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

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

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

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

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

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

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

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

Declaration of Dividend

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

Summary of Second Quarter and Other Recent Significant Events

  • Below is a summary of the average daily Time Charter Equivalent ("TCE") revenue (see Non-IFRS Measures section below) and duration of contracted pool voyages and time charters for the Company's vessels thus far in the third quarter of 2020 as of the date hereof (See footnotes to "Other operating data" table below for the definition of daily TCE revenue): 
  Total
Pool Average daily TCE revenue % of Days
LR2 $22,500 49 %
LR1 $22,000 53 %
MR $15,300 45 %
Handymax $12,000 52 %
  • Below is a summary of the average daily TCE revenue earned by the Company's vessels in each of the pools during the second quarter of 2020:
Pool Average daily TCE revenue
LR2 $47,064
LR1 $35,794
MR $21,808
Handymax $17,698
  • The Company's strong second quarter results, coupled with the repayment of debt, have resulted in the Company's net debt position decreasing by $228.8 million from $3.1 billion at March 31, 2020 to $2.9 billion at August 5, 2020. 
  • The Company is in discussions with a group of financial institutions to refinance the existing debt on eight of its vessels which, if consummated, is expected to increase the Company’s liquidity by an additional $80 million, after the repayment of existing debt.  These refinancings are expected to be agreed in the next few months, and the drawdowns are expected to occur before the end of 2020.
  • In July 2020, the Company repurchased $13.8 million aggregate principal amount of its Convertible Notes due 2022 at an average price of $882.23 per $1,000 principal amount, or $12.2 million.
  • In May 2020, the Company's Senior Unsecured Notes due May 2020 matured and the outstanding principal balance of $53.8 million was repaid in full.  Subsequently in May 2020, the Company issued $28.1 million aggregate principal amount of 7.0% senior unsecured notes due June 30, 2025 (the "Senior Notes due 2025") in an underwritten public offering.  This amount includes $3.1 million related to the partial exercise of the underwriters' option to purchase additional Senior Notes due 2025 under the same terms and conditions.  The aggregate net proceeds were approximately $26.5 million after deducting underwriting commissions and offering expenses.
  • In May 2020, the Company executed a credit facility for up to $225.0 million with a group of European financial institutions (the "2020 $225.0 Million Credit Facility").  The Company drew $101.2 million from this facility in June 2020, and the proceeds were used to refinance the existing debt on four LR2s that were previously financed under the ABN AMRO Credit Facility, which was scheduled to mature during the third quarter of 2020.  The remaining availability under this credit facility is expected to be used to refinance the existing debt on five of the Company's vessels and scrubbers on two LR2s.
  • In May 2020, the Company executed an agreement to upsize its $179.2 million credit facility with ING Bank N.V. to $251.4 million.  The upsized portion of this facility was fully drawn in May 2020, and the proceeds were used to refinance the existing debt on five vessels, which were previously financed under the KEXIM Credit Facility. 
  • Based upon the commitments received to date, which include the remaining availability under the 2020 $225.0 Million Credit Facility and certain financing transactions that have been previously announced, the Company expects to raise approximately $56 million of aggregate additional liquidity (after the repayment of existing debt) once all of the agreements are closed and drawn.  These drawdowns are expected to occur at varying points in the future as several of these financings are tied to scrubber installations on the Company’s vessels.
  • In April 2020, the Company reached an agreement with its counterparty to postpone the purchase and installation of scrubbers on 19 of its vessels.   The installation of these scrubbers is now expected to begin not earlier than 2021. 

Diluted Weighted Number of Shares

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

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

Novel Coronavirus (COVID-19)

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

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

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

$250 Million Securities Repurchase Program

In May 2015, the Company's Board of Directors authorized a Securities Repurchase Program to purchase up to an aggregate of $250 million of the Company's securities which, in addition to its common shares, currently consist of its Senior Notes due 2025 (NYSE: SBBA), which were issued in May 2020, and Convertible Notes due 2022, which were issued in May and July 2018.

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

As of the date hereof, the Company has repurchased a total of $140.6 million of its securities under the Securities Repurchase Program and has the authority to purchase up to an additional $109.4 million of its securities. The Company may repurchase its securities in the open market, at times and prices that are considered to be appropriate by the Company, but is not obligated under the terms of the Securities Repurchase Program to repurchase any of its securities.

At the Market Offering Program

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

Conference Call

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

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

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

Conference ID:  7309339

Participants should dial into the call 10 minutes before the scheduled time. The information provided on the teleconference is only accurate at the time of the conference call, and the Company will take no responsibility for providing updated information.

