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Scorpio Tankers Inc. Announces Financial Results for the Fourth Quarter of 2014 and Declaration of a Quarterly Dividend
MONACO — (Marketwired) — 03/02/15 — Scorpio Tankers Inc. (NYSE: STNG) (“Scorpio Tankers,” or the “Company”) today reported its results for the three months and year ended December 31, 2014.
Results for the three months ended December 31, 2014 and 2013
For the three months ended December 31, 2014, the Company’s adjusted net income was $18.3 million (see Non-GAAP Measure section below), or $0.12 basic and diluted earnings per share, which excluded (i) a write down of $17.9 million, or $0.12 per share, relating to the discontinuation of equity method accounting for our investment in Dorian LPG Ltd. (“Dorian”) as of October 29, 2014 and the designation of STI Harmony and STI Heritage as held for sale and (ii) an unrealized gain on derivative financial instruments of $0.1 million, or $0.00 per share. For the three months ended December 31, 2014, the Company had net income of $0.5 million, or $0.00 basic and diluted earnings per share.
For the three months ended December 31, 2013 the Company’s adjusted net loss was $14.5 million (see Non-GAAP Measure section below), or $0.08 basic and diluted loss per share, which excluded (i) a gain of $41.4 million, or $0.23 per share, resulting from our initial investment in Dorian, (ii) a write down of $21.2 million, or $0.12 per share, resulting from the designation of certain older vessels as held for sale and (iii) an unrealized gain on derivative financial instruments of $0.1 million, or $0.00 per share. For the three months ended December 31, 2013, the Company had net income of $5.8 million, or $0.03 basic and diluted earnings per share.
Results for the year ended December 31, 2014 and 2013
For the year ended December 31, 2014, the Company’s adjusted net income was $7.7 million (see Non-GAAP Measure section below), or $0.04 basic and diluted earnings per share, which excluded (i) a gain of $51.4 million, or $0.30 per share, resulting from the previously announced sales of seven Very Large Crude Carriers (‘VLCCs’) under construction in March 2014, (ii) a gain of $10.9 million, or $0.06 per share, resulting from the previously announced acquisition of 7,500,000 common shares of the Company in exchange for 3,422,665 shares of Dorian in June 2014, (iii) a write down of $17.9 million, or $0.10 per share, relating to the discontinuation of equity method accounting for our investment in Dorian as of October 29, 2014, and the designation of STI Harmony and STI Heritage as held for sale, (iv) a write-off of $0.3 million, or $0.00 per share, for deferred financing fees relating to the repayment of the STI Spirit Credit Facility in April 2014 and (v) an unrealized gain on derivative financial instruments of $0.3 million, or $0.00 per share. For the year ended December 31, 2014, the Company had net income of $52.1 million, or $0.30 basic and diluted earnings per share.
For the year ended December 31, 2013, the Company’s adjusted net loss was $3.7 million (see Non-GAAP Measure section below), or $0.03 basic and diluted loss per share, which excluded (i) a gain of $41.4 million, or $0.28 per share, resulting from our initial investment in Dorian, (ii) a write down of $21.2 million, or $0.14 per share, resulting from the designation of certain older vessels as held for sale and (iii) an unrealized gain on derivative financial instruments of $0.6 million, or $0.00 per share. For the year ended December 31, 2013, the Company had net income of $17.0 million, or $0.12 basic and $0.11 diluted earnings per share.
Declaration of Dividend
On February 26, 2015, the Scorpio Tankers’ board of directors declared a quarterly cash dividend of $0.12 per share, payable on March 30, 2015 to all shareholders as of March 13, 2015 (the record date). As of February 26, 2015, there were 163,827,903 shares outstanding.
First Quarter 2015 Revenue Update and Summary of Recent and Fourth Quarter Significant Events:
- Thus far in the first quarter of 2015, we have fixed 75% of our voyage days at approximately:
- $26,000 per day for the LR2s
- $22,000 per day for the LR1s
- $18,000 per day for the MRs
- $19,500 per day for the Handymaxes
- Recently took delivery of three vessels under the Company’s Newbuilding Program, two LR2’s, STI Veneto and STI Alexis and one MR, STI Bronx. The Company has taken delivery of 8 vessels under its Newbuilding Program during 2015.
- Reached an agreement in December 2014 with Scorpio Bulkers Inc., a related party, to purchase newbuilding contracts for four LR2 product tankers for $51.0 million each to be constructed at shipyards in South Korea and options to purchase two additional LR2 newbuilding contracts at $52.5 million each. The options expire on May 31, 2015.
- Reached an agreement in November 2014 with an unrelated third party to purchase two LR2 product tankers under construction at Daehan Shipbuilding Co., Ltd. (“DHSC”) for approximately $60.0 million each. These vessels, STI Rose and STI Alexis, were delivered in January and February 2015, respectively.
- Issued $51.75 million of 7.50% Senior Unsecured Notes due 2017 in October 2014.
- Took delivery of 13 vessels under the Company’s Newbuilding Program (three LR2, five MR, and five ice-class 1A Handymax) during the fourth quarter of 2014.
- Paid a quarterly cash dividend on the Company’s common stock of $0.12 per share in December 2014.
- Reached agreements to sell three of the Company’s older vessels, Venice (2001 built Post-Panamax), STI Harmony (2007 built LR1), and STI Heritage (2008 built LR1) for approximately $74.0 million in aggregate. The sales of these vessels are expected to close in March 2015.
Newbuilding Vessel deliveries
In January and February 2015, the Company took delivery of eight vessels under its Newbuilding Program.
- STI Rose and STI Alexis, LR2 product tankers, were delivered from DHSC. Upon delivery, STI Rose began a voyage for 14 days at approximately $30,000 per day, and STI Alexis began a voyage for 52 days at approximately $33,500 per day.
