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Scorpio Tankers Inc. Announces Financial Results for the First Quarter of 2014, a $100.0 Million Stock Buyback Program, and Increases Its Quarterly Dividend
MONACO — (Marketwired) — 04/28/14 — Scorpio Tankers Inc. (NYSE: STNG) (“Scorpio Tankers,” or the “Company”) today reported its results for the three months ended March 31, 2014.
Results for the three months ended March 31, 2014 and 2013
For the three months ended March 31, 2014, the Company had net income of $53.3 million, or $0.28 basic and diluted earnings per share. The Company’s adjusted net income was $1.9 million (see Non-GAAP Measure section below), or $0.01 basic and diluted earnings per share, which excludes (i) a gain of $51.4 million, or $0.27 per share, resulting from the previously announced sales agreement of seven Very Large Crude Carriers (‘VLCCs’) under construction, and (ii) an unrealized gain on derivative financial instruments of $47,000 or $0.00 per share.
For the three months ended March 31, 2013, the Company had net income of $6.6 million, or $0.08 basic and diluted earnings per share.
Declaration of Dividend
On April 28, 2014, the Scorpio Tankers’ board of directors declared a quarterly cash dividend of $0.09 per share, payable on June 12, 2014 to all shareholders as of May 27, 2014 (the record date). As of April 28, 2014, there are 199,718,567 shares outstanding.
Stock Buyback Program
Summary of Recent and First Quarter Significant Events:
- Closed on the previously announced sales agreement of seven VLCCs under construction for a gain of $51.4 million.
- Took delivery of three MR tankers under the Company’s Newbuilding Program, STI Texas City, in March 2014, and STI Opera and STI Duchessa, in January 2014.
- Converted the Newbuilding Credit Facility from a term loan into a reducing revolving credit facility giving the Company the ability to draw down and repay the available commitments under the facility when needed.
- Sold 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.
- Declared and paid a quarterly cash dividend on the Company’s common stock of $0.08 per share in March 2014.
Newbuilding Credit Facility conversion to a Revolver
In March 2014, the Company converted its Newbuilding Credit Facility with Credit Agricole Corporate and Investment Bank and Skandinaviska Enskilda Banken AB from a term loan to a reducing revolving credit facility. This gives the Company the ability to draw down and repay the available commitments under the facility when needed. All other terms and definitions remain unchanged.
The amount available under this facility is $82.3 million and is fully drawn as of the date of this press release. The amount available will reduce by $1.5 million each quarter until the maturity date in June 2019.
Vessel sales
As part of the Company’s commitment to a modern fuel efficient fleet, the Company recently sold three of its older vessels:
- Two, 2004 built, LR1 product tankers, Noemi and Senatore, for an aggregate selling price of $44.0 million. These sales closed in March and April 2014, respectively.
- The 2008 built LR2 product tanker, STI Spirit, for $30.2 million in April 2014.
The Company also made repayments of the debt associated with the three vessels sold for $43.9 million in aggregate. These repayments and their resultant impact on our credit facilities are further described below.
Time charter-in update
In April 2014, the Company extended the time charter on an MR tanker that is currently time chartered-in. The term of the agreement is for one year at $14,850 per day beginning in May 2014. The Company has options to extend the charter for up to two consecutive one year periods at $15,200 per day and $16,200 per day, respectively.
In April 2014, the Company extended the time charter on an LR2 that is currently time chartered-in. The term of the agreement is for six months at $15,250 per day beginning in May 2014. The Company has an option to extend the charter for up to six months at $15,500 per day.
In March 2014, the Company extended the time charter on a Handymax tanker that is currently time chartered-in. The term of the extension is for one year at $13,550 per day and began in April 2014.
In March 2014, the Company entered into a new time charter-in agreement on an LR1 vessel for one year at $15,000 per day. The Company has options to extend the charter for up to two consecutive one year periods at $16,250 per day and $17,250 per day, respectively. This vessel was delivered in March 2014.
In February 2014, the Company extended the time charters on two Handymax tankers that are currently time chartered-in. The terms of the agreements are for one year at $13,650 per day beginning in April and May 2014. The time charter beginning in April 2014 contains a 50% profit and loss sharing provision whereby the Company will split all of the vessel’s profits and losses above or below the daily base rate with the vessel’s owner.