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

Webcast URL: https://edge.media-server.com/mmc/p/yaoh87zz

Current Liquidity

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

Drydock, Scrubber and Ballast Water Treatment Update

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

  Number of Vessels Drydock Ballast Water Treatment Systems Scrubbers Aggregate Costs ($ in millions) (1) Aggregate Off-hire Days in Q2 2020
Completed in the second quarter of 2020            
LR2 8 7 3 8 $36.3 335
LR1 2 2 6.0 12
MR 6 3 3 6 22.8 214
Handymax
  16 10 6 16 $65.1 561
             
In progress as of  July 1, 2020            
LR2 2 1 1 2 $7.4 75
LR1
MR 5 3 3 5 18.5 126
Handymax
  7 4 4 7 $25.9 201

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

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

In millions of U.S. dollars As of August 5, 2020 (1) (2)
       
Q3 2020 - payments made through August 5, 2020 $ 11.9
 
Q3 2020 - remaining payments 25.8
 
Q4 2020 15.1
 
FY 2021 41.3  
FY 2022 48.9  

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

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

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

  Q3 2020  
  Ships Scheduled for (2): Off-hire
  Drydock Ballast Water Treatment Systems Scrubbers Days (3)
LR2 4     6   282  
LR1     1   48  
MR 1   1   3   188  
Handymax        
         
Total Q3 2020 5   1   10   518  
         
  Q4 2020  
  Ships Scheduled for (2): Off-hire
  Drydock Ballast Water Treatment Systems Scrubbers Days (3)
LR2     1   50  
LR1 1       20  
MR       39  
Handymax        
         
Total Q4 2020 1     1   109  
         
  FY 2021  
  Ships Scheduled for (2): Off-hire
  Drydock Ballast Water Treatment Systems Scrubbers Days (3)
LR2 12     1   280  
LR1 11       220  
MR     8   293  
Handymax        
         
Total FY 2021 23     9   793  
         
  FY 2022  
  Ships Scheduled for (2): Off-hire
  Drydock Ballast Water Treatment Systems Scrubbers Days (3)
LR2 5       100  
LR1     5   200  
MR 11   5   5   402  
Handymax        
         
Total FY 2022 16   5   10   702  

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

Debt

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



  In thousands of U.S. Dollars Outstanding Principal as of March 31, 2020 Drawdowns and (repayments), net Outstanding Principal as of June 30, 2020 Drawdowns and (repayments), net Outstanding Principal as of August 5, 2020
1 KEXIM Credit Facility (3) (8) $     140,191   $     (78,033 ) $     62,158   (1,092 ) $     61,066  
2 ABN AMRO Credit Facility (7) 89,816   (89,816 )      
3 ING Credit Facility (3) 128,254   68,941   197,195   2,181   199,376  
4 2018 NIBC Credit Facility (1) 30,813   2,318   33,131   (1,032 ) 32,099  
5 2017 Credit Facility 128,183   (3,316 ) 124,867     124,867  
6 Credit Agricole Credit Facility 88,586   (2,142 ) 86,444     86,444  
7 ABN AMRO / K-Sure Credit Facility 44,716   (963 ) 43,753     43,753  
8 Citibank / K-Sure Credit Facility 93,129   (2,104 ) 91,025     91,025  
9 ABN / SEB Credit Facility (9) 100,450   374   100,824   1,633   102,457  
10 Hamburg Commercial Credit Facility (2) 41,355   606   41,961     41,961  
11 Prudential Credit Facility 54,538   (1,386 ) 53,152   (924 ) 52,228  
12 2019 DNB / GIEK Credit Facility 31,850   (979 ) 30,871     30,871  
13 BNPP Sinosure Credit Facility (8) 42,096   22,790   64,886     64,886  
14 2020 $225.0 Million Credit Facility (7)   101,200   101,200     101,200  
15 Ocean Yield Lease Financing 146,815   (2,715 ) 144,100   (937 ) 143,163  
16 CMBFL Lease Financing 55,836   (1,227 ) 54,609     54,609  
17 BCFL Lease Financing (LR2s) (10) 91,123   (2,086 ) 89,037   1,045   90,082  
18 CSSC Lease Financing 224,889   (4,327 ) 220,562   (1,442 ) 219,120  
19 CSSC Scrubber Lease Financing 9,604   (1,372 ) 8,232   (457 ) 7,775  
20 BCFL Lease Financing (MRs) (10) 84,964   (2,932 ) 82,032   958   82,990  
21 2018 CMBFL Lease Financing (4) 123,900   7,596   131,496     131,496  
22 $116.0 Million Lease Financing (10) 104,322   (1,784 ) 102,538   5,043   107,581  
23 AVIC Lease Financing 124,361   (2,948 ) 121,413     121,413  
24 China Huarong Lease Financing 120,375   (3,375 ) 117,000     117,000  
25 $157.5 Million Lease Financing 134,407   (3,536 ) 130,871     130,871  
26 COSCO Lease Financing 74,525   (1,925 ) 72,600     72,600  
27 IFRS 16 - Leases  - 7 Handymax 10,071   (3,279 ) 6,792   (794 ) 5,998  
28 IFRS 16 - Leases  - 3 MR 42,430   (1,813 ) 40,617   (593 ) 40,024  
29 $670.0 Million Lease Financing 601,447   (15,306 ) 586,141   (5,129 ) 581,012  
30 Unsecured Senior Notes Due 2020 (5) 53,750   (53,750 )      
31 Unsecured Senior Notes Due 2025 (6)   28,100   28,100     28,100  
32 Convertible Notes Due 2022 203,500     203,500   (12,205 ) 191,295  
  Gross debt outstanding $ 3,220,296   $ (49,189 ) 3,171,107   $ (13,745 ) $ 3,157,362  
  Cash and cash equivalents 119,825     250,592           285,665  
  Net debt $     3,100,471   $     (49,189 ) $     2,920,515   $     (13,745 ) $      2,871,697  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 In millions of U.S. dollars   As of June 30, 2020 (1)
Q3 2020 - principal payments made through August 5, 2020   $     28.0  
Q3 2020 - remaining principal payments   49.6  
Q4 2020   74.1  
Q1 2021 (2)   156.9  
Q2 2021 (3)   99.8  
Q3 2021   66.6  
Q4 2021   70.0  
2022 and thereafter   2,626.1  
    $ 3,171.1  