- STI Veneto, an LR2 product tanker, was delivered from Hyundai Samho Heavy Industries Co. Ltd. (“HSHI”). Upon delivery, this vessel began a voyage for 60 days at approximately $32,000 per day.
- STI Tribeca, STI Gramercy and STI Bronx, MR product tankers, were delivered from SPP Shipbuilding Co., Ltd. of South Korea (“SPP”). Upon delivery, each vessel began a time charter for up to 120 days at approximately $18,000 per day.
- STI Hammersmith and STI Rotherhithe, Handymax product tankers, were delivered from Hyundai Mipo Dockyard of South Korea (“HMD”). Upon delivery, each vessel began a time charter for up to 120 days at approximately $14,000 per day.
The Company has taken delivery of 21 vessels under its Newbuilding Program with HSHI, DHSC, HMD, SPP and Daewoo Shipbuilding and Marine Engineering Co. Ltd. (“DSME”) since September 30, 2014. These deliveries are summarized as follows:
Month
Name delivered Type Shipyard
----------------- ----------------- ----------------- -----------------
1 STI Mayfair October 2014 MR SPP
2 STI Yorkville October 2014 MR HMD
3 STI Battersea October 2014 Handymax HMD
4 STI Wembley October 2014 Handymax HMD
5 STI Finchley November 2014 Handymax HMD
6 STI Clapham November 2014 Handymax HMD
7 STI Milwaukee November 2014 MR HMD
8 STI Battery November 2014 MR HMD
9 STI Sloane November 2014 LR2 HSHI
10 STI Broadway November 2014 LR2 DSME
11 STI Condotti November 2014 LR2 HSHI
12 STI Poplar December 2014 Handymax HMD
13 STI Soho December 2014 MR SPP
14 STI Tribeca January 2015 MR SPP
15 STI Hammersmith January 2015 Handymax HMD
16 STI Rotherhithe January 2015 Handymax HMD
17 STI Rose January 2015 LR2 DHSC
18 STI Gramercy January 2015 MR SPP
19 STI Veneto January 2015 LR2 HSHI
20 STI Alexis February 2015 LR2 DHSC
21 STI Bronx February 2015 MR SPP
Newbuilding vessel purchases
In December 2014, the Company reached an agreement with Scorpio Bulkers Inc., a related party, to purchase newbuilding contracts for four LR2 product tankers to be constructed at shipyards in South Korea and options to purchase two additional LR2 newbuilding contracts. The purchase price for each of the four LR2 newbuilding contracts is $51.0 million with scheduled vessel deliveries in the first three quarters of 2016. The purchase price for the two option contracts is fixed at $52.5 million for each contract with scheduled vessel deliveries in the fourth quarter of 2016. The options expire on May 31, 2015.
The independent members of the Company’s Board of Directors unanimously approved the transaction with Scorpio Bulkers Inc. described in the preceding paragraph.
In November 2014, the Company reached an agreement with an unrelated third party to purchase two LR2 product tankers under construction at DHSC for approximately $60.0 million each. These vessels, STI Rose and STI Alexis, were delivered in January and February 2015, respectively.
Vessel sales
The Company reached agreements to sell Venice (2001 built Post-Panamax), STI Harmony (2007 built LR1), and STI Heritage (2008 built LR1) for approximately $74.0 million in aggregate. The sales of these vessels are expected to close in March 2015. In connection with the Company’s entry into these vessel sale agreements, the Company recorded a write-down of approximately $4.0 million in the fourth quarter of 2014.
Time charter-in update
In February 2015, the Company took delivery of a previously announced time chartered-in-LR2 tanker that was under construction in South Korea. The vessel is chartered-in for one year at $21,050 per day and the Company also has an option to extend the charter for one year at $22,600 per day. Upon delivery from the shipyard, this vessel began a voyage for 54 days at approximately $31,000 per day.
In February 2015, the Company extended the time charter on an LR2 tanker that is currently time chartered-in. The term of the agreement is for six months at $16,250 per day beginning in March 2015.
In February 2015, the Company extended the time charter on an LR1 tanker that is currently time chartered-in. The term of the agreement is for one year at $16,250 per day beginning in March 2015.
Issuance of $51.75 million of 7.50% Senior Unsecured Notes
In October 2014, the Company completed a $51.75 million public offering of Senior Unsecured Notes due 2017. The notes will mature on October 15, 2017 and bear interest at a rate of 7.50% per year, payable in arrears on the 15th day of January, April, July and October of each year.
Stock Buyback Program Update
During 2014, the Company acquired an aggregate of 37,579,136 of its common shares that are being held as treasury shares, which include (i) 19,951,536 common shares that were purchased in the open market at an average price of $9.09 per share, (ii) 7,500,000 common shares that were acquired in exchange for 3,422,665 shares in Dorian and (iii) 10,127,600 common shares that were acquired in conjunction with the Company’s offering of $360 million of Convertible Senior Notes due 2019 in June 2014.
During 2015, the Company acquired an aggregate of 746,639 of its common shares that are being held as treasury shares at an average price of $7.91 per share. There are 163,827,903 shares outstanding as of February 26, 2015.
The Company has $69.3 million remaining under its stock buyback program as of the date of this press release. The Company expects to repurchase these shares in the open market, at times and prices that are considered to be appropriate by the Company, but is not obligated under the terms of the program to repurchase any shares.
Current Liquidity
As of February 27, 2015, the Company had $119.8 million in cash.
