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Scorpio Tankers Inc. Announces Financial Results for the Second Quarter of 2020 and Declaration of a Quarterly Dividend

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MONACO, Aug. 06, 2020 (GLOBE NEWSWIRE) -- Scorpio Tankers Inc. (NYSE: STNG) ("Scorpio Tankers" or the "Company") today reported its results for the three and six months ended June 30, 2020. The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.10 per share on the Company’s common stock.

Results for the three months ended June 30, 2020 and 2019

For the three months ended June 30, 2020, the Company had net income of $143.9 million, or $2.63 basic and $2.40 diluted earnings per share. For the three months ended June 30, 2020, the Company had an adjusted net income (see Non-IFRS Measures section below) of $144.3 million, or $2.63 basic and $2.40 diluted earnings per share, which excludes from net income a $0.3 million, or $0.01 per basic and diluted share, write-off of deferred financing fees.

For the three months ended June 30, 2019, the Company's net loss was $29.7 million, or $0.62 basic and diluted loss per share. There were no Non-IFRS adjustments to the net loss for the three months ended June 30, 2019.

Results for the six months ended June 30, 2020 and 2019

For the six months ended June 30, 2020, the Company had net income of $190.6 million, or $3.48 basic and $3.21 diluted earnings per share. For the six months ended June 30, 2020, the Company had an adjusted net income (see Non-IFRS Measures section below) of $190.9 million, or $3.49 basic and $3.21 diluted earnings per share, which excludes from net income a $0.3 million, or $0.01 per basic and diluted share, write-off of deferred financing fees.

For the six months ended June 30, 2019, the Company had a net loss of $15.2 million, or $0.32 basic and diluted loss per share. For the six months ended June 30, 2019, the Company’s adjusted net loss (see Non-IFRS Measures section below) was $15.0 million, or $0.31 basic and diluted loss per share, which excludes from the net loss a $0.3 million, or $0.01 per basic and diluted share, write-off of deferred financing fees.

Declaration of Dividend

On August 5, 2020, the Company's Board of Directors declared a quarterly cash dividend of $0.10 per common share, payable on or about September 29, 2020 to all shareholders of record as of September 9, 2020 (the record date). As of August 5, 2020, there were 58,807,747 common shares of the Company outstanding.

Summary of Second Quarter and Other Recent Significant Events

  • Below is a summary of the average daily Time Charter Equivalent ("TCE") revenue (see Non-IFRS Measures section below) and duration of contracted pool voyages and time charters for the Company's vessels thus far in the third quarter of 2020 as of the date hereof (See footnotes to "Other operating data" table below for the definition of daily TCE revenue):

Total

Pool

Average daily TCE revenue

% of Days

LR2

$22,500

49

%

LR1

$22,000

53

%

MR

$15,300

45

%

Handymax

$12,000

52

%

  • Below is a summary of the average daily TCE revenue earned by the Company's vessels in each of the pools during the second quarter of 2020:

Pool

Average daily TCE revenue

LR2

$47,064

LR1

$35,794

MR

$21,808

Handymax

$17,698

  • The Company's strong second quarter results, coupled with the repayment of debt, have resulted in the Company's net debt position decreasing by $228.8 million from $3.1 billion at March 31, 2020 to $2.9 billion at August 5, 2020.

  • The Company is in discussions with a group of financial institutions to refinance the existing debt on eight of its vessels which, if consummated, is expected to increase the Company’s liquidity by an additional $80 million, after the repayment of existing debt. These refinancings are expected to be agreed in the next few months, and the drawdowns are expected to occur before the end of 2020.

  • In July 2020, the Company repurchased $13.8 million aggregate principal amount of its Convertible Notes due 2022 at an average price of $882.23 per $1,000 principal amount, or $12.2 million.

  • In May 2020, the Company's Senior Unsecured Notes due May 2020 matured and the outstanding principal balance of $53.8 million was repaid in full. Subsequently in May 2020, the Company issued $28.1 million aggregate principal amount of 7.0% senior unsecured notes due June 30, 2025 (the "Senior Notes due 2025") in an underwritten public offering. This amount includes $3.1 million related to the partial exercise of the underwriters' option to purchase additional Senior Notes due 2025 under the same terms and conditions. The aggregate net proceeds were approximately $26.5 million after deducting underwriting commissions and offering expenses.

  • In May 2020, the Company executed a credit facility for up to $225.0 million with a group of European financial institutions (the "2020 $225.0 Million Credit Facility"). The Company drew $101.2 million from this facility in June 2020, and the proceeds were used to refinance the existing debt on four LR2s that were previously financed under the ABN AMRO Credit Facility, which was scheduled to mature during the third quarter of 2020. The remaining availability under this credit facility is expected to be used to refinance the existing debt on five of the Company's vessels and scrubbers on two LR2s.

  • In May 2020, the Company executed an agreement to upsize its $179.2 million credit facility with ING Bank N.V. to $251.4 million. The upsized portion of this facility was fully drawn in May 2020, and the proceeds were used to refinance the existing debt on five vessels, which were previously financed under the KEXIM Credit Facility.

  • Based upon the commitments received to date, which include the remaining availability under the 2020 $225.0 Million Credit Facility and certain financing transactions that have been previously announced, the Company expects to raise approximately $56 million of aggregate additional liquidity (after the repayment of existing debt) once all of the agreements are closed and drawn. These drawdowns are expected to occur at varying points in the future as several of these financings are tied to scrubber installations on the Company’s vessels.

  • In April 2020, the Company reached an agreement with its counterparty to postpone the purchase and installation of scrubbers on 19 of its vessels. The installation of these scrubbers is now expected to begin not earlier than 2021.

Diluted Weighted Number of Shares

Diluted earnings per share is determined using the if-converted method. Under this method, the Company assumes that its Convertible Notes due 2022, which were issued in May and July 2018, were converted into common shares at the beginning of each period and the interest and non-cash amortization expense associated with these notes of $3.8 million and $7.6 million, respectively, during the three and six months ended June 30, 2020 were not incurred. Conversion is not assumed if the results of this calculation are anti-dilutive.

For the three and six months ended June 30, 2020, the Company's basic weighted average number of shares were 54,827,479 and 54,747,345, respectively. For the three and six months ended June 30, 2020, the Company's diluted weighted average number of shares were 56,318,815 and 56,525,701 (which includes the potentially dilutive impact of unvested shares of restricted stock and excludes the impact of the Convertible Notes due 2022), respectively, and 61,593,958 and 61,801,095, respectively, under the if-converted method. Given the Company's results for the three and six months ended June 30, 2020, earnings per diluted share were calculated under the if-converted method as the result of this calculation was dilutive.

Novel Coronavirus (COVID-19)

Since the beginning of calendar year 2020, the outbreak of COVID-19 that originated in China and that has spread to most developed nations of the world has resulted in the implementation of numerous actions taken by governments and governmental agencies in an attempt to mitigate the spread of the virus. These measures have resulted in a significant reduction in global economic activity and extreme volatility in the global financial and commodities markets (including oil).

While the reduction of economic activity significantly reduced global demand for oil and refined petroleum products, the extreme volatility in the oil markets and the steep contango that developed in the prices of oil and refined petroleum products resulted in record increases in spot TCE rates as an abundance arbitrage and floating storage opportunities opened up. These conditions persisted for most of the second quarter of 2020 but began to abate in June 2020 as the underlying oil markets stabilized.