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

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

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

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

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

  • TCE revenue, a Non-IFRS measure, is vessel revenues less voyage expenses (including bunkers and port charges). TCE revenue is included herein because it is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company's performance irrespective of changes in the mix of charter types (i.e., spot voyages, time charters, and pool charters), and it provides useful information to investors and management. The following table sets forth TCE revenue for the three months ended June 30, 2020 and 2019:
      For the three months ended June 30,
In thousands of U.S. dollars   2020   2019
  Vessel revenue   $ 346,239     $ 150,805  
  Voyage expenses   (2,906 )   (1,328 )
  TCE revenue   $ 343,333     $ 149,477  
  • TCE revenue for the three months ended June 30, 2020 increased by $193.9 million to $343.3 million, from $149.5 million for the three months ended June 30, 2019. Overall average TCE revenue per day increased to $29,693 per day during the three months ended June 30, 2020, from $14,348 per day during the three months ended June 30, 2019.

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

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

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

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

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

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

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

Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Statements of Income or Loss
(unaudited)

    For the three months ended June 30,   For the six months ended June 30,
In thousands of U.S. dollars except per share and share data 2020   2019   2020   2019
Revenue              
  Vessel revenue $ 346,239     $ 150,805     $ 600,407     $ 346,635  
                 
Operating expenses              
  Vessel operating costs (79,758 )   (68,776 )   (161,221 )   (138,152 )
  Voyage expenses (2,906 )   (1,328 )   (7,125 )   (1,622 )
  Charterhire             (4,399 )
  Depreciation - owned or sale leaseback vessels (48,102 )   (44,369 )   (94,943 )   (88,183 )
  Depreciation - right of use assets (13,609 )   (5,895 )   (26,806 )   (8,030 )
  General and administrative expenses (18,747 )   (15,528 )   (36,010 )   (31,240 )
  Total operating expenses (163,122 )   (135,896 )   (326,105 )   (271,626 )
Operating income 183,117     14,909     274,302     75,009  
Other (expense) and income, net              
  Financial expenses (39,127 )   (47,327 )   (83,892 )   (96,083 )
  Financial income 295     2,725     860     5,843  
  Other expenses, net (344 )   (27 )   (702 )   (13 )
  Total other expense, net (39,176 )   (44,629 )   (83,734 )   (90,253 )
Net income / (loss) $ 143,941     $ (29,720 )   $ 190,568     $ (15,244 )
                 
Earnings / (Loss) per share              
                 
  Basic $ 2.63     $ (0.62 )   $ 3.48     $ (0.32 )
  Diluted $ 2.40     $ (0.62 )   $ 3.21     $ (0.32 )
  Basic weighted average shares outstanding 54,827,479     48,148,885     54,747,345     48,109,924  
  Diluted weighted average shares outstanding (1) 61,593,958     48,148,885     61,801,095     48,109,924  

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


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

  As of
In thousands of U.S. dollars June 30, 2020   December 31, 2019
Assets      
Current assets      
Cash and cash equivalents $ 250,592     $ 202,303  
Accounts receivable 114,925     78,174  
Prepaid expenses and other current assets 11,856     13,855  
Inventories 9,806     8,646  
Total current assets 387,179     302,978  
Non-current assets      
Vessels and drydock 4,062,574     4,008,158  
Right of use assets 791,927     697,903  
Other assets 83,688     131,139  
Goodwill 11,539     11,539  
Restricted cash 12,293     12,293  
Total non-current assets 4,962,021     4,861,032  
Total assets $ 5,349,200     $ 5,164,010  
Current liabilities      
Current portion of long-term debt $ 213,928     $ 235,482  
Finance lease liability 126,275     122,229  
Lease liability - IFRS 16 62,255     63,946  
Accounts payable 17,373     23,122  
Accrued expenses 33,663     41,452  
Total current liabilities 453,494     486,231  
Non-current liabilities      
Long-term debt 1,009,565     999,268  
Finance lease liability 1,141,108     1,195,494  
Lease liability - IFRS 16 571,295     506,028  
Total non-current liabilities 2,721,968     2,700,790  
Total liabilities 3,175,462     3,187,021  
Shareholders' equity      
Issued, authorized and fully paid-in share capital:      
Share capital 652     646  
Additional paid-in capital 2,848,623     2,842,446  
Treasury shares (467,057 )   (467,057 )
Accumulated deficit (208,480 )   (399,046 )
Total shareholders' equity 2,173,738     1,976,989  
Total liabilities and shareholders' equity $ 5,349,200     $ 5,164,010  


