Scorpio Tankers Inc. Announces Financial Results for the Third Quarter of 2017

MONACO, Nov. 16, 2017 (GLOBE NEWSWIRE) -- Scorpio Tankers Inc. (NYSE:STNG) ("Scorpio Tankers," or the "Company") today reported its results for the three and nine months ended September 30, 2017.

Results for the three months ended September 30, 2017 and 2016

For the three months ended September 30, 2017, the Company's adjusted net loss (see Non-IFRS Measures section below) was $34.0 million, or $0.15 basic and diluted loss per share, which excludes from net loss (i) $2.3 million of transaction costs related to the previously announced merger with Navig8 Product Tankers Inc ("NPTI") (see Merger with Navig8 Product Tankers Inc below) and (ii) a $0.6 million write-off of deferred financing fees. The adjustments resulted in an aggregate reduction of the Company’s net loss by $2.9 million, or $0.01 basic and diluted loss per share. For the three months ended September 30, 2017, the Company had a net loss of $36.9 million, or $0.16 basic and diluted loss per share.

For the three months ended September 30, 2016, the Company's adjusted net loss (see Non-IFRS Measures section below) was $18.3 million, or $0.11 basic and diluted loss per share, which excludes from net loss (i) an aggregate write-off of $9.0 million of deferred financing fees and (ii) a $0.2 million unrealized gain on derivative financial instruments. The adjustments resulted in an aggregate reduction of the Company's net loss by $8.8 million, or $0.06 basic and diluted loss per share. For the three months ended September 30, 2016, the Company had a net loss of $27.1 million, or $0.17 basic and diluted loss per share.

Results for the nine months ended September 30, 2017 and 2016

For the nine months ended September 30, 2017, the Company's adjusted net loss was $62.5 million (see Non-IFRS Measures section below), or $0.33 basic and diluted loss per share, which excludes from net loss (i) a $23.3 million loss on sales of vessels, (ii) $34.8 million of transaction costs related to the previously announced merger with NPTI, (iii) a $5.4 million gain recorded on the previously announced purchase of the four NPTI subsidiaries that own four LR1 tankers, and (iv) a $1.5 million write-off of deferred financing fees. The adjustments resulted in an aggregate reduction of the Company's net loss by $54.2 million, or $0.28 basic and diluted loss per share. For the nine months ended September 30, 2017, the Company had a net loss of $116.7 million, or $0.61 basic and diluted loss per share.

For the nine months ended September 30, 2016, the Company's adjusted net income (see Non-IFRS Measures section below) was $18.7 million, or $0.12 basic and $0.11 diluted earnings per share, which excludes from net income (i) a $2.1 million loss on sales of vessels, (ii) an aggregate write-off of $14.5 million of deferred financing fees, (iii) a $1.6 million unrealized gain on derivative financial instruments, and (iv) a $1.0 million aggregate gain recorded on the repurchase of $10.0 million aggregate principal amount of the Company's Convertible Notes. The adjustments resulted in an aggregate increase of net income by $14.0 million, or $0.09 basic and $0.08 diluted earnings per share. For the nine months ended September 30, 2016, the Company had net income of $4.8 million, or $0.03 basic and diluted earnings per share.

Declaration of Dividend

On November 14, 2017, the Company's Board of Directors declared a quarterly cash dividend of $0.01 per share, payable on or about December 28, 2017 to all shareholders as of December 13, 2017 (the record date). As of November 14, 2017, there were 281,095,755 shares outstanding.

Diluted Weighted Number of Shares

Diluted earnings per share is determined using the if-converted method. Under this method, the Company assumes that the Convertible Notes (which were issued in June 2014) are converted into common shares at the beginning of each period and the interest and non-cash amortization expense associated with these notes of $5.6 million and $16.7 million during the three and nine months ended September 30, 2017, respectively, are not incurred. Conversion is not assumed if the results of this calculation are anti-dilutive.

For the three and nine months ended September 30, 2017, the Company's basic weighted average number of shares were 232,062,058 and 192,304,650, respectively. The weighted average number of shares, both diluted and under the if-converted method, were anti-dilutive for the three and nine months ended September 30, 2017 as the Company incurred net losses.

For the three and nine months ended September 30, 2016, the Company's basic weighted average number of shares were 160,844,168 and 160,902,344, respectively. The weighted average number of shares, both diluted and under the if-converted method, were anti-dilutive for the three months ended September 30, 2016 as the Company incurred a net loss. The Company's diluted weighted average number of shares for the nine months ended September 30, 2016 was 166,839,648 which excludes the impact of the Convertible Notes since the if-converted method was anti-dilutive. As of the date hereof, the Convertible Notes are not eligible for conversion.

Summary of Recent and Third Quarter Significant Events

  • Completed the acquisition of NPTI and its fleet of 12 LR1 and 15 LR2 product tankers in exchange for 55 million shares of common stock and the assumption of NPTI's debt. Four of the LR1 product tankers were acquired on June 14, 2017, and the remaining vessels were acquired upon the closing of the merger on September 1, 2017. See "Merger with Navig8 Product Tankers Inc" below.
  • Below is a summary of the average daily TCE revenue and duration for voyages fixed for the Company's vessels thus far in the fourth quarter of 2017 as of the date hereof:
    • For the LR2s in the pool: approximately $16,500 per day for 60% of the days.
    • For the LR1s in the pool: approximately $10,750 per day for 60% of the days.
    • For the MRs in the pool: approximately $11,750 per day for 55% of the days.
    • For the ice-class 1A and 1B Handymaxes in the pool: approximately $9,200 per day for 60% of the days.
  • Below is a summary of the average daily TCE revenue earned on the Company's vessels during the third quarter of 2017:
    • For the LR2s in the pools: $12,903 per revenue day (includes the LR2s purchased from NPTI and operated in the Navig8 Alpha8 pool for a portion of the third quarter 2017).
    • For the LR1s in the pools: $12,037 per revenue day (includes the LR1s purchased from NPTI and operated in the Navig8 LR8 pool for all or a portion of the third quarter 2017).
    • For the MRs in the pool: $12,788 per revenue day.
    • For the Handymaxes in the pool: $9,370 per revenue day.
  • Entered into finance lease agreements for five 2012 built MR product tankers (STI Amber, STI Topaz, STI Ruby, STI Garnet and STI Onyx) with an unaffiliated third party. The financing for three of the vessels closed in September 2017, and the financing for one of the vessels closed in October 2017, resulting in an increase to the Company's liquidity of $29.4 million in aggregate, after the repayment of outstanding debt. The financing for the remaining vessel is expected to close before December 31, 2017 and is expected to result in an additional increase in the Company's liquidity of $7.1 million, after the repayment of outstanding debt. See “Finance Lease Agreements” below.
  • Took delivery of STI Leblon, STI La Boca, STI San Telmo and STI Donald C Trauscht, four MR product tankers that were under construction, from Hyundai Mipo Dockyard Co. Ltd. of South Korea ("HMD"). STI Leblon and STI La Boca were delivered in July 2017, STI San Telmo was delivered in September 2017, and STI Donald C Trauscht was delivered in October 2017. As part of these deliveries, the Company drew down $21.0 million, $21.0 million, $20.6 million and $20.7 million in June, July, September and October 2017, respectively, from its 2017 Credit Facility to partially finance the purchase of these vessels.
  • Paid a quarterly cash dividend on the Company's common stock of $0.01 per share in September 2017.

