Scorpio Tankers Inc. Announces Financial Results for the Second Quarter of 2015, Agreements for Four Newbuilding Contracts, and Declaration of a Quarterly Dividend
(firmenpresse) - MONACO -- (Marketwired) -- 07/29/15 -- Scorpio Tankers Inc. (NYSE: STNG) ("Scorpio Tankers," or the "Company") today reported its results for the three and six months ended June 30, 2015.
For the three months ended June 30, 2015, the Company's adjusted net income was $57.5 million, or $0.35 basic and $0.32 diluted earnings per share, which excludes an unrealized gain on derivative financial instruments of $0.1 million, or $0.00 per basic and diluted shares (see non-GAAP Measures section below). For the three months ended June 30, 2015, the Company had net income of $57.6 million, or $0.35 basic and $0.32 diluted earnings per share.
For the three months ended June 30, 2015, the Company's basic and diluted weighted average number of shares were 162,457,319 and 199,202,256, respectively. The diluted weighted average number of shares includes the potentially dilutive shares relating to our Convertible Senior Notes due 2019 (the "Convertible Notes") representing 31,094,568 potential common shares (see below for further information).
For the three months ended June 30, 2014, the Company had an adjusted net loss of $11.2 million (see Non-GAAP Measures section below), or $0.06 basic and diluted loss per share, which excludes (i) a gain of $10.9 million, or $0.06 per share, resulting from the acquisition of 7,500,000 common shares of the Company in exchange for 3,422,665 shares of Dorian LPG Ltd. ("Dorian"), (ii) a write-off of deferred financing fees of $0.3 million, or $0.00 per share and (iii) an unrealized gain on derivative financial instruments of $64,769, or $0.00 per share. For the three months ended June 30, 2014, the Company had a net loss of $0.6 million, or $0.00 basic and diluted loss per share.
For the six months ended June 30, 2015, the Company's adjusted net income was $96.8 million, or $0.62 basic and $0.55 diluted earnings per share, which excludes (i) a gain of $2.0 million, or $0.01 per basic and diluted shares, related to the closing of the sales of Venice, STI Harmony and STI Heritage and (ii) an unrealized loss on derivative financial instruments of $0.5 million, or $0.00 per basic and diluted shares (see non-GAAP Measures section below). For the six months ended June 30, 2015, the Company had net income of $98.3 million, or $0.63 basic and $0.56 diluted earnings per share.
For the six months ended June 30, 2014, the Company had an adjusted net loss of $9.4 million (see Non-GAAP Measures section below), or a $0.05 basic and diluted loss per share, which excludes (i) a gain of $51.4 million, or $0.27 per share, resulting from the sales of seven Very Large Crude Carriers ("VLCCs") under construction, (ii) a gain of $10.9 million, or $0.06 per share, resulting from the acquisition of 7,500,000 common shares of the Company in exchange for 3,422,665 shares of Dorian, (iii) a write-off of $0.3 million of deferred financing fees, or $0.00 per share and (iv) an unrealized gain on derivative financial instruments of $0.1 million or $0.00 per share. For the six months ended June 30, 2014, the Company had net income of $52.8 million, or $0.28 basic and diluted earnings per share.
The Company reached agreements to have two MR product tankers and two Handymax product tankers constructed at Hyundai Mipo Dockyard Co. Ltd. of South Korea ("HMD"). The contract price for the MR product tankers is approximately $34.5 million, and these vessels are scheduled for delivery in the first and second quarters of 2017. The contract price for the Handymax product tankers is approximately $32.5 million, and these vessels are scheduled for delivery in the second and third quarters of 2017. As part of the agreements, the Company holds certain options to construct up to six more MR product tankers and six more Handymax product tankers with fixed delivery dates and at fixed prices.
On July 29, 2015, the Scorpio Tankers' Board of Directors declared a quarterly cash dividend of $0.125 per share, payable on September 4, 2015 to all shareholders as of August 14, 2015 (the record date). As of July 29, 2015 there were 182,592,121 shares outstanding.
