MONACO, May 06, 2020 (GLOBE NEWSWIRE) -- Scorpio Tankers Inc. (NYSE: STNG) ("Scorpio Tankers" or the "Company") today reported its results for the three months ended March 31, 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 March 31, 2020 and 2019
For the three months ended March 31, 2020, the Company had a net income of $46.6 million, or $0.85 basic and $0.82 diluted earnings per share. There were no Non-IFRS adjustments to the net income for the three months ended March 31, 2020.
For the three months ended March 31, 2019, the Company had net income of $14.5 million, or $0.30 basic and diluted earnings per share. For the three months ended March 31, 2019, the Company’s adjusted net income (see Non-IFRS Measures section below) was $14.8 million, or $0.31 basic and $0.30 diluted income 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.
Declaration of Dividend
On May 5, 2020, the Company's Board of Directors declared a quarterly cash dividend of $0.10 per common share, payable on or about June 15, 2020 to all shareholders of record as of June 1, 2020 (the record date). As of May 5, 2020, there were 58,672,080 common shares of the Company outstanding.
Summary of First 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 second 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 | $53,000 | 63% | |||
| LR1 | $41,000 | 60% | |||
| MR | $25,000 | 56% | |||
| Handymax | $20,000 | 60% | |||
- Below is a summary of the average daily TCE revenue earned on the Company's vessels in each of the pools during the first quarter of 2020:
| Pool | Average daily TCE revenue | |||||||||
| LR2 | $26,818 | |||||||||
| LR1 | $20,296 | |||||||||
| MR | $20,951 | |||||||||
| Handymax | $22,564 | |||||||||
- The Company recently received commitments for a new credit facility for up to $225.0 million in aggregate, the proceeds of which are expected to be used to refinance the existing indebtedness on nine of the Company's vessels, including the four LR2s which are currently financed under our ABN AMRO Credit Facility, which is scheduled to mature during the third quarter of 2020. The closing of this credit facility is subject to customary conditions precedent, including the execution of definitive documentation.
- The Company recently executed an agreement to upsize its $179.2 million credit facility with ING Bank N.V. to $251.4 million. The proceeds of this upsized facility are expected to be used to refinance the existing debt on five vessels, which are currently financed under the KEXIM Credit Facility.
- Based upon the commitments received to date, which include the above two credit facilities and certain financing transactions that have been previously announced, the Company expects to raise approximately $109 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 January 2020, the Company took delivery of two scrubber-fitted MR product tankers (STI Miracle and STI Maestro), and in March 2020, the Company took delivery of an additional scrubber-fitted MR product tanker (STI Mighty) each under eight-year bareboat leases. The leasehold interests in these vessels were acquired as part of the Company's transaction with Trafigura Maritime Logistics Pte. Ltd. (the "Trafigura Transaction") that was announced in September 2019. The bareboat leases have similar terms and conditions as the original leased vessels in the Trafigura Transaction.
- 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 $1.5 million and $2.3 million, respectively, during the three months ended March 31, 2020 were not incurred. Conversion is not assumed if the results of this calculation are anti-dilutive.
For the three months ended March 31, 2020, the Company's basic weighted average number of shares was 54,667,211. For the three months ended March 31, 2020, the Company's diluted weighted average number of shares was 56,445,893 (which includes the potentially dilutive impact of unvested shares restricted stock and excludes the impact of the Convertible Notes due 2022), and 61,692,830, under the if-converted method. Given the Company's results for the first quarter of 2020, earnings per diluted share were calculated under the if-converted method, as the result of this calculation was dilutive.
$225.0 Million Credit Facility
The Company recently received commitments for a loan facility of up to $225.0 million with a group of European financial institutions. This loan facility is expected to consist of a $150.0 million term loan facility and $75.0 million revolving credit facility. The proceeds of this new facility are expected to be used to refinance the existing debt on nine vessels, including four vessels that are currently financed under the existing ABN AMRO Credit Facility which is scheduled to mature in the third quarter of 2020.
The borrowing amount of the facility is the lower of $225.0 million in aggregate and 55% of the fair market value of the vessels. The loan has a final maturity of five years from the closing date of the loan, is expected to bear interest at LIBOR plus a margin, and is expected to be repaid in equal quarterly installments of approximately $5.3 million per quarter, in aggregate, with a balloon payment due at maturity. This loan is expected to close before June 30, 2020. The remaining terms and conditions, including financial covenants, are expected to be similar to the Company's existing credit facilities. The closing of this credit facility is subject to customary conditions precedent, including the execution of definitive documentation.
ING Credit Facility Upsize
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 the loan facility consists of a $40.6 million term loan facility and $31.5 million revolving credit facility. The proceeds of this upsized facility are expected to be used to refinance the existing debt on five vessels, which are currently financed under the KEXIM Credit Facility.