Merger with Navig8 Product Tankers Inc

On May 23, 2017, the Company entered into definitive agreements to acquire NPTI, including its fleet of 12 LR1 and 15 LR2 product tankers for 55 million common shares of the Company and the assumption of NPTI's debt. The key events and corresponding timeline of the merger were as follows:

  • On May 30, 2017, the Company issued 50 million shares of common stock in an underwritten public offering at an offering price of $4.00 per share for net proceeds of approximately $188.7 million, after deducting underwriters' discounts and offering expenses. The completion of this offering was a condition to closing the merger with NPTI.
  • On June 14, 2017, the Company acquired certain of NPTI’s subsidiaries that own four LR1 tankers for an aggregate acquisition price of $156.0 million, consisting of $42.2 million of cash and $113.8 million of assumed indebtedness (including accrued interest). The cash portion of the acquisition price (after considering cash flows from operations) formed part of the balance sheet of the combined company upon the closing of the merger on September 1, 2017.
  • On September 1, 2017, the merger with NPTI closed, and the Company acquired the remaining eight LR1 and 15 LR2 tankers. As of November 14, 2017, all of the vessels acquired from NPTI have exited the Navig8 pools in which they were operating and have entered, or are expected to enter, the Scorpio Group pools before December 31, 2017.
  • The Company assumed NPTI's aggregate outstanding indebtedness of $806.4 million as of the date of closing.

Finance Lease Agreements

In September 2017, the Company entered into finance lease agreements for five 2012 built MR product tankers (STI Amber, STI Topaz, STI Ruby, STI Garnet and STI Onyx) to an unaffiliated third party for a sales price of $27.5 million per vessel. The financing for three of the vessels closed in September 2017 and the financing for one of the vessels closed in October 2017, resulting in an increase in the Company's liquidity of $29.4 million in aggregate, after the repayment of outstanding debt. The financing for the remaining vessel is expected to close before December 31, 2017 and is expected to result in an additional increase in the Company's liquidity of $7.1 million, after the repayment of outstanding debt.

Each agreement is for a fixed term of seven years at a bareboat rate of $9,025 per vessel per day, and the Company has three consecutive one-year options to extend each charter beyond the initial term. Furthermore, the Company has the option to purchase these vessels beginning at the end of the fifth year of the agreements through the end of the tenth year of the agreements. A deposit of $5.1 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 the Company at the expiration of the agreement (as applicable).

As a result of these transactions, the Company repaid the outstanding debt balance of (i) $44.6 million in aggregate for three vessels on its 2016 Credit Facility and (ii) $13.8 million on its HSH Credit Facility for the remaining vessel. These agreements are being accounted for as financing transactions. Upon the closing of the final sale, the Company expects to repay $14.9 million on its 2016 Credit Facility.

Time Charter-in Update

In November 2017, the Company extended the time charter-in agreement for an MR that is currently time chartered-in for an additional six months at $13,250 per day effective December 2017. The Company also has an option to extend the charter for an additional year at $14,500 per day.

$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 (i) Convertible Notes, which were issued in June 2014, (ii) Unsecured Senior Notes Due 2020 (NYSE:SBNA), which were issued in May 2014 and (iii) Unsecured Senior Notes Due 2019 (NYSE:SBBC), which were issued in March 2017.

In April 2017, we acquired an aggregate of 250,419 of our Unsecured Senior Notes due 2017 for aggregate consideration of $6.3 million, which was the result of the cash tender offer of such notes. These notes matured and were repaid in full in October 2017.

As of the date hereof, the Company has the authority to purchase up to an additional $147.1 million of its securities under its Securities Repurchase Program. The Company expects to repurchase its securities in the open market, at times and prices that are considered to be appropriate by the Company, but is not obligated under the terms of the Securities Repurchase Program to repurchase any of its securities.

Conference Call

The Company has scheduled a conference call on November 16, 2017 at 8:30 AM Eastern Standard Time and 2:30 PM Central European 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: 3439099

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.

Slides and Audio Webcast:

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/m6/p/uheiuc6g

Current Liquidity

As of November 14, 2017, the Company had $120.8 million in unrestricted cash and cash equivalents.

Drydock Update

Five of the Company’s 2012 built MR product tankers were drydocked in accordance with their scheduled, class required special survey during the third quarter of 2017 and for a portion of October 2017. These vessels were offhire for an aggregate of 102 days and the aggregate estimated drydock cost is approximately $6.0 million.

The Company has five MRs that are scheduled for drydock throughout 2018 and estimates that these vessels will be offhire for an aggregate of 100 days with estimated aggregate drydock costs of approximately $4.0 million.

Debt

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

In millions of U.S. dollars Outstanding as of June 30, 2017Additions, drawdowns and (repayments), netOutstanding as of September 30, 2017Drawdowns and (repayments), netOutstanding as of November 14, 2017 Availability as of November 14, 2017
K-Sure Credit Facility $295.8 $(12.3)$283.5 $ $283.5 $
KEXIM Credit Facility 349.8 (16.8)333.0 333.0
Credit Suisse Credit Facility 57.4 (3.9)53.5 53.5
ABN AMRO Credit Facility 117.7 (2.2)115.5 (1.7)113.8
ING Credit Facility 119.9 (10.0)109.9 109.9
BNP Paribas Credit Facility 31.0 31.0 31.0
Scotiabank Credit Facility 31.0 (2.2)28.8 28.8
NIBC Credit Facility 37.8 (3.1)34.7 34.7
2016 Credit Facility (1) 267.6 (51.4)216.2 216.2
HSH Nordbank Credit Facility (1) 30.4 (0.7)29.7 (14.2)15.5
2017 Credit Facility (2) 61.4 40.4 101.8 19.9 121.7 43.1
DVB 2017 Credit Facility 81.4 (1.5)79.9 (1.5)78.4
Credit Agricole Credit Facility (3) 112.1 (2.1)110.0 110.0
ABN AMRO/K-Sure Credit Facility (4) 54.3 54.3 54.3
Citi/K-Sure Credit Facility (5) 114.1 114.1 114.1
Ocean Yield Sale and Leaseback (6) 173.3 173.3 (0.9)172.4
CMBFL Sale and Leaseback (7) 68.0 68.0 68.0
BCFL Sale and Leaseback (LR2s) (8) 109.9 109.9 (0.6)109.3
CSSC Sale and Leaseback (9) 268.1 268.1 (1.4)266.7
BCFL Sale and Leaseback (MRs) (10) 66.6 66.6 21.9 88.5
2020 senior unsecured notes 53.8 53.8 53.8
2017 senior unsecured notes (11) 45.5 45.5 (45.5)
2019 senior unsecured notes 57.5 57.5 57.5
Convertible Notes 348.5 348.5 348.5
$2,098.6 $788.5 $2,887.1 $(24.0)$2,863.1 $43.1

(1) In September 2017, the Company repaid $44.6 million on its 2016 Credit Facility as a result of the closing of the previously announced finance lease for STI Topaz, STI Ruby and STI Garnet. In October 2017, the Company repaid $13.8 million on its HSH Credit Facility as a result of the closing of the finance lease for STI Onyx.