The Company expects that the future impact of the ongoing COVID-19 pandemic and the uncertainty in the demand for oil and refined petroleum products will continue to cause volatility in the commodities markets. The scale and duration of the impact of these factors remain unknowable but could have a material impact on our earnings, cash flow and financial condition for the remainder of 2020 and beyond. An estimate of the impact on the Company’s results of operations and financial condition cannot be made at this time.

$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, in addition to its common shares, currently consist of its Senior Notes due 2025 (NYSE: SBBA), which were issued in May 2020, and Convertible Notes due 2022, which were issued in May and July 2018.

In July 2020, the Company repurchased $13.8 million aggregate principal amount of its Convertible Notes due 2022 at an average price of $882.23 per $1,000 principal amount, or $12.2 million. No other securities were repurchased under this program during the second quarter of 2020 and through the date of this press release.

As of the date hereof, the Company has repurchased a total of $140.6 million of its securities under the Securities Repurchase Program and has the authority to purchase up to an additional $109.4 million of its securities. The Company may 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.

At the Market Offering Program

In June 2020, the Company sold an aggregate of 137,067 of its common shares at an average price of $18.79 per share for aggregate net proceeds of $2.6 million under its previously announced “at the market” offering program pursuant to which the Company may sell up to $100 million of its common shares. There is $97.4 million of remaining availability under this program as of August 5, 2020.

Conference Call

The Company has scheduled a conference call on August 6, 2020 at 9:30 AM Eastern Daylight Time and 3:30 PM Central European Summer Time. The dial-in information is as follows:

US Dial-In Number: 1 (855) 861-2416

International Dial-In Number: +1 (703) 736-7422

Conference ID: 7309339

Participants should dial into the call 10 minutes before the scheduled time. 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.

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://edge.media-server.com/mmc/p/yaoh87zz

Current Liquidity

As of August 5, 2020, the Company had $285.7 million in unrestricted cash and cash equivalents.

Drydock, Scrubber and Ballast Water Treatment Update

Set forth below is a table summarizing the drydock, scrubber and ballast water treatment system activity that occurred during the second quarter of 2020 and that is in progress as of July 1, 2020:

Number of Vessels

Drydock

Ballast Water Treatment Systems

Scrubbers

Aggregate Costs ($ in millions) (1)

Aggregate Off-hire Days in Q2 2020

Completed in the second quarter of 2020

LR2

8

7

3

8

$36.3

335

LR1

2

2

6.0

12

MR

6

3

3

6

22.8

214

Handymax

16

10

6

16

$65.1

561

In progress as of July 1, 2020

LR2

2

1

1

2

$7.4

75

LR1

MR

5

3

3

5

18.5

126

Handymax

7

4

4

7

$25.9

201

(1) Aggregate costs for vessels completed in the quarter represent the total costs incurred, some of which may have been incurred in prior periods. Aggregate costs for vessels in progress as of July 1, 2020 represent the total costs incurred through that date, some of which may have been incurred in prior periods.

Set forth below are the estimated expected payments to be made for the Company's drydocks, ballast water treatment system installations, and scrubber installations through 2020 (which also include actual payments made during the second quarter of 2020 and through August 5, 2020):

In millions of U.S. dollars

As of August 5, 2020 (1) (2)

Q3 2020 - payments made through August 5, 2020

$

11.9

Q3 2020 - remaining payments

25.8

Q4 2020

15.1

FY 2021

41.3

FY 2022

48.9

(1) Includes estimated cash payments for drydocks, ballast water treatment system installations and scrubber installations. These amounts include installment payments that are due in advance of the scheduled service and may be scheduled to occur in quarters prior to the actual installation. In addition to these installment payments, these amounts also include estimates of the installation costs of such systems. The timing of the payments set forth are estimates only and may vary as the timing of the related drydocks and installations finalize.

(2) Based upon the commitments received to date, which include the remaining availability under the 2020 $225.0 Million Credit Facility and certain financing transactions that have been previously announced, the Company expects to raise approximately $56 million of aggregate additional liquidity (after the repayment of existing debt) once all of the agreements are closed and drawn. These drawdowns are expected to occur at varying points in the future as several of these financings are tied to scrubber installations on the Company’s vessels.

Set forth below are the estimated expected number of ships and estimated expected off-hire days for the Company's drydocks, ballast water treatment system installations, and scrubber installations (1):

Q3 2020

Ships Scheduled for (2):

Off-hire

Drydock

Ballast Water Treatment Systems

Scrubbers

Days (3)

LR2

4

6

282

LR1

1

48

MR

1

1

3

188

Handymax

Total Q3 2020

5

1

10

518

Q4 2020

Ships Scheduled for (2):

Off-hire

Drydock

Ballast Water Treatment Systems

Scrubbers

Days (3)

LR2

1

50

LR1

1

20

MR

39

Handymax

Total Q4 2020

1

1

109

FY 2021

Ships Scheduled for (2):

Off-hire

Drydock

Ballast Water Treatment Systems

Scrubbers

Days (3)

LR2

12

1

280

LR1

11

220

MR

8

293

Handymax

Total FY 2021

23

9

793

FY 2022

Ships Scheduled for (2):

Off-hire

Drydock

Ballast Water Treatment Systems

Scrubbers

Days (3)

LR2

5

100

LR1

5

200

MR

11

5

5

402

Handymax

Total FY 2022

16

5

10

702

(1) The number of vessels in these tables reflect a certain amount of overlap where certain vessels are expected to be drydocked and have ballast water treatment systems and/or scrubbers installed simultaneously. Additionally, the timing set forth may vary as drydock, ballast water treatment system installation and scrubber installation times are finalized.
(2) Represents the number of vessels scheduled to commence drydock, ballast water treatment system, and/or scrubber installations during the period. It does not include vessels that commenced work in prior periods but will be completed in the subsequent period.
(3) Represents total estimated off-hire days during the period, including vessels that commenced work in a previous period.

Debt

Set forth below is a summary of the Company’s outstanding indebtedness as of the dates presented:

In thousands of U.S. Dollars

Outstanding Principal as of March 31, 2020

Drawdowns and (repayments), net

Outstanding Principal as of June 30, 2020

Drawdowns and (repayments), net

Outstanding Principal as of August 5, 2020

1

KEXIM Credit Facility (3) (8)

$

140,191

$

(78,033

)

$

62,158

(1,092

)

$

61,066

2

ABN AMRO Credit Facility (7)

89,816

(89,816

)

3

ING Credit Facility (3)

128,254

68,941

197,195

2,181

199,376

4

2018 NIBC Credit Facility (1)

30,813

2,318

33,131

(1,032

)

32,099

5

2017 Credit Facility

128,183

(3,316

)

124,867

124,867

6

Credit Agricole Credit Facility

88,586

(2,142

)

86,444

86,444

7

ABN AMRO / K-Sure Credit Facility

44,716

(963

)

43,753

43,753

8

Citibank / K-Sure Credit Facility

93,129

(2,104

)

91,025

91,025

9

ABN / SEB Credit Facility (9)

100,450

374

100,824

1,633

102,457

10

Hamburg Commercial Credit Facility (2)