The borrowing amount of the upsized loan is the lower of $72.1 million in aggregate and 50% of the fair market value of the vessels. 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.
Novel Coronavirus (COVID-19)
Since the beginning of the 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 markets. The reduction of economic activity has significantly reduced the global demand for oil and refined petroleum products. While recent actions taken by Saudi Arabia and other OPEC members to increase the production of oil in the near term has resulted in increased tankers rates in March and April of this year, the continued impact of these production increases is uncertain. We expect that the impact of the COVID-19 virus and the uncertainty in the supply of oil will continue to cause volatility in the commodity 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 2020. 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 Unsecured Notes due 2020 (NYSE: SBNA), which were issued in May 2014, and Convertible Notes due 2022, which were issued in May and July 2018.
No securities were repurchased under this program during the first quarter of 2020 and through the date of this press release.
As of the date hereof, the Company has repurchased a total of $128.4 million of its securities under the Securities Repurchase Program and has the authority to purchase up to an additional $121.6 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.
Conference Call
The Company has scheduled a conference call on May 6, 2020 at 9:00 AM Eastern Daylight Time and 3:00 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: 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/ato2kzkb
Current Liquidity
As of May 5, 2020, the Company had $204.2 million in unrestricted cash and cash equivalents.
Drydock, Scrubber and Ballast Water Treatment Update
Set forth below is a table summarizing the drydock, scrubber and ballast water treatment system activity that occurred during the first quarter of 2020 and that is in progress as of April 1, 2020:
| Number of Vessels | Drydock | Ballast Water Treatment Systems | Scrubbers | Aggregate Costs ($ in millions) (1) | Aggregate Offhire Days in Q1 2020 | |
| Completed in the first quarter of 2020 | ||||||
| LR2 | 6 | 5 | 5 | 6 | $31.3 | 219 |
| LR1 | 1 | — | — | 1 | 2.8 | 73 |
| MR | 6 | 6 | 5 | 6 | 27.3 | 321 |
| Handymax | 1 | 1 | 1 | — | 3.2 | 11 |
| 14 | 12 | 11 | 13 | $64.6 | 624 | |
| In progress as of April 1, 2020 | ||||||
| LR2 | 6 | 5 | 2 | 6 | $24.2 | 222 |
| LR1 | 2 | — | — | 2 | 5.0 | 108 |
| MR | 5 | 3 | 3 | 5 | 19.1 | 255 |
| Handymax | — | — | — | — | — | — |
| 13 | 8 | 5 | 13 | $48.3 | 585 |
(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 April 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 through May 5, 2020):
| In millions of U.S. dollars | As of May 5, 2020 (1) | ||
| Q2 2020 - payments made through May 5, 2020 | $ | 5.1 | |
| Q2 2020 - remaining payments | 52.4 | ||
| Q3 2020 | 23.7 | ||
| Q4 2020 | 6.6 | ||
| FY 2021 | 39.9 | ||
| FY 2022 | 47.8 | ||
(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.
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 (2):
| Q2 2020 | ||||||||
| Ships Scheduled for (3): | Off-hire | |||||||
| Drydock | Ballast Water Treatment Systems | Scrubbers | Days (4) | |||||
| LR2 | 5 | 2 | 6 | 412 | ||||
| LR1 | — | — | — | 6 | ||||
| MR | 5 | 5 | 10 | 445 | ||||
| Handymax | — | — | — | — | ||||
| Total Q2 2020 | 10 | 7 | 16 | 863 | ||||
| Q3 2020 | ||||||||
| Ships Scheduled for (3): | Off-hire | |||||||
| Drydock | Ballast Water Treatment Systems | Scrubbers | Days (4) | |||||
| LR2 | 3 | — | 6 | 254 | ||||
| LR1 | — | — | 1 | 40 | ||||
| MR | — | — | — | 88 | ||||
| Handymax | — | — | — | — | ||||
| Total Q3 2020 | 3 | — | 7 | 382 | ||||
| Q4 2020 | ||||||||
| Ships Scheduled for (3): | Off-hire | |||||||
| Drydock | Ballast Water Treatment Systems | Scrubbers | Days (4) | |||||
| LR2 | — | — | — | — | ||||
| LR1 | 1 | — | — | 20 | ||||
| MR | — | — | — | — | ||||
| Handymax | — | — | — | — | ||||
| Total Q4 2020 | 1 | — | — | 20 | ||||
| FY 2021 | ||||||||
| Ships Scheduled for (3): | Off-hire | |||||||
| Drydock | Ballast Water Treatment Systems | Scrubbers | Days (4) | |||||
| LR2 | 12 | — | 1 | 280 | ||||
| LR1 | 11 | — | — | 220 | ||||
| MR | — | — | 8 | 293 | ||||
| Handymax | — | — | — | — | ||||
| Total FY 2021 | 23 | — | 9 | 793 | ||||
| FY 2022 | ||||||||
| Ships Scheduled for (3): | Off-hire | |||||||
| Drydock | Ballast Water Treatment Systems | Scrubbers | Days (4) | |||||
| LR2 | 5 | — | — | 100 | ||||
| LR1 | — | — | 5 | 200 | ||||
| MR | 11 | 5 | 5 | 402 | ||||
| Handymax | — | — | — | — | ||||
| Total FY 2022 | 16 | 5 | 10 | 702 | ||||
(2) 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.