(2) The Company drew down $21.0 million in July 2017, $20.6 million in September and $20.7 million in October 2017 from the 2017 Credit Facility to partially finance the purchases of STI La Boca, STI San Telmo and STI Donald C Trauscht, respectively.

(3) In June 2017, prior to the closing of the merger with NPTI, the Company acquired certain of NPTI's subsidiaries that own four LR1 tankers (STI Excel, STI Excelsior, STI Expedite and STI Exceed). This transaction closed on June 14, 2017, and the Company assumed the outstanding indebtedness under NPTI's Credit Agricole Credit Facility upon closing. Repayments will be made in equal quarterly installments of $2.1 million in aggregate in accordance with a 15-year repayment profile with a balloon payment due upon maturity, which occurs between November 2022 and February 2023 (depending on the vessel). The facility bears interest at LIBOR plus a margin of 2.75%. The remaining terms and conditions, including financial covenants, have been amended to be similar to those in the Company's existing credit facilities.

(4) The Company assumed the outstanding indebtedness under NPTI's senior secured credit facility with ABN AMRO Bank N.V. and Korea Trade Insurance Corporation ("K-Sure"), which we refer to as the ABN AMRO/K-Sure Credit Facility, upon the closing of the merger with NPTI in September 2017. Two LR1s (STI Precision and STI Prestige) are collateralized under this facility, and the facility consists of two separate tranches, an $11.5 million commercial tranche and a $42.8 million K-Sure tranche (which represents the amounts outstanding at September 30, 2017). The commercial tranche bears interest at LIBOR plus 2.75%, and the K-Sure tranche bears interest at LIBOR plus 1.80%. Repayments on the K-Sure tranche will be made in equal quarterly installments of $1.0 million in accordance with a 12-year repayment profile from the date of delivery from the shipyard, with a balloon payment due upon maturity, and the commercial tranche will be repaid via a balloon payment upon maturity in September and November 2022 (depending on the vessel). The K-Sure tranche fully matures in September and November 2028 (depending on the vessel), and K-Sure has an option to require repayment upon the maturity of the commercial tranche if the commercial tranche is not refinanced by its maturity dates. The remaining terms and conditions, including financial covenants, have been amended to be similar to those in the Company's existing credit facilities.

(5) The Company assumed the outstanding indebtedness under NPTI's senior secured credit facility with Citibank N.A., London Branch, Caixabank, S.A., and K-Sure, which we refer to as the Citi/K-Sure Credit Facility, upon the closing of the merger with NPTI in September 2017. Four LR1s (STI Excellence, STI Executive, STI Experience, and STI Express) are collateralized under this facility. The facility consists of two separate tranches, a $25.1 million commercial tranche and a $89.0 million K-Sure tranche (which represents the amounts outstanding at September 30, 2017). The commercial tranche bears interest at LIBOR plus 2.50%, and the K-Sure tranche bears interest at LIBOR plus 1.60%. Repayments on the K-Sure tranche will be made in equal quarterly installments of $2.1 million in accordance with a 12-year repayment profile from the date of delivery from the shipyard, with a balloon payment due upon maturity, and the commercial tranche is scheduled to be repaid via a balloon payment upon maturity which occurs between March and May 2022 (depending on the vessel). The K-Sure tranche fully matures between March and May 2028 (depending on the vessel), and K-Sure has an option to require repayment upon the maturity of the commercial tranche if the commercial tranche is not refinanced by its maturity dates. The remaining terms and conditions, including financial covenants, have been amended to be similar to those in the Company's existing credit facilities.

(6) The Company assumed the obligations under NPTI’s finance lease arrangement with Ocean Yield ASA for four LR2 tankers (STI Sanctity, STI Steadfast, STI Supreme, and STI Symphony) upon the closing of the merger with NPTI in September 2017. Under this arrangement, each vessel is subject to a 13-year bareboat charter, which expires between February and August 2029 (depending on the vessel). Charterhire, which is paid monthly in advance, includes a quarterly adjustment based on prevailing LIBOR rates.

These arrangements are being accounted for as financing transactions, with a portion of the fixed rate attributed to interest expense and the remaining portion applied against the principle balance. Future principal payments are approximately $0.2 million gradually increasing to $0.3 million per vessel per month until the expiration of the agreement. The interest component of the leases approximates LIBOR plus 5.40%. The Company also has purchase options to re-acquire each of the vessels during the bareboat charter period, with the first of such options exercisable beginning at the end of the seventh year from the delivery date of the subject vessel. The Company is subject to certain terms and conditions, including financial covenants, under this arrangement which have been amended to be similar to those in the Company's existing credit facilities.

(7) The Company assumed the obligations under NPTI’s finance lease arrangement with CMB Financial Leasing Co. Ltd ("CMBFL") for two LR1 tankers (STI Pride and STI Providence) upon the closing of the merger with NPTI in September 2017. Under this arrangement, each vessel is subject to a seven-year bareboat charter which expires in July or August 2023 (depending on the vessel). Charterhire under the arrangement is comprised of a fixed, quarterly repayment amount of $0.6 million per vessel plus a variable component calculated at LIBOR plus 3.75%. The Company has purchase options to re-acquire each of the subject vessels during the bareboat charter period, with the first of such options exercisable on the third anniversary from the delivery date of the respective vessel. There is also purchase obligation for each vessel upon the expiration of the agreement for $40.2 million in aggregate. These arrangements are being accounted for as financing transactions. The Company is subject to certain terms and conditions, including financial covenants, under this arrangement which have been amended to be similar to those in the Company's existing credit facilities.

(8) The Company assumed the obligations under NPTI’s finance lease arrangement with Bank of Communications Finance Leasing Co Ltd., ("BCFL") for three LR2 tankers (STI Solace, STI Solidarity, and STI Stability) upon the closing of the merger with NPTI in September 2017. Under the arrangement, each vessel is subject to a 10-year bareboat charter, which expires in July 2026. Charterhire under the arrangement is determined in advance, on a quarterly basis and is calculated by determining the payment based off of the then outstanding balance, the time to expiration and an interest rate of LIBOR plus 3.50%. At current, prevailing interest rates, future principal payments are estimated to be $0.2 million gradually increasing to $0.3 million per vessel per month until the expiration of the agreement. The Company has purchase options to re-acquire each of the subject vessels during the bareboat charter period, with the first of such options exercisable at the end of the fourth year from the delivery date of the respective vessel. There is also purchase obligation for each vessel upon the expiration of the agreement for $29.7 million in aggregate. These arrangements are being accounted for as financing transactions.