41,355

606

41,961

41,961

11

Prudential Credit Facility

54,538

(1,386

)

53,152

(924

)

52,228

12

2019 DNB / GIEK Credit Facility

31,850

(979

)

30,871

30,871

13

BNPP Sinosure Credit Facility (8)

42,096

22,790

64,886

64,886

14

2020 $225.0 Million Credit Facility (7)

101,200

101,200

101,200

15

Ocean Yield Lease Financing

146,815

(2,715

)

144,100

(937

)

143,163

16

CMBFL Lease Financing

55,836

(1,227

)

54,609

54,609

17

BCFL Lease Financing (LR2s) (10)

91,123

(2,086

)

89,037

1,045

90,082

18

CSSC Lease Financing

224,889

(4,327

)

220,562

(1,442

)

219,120

19

CSSC Scrubber Lease Financing

9,604

(1,372

)

8,232

(457

)

7,775

20

BCFL Lease Financing (MRs) (10)

84,964

(2,932

)

82,032

958

82,990

21

2018 CMBFL Lease Financing (4)

123,900

7,596

131,496

131,496

22

$116.0 Million Lease Financing (10)

104,322

(1,784

)

102,538

5,043

107,581

23

AVIC Lease Financing

124,361

(2,948

)

121,413

121,413

24

China Huarong Lease Financing

120,375

(3,375

)

117,000

117,000

25

$157.5 Million Lease Financing

134,407

(3,536

)

130,871

130,871

26

COSCO Lease Financing

74,525

(1,925

)

72,600

72,600

27

IFRS 16 - Leases - 7 Handymax

10,071

(3,279

)

6,792

(794

)

5,998

28

IFRS 16 - Leases - 3 MR

42,430

(1,813

)

40,617

(593

)

40,024

29

$670.0 Million Lease Financing

601,447

(15,306

)

586,141

(5,129

)

581,012

30

Unsecured Senior Notes Due 2020 (5)

53,750

(53,750

)

31

Unsecured Senior Notes Due 2025 (6)

28,100

28,100

28,100

32

Convertible Notes Due 2022

203,500

203,500

(12,205

)

191,295

Gross debt outstanding

$

3,220,296

$

(49,189

)

3,171,107

$

(13,745

)

$

3,157,362

Cash and cash equivalents

119,825

250,592

285,665

Net debt

$

3,100,471

$

(49,189

)

$

2,920,515

$

(13,745

)

$

2,871,697

(1) In April 2020, the Company drew $3.1 million from its upsized $35.7 million loan facility to partially finance the purchase and installation of scrubbers on two vessels. The upsized portion of this facility matures in June 2021, bears interest at LIBOR plus a margin of 2.50% per annum and is expected to be repaid in equal quarterly installments of approximately $0.1 million per vessel, with a balloon payment due at maturity.

(2) In April 2020, the Company drew $1.4 million from its Hamburg Commercial Bank Credit Facility to partially finance the purchase and installation of a scrubber on one of its vessels. This drawdown reflects the remaining availability under this facility. All tranches (including those previously drawn) of the Hamburg Commercial Bank Credit Facility mature in November 2024, bear interest at LIBOR plus a margin of 2.25% per annum and are expected to be repaid in equal quarterly installments of approximately $0.8 million in aggregate, with a balloon payment due at maturity.

(3) In May 2020, the Company executed an agreement to upsize its $179.2 million credit facility with ING Bank N.V. to $251.4 million. This upsized portion of this facility of $72.1 million was fully drawn in May 2020, and the proceeds were used to refinance the existing debt on five vessels which were previously financed under the KEXIM Credit Facility. The Company repaid $60.2 million on the KEXIM Credit Facility as part of this transaction.

The upsized loan has a final maturity of five years from the initial drawdown date, and bears interest at LIBOR plus a margin. The upsized portion of the loan is scheduled to be repaid in equal quarterly installments of approximately $2.1 million per quarter, in aggregate, for the first twelve installments and approximately $2.0 million per quarter, in aggregate, thereafter, with a balloon payment due at maturity. The remaining terms and conditions, including financial covenants, are similar to the Company’s existing credit facilities.

In July 2020, the Company drew an aggregate of $3.3 million under the scrubber portion of the facility to partially finance the purchase and installation of scrubbers on two MRs and one LR2 that are currently part of this arrangement. The drawdowns of approximately $1.1 million per vessel bear interest at LIBOR plus a margin of 1.95%. One MR will be repaid in seven quarterly principal payments of approximately $0.1 million with the balance due upon maturity in June 2022. The other two vessels will be repaid in two quarterly principal payments of approximately $0.7 million in aggregate with the balance due upon maturity in March 2021.

(4) In May 2020, the Company drew an aggregate of $10.1 million under the scrubber portion of its 2018 CMB Lease Financing to partially finance the purchase and installation of scrubbers on the six MRs that are currently part of this arrangement. The upsized portion of the lease financing has a final maturity of 3.5 years after the first drawdown, bears interest at LIBOR plus a margin of 3.10% per annum and will be repaid in quarterly principal payments of approximately $0.1 million per vessel.

(5) In May 2020, the Company's Senior Unsecured Notes due May 2020 matured and the outstanding principal balance of $53.8 million was repaid in full.

(6) In May 2020, the Company issued $28.1 million aggregate principal amount of Senior Notes due 2025 in an underwritten offering. This amount includes $3.1 million related to the partial exercise of the underwriters' option to purchase additional Senior Notes due 2025 under the same terms and conditions. The aggregate net proceeds were approximately $26.5 million after deducting underwriting commissions and expenses.

(7) In May 2020, the Company executed the 2020 $225.0 Million Credit Facility with a group of European financial institutions. In June 2020 the Company drew $101.2 million from this facility to refinance the existing debt on four LR2s that were previously financed under the ABN AMRO Credit Facility (which was scheduled to mature during the third quarter of 2020). The Company repaid $87.7 million on the ABN AMRO Credit Facility as part of this transaction. The remaining availability under this credit facility is expected to be used to refinance the existing debt on five of the Company's vessels and scrubbers on two LR2s.

This facility has a final maturity of five years from the closing date of the loan, bears interest at LIBOR plus a margin, and is expected to be repaid in equal quarterly installments of approximately $0.6 million per vessel per quarter with a balloon payment due at maturity. The remaining terms and conditions, including financial covenants, are similar to the Company’s existing credit facilities.

(8) In June 2020, the Company drew $24.9 million under its BNPP Sinosure Credit Facility to partially finance the purchase and installation of scrubbers on 13 vessels. This borrowing is collateralized by one of its LR2 product tankers which was previously financed under the KEXIM Credit Facility. The Company repaid the outstanding debt of $17.8 million on the KEXIM Credit Facility related to this vessel as part of this transaction.