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

  For the six months ended June 30,
In thousands of U.S. dollars 2020   2019
Operating activities      
Net income $ 190,568     $ (15,244 )
Depreciation - owned or finance leased vessels 94,943     88,183  
Depreciation - right of use assets 26,806     8,030  
Amortization of restricted stock 15,355     13,860  
Amortization of deferred financing fees 3,086     4,088  
Write-off of deferred financing fees 313     275  
Accretion of convertible notes 4,565     6,995  
Accretion of fair value measurement on debt assumed in business combinations 1,742     1,827  
  337,378     108,014  
Changes in assets and liabilities:      
Increase in inventories (1,160 )   (461 )
(Increase) / decrease in accounts receivable (36,748 )   13,248  
Decrease / (increase) in prepaid expenses and other current assets 1,998     (175 )
Decrease / (increase) in other assets 666     (2,807 )
(Decrease) / increase in accounts payable (5,423 )   1,186  
(Decrease) / increase in accrued expenses (4,616 )   2,272  
  (45,283 )   13,263  
Net cash inflow from operating activities 292,095     121,277  
Investing activities      
Drydock, scrubber, ballast water treatment system and other vessel related payments (owned, finance leased and bareboat-in vessels) (119,805 )   (59,688 )
Net cash outflow from investing activities (119,805 )   (59,688 )
Financing activities      
Debt repayments (381,657 )   (166,755 )
Issuance of debt 318,194      
Debt issuance costs (9,706 )   (1,288 )
Principal repayments on lease liability - IFRS 16 (41,668 )   (7,129 )
Increase in restricted cash     (9 )
Repayment of convertible notes     (2,266 )
Gross proceeds from issuance of common stock 2,601      
Equity issuance costs (26 )   (295 )
Dividends paid (11,739 )   (10,279 )
Repurchase of common stock     (1 )
Net cash outflow from financing activities (124,001 )   (188,022 )
Increase / (decrease) in cash and cash equivalents 48,289     (126,433 )
Cash and cash equivalents at January 1, 202,303     593,652  
Cash and cash equivalents at June 30, $ 250,592     $ 467,219  


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

    For the three months ended June 30,   For the six months ended June 30,
    2020   2019   2020   2019
Adjusted EBITDA(1)  (in thousands of U.S. dollars except Fleet Data)   $ 251,993     $ 71,821     $ 410,704     $ 185,068  
                 
Average Daily Results                
TCE per day(2)   $ 29,693     $ 14,348     $ 26,250     $ 16,470  
Vessel operating costs per day(3)   $ 6,407     6,351     $ 6,499     $ 6,414  
                 
LR2                
TCE per revenue day (2)   $ 46,988     $ 16,974     $ 36,503     $ 19,948  
Vessel operating costs per day(3)   $ 6,656     6,687     $ 6,699     $ 6,748  
Average number of vessels   42.0     38.0     42.0     38.0  
                 
LR1                
TCE per revenue day (2)   $ 35,794     $ 14,527     $ 28,701     $ 16,221  
Vessel operating costs per day(3)   $ 6,891     $ 6,159     $ 6,785     $ 6,377  
Average number of vessels   12.0     12.0     12.0     12.0  
                 
MR                
TCE per revenue day (2)   $ 21,508     $ 13,436     $ 21,196     $ 14,594  
Vessel operating costs per day(3)   $ 6,161     $ 6,148     $ 6,291     $ 6,235  
Average number of vessels   62.0     48.0     61.4     48.2  
                 
Handymax                
TCE per revenue day (2)   $ 17,698     $ 11,520     $ 20,117     $ 14,644  
Vessel operating costs per day(3)   $ 6,359     $ 6,318     $ 6,548     $ 6,240  
Average number of vessels   20.8     21.0     20.9     21.0  
                 
Fleet data                
Average number of vessels   136.8     119.0     136.3     119.2  
                 
Drydock                
Drydock, scrubber, ballast water treatment system and other vessel related payments for owned, sale leaseback and bareboat chartered-in vessels (in thousands of U.S. dollars)   $ 56,319     $ 41,448     $ 119,805     $ 59,688  


(1) See Non-IFRS Measures section below.
(2) Freight rates are commonly measured in the shipping industry in terms of time charter equivalent per day (or TCE per day), which is calculated by subtracting voyage expenses, including bunkers and port charges, from vessel revenue and dividing the net amount (time charter equivalent revenues) by the number of revenue days in the period. Revenue days are the number of days the vessel is owned, finance leased or chartered-in less the number of days the vessel is off-hire for drydock and repairs.
(3) Vessel operating costs per day represent vessel operating costs divided by the number of operating days during the period. Operating days are the total number of available days in a period with respect to the owned, finance leased or bareboat chartered-in vessels, before deducting available days due to off-hire days and days in drydock. Operating days is a measurement that is only applicable to our owned, finance leased or bareboat chartered-in vessels, not our time chartered-in vessels.


