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

August, 06 2020 06:44 AM Scorpio Tankers Inc. 7.00% Senior Notes due 2025

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

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

Company Name:	Scorpio Tankers Inc. 7.00% Senior Notes due 2025
Stock Symbol:	SBBA
Market:	NYSE
Website:	scorpiotankers.com

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