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 February 2014, the Company entered into a new time charter-in agreement on an LR2 vessel for one year at $15,000 per day. The Company has an option to extend the charter for an additional six months at $16,250 per day. This vessel was delivered in March 2014.
Conference Call
The Company will have a conference call on April 28, 2014 at 11:00 AM 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(866)-675-4790 (U.S.) or 1(913)-312-0643 (International). The conference participant passcode is 3528758. 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=99087
Current Liquidity
As of April 25, 2014, the Company had $151.7 million in cash.
Debt
2010 Credit Facility
In January 2014, the Company drew down $72.4 million from the 2010 Revolving Credit Facility.
In March 2014, the Company repaid $22.5 million into this facility as a result of the sales of Noemi and Senatore. Consequently, the availability of this facility reduced by such amount and the quarterly reduction reduced to $2.1 million from $3.1 million per quarter. Additionally, we wrote off $0.2 million of deferred financing fees as a result of this repayment in the first quarter of 2014.
The amount available under the facility is now $47.8 million and is fully drawn as of the date of this press release.
2011 Credit Facility
In January 2014, the Company drew down $52.0 million from the 2011 Credit Facility. In connection with this drawdown, STI Duchessa, STI Le Rocher and STI Larvotto were provided as collateral under the facility. There are no further amounts available to draw under this facility.
2013 Credit 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 March 2014, the Company drew down $20.5 million from the 2013 Credit Facility to partially finance the delivery of STI Texas City.
STI Spirit Credit Facility
In April 2014, the Company repaid the outstanding balance under its STI Spirit Credit Facility of $21.4 million as a result of the sale of STI Spirit. $0.3 million of deferred financing fees will be written off as a result of this repayment in the second quarter of 2014.
As of April 28, 2014, the Company’s outstanding debt balance, and amount available to draw, is as follows:
As of April 28, 2014 ------------------------------------- In millions of U.S. dollars Amount outstanding Amount available ------------------ ------------------ 2010 Revolving Credit Facility $ 47.8 $ - STI Spirit Credit Facility - - 2011 Credit Facility 114.9 - Newbuilding Credit Facility 82.3 - 2013 Credit Facility 84.7 440.3(1) K-Sure Credit Facility - 458.3(2) KEXIM Credit Facility - 429.6(2) ------------------ ------------------ Total $ 329.7 $ 1,328.2 ================== ================== (1) Availability can be used to finance the lesser of 60% of the contract price for a qualifying newbuilding vessel and such vessel's fair market value at the date of drawdown. (2) Availability can be used to finance the lesser of 60% of the newbuilding contract price and 74% of the fair market value of the relevant vessel specified in the agreement.
Newbuilding Program
During the first quarter of 2014, the Company made $190.9 million of installment payments on its newbuilding vessels, which included an aggregate of $60.0 million for the delivery installment payments for STI Opera, STI Duchessa and STI Texas City. The Company currently has 55 newbuilding vessel orders with HMD, SPP, HSHI and DSME (29 MRs, 14 Handymaxes and 12 LR2s). The estimated future payment dates and amounts are as follows*:
Q2 2014 $ 347.9 million** Q3 2014 477.4 million Q4 2014 258.3 million Q1 2015 186.8 million Q2 2015 147.4 million -------------------- Total $ 1,417.8 million ====================
*These are estimates only and are subject to change as construction progresses.