Fleet list as of August 5, 2020

  Vessel Name   Year Built   DWT   Ice class   Employment   Vessel type   Scrubber  
                             
  Owned, sale leaseback and bareboat chartered-in vessels                  
1 STI Brixton   2014   38,734     1A    SHTP (1)   Handymax   N/A  
2 STI Comandante   2014   38,734     1A    SHTP (1)   Handymax   N/A  
3 STI Pimlico   2014   38,734     1A    SHTP (1)   Handymax   N/A  
4 STI Hackney   2014   38,734     1A    SHTP (1)   Handymax   N/A  
5 STI Acton   2014   38,734     1A    SHTP (1)   Handymax   N/A  
6 STI Fulham   2014   38,734     1A    SHTP (1)   Handymax   N/A  
7 STI Camden   2014   38,734     1A    SHTP (1)   Handymax   N/A  
8 STI Battersea   2014   38,734     1A    SHTP (1)   Handymax   N/A  
9 STI Wembley   2014   38,734     1A    SHTP (1)   Handymax   N/A  
10 STI Finchley   2014   38,734     1A    SHTP (1)   Handymax   N/A  
11 STI Clapham   2014   38,734     1A    SHTP (1)   Handymax   N/A  
12 STI Poplar   2014   38,734     1A    SHTP (1)   Handymax   N/A  
13 STI Hammersmith   2015   38,734     1A    SHTP (1)   Handymax   N/A  
14 STI Rotherhithe   2015   38,734     1A    SHTP (1)   Handymax   N/A  
15 STI Amber   2012   49,990       SMRP (2)   MR   Yes  
16 STI Topaz   2012   49,990       SMRP (2)   MR   Not Yet Installed  
17 STI Ruby   2012   49,990       SMRP (2)   MR   Not Yet Installed  
18 STI Garnet   2012   49,990       SMRP (2)   MR   Yes  
19 STI Onyx   2012   49,990       SMRP (2)   MR   Yes  
20 STI Fontvieille   2013   49,990       SMRP (2)   MR   Not Yet Installed  
21 STI Ville   2013   49,990       SMRP (2)   MR   Not Yet Installed  
22 STI Duchessa   2014   49,990       SMRP (2)   MR   Not Yet Installed  
23 STI Opera   2014   49,990       SMRP (2)   MR   Not Yet Installed  
24 STI Texas City   2014   49,990       SMRP (2)   MR   Yes  
25 STI Meraux   2014   49,990       SMRP (2)   MR   Yes  
26 STI San Antonio   2014   49,990       SMRP (2)   MR   Yes  
27 STI Venere   2014   49,990       SMRP (2)   MR   Yes  
28 STI Virtus   2014   49,990       SMRP (2)   MR   Yes  
29 STI Aqua   2014   49,990       SMRP (2)   MR   Yes  
30 STI Dama   2014   49,990       SMRP (2)   MR   Yes  
31 STI Benicia   2014   49,990       SMRP (2)   MR   Yes  
32 STI Regina   2014   49,990       SMRP (2)   MR   Yes  
33 STI St. Charles   2014   49,990       SMRP (2)   MR   Yes  
34 STI Mayfair   2014   49,990       SMRP (2)   MR   Yes  
35 STI Yorkville   2014   49,990       SMRP (2)   MR   Yes  
36 STI Milwaukee   2014   49,990       SMRP (2)   MR   Yes  
37 STI Battery   2014   49,990       SMRP (2)   MR   Yes  
38 STI Soho   2014   49,990       SMRP (2)   MR   Yes  
39 STI Memphis   2014   49,990       SMRP (2)   MR   Yes  
40 STI Tribeca   2015   49,990       SMRP (2)   MR   Yes  
41 STI Gramercy   2015   49,990       SMRP (2)   MR   Yes  
42 STI Bronx   2015   49,990       SMRP (2)   MR   Yes  
43 STI Pontiac   2015   49,990       SMRP (2)   MR   Yes  
44 STI Manhattan   2015   49,990       SMRP (2)   MR   Yes  
45 STI Queens   2015   49,990       SMRP (2)   MR   Yes  
46 STI Osceola   2015   49,990       SMRP (2)   MR   Yes  
47 STI Notting Hill   2015   49,687     1B   SMRP (2)   MR   Yes  
48 STI Seneca   2015   49,990       SMRP (2)   MR   Yes  
49 STI Westminster   2015   49,687     1B   SMRP (2)   MR   Not Yet Installed  
50 STI Brooklyn   2015   49,990       SMRP (2)   MR   Yes  
51 STI Black Hawk   2015   49,990       SMRP (2)   MR   Yes  
52 STI Galata   2017   49,990       SMRP (2)   MR   Yes  
53 STI Bosphorus   2017   49,990       SMRP (2)   MR   Not Yet Installed  
54 STI Leblon   2017   49,990       SMRP (2)   MR   Not Yet Installed  
55 STI La Boca   2017   49,990       SMRP (2)   MR   Yes  
56 STI San Telmo   2017   49,990     1B   SMRP (2)   MR   Not Yet Installed  
57 STI Donald C Trauscht   2017   49,990     1B   SMRP (2)   MR   Not Yet Installed  
58 STI Esles II   2018   49,990     1B   SMRP (2)   MR   Not Yet Installed  
59 STI Jardins   2018   49,990     1B   SMRP (2)   MR   Not Yet Installed  
60 STI Magic   2019   50,000       SMRP (2)   MR   Yes  
61 STI Majestic   2019   50,000       SMRP (2)   MR   Yes  
62 STI Mystery   2019   50,000       SMRP (2)   MR   Yes  
63 STI Marvel   2019   50,000       SMRP (2)   MR   Yes  
64 STI Magnetic   2019   50,000       SMRP (2)   MR   Yes  
65 STI Millennia   2019   50,000       SMRP (2)   MR   Yes  
66 STI Master   2019   50,000       SMRP (2)   MR   Yes  