Debt
We made the following drawdowns from our credit facilities since September 30, 2014:
Drawdown
amount
(in $
Credit facility millions) Drawdown date Collateral
------------------------ ------------- ------------- -----------------
1 K-Sure Credit Facility $ 20.4 October 2014 STI Mayfair
2 2013 Credit Facility 19.5 October 2014 STI Yorkville
3 K-Sure Credit Facility 18.9 October 2014 STI Battersea
4 2013 Credit Facility 18.0 October 2014 STI Wembley
5 KEXIM Credit Facility 19.0 November 2014 STI Finchley
6 KEXIM Credit Facility 19.0 November 2014 STI Clapham
7 2013 Credit Facility 20.5 November 2014 STI Milwaukee
8 2013 Credit Facility 19.5 November 2014 STI Battery
9 KEXIM Credit Facility 30.3 November 2014 STI Sloane
10 KEXIM Credit Facility 29.7 November 2014 STI Broadway
11 KEXIM Credit Facility 30.3 November 2014 STI Condotti
12 KEXIM Credit Facility 19.0 November 2014 STI Poplar
13 K-Sure Credit Facility 19.9 December 2014 STI Soho
14 K-Sure Credit Facility 20.4 December 2014 STI Tribeca
15 K-Sure Credit Facility 19.2 December 2014 STI Hammersmith
16 K-Sure Credit Facility 19.2 December 2014 STI Rotherhithe
17 2013 Credit Facility 35.4 December 2014 STI Rose
18 K-Sure Credit Facility 19.9 January 2015 STI Gramercy
19 KEXIM Credit Facility 30.3 January 2015 STI Veneto
20 2013 Credit Facility 35.4 February 2015 STI Alexis
21 K-Sure Credit Facility 19.5 February 2015 STI Bronx
As of March 2, 2015, the Company’s outstanding debt balance, and amount available to draw, is as follows:
Amount
Amount Outstanding Availability
outstanding as of the as of the
at December date of this date of this
In thousands of U.S. dollars 31, 2014 report report (5)
------------- ------------- -------------
2010 Revolving Credit Facility $ 41,456$ 35,395 - (1)
2011 Credit Facility 108,911 108,911 -
Newbuilding Credit Facility 77,841 77,841 -
2013 Credit Facility 384,523 419,923 94,100 (2)
K-Sure Credit Facility 197,160 236,560 221,700 (3)
KEXIM Credit Facility 399,300 429,600 -
Senior Unsecured Notes 105,500 105,500 -
Convertible Senior Notes 360,000 360,000 - (4)
------------- ------------- -------------
Total $ 1,674,691$ 1,773,730$ 315,800
============= ============= =============
(1) A repayment of $6.1 million was made in February 2015 in connection
with the sale of Venice, which is expected to close in early March
2015.
(2) Availability can be used to finance the lesser of 60% of the contract
price for a qualifying newbuilding vessel or such vessel's fair market
value at the date of drawdown.
(3) Availability can be used to finance the lesser of 60% of the
newbuilding contract price and 74% of the fair market value of the
relevant vessel specified in the agreement.
(4) As of December 31, 2014, $56.0 million of this amount has been
attributed to the conversion feature of the Convertible Senior Notes
and recorded within additional paid in capital on the consolidated
balance sheet.
(5) We are currently in discussions to finance the four LR2 newbuildings
that we agreed to purchase in December 2014. We expect to have
agreements on the financing for these vessels before the end of the
first quarter of 2015. The four vessels are scheduled to be delivered
in 2016.
Newbuilding Program
During the fourth quarter of 2014, the Company made $454.1 million of installment payments on its newbuilding vessels. This amount includes an aggregate of $94.2 million of final installment payments made to the shipyards in connection with four vessels that were delivered in early January 2015.
The Company currently has 16 newbuilding vessel orders with HMD, SPP, HSHI, DSME, DHSC, and Sungdong Shipbuilding & Marine Engineering Co., Ltd (“SSME”) (eight MRs and eight LR2s). The estimated first quarter of 2015 and future payments are as follows*:
$ in millions
----------------
Q1 2015 - installment payments made 123.3
Q1 2015 - remaining installment payments 75.2
Q2 2015 258.9
Q3 2015 27.5
Q4 2015 24.8
Q1 2016 52.1
Q2 2016 44.0
Q3 2016 29.6
----------------
Total $ 635.4 million
================
*These are estimates only and are subject to change as construction progresses.
Explanation of Variances on the Fourth Quarter of 2014 Financial Results Compared to the Fourth Quarter of 2013
For the three months ended December 31, 2014, the Company recorded net income of $0.5 million compared to net income of $5.8 million for the three months ended December 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 December 31, 2014 and 2013:
For the three months ended
December 31,
-------------------------------
2014 2013
-------------- --------------
In thousands of U.S. dollars
Vessel revenue $ 125,738$ 53,367
Voyage expenses (2,106) (1,064)
-------------- --------------
TCE revenue $ 123,632$ 52,303
============== ==============
- TCE revenue increased $71.3 million to $123.6 million. This increase was driven by an increase in the average number of operating vessels (owned and time chartered-in) to 72.8 from 47.2 for the three months ended December 31, 2014 and 2013, respectively, along with an increase in time charter equivalent revenue per day to $18,664 per day from $12,080 per day for the three months ended December 31, 2014 and 2013, respectively (see the breakdown of daily TCE averages below). The Company experienced quarter over quarter improvements in all vessel classes. This was particularly driven by the Atlantic basin trade as U.S. Gulf Coast refinery utilization increased during the quarter, driving MR rates to recent highs. Additionally, LR2 and LR1 strength was driven by an increase in exports of refined products out of the Middle East as Saudi Arabia’sYanbu refinery began operations in 2014.
- Vessel operating costs increased $18.5 million to $31.1 million from $12.6 million for the three months ended December 31, 2014 and 2013, respectively. This increase was primarily driven by an increase in the Company’s owned fleet to an average of 50.8 vessels from 19.0 vessels for the three months ended December 31, 2014 and 2013, respectively. The increase was offset by an overall decrease in vessel operating costs per day to $6,662 per day from $7,071 per day for the three months ended December 31, 2014 and 2013, respectively (see the breakdown of daily TCE averages below).
