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Scorpio Tankers Inc. Announces Financial Results for the Second Quarter of 2016 and Declaration of a Quarterly Dividend
MONACO — (Marketwired) — 07/28/16 — Scorpio Tankers Inc. (NYSE: STNG) (“Scorpio Tankers,” or the “Company”) today reported its results for the three and six months ended June 30, 2016 and declaration of a quarterly dividend.
Results for the three months ended June 30, 2016 and 2015
For the three months ended June 30, 2016, the Company’s adjusted net income (see Non-IFRS Measures section below) was $6.6 million, or $0.04 basic and diluted earnings per share, which excludes from net income (i) a $3.7 million write-off of deferred financing fees, (ii) a $0.4 million unrealized gain on derivative financial instruments, (iii) a $0.4 million gain recorded on the repurchase of $5.0 million aggregate principal amount of the Company’s Convertible Senior Notes due 2019 (the “Convertible Notes”) and (iv) a $0.1 million gain on sales of vessels. The adjustments resulted in an aggregate increase of net income by $2.7 million or $0.02 basic and diluted earnings per share. For the three months ended June 30, 2016, the Company had net income of $3.8 million, or $0.02 basic and diluted earnings per share (see below for further information).
For the three months ended June 30, 2015, the Company’s adjusted net income (see non-IFRS Measures section below) was $57.5 million, or $0.35 basic and $0.32 diluted earnings per share, which excludes an unrealized gain on derivative financial instruments of $0.1 million, or $0.00 per basic and diluted shares. For the three months ended June 30, 2015, the Company had net income of $57.6 million, or $0.35 basic and $0.32 diluted earnings per share.
Results for the six months ended June 30, 2016 and 2015
For the six months ended June 30, 2016, the Company’s adjusted net income (see Non-IFRS Measures section below) was $37.0 million, or $0.23 basic and $0.22 diluted earnings per share, which excludes from net income (i) a $2.1 million loss on sales of vessels, (ii) a $5.5 million write-off of deferred financing fees, (iii) a $1.4 million unrealized gain on derivative financial instruments and (iv) a $1.0 million aggregate gain recorded on the repurchase of $10.0 million aggregate principal amount of the Company’s Convertible Notes. The adjustments resulted in an aggregate increase of net income by $5.2 million or $0.03 basic and diluted earnings per share. For the six months ended June 30, 2016, the Company had net income of $31.9 million, or $0.20 basic and $0.19 diluted earnings per share.
For the six months ended June 30, 2015, the Company’s adjusted net income (see non-IFRS Measures section below) was $96.8 million, or $0.62 basic and $0.55 diluted earnings per share, which excludes from net income a gain of $2.0 million related to the closing of the sales of three vessels and an unrealized loss on derivative financial instruments of $0.5 million. These adjustments aggregated to a decrease of net income by $1.5 million, or $0.01 per basic and diluted shares. For the six months ended June 30, 2015, the Company had net income of $98.3 million, or $0.63 basic and $0.56 diluted earnings per share.
Declaration of Dividend
On July 28, 2016, the Company’s Board of Directors declared a quarterly cash dividend of $0.125 per share, payable on September 29, 2016 to all shareholders as of September 15, 2016 (the record date). As of July 27, 2016, there were 172,378,640 shares outstanding.
Diluted Weighted Number of Shares
Diluted earnings per share is determined using the if-converted method. Under this method, the Company assumes that the Convertible Notes (which were issued in June 2014) are converted into common shares at the beginning of each period and the interest and non-cash amortization expense associated with these notes of $5.4 million and $10.8 million during the three and six months ended June 30, 2016, respectively, are not incurred. Conversion is not assumed if the results of this calculation are anti-dilutive.
For the three and six months ended June 30, 2016, the Company’s basic weighted average number of shares were 161,381,900 and 160,931,752, respectively. The Company’s diluted weighted average number of shares for those periods were 165,943,795 and 166,306,290, respectively which excludes the impact of the Convertible Notes since the if-converted method was anti-dilutive. As of the date hereof, the Convertible Notes are not eligible for conversion.
Summary of Recent and Second Quarter Significant Events:
- Below is a summary of the average daily TCE revenue and duration for voyages fixed thus far in the third quarter of 2016:
- For the LR2s in the pool: approximately $17,000 per day for 47% of the days
- For the LR1 in the pool: approximately $13,000 per day for 42% of the days
- For the MRs in the pool: approximately $14,000 per day for 38% of the days
- For the Handymaxes in the pool: approximately $11,000 per day for 32% of the days
- Below is a summary of the average daily TCE revenue earned during the second quarter of 2016:
- For the LR2s in the pool: $20,402 per revenue day
- For the LR1 in the pool: $19,149 per revenue day
- For the MRs in the pool: $16,405 per revenue day
- For the Handymaxes in the pool: $12,924 per revenue day
- Reduced the Company’s outstanding debt by $95.1 million between April 1, 2016 and July 27, 2016.
- Received a commitment for a credit facility of up to $300 million from ABN AMRO Bank N.V, Nordea Bank Finland plc, acting through its New York branch, and Skandinaviska Enskilda Banken AB, the proceeds of which are expected to be used to refinance the existing indebtedness on 16 MR product tankers.
- Executed a credit facility with NIBC Bank N.V. in June 2016 to refinance the existing indebtedness on two 2013 built MR product tankers; the loan was fully drawn in July 2016.
- Took delivery of STI Jermyn, an LR2 product tanker that was under construction, from Daehan Shipbuilding Co., Ltd (“DHSC”) in June 2016.
