Scorpio Tankers Inc. Announces Financial Results for the Third Quarter of 2013, Makes Further Progress on Financing, and Increases Its Quarterly Dividend

STNG

Scorpio Tankers Inc. Announces Financial Results for the Third Quarter of 2013, Makes Further Progress on Financing, and Increases Its Quarterly Dividend

MONACO--(Marketwired - Oct 28, 2013) - Scorpio Tankers Inc. (NYSE: STNG) ("Scorpio Tankers," or the "Company") today reported its results for the three and nine months ended September 30, 2013.

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

For the three months ended September 30, 2013, the Company had an adjusted net income of $0.6 million (see Non-GAAP Measure section below), or $0.00 basic and diluted earnings per share, excluding a $0.1 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 $0.7 million, or $0.00 basic and diluted earnings per share. 

For the three months ended September 30, 2012, the Company had an adjusted net loss of $3.7 million (see Non-GAAP Measure section below), or $0.09 basic and diluted loss per share, excluding a $5.9 million, or $0.14 per share, loss from sales of vessels and a $3.0 million, or $0.07 per share, write-off of deferred financing fees. Including the aforementioned adjustments, the Company had a net loss of $12.5 million, or $0.30 basic and diluted loss per share for the three months ended September 30, 2012. 

Results for the nine months ended September 30, 2013 and 2012

For the nine months ended September 30, 2013, the Company had an adjusted net income of $10.8 million (see Non-GAAP Measure section below), or $0.08 basic and diluted earnings per share, excluding a $0.5 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 $11.2 million or $0.08 basic and diluted earnings per share. 

For the nine months ended September 30, 2012, the Company had an adjusted net loss of $8.3 million (see Non-GAAP Measure section below), or $0.21 basic and diluted loss per share, excluding a $10.4 million, or $0.26 per share, loss from sales of vessels and a $3.0 million, or $0.07 per share, write-off of deferred financing fees. Including the aforementioned adjustments, the Company recorded a net loss of $21.7 million, or $0.54 basic and diluted loss per share for the nine months ended September 30, 2012. 

Declaration of Dividend

On October 28, 2013, the Scorpio Tankers' board of directors declared a quarterly cash dividend of $0.07 per share, payable on December 18, 2013 to all shareholders as of December 3, 2013 (the record date). There are currently 191,656,422 shares outstanding.

Emanuele Lauro, chief executive officer and chairman of the board commented, "The past few months have been very exciting for us with the delivery of vessels and additional construction contracts for our Newbuilding Program, as well as a successful equity raising. I am pleased that we have made progress on financing our growth, having secured substantial commitments from KEXIM and KSURE."

Summary of Recent and Third Quarter Significant Events:

  • Received loan commitments from a group of financial institutions led by DNB Bank ASA and Skandinaviska Enskilda Banken AB (publ) and from the Export-Import Bank of Korea ("KEXIM") for a total loan facility of up to $429.6 million (the "KEXIM Financing"). The KEXIM Financing incorporates an optional guarantee from KEXIM for the issuance by the Company, at the option of the Company, of a five year $125.3 million amortizing bond facility; the proceeds of which will reduce KEXIM's direct loan commitment in the KEXIM Financing. 
  • Received an Acceptance of Insurance Agreement from Korea Trade Insurance Corporation ("KSURE") covering 95% of an up to $358.3 million KSURE tranche as part of a credit facility of up to $458.3 million (the "KSURE Financing") that is currently being finalized with a group of financial institutions.
  • Exercised options with Hyundai Samho Heavy Industries ("HSHI") for the construction of two Very Large Gas Carriers ("VLGC") for approximately $75.0 million each, with deliveries scheduled in the first quarter of 2016.
  • Reached agreements with certain unaffiliated third parties to issue shares in exchange for the transfer of ownership of four MR product tankers currently under construction in South Korea. The aggregate purchase price of the four vessels is $151.0 million with approximately 30% of the consideration consisting of the newly issued common shares. Deliveries of vessels are scheduled in the first and second quarters of 2014. 
  • Reached agreements with HSHI and Daewoo Shipbuilding and Marine Engineering Co., Ltd. ("DSME") for the construction of a total of nine VLGC for approximately $75.6 million each with deliveries scheduled in the second, third and fourth quarters of 2015.
  • Reached an agreement with Hyundai Mipo Dockyard ("HMD") to construct four product tankers consisting of two 52,000 dwt MR product tankers for approximately $35.0 million each (deliveries in the second quarter of 2015) and two Handymax ice class-1A (38,000 dwt) product tankers for approximately $32.0 million each (deliveries in the fourth quarter of 2014).
  • Closed on an underwritten offering of 23 million common shares in August 2013 which includes the full exercise of the underwriters' overallotment of 3 million shares, raising aggregate net proceeds of $209.8 million.
  • Declared and paid a quarterly cash dividend on the Company's common stock of $0.035 per share in September 2013.
  • Took delivery of four MR tankers under the Company's Newbuilding Program, STI Le Rocher  and STI Larvotto in July, STI Fontvieille in August and STI Ville in September 2013. After delivery, each vessel began a time charter for up to 120 days at approximately $19,000 per day.

