Scorpio Tankers Inc. Announces Financial Results for the Second Quarter of 2013 and Declares a Dividend

Marketwired

MONACO--(Marketwired - Jul 29, 2013) -  Scorpio Tankers Inc. (NYSE: STNG) ("Scorpio Tankers," or the "Company") today reported its results for the three and six months ended June 30, 2013.

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

For the three months ended June 30, 2013, the Company had an adjusted net income of $3.6 million (see Non-GAAP Measure section below), or $0.03 basic and diluted earnings per share, excluding a $0.3 million, or $0.00 per share of unrealized gain on derivative financial instruments. Including the unrealized gain on derivative financial instruments, the Company had net income of $4.0 million, or $0.03 basic and diluted earnings per share. 

For the three months ended June 30, 2012, the Company had a net loss of $4.0 million, or $0.10 basic and diluted loss per share. 

Results for the six months ended June 30, 2013 and 2012

For the six months ended June 30, 2013, the Company had an adjusted net income of $10.2 million (see Non-GAAP Measure section below), or $0.09 basic and diluted earnings per share, excluding a $0.4 million, or $0.00 per share unrealized gain on derivative financial instruments. Including the unrealized gain on derivative financial instruments, the Company had net income of $10.6 million or $0.09 basic and diluted earnings per share. 

For the six months ended June 30, 2012, the Company had an adjusted net loss of $4.6 million, or $0.12 basic and diluted loss per share, excluding a $4.5 million, or $0.11 basic and diluted loss per share relating to the loss from sales of STI Conqueror, STI Matador, and STI Gladiator. Including the loss from the sales of vessels, the Company had a net loss of $9.1 million or $0.23 basic and diluted loss per share.

Declaration of Dividend
On July 29, 2013, the Scorpio Tankers' board of directors declared a quarterly cash dividend of $0.035 per share, payable on September 25, 2013 to all shareholders as of September 10, 2013 (the record date). There are currently 164,656,424 shares outstanding.

Emanuele Lauro, chief executive officer and chairman of the board, commented, "Our year-over-year performance continues to improve both as a result of stronger market fundamentals and a stronger Company. The seasonal weakness which we typically experience in the second and third quarter has been particularly short-lived in the Atlantic basin this year. Burgeoning exports of refined products from the United States has contributed to a significant counter-seasonal swing in MR vessel freight rates since the end of June, reaching levels in excess of $20,000 per day.

"We are confident in the outlook for freight markets in the Eastern hemisphere and as well for the LPG trade as major global infrastructure develops. Finally, our conviction in sustained profitability for the Company has led our Board of Directors to authorize an increase in our quarterly dividend by 40%."

Summary of Recent and Second Quarter Significant Events:

  • Executed the previously announced $525.0 million 2013 Credit Facility in July 2013 (see additional information below). 
  • Reached agreements with Hyundai Samho Heavy Industries ("HSHI") and Daewoo Shipbuilding and Marine Engineering Co., Ltd. ("DSME") in July 2013 for the construction of a minimum of five and up to 10 Very Large Gas Carriers ("VLGCs") for approximately $75.0 million each, with deliveries scheduled in 2015. 
  • Declared and paid a quarterly cash dividend on the Company's common stock of $0.025 per share in June 2013.
  • Took delivery of the eighth, ninth and tenth MR tankers under the Company's Newbuilding Program, STI Beryl, STI Le Rocher and STI Larvotto in April, June and July 2013, respectively. After delivery, each vessel began a time charter for up to 120 days at approximately $19,000 per day.
  • Closed on a registered direct placement of common shares in May 2013, raising aggregate net proceeds of $289.1 million.
  • Reached agreements in May 2013 with two shipyards to construct four 114,000 dwt LR2 product tankers for approximately $50.5 million each, two at HSHI and two at DSME. These vessels are scheduled to be delivered in the first and second quarters of 2015. 
  • Reached an agreement in May 2013 with SPP Shipbuilding Co., Ltd. of South Korea ("SPP") to construct four 52,000 dwt MR product tankers for approximately $32.5 million each. These vessels are scheduled to be delivered in the first and second quarters of 2015.
  • Reached agreements in May 2013 with Hyundai Mipo Dockyard Co. Ltd. of South Korea ("HMD") for the construction of six Handymax ice class-1A tankers for approximately $31.6 million each with expected deliveries in the third quarter of 2014. 
  • Reached an agreement in April 2013 with an unaffiliated third party for the purchase of four MR tankers currently under construction at HMD for approximately $36.5 million each. The first two vessels under this agreement, STI Le Rocher and STI Larvotto were delivered in June and July 2013, respectively and the third and fourth vessels are expected to be delivered in August and September 2013. 