- Agreed to time charter-in three MR product tankers consisting of a 2013 built MR product tanker for one year at $15,800 per day (delivered in July 2016) and two 2011 built MR product tankers, each for two years at $15,250 per day (expected to be delivered in August 2016).
- Repurchased $5.0 million aggregate principal amount of the Convertible Notes for $847.50 per $1,000 aggregate principal amount in May 2016.
- Repurchased 657,154 common shares at an average price of $4.26 per share in July 2016. The repurchased shares are being held as treasury shares.
- Paid a quarterly cash dividend on the Company’s common stock of $0.125 per share in June 2016.
$300 Million Credit Facility Commitment
In July 2016, the Company received a commitment for a loan facility of up to $300 million from ABN AMRO Bank N.V, Nordea Bank Finland plc, acting through its New York branch, and Skandinaviska Enskilda Banken AB. The borrowings under the loan facility are expected to be used to refinance the existing indebtedness relating to 16 MR product tankers, and the loan facility has a final maturity of five years from the first drawdown date, and bears interest at LIBOR plus a margin of 2.50% per annum. The loan facility is expected to be comprised of a term loan up to $200 million and a revolver up to $100 million, and the availability may be used to finance up to 60% of the fair market value of the respective vessels at the time of delivery. The loan facility is subject to customary conditions precedent and the execution of definitive documentation.
NIBC Credit Facility
In June 2016, the Company executed a loan facility with NIBC Bank N.V. This facility was fully drawn in July 2016, and the proceeds of $40.8 million were used to refinance the existing indebtedness on two 2013 built MR product tankers. The loan facility has a final maturity of five years from the signing date and bears interest at LIBOR plus a margin of 2.50% per annum.
Vessel deliveries
In June 2016, the Company took delivery of STI Jermyn, an LR2 product tanker from DHSC. The Company drew down $26.0 million under its ING Credit Facility to partially finance the purchase price of this vessel.
In April 2016, the Company took delivery of STI Lombard, an LR2 product tanker that was previously bareboat chartered-in, and paid the remaining 90% of the purchase price, or $53.1 million, upon delivery. The Company drew down $26.5 million from its ING Credit Facility to partially finance this transaction.
$250 Million Securities Repurchase Program
In May 2015, the Company’s Board of Directors authorized a Securities Repurchase Program to purchase up to an aggregate of $250 million of the Company’s securities, which currently consist of its (i) Convertible Notes, which were issued in June 2014, (ii) Unsecured Senior Notes Due 2020 (NYSE: SBNA), which were issued in May 2014, and (iii) Unsecured Senior Notes Due 2017 (NYSE: SBNB), which were issued in October 2014. As of the date hereof, the Company has the authority to purchase up to an additional $153.3 million of its securities under its Securities Repurchase Program. The Company expects to repurchase its securities 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 Securities Repurchase Program to repurchase any of its securities.
Since April 1, 2016 through the date of this press release, the Company has repurchased its securities as follows:
- an aggregate of 657,154 of its common shares at an average price of $4.26 per share; the repurchased shares are being held as treasury shares. There are 172,378,640 shares outstanding as of July 27, 2016.
- $5.0 million aggregate principal amount of its Convertible Notes at an average price of $847.50 per $1,000 principal amount.
Time Charter-in Update
In July 2016, the Company agreed to time charter-in two 2011 built MR product tankers, each for two years at $15,250 per day. The Company also has an option to extend each charter for an additional year at $16,000 per day. These vessels are expected to be delivered in August 2016.
In July 2016, the Company time chartered-in a 2013 built MR product tanker for one year at $15,800 per day. The Company also has an option to extend the charter for an additional year at $17,000 per day. This vessel was delivered in July 2016.
In April 2016, the Company exercised its option to extend the charter on an MR product tanker that is currently time chartered-in for an additional year at $16,350 per day effective May 2016.
Conference Call
The Company will have a conference call on July 28, 2016 at 11:00 AM Eastern Daylight Time and 5:00 PM Central European Summer Time.
Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 (888) 599-8658 (U.S.) or +1 (913) 312-0868 (International). The conference participant passcode is 2851242. 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: https://www.webcaster4.com/Webcast/Page/610/16297
Current Liquidity
As of July 27, 2016, the Company had $164.6 million in cash.
Debt
Set forth below is a summary of the Company’s outstanding indebtedness as of the dates presented:
-------- -------- -------- --------
Activity: Activity:
Outstand- Drawdowns Outstand- Drawdowns Outstand- Availab-
ing as and ing as and ing as ility as
In millions of of March (repaym- of June (repaym- of July of July
U.S. dollars 31, 2016 ents), net 30, 2016 ents), net 27, 2016 27, 2016
------------------------------------------------ --------
2011 Credit
Facility $ 99.0$ (2.0)$ 97.0 $ - $ 97.0 $ -
Newbuilding Credit
Facility 70.3 (1.5) 68.8 - 68.8 -
2013 Credit
Facility (1) 385.0 (57.0) 328.0 (36.9) 291.1 -
K-Sure Credit
Facility (2) 406.7 (58.4) 348.3 (14.9) 333.4 -
KEXIM Credit
Facility 383.4 - 383.4 (4.3) 379.1 -
ING Credit
Facility (3) 60.1 68.6 128.7 (1.1) 127.6 -
ABN AMRO Credit
Facility 137.4 (2.4) 135.0 (0.6) 134.4 -
BNP Paribas Credit
Facility 34.0 (0.6) 33.4 - 33.4 -
Credit Suisse
Credit Facility - - - - - 61.2
Scotiabank Credit
Facility (4) - 33.3 33.3 - 33.3 -
NIBC Credit
Facility (5) - - - 40.8 40.8 -
Finance lease (6) 53.1 (53.1) - - - -
2020 senior
unsecured notes 53.8 - 53.8 - 53.8 -
2017 senior
unsecured notes 51.8 - 51.8 - 51.8 -
Convertible Notes
(7) 353.5 (5.0) 348.5 - 348.5 -
2016 $300 million
Credit Facility
(8) - - - - - 300.0
------------------------------------------------ --------
$2,088.1$ (78.1)$2,010.0$ (17.0)$1,993.0$ 361.2
================================================ ========
(1) Activity for the 2013 Credit Facility includes the following repayments
in connection with the refinancing of outstanding borrowings thereunder
(i) $18.3 million related to STI Osceola, which was refinanced in April
2016, (ii) $32.5 million related to STI Rose, which was refinanced in
June 2016, (iii) $18.4 million related to STI Fontvieille, which was
refinanced in July 2016, and (iv) $18.5 million related to STI Ville,
which was refinanced in July 2016. The Company also made a scheduled
principal repayment of $6.2 million in June 2016.