KEXIM Financing
In September 2013, the Company received loan commitments from a group of financial institutions led by DNB Bank ASA and Skandinaviska Enskilda Banken AB (publ) for loan commitments of up to $429.6 million, including a commitment from KEXIM for a commitment of up to $300.6 million (the "KEXIM Tranche").

The KEXIM Financing will be used to finance up to 60% of the contract price of 18 newbuilding product tankers upon delivery. The covenants are similar to those in the Company's existing credit facilities, and other terms and conditions of the loan are in accordance with OECD Guidelines. The KEXIM Financing is subject to executed documentation and is expected to close within the fourth quarter of 2013.

In addition to KEXIM's commitment of up to $300.6 million, KEXIM has also provided an optional guarantee for a five year amortizing note of $125.3 million (the "KEXIM Guaranteed Note") that may be issued by the Company at the Company's discretion in 2014; the proceeds of which will be used to reduce the $300.6 million KEXIM Tranche. 

KSURE Credit Facility
In October 2013, the Company received an Acceptance of Insurance Agreement from KSURE covering 95% of an up to $358.3 million KSURE tranche which will be a component of a credit facility of up to $458.3 million that is in the process of being finalized. The KSURE Financing will also include a commercial tranche (the "Commercial Tranche") of up to $100.0 million.

The KSURE Financing will be used to finance up to 60% of the contract price of up to 21 newbuilding product tankers upon delivery. The covenants are similar to those in the Company's existing credit facilities, and other terms and conditions of the loan are in accordance with OECD Guidelines. The facility is subject to credit approval from participating financial institutions as well as executed documentation, and is expected to close within the fourth quarter of 2013.

Newbuilding agreements

In September 2013, the Company reached agreements with certain unaffiliated third parties to issue shares in exchange for the transfer of ownership of four MR product tankers that are currently under construction with SPP Shipbuilding Co., Ltd. of South Korea ("SPP"). The aggregate purchase price of the four vessels is $151.0 million with approximately 30% of the consideration consisting of the newly issued shares having a valuation based on the fair market value of the shares at the time of issuance. The new common shares will be issued to Ceres, Valero and a group of institutional investors advised by JP Morgan Asset Management; the remainder of the purchase price will be paid to the shipyard from cash on hand and bank debt. Deliveries of the vessels are scheduled in the first and the second quarters of 2014. 

The transaction also includes a time charter-out agreement for each vessel for a fixed daily revenue amount at current market levels plus a profit sharing arrangement whereby earnings in excess of the base time charter rate will be split between the Company and charterer, Valero. The first vessel delivered will be time chartered-out for 24 months, and the remaining three will each be time chartered-out for 12 months. The transactions will be completed by way of novation of the existing shipbuilding agreements and remain subject to final documentation.

In August 2013, the Company reached an agreement with HMD to construct four product tankers consisting of two 52,000 dwt MR product tankers for approximately $35.0 million each and two Handymax ice class-1A (38,000 dwt) product tankers for approximately $32.0 million each. The MR tankers are scheduled to be delivered in the second quarter of 2015, and the Handymax ice class-1A tankers are scheduled to be delivered in the fourth quarter of 2014.

VLGC Newbuilding agreements

In October 2013, the Company exercised options with HSHI for the construction of two VLGC for approximately $75.0 million each. These vessels are expected to be delivered in the first quarter of 2016.

In July and August 2013, the Company reached agreements with HSHI and DSME for the construction of nine VLGC for approximately $75.6 million each. These vessels are expected to be delivered in the second, third and fourth quarters of 2015. 

These vessels are 84,000 cubic meter tankers designed for the carriage of liquefied petroleum gas ("LPG").

Underwritten offering and full exercise of underwriters' over-allotment

In August 2013, the Company closed on the sale of 20 million shares of common stock at an offering price of $9.50 per share. The underwriters also fully exercised their over-allotment option to purchase 3 million additional common shares at the offering price. The Company received aggregate net proceeds of $209.8 million after deducting underwriters' discounts and offering expenses. 