VLGC Newbuilding Agreements

In July 2013, the Company reached agreements with HSHI and DSME for the construction of a minimum of five and up to 10 VLGCs for approximately $75.0 million each. The vessels are 84,000 cubic meter tankers designed for the carriage of liquefied petroleum gas ("LPG"). Of the first five vessels, two are scheduled to be delivered in the second quarter of 2015, one in the third quarter of 2015, and two in the fourth quarter of 2015. These agreements replace the previously announced agreement to construct four LR2 vessels at Samsung Heavy Industries.

2013 Credit Facility

In July 2013, we executed final documentation for the previously announced $525.0 million 2013 Credit Facility. The 2013 Credit Facility consists of a $260.0 million delayed draw term loan facility and a $265.0 million revolving credit facility. Drawdowns under the 2013 Credit Facility will be secured by certain vessels for which we have entered into newbuilding contracts ("Collateral").

A single drawdown of the term loan may occur in connection with the delivery of each newbuilding vessel that provides security for this credit facility in an amount equal to the lesser of 60% of (i) the contract price for such vessel or (ii) its fair market value. The drawdowns under the revolving loan may occur in connection with the delivery of certain newbuilding vessels and is also capped at the lesser of 60% of the loan amount or fair market value, with such amount, once drawn, available on a revolving basis. In general, drawdowns under the term loan are available until January 31, 2015 and drawdowns under the revolving loan are available until July 31, 2015 and each will bear interest at LIBOR plus an applicable margin of 3.50%.

The term loan is payable and the revolving loans reduced, in each case, in an amount equal to 1/60th of such loan on a consecutive quarterly basis until final maturity on the sixth anniversary of the facility.

The 2013 Credit Facility includes financial covenants that are similar to the covenants in the other credit facilities.

Time chartered-in update

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

In July 2013, the Company entered into new agreements on two vessels that are currently time chartered-in. The agreements are for two Handymax product tankers for one year at $12,800 per day (2005 built, 40,471 dwt and 2006 built, 40,426 dwt). These agreements commenced in July 2013 upon expiration of the prior agreements. These agreements also contain options for the Company to extend the charters for an additional year at $13,550 per day. 

Conference Call
The Company will have a conference call on July 29, 2013 at 2:30 PM Eastern Daylight Time and 8:30 PM Central European Time

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1(888)-211-4495 (U.S.) or 1(913) 312-0949 (International). The conference participant passcode is 2139106. The information provided on the teleconference is only accurate at the time of the conference call, and the Company will take no responsibility for providing updated information.

Slides and Audio Webcast:

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

Webcast URL: http://www.visualwebcaster.com/event.asp?id=95304

Current Liquidity
As of July 26, 2013, the Company had $431.9 million in cash and $78.5 million available to draw down from its 2010 Revolving Credit Facility. 

Debt

As of July 29, 2013, the Company's outstanding debt balance is as follows:

         
2010 Revolving Credit Facility   $ -   million
2011 Credit Facility     66.3   million
STI Spirit Credit Facility     23.4   million
Newbuilding Credit Facility     86.8   million
2013 Credit Facility     -   million
Total   $ 176.5   million
           

2010 Revolving Credit Facility

In June 2013, the Company repaid $17.2 million into its 2010 Revolving Credit Facility. There is currently $78.5 million available to draw down under this facility.

STI Spirit Credit Facility

The credit facility with DVB Bank SE requires that the charter-free market value of STI Spirit shall be no less than 140% of the then outstanding loan balance. The Company posted additional cash collateral of $2.8 million into an escrow account in June 2013 to maintain compliance with this covenant. The amount held in escrow will be re-evaluated at the next measurement date, December 31, 2013. 

2011 Credit Facility

In April 2013, the Company drew down $17.7 million from the 2011 Credit Facility to partially finance the delivery of the Company's eighth newbuilding vessel, STI Beryl. 

Newbuilding Program

During the second quarter of 2013, the Company made $162.3 million of installment payments on its newbuilding vessels. The Company currently has 53 newbuilding vessel orders with HMD, SPP, HSHI and DSME (24 MRs, 12 Handymaxes, 12 LR2s and five VLGCs). The estimated future payment dates and amounts are as follows*:

         
Q3 2013   $ 256.2   million**
Q4 2013     157.3   million
Q1 2014     182.5   million
Q2 2014     288.2   million
Q3 2014     403.6   million
Q4 2014     269.6   million
Q1 2015     127.3   million
Q2 2015     207.3   million
Q3 2015     67.5   million
Q4 2015     15.0   million
Total   $ 1,974.5   million

*These are estimates only and are subject to change as construction progresses. 
**$63.2 million has been paid prior to the date of this press release, including the final installment payment of $18.4 million relating to the delivery of STI Larvotto.  