(9) The Company assumed the obligations under NPTI’s finance lease arrangement with CSSC (Hong Kong) Shipping Company Limited ("CSSC") for eight LR2 tankers (STI Gallantry, STI Nautilus, STI Guard, STI Guide, STI Goal, STI Gauntlet, STI Gladiator and STI Gratitude) upon the closing of the merger with NPTI in September 2017. Under the arrangement, each vessel is subject to a 10-year bareboat charter which expires throughout 2026 and 2027 (depending on the vessel). Charterhire under the arrangement is comprised of a fixed repayment amount of $0.2 million per month per vessel plus a variable component calculated at LIBOR plus 4.60%. The Company has purchase options to re-acquire each of the subject vessels during the bareboat charter period, with the first of such options exercisable at the end of the fourth year from the delivery date of the respective vessel. There is also a purchase obligation for each vessel upon the expiration of the agreement for $111.4 million in aggregate. These arrangements are being accounted for as financing transactions.

(10) In September 2017, the Company entered into finance lease agreements with BCFL for five 2012 built MR product tankers (STI Amber, STI Topaz, STI Ruby, STI Garnet and STI Onyx) for a sales price of $27.5 million per vessel. The financing for three of the vessels closed in September 2017 and the financing for one of the vessels closed in October 2017 resulting in an increase to the Company's liquidity of $29.4 million in aggregate, after the repayment of outstanding debt. The financing for the remaining vessel is expected to close before the end of the year and is expected to result in an additional increase to the Company's liquidity of $7.1 million, after the repayment of outstanding debt. Each agreement is for a fixed term of seven years at a bareboat rate of $9,025 per vessel per day and the Company has three consecutive one year options to extend each charter beyond the initial term. The Company also has the option to purchase these vessels beginning at the end of the fifth year of the agreements through the end of the tenth year of the agreements. A deposit of $5.1 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 the Company at the expiration of the agreement (as applicable). These agreements are being accounted for as financing transactions.

(11) In October 2017, the Company's 7.50% Senior Notes matured and were repaid in full.

Set forth below are the expected, estimated future principal repayments on the Company's outstanding indebtedness which includes amounts due under sale and finance leaseback arrangements:

In millions of U.S. dollars
Q4 2017 - principal payments made to date$66.9
Q4 2017 - remaining principal payments40.1
Q1 201846.2
Q2 201831.7
Q3 201862.5
Q4 201837.4
Q1 201962.6
Q2 2019470.1
Q3 201962.3
Q4 201937.1
2020 and thereafter2,013.2
$2,930.1

Newbuilding Program

As of September 30, 2017, the Company had three MR product tankers under construction with HMD. In October 2017, one of these three vessels, STI Donald C Trauscht was delivered from HMD. The Company refers to these vessels under construction as its Newbuilding Program.

During the third quarter of 2017, the Company made installment payments of $48.7 million relating to vessels under its Newbuilding Program, which included the deliveries of STI La Boca and STI San Telmo.

Set forth below are the expected installment payments and estimated debt drawdowns to partially finance the purchase vessels under construction as of September 30, 2017 (1):

In millions of U.S. dollars
Q4 2017 - installment payments made to date$27.0
Q4 2017 - remaining installment payment25.2
Q1 201821.6
$73.8


Expected debt drawdowns (1) In millions of U.S. dollars
Q4 2017 - drawdown made to date$20.7 (2)
Q4 2017 - drawdown to be made21.6
Q1 201821.6
Total expected debt drawdowns$63.9

(1) The installment payments and debt drawdowns are estimates only and are subject to change as construction progresses.

(2) As of September 30, 2017, the Company had $63.9 million available under its 2017 Credit Facility to partially finance the purchase of three MR product tankers that were under construction at HMD. In October 2017, the Company drew down $20.7 million to partially finance the purchase of STI Donald C Trauscht, which was delivered in October 2017.

Explanation of Variances on the Third Quarter of 2017 Financial Results Compared to the Third Quarter of 2016

For the three months ended September 30, 2017, the Company recorded a net loss of $36.9 million compared to a net loss of $27.1 million for the three months ended September 30, 2016. The following were the significant changes between the two periods:

  • Time charter equivalent, or TCE revenue, a Non-IFRS measure, is vessel revenues less voyage expenses (including bunkers and port charges). TCE revenue is included herein because it is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company's performance irrespective of changes in the mix of charter types (i.e., spot charters, time charters, and pool charters), and it provides useful information to investors and management. The following table depicts TCE revenue for the three months ended September 30, 2017 and 2016:

For the three months ended September 30,
In thousands of U.S. dollars 2017 2016
Vessel revenue $123,119 $114,336
Voyage expenses (1,276) (330)
TCE revenue $121,843 $114,006

  • TCE revenue increased $7.8 million to $121.8 million from $114.0 million for the three months ended September 30, 2017 and 2016, respectively. This increase was driven by the growth of the Company's fleet to an average of 108.9 operating vessels during the three months ended September 30, 2017 from an average of 90.3 operating vessels during the three months ended September 30, 2016. This increase was partially offset by a decrease in overall time charter equivalent revenue per day to $12,395 per day from $13,737 per day for the three months ended September 30, 2017 and 2016, respectively (see the breakdown of daily TCE below). TCE revenue per day reflects unfavorable market conditions, which have been driven by an unfavorable supply and demand imbalance throughout 2017.
  • Vessel operating costs increased $12.5 million to $58.4 million from $45.9 million for the three months ended September 30, 2017 and 2016, respectively. This increase was the result of an increase in the average number of owned and bareboat chartered-in vessels to 99.3 vessels from 77.0 vessels for the three months ended September 30, 2017 and 2016, respectively. This increase was partially offset by an overall decrease in vessel operating costs per day to $6,393 per day from $6,482 per day for the three months ended September 30, 2017 and 2016, respectively which was driven by improvements in our LR2 and MR operating segments (see the breakdown of daily vessel operating costs below).
  • Charterhire expense decreased $2.1 million to $18.9 million from $21.0 million for the three months ended September 30, 2017 and 2016, respectively. This decrease was driven by lower average daily base rates on the Company's time chartered-in fleet to an average of $13,658 per vessel per day from an average of $16,918 per vessel per day for the three months ended September 30, 2017 and 2016, respectively. The Company's time and bareboat chartered-in fleet increased to an average of 19.6 vessels, (9.6 time chartered-in vessels and 10.0 bareboat chartered-in vessels) from an average of 13.3 time chartered-in vessels for the three months ended September 30, 2017 and 2016, respectively. There were no bareboat chartered-in vessels during the three months ended September 30, 2016. The average daily base rate for the Company's bareboat chartered-in fleet was $7,309 per vessel per day for the three months ended September 30, 2017.
  • Depreciation expense increased $5.7 million to $36.3 million from $30.7 million for the three months ended September 30, 2017 and 2016, respectively. This increase was primarily driven by the delivery of two LR2 and five MR tankers under our Newbuilding Program during the nine months ended September 30, 2017, the delivery of the four LR1 vessels acquired from NPTI in June 2017 and the delivery of eight LR1 and 15 LR2 vessels acquired from NPTI in September 2017. These deliveries were offset by the sales of five MR vessels during 2017.
  • Merger transaction related costs of $2.3 million during the three months ended September 30, 2017 represent legal and advisory costs incurred as part of the merger with NPTI.
  • Financial expenses decreased $0.2 million to $30.9 million from $31.2 million for the three months ended September 30, 2017 and 2016, respectively. Financial expenses during the three months ended September 30, 2016 reflect a $9.0 million write-off of deferred financing fees as compared to a $0.6 million write-off of deferred financing fees that was recorded during the three months ended September 30, 2017. The increase in financial expenses, after removing the effect of deferred financing fee write-offs, was a result of (i) increased interest expense incurred as a result of the assumption of $806.4 million of indebtedness upon the closing of the merger with NPTI, (ii) increases in LIBOR rates when compared to the third quarter of 2016, (iii) interest incurred on the Company's newly issued Senior Notes due 2019, and (iv) a decrease in capitalized interest as a result of the decrease in the number of vessels under construction.


Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Statements of Income or Loss
(unaudited)
For the three months ended September 30, For the nine months ended September 30,
In thousands of U.S. dollars except per share and share data2017 2016 2017 2016
Revenue
Vessel revenue$123,119 $114,336 $364,338 $416,678
Operating expenses
Vessel operating costs(58,418) (45,915) (156,403) (140,187)
Voyage expenses(1,276) (330) (4,720) (1,158)
Charterhire(18,886) (21,011) (57,790) (55,341)
Depreciation(36,341) (30,686) (97,883) (90,775)
General and administrative expenses(12,539) (12,491) (36,141) (42,593)
Gain / (loss) on sales of vessels7 (23,345) (2,078)
Merger transaction related costs(2,285) (34,815)
Bargain purchase gain 5,417
Total operating expenses(129,738) (110,433) (405,680) (332,132)
Operating (loss) / income(6,619) 3,903 (41,342) 84,546
Other (expense) and income, net
Financial expenses(30,927) (31,150) (77,621) (82,381)
Realized loss on derivative financial instruments (116)
Unrealized gain on derivative financial instruments 169 1,600
Financial income665 59 1,154 1,163
Other expenses, net(67) (96) 1,195 (166)
Total other expense, net(30,329) (31,018) (75,388) (79,784)
Net (loss) / income$(36,948) $(27,115) $(116,730) $4,762
(Loss) / earnings per share
Basic$(0.16) $(0.17) $(0.61) $0.03
Diluted$(0.16) $(0.17) $(0.61) $0.03
Basic weighted average shares outstanding232,062,058 160,844,168 192,304,650 160,902,344
Diluted weighted average shares outstanding (1)232,062,058 160,844,168 192,304,650 166,839,648

(1) The dilutive effect of (i) unvested shares of restricted stock and (ii) the potentially dilutive securities relating to the Company's Convertible Notes were excluded from the computation of diluted earnings per share for the three and nine months ended September 30, 2017 because their effect would have been anti-dilutive. Weighted average shares under the if-converted method (which includes the potential dilutive effect of both the unvested shares of restricted stock and our Convertible Notes) were 270,697,114 and 231,888,265 for the three and nine months ended September 30, 2017, respectively.


Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(unaudited)
As of
In thousands of U.S. dollarsSeptember 30, 2017 December 31, 2016
Assets
Current assets
Cash and cash equivalents$197,368 $99,887
Accounts receivable59,423 42,329
Prepaid expenses and other current assets19,097 9,067
Derivative financial instruments 116
Inventories10,026 6,122
Total current assets285,914 157,521
Non-current assets
Vessels and drydock4,091,593 2,913,254
Vessels under construction39,380 137,917
Other assets47,675 21,495
Goodwill11,810
Restricted cash9,259
Total non-current assets4,199,717 3,072,666
Total assets$4,485,631 $3,230,187
Current liabilities
Current portion of long-term debt$179,226 $353,012
Finance lease liability45,845
Accounts payable25,124 9,282
Accrued expenses28,092 23,024
Total current liabilities278,287 385,318
Non-current liabilities
Long-term debt1,943,921 1,529,669
Finance lease liability639,775
Total non-current liabilities2,583,696 1,529,669
Total liabilities2,861,983 1,914,987
Shareholders' equity
Issued, authorized and fully paid-in share capital:
Share capital3,308 2,247
Additional paid-in capital2,180,886 1,756,769
Treasury shares(443,816) (443,816)
Accumulated deficit(116,730)
Total shareholders' equity1,623,648 1,315,200
Total liabilities and shareholders' equity$4,485,631 $3,230,187



Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(unaudited)
For the nine months ended September 30,
In thousands of U.S. dollars2017 2016
Operating activities
Net (loss) / income$(116,730) $4,762
Loss on sales of vessels23,345 2,078
Depreciation97,883 90,775
Amortization of restricted stock17,480 23,076
Amortization of deferred financing fees10,369 10,973
Write-off of deferred financing fees1,497 14,425
Bargain purchase gain(5,417)
Share-based transaction costs 5,973
Unrealized gain on derivative financial instruments (1,600)
Amortization of acquired time charter contracts 65
Accretion of Convertible Notes9,109 8,650
Accretion of fair value measurement on debt assumed from merger with NPTI510
Gain on repurchase of Convertible Notes (994)
44,019 152,210
Changes in assets and liabilities:
Drydock payments(2,803)
(Increase) / decrease in inventories(1,761) 781
Decrease in accounts receivable4,230 20,519
Decrease / (increase) in prepaid expenses and other current assets10,842 (7,500)
(Increase) / decrease in other assets(18,590) 2,078
Increase in accounts payable15,222 119
Decrease in accrued expenses(14,983) (12,868)
(7,843) 3,129
Net cash inflow from operating activities36,176 155,339
Investing activities
Acquisition of vessels and payments for vessels under construction(200,735) (111,785)
Proceeds from disposal of vessels127,372 158,175
Net cash paid for the merger with Navig8 Product Tankers Inc(23,062)
Net cash (outflow) / inflow from investing activities(96,425) 46,390
Financing activities
Debt repayments(409,452) (728,922)
Issuance of debt425,890 565,028
Debt issuance costs(12,386) (9,797)
Decrease in restricted cash10,762
Repayment of Convertible Notes (8,393)
Gross proceeds from issuance of common stock200,000
Equity issuance costs(11,291) (24)
Dividends paid(6,298) (65,094)
Redemption of Navig8 Product Tankers Redeemable Preferred Shares(39,495)
Repurchase of common stock (16,505)
Net cash inflow / (outflow) from financing activities157,730 (263,707)
Increase / (decrease) in cash and cash equivalents97,481 (61,978)
Cash and cash equivalents at January 1,99,887 200,970
Cash and cash equivalents at September 30,$197,368 $138,992