A total of approximately $67.0 million has been drawn and there is $67.0 million of remaining availability under the BNPP Sinosure Credit Facility. Each drawdown is split evenly into two facilities, (i) a commercial facility (the "Commercial Facility"), and (ii) a Sinosure facility (the "Sinosure Facility"), which is being funded by the lenders under the Commercial Facility and insured by the China Export & Credit Insurance Corporation ("Sinosure"). The BNPP Sinosure Credit Facility is split into 70 tranches each of which represent the lesser of 85% of the purchase and installation price of 70 scrubbers, or $1.9 million per scrubber (not to exceed 65% of the fair market value of the collateral vessels). The Sinosure Facility and the Commercial Facility bear interest at LIBOR plus a margin of 1.80% and 2.80% per annum, respectively. The remaining availability under this loan facility is available for en bloc drawdowns on September 15, 2020, December 15, 2020 and March 15, 2021. The Sinosure Facility is expected to be repaid in 10 equal semi-annual installments and the Commercial Facility is expected to be repaid at the final maturity date of the facility, or October 2025.

(9) In June 2020, the Company drew $3.2 million from its upsized ABN/SEB Credit Facility to partially finance the purchase and installation of scrubbers on two vessels. The upsized portion of this facility matures in June 2023, bears interest at LIBOR plus a margin of 2.60% per annum and is expected to be repaid in equal quarterly installments of approximately $0.1 million per vessel, with a balloon payment due at maturity.

In July 2020, the Company drew an additional $1.6 million to partially finance the purchase and installation of a scrubber on one of the vessels covered by the facility under the same terms.

(10) In April 2020, the Company executed agreements to increase the borrowing capacities of several of its lease financing arrangements by up to $1.9 million per vessel, the proceeds of which are to be used to partially finance the purchase and installation of scrubbers on certain vessels. Three vessels are under the BCFL Lease Financing (LR2s) arrangement, five vessels are under the BCFL Lease Financing (MRs) arrangement, four vessels are under the $116.0 Million Lease Financing arrangement and three vessels are under the IFRS-16 - Leases - 3 MR arrangement for an aggregate of fifteen vessels. Each agreement will be for a fixed term of three years at the rate of up to $1,910 per vessel per day to be allocated to principal and interest.

In July 2020, the Company drew an aggregate of $9.4 million on these agreements to partially finance the purchase and installation of scrubbers on five vessels as follows: (i) $1.8 million on one vessel under the BCFL Lease Financing (LR2s) arrangement; (ii) $1.9 million on one vessel under the BCFL Lease Financing (MRs) arrangement; and (iii) $5.7 million on three vessels under the $116.0 Million Lease Financing arrangement.

Set forth below are the estimated expected future principal repayments on the Company's outstanding indebtedness as of June 30, 2020, which includes principal amounts due under secured credit facilities, Convertible Notes due 2022, lease financing arrangements, the Senior Notes due 2025, and lease liabilities under IFRS 16 (which also include actual payments made during the second quarter of 2020 and through August 5, 2020):

In millions of U.S. dollars

As of June 30, 2020 (1)

Q3 2020 - principal payments made through August 5, 2020

$

28.0

Q3 2020 - remaining principal payments

49.6

Q4 2020

74.1

Q1 2021 (2)

156.9

Q2 2021 (3)

99.8

Q3 2021

66.6

Q4 2021

70.0

2022 and thereafter

2,626.1

$

3,171.1

(1) Amounts represent the principal payments due on the Company’s outstanding indebtedness as of June 30, 2020 and do not incorporate the impact of any of the Company’s new financing initiatives which have not closed as of that date.

(2) Repayments include the maturities of the Company's KEXIM Credit Facility for $57.9 million and two tranches of the ING Credit Facility for $29.6 million. As of the date of this press release, the Company has received commitments to refinance the amounts borrowed on the KEXIM Credit Facility (the timing of this refinancing may be impacted by the timing of installations of scrubbers on certain vessels). The Company expects to commence refinancing discussions on the ING Credit Facility during the fourth quarter of 2020.

(3) Repayments include the maturity of the Company's NIBC Credit Facility for $30.0 million. The Company expects to commence refinancing discussions on the NIBC Credit Facility during the fourth quarter of 2020.

Explanation of Variances on the Second Quarter of 2020 Financial Results Compared to the Second Quarter of 2019

For the three months ended June 30, 2020, the Company recorded net income of $143.9 million compared to net loss of $29.7 million for the three months ended June 30, 2019. The following were the significant changes between the two periods:

  • 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 voyages, time charters, and pool charters), and it provides useful information to investors and management. The following table sets forth TCE revenue for the three months ended June 30, 2020 and 2019:

For the three months ended June 30,

In thousands of U.S. dollars

2020

2019

Vessel revenue

$

346,239

$

150,805

Voyage expenses

(2,906

)

(1,328

)

TCE revenue

$

343,333

$

149,477

  • TCE revenue for the three months ended June 30, 2020 increased by $193.9 million to $343.3 million, from $149.5 million for the three months ended June 30, 2019. Overall average TCE revenue per day increased to $29,693 per day during the three months ended June 30, 2020, from $14,348 per day during the three months ended June 30, 2019.

    During the second quarter of 2020, travel restrictions and other preventive measures to control the spread of the COVID-19 pandemic resulted in a precipitous decline in oil demand. A lack of corresponding production and refinery cuts resulted in a supply glut of crude oil and refined petroleum products, which was exacerbated by extreme oil price volatility brought on from the Russia-Saudi Arabia oil price war. This oversupply of petroleum products resulted in a steep contango in oil prices which led to an abundance of arbitrage opportunities of both crude and refined petroleum products and record floating storage. These market conditions, which began in March 2020, drove spot TCE rates to record levels resulting in the second quarter of 2020 being the Company's most profitable quarter in its history. In June 2020, the oil markets began to stabilize as global economies slowly re-opened, thus limiting arbitrage opportunities and resulting in the drawdown of accumulated inventories. Consequently, trading volumes and spot TCE rates decreased towards the end of the second quarter and have remained at lower levels through the date of this press release.

    The increase in TCE revenue in the second quarter of 2020 as compared to the second quarter of 2019 was also affected by an increase in the number of the Company's vessels to an average of 136.8 operating vessels during the three months ended June 30, 2020 from an average of 119.0 operating vessels during the three months ended June 30, 2019, which was primarily the result of the Company's acquisition of leasehold interests in 19 vessels (11 MRs, four LR2s, and four MRs then under construction) from Trafigura Maritime Logistics Pte. Ltd. in September 2019 (the "Trafigura Transaction"). Three of the MRs acquired that were then under construction were delivered in the first quarter of 2020.

  • Vessel operating costs for the three months ended June 30, 2020 increased by $11.0 million to $79.8 million, from $68.8 million for the three months ended June 30, 2019. This increase was primarily due to the Trafigura Transaction. Three of the MRs acquired that were then under construction were delivered in the first quarter of 2020 and thus operated for the entirety of the second quarter of 2020. Vessel operating costs per day remained largely consistent, increasing slightly to $6,407 per day for the three months ended June 30, 2020 from $6,351 per day for the three months ended June 30, 2019.

  • Depreciation expense - owned or sale leaseback vessels for the three months ended June 30, 2020 increased by $3.7 million to $48.1 million, from $44.4 million for the three months ended June 30, 2019. The increase was due to the Company's drydock, scrubber and ballast water treatment system installations that have taken place over the preceding 12-month period. Depreciation expense in future periods is expected to increase as the Company continues the installation of ballast water treatment systems and/or scrubbers on certain of its vessels in 2020 and beyond. The Company expects to depreciate the majority of the cost of this equipment over each vessel's remaining useful life.