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

For the three months ended June 30, 2013, the Company recorded net income of $4.0 million compared to a net loss of $4.0 million in the three months ended June 30, 2012. The following were the significant changes between the two periods:

  • Time charter equivalent, or TCE revenues, a non-IFRS measure, is vessel revenues less voyage expenses (including bunkers and port charges). TCE revenue is also included herein because it is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company's performance irrespective of changes in the mix of charter types (i.e., spot charters, time charters, and pool charters), and it provides useful information to investors and management. The following table depicts TCE revenue for the three months ended June 30, 2013 and 2012:
       
    For the three months ended June 30,  
In thousands of U.S. dollars   2013     2012  
Vessel revenue   $ 51,533     $ 27,487  
Voyage expenses     (1,333 )     (7,797 )
TCE revenue   $ 50,200     $ 19,690  
                 
  • TCE revenue increased by $30.5 million to $50.2 million as a result of an increase in the average number of operating vessels (owned and time chartered-in) to 35.9 from 17.8 for the three month periods ended June 30, 2013 and 2012, respectively. Additionally, the Company experienced an increase in time charter equivalent revenue per day to $15,444 per day from $12,258 per day for the three months ended June 30, 2013 and 2012, respectively (see the breakdown of daily TCE averages below). 

  • Vessel operating costs increased $1.5 million to $8.5 million from $7.0 million. This increase was driven by an increase in the Company's owned fleet to an average of 14.69 vessels from 9.55 vessels for the three months ended June 30, 2013 and 2012, respectively. This increase was offset by a decrease in operating costs per day to $6,262 per day from $7,942 per day for the three months ended June 30, 2013 and 2012, respectively. The improvement in operating costs per day was primarily driven by the mix of vessels in the Company's fleet. 

    • The Company's fleet for the three months ended June 30, 2013 included the first eight vessels under the Company's Newbuilding program for all or part of the period. Daily operating costs for these vessels were $5,945 per day. The Company's fleet for three months ended June 30, 2012 did not include such vessels and included STI Matador, STI Gladiator, STI Diamond and STI Coral, which were sold during 2012. Daily operating costs for these vessels were $8,241 per day. 

  • Charterhire expense increased $17.2 million to $27.0 million as a result of an increase in the average number of time chartered-in vessels to 21.19 from 8.25 for the three months ended June 30, 2013 and 2012, respectively. See the Company's Fleet List below for the terms of these agreements.

  • Depreciation expense increased $2.3 million to $5.5 million primarily as a result of (i) an increase in the average number of owned vessels to 14.69 from 9.55 for the three months ended June 30, 2013 and 2012, and (ii) a change in the mix vessels in the Company's fleet. Both were driven by the deliveries of the first eight vessels under the Company's Newbuilding program offset by the sales of STI Matador, STI Gladiator, STI Diamond and STI Coral in 2012.
     
  • General and administrative expenses increased $2.6 million to $5.3 million. This increase was driven by (i) a $1.5 million increase in restricted stock amortization (non-cash) as a result of restricted stock issued during the second quarter under the Company's Equity Incentive Plan and (ii) an overall increase in other general and administrative expenses due to the significant growth in the Company's fleet and Newbuilding program. 
   
   
Scorpio Tankers Inc. and Subsidiaries  
Condensed Consolidated Statement of Profit or Loss  
(unaudited)  
   
    For the three months ended
June 30,
    For the six months ended
June 30,
 
In thousands of U.S. dollars except per share and share data   2013     2012     2013     2012  
Revenue                                
  Vessel revenue     51,533       27,487       96,457       56,611  
                                 
Operating expenses:                                
  Vessel operating costs     (8,527 )     (6,966 )     (16,498 )     (15,784 )
  Voyage expenses     (1,333 )     (7,797 )     (2,533 )     (13,647 )
  Charterhire     (26,972 )     (9,766 )     (47,469 )     (16,891 )
  Depreciation     (5,521 )     (3,178 )     (10,288 )     (6,824 )
  Loss from sale of vessels     -       (31 )     -       (4,525 )
  General and administrative expenses     (5,290 )     (2,737 )     (8,049 )     (5,592 )
  Total operating expenses     (47,643 )     (30,475 )     (84,837 )     (63,263 )
Operating income / (loss)     3,890       (2,988 )     11,620       (6,652 )
Other (expense) and income, net                                
  Financial expenses     (476 )     (1,049 )     (1,875 )     (2,475 )
  Realized (loss) / gain on derivative financial instruments     (46 )     -       23       -  
  Unrealized gain on derivative financial instruments     323       -       365       -  
  Financial income     369       1       550       2  
  Other expenses, net     (92 )     (8 )     (107 )     (20 )
  Total other expense, net     78       (1,056 )     (1,044 )     (2,493 )
Net income / (loss)   $ 3,968     $ (4,044 )   $ 10,576     $ (9,145 )
                                 