Scorpio Tankers Inc. and Subsidiaries
Other operating data for the three and nine months ended September 30, 2017
(unaudited)
For the three months ended September 30, For the nine months ended September 30,
2017 2016 2017 2016
Adjusted EBITDA(1) (in thousands of U.S. dollars) $37,808 $42,081 $127,844 $200,309
Average Daily Results
Time charter equivalent per day(2) $12,395 $13,737 $13,289 $16,932
Vessel operating costs per day(3) $6,393 $6,482 $6,379 $6,560
Aframax/LR2
TCE per revenue day (2) $13,234 $19,142 $14,768 $22,274
Vessel operating costs per day(3) $6,469 $6,652 $6,448 $6,671
Average number of owned or finance leased vessels 27.9 21.0 23.9 20.1
Average number of time chartered-in vessels 1.6 2.0 1.3 2.0
Panamax/LR1
TCE per revenue day (2) $11,787 $10,547 $11,588 $18,177
Vessel operating costs per day(3) $6,525 $
$6,399 $
Average number of owned or finance leased vessels 6.6 2.5
Average number of time chartered-in vessels 1.0 0.5 0.9
MR
TCE per revenue day (2) $13,041 $12,539 $13,183 $15,907
Vessel operating costs per day(3) $6,208 $6,420 $6,220 $6,569
Average number of owned or finance leased vessels 40.8 42.0 41.4 43.9
Average number of time chartered-in vessels 6.0 5.3 6.9 4.4
Average number of bareboat chartered-in vessels 3.0 1.8
Handymax
TCE per revenue day (2) $10,062 $10,274 $12,036 $13,130
Vessel operating costs per day(3) $6,635 $6,424 $6,631 $6,365
Average number of owned or finance leased vessels 14.0 14.0 14.0 14.0
Average number of time chartered-in vessels 2.0 5.0 2.1 4.4
Average number of bareboat chartered-in vessels 7.0 5.8
Fleet data
Average number of owned or finance leased vessels 89.3 77.0 81.8 78.0
Average number of time chartered-in vessels 9.6 13.3 10.8 11.8
Average number of bareboat chartered-in vessels 10.0 7.5
Drydock
Expenditures for drydock (in thousands of U.S. dollars) $4,799 $
$5,156 $


(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 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 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 November 14, 2017
Vessel Name Year Built DWT Ice class Employment Vessel type
Owned or finance leased vessels
1 STI Brixton 2014 38,734 1A SHTP (1) Handymax
2 STI Comandante 2014 38,734 1A SHTP (1) Handymax
3 STI Pimlico 2014 38,734 1A Time Charter (6) Handymax
4 STI Hackney 2014 38,734 1A SHTP (1) Handymax
5 STI Acton 2014 38,734 1A SHTP (1) Handymax
6 STI Fulham 2014 38,734 1A SHTP (1) Handymax
7 STI Camden 2014 38,734 1A SHTP (1) Handymax
8 STI Battersea 2014 38,734 1A SHTP (1) Handymax
9 STI Wembley 2014 38,734 1A SHTP (1) Handymax
10 STI Finchley 2014 38,734 1A SHTP (1) Handymax
11 STI Clapham 2014 38,734 1A SHTP (1) Handymax
12 STI Poplar 2014 38,734 1A Time Charter (6) Handymax
13 STI Hammersmith 2015 38,734 1A SHTP (1) Handymax
14 STI Rotherhithe 2015 38,734 1A SHTP (1) Handymax
15 STI Amber 2012 49,990 SMRP (2) MR
16 STI Topaz 2012 49,990 SMRP (2) MR
17 STI Ruby 2012 49,990 SMRP (2) MR
18 STI Garnet 2012 49,990 SMRP (2) MR
19 STI Onyx 2012 49,990 SMRP (2) MR
20 STI Fontvieille 2013 49,990 SMRP (2) MR
21 STI Ville 2013 49,990 SMRP (2) MR
22 STI Duchessa 2014 49,990 SMRP (2) MR
23 STI Opera 2014 49,990 SMRP (2) MR
24 STI Texas City 2014 49,990 SMRP (2) MR
25 STI Meraux 2014 49,990 SMRP (2) MR
26 STI San Antonio 2014 49,990 SMRP (2) MR
27 STI Venere 2014 49,990 SMRP (2) MR
28 STI Virtus 2014 49,990 SMRP (2) MR
29 STI Aqua 2014 49,990 SMRP (2) MR
30 STI Dama 2014 49,990 SMRP (2) MR
31 STI Benicia 2014 49,990 SMRP (2) MR
32 STI Regina 2014 49,990 SMRP (2) MR
33 STI St. Charles 2014 49,990 SMRP (2) MR
34 STI Mayfair 2014 49,990 SMRP (2) MR
35 STI Yorkville 2014 49,990 SMRP (2) MR
36 STI Milwaukee 2014 49,990 SMRP (2) MR
37 STI Battery 2014 49,990 SMRP (2) MR
38 STI Soho 2014 49,990 SMRP (2) MR
39 STI Memphis 2014 49,995 SMRP (2) MR
40 STI Tribeca 2015 49,990 SMRP (2) MR
41 STI Gramercy 2015 49,990 SMRP (2) MR
42 STI Bronx 2015 49,990 SMRP (2) MR
43 STI Pontiac 2015 49,990 SMRP (2) MR
44 STI Manhattan 2015 49,990 SMRP (2) MR
45 STI Queens 2015 49,990 SMRP (2) MR
46 STI Osceola 2015 49,990 SMRP (2) MR
47 STI Notting Hill 2015 49,687 1B Time Charter (7) MR
48 STI Seneca 2015 49,990 SMRP (2) MR
49 STI Westminster 2015 49,687 1B Time Charter (7) MR
50 STI Brooklyn 2015 49,990 SMRP (2) MR
51 STI Black Hawk 2015 49,990 SMRP (2) MR
52 STI Galata 2017 49,990 SMRP (2) MR
53 STI Bosphorus 2017 49,990 SMRP (2) MR
54 STI Leblon 2017 49,990 SMRP (2) MR
55 STI La Boca 2017 49,990 SMRP (2) MR
56 STI San Telmo 2017 49,990 1B Spot (8) MR
57 STI Donald C Trauscht 2017 49,990 1B Spot (8) MR
58 STI Excel 2015 74,000 SLR1P (3) LR1
59 STI Excelsior 2016 74,000 SLR1P (3) LR1
60 STI Expedite 2016 74,000 SLR1P (3) LR1
61 STI Exceed 2016 74,000 SLR1P (3) LR1
62 STI Executive 2016 74,000 SLR1P (3) LR1
63 STI Excellence 2016 74,000 SLR1P (3) LR1
64 STI Experience 2016 74,000 SLR1P (3) LR1
65 STI Express 2016 74,000 SLR1P (3) LR1
66 STI Precision 2016 74,000 SLR1P (3) LR1
67 STI Prestige 2016 74,000 SLR1P (3) LR1
68 STI Pride 2016 74,000 SLR1P (3) LR1
69 STI Providence 2016 74,000 SLR1P (3) LR1
70 STI Elysees 2014 109,999 SLR2P (4) LR2
71 STI Madison 2014 109,999 SLR2P (4) LR2
72 STI Park 2014 109,999 SLR2P (4) LR2
73 STI Orchard 2014 109,999 SLR2P (4) LR2
74 STI Sloane 2014 109,999 SLR2P (4) LR2
75 STI Broadway 2014 109,999 SLR2P (4) LR2
76 STI Condotti 2014 109,999 SLR2P (4) LR2
77 STI Rose 2015 109,999 Time Charter (9) LR2
78 STI Veneto 2015 109,999 SLR2P (4) LR2
79 STI Alexis 2015 109,999 SLR2P (4) LR2
80 STI Winnie 2015 109,999 SLR2P (4) LR2
81 STI Oxford 2015 109,999 SLR2P (4) LR2
82 STI Lauren 2015 109,999 SLR2P (4) LR2
83 STI Connaught 2015 109,999 SLR2P (4) LR2
84 STI Spiga 2015 109,999 SLR2P (4) LR2
85 STI Savile Row 2015 109,999 SLR2P (4) LR2
86 STI Kingsway 2015 109,999 SLR2P (4) LR2
87 STI Carnaby 2015 109,999 SLR2P (4) LR2
88 STI Solidarity 2015 109,999 SLR2P (4) LR2
89 STI Lombard 2015 109,999 SLR2P (4) LR2
90 STI Grace 2016 109,999 SLR2P (4) LR2
91 STI Jermyn 2016 109,999 SLR2P (4) LR2
92 STI Sanctity 2016 109,999 SLR2P (4) LR2
93 STI Solace 2016 109,999 SLR2P (4) LR2
94 STI Stability 2016 109,999 SLR2P (4) LR2
95 STI Steadfast 2016 109,999 SLR2P (4) LR2
96 STI Supreme 2016 109,999 SAPC (5) LR2
97 STI Symphony 2016 109,999 SAPC (5) LR2
98 STI Selatar 2017 109,999 SLR2P (4) LR2
99 STI Rambla 2017 109,999 SLR2P (4) LR2
100 STI Gallantry 2016 113,000 SLR2P (4) LR2
101 STI Goal 2016 113,000 SLR2P (4) LR2
102 STI Nautilus 2016 113,000 SLR2P (4) LR2
103 STI Guard 2016 113,000 SLR2P (4) LR2
104 STI Guide 2016 113,000 SLR2P (4) LR2
105 STI Gauntlet 2017 113,000 SLR2P (4) LR2
106 STI Gladiator 2017 113,000 SLR2P (4) LR2
107 STI Gratitude 2017 113,000 SLR2P (4) LR2
Total owned DWT 7,783,215


