MONACO, Aug. 02, 2023 (GLOBE NEWSWIRE) -- Scorpio Tankers Inc. (: STNG) ("Scorpio Tankers" or the "Company") today reported its results for the three and six months ended June 30, 2023. The Company also announced that its board of directors (the "Board of Directors") has declared a quarterly cash dividend on its common shares of $0.25 per share.
Results for the three months ended June 30, 2023 and 2022
For the three months ended June 30, 2023, the Company had net income of $132.4 million, or $2.50 basic and $2.40 diluted earnings per share.
For the three months ended June 30, 2023, the Company had adjusted net income (see Non-IFRS Measures section below) of $133.3 million, or $2.51 basic and $2.41 diluted earnings per share, which excludes from net income a $0.9 million, or $0.02 per basic and diluted share, write-off or acceleration of the amortization of deferred financing fees on certain lease financing obligations and related debt extinguishment costs.
For the three months ended June 30, 2022, the Company had net income of $191.1 million, or $3.44 basic and $3.06 diluted earnings per share.
For the three months ended June 30, 2022, the Company had adjusted net income (see Non-IFRS Measures section below) of $196.1 million, or $3.53 basic and $3.13 diluted earnings per share, which excludes from net income (i) a $1.5 million, or $0.03 per basic and $0.02 per diluted share, aggregate write-down of vessels held for sale and loss on the sale of vessels, (ii) a $3.9 million, or $0.07 per basic and $0.06 per diluted share, write-off or acceleration of the amortization of deferred financing fees on the debt or lease financing obligations relating to these vessel sales and related debt extinguishment costs, and (iii) a $0.4 million, or $0.01 per basic and $0.01 per diluted share, gain recorded on the repurchase of the Company's Convertible Notes Due 2025.
Results for the six months ended June 30, 2023 and 2022
For the six months ended June 30, 2023, the Company had net income of $325.6 million, or $5.93 basic and $5.69 diluted earnings per share.
For the six months ended June 30, 2023, the Company had adjusted net income (see Non-IFRS Measures section below) of $328.9 million, or $5.99 basic and $5.75 diluted earnings per share, which excludes from net income a $3.3 million, or $0.06 per basic and diluted share, write-off or acceleration of the amortization of deferred financing fees on certain lease financing obligations and related debt extinguishment costs.
For the six months ended June 30, 2022, the Company had net income of $106.7 million, or $1.92 basic and $1.84 diluted earnings per share.
For the six months ended June 30, 2022, the Company had adjusted net income (see Non-IFRS Measures section below) of $181.3 million, or $3.27 basic and $2.99 diluted earnings per share, which excludes from net income (i) a $69.2 million, or $1.25 per basic and $1.07 per diluted share, aggregate write-down of vessels held for sale and loss on the sale of vessels, (ii) a $5.8 million, or $0.10 per basic and $0.09 per diluted share, write-off or acceleration of the amortization of deferred financing fees on the debt or lease financing obligations relating to these vessel sales and related debt extinguishment costs and (iii) a $0.4 million, or $0.01 per basic and $0.01 per diluted share, gain recorded on the repurchase of the Company's Convertible Notes Due 2025.
Declaration of Dividend
On August 1, 2023, the Board of Directors declared a quarterly cash dividend of $0.25 per common share, with a payment date of September 15, 2023 to all shareholders of record as of August 15, 2023 (the record date). As of August 1, 2023, there were 54,493,654 common shares of the Company outstanding.
