                                        02-
                    2010      115,708   -    SLR2P    LR2   $16,250 Sep
                                              (3)                   -14
48  Orange                                                          06-
    Stars           2011      115,756   -    SLR2P    LR2   $16,125 Apr
                                              (3)                   -14

                              -------
    Total time                1,913,6
    chartered-in DWT             11
                              =======

    Newbuildings currently
    under construction
                                       Ice          Vessel
    Vessel Name     Yard        DWT   class          type
    -----------    -----      ------- -----        --------
    Product
    tankers

49  Hull 2451       HMD  (27)  38,000   1A         Handymax
50  Hull 2452       HMD  (27)  38,000   1A         Handymax
51  Hull 2453       HMD  (27)  38,000   1A         Handymax
52  Hull 2454       HMD  (27)  38,000   1A         Handymax
53  Hull 2462       HMD  (27)  38,000   1A         Handymax
54  Hull 2463       HMD  (27)  38,000   1A         Handymax
55  Hull 2464       HMD  (27)  38,000   1A         Handymax
56  Hull 2465       HMD  (27)  38,000   1A         Handymax
57  Hull 2476       HMD  (27)  38,000   1A         Handymax
58  Hull 2477       HMD  (27)  38,000   1A         Handymax
59  Hull 2478       HMD  (27)  38,000   1A         Handymax
60  Hull 2479       HMD  (27)  38,000   1A         Handymax
61  Hull 2499       HMD  (27)  38,000   1A         Handymax
62  Hull 2500       HMD  (27)  38,000   1A         Handymax
63  Hull 2389       HMD  (27)  52,000                 MR
64  Hull 2390       HMD  (27)  52,000                 MR
65  Hull 2391       HMD  (27)  52,000                 MR
66  Hull 2392       HMD  (27)  52,000                 MR
67  Hull 2449       HMD  (27)  52,000                 MR
68  Hull 2450       HMD  (27)  52,000                 MR
69  Hull 2458       HMD  (27)  52,000                 MR
70  Hull 2459       HMD  (27)  52,000                 MR
71  Hull 2460       HMD  (27)  52,000                 MR
72  Hull 2461       HMD  (27)  52,000                 MR
73  Hull 2492       HMD  (27)  52,000                 MR
74  Hull 2493       HMD  (27)  52,000                 MR
75  Hull S1138      SPP  (28)  52,000                 MR
76  Hull S1139      SPP  (28)  52,000                 MR
77  Hull S1140      SPP  (28)  52,000                 MR
78  Hull S1141      SPP  (28)  52,000                 MR
79  Hull S1142      SPP  (28)  52,000                 MR
80  Hull S1143      SPP  (28)  52,000                 MR
81  Hull S1144      SPP  (28)  52,000                 MR
82  Hull S1145      SPP  (28)  52,000                 MR
83  Hull S1167      SPP  (28)  52,000                 MR
84  Hull S1168      SPP  (28)  52,000                 MR
85  Hull S1169      SPP  (28)  52,000                 MR
86  Hull S1170      SPP  (28)  52,000                 MR
87  Hull S5122      SPP  (28)  52,000                 MR
88  Hull S5123      SPP  (28)  52,000                 MR
89  Hull S5124      SPP  (28)  52,000                 MR
90  Hull S5125      SPP  (28)  52,000                 MR
91  Hull S703       HSHI (29) 114,000                 LR2
92  Hull S704       HSHI (29) 114,000                 LR2
93  Hull S705       HSHI (29) 114,000                 LR2
94  Hull S706       HSHI (29) 114,000                 LR2
95  Hull S709       HSHI (29) 114,000                 LR2
96  Hull S710       HSHI (29) 114,000                 LR2
97  Hull S715       HSHI (29) 114,000                 LR2
98  Hull S716       HSHI (29) 114,000                 LR2
99  Hull 5394       DSME (30) 114,000                 LR2
100 Hull 5395       DSME (30) 114,000                 LR2
101 Hull 5398       DSME (30) 114,000                 LR2
102 Hull 5399       DSME (30) 114,000                 LR2

                              -------
    Total product             3,356,0
    tankers DWT                  00
                              =======

                               Vessel
                               size                 Vessel
    Vessel Name     Yard       (cbm)                 type
    -----------    -----      -------              --------
    LPG
    Carriers
103 Hull 2336       DSME (31)  84,000                VLGC
104 Hull 2337       DSME (31)  84,000                VLGC
105 Hull 2338       DSME (31)  84,000                VLGC
106 Hull S749       HSHI (32)  84,000                VLGC
107 Hull S750       HSHI (32)  84,000                VLGC
108 Hull S751       HSHI (32)  84,000                VLGC
109 Hull S752       HSHI (32)  84,000                VLGC
110 Hull S755       HSHI (32)  84,000                VLGC
111 Hull S756       HSHI (32)  84,000                VLGC
112 Hull S753       HSHI (32)  84,000                VLGC
113 Hull S754       HSHI (32)  84,000                VLGC


                              -------
    Total LPG carriers
    (cbm)                     924,000
                              =======