Time charter-in update

In October 2013, the Company entered into a new time charter-in agreement on an LR1 vessel that is currently time chartered-in. The new agreement is for two years at $14,525 per day and commenced upon the expiration of the existing charter in September 2013.

In August 2013, the Company agreed to time charter-in and took delivery of two 2007 built Handymax product tankers (37,412 dwt and 37,455 dwt, respectively). The first vessel is time chartered-in for 18 months at $12,500 per day with an option for the Company to extend the charter for an additional year at $13,500 per day. The second vessel is time chartered-in for one year at $12,500 per day with an option for the Company to extend the charter for an additional year at $13,250 per day. 

In August 2013, the Company declared an option on an LR2 vessel that is currently time chartered-in. The option period is for six months at $15,000 per day and commences upon the expiration of the existing charter in November 2013. 

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 at $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. 

Conference Call

The Company will have a conference call on October 28, 2013 at 12:00 PM Eastern Daylight Time and 5:00 PM Central European Time.

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 (888)-215-7046 (U.S.) or 1 (913)-312-0659 (International). The conference participant passcode is 6328598. 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=96603  

Current Liquidity

As of October 25, 2013, the Company had $381.9 million in cash and $75.5 million available to draw down from its 2010 Revolving Credit Facility. 

Debt

As of October 28, 2013, the Company's outstanding debt balance is as follows:

       
       
2010 Revolving Credit Facility   $ - million
2011 Credit Facility     65.2 million
STI Spirit Credit Facility     23.4 million
Newbuilding Credit Facility     85.3 million
2013 Credit Facility     - million
         
Total   $ 173.9 million
         
         

Newbuilding Program

During the third quarter of 2013, the Company made $255.0 million of installment payments on its newbuilding vessels. The Company currently has 65 newbuilding vessel orders with HMD, SPP, HSHI and DSME (28 MRs, 14 Handymaxes, 12 LR2s and 11 VLGC). The estimated future payment dates and amounts are as follows*:

           
           
Q4 2013   $ 215.7   million ** 
Q1 2014     250.3   million  
Q2 2014     397.5   million  
Q3 2014     394.8   million  
Q4 2014     323.1   million  
Q1 2015     134.6   million  
Q2 2015     249.2   million  
Q3 2015     151.1   million  
Q4 2015     197.3   million  
Q1 2016     105.0   million  
Total   $ 2,418.6   million *** 
             
             

*These are estimates only and are subject to change as construction progresses. 
**$47.0 million has been paid prior to the date of this press release. 
***Excludes the consideration of newly issued common shares of approximately 30% of the purchase price for four MRs currently under construction with first and second quarter 2014 deliveries.

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

For the three months ended September 30, 2013, the Company recorded net income of $0.7 million compared to a net loss of $12.5 million in the three months ended September 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 September 30, 2013 and 2012:

     
     
  For the three months ended September 30,  
In thousands of U.S. dollars 2013     2012  
Vessel revenue $ 57,756     $ 28,667  
Voyage expenses   (1,249 )     (6,304 )
TCE revenue $ 56,507     $ 22,363  
               
               
  • TCE revenue increased by $34.1 million to $56.5 million as a result of an increase in the average number of operating vessels (owned and time chartered-in) to 42.3 from 20.4 for the three months ended September 30, 2013 and 2012, respectively. Additionally, the Company experienced an overall increase in time charter equivalent revenue per day to $14,557 per day from $11,926 per day for the three months ended September 30, 2013 and 2012, respectively (see the breakdown of daily TCE averages below). 

  • Vessel operating costs increased $4.7 million to $11.1 million from $6.4 million for the three months ended September 30, 2013 and 2012, respectively. This increase was primarily driven by an increase in the Company's owned fleet to an average of 17.3 vessels from 9.9 vessels for the three months ended September 30, 2013 and 2012, respectively. 

  • Charterhire expense increased $19.3 million to $31.9 million as a result of an increase in the average number of time chartered-in vessels to 25.0 from 10.5 for the three months ended September 30, 2013 and 2012, respectively. See the Company's Fleet List below for the terms of these agreements.

  • Depreciation expense increased $3.0 million to $6.4 million primarily as a result of an increase in the average number of owned vessels to 17.3 from 9.9 for the three months ended September 30, 2013 and 2012.

  • General and administrative expenses increased $3.7 million to $6.5 million. This increase was driven by (i) a $3.0 million increase in restricted stock amortization (non-cash) and (ii) an overall increase in other general and administrative expenses due to the significant growth in the Company's fleet and Newbuilding program. 