  • Depreciation expense - right of use assets for the three months ended June 30, 2020 increased by $7.7 million to $13.4 million from $5.9 million for the three months ended June 30, 2019. Depreciation expense - right of use assets reflects the straight-line depreciation expense recorded under IFRS 16 - Leases. Right of use asset depreciation expense increased as a result of the Trafigura Transaction. Three of the MRs acquired that were then under construction were delivered in the first quarter of 2020 and all vessels acquired as part of the Trafigura Transaction are being accounted for as right of use assets under IFRS 16. The right of use asset depreciation for these vessels is approximately $0.2 million per MR per month and $0.3 million per LR2 per month. In addition to the leasehold interests acquired as part of the Trafigura Transaction, the Company also had three MRs and seven Handymax leases that were accounted for under IFRS 16 during the second quarter of 2020. The bareboat charters on two of these Handymax vessels expired in June of 2020 and a third expired in July 2020.

  • General and administrative expenses for the three months ended June 30, 2020, increased by $3.2 million to $18.7 million, from $15.5 million for the three months ended June 30, 2019. This increase was primarily driven by compensation expenses, including an increase in restricted stock amortization. General and administrative expenses in future periods are expected to reflect a similar run-rate to that which was incurred during the first six months of 2020.

  • Financial expenses for the three months ended June 30, 2020 decreased by $8.2 million to $39.1 million, from $47.3 million for the three months ended June 30, 2019. The decrease was primarily driven by significant decreases in LIBOR rates, which underpin all of the Company's variable rate borrowings, and which have collapsed since the onset of the COVID-19 pandemic.

Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Statements of Income 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

2020

2019

2020

2019

Revenue

Vessel revenue

$

346,239

$

150,805

$

600,407

$

346,635

Operating expenses

Vessel operating costs

(79,758

)

(68,776

)

(161,221

)

(138,152

)

Voyage expenses

(2,906

)

(1,328

)

(7,125

)

(1,622

)

Charterhire

(4,399

)

Depreciation - owned or sale leaseback vessels

(48,102

)

(44,369

)

(94,943

)

(88,183

)

Depreciation - right of use assets

(13,609

)

(5,895

)

(26,806

)

(8,030

)

General and administrative expenses

(18,747

)

(15,528

)

(36,010

)

(31,240

)

Total operating expenses

(163,122

)

(135,896

)

(326,105

)

(271,626

)

Operating income

183,117

14,909

274,302

75,009

Other (expense) and income, net

Financial expenses

(39,127

)

(47,327

)

(83,892

)

(96,083

)

Financial income

295

2,725

860

5,843

Other expenses, net

(344

)

(27

)

(702

)

(13

)

Total other expense, net

(39,176

)

(44,629

)

(83,734

)

(90,253

)

Net income / (loss)

$

143,941

$

(29,720

)

$

190,568

$

(15,244

)

Earnings / (Loss) per share

Basic

$

2.63

$

(0.62

)

$

3.48

$

(0.32

)

Diluted

$

2.40

$

(0.62

)

$

3.21

$

(0.32

)

Basic weighted average shares outstanding

54,827,479

48,148,885

54,747,345

48,109,924

Diluted weighted average shares outstanding (1)

61,593,958

48,148,885

61,801,095

48,109,924

(1) The computation of diluted earnings per share includes the effect of potentially dilutive unvested shares of restricted stock and the Convertible Notes due 2022 for the three and six months ended June 30, 2020. The effect of potentially dilutive securities relating to the Company's Convertible Notes due 2022 was included in the computation of diluted earnings per share for the three and six months ended June 30, 2020 as their effect was dilutive under the if-converted method.


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

As of

In thousands of U.S. dollars

June 30, 2020

December 31, 2019

Assets

Current assets

Cash and cash equivalents

$

250,592

$

202,303

Accounts receivable

114,925

78,174

Prepaid expenses and other current assets

11,856

13,855

Inventories

9,806

8,646

Total current assets

387,179

302,978

Non-current assets

Vessels and drydock

4,062,574

4,008,158

Right of use assets

791,927

697,903

Other assets

83,688

131,139

Goodwill

11,539

11,539

Restricted cash

12,293

12,293

Total non-current assets

4,962,021

4,861,032

Total assets

$

5,349,200

$

5,164,010

Current liabilities

Current portion of long-term debt

$

213,928

$

235,482

Finance lease liability

126,275

122,229

Lease liability - IFRS 16

62,255

63,946

Accounts payable

17,373

23,122

Accrued expenses

33,663

41,452

Total current liabilities

453,494

486,231

Non-current liabilities

Long-term debt

1,009,565

999,268

Finance lease liability

1,141,108

1,195,494

Lease liability - IFRS 16

571,295

506,028

Total non-current liabilities

2,721,968

2,700,790

Total liabilities

3,175,462

3,187,021

Shareholders' equity

Issued, authorized and fully paid-in share capital:

Share capital

652

646

Additional paid-in capital

2,848,623

2,842,446

Treasury shares

(467,057

)

(467,057

)

Accumulated deficit

(208,480

)

(399,046

)

Total shareholders' equity

2,173,738

1,976,989

Total liabilities and shareholders' equity

$

5,349,200

$

5,164,010


Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(unaudited)

For the six months ended June 30,

In thousands of U.S. dollars

2020

2019

Operating activities

Net income

$

190,568

$

(15,244

)

Depreciation - owned or finance leased vessels

94,943

88,183

Depreciation - right of use assets

26,806

8,030

Amortization of restricted stock

15,355

13,860

Amortization of deferred financing fees

3,086

4,088

Write-off of deferred financing fees

313

275

Accretion of convertible notes

4,565

6,995

Accretion of fair value measurement on debt assumed in business combinations

1,742

1,827

337,378

108,014

Changes in assets and liabilities:

Increase in inventories

(1,160

)

(461

)

(Increase) / decrease in accounts receivable

(36,748

)

13,248

Decrease / (increase) in prepaid expenses and other current assets

1,998

(175

)

Decrease / (increase) in other assets

666

(2,807

)

(Decrease) / increase in accounts payable

(5,423

)

1,186

(Decrease) / increase in accrued expenses

(4,616

)

2,272

(45,283

)

13,263

Net cash inflow from operating activities

292,095

121,277

Investing activities

Drydock, scrubber, ballast water treatment system and other vessel related payments (owned, finance leased and bareboat-in vessels)

(119,805

)

(59,688

)

Net cash outflow from investing activities

(119,805

)

(59,688

)

Financing activities

Debt repayments

(381,657

)

(166,755

)

Issuance of debt

318,194

Debt issuance costs

(9,706

)

(1,288

)

Principal repayments on lease liability - IFRS 16

(41,668

)

(7,129

)

Increase in restricted cash

(9

)

Repayment of convertible notes

(2,266

)

Gross proceeds from issuance of common stock

2,601

Equity issuance costs

(26

)

(295

)

Dividends paid

(11,739

)

(10,279

)

Repurchase of common stock

(1

)

Net cash outflow from financing activities

(124,001

)

(188,022

)

Increase / (decrease) in cash and cash equivalents

48,289

(126,433

)

Cash and cash equivalents at January 1,

202,303

593,652

Cash and cash equivalents at June 30,

$

250,592

$

467,219


Scorpio Tankers Inc. and Subsidiaries
Other operating data for the six months ended June 30, 2020 and 2019
(unaudited)