Vessel Name Year Built DWT Ice class Employment Vessel type Charter type Daily Base Rate Expiry (10)
Time or bareboat chartered-in vessels
108 Kraslava 2007 37,258 1B SHTP (1) Handymax Time charter $11,250 13-May-18(11)
109 Krisjanis Valdemars 2007 37,266 1B SHTP (1) Handymax Time charter $11,250 13-Mar-18(11)
110 Silent 2007 37,847 1A SHTP (1) Handymax Bareboat $7,500 31-Mar-19(12)
111 Single 2007 37,847 1A SHTP (1) Handymax Bareboat $7,500 31-Mar-19(12)
112 Star I 2007 37,847 1A SHTP (1) Handymax Bareboat $7,500 31-Mar-19(12)
113 Sky 2007 37,847 1A SHTP (1) Handymax Bareboat $6,000 31-Mar-19(12)
114 Steel 2008 37,847 1A SHTP (1) Handymax Bareboat $6,000 31-Mar-19(12)
115 Stone I 2008 37,847 1A SHTP (1) Handymax Bareboat $6,000 31-Mar-19(12)
116 Style 2008 37,847 1A SHTP (1) Handymax Bareboat $6,000 31-Mar-19(12)
117 STI Beryl 2013 49,990 SMRP (2) MR Bareboat $8,800 18-Apr-25(13)
118 STI Le Rocher 2013 49,990 SMRP (2) MR Bareboat $8,800 21-Apr-25(13)
119 STI Larvotto 2013 49,990 SMRP (2) MR Bareboat $8,800 28-Apr-25(13)
120 Vukovar 2015 49,990 SMRP (2) MR Time charter $17,034 01-May-18
121 Zefyros 2013 49,999 SMRP (2) MR Time charter $13,000 08-June-18(14)
122 Gan-Trust 2013 51,561 SMRP (2) MR Time charter $13,050 06-Jan-18(15)
123 CPO New Zealand 2011 51,717 SMRP (2) MR Time charter $15,250 12-Sep-18(16)
124 CPO Australia 2011 51,763 SMRP (2) MR Time charter $15,250 01-Sep-18(16)
125 Ance 2006 52,622 SMRP (2) MR Time charter $13,500 12-Oct-18(17)
126 Densa Crocodile 2015 105,408 SLR2P (5) LR2 Time charter $14,750 06-Jan-18(18)
Total time or bareboat chartered-in DWT 902,483
Newbuildings currently under construction
Vessel Name Yard DWT Vessel type
127 Hull 2607 - TBN STI Esles II HMD(19)52,000 MR
128 Hull 2608 - TBN STI Jardins HMD(19)52,000 MR
Total newbuilding product tankers DWT 104,000
Total Fleet DWT 8,789,698