Diluted earnings per share for the three and six months ended June 30, 2015 includes the potentially dilutive shares relating to the Convertible Notes representing 31,094,568 potential common shares. The Convertible Notes were issued in June 2014. The dilutive impact of the Convertible Notes is determined using the if-converted method. Under this method, we assume that the Convertible Notes are converted into common shares during the period and the interest and non-cash amortization expense associated with these notes of $5.3 million and $10.6 million during the three and six months ended June 30, 2015, respectively, is not incurred. Conversion is not assumed if the results of this calculation are anti-dilutive. The Convertible Notes are currently ineligible for conversion.
Below is a summary of the voyages fixed thus far in the third quarter of 2015:
For the LR2s: approximately $38,000 per day for 50% of the days
For the LR1s: approximately $27,000 per day for 40% of the days
For the MRs: approximately $25,000 per day for 43% of the days
For the Handymaxes: approximately $21,500 per day for 36% of the days
Reached an agreement with an unrelated third party to purchase a 2014 built MR product tanker for approximately $37.1 million. The vessel is expected to be delivered in August 2015.
Reached agreements with two unrelated third parties to sell the Company's investment in Dorian LPG Ltd. ("Dorian") consisting of 6 million common shares to BW Euroholdings Limited, a wholly owned subsidiary of BW Group Limited, for a purchase price of $15.34 per share and 3,392,083 common shares to Sino Energy Holdings LLC, for a purchase price of $16.16 per share.
Purchased 270,349 shares of the Company's common shares that are being held as treasury shares at an average price of $10.06 per share.
Purchased face value of $1.5 million of the Company's 2.375% Convertible Bonds Due 2019 at 1.0881 or $1.6 million.
Reached an agreement with an unrelated third party to purchase an LR2 product tanker that is currently under construction at Daehan Shipbuilding Co., Ltd ("DHSC") for approximately $58.5 million. This vessel is scheduled to be delivered in August 2015 whereupon the Company will bareboat charter-in the vessel for $10,000 per day for up to nine months. The Company will take ownership of the vessel at the conclusion of the bareboat charter.
Reached an agreement with an unrelated third party to purchase an MR product tanker that is currently under construction at HMD for approximately $37.0 million. This vessel is scheduled to be delivered in September 2015.
Executed a Senior Secured Term Loan Facility for up to $142.2 million to partially finance four LR2s. The facility bears interest at LIBOR plus a margin of 2.15% per annum and the proceeds will be used to finance up to 60% of the purchase price of the vessels specified in the facility.
Took delivery of eleven vessels under the Company's Newbuilding Program, five LR2s and five MRs during the second quarter of 2015 and one MR in July 2015.
Approved a new securities buyback program to purchase up to an aggregate of $250 million of the Company's common stock and bonds.
Reached agreements with two unrelated third parties to purchase an aggregate of four LR2 product tankers under construction at Sungdong Shipbuilding and Marine Engineering Co., Ltd. ("SSME") and DHSC for approximately $60.0 million each.
Closed on an underwritten offering of 17,177,123 common shares, raising aggregate net proceeds of $152.1 million.
Paid a quarterly cash dividend on the Company's common stock of $0.125 per share in June 2015.
In July 2015, the Company announced that it agreed to sell its investment in Dorian to two unrelated third parties in two separate transactions. The Company sold 6 million shares in Dorian to BW Euroholdings Limited, a wholly owned subsidiary of BW Group Limited, for a purchase price of $15.34 per share. The Company agreed to sell 3,392,083 shares to SINO Energy Holdings LLC, for a purchase price of $16.16 per share. The sale to SINO Energy Holdings LLC is expected to close at the end of July 2015. All shares were sold pursuant to an effective resale registration statement filed by Dorian on July 8, 2015.
In July 2015, the Company reached an agreement with an unrelated third party to purchase an MR product tanker that was built in 2014 at SPP Shipbuilding Co., Ltd. of South Korea ("SPP") for approximately $37.1 million. The vessel is expected to be delivered in August 2015.