**$22.8 million has been paid prior to the date of this press release.
Explanation of Variances on the First Quarter of 2014 Financial Results Compared to the First Quarter of 2013
For the three months ended March 31, 2014, the Company recorded net income of $53.3 million compared to net income of $6.6 million in the three months ended March 31, 2013. The following were the significant changes between the two periods:
- Time charter equivalent, or TCE revenue, a non-IFRS measure, is vessel revenues less voyage expenses (including bunkers and port charges). TCE revenue is included herein because it is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company’s performance irrespective of changes in the mix of charter types (i.e., spot charters, time charters, and pool charters), and it provides useful information to investors and management. The following table depicts TCE revenue for the three months ended March 31, 2014 and 2013:
For the three months ended March 31, ------------------------------------ In thousands of U.S. dollars 2014 2013 ----------------- ----------------- Vessel revenue 76,734 $ 44,924 Voyage expenses (3,974) (1,200) ----------------- ----------------- TCE revenue $ 72,760 $ 43,724 ================= =================
- TCE revenue increased $29.0 million to $72.8 million. This increase was primarily driven by an increase in the average number of operating vessels (owned and time chartered-in) to 50.7 from 29.6 for the three months ended March 31, 2014 and 2013, respectively. This increase was offset by an overall decrease in time charter equivalent revenue per day to $15,906 per day from $16,597 per day for the three months ended March 31, 2014 and 2013, respectively (see the breakdown of daily TCE averages below).
- Vessel operating costs increased $5.1 million to $13.1 million from $8.0 million for the three months ended March 31, 2014 and 2013, respectively. This increase was primarily driven by an increase in the Company’s owned fleet to an average of 20.2 vessels from 12.8 vessels for the three months ended March 31, 2014 and 2013, respectively. The increase was augmented by an overall decrease in vessel operating costs per day to $7,185 per day from $6,840 per day for the three months ended March 31, 2014 and 2013, respectively (see the breakdown of daily TCE averages below).
- Charterhire expense increased $19.7 million to $40.2 million from $20.5 million as a result of an increase in the average number of vessels time chartered-in to 30.5 from 16.8 for the three months ended March 31, 2014 and 2013, respectively. See the Company’s Fleet List below for the terms of these agreements.
- Depreciation expense increased $1.2 million to $6.0 million from $4.8 million primarily as a result of an increase in the average number of owned vessels to 20.2 from 12.8 for the three months ended March 31, 2014 and 2013, respectively.
- General and administrative expenses increased $8.2 million to $11.0 million from $2.8 million. This increase was driven by a $6.5 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.
- Gain on sale of VLCCs of $51.4 million relates to the gain recorded as a result of the sale of our VLCCs under construction.
Scorpio Tankers Inc. and Subsidiaries Condensed Consolidated Statement of Profit or Loss (unaudited) For the three months ended March 31, ------------------------------------ In thousands of U.S. dollars except per share and share data 2014 2013 ----------------- ----------------- Revenue Vessel revenue $ 76,734 $ 44,924 Operating expenses Vessel operating costs (13,070) (7,971) Voyage expenses (3,974) (1,200) Charterhire (40,173) (20,496) Depreciation (5,953) (4,767) General and administrative expenses (10,966) (2,759) Gain on sale of VLCCs 51,419 - ----------------- ----------------- Total operating expenses (22,717) (37,193) ----------------- ----------------- Operating income 54,017 7,731 ----------------- ----------------- Other (expense) and income, net Financial expenses (399) (1,399) Realized gain on derivative financial instruments 17 68 Unrealized gain on derivative financial instruments 47 44 Financial income 27 181 Share of loss from associate (324) - Other expenses, net (47) (15) ----------------- ----------------- Total other expenses, net (679) (1,121) ----------------- ----------------- Net income $ 53,338 $ 6,610 ================= ================= Earnings per share Basic and diluted $ 0.28 $ 0.08