- Charterhire expense decreased $6.4 million to $29.8 million from $36.2 million for the three months ended December 31, 2014 and 2013, respectively. This decrease was driven by a decrease in the Company’s time chartered-in fleet to an average of 22.0 vessels from 28.2 vessels for the three months ended December 31, 2014 and 2013, respectively.
- Depreciation expense increased $10.8 million to $17.7 million from $6.9 million for the three months ended December 31, 2014 and 2013, respectively. This increase was the result of an increase in the average number of owned vessels to 50.8 from 19.0 for the three months ended December 31, 2014 and 2013, respectively.
- General and administrative expenses increased $2.6 million to $13.8 million from $11.2 million for the three months ended December 31, 2014 and 2013, respectively. This increase was driven by a $1.3 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.
- The write down of vessels held for sale and loss from sale of vessels decreased $17.2 million to $4.0 million from $21.2 million for the three months ended December 31, 2014 and 2013, respectively. During December 2014, we recognized an aggregate write-down of $4.0 million resulting from the designation of STI Harmony and STI Heritage as held for sale. During December 2013, we recognized a write-down of $21.2 million resulting from the designation of four vessels (Senatore, Noemi, Venice and STI Spirit) as held for sale.
- Gain on sale of VLGCs of $41.4 million for the three months ended December 31, 2013, relates to the gain recorded as a result of our contribution of 11 VLGCs under construction and $1.9 million in cash, to Dorian in exchange for 30% of Dorian’s then outstanding shares.
- The write down for our investment in Dorian relates to the change in the accounting method from the equity method to the available for sale method on October 29, 2014, which is the date we lost significant influence when Robert Bugbee, our President, resigned from Dorian’s board of directors. As a result of the change in accounting methods, we remeasured our investment in Dorian to its fair market value on October 29, 2014, which resulted in a write down of $13.9 million, and we will no longer record our share of earnings from Dorian (“share of income from associate”) in the Consolidated Statement of Profit or Loss.
- Financial expenses increased $12.8 million to $13.2 million from $0.4 million primarily as a result in an increase in the Company’s debt balance for the three months ended December 31, 2014 and 2013, respectively. Total debt outstanding, net of deferred financing fees, was $1.6 billion at December 31, 2014 compared to $167.1 million at December 31, 2013.
Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Statement of Profit or Loss
(unaudited)
For the three months For the year ended
ended December 31, December 31,
---------------------- ----------------------
In thousands of U.S. dollars
except per share and share
data 2014 2013 2014 2013
---------- ---------- ---------- ----------
Revenue
Vessel revenue $ 125,738$ 53,367$ 342,807$ 207,580
Operating expenses
Vessel operating costs (31,140) (12,569) (78,823) (40,204)
Voyage expenses (2,106) (1,064) (7,533) (4,846)
Charterhire (29,834) (36,197) (139,168) (115,543)
Depreciation (17,721) (6,930) (42,617) (23,595)
General and administrative
expenses (13,830) (11,216) (48,129) (25,788)
Write down of vessels held
for sale and loss from
sales of vessels (3,978) (21,187) (3,978) (21,187)
Gain on sale of VLGCs - 41,375 - 41,375
Gain on sale of VLCCs - - 51,419 -
Gain on sale of Dorian
shares - - 10,924 -
Write down of investment in
Dorian (13,895) - (13,895) -
---------- ---------- ---------- ----------
Total operating expenses (112,504) (47,788) (271,800) (189,788)
---------- ---------- ---------- ----------
Operating income 13,234 5,579 71,007 17,792
---------- ---------- ---------- ----------
Other (expense) and income,
net
Financial expenses (13,216) (383) (20,770) (2,705)
Realized gain on derivative
financial instruments - (22) 17 3
Unrealized gain on
derivative financial
instruments 77 82 264 567
Financial income 32 197 203 1,147
Share of income from
associate 438 369 1,473 369
Other expenses, net (70) (51) (103) (158)
---------- ---------- ---------- ----------
Total other expense, net (12,739) 192 (18,916) (777)
---------- ---------- ---------- ----------
Net income $ 495$ 5,771$ 52,091$ 17,015
========== ========== ========== ==========
Earnings per share
Basic $ 0.00$ 0.03$ 0.30$ 0.12
Diluted $ 0.00$ 0.03$ 0.30$ 0.11
Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
(unaudited)
As of
--------------------------
December 31, December 31,
In thousands of U.S. dollars 2014 2013
------------ ------------
Assets
Current assets
Cash and cash equivalents $ 116,143$ 78,845
Accounts receivable 76,554 72,542
Prepaid expenses and other current assets 2,420 2,277
Inventories 6,075 2,857
Vessels held for sale 70,865 82,649
------------ ------------
Total current assets 272,057 239,170
------------ ------------
Non-current assets
Vessels and drydock 1,971,878 530,270
Vessels under construction 406,524 649,526
Other assets 23,728 17,907
Investment in associate - 209,803
Available for sale investment 130,456 -
------------ ------------
Total non-current assets 2,532,586 1,407,506
------------ ------------
Total assets $ 2,804,643$ 1,646,676
============ ============
Current liabilities
Current portion of long term debt 87,163 10,453