(2) Activity for the K-Sure Credit Facility includes the aggregate
repayment of $55.1 million in connection with the sales of STI Chelsea,
STI Olivia and STI Powai in April 2016, April 2016 and May 2016,
respectively. The Company also made a scheduled principal repayments of
$3.3 million in June 2016 and $14.9 million in July 2016.
(3) Activity for the ING Credit Facility includes drawdowns of (i) $26.5
million to partially finance the purchase price of STI Lombard in April
2016, (ii) $17.1 million as part of the refinancing of the amounts
borrowed for STI Osceola in April 2016 and (iii) $26.0 million to
partially finance the purchase price of STI Jermyn in June 2016. These
drawdowns were offset by scheduled principal repayments of $1.0 million
during the second quarter of 2016 and $1.1 million in July 2016.
(4) Activity for the Scotiabank Credit Facility includes the drawdown of
$33.3 million, which was used to refinance the outstanding borrowings
relating to STI Rose in June 2016.
(5) The Company executed a loan facility with NIBC Bank N.V. in June 2016.
The facility has a maturity of five years from the agreement date and
bears interest at LIBOR plus a margin of 2.50% per annum. This facility
was fully drawn in July 2016, and the proceeds were used to refinance
the existing indebtedness on STI Ville and STI Fontvieille, which were
previously financed under the 2013 Credit Facility.
(6) In April 2016, the Company took delivery of STI Lombard from its
previously announced bareboat charter-in agreement and paid the
remaining 90% of the purchase price, or $53.1 million, as part of this
transaction.
(7) In May 2016, the Company repurchased $5.0 million aggregate principal
amount of the Convertible Notes for $847.50 per $1,000 principal
amount. $37.8 million and $41.2 million of the amounts outstanding have
been attributed to the conversion feature of the Convertible Notes and
recorded within additional paid in capital on the unaudited condensed
consolidated balance sheet as of June 30, 2016 and March 31, 2016,
respectively.
(8) In July 2016, the Company received a commitment for a loan facility of
up to $300 million from ABN AMRO Bank N.V, Nordea Bank Finland plc,
acting through its New York branch, and Skandinaviska Enskilda Banken
AB. The borrowings under the loan facility are expected to be used to
refinance the existing indebtedness on 16 MR product tankers and the
loan facility bears interest at LIBOR plus a margin of 2.50% per annum.
The loan facility is subject to customary conditions precedent and the
execution of definitive documentation.
Newbuilding Program
During the second quarter of 2016, the Company made installment payments of $77.0 million relating to vessels under its Newbuilding Program.
The Company currently has 10 newbuilding vessel orders (eight MRs and two LR2s) with Hyundai Mipo Dockyard Co., Ltd. (“HMD”) and Sungdong Shipbuilding and Marine Engineering Co., Ltd. (“SSME”). Set forth below are the installment payments that have been made and are expected to be made in the third quarter of 2016 and future installment payments *:
In millions of
U.S. dollars
-----------------
Q3 2016 - installment payment made $ 3.6
Q3 2016 - remaining installment payments 33.2
Q4 2016 42.0
Q1 2017 32.3
Q2 2017 50.2
Q3 2017 50.3
Q4 2017 46.9
Q1 2018 21.6
-----------------
Total $ 280.1
=================
*These are estimates only and are subject to change as construction progresses.
Explanation of Variances on the Second Quarter of 2016 Financial Results Compared to the Second Quarter of 2015
For the three months ended June 30, 2016, the Company recorded net income of $3.8 million compared to net income of $57.6 million for the three months ended June 30, 2015. 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 June 30, 2016 and 2015:
For the three months ended
June 30,
---------------------------
In thousands of U.S. dollars 2016 2015
------------- -------------
Vessel revenue $ 137,214$ 188,464
Voyage expenses (472) (1,112)
------------- -------------
TCE revenue $ 136,742$ 187,352
============= =============
- TCE revenue decreased $50.6 million to $136.7 million from $187.4 million for the three months ended June 30, 2016 and 2015, respectively. This decrease was driven by a decrease in time charter equivalent revenue per day to $16,903 per day from $23,469 per day for the three months ended June 30, 2016 and 2015, respectively (see the breakdown of daily TCE below). TCE revenue per day decreased across all of our operating segments. Global refining margins were robust in 2015, which led to a build-up of product inventories and the deferral of refinery maintenance. As a result, refinery utilization in the second quarter of 2016 decreased as overdue maintenance was performed, thus dampening global demand for product tankers.