Summary of Second Quarter 2023 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 voyages and time charters for the Company's vessels (both in the pools and outside of the pools) thus far in the third quarter of 2023 as of the date hereof (See footnotes to "Other operating data" table below for the definition of daily TCE revenue):
| Pool and Spot Market | Time Charters Out of the Pool | ||||||||||
| Average Daily TCE Revenue | Expected Revenue Days(1) | % of Days | Average Daily TCE Revenue | Expected Revenue Days(1) | % of Days | ||||||
| LR2 | $ | 27,000 | 2,650 | 41 | % | $ | 30,500 | 910 | 100 | % | |
| MR | $ | 27,000 | 4,900 | 37 | % | $ | 21,800 | 450 | 100 | % | |
| Handymax | $ | 20,000 | 1,270 | 33 | % | N/A | N/A | N/A | |||
(1) Expected Revenue Days are the total number of calendar days in the quarter for each vessel, less the total number of expected off-hire days during the period associated with major repairs or drydockings. Consequently, Expected Revenue Days represent the total number of days the vessel is expected to be available to earn revenue. Idle days, which are days when a vessel is available to earn revenue, yet is not employed, are included in revenue days. The Company uses revenue days to show changes in net vessel revenues between periods.
- Below is a summary of the average daily TCE revenue earned by the Company's vessels during the second quarter of 2023:
| Average Daily TCE Revenue | ||||
| Vessel class | Pool / Spot | Time Charters | ||
| LR2 | $ | 42,647 | $ | 30,361 |
| MR | $ | 29,207 | $ | 21,711 |
| Handymax | $ | 26,784 | N/A | |
- In July 2023, the Company executed its previously announced $1.0 billion term loan and revolving credit facility with a group of financial institutions (the "2023 $1.0 Billion Credit Facility"). The Company drew $440.6 million from this facility (split evenly between the term and revolving portions) to finance 21 of the Company’s unencumbered vessels. This facility has a final maturity of June 30, 2028 and bears interest at SOFR plus a margin of 1.95% per annum. The remaining availability of this facility is expected to be drawn between the third quarter of 2023 and the end of the first quarter of 2024, and mainly be used to repay (and re-finance) more expensive lease financing.
- In July 2023, the Company gave notice to exercise the purchase options on two MR product tankers (STI Leblon and STI Bosphorus) which are currently financed on the 2020 CMBFL Lease Financing. Additionally, the Company gave notice in October 2022 to exercise the purchase option on one LR2 product tanker (STI Supreme) which is currently financed on the Ocean Yield Lease Financing. These purchases are expected to take place prior to the end of the third quarter of 2023 and result in an aggregate debt reduction of $64.3 million.
- In July 2023, the Company exercised the purchase options on six MR product tankers (STI Miracle, STI Maestro, STI Mighty, STI Modest, STI Maverick, and STI Millennia) that were previously financed as part of the IFRS 16 - Leases - $670.0 Million lease financing. These transactions resulted in an aggregate debt reduction of $143.6 million.
- In July 2023, the Company sold the 2013 built MR product tanker, STI Ville, for $32.5 million. As the vessel was unencumbered, the Company made no debt repayments associated with this sale.
- During the second quarter of 2023, the Company exercised the purchase options on five LR2s and seven MRs (STI Steadfast, STI Grace, STI Jermyn, STI Lavender, STI Lobelia, STI Magnetic, STI Marshall, STI Magic, STI Mystery, STI Marvel, STI Mythic, and STI Magister) that were previously financed on the IFRS 16 - Leases - $670.0 Million lease financing, the Ocean Yield Lease Financing, and the 2021 CSSC Lease Financing. These transactions resulted in an aggregate debt reduction of $300.2 million.
- In May 2023, the Company executed a $117.4 million credit facility from a European financial institution (the "2023 $117.4 Million Credit Facility"). This facility was fully drawn upon execution and seven vessels (STI Battersea, STI Wembley, STI Texas City, STI Meraux, STI Mayfair, STI St. Charles, and STI Alexis) were collateralized on the facility upon drawdown. The 2023 $117.4 Million Credit Facility has a final maturity of five years from the drawdown date of each vessel and bears interest at SOFR plus a margin of 1.925% per annum.
- In June 2023, the Company received a commitment from DekaBank Deutsche Girozentrale for a credit facility of up to $94.0 million (the "2023 $94.0 Million Credit Facility"). This credit facility is expected to be used to finance one MR product tanker and three LR2 product tankers. This credit facility has a final maturity of five years from the drawdown date of each vessel and bears interest at SOFR plus a margin of 1.70% per annum.
- Since April 1, 2023 and through the date of this press release, the Company has repurchased an aggregate of 5,893,324 of its common shares in the open market at an average price of $48.00 per share.