Earnings / (loss) per share                                
                                 
  Basic and diluted   $ 0.03     $ (0.10 )   $ 0.09     $ (0.23 )
                                   
                                   
                                   
Scorpio Tankers Inc. and Subsidiaries  
Condensed Consolidated Balance Sheet  
(unaudited)  
   
    As of  
In thousands of U.S. dollars   June 30, 2013     December 31, 2012  
Assets                
Current assets                
Cash and cash equivalents   $ 520,849     $ 87,165  
Accounts receivable     62,847       36,438  
Prepaid expenses and other current assets     4,076       956  
Inventories     2,525       2,169  
Total current assets     590,297       126,728  
Non-current assets                
Vessels and drydock     498,639       395,412  
Vessels under construction     261,580       50,251  
Other assets     11,895       889  
Total non-current assets     772,114       446,552  
Total assets   $ 1,362,411     $ 573,280  
                 
Current liabilities                
Bank loans     13,373       7,475  
Accounts payable     12,868       11,387  
Accrued expenses     12,384       3,057  
Derivative financial instruments     738       844  
Total current liabilities     39,363       22,763  
Non-current liabilities                
Bank loans     160,448       134,984  
Derivative financial instruments     378       743  
Total non-current liabilities     160,826       135,727  
Total liabilities     200,189       158,490  
                 
Shareholders' equity                
Issued, authorized and fully paid in share capital:                
  Share capital     1,658       650  
  Additional paid in capital     1,255,260       519,493  
Treasury shares     (7,938 )     (7,938 )
Hedging reserve     (250 )     (329 )
Accumulated deficit     (86,508 )     (97,086 )
Total shareholders' equity     1,162,222       414,790  
Total liabilities and shareholders' equity   $ 1,362,411     $ 573,280  
                 
                 
                 
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   2013     2012  
                 
Operating activities                
Net income / (loss)   $ 10,576     $ (9,145 )
Loss from sale of vessels     -       4,525  
Depreciation     10,288       6,824  
Amortization of restricted stock     2,882       1,706  
Amortization of deferred financing fees     536       627  
Straight-line adjustment for charterhire expense     (118 )     89  
Unrealized gain on derivative financial instruments     (365 )     -  
      23,799       4,626  
Changes in assets and liabilities:                
Drydock payments     (1,381 )     (119 )
Increase in inventories     (356 )     (561 )
Increase in accounts receivable     (26,410 )     (3,608 )
(Increase)/decrease in prepaid expenses and other current assets     (3,146 )     476  
(Decrease)/increase in other assets     (394 )     1,068  
Increase in accounts payable     1,684       2,333  
(Decrease)/increase in accrued expenses     (833 )     1,111  
      (30,836 )     700  
Net cash (outflow) / inflow from operating activities     (7,037 )     5,326  
Investing activities                
Acquisition of vessels and payments for vessels under construction     (323,548 )     (46,680 )
Proceeds from disposal of vessels     -       52,236  
Net cash (outflow) / inflow from investing activities     (323,548 )     5,556  
Financing activities                
Bank loan repayment     (21,452 )     (58,891 )
Bank loan drawdown     52,050       25,708  
Debt issuance costs     (439 )     (2,097 )
Gross proceeds from issuance of common stock     765,037       27,000  
Equity issuance costs     (26,811 )     (1,118 )
Purchase of treasury shares     -       (2,000 )
Dividends paid     (4,116 )     -  
Net cash inflow / (outflow) from financing activities     764,269       (11,398 )
Increase in cash and cash equivalents     433,684       (516 )
Cash and cash equivalents at January 1,     87,165       36,833  
Cash and cash equivalents at June 30,   $ 520,849     $ 36,317  
                 
                 
                 
Scorpio Tankers Inc. and Subsidiaries
Other operating data for the three and six months ended June 30, 2013 and 2012
(unaudited)
 
    For the three months ended
June 30,
  For the six months ended
June 30,
    2013   2012   2013   2012
Adjusted EBITDA(1)(in thousands of U.S. dollars)   $ 11,655   $ 1,105   $ 24,706   $ 6,383
                         
Average Daily Results                        
Time charter equivalent per day(2)   $ 15,444   $ 12,258   $ 15,943   $ 13,329
Vessel operating costs per day(3)     6,262     7,942     6,529   $ 8,042
                         