  • Financial expenses decreased $3.7 million to $0.4 million primarily as a result of the one-time write-off of deferred financing fees during the three months ended September 30, 2012 of $3.0 million relating to the amendment signed in July 2012 to extend the availability period of the 2011 Credit Facility to January 2014. 

   
   
Scorpio Tankers Inc. and Subsidiaries  
Condensed Consolidated Statement of Profit or Loss  
(unaudited)  
   
   
   
    For the three months ended September 30,     For the nine months ended September 30,  
In thousands of U.S. dollars except per share and share data   2013     2012     2013     2012  
Revenue                                
  Vessel revenue   $ 57,756     $ 28,667     $ 154,213     $ 85,278  
                                 
Operating expenses:                                
  Vessel operating costs     (11,137 )     (6,374 )     (27,635 )     (22,158 )
  Voyage expenses     (1,249 )     (6,304 )     (3,782 )     (19,950 )
  Charterhire     (31,877 )     (12,588 )     (79,345 )     (29,479 )
  Depreciation     (6,377 )     (3,389 )     (16,665 )     (10,213 )
  Loss from sale of vessels     -       (5,879 )     -       (10,404 )
  General and administrative expenses     (6,522 )     (2,815 )     (14,572 )     (8,404 )
  Total operating expenses     (57,162 )     (37,349 )     (141,999 )     (100,608 )
Operating income / (loss)     594       (8,682 )     12,214       (15,330 )
Other (expense) and income, net                                
  Financial expenses     (448 )     (4,108 )     (2,323 )     (6,583 )
  Realized gain on derivative financial instruments     3       286       25       286  
  Unrealized gain on derivative financial instruments     118       38       483       38  
  Financial income     400       4       950       6  
  Other expenses, net     -       (49 )     (106 )     (73 )
  Total other expense, net     73       (3,829 )     (971 )     (6,326 )
Net income / (loss)   $ 667     $ (12,511 )   $ 11,243     $ (21,656 )
                                 
Earnings / (loss) per share                                
                                 
  Basic and diluted   $ 0.00     $ (0.30 )   $ 0.08     $ (0.54 )
                                 
                                 
                                 
Scorpio Tankers Inc. and Subsidiaries  
Condensed Consolidated Balance Sheet  
(unaudited)  
   
   
   
  As of  
In thousands of U.S. dollars September 30, 2013     December 31, 2012  
Assets              
Current assets              
Cash and cash equivalents $ 447,368     $ 87,165  
Accounts receivable   73,961       36,438  
Prepaid expenses and other current assets   3,871       956  
Inventories   3,498       2,169  
Total current assets   528,698       126,728  
Non-current assets              
Vessels and drydock   640,855       395,412  
Vessels under construction   371,236       50,251  
Other assets   14,045       889  
Total non-current assets   1,026,136       446,552  
Total assets $ 1,554,834     $ 573,280  
               
Current liabilities              
Bank loans   13,754       7,475  
Accounts payable   9,194       11,387  
Accrued expenses   3,254       3,057  
Derivative financial instruments   675       844  
Total current liabilities   26,877       22,763  
Non-current liabilities              
Bank loans   157,543       134,984  
Derivative financial instruments   309       743  
Total non-current liabilities   157,852       135,727  
Total liabilities   184,729       158,490  
               
Shareholders' equity              
Issued, authorized and fully paid in share capital:              
  Share capital   1,888       650  
  Additional paid in capital   1,462,232       519,493  
Treasury shares   (7,938 )     (7,938 )
Hedging reserve   (236 )     (329 )
Accumulated deficit   (85,841 )     (97,086 )
Total shareholders' equity   1,370,105       414,790  
Total liabilities and shareholders' equity $ 1,554,834     $ 573,280  
               
               
               
Scorpio Tankers Inc. and Subsidiaries  
Condensed Consolidated Statement of Cash Flows  
(unaudited)  
   
   
   
  For the nine months ended September 30,  
In thousands of U.S. dollars 2013     2012  
               