(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 options to extend each 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
     $15,000 per day.
(16) We have an option to extend the charter for an additional year at
     $15,700 per day.
(17) We have an option to extend the charter for an additional year at
     $16,000 per day.
(18) 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.
(19) We have an option to extend the charter for an additional year at
     $14,500 per day.
(20) 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.
(21) We have an option to extend the charter for an additional year at
     $15,000 per day.
(22) We have an option to extend the charter for an additional six months at
     $14,250 per day.
(23) We have extended the charter for six months at $15,000 per day
     beginning in November 2013. Subsequent to that, we have options to
     extend the charter for two consecutive six month periods at $15,250 per
     day, and $15,500 per day respectively.
(24) We have options to extend the charter for two consecutive six month
     periods at $15,250 per day and $15,500 per day respectively.
(25) We have an option to extend the charter for one year at $17,550 per
     day.
(26) We have options to extend the charter for two consecutive six month
     periods at $16,500 per day and $16,750 per day, respectively.
(27) These newbuilding vessels are being constructed at HMD (Hyundai Mipo
     Dockyard Co. Ltd. of South Korea). 24 vessels are expected to be
     delivered in 2014 and two vessels in the second quarter of 2015.
(28) These newbuilding vessels are being constructed at SPP (SPP
     Shipbuilding Co., Ltd. of South Korea ). 12 vessels are expected to be
     delivered during the second, third and fourth quarters of 2014 and four
     in the first and second quarters of 2015.
(29) 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.
(30) 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.
(31) These newbuilding vessels are being constructed at DSME (Daewoo
     Shipbuilding and Marine Engineering). One vessel is expected to be
     delivered in the third quarter and two in the fourth quarter of 2015.
(32) These newbuilding vessels are being constructed at HSHI (Hyundai Samho
     Heavy Industries Co., Ltd.). Two vessels are expected to be delivered
     each in the second quarter, third and fourth quarters of 2015 and two
     in the first quarter 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 medium-sized tanker vessels and gas carriers. The Company intends to acquire modern, high-quality tankers and gas carriers through timely and selective acquisitions. The Company is currently concentrating on product or coated tankers and gas carriers because of the fundamentals of these segments, which the Company believes includes:

  • increasing demand for refined products and LPG,
  • increasing ton miles (distance between new refiners 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 October 28, 2013, the Company’s board of directors declared a quarterly cash dividend of $0.07 per share, payable on December 18, 2013 to all shareholders as of December 3, 2013 (the record date). On September 25, 2013, the Company paid a quarterly cash dividend on its common stock of $0.035 per share to all shareholders as of September 10, 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 October 28, 2013, 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 19 tankers (one LR2 tanker, four LR1 tankers, one Handymax tanker, 12 MR tankers, and one post-Panamax tanker) with an average age of 4.0 years, time charters-in 29 product tankers (eight LR2, four LR1, eight MR and nine Handymax tankers), and has contracted for 65 newbuilding vessels (28 MR, 12 LR2, and 14 Handymax ice class-1A product tankers, and 11 Very Large Gas Carriers), 44 of which are expected to be delivered within 2014, 19 within 2015 and the remaining two in the first quarter of 2016. 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,
                                 ------------------------------------------
                                         2013                  2012
                                 --------------------  --------------------
In thousands of U.S. dollars
 except per share and share data   Amount   Per share    Amount   Per share
                                 ---------  ---------  ---------  ---------
  Net income / (loss)            $     667$    0.00$ (12,511)$   (0.30)
  Adjustments:
    Loss from sale of vessels            -       0.00      5,879       0.14
    Write off of deferred
     financing fees                      -       0.00      2,977       0.07
    Unrealized gain on
     derivative financial
     instruments                      (118)     (0.00)       (38)     (0.00)
                                 ---------  ---------  ---------  ---------
  Total adjustments                   (118)     (0.00)     8,818       0.21
                                 ---------  ---------  ---------  ---------
  Adjusted net income/ (loss)    $     549$    0.00$  (3,693)$   (0.09)
                                 =========  =========  =========  =========

                                   For the nine months ended September 30,
                                 ------------------------------------------
                                         2013                  2012
                                 --------------------  --------------------
                                   Amount   Per share    Amount   Per share
                                 ---------  ---------  ---------  ---------
  Net income / (loss)            $  11,243$    0.08$ (21,656)$   (0.54)
  Adjustments:
    Loss from sale of vessels            -       0.00     10,404       0.26
    Write off of deferred
     financing fees                      -       0.00      2,977       0.07
    Unrealized gain on
     derivative financial
     instruments                      (483)     (0.00)       (38)     (0.00)
                                 ---------  ---------  ---------  ---------
  Total adjustments                   (483)     (0.00)    13,343       0.33
                                 ---------  ---------  ---------  ---------
  Adjusted net income/ (loss)    $  10,760$    0.08$  (8,313)$   (0.21)
                                 =========  =========  =========  =========



 

Adjusted EBITDA

 

                                 For the three months   For the nine months
                                  ended September 30,   ended September 30,
                                 --------------------  --------------------
In thousands of U.S. dollars        2013       2012       2013       2012
                                 ---------  ---------  ---------  ---------
Net income / (loss)              $     667$ (12,511)$  11,243$ (21,656)
  Financial expenses                   448      4,108      2,323      6,583
  Unrealized gain on derivative
   financial instruments              (118)       (38)      (483)       (38)
  Financial income                    (400)        (4)      (950)        (6)
  Depreciation                       6,377      3,389     16,665     10,213
  Amortization of restricted
   stock                             3,856        892      6,738      2,598
  Loss from sale of vessels              -      5,879          0     10,404
                                 ---------  ---------  ---------  ---------
  Adjusted EBITDA                $  10,830$   1,715$  35,536$   8,098
                                 =========  =========  =========  =========



 

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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