(3) Represents the number of vessels scheduled to commence drydock, ballast water treatment system, and/or scrubber installations during the period. Does not include vessels that commenced work in prior periods but will be completed in the current period.
(4) Represents total estimated expected offhire days during the period, including vessels that commenced work during the period or that commenced work in previous periods which are scheduled for completion in the current 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 December 31, 2019 | Drawdowns and (repayments), net | Outstanding Principal as of March 31, 2020 | Drawdowns and (repayments), net | Outstanding Principal as of May 5, 2020 | |||||||||||
| 1 | KEXIM Credit Facility | $ | 199,013 | $ | (58,822 | ) | $ | 140,191 | $ | — | $ | 140,191 | ||||
| 2 | ABN AMRO Credit Facility | 91,952 | (2,136 | ) | 89,816 | (1,065 | ) | 88,751 | ||||||||
| 3 | ING Credit Facility | 131,440 | (3,186 | ) | 128,254 | (1,071 | ) | 127,183 | ||||||||
| 4 | $35.7 Million Term Loan Facility | 31,618 | (805 | ) | 30,813 | 2,318 | 33,131 | |||||||||
| 5 | 2017 Credit Facility | 131,501 | (3,318 | ) | 128,183 | — | 128,183 | |||||||||
| 6 | Credit Agricole Credit Facility | 90,727 | (2,141 | ) | 88,586 | — | 88,586 | |||||||||
| 7 | ABN AMRO/K-Sure Credit Facility | 45,678 | (962 | ) | 44,716 | — | 44,716 | |||||||||
| 8 | Citi/K-Sure Credit Facility | 95,234 | (2,105 | ) | 93,129 | — | 93,129 | |||||||||
| 9 | ABN AMRO/SEB Credit Facility | 103,325 | (2,875 | ) | 100,450 | — | 100,450 | |||||||||
| 10 | Hamburg Commercial Bank Credit Facility (1) | 42,150 | (795 | ) | 41,355 | 1,429 | 42,784 | |||||||||
| 11 | Prudential Credit Facility | 55,463 | (925 | ) | 54,538 | (924 | ) | 53,614 | ||||||||
| 12 | 2019 DNB/GIEK Credit Facility | — | 31,850 | 31,850 | — | 31,850 | ||||||||||
| 13 | BNPP Sinosure Credit Facility | — | 42,096 | 42,096 | — | 42,096 | ||||||||||
| 14 | Ocean Yield Lease Financing | 149,531 | (2,716 | ) | 146,815 | (888 | ) | 145,927 | ||||||||
| 15 | CMBFL Lease Financing | 57,063 | (1,227 | ) | 55,836 | — | 55,836 | |||||||||
| 16 | BCFL Lease Financing (LR2s) | 93,148 | (2,025 | ) | 91,123 | (683 | ) | 90,440 | ||||||||
| 17 | CSSC Lease Financing | 229,218 | (4,329 | ) | 224,889 | (1,442 | ) | 223,447 | ||||||||
| 18 | BCFL Lease Financing (MRs) | 87,810 | (2,846 | ) | 84,964 | (988 | ) | 83,976 | ||||||||
| 19 | 2018 CMB Lease Financing | 126,427 | (2,527 | ) | 123,900 | (836 | ) | 123,064 | ||||||||
| 20 | $116.0 Million Lease Financing | 106,041 | (1,719 | ) | 104,322 | (604 | ) | 103,718 | ||||||||
| 21 | AVIC International Lease Financing | 127,311 | (2,950 | ) | 124,361 | — | 124,361 | |||||||||
| 22 | China Huarong Shipping Lease Financing | 123,750 | (3,375 | ) | 120,375 | — | 120,375 | |||||||||
| 23 | $157.5 Million Lease Financing | 137,942 | (3,535 | ) | 134,407 | — | 134,407 | |||||||||
| 24 | COSCO Lease Financing | 76,450 | (1,925 | ) | 74,525 | — | 74,525 | |||||||||
| 25 | IFRS 16 - Leases - 3 MRs | 44,192 | (1,762 | ) | 42,430 | (610 | ) | 41,820 | ||||||||
| 26 | IFRS 16 - Leases - 7 Handymax | 12,779 | (2,708 | ) | 10,071 | (1,276 | ) | 8,795 | ||||||||
| 27 | IFRS 16 - Leases - acquired from Trafigura (2) | 513,004 | 88,443 | 601,447 | (5,102 | ) | 596,345 | |||||||||
| 28 | CSSC Scrubber Financing | 10,976 | (1,372 | ) | 9,604 | (457 | ) | 9,147 | ||||||||
| 29 | 2020 Senior Unsecured Notes | 53,750 | — | 53,750 | — | 53,750 | ||||||||||
| 30 | Convertible Notes due 2022 | 203,500 | — | 203,500 | — | 203,500 | ||||||||||
| $ | 3,170,993 | $ | 49,303 | $ | 3,220,296 | $ | (12,199 | ) | $ | 3,208,097 | ||||||
(1) In April 2020, the Company drew down $1.4 million to partially finance the purchase and installation of the scrubber on the STI Veneto.