Aframax/LR2                        
TCE per revenue day (2)   $ 12,681   $ 491   $ 14,680   $ 9,319
Vessel operating costs per day(3)     7,301     10,363     7,131     9,115
                         
Panamax/LR1                        
TCE per revenue day (2)   $ 14,242   $ 15,591   $ 13,600   $ 15,138
Vessel operating costs per day(3)     6,553     7,496     7,264     8,042
                         
MR                        
TCE per revenue day (2)   $ 17,840   $ 13,210   $ 18,000   $ 11,845
Vessel operating costs per day(3)     5,945     7,538     5,905     7,880
                         
Handymax                        
TCE per revenue day (2)   $ 13,906   $ 10,968   $ 14,979   $ 13,605
Vessel operating costs per day(3)     6,211     8,340     6,453     7,766
                         
Fleet data                        
Average number of owned vessels     14.69     9.55     13.73     10.71
Average number of time chartered-in vessels     21.19     8.25     19.02     7.18
                         
Drydock                        
Expenditures for drydock (in thousands of U.S. dollars)     -     -     -     -
                         
(1) See Non-GAAP Measure section below
(2) Freight rates are commonly measured in the shipping industry in terms of time charter equivalent per day (or TCE per day), which is calculated by subtracting voyage expenses, including bunkers and port charges, from vessel revenue and dividing the net amount (time charter equivalent revenues) by the number of revenue days in the period. Revenue days are the number of days the vessel is owned less the number of days the vessel is off-hire for drydock and repairs.
(3) Vessel operating costs per day represent vessel operating costs excluding non-recurring expenses (for example insurance deductible expenses for repairs) divided by the number of days the vessel is owned during the period.
   
   
   
Fleet List as of July 29, 2013
 
  Vessel Name   Year Built   DWT   Ice class       Employment   Vessel type        
  Owned vessels                                
1 STI Highlander   2007   37,145   1A       SHTP (1)   Handymax        
2 STI Amber   2012   52,000   -       SMRP(4)   MR        
3 STI Topaz   2012   52,000   -       SMRP(4)   MR        
4 STI Ruby   2012   52,000   -       SMRP(4)   MR        
5 STI Garnet   2012   52,000   -       SMRP(4)   MR        
6 STI Onyx   2012   52,000   -       SMRP(4)   MR        
7 STI Sapphire   2013   52,000   -       SMRP(4)   MR        
8 STI Emerald   2013   52,000   -       SMRP(4)   MR        
9 STI Beryl   2013   52,000   -       SMRP(4)   MR        
10 STI Le Rocher   2013   52,000   -       Spot   MR        
11 STI Larvotto   2013   52,000   -       Spot   MR        
12 Noemi   2004   72,515   -       SPTP (2)   LR1        
13 Senatore   2004   72,514   -       SPTP (2)   LR1        
14 STI Harmony   2007   73,919   1A       SPTP (2)   LR1        
15 STI Heritage   2008   73,919   1A       SPTP (2)   LR1        
16 Venice   2001   81,408   1C       SPTP (2)   Post-Panamax        
17 STI Spirit   2008   113,100   -       SLR2P (3)   LR2        
                                   