(1)This vessel operates in or is expected to operate in the Scorpio Handymax Tanker Pool, or SHTP. SHTP is operated by Scorpio Commercial Management, or SCM. SHTP and SCM are related parties to the Company.
(2)This vessel operates in the Scorpio MR Pool, or SMRP. SMRP 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 operated by SCM. SLR1P is a related party to the Company.
(4)This vessel operates in or is expected to operate in the Scorpio LR2 Pool, or SLR2P. SLR2P is operated by SCM. SLR2P is a related party to the Company.
(5)This vessel operates in the Scorpio Aframax Pool, or SAPC. SAPC is operated by SCM. SAPC is a related party to the Company.
(6)This vessel is currently time chartered-out to an unrelated third-party for three years at $18,000 per day. This time charter is scheduled to expire in January 2019.
(7)This vessel is currently time chartered-out to an unrelated third-party for three years at $20,500 per day. This time charter is scheduled to expire in December 2018.
(8)This vessel is currently employed under a short-term time charter-out agreement with an unrelated third party, following which this vessel is expected enter the SMRP. We consider short-term time charters (less than one year) as spot market voyages.
(9)This vessel is currently time chartered-out to an unrelated third-party for three years at $28,000 per day. This time charter is scheduled to expire in February 2019.
(10)Redelivery from the charterer is plus or minus 30 days from the expiry date.
(11)We have an option to extend the charter for an additional year at $13,250 per day.
(12)This agreement includes a purchase option which can be exercised through December 31, 2018. If the purchase option is not exercised, the bareboat-in agreement will expire on March 31, 2019.
(13)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 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 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.
(14)In November 2017, we declared the option to extend this charter for an additional six months at $13,250 per day effective December 2017. We have an option to extend the charter for an additional year at $14,500 per day.
(15)We have an option to extend the charter for an additional year at $15,000 per day.
(16)We have an option to extend the charter for an additional year at $16,000 per day.
(17)In August 2017, we entered into a new time charter-in agreement for one year at $13,500 per day. We have an option to extend the charter for an additional year at $15,000 per day.
(18)We have an option to extend this charter for an additional six months at $15,750 per day.
(19)These newbuilding vessels are being constructed at HMD (Hyundai Mipo Dockyard Co. Ltd. of South Korea). One vessel is expected to be delivered before the end of 2017 and one vessel is expected to be delivered in the first quarter of 2018.

Dividend Policy

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

The Company's dividends paid during 2016 and 2017 were as follows:

Date paidDividends per
share
March 2016$0.125
June 2016$0.125
September 2016$0.125
December 2016$0.125
March 2017$0.010
June 2017$0.010
September 2017$0.010

On November 14, 2017, the Company's Board of Directors declared a quarterly cash dividend of $0.01 per share, payable on or about December 28, 2017 to all shareholders as of December 13, 2017 (the record date). As of November 14, 2017, there were 281,095,755 shares outstanding.

Securities Repurchase Program

In May 2015, the Company's Board of Directors authorized a Securities Repurchase Program to purchase up to an aggregate of $250 million of the Company's securities which, in addition to its common shares, currently consist of its (i) Convertible Notes, which were issued in June 2014, (ii) Unsecured Senior Notes Due 2020 (NYSE:SBNA), which were issued in May 2014, and (iii) Unsecured Senior Notes Due 2019 (NYSE:SBBC), which were issued in March 2017.

In April 2017, we acquired an aggregate of 250,419 of our Unsecured Senior Notes due 2017 for aggregate consideration of $6.3 million, which was the result of the cash tender offer of such notes. These notes matured and were repaid in full in October 2017.

As of the date hereof, the Company has the authority to purchase up to an additional $147.1 million of its securities under its Securities Repurchase Program. The Company expects to 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 or finance leases 107 product tankers (38 LR2 tankers, 12 LR1 tankers, 43 MR tankers, 14 Handymax tankers) with an average age of 2.3 years and time or bareboat charters-in 19 product tankers (one LR2 tanker, nine MR tankers and nine Handymax tankers). The Company has contracted for two newbuilding MR product tankers, one of which is expected to be delivered before the end of 2017 and the other in the first quarter of 2018. 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 adjusted net income or loss and adjusted EBITDA, which are not measures prepared in accordance with IFRS (i.e. "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 adjusted net income or loss with adjusted earnings or loss per share, basic and diluted, and adjusted EBITDA are useful to investors 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 adjusted net income or loss with adjusted earnings or loss 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 adjusted net income or loss with the adjusted earnings or loss 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.

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

For the three months ended September 30, 2017
Per share Per share
In thousands of U.S. dollars except per share data Amount basic diluted
Net loss $(36,948) $(0.16) $(0.16)
Adjustments:
Deferred financing fees write-off 630 0.00 0.00
Merger transaction related costs 2,285 0.01 0.01
Gain on sale of vessel (7) 0.00 0.00
Adjusted net loss $(34,040) $(0.15) $(0.15)


For the three months ended September 30, 2016
Per share Per share
In thousands of U.S. dollars except per share data Amount basic diluted
Net loss $(27,115) $(0.17) $(0.17)
Adjustments:
Deferred financing fees write-off 8,978 0.06 0.06
Unrealized gain on derivative financial instruments (169) 0.00 0.00
Adjusted net loss $(18,306) $(0.11) $(0.11)

For the nine months ended September 30, 2017
Per share Per share
In thousands of U.S. dollars except per share data Amount basic diluted
Net loss $(116,730) $(0.61) $(0.61)
Adjustments:
Deferred financing fees write-off 1,497 0.01 0.01
Merger transaction related costs 34,815 0.18 0.18
Bargain purchase gain (5,417) (0.03) (0.03)
Loss / (gain) on sales of vessels 23,345 0.12 0.12
Adjusted net loss $(62,490) $(0.33) $(0.33)


For the nine months ended September 30, 2016
Per share Per share
In thousands of U.S. dollars except per share data Amount basic diluted
Net income $4,762 $0.03 $0.03
Adjustments:
Deferred financing fees write-off 14,479 0.09 0.09
Unrealized gain on derivative financial instruments (1,600) (0.01) (0.01)
Gain on repurchase of Convertible Notes (994) (0.01) (0.01)
Loss on sales of vessels 2,078 0.01 0.01
Adjusted net income $18,725 $0.12 (1)$0.11

(1) Summation differences due to rounding

Reconciliation of Net (Loss) / Income to Adjusted EBITDA

For the three months ended September 30, For the nine months ended September 30,
In thousands of U.S. dollars 2017 2016 2017 2016
Net (loss) / income $(36,948) $(27,115) $(116,730) $4,762
Financial expenses 30,927 31,150 77,621 82,381
Unrealized gain on derivative financial instruments (169) (1,600)
Financial income (665) (59) (1,154) (169)
Depreciation 36,341 30,686 97,883 90,775
Merger transaction related costs 2,285 34,815
Bargain purchase gain (5,417)
Amortization of restricted stock 5,875 7,588 17,481 23,076
(Gain) / loss on sale of vessels (7) 23,345 2,078
Gain on repurchase of Convertible Notes (recorded within Financial income) (994)
Adjusted EBITDA $37,808 $42,081 $127,844 $200,309

Forward-Looking Statements

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

The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. We undertake no obligation, and specifically decline 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 our 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, expansion and growth of our operations, risks relating to the integration of the operations of Navig8 Product Tankers Inc. (“NPTI”) and the possibility that the anticipated synergies and other benefits of the acquisition of NPTI will not be realized or will not be realized within the expected timeframe, the outcome of any legal proceedings related to the merger with NPTI and the related transactions, the failure of counterparties to fully perform their contracts with us, the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for tanker vessel capacity, changes in our operating expenses, including bunker prices, drydocking and insurance costs, the market for our vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain financing and comply with covenants in such financing arrangements, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off-hires, and other factors. Please see Scorpio Tankers’ filings with the U.S. Securities and Exchange Commission for a more complete discussion of certain of these and other risks and uncertainties.

Scorpio Tankers Inc.
212-542-1616

Source:Scorpio Tankers Inc.