Securities Repurchase Program
On February 15, 2023, the Board of Directors authorized a new Securities Repurchase Program (the "2023 Securities Repurchase Program") to purchase up to an aggregate of $250.0 million of the Company’s securities which, in addition to its common shares also currently consist of its Senior Unsecured Notes Due 2025 (: SBBA).
On May 1, 2023, and again on May 31, 2023, the Board of Directors authorized to reset the 2023 Securities Repurchase Program up to an aggregate of $250.0 million of the Company’s securities.
From April 1, 2023 through the date of this press release, the Company has purchased an aggregate of 5,893,324 of its common shares in the open market at an average price of $48.00 per share.
There is $213.2 million available under the 2023 Securities Repurchase Program as of August 1, 2023.
Lease Repayments
During the second quarter of 2023, the Company exercised the purchase options on five LR2s and seven MRs (STI Steadfast, STI Grace, STI Jermyn, STI Lavender, STI Lobelia, STI Magnetic, STI Marshall, STI Magic, STI Mystery, STI Marvel, STI Mythic, and STI Magister) that were previously financed on the IFRS 16 - Leases - $670.0 Million lease financing, the Ocean Yield Lease Financing, and the 2021 CSSC Lease Financing. These transactions resulted in an aggregate debt reduction of $300.2 million.
In July 2023, the Company exercised the purchase options on six MR product tankers that were previously financed on the IFRS 16 - Leases - $670.0 Million lease financing (STI Miracle, STI Maestro, STI Mighty, STI Modest, STI Maverick, and STI Millennia). These transactions resulted in an aggregate debt reduction of $143.6 million.
In July 2023, the Company gave notice to exercise the purchase options on two MR product tankers (STI Leblon and STI Bosphorus) that are currently financed on the 2020 CMBFL Lease Financing. These purchases are expected to take place prior to the end of the third quarter of 2023 and result in an aggregate debt reduction of $36.5 million.
The Company also expects to complete the previously announced repurchase of STI Supreme, which is currently financed on the Ocean Yield Lease Financing, in the third quarter of 2023 and which is expected to result in a debt reduction of $27.8 million.
All of these lease financings bore interest at LIBOR plus margins of between 3.2% and 5.4%.
New Executed or Committed Financings
The Company has executed or received commitments for three separate credit facilities for up to $1.2 billion in the aggregate (the "New Facilities").
The first credit facility, the 2023 $117.4 Million Credit Facility, is from a European financial institution for $117.4 million and was executed in May 2023. This facility was fully drawn upon execution and seven vessels (STI Battersea, STI Wembley, STI Texas City, STI Meraux, STI Mayfair, STI St. Charles, and STI Alexis) were collateralized on the facility upon drawdown. The 2023 $117.4 Million Credit Facility has a final maturity of five years from the drawdown date of each vessel, bears interest at SOFR plus a margin of 1.925% per annum and is expected to be repaid in equal, aggregate, installments of $4.3 million per quarter, with a balloon payment due at maturity. The remaining terms and conditions of this credit facility, including financial covenants, are similar to those set forth in the Company’s existing credit facilities.
The second credit facility, the 2023 $1.0 Billion Credit Facility, is a term loan and revolving credit facility from a group of financial institutions for up to $1.0 billion. Upon execution in July 2023, $440.6 million was drawn from this facility (split evenly between the term loan and the revolver) to finance 21 of the Company’s unencumbered vessels (STI Lobelia, STI Lavender, STI Jermyn, STI Steadfast, STI Magic, STI Mystery, STI Marvel, STI Millennia, STI Magister, STI Mythic, STI Modest, STI Maverick, STI Miracle, STI Maestro, STI Mighty, STI Magnetic, STI Seneca, STI Brooklyn, STI Manhattan, STI Bronx, and STI Tribeca). This facility has a final maturity of June 30, 2028 and bears interest at SOFR plus a margin of 1.95% per annum. The remaining availability of this facility is expected to be drawn between the third quarter of 2023 and the end of the first quarter of 2024, and mainly be used to repay (and re-finance) more expensive lease financing. This credit facility is expected to be repaid in quarterly installments with a balloon payment due at maturity date, where the term loan portion for each vessel shall be repaid in full prior to the reduction of the revolver for each vessel. The amounts drawn thus far are expected to be repaid in aggregate repayments of $12.9 million per quarter for the first two years, $8.7 million per quarter in years three through five, with a balloon payment at maturity.