- Vessel operating costs increased $5.1 million to $46.2 million from $41.1 million for the three months ended June 30, 2016 and 2015, respectively. This increase was primarily driven by an increase in the Company’s owned fleet to an average of 77.2 vessels from 69.6 vessels for the three months ended June 30, 2016 and 2015, respectively. Overall vessel operating costs per day remained consistent, increasing slightly to $6,585 per day from $6,487 per day for the three months ended June 30, 2016 and 2015, respectively (see the breakdown of daily vessel operating costs below).
- Charterhire expense decreased $7.2 million to $18.7 million from $25.9 million for the three months ended June 30, 2016 and 2015, respectively. This decrease was primarily driven by a decrease in the Company’s time chartered-in fleet to an average of 11.7 vessels from 18.6 vessels for the three months ended June 30, 2016 and 2015, respectively.
- Depreciation expense increased $4.3 million to $29.9 million from $25.6 million for the three months ended June 30, 2016 and 2015, respectively. This increase was the result of an increase in the average number of owned vessels to 77.2 from 69.6 for the three months ended June 30, 2016 and 2015, respectively.
- General and administrative expenses decreased $2.4 million to $13.1 million from $15.5 million for the three months ended June 30, 2016 and 2015, respectively. This decrease was primarily driven by reductions in compensation expense (which includes a reduction in restricted stock amortization), and legal and professional fees.
- Financial expenses increased $4.2 million to $26.0 million from $21.8 million primarily as a result of:
- an increase in average debt outstanding to $1.98 billion from $1.90 billion for the three months ended June 30, 2016 and 2015, respectively, accompanied by an increase in LIBOR rates over those same periods
- an aggregate write-off of $3.7 million of deferred financing fees as a result of (i) the sales, and corresponding debt repayments on the amounts borrowed for STI Chelsea, STI Olivia and STI Powai, (ii) the refinancing of the amounts borrowed for STI Rose and STI Osceola and (iii) the repurchase of $5 million aggregate principal amount of the Convertible Notes in May 2016.
- These increases were offset by an increase in the amount of interest capitalized of $0.5 million.
- Unrealized gains and losses on derivative financial instruments relate to the change in the fair value of the profit or loss agreement on one of the Company’s time chartered-in vessels with a third party who neither owns nor operates the vessel.
- Financial income for the three months ended June 30, 2016 primarily consists of the gain recorded when the Company repurchased $5.0 million aggregate principal amount of the Company’s Convertible Notes for $847.50 per $1,000 principal amount in May 2016.
Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Statement of Income
(unaudited)
For the three months For the six months ended
ended June 30, June 30,
------------------------- -------------------------
In thousands of U.S.
dollars except per
share and share data 2016 2015 2016 2015
------------ ------------ ------------ ------------
Revenue
Vessel revenue $ 137,214$ 188,464$ 302,342$ 349,170
Operating expenses
Vessel operating costs (46,237) (41,147) (94,272) (78,622)
Voyage expenses (472) (1,112) (828) (3,206)
Charterhire (18,685) (25,915) (34,330) (54,646)
Depreciation (29,885) (25,550) (60,089) (46,958)
General and
administrative
expenses (13,085) (15,451) (30,102) (29,153)
Gain / (loss) on sales
of vessels 137 11 (2,078) 2,019
------------ ------------ ------------ ------------
Total operating
expenses (108,227) (109,164) (221,699) (210,566)
------------ ------------ ------------ ------------
Operating income 28,987 79,300 80,643 138,604
------------ ------------ ------------ ------------
Other (expense) and
income, net
Financial expenses (26,010) (21,840) (51,231) (39,898)
Realized gain on
derivative financial
instruments - 15 - 55
Unrealized gain /
(loss) on derivative
financial instruments 429 64 1,431 (542)
Financial income 489 53 1,104 78
Other income
(expenses), net (49) (4) (70) (14)
------------ ------------ ------------ ------------
Total other expense,
net (25,141) (21,712) (48,766) (40,321)
------------ ------------ ------------ ------------
Net income $ 3,846$ 57,588$ 31,877$ 98,283
============ ============ ============ ============
Earnings per share
Basic $ 0.02$ 0.35$ 0.20$ 0.63
Diluted $ 0.02$ 0.32$ 0.19$ 0.56
Basic weighted average
shares outstanding 161,381,900 162,457,319 160,931,752 157,177,056
Diluted weighted
average shares
outstanding (1) 165,943,795 199,202,256 166,306,290 193,533,559
(1) Diluted weighted average shares outstanding, assuming conversion of the
Company's Convertible Notes, were 198,076,053 and 198,342,263 for the
three and six months ended June 30, 2016, respectively. Earnings per
share for these periods did not consider the effect of the Convertible
Notes because the if-converted method was anti-dilutive.
Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(unaudited)
As of
-------------------------
June 30, December 31,
In thousands of U.S. dollars 2016 2015
------------ ------------
Assets
Current assets
Cash and cash equivalents $ 183,855$ 200,970
Accounts receivable 53,812 69,017
Prepaid expenses and other current assets 8,399 3,585
Derivative financial instruments 175 -
Inventories 6,187 6,575
------------ ------------
Total current assets 252,428 280,147
------------ ------------
Non-current assets
Vessels and drydock 2,974,596 3,087,753
Vessels under construction 113,921 132,218
Other assets 22,937 23,337
------------ ------------
Total non-current assets 3,111,454 3,243,308
------------ ------------
Total assets $ 3,363,882$ 3,523,455
============ ============
Current liabilities
Current portion of long-term debt $ 217,287$ 124,503
Finance lease liability - 53,372
Accounts payable 10,941 25,683
Accrued expenses 22,848 32,643
Derivative financial instruments - 1,175
------------ ------------
Total current liabilities 251,076 237,376
------------ ------------
Non-current liabilities
Long-term debt 1,709,084 1,872,114
Derivative financial instruments - 80
------------ ------------
Total non-current liabilities 1,709,084 1,872,194
------------ ------------
Total liabilities 1,960,160 2,109,570
------------ ------------
Shareholders' equity
Issued, authorized and fully paid-in share
capital:
Share capital 2,224 2,224
Additional paid-in capital 1,744,240 1,729,314
Treasury shares (441,018) (427,311)
Retained earnings 98,276 109,658
------------ ------------
Total shareholders' equity 1,403,722 1,413,885
------------ ------------
Total liabilities and shareholders' equity $ 3,363,882$ 3,523,455
============ ============
Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(unaudited)
For the six months ended
June 30,
-------------------------
In thousands of U.S. dollars 2016 2015
------------ ------------
Operating activities
Net income $ 31,877$ 98,283
Loss / (gain) on sales of vessels 2,078 (2,019)
Depreciation 60,089 46,958
Amortization of restricted stock 15,488 15,140
Amortization of deferred financing fees 12,967 7,088
Unrealized (gain) / loss on derivative financial
instruments (1,431) 542
Amortization of acquired time charter contracts 65 346
Accretion of Convertible Notes 5,740 5,471
Gain on repurchase of Convertible Notes (994) -
------------ ------------
125,879 171,809
------------ ------------
Changes in assets and liabilities:
Drydock payments - -
Decrease / (increase) in inventories 498 (1,075)
Decrease / (increase) in accounts receivable 15,205 (3,626)
Increase in prepaid expenses and other current
assets (4,878) (7,668)
Decrease / (increase) in other assets 310 (5,607)
(Decrease) / increase in accounts payable (1,033) 7,481
Decrease in accrued expenses (9,373) (2,641)
Interest rate swap termination payment - (128)
------------ ------------
729 (13,264)
------------ ------------
Net cash inflow from operating activities 126,608 158,545
------------ ------------
Investing activities
Acquisition of vessels and payments for vessels
under construction (102,872) (575,467)
Proceeds from disposal of vessels 158,175 72,884
------------ ------------
Net cash inflow / (outflow) from investing
activities 55,303 (502,583)
------------ ------------
Financing activities
Debt repayments (276,586) (75,034)
Issuance of debt 146,191 429,600
Debt issuance costs (3,248) (3,969)
Repayment of Convertible Notes (8,393) -
Gross proceeds from issuance of common stock - 159,747
Equity issuance costs (24) (7,394)
Dividends paid (43,259) (42,285)
Repurchase of common stock (13,707) (5,907)
------------ ------------
Net cash (outflow) / inflow from financing
activities (199,026) 454,758
------------ ------------
(Decrease) / increase in cash and cash equivalents (17,115) 110,720
Cash and cash equivalents at January 1, 200,970 116,143
------------ ------------
Cash and cash equivalents at June 30, $ 183,855$ 226,863
============ ============
Scorpio Tankers Inc. and Subsidiaries
Other operating data for the three and six months ended June 30, 2016 and
2015
(unaudited)
For the three months For the six months ended
ended June 30, June 30,
------------------------- -------------------------
2016 2015 2016 2015
------------ ------------ ------------ ------------
Adjusted EBITDA(1)(in
thousands of U.S.
dollars) $ 65,866$ 112,314$ 158,228$ 198,724
Average Daily Results
Time charter equivalent
per day(2) $ 16,903$ 23,469$ 18,561$ 22,331
Vessel operating costs
per day(3) $ 6,585$ 6,487$ 6,599$ 6,534
Aframax/LR2
TCE per revenue day (2) $ 20,688$ 30,116$ 23,963$ 27,876
Vessel operating costs
per day(3) $ 6,562$ 6,751$ 6,681$ 6,797
Average number of owned
vessels 20.1 13.3 19.6 11.1
Average number of time
chartered-in vessels 2.0 4.4 2.0 5.3
Panamax/LR1
TCE per revenue day (2) $ 19,149$ 23,243$ 22,742$ 22,317
Vessel operating costs
per day(3) - * - $ 8,362
Average number of owned
vessels - 0.1 - 1.4
Average number of time
chartered-in vessels 0.7 4.7 0.8 4.8
MR
TCE per revenue day (2) $ 16,528$ 22,599$ 17,562$ 21,402
Vessel operating costs
per day(3) $ 6,699$ 6,352$ 6,639$ 6,375
Average number of owned
vessels 43.1 41.2 44.9 38.9
Average number of time
chartered-in vessels 4.0 3.2 4.0 3.3
Handymax
TCE per revenue day (2) $ 13,382$ 19,774$ 14,616$ 19,909
Vessel operating costs
per day(3) $ 6,226$ 6,422$ 6,336$ 6,586
Average number of owned
vessels 14.0 15.0 14.0 15.0
Average number of time
chartered-in vessels 5.1 6.2 4.2 6.5
Fleet data
Average number of owned
vessels 77.2 69.6 78.5 66.3
Average number of time
chartered-in vessels 11.7 18.6 11.0 19.8
* In early April 2015, the Company sold STI Harmony and STI Heritage, which were the last two owned LR1 tankers in this segment. Since there were only four total operating days in this segment in the period presented, operating costs per day were not a meaningful metric and thus not presented for the three months ended June 30, 2015.