(2) In January 2020, the Company took delivery of two scrubber-fitted MR product tankers (STI Miracle and STI Maestro) and in March 2020, the Company took delivery of an additional scrubber-fitted MR product tanker (STI Mighty), each under eight-year bareboat leases. The leasehold interests in these vessels were acquired as part of the Trafigura Transaction and a $103.6 million lease liability was recorded at the commencement date of these leases, which are being accounted for as lease liabilities under IFRS 16.
Set forth below are the estimated expected future principal repayments on the Company's outstanding indebtedness as of March 31, 2020, which includes principal amounts due under secured credit facilities, the Senior Unsecured Notes due 2020, Convertible Notes due 2022, lease financing arrangements, and lease liabilities under IFRS 16 (which also include actual payments made during the second quarter of 2020 through May 5, 2020):
| In millions of U.S. dollars | As of May 5, 2020 (1) | Pro-forma for new financing arrangements (2) | |||||
| Q2 2020 - principal payments made through May 5, 2020 | $ | 16.8 | $ | 16.8 | |||
| Q2 2020 - remaining principal payments (3) | 111.0 | 111.0 | |||||
| Q3 2020 | 164.8 | 70.5 | |||||
| Q4 2020 | 67.1 | 74.3 | |||||
| Q1 2021 | 232.5 | 106.6 | |||||
| Q2 2021 | 100.3 | 109.7 | |||||
| Q3 2021 | 67.5 | 72.2 | |||||
| Q4 2021 | 69.7 | 79.0 | |||||
| 2022 and thereafter | 2,395.2 | 2,634.9 | |||||
| $ | 3,224.9 | $ | 3,275.0 | ||||
(1) Amounts represent the estimated principal payments due on the Company’s outstanding indebtedness as of May 5, 2020 which do not incorporate the impact of the Company’s new financing initiatives which have not closed as of that date.
(2) Amounts represent the estimated principal payments due on the Company’s outstanding indebtedness after incorporating the impact of the expected refinancing of upcoming maturities with the Company’s new loan agreements which have been agreed to, but all not yet closed, as of May 5, 2020. These figures do not reflect the impact of upsized scrubber financing agreements and are subject to change based on the timing of the respective closings and drawdowns.
(3) Repayments include $53.8 million due upon the maturity of the Company's Senior Unsecured Notes due 2020.
Explanation of Variances on the First Quarter of 2020 Financial Results Compared to the First Quarter of 2019
For the three months ended March 31, 2020, the Company recorded a net income of $46.6 million compared to net income of $14.5 million for the three months ended March 31, 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 March 31, 2020 and 2019:
| For the three months ended March 31, | |||||||||
| In thousands of U.S. dollars | 2020 | 2019 | |||||||
| Vessel revenue | $ | 254,167 | $ | 195,830 | |||||
| Voyage expenses | (4,220 | ) | (295 | ) | |||||
| TCE revenue | $ | 249,947 | $ | 195,535 | |||||
- TCE revenue for the three months ended March 31, 2020 increased by $54.4 million to $249.9 million, from $195.5 million for the three months ended March 31, 2019. The increase was the result of quarter over quarter improvements in TCE revenue per day across all of the Company's operating segments. Overall average TCE revenue per day increased to $22,644 per day during the three months ended March 31, 2020, from $18,570 per day during the three months ended March 31, 2019. The first quarter of 2020 reflected improvements in TCE revenue per day, both sequentially, and as compared to the first quarter of 2019. The strength in the first quarter of 2020 can be characterized in two components:
-- Supply and demand dynamics shifted favorably during the fourth quarter of 2019 and early in the first quarter of 2020, driven by the January 1, 2020 implementation date of the International Maritime Organization’s ("IMO") low sulfur emissions standards. The implementation of these standards impacted the trade flows of both crude and refined petroleum products which, combined with favorable supply and demand dynamics, resulted in improvements in daily spot market TCE rates.