The 2023 $1.0 Billion Credit Facility offers the Company an ability to substitute vessels and also includes an uncommitted accordion feature of up to $200.0 million, which may be incurred under the same terms and conditions at no later than 24 months after the closing date. The other terms and conditions of the 2023 $1.0 Billion Credit Facility, including financial covenants, are similar to those set forth in the Company’s existing credit facilities.
The third credit facility commitment, the 2023 $94.0 Million Credit Facility, is from DekaBank Deutsche Girozentrale for a credit facility of up to $94 million. This credit facility is expected to be used to finance one MR product tanker and three LR2 product tankers. This credit facility will have a final maturity of five years from the drawdown date of each vessel and will bear interest at SOFR plus a margin of 1.70% per annum. The terms and conditions of this credit facility, including financial covenants, will be similar to those set forth in the Company’s existing credit facilities. This credit facility will be subject to customary conditions precedent, and the execution of definitive documentation, and is expected to close within the third quarter of 2023.
The proceeds of the new facilities are expected to be used, primarily, to repay more expensive lease financing.
Diluted Weighted Number of Shares
The computation of earnings per share is determined by taking into consideration the potentially dilutive shares arising from the Company’s equity incentive plan. These potentially dilutive shares are excluded from the computation of earnings per share to the extent they are anti-dilutive.
For the three and six months ended June 30, 2023, the Company’s basic weighted average number of shares outstanding were 53,040,031 and 54,926,939, respectively. For the three and six months ended June 30, 2023, the Company’s diluted weighted average number of shares outstanding were 55,228,080 and 57,186,103, respectively, which included the potentially dilutive impact of restricted shares issued under the Company's equity incentive plan.
Conference Call
On Wednesday August 2, 2023, the Company plans to issue its second quarter 2023 earnings press release in the morning (Eastern Daylight Time) and host a conference call at 8:30 AM Eastern Daylight Time and 2:30 PM Central European Summer Time.
Title: Scorpio Tankers Inc. Second Quarter 2023 Conference Call
Date: Wednesday August 2, 2023
Time: 8:30 AM Eastern Daylight Time and 2:30 PM Central European Summer Time
The conference call will be available over the internet, through the Scorpio Tankers Inc. website www.scorpiotankers.com and the webcast link:
https://edge.media-server.com/mmc/p/8q35pjcs
Participants for the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.
The conference will also be available telephonically:
US/CANADA Dial-In Number: 1 (833) 636-1321
International Dial-In Number: +1 (412) 902-4260
Please ask to join the Scorpio Tankers Inc call
Participants should dial into the call 10 minutes before the scheduled time.
To access the replay telephonically (valid until August 16, 2023):
US Toll Free: 1-877-344-7529
International Toll: +1-412-317-0088
Canada Toll Free: 1-855-669-9658
To access dial-in numbers for additional countries click on the below link
https://services.choruscall.com/ccforms/replay.html
Replay Access Code: 8082952
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. Information on the Company’s website does not constitute a part of and is not incorporated by reference into this press release.
Current Liquidity
As of July 31, 2023, the Company had $682.7 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 ("BWTS") activity that occurred during the second quarter of 2023 and the estimated expected payments to be made, and off-hire days that are expected to be incurred, for the Company's drydocks, ballast water treatment system installations, and scrubber installations through 2023 and 2024:
| Number of(3) | ||||||
| Aggregate costs in millions of USD(1) | Aggregate offhire days(2) | LR2s | MRs | Handymax | ||
| Q2 2023 - actual (a) | $ | 5.1 | 64 | — | 3 | — |
| Q3 2023 - estimated (b) | 3.9 | 20 | — | 1 | — | |
| Q4 2023 - estimated (c) | 7.5 | 20 | — | 1 | — | |
| FY 2024 - estimated (d) | 69.9 | 1,355 | 11 | 36 | 12 | |
(1) These costs include estimated cash payments for drydocks, ballast water treatment system installations and scrubber installations. These amounts may include costs incurred for previous projects for which payments may not be due until subsequent quarters, or 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) Represents the total estimated off-hire days during the period, including vessels that commenced work in a previous period.