(1) See Non-IFRS Measures 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 July 27, 2016
Vessel Name Year Built DWT Ice class Employment Vessel type
-------------- ---------- ---------- ---------- ------------ ------------
Owned vessels
1 STI Brixton 2014 38,000 1A SHTP (1) Handymax
2 STI Comandante 2014 38,000 1A SHTP (1) Handymax
Time Charter
3 STI Pimlico 2014 38,000 1A (5) Handymax
4 STI Hackney 2014 38,000 1A SHTP (1) Handymax
5 STI Acton 2014 38,000 1A SHTP (1) Handymax
6 STI Fulham 2014 38,000 1A SHTP (1) Handymax
7 STI Camden 2014 38,000 1A SHTP (1) Handymax
8 STI Battersea 2014 38,000 1A SHTP (1) Handymax
9 STI Wembley 2014 38,000 1A SHTP (1) Handymax
10 STI Finchley 2014 38,000 1A SHTP (1) Handymax
11 STI Clapham 2014 38,000 1A SHTP (1) Handymax
Time Charter
12 STI Poplar 2014 38,000 1A (5) Handymax
STI
13 Hammersmith 2015 38,000 1A SHTP (1) Handymax
STI
14 Rotherhithe 2015 38,000 1A SHTP (1) Handymax
15 STI Amber 2012 52,000 - SMRP(2) MR
16 STI Topaz 2012 52,000 - SMRP(2) MR
17 STI Ruby 2012 52,000 - SMRP(2) MR
18 STI Garnet 2012 52,000 - SMRP(2) MR
19 STI Onyx 2012 52,000 - SMRP(2) MR
20 STI Sapphire 2013 52,000 - SMRP(2) MR
21 STI Emerald 2013 52,000 - SMRP(2) MR
22 STI Beryl 2013 52,000 - SMRP(2) MR
23 STI Le Rocher 2013 52,000 - SMRP(2) MR
24 STI Larvotto 2013 52,000 - SMRP(2) MR
STI
25 Fontvieille 2013 52,000 - SMRP(2) MR
26 STI Ville 2013 52,000 - SMRP(2) MR
27 STI Duchessa 2014 52,000 - SMRP(2) MR
28 STI Opera 2014 52,000 - SMRP(2) MR
29 STI Texas City 2014 52,000 - SMRP(2) MR
30 STI Meraux 2014 52,000 - SMRP(2) MR
STI San
31 Antonio 2014 52,000 - SMRP(2) MR
32 STI Venere 2014 52,000 - SMRP(2) MR
33 STI Virtus 2014 52,000 - SMRP(2) MR
34 STI Aqua 2014 52,000 - SMRP(2) MR
35 STI Dama 2014 52,000 - SMRP(2) MR
36 STI Benicia 2014 52,000 - SMRP(2) MR
37 STI Regina 2014 52,000 - SMRP(2) MR
STI St.
38 Charles 2014 52,000 - SMRP(2) MR
39 STI Mayfair 2014 52,000 - SMRP(2) MR
40 STI Yorkville 2014 52,000 - SMRP(2) MR
41 STI Milwaukee 2014 52,000 - SMRP(2) MR
42 STI Battery 2014 52,000 - SMRP(2) MR
43 STI Soho 2014 52,000 - SMRP(2) MR
44 STI Memphis 2014 52,000 - SMRP(2) MR
45 STI Tribeca 2015 52,000 - SMRP(2) MR
46 STI Gramercy 2015 52,000 - SMRP(2) MR
47 STI Bronx 2015 52,000 - SMRP(2) MR
48 STI Pontiac 2015 52,000 - SMRP(2) MR
49 STI Manhattan 2015 52,000 - SMRP(2) MR
50 STI Queens 2015 52,000 - SMRP(2) MR
51 STI Osceola 2015 52,000 - SMRP(2) MR
STI Notting Time Charter
52 Hill 2015 52,000 1B (6) MR
53 STI Seneca 2015 52,000 - SMRP(2) MR
STI Time Charter
54 Westminster 2015 52,000 1B (6) MR
55 STI Brooklyn 2015 52,000 - SMRP(2) MR
56 STI Black Hawk 2015 52,000 - SMRP(2) MR
57 STI Elysees 2014 109,999 - SLR2P (4) LR2
58 STI Madison 2014 109,999 - SLR2P (4) LR2
59 STI Park 2014 109,999 - SLR2P (4) LR2
60 STI Orchard 2014 109,999 - SLR2P (4) LR2
61 STI Sloane 2014 109,999 - SLR2P (4) LR2
62 STI Broadway 2014 109,999 - SLR2P (4) LR2
63 STI Condotti 2014 109,999 - SLR2P (4) LR2
Time Charter
64 STI Rose 2015 109,999 - (7) LR2
65 STI Veneto 2015 109,999 - SLR2P (4) LR2
66 STI Alexis 2015 109,999 - SLR2P (4) LR2
67 STI Winnie 2015 109,999 - SLR2P (4) LR2
68 STI Oxford 2015 109,999 - SLR2P (4) LR2
69 STI Lauren 2015 109,999 - SLR2P (4) LR2
70 STI Connaught 2015 109,999 - SLR2P (4) LR2
71 STI Spiga 2015 109,999 - SLR2P (4) LR2
72 STI Savile Row 2015 109,999 - SLR2P (4) LR2
73 STI Kingsway 2015 109,999 - SLR2P (4) LR2
74 STI Carnaby 2015 109,999 - SLR2P (4) LR2
75 STI Lombard 2015 109,999 - SLR2P (4) LR2
76 STI Grace 2016 109,999 - SLR2P (4) LR2
77 STI Jermyn 2016 109,999 - SLR2P (4) LR2
----------
Total owned
DWT 5,025,979
==========
Daily
Vessel Year Ice Vessel Base Expiry
Name Built DWT class Employment type Rate (8)
---------- ----- ------- ----- ---------- -------- ------- ---------
Time
chartered
-in
vessels
78 Kraslava 2007 37,258 1B SHTP (1) Handymax $17,000 02-Jun-17 (9)
Krisjanis
79 Valdemars 2007 37,266 1B SHTP (1) Handymax $17,000 02-Apr-17 (10)
80 Silent 2007 37,847 1A SHTP (1) Handymax $15,600 21-Mar-19 (11)
81 Single 2007 37,847 1A SHTP (1) Handymax $15,600 24-Mar-19 (11)
82 Star I 2007 37,847 1A SHTP (1) Handymax $15,600 27-Mar-19 (11)
Miss
Mariarosa
83 ria 2011 47,499 - SMRP(2) MR $16,350 26-May-17 (12)
84 Vukovar 2015 49,990 - SMRP(2) MR $17,034 01-May-18
85 Targale 2007 49,999 - SMRP(2) MR $16,200 17-May-17 (13)
86 Zefyros 2013 49,999 - SMRP(2) MR $15,800 08-Jul-17 (14)
87 Gan-Trust 2013 51,561 - SMRP(2) MR $17,500 06-Jan-17 (15)
Hellespont
88 Progress 2006 73,728 - SPTP (3) LR1 $17,250 14-Mar-17
Densa
89 Crocodile 2015 105,408 - SLR2P (4) LR2 $22,600 07-Feb-17 (16)