Operating activities              
Net income / (loss) $ 11,243     $ (21,656 )
Loss from sale of vessels   -       10,404  
Depreciation   16,665       10,213  
Amortization of restricted stock   6,738       2,598  
Amortization of deferred financing fees   538       3,844  
Straight-line adjustment for charterhire expense   7       225  
Unrealized gain on derivative financial instruments   (483 )     (38 )
    34,708       5,590  
Changes in assets and liabilities:              
Drydock payments   (1,448 )     (150 )
Increase in inventories   (1,328 )     (77 )
Increase in accounts receivable   (37,523 )     (5,575 )
(Increase)/decrease in prepaid expenses and other current assets   (2,942 )     129  
(Increase)/decrease in other assets   (394 )     2,442  
Increase in accounts payable   1,337       4,413  
(Decrease)/increase in accrued expenses   (29 )     598  
    (42,327 )     1,780  
Net cash (outflow) / inflow from operating activities   (7,169 )     7,370  
Investing activities              
Acquisition of vessels and payments for vessels under construction   (585,182 )     (176,556 )
Proceeds from disposal of vessels   -       101,335  
Net cash outflow from investing activities   (585,182 )     (75,221 )
Financing activities              
Bank loan repayment   (24,102 )     (75,989 )
Bank loan drawdown   52,050       124,173  
Debt issuance costs   (12,266 )     (2,944 )
Gross proceeds from issuance of common stock   983,537       27,000  
Equity issuance costs   (35,531 )     (1,137 )
Purchase of treasury shares   -       (2,440 )
Dividends paid   (10,684 )     -  
Net cash inflow from financing activities   953,004       68,663  
Increase in cash and cash equivalents   360,203       812  
Cash and cash equivalents at January 1,   87,165       36,833  
Cash and cash equivalents at September 30, $ 447,368     $ 37,645  
               
               
               
Scorpio Tankers Inc. and Subsidiaries
Other operating data for the three and nine months ended September 30, 2013 and 2012
(unaudited)
 
 
 
    For the three months ended September 30,   For the nine months ended September 30,
    2013   2012   2013   2012
Adjusted EBITDA(1)(in thousands of U.S. dollars)   $ 10,830   $ 1,715   $ 35,536   $ 8,098
                         
Average Daily Results                        
Time charter equivalent per day(2)   $ 14,557   $ 11,926   $ 15,388   $ 12,719
Vessel operating costs per day(3)     6,851     6,935     6,656     7,690
                         
Aframax/LR2                        
TCE per revenue day (2)   $ 10,876   $ 15,809   $ 12,803   $ 10,940
Vessel operating costs per day(3)     9,112     7,645     7,799     8,622
                         
Panamax/LR1                        
TCE per revenue day (2)   $ 13,349   $ 13,613   $ 13,519   $ 14,609
Vessel operating costs per day(3)     8,174     7,271     7,570     7,783
                         
MR                        
TCE per revenue day (2)   $ 17,304   $ 10,972   $ 17,706   $ 11,195
Vessel operating costs per day(3)     5,956     6,593     5,930     7,338
                         
Handymax                        
TCE per revenue day (2)   $ 13,029   $ 11,106   $ 14,246   $ 12,804
Vessel operating costs per day(3)     7,157     5,524     6,690     7,414
                         
Fleet data                        
Average number of owned vessels     17.3     9.9     14.9     10.4
Average number of time chartered-in vessels     25.0     10.5     21.1     8.4
                         
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 October 28, 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   -   SMRP (4)   MR            
11 STI Larvotto   2013       52,000   -   SMRP (4)   MR            
12 STI Fontvieille   2013       52,000   -   SMRP (4)   MR            
13 STI Ville   2013       52,000   -   Spot   MR            
14 Noemi   2004       72,515   -   SPTP (2)   LR1            
15 Senatore   2004       72,514   -   SPTP (2)   LR1            
16 STI Harmony   2007       73,919   1A   SPTP (2)   LR1            
17 STI Heritage   2008       73,919   1A   SPTP (2)   LR1            
18 Venice   2001       81,408   1C   SPTP (2)   Post-Panamax            
19 STI Spirit   2008       113,100   -   SLR2P (3)   LR2            
                                       