67 STI Mythic   2019   50,000       SMRP (2)   MR   Yes  
68 STI Marshall   2019   50,000       SMRP (2)   MR   Yes  
69 STI Modest   2019   50,000       SMRP (2)   MR   Yes  
70 STI Maverick   2019   50,000       SMRP (2)   MR   Yes  
71 STI Miracle   2020   50,000       SMRP (2)   MR   Yes  
72 STI Maestro   2020   50,000       SMRP (2)   MR   Yes  
73 STI Mighty   2020   50,000       SMRP (2)   MR   Yes  
74 STI Excel   2015   74,000       SLR1P (3)   LR1   Not Yet Installed  
75 STI Excelsior   2016   74,000       SLR1P (3)   LR1   Not Yet Installed  
76 STI Expedite   2016   74,000       SLR1P (3)   LR1   Not Yet Installed  
77 STI Exceed   2016   74,000       SLR1P (3)   LR1   Not Yet Installed  
78 STI Executive   2016   74,000       SLR1P (3)   LR1   Yes  
79 STI Excellence   2016   74,000       SLR1P (3)   LR1   Yes  
80 STI Experience   2016   74,000       SLR1P (3)   LR1   Not Yet Installed  
81 STI Express   2016   74,000       SLR1P (3)   LR1   Yes  
82 STI Precision   2016   74,000       SLR1P (3)   LR1   Not Yet Installed  
83 STI Prestige   2016   74,000       SLR1P (3)   LR1   Yes  
84 STI Pride   2016   74,000       SLR1P (3)   LR1   Yes  
85 STI Providence   2016   74,000       SLR1P (3)   LR1   Yes  
86 STI Elysees   2014   109,999       SLR2P (4)   LR2   Yes  
87 STI Madison   2014   109,999       SLR2P (4)   LR2   Yes  
88 STI Park   2014   109,999       SLR2P (4)   LR2   Yes  
89 STI Orchard   2014   109,999       SLR2P (4)   LR2   Yes  
90 STI Sloane   2014   109,999       SLR2P (4)   LR2   Yes  
91 STI Broadway   2014   109,999       SLR2P (4)   LR2   Yes  
92 STI Condotti   2014   109,999       SLR2P (4)   LR2   Yes  
93 STI Rose   2015   109,999       SLR2P (4)   LR2   Yes  
94 STI Veneto   2015   109,999       SLR2P (4)   LR2   Yes  
95 STI Alexis   2015   109,999       SLR2P (4)   LR2   Yes  
96 STI Winnie   2015   109,999       SLR2P (4)   LR2   Yes  
97 STI Oxford   2015   109,999       SLR2P (4)   LR2   Yes  
98 STI Lauren   2015   109,999       SLR2P (4)   LR2   Yes  
99 STI Connaught   2015   109,999       SLR2P (4)   LR2   Yes  
100 STI Spiga   2015   109,999       SLR2P (4)   LR2   Yes  
101 STI Savile Row   2015   109,999       SLR2P (4)   LR2   Yes  
102 STI Kingsway   2015   109,999       SLR2P (4)   LR2   Not Yet Installed  
103 STI Carnaby   2015   109,999       SLR2P (4)   LR2   Not Yet Installed  
104 STI Solidarity   2015   109,999       SLR2P (4)   LR2   Not Yet Installed  
105 STI Lombard   2015   109,999       SLR2P (4)   LR2   Yes  
106 STI Grace   2016   109,999       SLR2P (4)   LR2   Not Yet Installed  
107 STI Jermyn   2016   109,999       SLR2P (4)   LR2   Not Yet Installed  
108 STI Sanctity   2016   109,999       SLR2P (4)   LR2   Yes  
109 STI Solace   2016   109,999       SLR2P (4)   LR2   Yes  
110 STI Stability   2016   109,999       SLR2P (4)   LR2   Not Yet Installed  
111 STI Steadfast   2016   109,999       SLR2P (4)   LR2   Yes  
112 STI Supreme   2016   109,999       SLR2P (4)   LR2   Not Yet Installed  
113 STI Symphony   2016   109,999       SLR2P (4)   LR2   Yes  
114 STI Gallantry   2016   113,000       SLR2P (4)   LR2   Yes  
115 STI Goal   2016   113,000       SLR2P (4)   LR2   Yes  
116 STI Nautilus   2016   113,000       SLR2P (4)   LR2   Yes  
117 STI Guard   2016   113,000       SLR2P (4)   LR2   Yes  
118 STI Guide   2016   113,000       SLR2P (4)   LR2   Yes  
119 STI Selatar   2017   109,999       SLR2P (4)   LR2   Yes  
120 STI Rambla   2017   109,999       SLR2P (4)   LR2   Not Yet Installed  
121 STI Gauntlet   2017   113,000       SLR2P (4)   LR2   Yes  
122 STI Gladiator   2017   113,000       SLR2P (4)   LR2   Yes  
123 STI Gratitude   2017   113,000       SLR2P (4)   LR2   Yes  
124 STI Lobelia   2019   110,000       SLR2P (4)   LR2   Yes  
125 STI Lotus   2019   110,000       SLR2P (4)   LR2   Yes  
126 STI Lily   2019   110,000       SLR2P (4)   LR2   Yes  
127 STI Lavender   2019   110,000       SLR2P (4)   LR2   Yes  
128 Sky   2007   37,847     1A    SHTP (1)   Handymax   N/A (5 )
129 Steel   2008   37,847     1A    SHTP (1)   Handymax   N/A (5 )
130 Stone I   2008   37,847     1A    SHTP (1)   Handymax   N/A (5 )
131 Style   2008   37,847     1A    SHTP (1)   Handymax   N/A (5 )
132 STI Beryl   2013   49,990       SMRP (2)   MR   Not Yet Installed (6 )
133 STI Le Rocher   2013   49,990       SMRP (2)   MR   Not Yet Installed (6 )
134 STI Larvotto   2013   49,990       SMRP (2)   MR   Not Yet Installed (6 )
                             