Densa
90 Alligator 2013 105,708 - SLR2P (4) LR2 $24,875 17-Sep-16 (17)
-------
Total time
chartered
-in DWT 721,957
=======
Newbuildings currently under
construction
Vessel Name Yard DWT Vessel type
------------------------------ -------- ---------- ------------
91 Hull 2601 - TBN STI Galata HMD (18) 52,000 MR
92 Hull 2602 - TBN STI Bosphorus HMD (18) 52,000 MR
93 Hull 2603 - TBN STI Leblon HMD (18) 52,000 MR
94 Hull 2604 - TBN STI La Boca HMD (18) 52,000 MR
95 Hull 2605 - TBN STI San Telmo HMD (18) 52,000 MR
96 Hull 2606 - TBN STI Jurere HMD (18) 52,000 MR
97 Hull 2607 - TBN STI Esles II HMD (18) 52,000 MR
98 Hull 2608 - TBN STI Jardins HMD (18) 52,000 MR
99 Hull S3120 - TBN STI Selatar SSME (19) 109,999 LR2
100 Hull S3121 - TBN STI Rambla SSME (19) 109,999 LR2
----------
Total newbuilding product
tankers DWT 635,998
==========
----------
Total Fleet DWT 6,383,934
==========
(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 MR
Pool (SMRP). SMRP is operated by SCM. SMRP is a related party to the
Company.
(3) 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.
(4) 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
(5) This vessel is currently time chartered-out to an unrelated third-party
for three years at $18,000 per day. This time charter is scheduled to
expire in January 2019.
(6) This vessel is currently time chartered-out to an unrelated third-party
for three years at $20,500 per day. This time charter is scheduled to
expire in December 2018.
(7) This vessel is currently time chartered-out to an unrelated third-party
for three years at $28,000 per day. This time charter is scheduled to
expire in February 2019.
(8) Redelivery from the charterer is plus or minus 30 days from the expiry
date.
(9) In March 2016, we extended the charter for an additional year at
$17,000 per day effective June 2016.
(10) In March 2016, we extended the charter for an additional year at
$17,000 per day effective April 2016.
(11) We have options to extend this charter for two consecutive one year
periods at $16,500 and $17,500 per day, respectively.
(12) In April 2016, we declared the option to extend the charter for an
additional year at $16,350 per day effective May 2016.
(13) In March 2016, we extended the charter for an additional year at
$16,200 per day effective May 2016.
(14) We have an option to extend the charter for an additional year at
$17,000 per day.
(15) We have an option to extend the charter for an additional year at
$18,000 per day.
(16) We have entered into an agreement with a third party whereby we split
all of the vessel's profits and losses above or below the daily base
rate.
(17) We have an option to extend the charter for an additional year at
$26,925 per day.
(18) These newbuilding vessels are being constructed at HMD (Hyundai Mipo
Dockyard Co. Ltd. of South Korea). Seven vessels are expected to be
delivered throughout 2017 and one vessel is expected to be delivered in
the first quarter of 2018.
(19) These newbuilding vessels are being constructed at SSME (Sungdong
Shipbuilding & Marine Engineering Co., Ltd). One vessel is expected to
be delivered in the third quarter of 2016 and one in the fourth quarter
of 2016.
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’s dividends paid during 2015 and 2016 were as follows:
Dividends per
Date paid share
----------------------------------------------------------------------------
March 2015$0.120June 2015$0.125September 2015$0.125December 2015$0.125March 2016$0.125June 2016$0.125
On July 28, 2016, the Scorpio Tankers’ Board of Directors declared a quarterly cash dividend of $0.125 per share, payable on September 29, 2016 to all shareholders as of September 15, 2016 (the record date). As of July 27, 2016 there were 172,378,640 shares outstanding.
Securities Repurchase Program
In May 2015, the Company’s Board of Directors authorized a new Securities Repurchase Program to purchase up to an aggregate of $250 million of the Company’s securities, which currently consist of its (i) Convertible Notes, which were issued in June 2014, (ii) Unsecured Senior Notes Due 2020 (NYSE: SBNA), which were issued in May 2014, and (iii) Unsecured Senior Notes Due 2017 (NYSE: SBNB), which were issued in October 2014. As of the date hereof, the Company has the authority to purchase up to an additional $153.3 million of its securities under its Securities Repurchase Program. The Company expects to repurchase any securities 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 Securities Repurchase Program to repurchase any securities.