  Total owned DWT         1,148,520                        
                                       
  Vessel Name   Year Built       DWT   Ice class   Employment   Vessel type   Daily Base Rate   Expiry (5)    
  Time Chartered-In vessels                                
20 Freja Polaris   2004       37,217   1B   SHTP (1)   Handymax   $12,700   14-Apr-14   (6)
21 Kraslava   2007       37,258   1B   SHTP (1)   Handymax   $12,800   18-May-14   (7)
22 Krisjanis Valdemars 2007       37,266   1B   SHTP (1)   Handymax   $12,800   14-Apr-14   (8)
23 Jinan   2003       37,285   -   SHTP (1)   Handymax   $12,600   28-Apr-15    
24 Iver Progress   2007       37,412   -   SHTP (1)   Handymax   $12,500   03-Mar-15   (9)
25 Iver Prosperity   2007       37,455   -   SHTP (1)   Handymax   $12,500   20-Oct-14   (10)
26 Histria Azure   2007       40,394   -   SHTP (1)   Handymax   $12,600   04-Apr-14   (11)
27 Histria Coral   2006       40,426   -   SHTP (1)   Handymax   $12,800   17-Jul-14   (12)
28 Histria Perla   2005       40,471   -   SHTP (1)   Handymax   $12,800   15-Jul-14   (12)
29 STX Ace 6   2007       46,161   -   SMRP (4)   MR   $14,150   17-May-14   (13)
30 Targale   2007       49,999   -   SMRP (4)   MR   $14,500   17-May-14   (14)
31 Ugale   2007       49,999   1B   SMRP (4)   MR   $14,000   15-Jan-14   (15)
32 Gan Triumph   2010       49,999   -   SMRP (4)   MR   $14,150   20-May-14    
33 Nave Orion   2013       49,999   -   SMRP (4)   MR   $14,300   25-Mar-15   (16)
34 Freja Lupus   2012       50,385   -   SMRP (4)   MR   $14,760   26-Apr-14   (17)
35 Gan-Trust   2013       51,561   -   SMRP (4)   MR   $16,250   06-Jan-16   (18)
36 Usma   2007       52,684   1B   SMRP (4)   MR   $13,500   03-Jan-14   (19)
37 SN Federica   2003       72,344   -   SPTP (2)   LR1   $11,250   15-May-15   (20)
38 King Douglas   2008       73,666       Spot   LR1   $14,000   08-Aug-14   (21)
39 Hellespont Promise 2007       73,669   -   SPTP (2)   LR1   $12,500   16-Dec-13   (22)
40 FPMC P Eagle   2009       73,800   -   SPTP (2)   LR1   $14,525   09-Sep-15    
41 FPMC P Hero   2011       99,995   -   SLR2P (3)   LR2   $14,750   02-May-14   (23)
42 FPMC P Ideal   2012       99,993   -   SLR2P (3)   LR2   $15,000   09-Jan-14   (24)
43 Densa Alligator   2013       105,708   -   SLR2P (3)   LR2   $16,500   17-Sep-14   (25)
44 Khawr Aladid   2006       106,003   -   SLR2P (3)   LR2   $15,400   11-Jul-15    
45 Fair Seas   2008       115,406   -   SLR2P (3)   LR2   $16,250   31-Jan-14   (26)
46 Pink Stars   2010       115,592   -   SLR2P (3)   LR2   $16,125   10-Apr-14    
47 Four Sky   2010       115,708   -   SLR2P (3)   LR2   $16,250   02-Sep-14    
48 Orange Stars   2011       115,756   -   SLR2P (3)   LR2   $16,125   06-Apr-14    
                                       
  Total time chartered-in DWT       1,913,611                        
                                       
  Newbuildings currently under construction                            
  Vessel Name   Yard       DWT   Ice class       Vessel type            
  Product tankers                                    
                                       