  Total owned DWT       1,044,520                        
                                   
                                   
  Time Chartered-In vessels                   Time Charter Info    
  Vessel Name   Year Built   DWT   Ice class   Employment   Vessel type   Daily Base Rate   Expiry (5)    
18 Freja Polaris   2004   37,217   1B   SHTP (1)   Handymax   $12,700   14-Apr-14   (6)
19 Kraslava   2007   37,258   1B   SHTP (1)   Handymax   $12,800   18-May-14   (7)
20 Krisjanis Valdemars   2007   37,266   1B   SHTP (1)   Handymax   $12,800   14-Apr-14   (8)
21 Jinan   2003   37,285   -   SHTP (1)   Handymax   $12,600   28-Apr-15    
22 Histria Azure   2007   40,394   -   SHTP (1)   Handymax   $12,600   04-Apr-14   (9)
23 Histria Coral   2006   40,426   -   SHTP (1)   Handymax   $12,800   17-Jul-14   (10)
24 Histria Perla   2005   40,471   -   SHTP (1)   Handymax   $12,800   15-Jul-14   (10)
25 STX Ace 6   2007   46,161   -   SMRP (4)   MR   $14,150   17-May-14   (11)
26 Targale   2007   49,999   -   SMRP (4)   MR   $14,500   17-May-14   (12)
27 Ugale   2007   49,999   1B   SMRP (4)   MR   $14,000   15-Jan-14   (13)
28 Gan Triumph   2010   49,999   -   SMRP (4)   MR   $14,150   20-May-14    
29 Nave Orion   2013   49,999   -   SMRP (4)   MR   $14,300   25-Mar-15   (14)
30 Freja Lupus   2012   50,385   -   SMRP (4)   MR   $14,760   26-Apr-14   (15)
31 Gan-Trust   2013   51,561   -   SMRP (4)   MR   $16,250   06-Jan-16   (16)
32 Usma   2007   52,684   1B   SMRP (4)   MR   $13,500   03-Jan-14   (17)
33 SN Federica   2003   72,344   -   SPTP (2)   LR1   $11,250   15-May-15   (18)
34 King Douglas   2008   73,666       SPTP (2)   LR1   $14,000   26-Jul-14   (19)
35 Hellespont Promise   2007   73,669   -   SPTP (2)   LR1   $12,500   16-Dec-13   (20)
36 FPMC P Eagle   2009   73,800   -   SPTP (2)   LR1   $12,800   09-Sep-13   (21)
37 FPMC P Hero   2011   99,995   -   SLR2P (3)   LR2   $14,750   02-Nov-13   (22)
38 FPMC P Ideal   2012   99,993   -   SLR2P (3)   LR2   $15,000   09-Jan-14   (23)
39 Densa Alligator   2013   105,708   -   SLR2P (3)   LR2   $16,500   11-Sep-14   (24)
40 Khawr Aladid   2006   106,003   -   SLR2P (3)   LR2   $15,400   11-Jul-15    
41 Fair Seas   2008   115,406   -   SLR2P (3)   LR2   $16,250   31-Jan-14   (25)
42 Pink Stars   2010   115,592   -   SLR2P (3)   LR2   $16,125   10-Apr-14    
43 Four Sky   2010   115,708   -   SLR2P (3)   LR2   $16,250   01-Sep-14   (26)
44 Orange Stars   2011   115,756   -   SLR2P (3)   LR2   $16,125   06-Apr-14    
                                   
  Total time chartered-in DWT   1,838,744                        
                                   
  Newbuildings currently under construction                            
                                     
  Vessel Name   Yard     DWT   Ice class       Vessel type            
  Product tankers                                  
                                     
45 Hull 2451   HMD (27)   38,000   1A       Handymax            
46 Hull 2452   HMD (27)   38,000   1A       Handymax            
47 Hull 2453   HMD (27)   38,000   1A       Handymax            
48 Hull 2454   HMD (27)   38,000   1A       Handymax            
49 Hull 2462   HMD (27)   38,000   1A       Handymax            
50 Hull 2463   HMD (27)   38,000   1A       Handymax            
51 Hull 2464   HMD (27)   38,000   1A       Handymax            
52 Hull 2465   HMD (27)   38,000   1A       Handymax            
53 Hull 2476   HMD (27)   38,000   1A       Handymax            
54 Hull 2477   HMD (27)   38,000   1A       Handymax            
55 Hull 2478   HMD (27)   38,000   1A       Handymax            
56 Hull 2479   HMD (27)   38,000   1A       Handymax            
57 Hull 2349   HMD (27)   52,000           MR            
58 Hull 2350   HMD (27)   52,000           MR            
59 Hull 2389   HMD (27)   52,000           MR            
60 Hull 2390   HMD (27)   52,000           MR            
61 Hull 2391   HMD (27)   52,000           MR            
62 Hull 2392   HMD (27)   52,000           MR            
63 Hull 2449   HMD (27)   52,000           MR            
64 Hull 2450   HMD (27)   52,000           MR            
65 Hull 2458   HMD (27)   52,000           MR            
66 Hull 2459   HMD (27)   52,000           MR            
67 Hull 2460   HMD (27)   52,000           MR            
68 Hull 2461   HMD (27)   52,000           MR            
69 Hull S1138   SPP (28)   52,000           MR            
70 Hull S1139   SPP (28)   52,000           MR            
71 Hull S1140   SPP (28)   52,000           MR            
72 Hull S1141   SPP (28)   52,000           MR            
73 Hull S1142   SPP (28)   52,000           MR            
74 Hull S1143   SPP (28)   52,000           MR            
75 Hull S1144   SPP (28)   52,000           MR            
76 Hull S1145   SPP (28)   52,000           MR            
77 Hull S1167   SPP (28)   52,000           MR            
78 Hull S1168   SPP (28)   52,000           MR            
79 Hull S1169   SPP (28)   52,000           MR            
80 Hull S1170   SPP (28)   52,000           MR            
81 Hull S703   HSHI (29)   114,000           LR2            
82 Hull S704   HSHI (29)   114,000           LR2            
83 Hull S705   HSHI (29)   114,000           LR2            
84 Hull S706   HSHI (29)   114,000           LR2            
85 Hull S709   HSHI (29)   114,000           LR2            
86 Hull S710   HSHI (29)   114,000           LR2            
87 Hull S715   HSHI (29)   114,000           LR2            
88 Hull S716   HSHI (29)   114,000           LR2            
89 Hull 5394   DSME (30)   114,000           LR2            
90 Hull 5395   DSME (30)   114,000           LR2            
91 Hull 5398   DSME (30)   114,000           LR2            
92 Hull 5399   DSME (30)   114,000           LR2            
                                     