Since January 1, 2016 through the date of this press release, the Company has repurchased its securities as follows:
- an aggregate of 2,956,760 of its common shares at an average price of $5.58 per share; the repurchased shares are being held as treasury shares. There are 172,378,640 shares outstanding as of July 27, 2016.
- $10.0 million aggregate principal amount of its Convertible Notes at an average price of $839.28 per $1,000 principal amount.
About Scorpio Tankers Inc.
Scorpio Tankers Inc. is a provider of marine transportation of petroleum products worldwide. Scorpio Tankers Inc. currently owns 77 product tankers (21 LR2, 14 Handymax, and 42 MR tankers) with an average age of 1.8 years and time charters-in 13 product tankers (two LR2, one LR1, five MR and five Handymax tankers). The Company has contracted for 10 newbuilding product tankers (eight MR and two LR2 tankers). The two LR2s are expected to be delivered in the second half of 2016 (one per quarter), seven MRs are expected to be delivered throughout 2017 and one MR is expected to be delivered in the first quarter of 2018. 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-IFRS Measures
Reconciliation of IFRS Financial Information to Non-IFRS Financial Information
This press release describes adjusted net income and adjusted EBITDA, which are not measures prepared in accordance with IFRS (i.e. “Non-IFRS” measures). The Non-IFRS 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-IFRS measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with IFRS.
The Company believes that the presentation of adjusted net income with adjusted earnings per share, basic and diluted, and adjusted EBITDA are useful to investors because they facilitate the comparability and the evaluation of companies in the Company’s industry. In addition, the Company believes that adjusted net income with adjusted earnings per share, basic and diluted, and adjusted EBITDA are useful in evaluating its operating performance compared to that of other companies in the Company’s industry. The Company’s definitions of adjusted net income with the adjusted earnings per share, basic and diluted, and adjusted EBITDA may not be the same as reported by other companies in the shipping industry or other industries.
Reconciliation of Net Income to Adjusted Net Income
For the three months ended June 30,
2016
--------------------------------------
In thousands of U.S. dollars except Per share Per share
per share data Amount basic diluted
------------ ------------ ------------
Net income $ 3,846$ 0.02$ 0.02
Adjustments:
Deferred financing fees write-off 3,706 0.02 0.02
Unrealized gain on derivative
financial instruments (429) (0.00) (0.00)
Gain on repurchase of Convertible
Notes (413) (0.00) (0.00)
Gain on sales of vessels (137) (0.00) (0.00)
------------ ------------ ------------
Adjusted net income $ 6,573$ 0.04$ 0.04
============ ============ ============
For the three months ended June 30,
2015
--------------------------------------
In thousands of U.S. dollars except Per share Per share
per share data Amount basic diluted
------------ ------------ ------------
Net income $ 57,588$ 0.35$ 0.32
Adjustments:
Unrealized loss on derivative
financial instruments (64) (0.00) (0.00)
Gain on sales of vessels (11) (0.00) (0.00)
------------ ------------ ------------
Adjusted net income $ 57,513$ 0.35$ 0.32
============ ============ ============
For the six months ended June 30, 2016
------------------------------------------
In thousands of U.S. dollars Per share Per share
except per share data Amount basic diluted
------------ ------------ ------------
Net income $ 31,877$ 0.20$ 0.19
Adjustments:
Deferred financing fees
write-off 5,501 0.03 0.03
Unrealized gain on
derivative financial
instruments (1,431) (0.01) (0.01)
Gain on repurchase of
Convertible Notes (994) (0.01) (0.01)
Loss on sale of vessels 2,078 0.01 0.01
------------ ------------ ------------
Adjusted net income $ 37,031$ 0.23 (1) $ 0.22 (1)
============ ============ ============
(1) Summation differences due to rounding
For the six months ended June 30, 2015
--------------------------------------
In thousands of U.S. dollars except Per share Per share
per share data Amount basic diluted
------------ ------------ ------------
Net income $ 98,283$ 0.63$ 0.56
Adjustments:
Unrealized loss on derivative
financial instruments 542 0.00 0.00
Gain on sales of vessels (2,019) (0.01) (0.01)
------------ ------------ ------------
Adjusted net income $ 96,806$ 0.62$ 0.55
============ ============ ============
Reconciliation of Net Income to Adjusted EBITDA
For the three months For the six months ended
ended June 30, June 30,
------------------------- -------------------------
In thousands of U.S.
dollars 2016 2015 2016 2015
------------ ------------ ------------ ------------
Net income $ 3,846$ 57,588$ 31,877$ 98,283
Financial expenses 26,010 21,840 51,231 39,898
Unrealized (gain) /
loss on derivative
financial instruments (429) (64) (1,431) 542
Financial income (76) (53) (110) (78)
Depreciation 29,885 25,550 60,089 46,958
Amortization of
restricted stock 7,180 7,464 15,488 15,140
(Gain) / loss on sales
of vessels (137) (11) 2,078 (2,019)
Gain on repurchase of
Convertible Notes (413) - (994) -
------------ ------------ ------------ ------------
Adjusted EBITDA $ 65,866$ 112,314$ 158,228$ 198,724
============ ============ ============ ============
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. We undertake no obligation, and specifically decline any obligation, except as required by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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.
Contact Information
Scorpio Tankers Inc.
(212) 542-1616