For the three months ended June 30,

For the six months ended June 30,

2020

2019

2020

2019

Adjusted EBITDA(1) (in thousands of U.S. dollars except Fleet Data)

$

251,993

$

71,821

$

410,704

$

185,068

Average Daily Results

TCE per day(2)

$

29,693

$

14,348

$

26,250

$

16,470

Vessel operating costs per day(3)

$

6,407

6,351

$

6,499

$

6,414

LR2

TCE per revenue day (2)

$

46,988

$

16,974

$

36,503

$

19,948

Vessel operating costs per day(3)

$

6,656

6,687

$

6,699

$

6,748

Average number of vessels

42.0

38.0

42.0

38.0

LR1

TCE per revenue day (2)

$

35,794

$

14,527

$

28,701

$

16,221

Vessel operating costs per day(3)

$

6,891

$

6,159

$

6,785

$

6,377

Average number of vessels

12.0

12.0

12.0

12.0

MR

TCE per revenue day (2)

$

21,508

$

13,436

$

21,196

$

14,594

Vessel operating costs per day(3)

$

6,161

$

6,148

$

6,291

$

6,235

Average number of vessels

62.0

48.0

61.4

48.2

Handymax

TCE per revenue day (2)

$

17,698

$

11,520

$

20,117

$

14,644

Vessel operating costs per day(3)

$

6,359

$

6,318

$

6,548

$

6,240

Average number of vessels

20.8

21.0

20.9

21.0

Fleet data

Average number of vessels

136.8

119.0

136.3

119.2

Drydock

Drydock, scrubber, ballast water treatment system and other vessel related payments for owned, sale leaseback and bareboat chartered-in vessels (in thousands of U.S. dollars)

$

56,319

$

41,448

$

119,805

$

59,688


(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, finance leased or chartered-in less the number of days the vessel is off-hire for drydock and repairs.

(3)

Vessel operating costs per day represent vessel operating costs divided by the number of operating days during the period. Operating days are the total number of available days in a period with respect to the owned, finance leased or bareboat chartered-in vessels, before deducting available days due to off-hire days and days in drydock. Operating days is a measurement that is only applicable to our owned, finance leased or bareboat chartered-in vessels, not our time chartered-in vessels.


Fleet list as of August 5, 2020

Vessel Name

Year Built

DWT

Ice class

Employment

Vessel type

Scrubber

Owned, sale leaseback and bareboat chartered-in vessels

1

STI Brixton

2014

38,734

1A

SHTP (1)

Handymax

N/A

2

STI Comandante

2014

38,734

1A

SHTP (1)

Handymax

N/A

3

STI Pimlico

2014

38,734

1A

SHTP (1)

Handymax

N/A

4

STI Hackney

2014

38,734

1A

SHTP (1)

Handymax

N/A

5

STI Acton

2014

38,734

1A

SHTP (1)

Handymax

N/A

6

STI Fulham

2014

38,734

1A

SHTP (1)

Handymax

N/A

7

STI Camden

2014

38,734

1A

SHTP (1)

Handymax

N/A

8

STI Battersea

2014

38,734

1A

SHTP (1)

Handymax

N/A

9

STI Wembley

2014

38,734

1A

SHTP (1)

Handymax

N/A

10

STI Finchley

2014

38,734

1A

SHTP (1)

Handymax

N/A

11

STI Clapham

2014

38,734

1A

SHTP (1)

Handymax

N/A

12

STI Poplar

2014

38,734

1A

SHTP (1)

Handymax

N/A

13

STI Hammersmith

2015

38,734

1A

SHTP (1)

Handymax

N/A

14

STI Rotherhithe

2015

38,734

1A

SHTP (1)

Handymax

N/A

15

STI Amber

2012

49,990

SMRP (2)

MR

Yes

16

STI Topaz

2012

49,990

SMRP (2)

MR

Not Yet Installed

17

STI Ruby

2012

49,990

SMRP (2)

MR

Not Yet Installed

18

STI Garnet

2012

49,990

SMRP (2)

MR

Yes

19

STI Onyx

2012

49,990

SMRP (2)

MR

Yes

20

STI Fontvieille

2013

49,990

SMRP (2)

MR

Not Yet Installed

21

STI Ville

2013

49,990

SMRP (2)

MR

Not Yet Installed

22

STI Duchessa

2014

49,990

SMRP (2)

MR

Not Yet Installed

23

STI Opera

2014

49,990

SMRP (2)

MR

Not Yet Installed

24

STI Texas City

2014

49,990

SMRP (2)

MR

Yes

25

STI Meraux

2014

49,990

SMRP (2)

MR

Yes

26

STI San Antonio

2014

49,990

SMRP (2)

MR

Yes

27

STI Venere

2014

49,990

SMRP (2)

MR

Yes

28

STI Virtus

2014

49,990

SMRP (2)

MR

Yes

29

STI Aqua

2014

49,990

SMRP (2)

MR

Yes

30

STI Dama

2014

49,990

SMRP (2)

MR

Yes

31

STI Benicia

2014

49,990

SMRP (2)

MR

Yes

32

STI Regina

2014

49,990

SMRP (2)

MR

Yes

33

STI St. Charles

2014

49,990

SMRP (2)

MR

Yes

34

STI Mayfair

2014

49,990

SMRP (2)

MR

Yes

35

STI Yorkville

2014

49,990

SMRP (2)

MR

Yes

36

STI Milwaukee

2014

49,990

SMRP (2)

MR

Yes

37

STI Battery

2014

49,990

SMRP (2)

MR

Yes

38

STI Soho

2014

49,990

SMRP (2)

MR

Yes

39

STI Memphis

2014

49,990

SMRP (2)

MR

Yes

40

STI Tribeca

2015

49,990

SMRP (2)

MR

Yes

41

STI Gramercy

2015

49,990

SMRP (2)

MR

Yes

42

STI Bronx

2015

49,990

SMRP (2)

MR

Yes

43

STI Pontiac

2015

49,990

SMRP (2)

MR

Yes

44

STI Manhattan

2015

49,990

SMRP (2)

MR

Yes

45

STI Queens

2015

49,990

SMRP (2)

MR

Yes

46

STI Osceola

2015

49,990

SMRP (2)

MR

Yes

47

STI Notting Hill

2015

49,687

1B

SMRP (2)

MR

Yes

48

STI Seneca

2015

49,990

SMRP (2)

MR

Yes

49

STI Westminster

2015

49,687

1B

SMRP (2)

MR

Not Yet Installed

50

STI Brooklyn

2015

49,990

SMRP (2)

MR

Yes

51

STI Black Hawk

2015

49,990

SMRP (2)

MR

Yes

52

STI Galata

2017

49,990

SMRP (2)

MR

Yes

53

STI Bosphorus

2017

49,990

SMRP (2)

MR

Not Yet Installed

54

STI Leblon

2017

49,990

SMRP (2)

MR

Not Yet Installed

55

STI La Boca

2017

49,990

SMRP (2)

MR

Yes

56

STI San Telmo

2017

49,990

1B

SMRP (2)

MR

Not Yet Installed

57

STI Donald C Trauscht

2017

49,990

1B

SMRP (2)