  Total product tankers DWT     3,072,000                        
                                     
  Vessel Name   Yard     Vessel size
(cbm)
          Vessel type            
  LPG Carriers                                  
93 VLGC #1   DSME (31)   84,000           VLGC            
94 VLGC #2   DSME (31)   84,000           VLGC            
95 Hull S749   HSHI (32)   84,000           VLGC            
96 Hull S750   HSHI (32)   84,000           VLGC            
97 Hull S751   HSHI (32)   84,000           VLGC            
                                     
  Total LPG carriers (cbm)     420,000                        
   
(1) This vessel operates in or is expected to operate in the Scorpio Handymax Tanker Pool (SHTP). SHTP is operated by Scorpio Commercial Management (SCM). SHTP and SCM are related parties to the Company.
(2) This vessel operates in or is expected to operate in the Scorpio Panamax Tanker Pool (SPTP). SPTP is operated by SCM. SPTP is a related party to the Company.
(3) This vessel operates in or is expected to operate in the Scorpio LR2 Pool (SLR2P). SLR2P is operated by SCM. SLR2P is a related party to the Company.
(4) This vessel operates in or is expected to operate in the Scorpio MR Pool (SMRP). SMRP is operated by SCM. SMRP is a related party to the Company.
(5) Redelivery from the charterer is plus or minus 30 days from the expiry date.
(6) We have an option to extend the charter for an additional year at $14,000 per day.
(7) We have extended the charter for an additional ten months at $12,800 per day beginning in July 2013. We have an option to extend the charter for an additional year at $13,650 per day.
(8) We have extended the charter for an additional ten months at $12,800 per day beginning in June 2013. We have an option to extend the charter for an additional year at $13,650 per day. The agreement also contains a 50% profit and loss sharing provision whereby we split all of the vessel's profits and losses above or below the daily base rate with the vessel's owner.
(9) We have an option to extend the term of the charter for an additional year at $13,550 per day.
(10) We entered into new charter agreements at $12,800 per day. We have options to extend the charters for an additional year at $13,550 per day.
(11) We have an option to extend the charter for an additional year at $15,150 per day.
(12) We have options to extend the charter for up to three consecutive one year periods at $14,850 per day, $15,200 per day and $16,200 per day, respectively.
(13) We have an option to extend the charter for an additional year at $15,000 per day.
(14) We have an option to extend the charter for an additional year at $15,700 per day.
(15) We have an option to extend the charter for an additional year at $16,000 per day.
(16) The daily base rate represents the average rate for the three year duration of the agreement. The rate for the first year is $15,750 per day, the rate for the second year is $16,250 per day, and the rate for the third year is $16,750 per day. We have options to extend the charter for up to two consecutive one year periods at $17,500 per day and $18,000 per day, respectively.
(17) We have an option to extend the charter for an additional year at $14,500 per day.
(18) We have an option to extend the charter for an additional year at $12,500 per day. We have also entered into an agreement with the owner whereby we split all of the vessel's profits above the daily base rate.
(19) We have an option to extend the charter for an additional year at $15,000 per day.
(20) We have an option to extend the charter for an additional six months at $14,250 per day.
(21) We have also 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.
(22) We have options to extend the charter for three consecutive six month periods at $15,000 per day, $15,250 per day, and $15,500 per day respectively.
(23) We have options to extend the charter for two consecutive six month periods at $15,250 per day, and $15,500 per day respectively.
(24) This vessel is expected to be delivered in early September 2013. We have an option to extend the charter for one year at $17,550 per day.
(25) We have options to extend the charter for two consecutive six month periods at $16,500 per day and $16,750 per day, respectively.
(26) This vessel is expected to be delivered by the end of September 2013.
(27) These newbuilding vessels are being constructed at HMD (Hyundai Mipo Dockyard Co. Ltd. of South Korea). Two vessels are expected to be delivered in the third quarter of 2013 and the remaining 22 vessels by the end of 2014.
(28) These newbuilding vessels are being constructed at SPP (SPP Shipbuilding Co., Ltd. of South Korea ). Eight vessels are expected to be delivered during the second, third and fourth quarters of 2014 and four in the first and second quarter of 2015.
(29) These newbuilding vessels are being constructed at HSHI (Hyundai Samho Heavy Industries Co., Ltd.). Six vessels are expected to be delivered in the third and fourth quarters of 2014 and two in the first quarter of 2015.
(30) These newbuilding vessels are being constructed at DSME (Daewoo Shipbuilding and Marine Engineering). Two vessels are expected to be delivered in the fourth quarter of 2014 and two in the second quarter of 2015.
(31) These newbuilding vessels are being constructed at DSME (Daewoo Shipbuilding and Marine Engineering). One vessel is expected to be delivered in the second quarter and one in the fourth quarter of 2015.
(32) These newbuilding vessels are being constructed at HSHI (Hyundai Samho Heavy Industries Co., Ltd.). One vessel is expected to be delivered in the second quarter, one in the third quarter and one in the fourth quarter of 2015.
   