49 Hull 2451   HMD   (27)   38,000   1A       Handymax            
50 Hull 2452   HMD   (27)   38,000   1A       Handymax            
51 Hull 2453   HMD   (27)   38,000   1A       Handymax            
52 Hull 2454   HMD   (27)   38,000   1A       Handymax            
53 Hull 2462   HMD   (27)   38,000   1A       Handymax            
54 Hull 2463   HMD   (27)   38,000   1A       Handymax            
55 Hull 2464   HMD   (27)   38,000   1A       Handymax            
56 Hull 2465   HMD   (27)   38,000   1A       Handymax            
57 Hull 2476   HMD   (27)   38,000   1A       Handymax            
58 Hull 2477   HMD   (27)   38,000   1A       Handymax            
59 Hull 2478   HMD   (27)   38,000   1A       Handymax            
60 Hull 2479   HMD   (27)   38,000   1A       Handymax            
61 Hull 2499   HMD   (27)   38,000   1A       Handymax            
62 Hull 2500   HMD   (27)   38,000   1A       Handymax            
63 Hull 2389   HMD   (27)   52,000           MR            
64 Hull 2390   HMD   (27)   52,000           MR            
65 Hull 2391   HMD   (27)   52,000           MR            
66 Hull 2392   HMD   (27)   52,000           MR            
67 Hull 2449   HMD   (27)   52,000           MR            
68 Hull 2450   HMD   (27)   52,000           MR            
69 Hull 2458   HMD   (27)   52,000           MR            
70 Hull 2459   HMD   (27)   52,000           MR            
71 Hull 2460   HMD   (27)   52,000           MR            
72 Hull 2461   HMD   (27)   52,000           MR            
73 Hull 2492   HMD   (27)   52,000           MR            
74 Hull 2493   HMD   (27)   52,000           MR            
75 Hull S1138   SPP   (28)   52,000           MR            
76 Hull S1139   SPP   (28)   52,000           MR            
77 Hull S1140   SPP   (28)   52,000           MR            
78 Hull S1141   SPP   (28)   52,000           MR            
79 Hull S1142   SPP   (28)   52,000           MR            
80 Hull S1143   SPP   (28)   52,000           MR            
81 Hull S1144   SPP   (28)   52,000           MR            
82 Hull S1145   SPP   (28)   52,000           MR            
83 Hull S1167   SPP   (28)   52,000           MR            
84 Hull S1168   SPP   (28)   52,000           MR            
85 Hull S1169   SPP   (28)   52,000           MR            
86 Hull S1170   SPP   (28)   52,000           MR            
87 Hull S5122   SPP   (28)   52,000           MR            
88 Hull S5123   SPP   (28)   52,000           MR            
89 Hull S5124   SPP   (28)   52,000           MR            
90 Hull S5125   SPP   (28)   52,000           MR            
91 Hull S703   HSHI   (29)   114,000           LR2            
92 Hull S704   HSHI   (29)   114,000           LR2            
93 Hull S705   HSHI   (29)   114,000           LR2            
94 Hull S706   HSHI   (29)   114,000           LR2            
95 Hull S709   HSHI   (29)   114,000           LR2            
96 Hull S710   HSHI   (29)   114,000           LR2            
97 Hull S715   HSHI   (29)   114,000           LR2            
98 Hull S716   HSHI   (29)   114,000           LR2            
99 Hull 5394   DSME   (30)   114,000           LR2            
100 Hull 5395   DSME   (30)   114,000           LR2            
101 Hull 5398   DSME   (30)   114,000           LR2            
102 Hull 5399   DSME   (30)   114,000           LR2            
                                       
  Total product tankers DWT       3,356,000                        
                                       
  Vessel Name   Yard       Vessel size
(cbm)
          Vessel type            
  LPG Carriers                                    
103 Hull 2336   DSME   (31)   84,000           VLGC            
104 Hull 2337   DSME   (31)   84,000           VLGC            
105 Hull 2338   DSME   (31)   84,000           VLGC            
106 Hull S749   HSHI   (32)   84,000           VLGC            
107 Hull S750   HSHI   (32)   84,000           VLGC            
108 Hull S751   HSHI   (32)   84,000           VLGC            
109 Hull S752   HSHI   (32)   84,000           VLGC            
110 Hull S755   HSHI   (32)   84,000           VLGC            
111 Hull S756   HSHI   (32)   84,000           VLGC            
112 Hull S753   HSHI   (32)   84,000           VLGC            
113 Hull S754   HSHI   (32)   84,000           VLGC            
                                       
                                       
  Total LPG carriers (cbm)       924,000                        
                                       
(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 an option to extend the charter for an additional year at $13,650 per day.
(8) 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 charter for an additional year at $13,500 per day.
(10) We have an option to extend the charter for an additional year at $13,250 per day.
(11) We have an option to extend the charter for an additional year at $13,550 per day.
(12) We have options to extend each charter for an additional year at $13,550 per day.
(13) We have an option to extend the charter for an additional year at $15,150 per day.
(14) We have options to extend the charter for up to three consecutive one year periods at $14,850 per day, $15,200 per day and $16,200 per day, respectively.
(15) We have an option to extend the charter for an additional year at $15,000 per day.
(16) We have an option to extend the charter for an additional year at $15,700 per day.
(17) We have an option to extend the charter for an additional year at $16,000 per day.
(18) 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.
(19) We have an option to extend the charter for an additional year at $14,500 per day.
(20) We have an option to extend the charter for an additional year at $12,500 per day. We have also entered into an agreement with the vessel's owner whereby we split all of the vessel's profits above the daily base rate.
(21) We have an option to extend the charter for an additional year at $15,000 per day.
(22) We have an option to extend the charter for an additional six months at $14,250 per day.
(23) We have extended the charter for six months at $15,000 per day beginning in November 2013. Subsequent to that, 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) We have options to extend the charter for two consecutive six month periods at $15,250 per day and $15,500 per day respectively.
(25) We have an option to extend the charter for one year at $17,550 per day.
(26) We have options to extend the charter for two consecutive six month periods at $16,500 per day and $16,750 per day, respectively.
(27) These newbuilding vessels are being constructed at HMD (Hyundai Mipo Dockyard Co. Ltd. of South Korea). 24 vessels are expected to be delivered in 2014 and two vessels in the second quarter of 2015.
(28) These newbuilding vessels are being constructed at SPP (SPP Shipbuilding Co., Ltd. of South Korea ). 12 vessels are expected to be delivered during the second, third and fourth quarters of 2014 and four in the first and second quarters 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 third quarter and two in the fourth quarter of 2015.
(32) These newbuilding vessels are being constructed at HSHI (Hyundai Samho Heavy Industries Co., Ltd.). Two vessels are expected to be delivered each in the second quarter, third and fourth quarters of 2015 and two in the first quarter of 2016.
   