(3) 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. The number of vessels in these tables may 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 in these tables may vary as drydock, ballast water treatment system installation and scrubber installation times are finalized.
(a) Includes one BWTS installation.
(b) Includes one BWTS installation.
(c) Includes one BWTS installation.
(d) Includes 11 scrubber installations.
Debt
Set forth below is a summary of the principal balances of the Company’s outstanding indebtedness as of the dates presented:
| In thousands of U.S. Dollars | Outstanding Principal as of March 31, 2023 | Outstanding Principal as of June 30, 2023 | Outstanding Principal as of July 31, 2023 | ||||
| 1 | Hamburg Commercial Credit Facility (6) | $ | 32,909 | $ | 32,086 | $ | 32,086 |
| 2 | Prudential Credit Facility (6) | 37,899 | 36,513 | 35,589 | |||
| 3 | 2019 DNB / GIEK Credit Facility (6) | 36,559 | 34,781 | 34,781 | |||
| 4 | BNPP Sinosure Credit Facility (6) | 80,576 | 75,121 | 75,121 | |||
| 5 | 2020 $225.0 Million Credit Facility (6) | 36,482 | 35,198 | 35,198 | |||
| 6 | 2023 $225.0 Million Credit Facility | 225,000 | 216,525 | 208,050 | |||
| 7 | 2023 $49.1 Million Credit Facility | 49,088 | 47,934 | 47,934 | |||
| 8 | 2023 $117.4 Million Credit Facility (1) | — | 117,394 | 117,394 | |||
| 9 | 2023 $1.0 Billion Credit Facility (2) | — | — | 440,600 | |||
| 10 | Ocean Yield Lease Financing (3) (6) | 84,372 | 54,895 | 54,443 | |||
| 11 | BCFL Lease Financing (LR2s) | 65,598 | 62,837 | 61,931 | |||
| 12 | CSSC Lease Financing (6) | 117,635 | 113,994 | 112,780 | |||
| 13 | BCFL Lease Financing (MRs) | 49,202 | 45,040 | 43,688 | |||
| 14 | 2020 CMBFL Lease Financing (6) | 37,279 | 36,468 | 36,468 | |||
| 15 | 2020 TSFL Lease Financing | 39,777 | 38,947 | 38,947 | |||
| 16 | 2020 SPDBFL Lease Financing (6) | 81,887 | 80,264 | 80,264 | |||
| 17 | 2021 AVIC Lease Financing (6) | 82,822 | 81,009 | 81,009 | |||
| 18 | 2021 CMBFL Lease Financing (6) | 66,415 | 64,785 | 64,380 | |||
| 19 | 2021 TSFL Lease Financing | 48,902 | 47,807 | 47,807 | |||
| 20 | 2021 CSSC Lease Financing (4) | 47,315 | — | — | |||
| 21 | 2021 $146.3 Million Lease Financing (6) | 130,404 | 127,110 | 123,815 | |||
| 22 | 2021 Ocean Yield Lease Financing (6) | 62,490 | 61,032 | 60,535 | |||
| 23 | 2022 AVIC Lease Financing (6) | 111,512 | 109,220 | 109,220 | |||
| 24 | IFRS 16 - Leases - 3 MR | 19,063 | 16,904 | 16,195 | |||
| 25 | IFRS 16 - Leases - $670.0 Million (5) | 464,813 | 231,015 | 86,673 | |||
| 26 | Unsecured Senior Notes Due 2025 | 70,571 | 70,571 | 70,571 | |||
| Gross debt outstanding | 2,078,570 | 1,837,450 | 2,115,479 | ||||
| Cash and cash equivalents | 612,655 | 313,923 | 682,678 | ||||
| Net debt | $ | 1,465,915 | $ | 1,523,527 | $ | 1,432,801 | |
(1) The 2023 $117.4 Million Credit Facility was executed and drawn in May 2023. Seven product tankers (two Handymax, four MRs and one LR2) were collateralized under this facility as part of the drawdown. The 2023 $117.4 Million Credit Facility has a final maturity of five years from the drawdown date of each vessel, bears interest at SOFR plus a margin of 1.925% per annum and is expected to be repaid in equal, aggregate, installments of $4.3 million per quarter, with a balloon payment due at maturity The remaining terms and conditions of this credit facility, including financial covenants, are similar to those set forth in the Company’s existing credit facilities.