MR

Not Yet Installed

58

STI Esles II

2018

49,990

1B

SMRP (2)

MR

Not Yet Installed

59

STI Jardins

2018

49,990

1B

SMRP (2)

MR

Not Yet Installed

60

STI Magic

2019

50,000

SMRP (2)

MR

Yes

61

STI Majestic

2019

50,000

SMRP (2)

MR

Yes

62

STI Mystery

2019

50,000

SMRP (2)

MR

Yes

63

STI Marvel

2019

50,000

SMRP (2)

MR

Yes

64

STI Magnetic

2019

50,000

SMRP (2)

MR

Yes

65

STI Millennia

2019

50,000

SMRP (2)

MR

Yes

66

STI Master

2019

50,000

SMRP (2)

MR

Yes

67

STI Mythic

2019

50,000

SMRP (2)

MR

Yes

68

STI Marshall

2019

50,000

SMRP (2)

MR

Yes

69

STI Modest

2019

50,000

SMRP (2)

MR

Yes

70

STI Maverick

2019

50,000

SMRP (2)

MR

Yes

71

STI Miracle

2020

50,000

SMRP (2)

MR

Yes

72

STI Maestro

2020

50,000

SMRP (2)

MR

Yes

73

STI Mighty

2020

50,000

SMRP (2)

MR

Yes

74

STI Excel

2015

74,000

SLR1P (3)

LR1

Not Yet Installed

75

STI Excelsior

2016

74,000

SLR1P (3)

LR1

Not Yet Installed

76

STI Expedite

2016

74,000

SLR1P (3)

LR1

Not Yet Installed

77

STI Exceed

2016

74,000

SLR1P (3)

LR1

Not Yet Installed

78

STI Executive

2016

74,000

SLR1P (3)

LR1

Yes

79

STI Excellence

2016

74,000

SLR1P (3)

LR1

Yes

80

STI Experience

2016

74,000

SLR1P (3)

LR1

Not Yet Installed

81

STI Express

2016

74,000

SLR1P (3)

LR1

Yes

82

STI Precision

2016

74,000

SLR1P (3)

LR1

Not Yet Installed

83

STI Prestige

2016

74,000

SLR1P (3)

LR1

Yes

84

STI Pride

2016

74,000

SLR1P (3)

LR1

Yes

85

STI Providence

2016

74,000

SLR1P (3)

LR1

Yes

86

STI Elysees

2014

109,999

SLR2P (4)

LR2

Yes

87

STI Madison

2014

109,999

SLR2P (4)

LR2

Yes

88

STI Park

2014

109,999

SLR2P (4)

LR2

Yes

89

STI Orchard

2014

109,999

SLR2P (4)

LR2

Yes

90

STI Sloane

2014

109,999

SLR2P (4)

LR2

Yes

91

STI Broadway

2014

109,999

SLR2P (4)

LR2

Yes

92

STI Condotti

2014

109,999

SLR2P (4)

LR2

Yes

93

STI Rose

2015

109,999

SLR2P (4)

LR2

Yes

94

STI Veneto

2015

109,999

SLR2P (4)

LR2

Yes

95

STI Alexis

2015

109,999

SLR2P (4)

LR2

Yes

96

STI Winnie

2015

109,999

SLR2P (4)

LR2

Yes

97

STI Oxford

2015

109,999

SLR2P (4)

LR2

Yes

98

STI Lauren

2015

109,999

SLR2P (4)

LR2

Yes

99

STI Connaught

2015

109,999

SLR2P (4)

LR2

Yes

100

STI Spiga

2015

109,999

SLR2P (4)

LR2

Yes

101

STI Savile Row

2015

109,999

SLR2P (4)

LR2

Yes

102

STI Kingsway

2015

109,999

SLR2P (4)

LR2

Not Yet Installed

103

STI Carnaby

2015

109,999

SLR2P (4)

LR2

Not Yet Installed

104

STI Solidarity

2015

109,999

SLR2P (4)

LR2

Not Yet Installed

105

STI Lombard

2015

109,999

SLR2P (4)

LR2

Yes

106

STI Grace

2016

109,999

SLR2P (4)

LR2

Not Yet Installed

107

STI Jermyn

2016

109,999

SLR2P (4)

LR2

Not Yet Installed

108

STI Sanctity

2016

109,999

SLR2P (4)

LR2

Yes

109

STI Solace

2016

109,999

SLR2P (4)

LR2

Yes

110

STI Stability

2016

109,999

SLR2P (4)

LR2

Not Yet Installed

111

STI Steadfast

2016

109,999

SLR2P (4)

LR2

Yes

112

STI Supreme

2016

109,999

SLR2P (4)

LR2

Not Yet Installed

113

STI Symphony

2016

109,999

SLR2P (4)

LR2

Yes

114

STI Gallantry

2016

113,000

SLR2P (4)

LR2

Yes

115

STI Goal

2016

113,000

SLR2P (4)

LR2

Yes

116

STI Nautilus

2016

113,000

SLR2P (4)

LR2

Yes

117

STI Guard

2016

113,000

SLR2P (4)

LR2

Yes

118

STI Guide

2016

113,000

SLR2P (4)

LR2

Yes

119

STI Selatar

2017

109,999

SLR2P (4)

LR2

Yes

120

STI Rambla

2017

109,999

SLR2P (4)

LR2

Not Yet Installed

121

STI Gauntlet

2017

113,000

SLR2P (4)

LR2

Yes

122

STI Gladiator

2017

113,000

SLR2P (4)

LR2

Yes

123

STI Gratitude

2017

113,000

SLR2P (4)

LR2

Yes

124

STI Lobelia

2019

110,000

SLR2P (4)

LR2

Yes

125

STI Lotus

2019

110,000

SLR2P (4)

LR2

Yes

126

STI Lily

2019

110,000

SLR2P (4)

LR2

Yes

127

STI Lavender

2019

110,000

SLR2P (4)

LR2

Yes

128

Sky

2007

37,847

1A

SHTP (1)

Handymax

N/A

(5

)

129

Steel

2008

37,847

1A

SHTP (1)

Handymax

N/A

(5

)

130

Stone I

2008

37,847

1A

SHTP (1)

Handymax

N/A

(5

)

131

Style

2008

37,847

1A

SHTP (1)

Handymax

N/A

(5

)

132

STI Beryl

2013

49,990

SMRP (2)

MR

Not Yet Installed

(6

)

133

STI Le Rocher

2013

49,990

SMRP (2)

MR

Not Yet Installed

(6

)

134

STI Larvotto

2013

49,990

SMRP (2)

MR

Not Yet Installed

(6

)

Total owned, sale leaseback and bareboat chartered-in fleet DWT

9,324,548

Leasehold newbuilding currently under construction

Hull S471 - TBN STI Maximus

HVS

(7

)

50,000

MR

Total leasehold newbuilding product tankers DWT

50,000

Total Fleet DWT

9,374,548


(1

)

This vessel operates in the Scorpio Handymax Tanker Pool, or SHTP. SHTP is a Scorpio Pool and is operated by Scorpio Commercial Management S.A.M. (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, or SMRP. SMRP is a Scorpio Pool and is operated by SCM. SMRP and SCM are related parties to the Company.