-- Towards the end of the first quarter, travel restrictions and other preventive measure to control the spread of the COVID-19 pandemic resulted in a precipitous decline in oil demand. Lack of corresponding production and refinery cuts resulted in a supply glut of oil and refined petroleum products, which was exacerbated by extreme oil price volatility from the Russia-Saudi Arabia oil price war. The oversupply of petroleum products and contango in oil prices has led to record floating storage and arbitrage opportunities of both crude and refined petroleum products. These market conditions, which began in March 2020 and are continuing through the date of this press release, have had a disruptive impact on the supply and demand balance of product tankers, resulting in significant and prolonged spikes in spot TCE rates as vessel availability continues to tighten.
The increase in TCE revenue in the first quarter of 2020 as compared to the first quarter of 2019 was also affected by an increase in the number of the Company's vessels to an average of 135.8 operating vessels during the three months ended March 31, 2020 from an average of 119.3 operating vessels during the three months ended March 31, 2019, which was primarily the result of the Trafigura Transaction, whereby in September 2019 the Company acquired the leasehold interests in 19 vessels (11 MRs, four LR2s, and four MRs then under construction). Three of the MRs under construction were delivered in the first quarter of 2020. - Vessel operating costs for the three months ended March 31, 2020 increased by $12.1 million to $81.5 million, from $69.4 million for the three months ended March 31, 2019. This increase was primarily due to the acquisition of 15 vessels (11 MRs and four LR2s) that were acquired in connection with the Trafigura Transaction whereby in September 2019 the Company acquired the leasehold interests in 19 vessels (11 MRs, four LR2s, and four MRs then under construction). Three of the MRs under construction were delivered in the first quarter of 2020. Vessel operating costs per day remained largely consistent, increasing slightly to $6,592 per day for the three months ended March 31, 2020 from $6,478 per day for the three months ended March 31, 2019.
- Charterhire expense for the three months ended March 31, 2020 decreased by $4.4 million to $0.0 million from $4.4 million for the three months ended March 31, 2019. This decrease was the result of the implementation of IFRS 16 - Leases beginning on January 1, 2019. Under IFRS 16, there is no charterhire expense as the right of use assets are depreciated on a straight-line basis (through depreciation expense) over the lease term and the lease liability is amortized over that same period (with a portion of each payment allocated to principal and a portion allocated to interest expense). The charterhire expense recorded during the three months ended March 31, 2019 related to time or bareboat chartered-in vessels whose term expired within 12 months of the transition date of IFRS 16 and thus qualified for the practical expedient to be excluded from the standard's scope.
- Depreciation expense - owned or sale leaseback vessels for the three months ended March 31, 2020 increased slightly by $3.0 million to $46.8 million, from $43.8 million for the three months ended March 31, 2019. Depreciation expense in future periods is expected to increase as the Company installs ballast water treatment systems and/or scrubbers on certain of its vessels in 2020. 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 March 31, 2020 increased by $11.1 million to $13.2 million from $2.1 million for the three months ended March 31, 2019. Depreciation expense - right of use assets reflects the straight-line depreciation expense recorded under IFRS 16 - Leases. Right of use asset depreciation is approximately $0.2 million per vessel per month for the 10 vessels (seven Handymax and three MR) previously bareboat chartered-in prior to the implementation of IFRS 16. Right of use asset depreciation expense increased as a result of the Trafigura Transaction, whereby the Company acquired the leasehold interests in 19 vessels in September 2019 (11 MRs, four LR2s, and four MRs then under construction). Three of the MRs 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. The bareboat charters on three of the Handymax vessels are scheduled to expire during the second quarter of 2020.
- General and administrative expenses for the three months ended March 31, 2020, increased by $1.5 million to $17.3 million, from $15.7 million for the three months ended March 31, 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 in the first quarter of 2020.
- Financial expenses for the three months ended March 31, 2020 decreased by $4.0 million to $44.8 million, from $48.8 million for the three months ended March 31, 2019. The decrease was primarily driven by significant decreases in LIBOR rates, which has had a consequential impact on our variable rate borrowings.
Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Statements of Income or Loss
(unaudited)
| For the three months ended March 31, | ||||||||
| In thousands of U.S. dollars except per share and share data | 2020 | 2019 | ||||||
| Revenue | ||||||||
| Vessel revenue | $ | 254,167 | $ | 195,830 | ||||
| Operating expenses | ||||||||
| Vessel operating costs | (81,463 | ) | (69,376 | ) | ||||
| Voyage expenses | (4,220 | ) | (295 | ) | ||||
| Charterhire | — | (4,399 | ) | |||||
| Depreciation - owned or sale leaseback vessels | (46,841 | ) | (43,814 | ) | ||||
| Depreciation - right of use assets | (13,197 | ) | (2,135 | ) | ||||
| General and administrative expenses | (17,261 | ) | (15,712 | ) | ||||
| Total operating expenses | (162,982 | ) | (135,731 | ) | ||||
| Operating income | 91,185 | 60,099 | ||||||
| Other (expense) and income, net | ||||||||
| Financial expenses | (44,765 | ) | (48,756 | ) | ||||
| Financial income | 565 | 3,119 | ||||||
| Other expenses, net | (358 | ) | 14 | |||||
| Total other expense, net | (44,558 | ) | (45,623 | ) | ||||
| Net income | $ | 46,627 | $ | 14,476 | ||||
| Earnings per share | ||||||||
| Basic | $ | 0.85 | $ | 0.30 | ||||
| Diluted | $ | 0.82 | $ | 0.30 | ||||
| Basic weighted average shares outstanding | 54,667,211 | 48,070,530 | ||||||
| Diluted weighted average shares outstanding (1) | 61,692,830 | 48,556,887 | ||||||
(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 months ended March 31, 2020. The effect of potentially dilutive securities relating to the Company's Convertible Notes due 2022 was excluded from the computation of diluted earnings per share for the three months ended March 31, 2019 because their effect would have been anti-dilutive under the if-converted method.
Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(unaudited)
| As of | |||||||
| In thousands of U.S. dollars | March 31, 2020 | December 31, 2019 | |||||
| Assets | |||||||
| Current assets | |||||||
| Cash and cash equivalents (see Note 1 below) | $ | 119,825 | $ | 202,303 | |||
| Accounts receivable (see Note 1 below) | 148,537 | 78,174 | |||||
| Prepaid expenses and other current assets | 11,774 | 13,855 | |||||
| Inventories | 9,867 | 8,646 | |||||
| Total current assets | 290,003 | 302,978 | |||||
| Non-current assets | |||||||
| Vessels and drydock | 4,051,604 | 4,008,158 | |||||
| Right of use assets | 804,726 | 697,903 | |||||
| Other assets | 96,977 | 131,139 | |||||
| Goodwill | 11,539 | 11,539 | |||||
| Restricted cash | 12,293 | 12,293 | |||||
| Total non-current assets | 4,977,139 | 4,861,032 | |||||
| Total assets | $ | 5,267,142 | $ | 5,164,010 | |||
| Current liabilities | |||||||
| Current portion of long-term debt | $ | 263,889 | $ | 235,482 | |||
| Finance lease liability | 122,599 | 122,229 | |||||
| Lease liability - IFRS 16 | 69,711 | 63,946 | |||||
| Accounts payable | 21,552 | 23,122 | |||||
| Accrued expenses | 45,622 | 41,452 | |||||
| Total current liabilities | 523,373 | 486,231 | |||||
| Non-current liabilities | |||||||
| Long-term debt | 968,914 | 999,268 | |||||
| Finance lease liability | 1,165,025 | 1,195,494 | |||||
| Lease liability - IFRS 16 | 584,237 | 506,028 | |||||
| Total non-current liabilities | 2,718,176 | 2,700,790 | |||||
| Total liabilities | 3,241,549 | 3,187,021 | |||||
| Shareholders' equity | |||||||
| Issued, authorized and fully paid-in share capital: | |||||||
| Share capital | 650 | 646 | |||||
| Additional paid-in capital | 2,844,419 | 2,842,446 | |||||
| Treasury shares | (467,057 | ) | (467,057 | ) | |||
| Accumulated deficit | (352,419 | ) | (399,046 | ) | |||
| Total shareholders' equity | 2,025,593 | 1,976,989 | |||||
| Total liabilities and shareholders' equity | $ | 5,267,142 | $ | 5,164,010 | |||
(1) The increase in accounts receivable from December 31, 2019 to March 31, 2020 relates to the timing of cash receipts from the Scorpio pools. Approximately $67 million of pool distributions relating to March 2020 were received during the first week of April 2020.
Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(unaudited)
| For the three months ended March 31, | |||||||
| In thousands of U.S. dollars | 2020 | 2019 | |||||
| Operating activities | |||||||
| Net income | $ | 46,627 | $ | 14,476 | |||
| Depreciation - owned or finance leased vessels | 46,841 | 43,814 | |||||
| Depreciation - right of use assets | 13,197 | 2,135 | |||||
| Amortization of restricted stock | 7,845 | 7,184 | |||||
| Amortization of deferred financing fees | 1,458 | 2,215 | |||||
| Write-off of deferred financing fees | — | 275 | |||||
| Accretion of convertible notes | 2,259 | 3,493 | |||||
| Accretion of fair value measurement on debt assumed in business combinations | 877 | 920 | |||||
| 119,104 | 74,512 | ||||||
| Changes in assets and liabilities: | |||||||
| Increase in inventories | (1,221 | ) | (390 | ) | |||
| (Increase) / decrease in accounts receivable | (70,363 | ) | 4,208 | ||||
| Decrease / (increase) in prepaid expenses and other current assets | 2,080 | (580 | ) | ||||
| Decrease / (increase) in other assets | 46 | (2,676 | ) | ||||
| Decrease in accounts payable | (675 | ) | (1,543 | ) | |||
| Decrease / (increase) in accrued expenses | (4,870 | ) | 1,036 | ||||
| (75,003 | ) | 55 | |||||
| Net cash inflow from operating activities | 44,101 | 74,567 | |||||
| Investing activities | |||||||
| Drydock, scrubber, ballast water treatment system and other vessel related payments (owned, finance leased and bareboat-in vessels) | (63,486 | ) | (18,240 | ) | |||
| Net cash outflow from investing activities | (63,486 | ) | (18,240 | ) | |||
| Financing activities | |||||||
| Debt repayments | (108,617 | ) | (120,360 | ) | |||
| Issuance of debt | 73,946 | — | |||||
| Debt issuance costs | (1,783 | ) | (1,284 | ) | |||
| Principal repayments on lease liability - IFRS 16 | (20,772 | ) | (1,726 | ) | |||
| Increase in restricted cash | — | (9 | ) | ||||
| Repayment of convertible notes | — | (2,292 | ) | ||||
| Equity issuance costs | — | (285 | ) | ||||
| Dividends paid | (5,867 | ) | (5,140 | ) | |||
| Repurchase of common stock | — | (1 | ) | ||||
| Net cash (outflow) / inflow from financing activities | (63,093 | ) | (131,097 | ) | |||
| (Decrease) / increase in cash and cash equivalents | (82,478 | ) | (74,770 | ) | |||
| Cash and cash equivalents at January 1, | 202,303 | 593,652 | |||||
| Cash and cash equivalents at March 31, | $ | 119,825 | $ | 518,882 | |||
Scorpio Tankers Inc. and Subsidiaries
Other operating data for the three months ended March 31, 2020 and 2019
(unaudited)
| For the three months ended March 31 | ||||||||
| 2020 | 2019 | |||||||
| Adjusted EBITDA(1) (in thousands of U.S. dollars except Fleet Data) | $ | 158,710 | $ | 113,246 | ||||
| Average Daily Results | ||||||||
| TCE per day(2) | $ | 22,644 | $ | 18,570 | ||||
| Vessel operating costs per day(3) | $ | 6,592 | 6,478 | |||||
| LR2 | ||||||||
| TCE per revenue day (2) | $ | 25,914 | $ | 22,953 | ||||
| Vessel operating costs per day(3) | $ | 6,742 | 6,810 | |||||
| Average number of vessels | 42.0 | 38.0 | ||||||
| LR1 | ||||||||
| TCE per revenue day (2) | $ | 20,296 | $ | 17,929 | ||||
| Vessel operating costs per day(3) | $ | 6,678 | $ | 6,597 | ||||
| Average number of vessels | 12.0 | 12.0 | ||||||
| MR | ||||||||
| TCE per revenue day (2) | $ | 20,866 | $ | 15,715 | ||||
| Vessel operating costs per day(3) | $ | 6,422 | $ | 6,324 | ||||
| Average number of vessels | 60.8 | 48.3 | ||||||
| Handymax | ||||||||
| TCE per revenue day (2) | $ | 22,564 | $ | 17,729 | ||||
| Vessel operating costs per day(3) | $ | 6,734 | $ | 6,160 | ||||
| Average number of vessels | 21.0 | 21.0 | ||||||
| Fleet data | ||||||||
| Average number of vessels | 135.8 | 119.3 | ||||||
| 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) | $ | 63,486 | $ | 18,240 | ||||
| (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 May 5, 2020
| Vessel Name | Year Built | DWT | Ice class | Employment | Vessel type | Scrubber | |||||||||||
| Owned, sale leaseback or 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 | Not Yet Installed | ||||||||||
| 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 | Not Yet Installed | ||||||||||
| 19 | STI Onyx | 2012 | 49,990 | — | SMRP (2) | MR | Not Yet Installed | ||||||||||
| 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 | Not Yet Installed | ||||||||||
| 48 | STI Seneca | 2015 | 49,990 | — | SMRP (2) | MR | Not Yet Installed | ||||||||||
| 49 | STI Westminster | 2015 | 49,687 | 1B | SMRP (2) | MR | Not Yet Installed | ||||||||||
| 50 | STI Brooklyn | 2015 | 49,990 | — | SMRP (2) | MR | Not Yet Installed | ||||||||||
| 51 | STI Black Hawk | 2015 | 49,990 | — | SMRP (2) | MR | Not Yet Installed | ||||||||||
| 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 | Not Yet Installed | ||||||||||
| 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 | Not Yet Installed | ||||||||||
| 97 | STI Oxford | 2015 | 109,999 | — | SLR2P (4) | LR2 | Not Yet Installed | ||||||||||