Debt related to vessels held for sale 32,932 21,397
Accounts payable 14,929 20,696
Accrued expenses 55,137 7,251
Derivative financial instruments 205 689
------------ ------------
Total current liabilities 190,366 60,486
------------ ------------
Non-current liabilities
Long term debt 1,451,427 135,279
Derivative financial instruments - 188
------------ ------------
Total non-current liabilities 1,451,427 135,467
------------ ------------
Total liabilities 1,641,793 195,953
------------ ------------
Shareholders' equity
Issued, authorized and fully paid in share
capital:
Share capital 2,033 1,999
Additional paid in capital 1,550,956 1,536,945
Treasury shares (351,283) (7,938)
Accumulated other comprehensive loss (10,878) (212)
Accumulated deficit (27,978) (80,071)
------------ ------------
Total shareholders' equity 1,162,850 1,450,723
------------ ------------
Total liabilities and shareholders' equity $ 2,804,643$ 1,646,676
============ ============
Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(unaudited)
For the year ended
December 31,
------------------------
In thousands of U.S. dollars 2014 2013
----------- -----------
Operating activities
Net income $ 52,091$ 17,015
Gain on sale of VLGCs - (41,375)
Gain on sale of VLCCs (51,419) -
Gain on sale of Dorian shares (10,924) -
Write down of investment in Dorian 13,895 -
Write down of vessels held for sale and loss from
sales of vessels 3,978 21,187
Depreciation 42,617 23,595
Amortization of restricted stock 29,726 13,142
Amortization of deferred financing fees 4,834 332
Straight-line adjustment for charterhire expense 3 53
Share of income from associate (1,473) (369)
Unrealized gain on derivative financial instruments (264) (567)
Amortization of acquired time charter contracts 478 -
Accretion of convertible senior notes 5,330 -
----------- -----------
88,872 33,013
----------- -----------
Changes in assets and liabilities:
Drydock payments (1,290) (1,469)
Increase in inventories (3,218) (687)
Increase in accounts receivable (4,012) (36,104)
Increase in prepaid expenses and other current
assets (154) (823)
Increase in other assets (2,901) (1,849)
Increase / (decrease) in accounts payable 6,471 (2,021)
Increase in accrued expenses 43,347 4,285
Interest rate swap termination payment (274) -
----------- -----------
37,969 (38,668)
----------- -----------
Net cash inflow / (outflow) from operating
activities 126,841 (5,655)
----------- -----------
Investing activities
Acquisition of vessels and payments for vessels
under construction (1,404,829) (767,448)
Proceeds from disposal of vessels 213,670 -
VLGC installment payments - (83,070)
Investment in associate - (84,583)
----------- -----------
Net cash outflow from investing activities (1,191,159) (935,101)
----------- -----------
Financing activities
Debt repayments (74,674) (28,410)
Issuance of debt 1,219,784 52,050
Debt issuance costs (45,670) (14,693)
Proceeds from issuance of convertible senior notes 360,000 -
Convertible senior notes issuance costs (10,993) -
Gross proceeds from issuance of common stock - 983,537
Equity issuance costs (42) (35,695)
Dividends paid (70,495) (24,353)
Repurchase of common stock (276,294) -
----------- -----------
Net cash inflow from financing activities 1,101,616 932,436
----------- -----------
Increase / (decrease) in cash and cash equivalents 37,298 (8,320)
Cash and cash equivalents at January 1, 78,845 87,165
----------- -----------
Cash and cash equivalents at December 31, $ 116,143$ 78,845
=========== ===========
Scorpio Tankers Inc. and Subsidiaries
Other operating data for the three months and year ended December 31, 2014
and 2013
(unaudited)
For the three
months ended For the year ended
December 31, December 31,
------------------- -------------------
2014 2013 2014 2013
--------- --------- --------- ---------
Adjusted EBITDA(1) (in thousands of
U.S. dollars) $ 57,061$ (681)$ 102,342$ 34,852
Average Daily Results
Time charter equivalent per day(2) 18,664 12,080 15,935 14,369
Vessel operating costs per day(3) 6,662 7,071 6,802 6,781
Aframax/LR2
TCE per revenue day (2) 23,561 12,582 18,621 12,718
Vessel operating costs per day(3) 6,520 9,402 6,789 8,203
Panamax/LR1
TCE per revenue day (2) 17,571 10,194 16,857 12,599
Vessel operating costs per day(3) 7,705 8,306 8,332 7,756
MR
TCE per revenue day (2) 18,619 13,784 15,297 16,546
Vessel operating costs per day(3) 6,621 6,340 6,580 6,069
Handymax
TCE per revenue day (2) 15,705 9,618 14,528 12,862
Vessel operating costs per day(3) 6,563 7,332 6,704 6,852
Fleet data
Average number of owned vessels 50.8 19.0 31.6 15.9
Average number of time chartered-in
vessels 22.0 28.2 26.3 22.9
Drydock
Expenditures for drydock (in
thousands of U.S. dollars) - - $ 1,290 -
(1) See Non-GAAP Measure section below
(2) Freight rates are commonly measured in the shipping industry in terms of
time charter equivalent per day (or TCE per day), which is calculated by
subtracting voyage expenses, including bunkers and port charges, from
vessel revenue and dividing the net amount (time charter equivalent
revenues) by the number of revenue days in the period. Revenue days are
the number of days the vessel is owned less the number of days the
vessel is off-hire for drydock and repairs.
(3) Vessel operating costs per day represent vessel operating costs
excluding non-recurring expenses (for example insurance deductible
expenses for repairs) divided by the number of days the vessel is owned
during the period.