Scorpio Tankers Inc. and Subsidiaries Condensed Consolidated Balance Sheet (unaudited) As of ------------------------------------ In thousands of U.S. dollars March 31, 2014 December 31, 2013 ----------------- ----------------- Assets Current assets Cash and cash equivalents $ 194,987 $ 78,845 Accounts receivable 84,448 72,542 Prepaid expenses and other current assets 3,855 2,277 Inventories 4,553 2,857 Vessels held for sale 61,410 82,649 ----------------- ----------------- Total current assets 349,253 239,170 ----------------- ----------------- Non-current assets Vessels and drydock 631,385 530,270 Vessels under construction 649,718 649,526 Other assets 30,213 17,907 Investment in associate 209,479 209,803 ----------------- ----------------- Total non-current assets 1,520,795 1,407,506 ----------------- ----------------- Total assets $ 1,870,048$ 1,646,676 ================= ================= Current liabilities Bank loans 27,744 10,453 Accounts payable 21,977 20,696 Accrued expenses 7,940 7,251 Derivative financial instruments 482 689 Bank loans related to vessels held for sale 27,617 21,397 ----------------- ----------------- Total current liabilities 85,760 60,486 ----------------- ----------------- Non-current liabilities Bank loans 289,273 135,279 Derivative financial instruments 51 188 ----------------- ----------------- Total non-current liabilities 289,324 135,467 ----------------- ----------------- Total liabilities 375,084 195,953 ----------------- ----------------- Shareholders' equity Issued, authorized and fully paid in share capital: Share capital 2,021 1,999 Additional paid in capital 1,527,802 1,536,945 Treasury shares (7,938) (7,938) Hedging reserve (188) (212) Accumulated deficit (26,733) (80,071) ----------------- ----------------- Total shareholders' equity 1,494,964 1,450,723 ----------------- ----------------- Total liabilities and shareholders' equity $ 1,870,048$ 1,646,676 ================= ================= Scorpio Tankers Inc. and Subsidiaries Condensed Consolidated Statement of Cash Flows (unaudited) For the three months ended March 31, ------------------------------------ In thousands of U.S. dollars 2014 2013 ----------------- ----------------- Operating activities Net income $ 53,338 $ 6,610 Gain on sale of VLCCs (51,419) - Depreciation 5,953 4,767 Amortization of restricted stock 6,955 500 Amortization of deferred financing fees 155 255 Straight-line adjustment for charterhire expense 3 (31) Share of loss from associate 324 - Unrealized gain on derivative financial instruments (47) (44) ----------------- ----------------- 15,262 12,057 ----------------- ----------------- Changes in assets and liabilities: Drydock payments - (1,202) Increase in inventories (1,700) (719) Increase in accounts receivable (11,906) (11,211) Increase in prepaid expenses and other current assets (935) (1,006) Increase in other assets (47) - Increase in accounts payable 3,125 593 Increase / (decrease) in accrued expenses 1,759 (88) Interest rate swap termination payment (274) - ----------------- ----------------- (9,978) (13,633) ----------------- ----------------- Net cash inflow / (outflow) from operating activities 5,284 (1,576) ----------------- ----------------- Investing activities Acquisition of vessels and payments for vessels under construction (199,055) (155,180) Proceeds from disposal of vessels 162,950 - ----------------- ----------------- Net cash outflow from investing activities (36,105) (155,180) ----------------- ----------------- Financing activities Bank loan repayment (27,674) (1,838) Bank loan drawdown 209,100 34,375 Debt issuance costs (18,345) (343) Gross proceeds from issuance of common stock - 465,037 Equity issuance costs (42) (15,774) Dividends paid (16,076) - ----------------- ----------------- Net cash inflow from financing activities 146,963 481,457 ----------------- ----------------- Increase in cash and cash equivalents 116,142 324,701 Cash and cash equivalents at January 1, 78,845 87,165 ----------------- ----------------- Cash and cash equivalents at March 31, $ 194,987 $ 411,866 ================= ================= Scorpio Tankers Inc. and Subsidiaries Other operating data for the three months ended March 31, 2014 and 2013 (unaudited) For the three months ended March 31, ------------------------------------- 2014 2013 ------------------ ------------------ Adjusted EBITDA(1)(in thousands of U.S. dollars) $ 15,896 $ 13,051 Average Daily Results Time charter equivalent per day(2) $ 15,906 $ 16,597 Vessel operating costs per day(3) 7,185 6,840 Aframax/LR2 TCE per revenue day (2) $ 14,342 $ 19,172 Vessel operating costs per day(3) 7,386 6,960 Panamax/LR1 TCE per revenue day (2) $ 20,063 $ 12,895 Vessel operating costs per day(3) 8,372 7,982 MR TCE per revenue day (2) $ 14,262 $ 18,259 Vessel operating costs per day(3) 6,466 5,852 Handymax TCE per revenue day (2) $ 16,736 $ 16,343 Vessel operating costs per day(3) 10,814 6,698 Fleet data Average number of owned vessels 20.2 12.8 Average number of time chartered-in vessels 30.5 16.8 (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 April 28, 2014 Ice Vessel Name Year Built DWT 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 - SMRP(4) MR 15 STI Opera 2014 52,000 - Spot (5) MR 16 STI Texas City 2014 - Time Charter MR 52,000 (6) 17 STI Harmony 2007 73,919 1A SPTP (2) LR1 18 STI Heritage 2008 73,919 1A SPTP (2) LR1 19 Venice 2001 1C Spot Post- 81,408 Panamax --------- Total owned DWT 1,046,391 ========= Year Daily Vessel Built Ice Employment Vessel Base Expiry Name DWT class type Rate (7) ---------- ---- --------- ----- --------- -------- ------- --------- Time chartered-in vessels 20 Kraslava 2007 37,258 1B SHTP (1) Handymax $12,800 18-May-15 21 Krisjanis 2007 1B SHTP (1) Handymax $13,650 14-Apr-15 (8) Valdemars 37,266 22 Jinan 2003 37,285 - SHTP (1) Handymax $12,600 28-Apr-15 23 Iver 2007 - SHTP (1) Handymax $12,500 03-Mar-15 (9) Progress 37,412 24 Iver 2007 - SHTP (1) Handymax $12,500 20-Oct-14 (10) Prosperity 37,455 25 Histria 2007 - SHTP (1) Handymax $13,550 04-Apr-15 (11) Azure 40,394 26 Histria 2006 - SHTP (1) Handymax $12,800 17-Jul-14 (12) Coral 40,426 27 Histria 2005 - SHTP (1) Handymax $12,800 15-Jul-14 (12) Perla 40,471 28 STX Ace 6 2007 46,161 - SMRP(4) MR $14,150 17-May-14 (13) 29 Targale 2007 49,999 - SMRP(4) MR $14,500 17-May-15 (14) 30 Gan- 2010 - SMRP(4) MR $14,150 20-May-14 Triumph 49,999 31 Nave Orion 2013 49,999 - SMRP(4) MR $14,300 25-Mar-15 (15) 32 Gan-Trust 2013 51,561 - SMRP(4) MR $16,250 06-Jan-16 (16) 33 Usma 2007 52,684 1B SMRP(4) MR $14,500 03-Jan-15 34 SN 2003 - SPTP (2) LR1 $11,250 15-May-15 (17) Federica 72,344 35 SN Azzura 2003 72,344 - SPTP (2) LR1 $13,600 25-Dec-14 36 King 2008 - SPTP (2) LR1 $14,000 08-Aug-14 (18) Douglas 73,666 37 Hellespont 2007 - SPTP (2) LR1 $14,250 14-Aug-14 Promise 73,669 38 Hellespont 2006 - SPTP (2) LR1 $15,000 18-Mar-15 (19) Progress 73,728 39 FPMC P 2009 - SPTP (2) LR1 $14,525 09-Sep-15 Eagle 73,800 40 FPMC P 2011 - SLR2P (3) LR2 $15,000 02-Nov-14 (20) Hero 99,995 41 FPMC P 2012 - SLR2P (3) LR2 $15,250 09-Jul-14 (21) Ideal 99,993 42 Swarna 2010 SLR2P (3) LR2 $15,000 11-Mar-15 (22) Jayanti 104,895 43 Densa 2013 - SLR2P (3) LR2 $16,500 17-Sep-14 (23) Alligator 105,708 44 Khawr 2006 - SLR2P (3) LR2 $15,400 11-Jul-15 Aladid 106,003 45 Fair Seas 2008 115,406 - SLR2P (3) LR2 $16,500 21-Aug-14 46 Southport 2008 115,462 SLR2P (3) LR2 $15,700 10-Dec-14 47 Four Sky 2010 115,708 - SLR2P (3) LR2 $16,250 02-Sep-14 --------- Total time chartered-in DWT 1,911,091 =========