  Total owned, sale leaseback and bareboat chartered-in fleet DWT       9,324,548                  
                             
  Leasehold newbuilding currently under construction                      
  Hull S471  - TBN STI Maximus   HVS (7 ) 50,000           MR      
                             
  Total leasehold newbuilding product tankers DWT   50,000                  
  Total Fleet DWT       9,374,548                  


(1 ) This vessel operates in the Scorpio Handymax Tanker Pool, or SHTP. SHTP is a Scorpio Pool and is operated by Scorpio Commercial Management S.A.M. (SCM). SHTP and SCM are related parties to the Company.
(2 ) This vessel operates in or is expected to operate in, the Scorpio MR Pool, or SMRP. SMRP is a Scorpio Pool and is operated by SCM. SMRP and SCM are related parties to the Company.
(3 ) This vessel operates in the Scorpio LR1 Pool, or SLR1P. SLR1P is a Scorpio Pool and is operated by SCM. SLR1P and SCM are related parties to the Company.
(4 ) This vessel operates in or is expected to operate in the Scorpio LR2 Pool, or SLR2P. SLR2P is a Scorpio Pool and is operated by SCM. SLR2P and SCM are related parties to the Company.
(5 ) In March 2019, we entered into a new bareboat charter-in agreement on a previously bareboat chartered-in vessel. The term of the agreement is for two years at a bareboat rate of $6,300 per day. The agreement is expected to expire on March 31, 2021.
(6 ) In April 2017, we sold and leased back this vessel, on a bareboat basis, for a period of up to eight years for $8,800 per day.  The sales price was $29.0 million per vessel, and we have the option to purchase this vessel beginning at the end of the fifth year of the agreement through the end of the eighth year of the agreement, at market-based prices. Additionally, a deposit of $4.35 million per vessel was retained by the buyer and will either be applied to the purchase price of the vessel if a purchase option is exercised or refunded to us at the expiration of the agreement.
(7 ) The leasehold interest in this vessel was acquired from Trafigura in September 2019 as part of the Trafigura Transaction and this vessel is currently under construction at Hyundai-Vietnam Shipbuilding Co., Ltd. with delivery expected in the third quarter of 2020. 


Dividend Policy

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

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

Date paid Dividends per common
share
March 2019 $0.100
June 2019 $0.100
September 2019 $0.100
December 2019 $0.100
March 2020 $0.100
June 2020 $0.100

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

$250 Million Securities Repurchase Program

In May 2015, the Company's Board of Directors authorized a Securities Repurchase Program to purchase up to an aggregate of $250 million of the Company's securities which, in addition to its common shares, currently consist of its Senior Notes due 2025 (NYSE: SBBA), which were issued in May 2020, and Convertible Notes due 2022, which were issued in May and July 2018.

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

As of the date hereof, the Company has repurchased a total of $140.6 million of its securities under the Securities Repurchase Program and has the authority to purchase up to an additional $109.4 million of its securities. The Company may repurchase its securities in the open market, at times and prices that are considered to be appropriate by the Company, but is not obligated under the terms of the Securities Repurchase Program to repurchase any of its securities.