Fleet List as of March 2, 2015
Year Ice Vessel
Vessel Name Built DWT class Employment type
----------- -------- --------- ------- ---------- ---------
Owned
vessels
1 STI
Highlander 2007 37,145 1A SHTP (1) Handymax
2 STI Brixton 2014 38,000 1A SHTP (1) Handymax
3 STI
Comandante 2014 38,000 1A SHTP (1) Handymax
4 STI Pimlico 2014 38,000 1A SHTP (1) Handymax
5 STI Hackney 2014 38,000 1A SHTP (1) Handymax
6 STI Acton 2014 38,000 1A SHTP (1) Handymax
7 STI Fulham 2014 38,000 1A SHTP (1) Handymax
8 STI Camden 2014 38,000 1A SHTP (1) Handymax
9 STI
Battersea 2014 38,000 1A SHTP (1) Handymax
10 STI Wembley 2014 38,000 1A SHTP (1) Handymax
11 STI
Finchley 2014 38,000 1A SHTP (1) Handymax
12 STI Clapham 2014 38,000 1A SHTP (1) Handymax
13 STI Poplar 2014 38,000 1A Spot Handymax
14 STI
Hammersmith 2015 38,000 1A Spot Handymax
15 STI
Rotherhithe 2015 38,000 1A Spot Handymax
16 STI Amber 2012 52,000 - SMRP (4) MR
17 STI Topaz 2012 52,000 - SMRP (4) MR
18 STI Ruby 2012 52,000 - SMRP (4) MR
19 STI Garnet 2012 52,000 - SMRP (4) MR
20 STI Onyx 2012 52,000 - SMRP (4) MR
21 STI
Sapphire 2013 52,000 - SMRP (4) MR
22 STI Emerald 2013 52,000 - SMRP (4) MR
23 STI Beryl 2013 52,000 - SMRP (4) MR
24 STI Le
Rocher 2013 52,000 - SMRP (4) MR
25 STI
Larvotto 2013 52,000 - SMRP (4) MR
26 STI
Fontvieille 2013 52,000 - SMRP (4) MR
27 STI Ville 2013 52,000 - SMRP (4) MR
28 STI
Duchessa 2014 52,000 - SMRP (4) MR
29 STI Opera 2014 52,000 - SMRP (4) MR
30 STI Texas Time
City Charter
2014 52,000 - (5) MR
31 STI Meraux Time
Charter
2014 52,000 - (6) MR
32 STI Chelsea 2014 52,000 - SMRP (4) MR
33 STI
Lexington 2014 52,000 - SMRP (4) MR
34 STI San Time
Antonio Charter
2014 52,000 - (6) MR
35 STI Venere 2014 52,000 - SMRP (4) MR
36 STI Virtus 2014 52,000 - SMRP (4) MR
37 STI Powai 2014 52,000 - SMRP (4) MR
38 STI Aqua 2014 52,000 - SMRP (4) MR
39 STI Dama 2014 52,000 - SMRP (4) MR
40 STI Olivia 2014 52,000 - SMRP (4) MR
41 STI Mythos 2014 52,000 - SMRP (4) MR
42 STI Benicia Time
Charter
2014 52,000 - (6) MR
43 STI Regina 2014 52,000 - SMRP (4) MR
44 STI St.
Charles 2014 52,000 - SMRP (4) MR
45 STI Mayfair 2014 52,000 - SMRP (4) MR
46 STI
Yorkville 2014 52,000 - SMRP (4) MR
47 STI
Milwaukee 2014 52,000 - SMRP (4) MR
48 STI Battery 2014 52,000 - SMRP (4) MR
49 STI Soho 2014 52,000 - Spot MR
50 STI Tribeca 2015 52,000 - Spot MR
51 STI
Gramercy 2015 52,000 - Spot MR
52 STI Bronx 2015 52,000 - Spot MR
53 STI Harmony 2007 73,919 1A SPTP (2) LR1
54 STI
Heritage 2008 73,919 1A SPTP (2) LR1
55 Venice Post-
2001 81,408 1C SPTP (2) Panamax
56 STI Elysees 2014 109,999 - SLR2P (3) LR2
57 STI Madison 2014 109,999 - SLR2P (3) LR2
58 STI Park 2014 109,999 - SLR2P (3) LR2
59 STI Orchard 2014 109,999 - SLR2P (3) LR2
60 STI Sloane 2014 109,999 - SLR2P (3) LR2
61 STI
Broadway 2014 109,999 - SLR2P (3) LR2
62 STI
Condotti 2014 109,999 - SLR2P (3) LR2
63 STI Rose 2015 109,999 - SLR2P (3) LR2
64 STI Veneto 2015 109,999 - SLR2P (3) LR2
65 STI Alexis 2015 109,999 - SLR2P (3) LR2
---------
Total owned
DWT 3,822,381
=========
Vessel Year DWT Ice Employ- Vessel Daily Expiry
Name Built class ment type Base (7)
Rate
---------- ----- ------- ----- ------- --------- ------- -------
Time chartered-
in vessels
66 Kraslava SHTP 18-May-
2007 37,258 1B (1) Handymax $13,650 15
67 Krisjanis SHTP 14-Apr-
Valdemars 2007 37,266 1B (1) Handymax $13,650 15 (8)
68 Jinan SHTP 28-Apr-
2003 37,285 - (1) Handymax $12,600 15
69 Iver SHTP 03-Mar-
Prosperity 2007 37,412 - (1) Handymax $12,500 16 (9)
70 Histria SHTP 04-Apr-
Azure 2007 40,394 - (1) Handymax $13,550 15
71 Histria SHTP 17-Jul-
Coral 2006 40,426 - (1) Handymax $13,550 15
72 Histria SHTP 15-Jul-
Perla 2005 40,471 - (1) Handymax $13,550 15
73 Targale SMRP 17-May-
2007 49,999 - (4) MR $14,850 15 (10)
74 Nave Orion SMRP 25-Mar-
2013 49,999 - (4) MR $14,300 15 (11)
75 Gan-Trust SMRP 06-Jan-
2013 51,561 - (4) MR $16,250 16 (12)
76 SN SPTP 15-May-
Federica 2003 72,344 - (2) LR1 $11,250 15 (13)
77 SN Azzura SPTP 31-Mar-
2003 72,344 - (2) LR1 $13,600 15
78 King SPTP 08-Nov-
Douglas 2008 73,666 - (2) LR1 $15,000 15
79 Hellespont SPTP 18-Mar-
Progress 2006 73,728 - (2) LR1 $15,000 16 (14)
80 FPMC P SPTP 09-Sep-
Eagle 2009 73,800 - (2) LR1 $14,525 15
81 FPMC P SLR2P 02-May-
Hero 2011 99,995 - (3) LR2 $15,500 15
82 Swarna SLR2P 11-Sep-
Jayanti 2010 104,895 - (3) LR2 $15,000 15 (15)
83 Densa SLR2P 07-Feb-
Crocodile 2015 105,408 - (3) LR2 $21,050 16 (16)
84 Densa SLR2P 17-Sep-
Alligator 2013 105,708 - (3) LR2 $17,550 15
85 Khawr SLR2P 11-Jul-
Aladid 2006 106,003 - (3) LR2 $15,400 15
86 Fair Seas SLR2P 10-Mar-
2008 115,406 - (3) LR2 $17,500 15
---------
Total time
chartered-in DWT 1,425,368
=========
Newbuildings currently under construction
Vessel Name Yard DWT Ice Vessel
class type
----------- ------ ---------- ----- ------