In July 2015, the Company reached an agreement to purchase an LR2 product tanker that is currently under construction at DHSC for a purchase price of $58.5 million. The vessel is scheduled for delivery in August 2015. Upon delivery, the Company will bareboat charter-in the vessel for up to nine months at $10,000 per day. The Company will take ownership of the vessel at the conclusion of the bareboat charter.
In June 2015, the Company purchased an MR product tanker that is under construction at HMD for $37.0 million. This vessel is scheduled for delivery in September 2015.
In May 2015, the Company reached agreements with two unrelated third parties to purchase an aggregate of four LR2 product tankers under construction at SSME and DHSC for approximately $60.0 million each. Two of these vessels, STI Spiga and STI Savile Row, were delivered in June 2015. The remaining two are expected to be delivered in August and September 2015, respectively.
In July 2015, the Company executed a Term Loan Facility with ABN AMRO Bank N.V. and DVB Bank SE for up to $142.2 million to partially finance four LR2s. The facility bears interest at LIBOR plus a margin of 2.15% per annum and the proceeds will be used to finance up to 60% of the purchase price of the vessels specified in the facility.
The facility has a 15 year repayment profile and a final maturity of five years from the drawdown date of the loan for each vessel. The terms and conditions, including covenants, are similar to those in the Company's existing credit facilities.
In May 2015, the Company's Board of Directors authorized a new securities buyback program to purchase up to an aggregate of $250 million of the Company's common stock and bonds, which currently consist of its (i) Convertible Senior Notes Due 2019, which were issued in June 2014, (ii) Unsecured Senior Notes Due 2020 (NYSE: SBNA), which were issued in May 2014, and (iii) Unsecured Senior Notes Due 2017 (NYSE: SBNB), which were issued in October 2014. This program replaces the Company's stock buyback program that was previously announced in July 2014 and was terminated in conjunction with this new repurchase program.
During 2015 (through the date of this press release), the Company has acquired the following:
an aggregate of 1,016,988 of its common shares that are being held as treasury shares at an average price of $8.48 per share (270,349 shares were purchased at an average price at $10.06 under the May 2015 $250 million securities buyback program; the remaining shares were purchased in the first quarter of 2015 under the previous buyback program) . There are 182,592,121 shares outstanding as of July 29, 2015.
$1.5 million face value of its Convertible Senior Notes Due 2019 at an average price of $1,088.10 per $1,000 principal amount (all of the Convertible Notes were purchased under the May 2015 $250 million securities buyback program).
The Company has $245.6 million remaining under its securities buyback program as of the date of this press release. The Company expects to repurchase any securities in the open market, at times and prices that are considered to be appropriate by the Company, but is not obligated under the terms of the program to repurchase any securities.
In May 2015, the Company closed on the sale of 17,177,123 newly issued shares of common stock in an underwritten public offering at an offering price of $9.30 per share. We received aggregate net proceeds of approximately $152.1 million, after deducting underwriters' discounts and estimated offering expenses of $7.6 million.
The Company has taken delivery of 11 vessels under its Newbuilding Program with HMD, DHSC, SSME, SPP and Hyundai Samho Heavy Industries Co., Ltd ("HSHI") since March 31, 2015. These deliveries are summarized as follows:
At the end of June 2015, one of the Company's Handymax tankers, STI Pimlico, was involved in a collision with a passenger vessel in the Dardanelles Strait in Turkey. There were no reports of injuries on either vessel; however, STI Pimlico sustained damage. The incident and the costs to repair are currently under investigation however we expect these costs to be covered by insurance, less customary deductibles. The vessel is currently being repaired and is expected to be offhire for approximately 60 days in the third quarter of 2015.
In May 2015, the Company time chartered-in an MR product tanker for six months at $15,250 per day. The Company also has two consecutive options to extend the charter for additional six month and one year periods at $15,250 per day and $16,350 per day, respectively.
In May 2015, the Company declared an option to extend the charter on an LR1 product tanker that is currently time chartered-in for one year at $12,500 per day. The agreement also contains a provision whereby the Company splits all of the vessel's profits above the daily base rate with the vessel's owner.