Business Strategy, Dividend Policy, and Stock Buyback Program

Business Strategy

The Company's primary objectives are to profitably grow the business and emerge as a major operator of medium-sized tanker vessels and gas carriers. The Company intends to acquire modern, high-quality tankers and gas carriers through timely and selective acquisitions. The Company is currently concentrating on product or coated tankers and gas carriers because of the fundamentals of these segments, which the Company believes includes:

  • increasing demand for refined products and LPG;
  • increasing ton miles (distance between new refiners and areas of demand); and
  • reduced order book.

Dividend Policy

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

On July 29, 2013, the Company's board of directors declared a quarterly cash dividend of $0.035 per share, payable on September 25, 2013 to all shareholders as of September 10, 2013 (the record date). On June 25, 2013, the Company paid a quarterly cash dividend on its common stock of $0.025 per share to all shareholders as of June 11, 2013 (the record date).

Share Buyback Program

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

As of July 29, 2013, the Company has purchased $7.9 million of shares in the open market at an average price of $6.78.

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 June 30,  
    2013     2012  
In thousands of U.S. dollars except per share and share data   Amount     Per share     Amount     Per share  
  Net income / (loss)   $ 3,968     $ 0.03     $ (4,044 )   $ (0.10 )
  Adjustments:                                
    Loss from sale of vessels     -       0.00       31       0.00  
    Unrealized gain on derivative financial instruments     (323 )     (0.00 )     -       0.00  
  Total adjustments     (323 )     (0.00 )     31       0.00  
  Adjusted net income/ (loss)   $ 3,645     $ 0.03     $ (4,013 )   $ (0.10 )
                                 
    For the six months ended June 30,  
    2013     2012  
    Amount     Per share     Amount     Per share  
  Net income / (loss)   $ 10,576     $ 0.09     $ (9,145 )   $ (0.23 )
  Adjustments:                                
    Loss from sale of vessels     -       0.00       4,525       0.11  
    Unrealized gain on derivative financial instruments     (365 )     (0.00 )     -       0.00  
  Total adjustments     (365 )     (0.00 )     4,525       0.11  
  Adjusted net income/ (loss)   $ 10,211     $ 0.09     $ (4,620 )   $ (0.12 )
                                 
                                 
                                 
Adjusted EBITDA  
   
    For the three months ended June 30,     For the six months ended June 30,  
In thousands of U.S. dollars   2013     2012     2013     2012  
  Net income / (loss)   $ 3,968     $ (4,044 )   $ 10,576     $ (9,145 )
  Financial expenses     476       1,049       1,875       2,475  
  Unrealized gain on derivative financial instruments     (323 )     -       (365 )     -  
  Financial income     (369 )     (1 )     (550 )     (2 )
  Depreciation     5,521       3,178       10,288       6,824  
  Amortization of restricted stock     2,382       892       2,882       1,706  
  Loss from sale of vessels     -       31       -       4,525  
  Adjusted EBITDA   $ 11,655     $ 1,105     $ 24,706     $ 6,383  
                                 

About Scorpio Tankers Inc.

Scorpio Tankers Inc. is a provider of marine transportation of petroleum products worldwide. Scorpio Tankers Inc. currently owns 17 tankers (one LR2 tanker, four LR1 tankers, one Handymax tanker, ten MR tankers, and one post-Panamax tanker) with an average age of 4.1 years, time charters-in 27 product tankers (eight LR2, four LR1, eight MR and seven Handymax tankers), and has contracted for 53 newbuilding vessels (24 MR, 12 LR2, and 12 Handymax ice class-1A product tankers, and 5 Very Large Gas Carriers), two of which are expected to be delivered to the Company by September 2013, 38 within 2014 and the remaining 13 by the end of 2015. Additional information about the Company is available at the Company's website www.scorpiotankers.com, which is not a part of this press release.

Forward-Looking Statements

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

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

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

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