87 Hull 2474 -
TBN STI
Pontiac HMD (17) 52,000 - MR
88 Hull 2490 -
TBN STI
Osceola HMD (17) 52,000 - MR
89 Hull 2492 -
TBN STI
Notting
Hill HMD (17) 52,000 - MR
90 Hull 2493 -
TBN STI
Westminster HMD (17) 52,000 - MR
91 Hull 2475 -
TBN STI
Seneca HMD (17) 52,000 - MR
92 Hull S1169
- TBN STI
Manhattan SPP (18) 52,000 - MR
93 Hull S1170
- TBN STI
Queens SPP (18) 52,000 - MR
94 Hull S1168
- TBN STI
Brooklyn SPP (18) 52,000 - MR
95 Hull S715 -
TBN STI
Oxford HSHI (19) 109,999 - LR2
96 Hull S716 -
TBN STI
Connaught HSHI (19) 109,999 - LR2
97 Hull 5398 -
TBN STI
Winnie DSME (20) 109,999 - LR2
98 Hull 5399 -
TBN STI
Lauren DSME (20) 109,999 - LR2
99 Hull S3120
- TBN STI
Selatar SSME (21) 109,999 - LR2
100 Hull S3121
- TBN STI
Rambla SSME (21) 109,999 - LR2
101 Hull 5003 -
TBN STI
Grace DHSC (22) 109,999 - LR2
102 Hull 5004 -
TBN STI
Jermyn DHSC (22) 109,999 - LR2
----------
Total newbuilding
product tankers DWT 1,295,992
==========
----------
Total Fleet
DWT 6,543,741
==========
(1) This vessel operates in or is expected to operate in the Scorpio
Handymax Tanker Pool (SHTP). SHTP is operated by Scorpio Commercial
Management (SCM). SHTP and SCM are related parties to the Company.
(2) This vessel operates in or is expected to operate in the Scorpio
Panamax Tanker Pool (SPTP). SPTP is operated by SCM. SPTP is a related
party to the Company.
(3) This vessel operates in or is expected to operate in the Scorpio LR2
Pool (SLR2P). SLR2P is operated by SCM. SLR2P is a related party to the
Company.
(4) This vessel operates in or is expected to operate in the Scorpio MR
Pool (SMRP). SMRP is operated by SCM. SMRP is a related party to the
Company.
(5) This vessel is on a time charter agreement for two years, which also
contains a 50% profit sharing provision whereby we split all of the
vessel's profits above the daily base rate with the charterer.
(6) This vessel is on a time charter agreement for one year, which also
contains a 50% profit sharing provision whereby we split all of the
vessel's profits above the daily base rate with the charterer.
(7) Redelivery from the charterer is plus or minus 30 days from the expiry
date.
(8) The agreement also contains a 50% profit and loss sharing provision
whereby we split all of the vessel's profits and losses above or below
the daily base rate with the vessel's owner.
(9) In September 2014, we declared an option to extend the charter for an
additional year at $13,500 per day effective March 3, 2015.
(10) We have options to extend the charter for up to two consecutive one
year periods at $15,200 per day and $16,200 per day, respectively.
(11) We have an option to extend the charter for an additional year at
$15,700 per day.
(12) The rate for the first year of this agreement was $15,750 per day, the
rate for the second year is $16,250 per day, and the rate for the third
year is $16,750 per day. We have options to extend the charter for up
to two consecutive one year periods at $17,500 per day and $18,000 per
day, respectively.
(13) We have an option to extend the charter for an additional year at
$12,500 per day. We have also entered into an agreement with the
vessel's owner whereby we split all of the vessel's profits above the
daily base rate.
(14) In February 2015, we declared an option to extend the charter for an
additional year at $16,250 per day effective March 18, 2015. We have an
option to extend the charter for an additional year at $17,250 per day.
(15) In February 2015, we declared an option to extend the charter for an
additional six months at $16,250 per day effective March 11, 2015.
(16) This vessel was delivered in February 2015. We have an option to extend
the charter for an additional year at $22,600 per day.
(17) These newbuilding vessels are being constructed at HMD (Hyundai Mipo
Dockyard Co. Ltd. of South Korea). One vessel is expected to be
delivered in the first quarter and four vessels in the second quarter
of 2015.
(18) These newbuilding vessels are being constructed at SPP (SPP
Shipbuilding Co., Ltd. of South Korea). One vessel is expected to be
delivered in the first quarter and two vessels in the second quarter of
2015.
(19) These newbuilding vessels are being constructed at HSHI (Hyundai Samho
Heavy Industries Co., Ltd). These two vessels are expected to be
delivered in the second quarter of 2015.
(20) These newbuilding vessels are being constructed at DSME (Daewoo
Shipbuilding and Marine Engineering). One vessel is expected to be
delivered in the first quarter and one in the second quarter of 2015.
(21) These newbuilding vessels are being constructed at SSME (Sungdong
Shipbuilding & Marine Engineering Co., Ltd). These two vessels are
expected to be delivered in the second and third quarter of 2016.