In April 2015, the Company agreed to time charter-in an MR product tanker that was under construction in South Korea. The vessel was delivered in May 2015 and is being time chartered-in for three years at $17,034 per day.
In April 2015, the Company extended the time charter on an LR2 product tanker that is currently time chartered-in. The term of the agreement is for one year at $24,875 per day beginning in September 2015. The Company also has an option to extend the charter for an additional year at $26,925 per day.
The Company will have a conference call on Wednesday, July 29, 2015 at 10:00 AM Eastern Daylight Time and 4:00 PM Central European Summer Time.
Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1-800-289-0438 (U.S.) or 1-913-312-0845 (International). The conference participant passcode is 6711816. 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 . Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.
Webcast URL:
As of July 28, 2015, the Company had $247.3 million in cash. The cash balance does not include the $54.8 million proceeds from the sale of 3.4 million shares of Dorian; the sale is scheduled to close on July 29, 2015.
We made the following drawdowns from our credit facilities since March 31, 2015 and through the date of this press release:
As of July 29, 2015, the Company's outstanding debt balance, and amount available to draw, is as follows:
Newbuilding Program
During the second quarter of 2015, the Company made $345.6 million of installment payments on its newbuilding vessels.
The Company currently has 12 newbuilding vessel orders with HMD, DHSC, and SSME (three MRs, seven LR2s and two Handymaxes) in addition to the expected delivery of a 2014 built MR product tanker in August 2015. The estimated third quarter of 2015 and future payments are as follows*:
*These are estimates only and are subject to change as construction progresses.
** Includes the 2014 built MR product tanker at SPP that is expected to be delivered in August 2015.
For the three months ended June 30, 2015, the Company recorded net income of $57.6 million compared to a net loss of $0.6 million for the three months ended June 30, 2014. The following were the significant changes between the two periods:
Time charter equivalent, or TCE revenue, a non-IFRS measure, is vessel revenues less voyage expenses (including bunkers and port charges). TCE revenue is included herein because it is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company's performance irrespective of changes in the mix of charter types (i.e., spot charters, time charters, and pool charters), and it provides useful information to investors and management. The following table depicts TCE revenue for the three months ended June 30, 2015 and 2014:
TCE revenue increased $130.5 million to $187.4 million. This increase was driven by an increase in the average number of operating vessels (owned and time chartered-in) to 88.2 from 49.3 for the three months ended June 30, 2015 and 2014, respectively, along with an increase in time charter equivalent revenue per day to $23,469 per day from $12,733 per day for the three months ended June 30, 2015 and 2014, respectively (see the breakdown of daily TCE averages below). Spot rates across all of our operating segments improved during the second quarter as fundamentals in the product tanker market remained strong. These fundamentals were driven by increased refining capacity in the Middle East and India along with improved refining margins worldwide which have had a resultant, positive impact on the demand for our vessels.
Vessel operating costs increased $27.4 million to $41.1 million from $13.7 million for the three months ended June 30, 2015 and 2014, respectively. This increase was primarily driven by an increase in the Company's owned fleet to an average of 69.6 vessels from 21.5 vessels for the three months ended June 30, 2015 and 2014, respectively. The increase was offset by an overall decrease in vessel operating costs per day to $6,487 per day from $6,960 per day for the three months ended June 30, 2015 and 2014, respectively (see the breakdown of daily TCE averages below)
Charterhire expense decreased $10.3 million to $25.9 million from $36.2 million for the three months ended June 30, 2015 and 2014, respectively. This difference was driven by a decrease in the Company's time chartered-in fleet to an average of 18.6 vessels from 27.8 vessels for the three months ended June 30, 2015 and 2014, respectively.
Depreciation expense increased $18.1 million to $25.5 million from $7.4 million for the three months ended June 30, 2015 and 2014, respectively. This change was the result of an increase in the average number of owned vessels to 69.6 from 21.5 for the three months ended June 30, 2015 and 2014, respectively.
General and administrative expenses increased $3.8 million to $15.4 million from $11.6 million for the three months ended June 30, 2015 and 2014, respectively. This increase is due to the significant growth in the Company's fleet.