Newbuildings currently under construction Ice Vessel Name Yard DWT class Vessel type --------------------- ---------- ---------- ---------- ------------ Product tankers 48 Hull 2451 HMD (24) 38,000 1A Handymax 49 Hull 2452 HMD (24) 38,000 1A Handymax 50 Hull 2453 HMD (24) 38,000 1A Handymax 51 Hull 2454 HMD (24) 38,000 1A Handymax 52 Hull 2462 HMD (24) 38,000 1A Handymax 53 Hull 2463 HMD (24) 38,000 1A Handymax 54 Hull 2464 HMD (24) 38,000 1A Handymax 55 Hull 2465 HMD (24) 38,000 1A Handymax 56 Hull 2476 HMD (24) 38,000 1A Handymax 57 Hull 2477 HMD (24) 38,000 1A Handymax 58 Hull 2478 HMD (24) 38,000 1A Handymax 59 Hull 2479 HMD (24) 38,000 1A Handymax 60 Hull 2499 HMD (24) 38,000 1A Handymax 61 Hull 2500 HMD (24) 38,000 1A Handymax 62 Hull 2391 HMD (24) 52,000 MR 63 Hull 2392 HMD (24) 52,000 MR 64 Hull 2449 HMD (24) 52,000 MR 65 Hull 2450 HMD (24) 52,000 MR 66 Hull 2458 HMD (24) 52,000 MR 67 Hull 2459 HMD (24) 52,000 MR 68 Hull 2460 HMD (24) 52,000 MR 69 Hull 2461 HMD (24) 52,000 MR 70 Hull 2492 HMD (24) 52,000 MR 71 Hull 2493 HMD (24) 52,000 MR 72 Hull 2445 HMD (24) 52,000 MR 73 Hull 2474 HMD (24) 52,000 MR 74 Hull 2475 HMD (24) 52,000 MR 75 Hull 2490 HMD (24) 52,000 MR 76 Hull S1138 SPP (25) 52,000 MR 77 Hull S1139 SPP (25) 52,000 MR 78 Hull S1140 SPP (25) 52,000 MR 79 Hull S1141 SPP (25) 52,000 MR 80 Hull S1142 SPP (25) 52,000 MR 81 Hull S1143 SPP (25) 52,000 MR 82 Hull S1144 SPP (25) 52,000 MR 83 Hull S1145 SPP (25) 52,000 MR 84 Hull S1167 SPP (25) 52,000 MR 85 Hull S1168 SPP (25) 52,000 MR 86 Hull S1169 SPP (25) 52,000 MR 87 Hull S1170 SPP (25) 52,000 MR 88 Hull S5123 SPP (25) 52,000 MR 89 Hull S5124 SPP (25) 52,000 MR 90 Hull S5125 SPP (25) 52,000 MR 91 Hull S703 HSHI (26) 114,000 LR2 92 Hull S704 HSHI (26) 114,000 LR2 93 Hull S705 HSHI (26) 114,000 LR2 94 Hull S706 HSHI (26) 114,000 LR2 95 Hull S709 HSHI (26) 114,000 LR2 96 Hull S710 HSHI (26) 114,000 LR2 97 Hull S715 HSHI (26) 114,000 LR2 98 Hull S716 HSHI (26) 114,000 LR2 99 Hull 5394 DSME (27) 114,000 LR2 100 Hull 5395 DSME (27) 114,000 LR2 101 Hull 5398 DSME (27) 114,000 LR2 102 Hull 5399 DSME (27) 114,000 LR2 ---------- Total newbuilding product tankers DWT 3,408,000 ========== ---------- Total Fleet DWT 6,365,482 ========== (1) This vessel operates in or is expected to operate in the Scorpio Handymax Tanker Pool (SHTP). SHTP is operated by Scorpio Commercial Management (SCM). SHTP and SCM are related parties to the Company. (2) This vessel operates in or is expected to operate in the Scorpio Panamax Tanker Pool (SPTP). SPTP is operated by SCM. SPTP is a related party to the Company. (3) This vessel operates in or is expected to operate in the Scorpio LR2 Pool (SLR2P). SLR2P is operated by SCM. SLR2P is a related party to the Company. (4) This vessel operates in or is expected to operate in the Scorpio MR Pool (SMRP). SMRP is operated by SCM. SMRP is a related party to the Company. (5) This vessel is on a short term time charter for up to 120 days at approximately $19,000 per day. (6) This vessel is on a time charter agreement for two years at $16,000 per day. The agreement also contains a 50% profit sharing provision whereby we split all of the vessel's profits above the daily base rate with the charterer. (7) Redelivery from the charterer is plus or minus 30 days from the expiry date. (8) The agreement also contains a 50% profit and loss sharing provision whereby we split all of the vessel's profits and losses above or below the daily base rate with the vessel's owner. (9) 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 two consecutive one year periods at $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) 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. (17) 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. (18) We have an option to extend the charter for an additional year at $15,000 per day. (19) We have options to extend the charter for up to two consecutive one year periods at $16,250 per day and $17,250 per day, respectively. (20) We have an option to extend the charter for an additional six month at $15,500 per day. (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 an additional six months at $16,250 per day. (23) We have an option to extend the charter for one year at $17,550 per day. (24) 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. (25) These newbuilding vessels are being constructed at SPP (SPP Shipbuilding Co., Ltd. of South Korea). 11 vessels are expected to be delivered in 2014 and four in the first and second quarters of 2015. (26) 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. (27) 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.