About Scorpio Tankers Inc.

Scorpio Tankers Inc. is a provider of marine transportation of petroleum products worldwide. Scorpio Tankers Inc. currently owns, finance leases or bareboat charters-in 134 product tankers (42 LR2 tankers, 12 LR1 tankers, 62 MR tankers and 18 Handymax tankers) with an average age of 4.7 years. In addition, the Company will bareboat charter-in one MR tanker that is currently under construction and is scheduled to be delivered in September 2020. Additional information about the Company is available at the Company's website www.scorpiotankers.com, which is not a part of this press release.

Non-IFRS Measures

Reconciliation of IFRS Financial Information to Non-IFRS Financial Information

This press release describes time charter equivalent revenue, or TCE revenue, adjusted net income or loss, and adjusted EBITDA, which are not measures prepared in accordance with IFRS ("Non-IFRS" measures). The Non-IFRS measures are presented in this press release as we believe that they provide investors and other users of our financial statements, such as our lenders, with a means of evaluating and understanding how the Company's management evaluates the Company's operating performance. These Non-IFRS measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with IFRS.

The Company believes that the presentation of TCE revenue, adjusted net income or loss with adjusted earnings per share, basic and diluted, and adjusted EBITDA are useful to investors or other users of our financial statements, such as our lenders, because they facilitate the comparability and the evaluation of companies in the Company’s industry. In addition, the Company believes that TCE revenue, adjusted net income or loss with adjusted earnings per share, basic and diluted, and adjusted EBITDA are useful in evaluating its operating performance compared to that of other companies in the Company’s industry. The Company’s definitions of TCE revenue, adjusted net income or loss with adjusted earnings per share, basic and diluted, and adjusted EBITDA may not be the same as reported by other companies in the shipping industry or other industries.

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

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

      For the three months ended June 30, 2020  
          Per share   Per share  
In thousands of U.S. dollars except per share data   Amount    basic    diluted  
  Net income   $ 143,941     $ 2.63     $ 2.40    
  Adjustment:              
  Deferred financing fees write-off   313     0.01     0.01    
  Adjusted net income   $ 144,254     $ 2.63   (1) $ 2.40   (1)

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

      For the six months ended June 30, 2020  
          Per share   Per share  
In thousands of U.S. dollars except per share data   Amount    basic    diluted  
  Net income   $ 190,568     $ 3.48     $ 3.21    
  Adjustments:              
  Deferred financing fees write-off   313     0.01     0.01    
  Adjusted net income   $ 190,881     $ 3.49     $ 3.21   (1)


      For the six months ended June 30, 2019
          Per share   Per share
In thousands of U.S. dollars except per share data   Amount    basic    diluted
  Net loss   $ (15,244 )   $ (0.32 )   $ (0.32 )
  Adjustment:            
  Deferred financing fees write-off   275     0.01     0.01  
  Adjusted net loss   $ (14,969 )   $ (0.31 )   $ (0.31 )

(1) Summation differences due to rounding.

Reconciliation of Net Income / (Loss) to Adjusted EBITDA

      For the three months ended June 30,   For the six months ended June 30,
In thousands of U.S. dollars   2020   2019   2020   2019
  Net income / (loss)   $ 143,941     $ (29,720 )   $ 190,568     $ (15,244 )
  Financial expenses   39,127     47,327     83,892     96,083  
  Financial income   (295 )   (2,725 )   (860 )   (5,843 )
  Depreciation - owned or finance leased vessels   48,102     44,369     94,943     88,183  
  Depreciation - right of use assets   13,609     5,895     26,806     8,030  
  Amortization of restricted stock   7,509     6,675     15,355     13,859  
  Adjusted EBITDA   $ 251,993     $ 71,821     $ 410,704     $ 185,068  

Forward-Looking Statements

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

The forward‐looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in the Company’s records and other data available from third parties. Although management believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond the Company’s control, there can be no assurance that the Company will achieve or accomplish these expectations, beliefs or projections. The Company undertakes no obligation, and specifically declines any obligation, except as required by law, to publicly update or revise any forward‐looking statements, whether as a result of new information, future events or otherwise.

In addition to these important factors, other important factors that, in the Company’s view, could cause actual results to differ materially from those discussed in the forward‐looking statements include unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies for the management, length and severity of the ongoing novel coronavirus (COVID-19) outbreak, including its effect on demand for petroleum products and the transportation thereof, expansion and growth of the Company’s operations, risks relating to the integration of assets or operations of entities that it has or may in the future acquire and the possibility that the anticipated synergies and other benefits of such acquisitions may not be realized within expected timeframes or at all, the failure of counterparties to fully perform their contracts with the Company, the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for tanker vessel capacity, changes in the Company’s operating expenses, including bunker prices, drydocking and insurance costs, the market for the Company’s vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain financing and comply with covenants in such financing arrangements, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off‐hires, and other factors. Please see the Company's filings with the SEC for a more complete discussion of certain of these and other risks and uncertainties.

Scorpio Tankers Inc.
212-542-1616

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