| 98 | STI Lauren | 2015 | 109,999 | — | SLR2P (4) | LR2 | Not Yet Installed | ||||||||||
| 99 | STI Connaught | 2015 | 109,999 | — | SLR2P (4) | LR2 | Not Yet Installed | ||||||||||
| 100 | STI Spiga | 2015 | 109,999 | — | SLR2P (4) | LR2 | Not Yet Installed | ||||||||||
| 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 | Not Yet Installed | ||||||||||
| 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 | Not Yet Installed | ||||||||||
| 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 | Silent | 2007 | 37,847 | 1A | SHTP (1) | Handymax | N/A | (5 | ) | ||||||||
| 129 | Single | 2007 | 37,847 | 1A | SHTP (1) | Handymax | N/A | (5 | ) | ||||||||
| 130 | Star I | 2007 | 37,847 | 1A | SHTP (1) | Handymax | N/A | (5 | ) | ||||||||
| 131 | Sky | 2007 | 37,847 | 1A | SHTP (1) | Handymax | N/A | (6 | ) | ||||||||
| 132 | Steel | 2008 | 37,847 | 1A | SHTP (1) | Handymax | N/A | (6 | ) | ||||||||
| 133 | Stone I | 2008 | 37,847 | 1A | SHTP (1) | Handymax | N/A | (6 | ) | ||||||||
| 134 | Style | 2008 | 37,847 | 1A | SHTP (1) | Handymax | N/A | (6 | ) | ||||||||
| 135 | STI Beryl | 2013 | 49,990 | — | SMRP (2) | MR | Not Yet Installed | (7 | ) | ||||||||
| 136 | STI Le Rocher | 2013 | 49,990 | — | SMRP (2) | MR | Not Yet Installed | (7 | ) | ||||||||
| 137 | STI Larvotto | 2013 | 49,990 | — | SMRP (2) | MR | Not Yet Installed | (7 | ) | ||||||||
| Total owned, finance leased and bareboat chartered-in fleet DWT | 9,438,089 | ||||||||||||||||
| Leasehold newbuilding currently under construction | |||||||||||||||||
| Hull S471 - TBN STI Maximus | HVS | (8 | ) | 50,000 | MR | ||||||||||||
| Total leasehold newbuilding product tankers DWT | 50,000 | ||||||||||||||||
| Total Fleet DWT | 9,488,089 | ||||||||||||||||
| (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 2020, we extended the bareboat charter-in agreement on a previously bareboat chartered-in vessel to May 2020 from March 2020 at a bareboat rate of $6,300 per day. |
| (6 | ) | 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. |
| (7 | ) | 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. |
| (8 | ) | 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 expected delivery 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 | |
On May 5, 2020, the Company's Board of Directors declared a quarterly cash dividend of $0.10 per share, payable on or about June 15, 2020 to all shareholders of record as of June 1, 2020 (the record date). As of May 5, 2020, there were 58,672,080 common shares of the Company outstanding.
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 Unsecured Notes due 2020 (NYSE: SBNA), which were issued in May 2014, and Convertible Notes due 2022, which were issued in May and July 2018.
No securities were repurchased under this program during the first quarter of 2020 and through the date of this press release.
As of the date hereof, the Company has repurchased a total of $128.4 million of its securities under the Securities Repurchase Program and has the authority to purchase up to an additional $121.6 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 137 product tankers (42 LR2 tankers, 12 LR1 tankers, 62 MR tankers and 21 Handymax tankers) with an average age of 4.6 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 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 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 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 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 is reconciled above in the section entitled "Explanation of Variances on the First Quarter of 2020 Financial Results Compared to the First Quarter of 2019".
Reconciliation of Net Income to Adjusted Net Income
There were no Non-IFRS adjustments to the Net Income for the three months ended March 31, 2020.
| For the three months ended March 31, 2019 | |||||||||||||
| Per share | Per share | ||||||||||||
| In thousands of U.S. dollars except per share data | Amount | basic | diluted | ||||||||||
| Net income | $ | 14,476 | $ | 0.30 | $ | 0.30 | |||||||
| Adjustment: | |||||||||||||
| Deferred financing fees write-off | 275 | 0.01 | 0.01 | ||||||||||
| Adjusted net income | $ | 14,751 | $ | 0.31 | $ | 0.30 | (1) | ||||||
(1) Summation differences due to rounding.
Reconciliation of Net Income to Adjusted EBITDA
| For the three months ended March 31, | ||||||||
| In thousands of U.S. dollars | 2020 | 2019 | ||||||
| Net income | $ | 46,627 | $ | 14,476 | ||||
| Financial expenses | 44,765 | 48,756 | ||||||
| Financial income | (565 | ) | (3,119 | ) | ||||
| Depreciation - owned or finance leased vessels | 46,841 | 43,814 | ||||||
| Depreciation - right of use assets | 13,197 | 2,135 | ||||||
| Amortization of restricted stock | 7,845 | 7,184 | ||||||
| Adjusted EBITDA | $ | 158,710 | $ | 113,246 | ||||
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 recent 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