(2) The 2023 $1.0 Billion Credit Facility was executed in July 2023. Upon execution, $440.6 million was drawn from this facility (split evenly between the term loan and the revolver) to finance 21 of the Company’s unencumbered vessels (17 MRs and four LR2s). This facility has a final maturity of June 30, 2028 and bears interest at SOFR plus a margin of 1.95% per annum. The amounts drawn, thus far, are expected to be repaid in aggregate repayments of $12.9 million per quarter for the first two years, $8.7 million per quarter in years three through five, with a balloon payment at maturity, where the term loan portion for each vessel shall be repaid in full prior to the reduction of the revolver for each vessel. The remaining terms and conditions of this credit facility, including financial covenants, are similar to those set forth in the Company’s existing credit facilities.
(3) In October 2022, the Company gave notice to exercise the purchase options on STI Steadfast and STI Supreme on the Ocean Yield Lease Financing. In May 2023, the Company exercised the purchase option on STI Steadfast resulting in a debt reduction of $27.8 million. The remaining transaction for STI Supreme is expected to occur in the third quarter of 2023 resulting in a debt reduction of $27.8 million.
(4) In May 2023, the Company exercised the purchase options on STI Grace and STI Jermyn on the 2021 CSSC Lease Financing and repaid the aggregate outstanding lease obligation of $46.9 million as part of these transactions.
(5) In May and June 2023, the Company exercised the purchase options on STI Lavender, STI Magnetic, STI Marshall, STI Lobelia, STI Magic, STI Mystery, STI Marvel, STI Mythic, and STI Magister on the IFRS 16 - Leases - $670.0 Million lease financing and repaid the aggregate outstanding lease obligation of $225.5 million as part of these transactions. In July 2023, the Company exercised the purchase options on STI Miracle, STI Maestro, STI Mighty, STI Modest, STI Maverick, and STI Millennia on the IFRS 16 - Leases - $670.0 Million lease financing and repaid the aggregate outstanding lease obligation of $143.6 million as part of these transactions.
(6) We have agreed to, or executed an amendment agreement for the transitioning from LIBOR to SOFR. The weighted average credit adjustment spread of all these transition agreements (based on June 30, 2023 debt outstanding), which will be added to the margin on each facility, is 0.17%.
Set forth below are the estimated expected future principal repayments on the Company's outstanding indebtedness as of June 30, 2023, which includes principal amounts due under the Company's secured credit facilities, lease financing arrangements, Senior Notes Due 2025, and lease liabilities under IFRS 16 (which also include actual scheduled payments made from July 1, 2023 through July 31, 2023):
| In millions of U.S. dollars | Repayments/maturities of unsecured debt | Vessel financings - announced vessel purchases and maturities in 2023 and 2024 | Vessel financings - scheduled repayments, in addition to maturities in 2025 and thereafter | Total(1) | Repayments of new borrowing during July 2023(4) | Pro forma, including new borrowing | |||||||
| July 1, 2023 to July 31, 2023(2) | $ | — | $ | 143.6 | $ | 19.0 | $ | 162.6 | $ | — | $ | 162.6 | |
| Q3 2023(3) | — | 64.3 | 29.9 | 94.2 | 12.9 | 107.1 | |||||||
| Q4 2023 | — | — | 54.2 | ||||||||||