Gain on sale of Dorian shares during the three months ended June 30, 2014 resulted from the acquisition of 7,500,000 common shares of the Company in exchange for 3,422,665 shares of Dorian in June 2014.
Financial expenses increased $21.4 million to $21.8 million from $0.4 million primarily as a result of an increase in the Company's debt balance in addition to a decrease in the amount of interest capitalized for the three months ended June 30, 2015 and 2014, respectively. Total debt outstanding, net of deferred financing fees, was $1.9 billion at June 30, 2015 compared to $807.5 million at June 30, 2014.
*Diluted earnings per share for the three months ended June 30, 2015 primarily includes the potentially dilutive shares relating to our Convertible Senior Notes due 2019 (the "Convertible Notes") representing 31,094,568 potential common shares. The dilutive impact of the Convertible Notes is determined using the if-converted method. Under this method, we assume that the Convertible Notes are converted into common shares during the period and the interest and non-cash amortization expense associated with these notes of $5.3 million and $10.6 million for the three and six months ended June 30, 2015, respectively, is not incurred. Conversion is not assumed if the results of this calculation are anti-dilutive. The Convertible Notes are currently ineligible for conversion.
*In early April 2015, the Company sold STI Harmony and STI Heritage, which were the last two owned LR1 tankers in this segment. As there were only four total operating days in this segment, operating costs per day are not a meaningful metric during the three months ended June 30, 2015.
Business Strategy
The Company's primary objectives are to profitably grow the business and emerge as a major operator of product tanker vessels. The Company intends to acquire modern, high-quality tankers through timely and selective acquisitions. The Company is currently concentrating on these sectors because of their attractive fundamentals which the Company believes includes:
increasing demand for refined products.
increasing ton miles (distance between production 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.
The Company's dividend history is as follows:
On July 29, 2015, the Scorpio Tankers' Board of Directors declared a quarterly cash dividend of $0.125 per share, payable on September 4, 2015 to all shareholders as of August 14, 2015 (the record date). As of July 29, 2015 there were 182,592,121 shares outstanding.
Securities Buyback Program
In May 2015, the Company's Board of Directors authorized a new securities buyback program to purchase up to an aggregate of $250 million of the Company's common stock and bonds, which currently consist of its (i) Convertible Senior Notes Due 2019, which were issued in June 2014, (ii) Unsecured Senior Notes Due 2020 (NYSE: SBNA), which were issued in May 2014, and (iii) Unsecured Senior Notes Due 2017 (NYSE: SBNB), which were issued in October 2014. This program replaces the Company's stock buyback program that was previously announced in July 2014 and was terminated in conjunction with this new repurchase program.
During 2015 (through the date of this press release), the Company has acquired the following:
an aggregate of 1,016,988 of its common shares that are being held as treasury shares at an average price of $8.46 per share. There are 182,592,121 shares outstanding as of July 29, 2015.
$1.5 million face value of its Convertible Senior Notes Due 2019 at an average price of $1,088.10 per $1,000 principal amount.
The Company has $245.6 million remaining under its securities buyback program as of the date of this press release. The Company expects to repurchase any securities in the open market, at times and prices that are considered to be appropriate by the Company, but is not obligated under the terms of the program to repurchase any securities.
Scorpio Tankers Inc. is a provider of marine transportation of petroleum products worldwide. Scorpio Tankers Inc. currently owns 76 tankers (16 LR2 tankers, 15 Handymax tankers, and 45 MR tankers) with an average age of 1.0 years, and time charters-in 17 product tankers (four LR2, four LR1, four MR and five Handymax tankers). The Company has reached an agreement to acquire an MR product tanker in August 2015 and has contracted for 12 newbuilding product tankers (two Handymax, three MR and seven LR2), four of which are expected to be delivered in the third quarter of 2015, four throughout 2016 and four throughout 2017. Additional information about the Company is available at the Company's website , which is not a part of this press release.
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.
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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Datum: 29.07.2015 - 11:59 Uhr
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