Business Strategy, Dividend Policy, and Stock Buyback Program
Business Strategy
The Company’s primary objectives are to profitably grow the business and emerge as a major operator of product tanker vessels. The Company intends to acquire modern, high-quality tankers through timely and selective acquisitions. The Company is currently concentrating on these sectors because of their attractive fundamentals which the Company believes includes:
- increasing demand for refined products.
- increasing ton miles (distance between production and areas of demand), and
- reduced order book.
Dividend Policy
The declaration and payment of dividends is subject at all times to the discretion of the Company’s board of directors. The timing and amount of dividends, if any, depends on the Company’s earnings, financial condition, cash requirements and availability, fleet renewal and expansion, restrictions in the loan agreements, the provisions of Marshall Islands law affecting the payment of dividends and other factors.
On April 28, 2014, the Company’s board of directors declared a quarterly cash dividend of $0.09 per share, payable on June 12, 2014 to all shareholders as of May 27, 2014 (the record date). On March 26, 2014, the Company paid a quarterly cash dividend on its common stock of $0.08 per share to all shareholders as of March 11, 2014 (the record date).
Share Buyback Program
On July 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 April 28, 2014, the Company has purchased $18.9 million of shares in the open market at an average price of $7.80 and has authorization to purchase an additional $100 million of shares.
About Scorpio Tankers Inc.
Scorpio Tankers Inc. is a provider of marine transportation of petroleum products worldwide. Scorpio Tankers Inc. currently owns 19 tankers (two LR1 tankers, one Handymax tanker, 15 MR tankers, and one post-Panamax tanker) with an average age of 2.9 years, time charters-in 28 product tankers (eight LR2, six LR1, six MR and eight Handymax tankers), and has contracted for 55 newbuilding product tankers (29 MR, 12 LR2, and 14 Handymax ice class-1A product tankers), 42 are expected to be delivered to the Company throughout 2014 and 13 in 2015. 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 March 31, 2014 ------------------------- In thousands of U.S. dollars except per share and share data Amount Per share ----------- ----------- Net income $ 53,338$ 0.28 Adjustments: Unrealized gain on derivative financial instruments (47) (0.00) Gain on sale of VLCCs (51,419) (0.27) ----------- ----------- Total adjustments (51,466) (0.27) ----------- ----------- Adjusted net income $ 1,872$ 0.01 =========== ===========
Adjusted EBITDA
For the three months ended March 31, ------------------------ In thousands of U.S. dollars 2014 2013 ----------- ----------- Net income $ 53,338$ 6,610 Financial expenses 399 1,399 Unrealized gain on derivative financial instruments (47) (44) Financial income (27) (181) Depreciation 5,953 4,767 Depreciation component of our net loss from associate 744 - Amortization of restricted stock 6,955 500 Gain on sale of VLCCs (51,419) - ----------- ----------- Adjusted EBITDA $ 15,896$ 13,051 =========== ===========
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.