(22) These newbuilding vessels are being constructed at DHSC (Daehan
Shipbuilding Co. Ltd). These two vessels are expected to be delivered
in the first and second 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 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.
The Company paid the following dividends during 2014:
- On December 12, 2014, the Company paid a quarterly cash dividend on the Company’s common stock of $0.12 per share to all shareholders as of November 25, 2014 (the record date).
- On September 10, 2014, the Company paid a quarterly cash dividend on its common stock of $0.10 per share to all shareholders as of August 22, 2014 (the record date).
- On June 12, 2014, the Company paid a quarterly cash dividend on its common stock of $0.09 per share to all shareholders as of May 27, 2014 (the record date).
- On March 26, 2014, the Company paid a quarterly cash dividend on its common stock of $0.08 per share to all shareholders as of March 11, 2014 (the record date).
Share Buyback Program
During 2014, the Company acquired an aggregate of 37,579,136 of its common shares that are being held as treasury shares, which include (i) 19,951,536 common shares that were purchased in the open market at an average price of $9.09 per share, (ii) 7,500,000 common shares that were acquired in exchange for 3,422,665 shares in Dorian and (iii) 10,127,600 common shares that were acquired in conjunction with the Company’s offering of $360 million of Convertible Senior Notes due 2019 in June 2014.
During 2015, the Company acquired an aggregate of 746,639 of its common shares that are being held as treasury shares at an average price of $7.91. There are 163,827,903 shares outstanding as of March 2, 2015.
The Company has $69.3 million remaining under its stock buyback program as of the date of this press release. The Company expects to repurchase these shares in the open market, at times and prices that are considered to be appropriate by the Company, but is not obligated under the terms of the program to repurchase any shares.
About Scorpio Tankers Inc.
Scorpio Tankers Inc. is a provider of marine transportation of petroleum products worldwide. Scorpio Tankers Inc. currently owns 65 tankers (ten LR2 tankers, two LR1 tankers, 15 Handymax tankers, 37 MR tankers, and one post-Panamax tanker) with an average age of 1.3 years, time charters-in 21 product tankers (six LR2, five LR1, three MR and seven Handymax tankers), and has contracted for 16 newbuilding product tankers (eight MR and eight LR2), three of which are expected to be delivered in the first quarter of 2015, nine of which are expected to be delivered in the second quarter of 2015 and the remaining four vessels throughout 2016. The Company has also reached agreements to sell three vessels of its older vessels (two LR1 tankers and one post-Panamax tanker). The Company also owns approximately 16% of Dorian LPG Ltd. Additional information about the Company is available at the Company’s website www.scorpiotankers.com, which is not a part of this press release.
Non-GAAP Measures
This press release describes adjusted net income and adjusted EBITDA, which are not measures prepared in accordance with IFRS (i.e. “Non-GAAP” measure). The Non-GAAP measures are presented in this press release as we believe that they provide investors with a means of evaluating and understanding how the Company’s management evaluates the Company’s operating performance. These Non-GAAP measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with IFRS.
Adjusted net income / (loss)
For the three months ended December 31,
------------------------------------------
2014 2013
-------------------- --------------------
In thousands of U.S. dollars
except per share and share data Amount Per share Amount Per share
--------- --------- --------- ---------
Net income $ 495$ 0.00$ 5,771$ 0.03
Adjustments:
Unrealized gain on derivative
financial instruments (77) (0.00) (82) (0.00)
Write down of vessels held
for sale 3,978 0.03 21,187 0.12
Gain on sale of VLGCs - - (41,375) (0.23)
Write down of investment in
Dorian 13,895 0.09 - -
--------- --------- --------- ---------
Total adjustments 17,796 0.12 (20,270) (0.11)
--------- --------- --------- ---------
Adjusted net income / (loss) $ 18,291 0.12 $ (14,499)$ (0.08)
========= ========= ========= =========
For the year ended December 31,
------------------------------------------
2014 2013
-------------------- --------------------
Amount Per share Amount Per share
--------- --------- --------- ---------
Net income $ 52,091$ 0.30$ 17,015$ 0.12
Adjustments:
Deferred financing fees
write-off - STI Spirit 317 0.00 - -
Unrealized gain on derivative
financial instruments (264) (0.00) (567) (0.00)
Write down of vessels held
for sale 3,978 0.02 21,187 0.14
Gain on sale of VLGCs - - (41,375) (0.28)
Gain on sale of VLCCs (51,419) (0.30) - -
Gain on sale of Dorian shares (10,924) (0.06) - -
Write down of investment in
Dorian 13,895 0.08 - -
--------- --------- --------- ---------
Total adjustments (44,417) (0.26) (20,755) (0.14)
--------- --------- --------- ---------
Adjusted net income / (loss) $ 7,674$ 0.04$ (3,740)$ (0.03)
========= ========= ========= =========
Adjusted EBITDA
For the three months For the year ended
ended December 31, December 31,
-------------------- --------------------
In thousands of U.S. dollars 2014 2013 2014 2013
--------- --------- --------- ---------
Net income $ 495$ 5,771$ 52,091$ 17,015
Financial expenses 13,216 383 20,770 2,705
Unrealized gain on derivative
financial instruments (77) (82) (264) (567)
Financial income (32) (197) (203) (1,147)
Depreciation 17,721 6,930 42,617 23,595
Depreciation component of our
net profit from associate 206 297 2,075 297
Amortization of restricted
stock 7,659 6,405 29,726 13,142
Write down of vessels held for
sale 3,978 21,187 3,978 21,187
Gain on sale of VLGCs - (41,375) - (41,375)
Gain on sale of VLCCs - - (51,419) -
Gain on sale of Dorian shares - - (10,924) -
Write down of investment in
Dorian 13,895 - 13,895 -
--------- --------- --------- ---------
Adjusted EBITDA $ 57,061$ (681)$ 102,342$ 34,852
========= ========= ========= =========
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.