(3

)

This vessel operates in the Scorpio LR1 Pool, or SLR1P. SLR1P is a Scorpio Pool and is operated by SCM. SLR1P and SCM are related parties to the Company.

(4

)

This vessel operates in or is expected to operate in the Scorpio LR2 Pool, or SLR2P. SLR2P is a Scorpio Pool and is operated by SCM. SLR2P and SCM are related parties to the Company.

(5

)

In March 2019, we entered into a new bareboat charter-in agreement on a previously bareboat chartered-in vessel. The term of the agreement is for two years at a bareboat rate of $6,300 per day. The agreement is expected to expire on March 31, 2021.

(6

)

In April 2017, we sold and leased back this vessel, on a bareboat basis, for a period of up to eight years for $8,800 per day. The sales price was $29.0 million per vessel, and we have the option to purchase this vessel beginning at the end of the fifth year of the agreement through the end of the eighth year of the agreement, at market-based prices. Additionally, a deposit of $4.35 million per vessel was retained by the buyer and will either be applied to the purchase price of the vessel if a purchase option is exercised or refunded to us at the expiration of the agreement.

(7

)

The leasehold interest in this vessel was acquired from Trafigura in September 2019 as part of the Trafigura Transaction and this vessel is currently under construction at Hyundai-Vietnam Shipbuilding Co., Ltd. with delivery expected in the third quarter of 2020.


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 the amount of dividends, if any, depends on the Company's earnings, financial condition, cash requirements and availability, fleet renewal and expansion, restrictions in loan agreements, the provisions of Marshall Islands law affecting the payment of dividends and other factors.

The Company's dividends paid during 2019 and 2020 were as follows:

Date paid

Dividends per common
share

March 2019

$0.100

June 2019

$0.100

September 2019

$0.100

December 2019

$0.100

March 2020

$0.100

June 2020

$0.100

On August 5, 2020, the Company's Board of Directors declared a quarterly cash dividend of $0.10 per share, payable on or about September 29, 2020 to all shareholders of record as of September 9, 2020 (the record date). As of August 5, 2020, there were 58,807,747 common shares of the Company outstanding.

$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, in addition to its common shares, currently consist of its Senior Notes due 2025 (NYSE: SBBA), which were issued in May 2020, and Convertible Notes due 2022, which were issued in May and July 2018.

In July 2020, the Company repurchased $13.8 million aggregate principal amount of its Convertible Notes due 2022 at an average price of $882.23 per $1,000 principal amount, or $12.2 million. No other securities were repurchased under this program during the second quarter of 2020 and through the date of this press release.

As of the date hereof, the Company has repurchased a total of $140.6 million of its securities under the Securities Repurchase Program and has the authority to purchase up to an additional $109.4 million of its securities. The Company may 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.

About Scorpio Tankers Inc.

Scorpio Tankers Inc. is a provider of marine transportation of petroleum products worldwide. Scorpio Tankers Inc. currently owns, finance leases or bareboat charters-in 134 product tankers (42 LR2 tankers, 12 LR1 tankers, 62 MR tankers and 18 Handymax tankers) with an average age of 4.7 years. In addition, the Company will bareboat charter-in one MR tanker that is currently under construction and is scheduled to be delivered in September 2020. 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 time charter equivalent revenue, or TCE revenue, adjusted net income or loss, and adjusted EBITDA, which are not measures prepared in accordance with IFRS ("Non-IFRS" measures). The Non-IFRS measures are presented in this press release as we believe that they provide investors and other users of our financial statements, such as our lenders, 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 TCE revenue, adjusted net income or loss with adjusted earnings per share, basic and diluted, and adjusted EBITDA are useful to investors or other users of our financial statements, such as our lenders, because they facilitate the comparability and the evaluation of companies in the Company’s industry. In addition, the Company believes that TCE revenue, adjusted net income or loss 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 TCE revenue, adjusted net income or loss with 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.

TCE revenue, on a historical basis, is reconciled above in the section entitled "Explanation of Variances on the Second Quarter of 2020 Financial Results Compared to the Second Quarter of 2019". The Company has not provided a reconciliation of forward-looking TCE revenue because the most directly comparable IFRS measure on a forward-looking basis is not available to the Company without unreasonable effort.

Reconciliation of Net Income / (Loss) to Adjusted Net Income / (Loss)

For the three months ended June 30, 2020

Per share

Per share

In thousands of U.S. dollars except per share data

Amount

basic

diluted

Net income

$

143,941

$

2.63

$

2.40

Adjustment:

Deferred financing fees write-off

313

0.01

0.01

Adjusted net income

$

144,254

$

2.63

(1)

$

2.40

(1)

There were no Non-IFRS adjustments to the Net Loss for the three months ended June 30, 2019.

For the six months ended June 30, 2020

Per share

Per share

In thousands of U.S. dollars except per share data

Amount

basic

diluted

Net income

$

190,568

$

3.48

$

3.21

Adjustments:

Deferred financing fees write-off

313

0.01

0.01

Adjusted net income

$

190,881

$

3.49

$

3.21

(1)


For the six months ended June 30, 2019

Per share

Per share

In thousands of U.S. dollars except per share data

Amount

basic

diluted

Net loss

$

(15,244

)

$

(0.32

)

$

(0.32

)

Adjustment:

Deferred financing fees write-off

275

0.01

0.01

Adjusted net loss

$

(14,969

)

$

(0.31

)

$

(0.31

)

(1) Summation differences due to rounding.

Reconciliation of Net Income / (Loss) to Adjusted EBITDA

For the three months ended June 30,

For the six months ended June 30,

In thousands of U.S. dollars

2020

2019

2020

2019

Net income / (loss)

$

143,941

$

(29,720

)

$

190,568

$

(15,244

)

Financial expenses

39,127

47,327

83,892

96,083

Financial income

(295

)

(2,725

)

(860

)

(5,843

)

Depreciation - owned or finance leased vessels

48,102

44,369

94,943

88,183

Depreciation - right of use assets

13,609

5,895

26,806

8,030

Amortization of restricted stock

7,509

6,675

15,355

13,859

Adjusted EBITDA

$

251,993

$

71,821

$

410,704

$

185,068

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," "expect," "anticipate," "estimate," "intend," "plan," "target," "project," "likely," "may," "will," "would," "could" 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, management’s examination of historical operating trends, data contained in the Company’s records and other data available from third parties. Although management believes 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 the Company’s control, there can be no assurance that the Company will achieve or accomplish these expectations, beliefs or projections. The Company undertakes no obligation, and specifically declines 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 the Company’s view, could cause actual results to differ materially from those discussed in the forward‐looking statements include unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies for the management, length and severity of the ongoing novel coronavirus (COVID-19) outbreak, including its effect on demand for petroleum products and the transportation thereof, expansion and growth of the Company’s operations, risks relating to the integration of assets or operations of entities that it has or may in the future acquire and the possibility that the anticipated synergies and other benefits of such acquisitions may not be realized within expected timeframes or at all, the failure of counterparties to fully perform their contracts with the Company, 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 the Company’s operating expenses, including bunker prices, drydocking and insurance costs, the market for the Company’s 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 the Company's filings with the SEC for a more complete discussion of certain of these and other risks and uncertainties.

Scorpio Tankers Inc.
212-542-1616