   
   

Business Strategy, Dividend Policy, and Stock Buyback Program

Business Strategy

The Company's primary objectives are to profitably grow the business and emerge as a major operator of 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 October 28, 2013, the Company's board of directors declared a quarterly cash dividend of $0.07 per share, payable on December 18, 2013 to all shareholders as of December 3, 2013 (the record date). On September 25, 2013, the Company paid a quarterly cash dividend on its common stock of $0.035 per share to all shareholders as of September 10, 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 October 28, 2013, the Company has purchased $7.9 million of shares in the open market at an average price of $6.78.

About Scorpio Tankers Inc.

Scorpio Tankers Inc. is a provider of marine transportation of petroleum products worldwide. Scorpio Tankers Inc. currently owns 19 tankers (one LR2 tanker, four LR1 tankers, one Handymax tanker, 12 MR tankers, and one post-Panamax tanker) with an average age of 4.0 years, time charters-in 29 product tankers (eight LR2, four LR1, eight MR and nine Handymax tankers), and has contracted for 65 newbuilding vessels (28 MR, 12 LR2, and 14 Handymax ice class-1A product tankers, and 11 Very Large Gas Carriers), 44 of which are expected to be delivered within 2014, 19 within 2015 and the remaining two in the first quarter of 2016. Additional information about the Company is available at the Company's website www.scorpiotankers.com, which is not a part of this press release.

Non-GAAP Measures
This press release describes adjusted net income and Adjusted EBITDA, which are not measures prepared in accordance with IFRS (i.e. "Non-GAAP" measure). The Non-GAAP measures are presented in this press release as we believe that they provide investors with a means of evaluating and understanding how the Company's management evaluates the Company's operating performance. These Non-GAAP measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with IFRS.

Adjusted net income / (loss)

       
    For the three months ended September 30,  
    2013     2012  
In thousands of U.S. dollars except per share and share data   Amount     Per share     Amount     Per share  
  Net income / (loss)   $ 667     $ 0.00     $ (12,511 )   $ (0.30 )
  Adjustments:                                
    Loss from sale of vessels     -       0.00       5,879       0.14  
    Write off of deferred financing fees     -       0.00       2,977       0.07  
    Unrealized gain on derivative financial instruments     (118 )     (0.00 )     (38 )     (0.00 )
  Total adjustments     (118 )     (0.00 )     8,818       0.21  
  Adjusted net income/ (loss)   $ 549     $ 0.00     $ (3,693 )   $ (0.09 )
                                 
    For the nine months ended September 30,  
    2013     2012  
    Amount     Per share     Amount     Per share  
  Net income / (loss)   $ 11,243     $ 0.08     $ (21,656 )   $ (0.54 )
  Adjustments:                                
    Loss from sale of vessels     -       0.00       10,404       0.26  
    Write off of deferred financing fees     -       0.00       2,977       0.07  
    Unrealized gain on derivative financial instruments     (483 )     (0.00 )     (38 )     (0.00 )
  Total adjustments     (483 )     (0.00 )     13,343       0.33  
  Adjusted net income/ (loss)   $ 10,760     $ 0.08     $ (8,313 )   $ (0.21 )
                                 
                                 
                                 

Adjusted EBITDA

             
    For the three months ended September 30,     For the nine months ended September 30,  
In thousands of U.S. dollars   2013     2012     2013     2012  
Net income / (loss)   $ 667     $ (12,511 )   $ 11,243     $ (21,656 )
  Financial expenses     448       4,108       2,323       6,583  
  Unrealized gain on derivative financial instruments     (118 )     (38 )     (483 )     (38 )
  Financial income     (400 )     (4 )     (950 )     (6 )
  Depreciation     6,377       3,389       16,665       10,213  
  Amortization of restricted stock     3,856       892       6,738       2,598  
  Loss from sale of vessels     -       5,879       0       10,404  
  Adjusted EBITDA   $ 10,830     $ 1,715     $ 35,536     $ 8,098  
                                 
                                 
                                 

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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