Scorpio Tankers Inc. Announces Financial Results for the Third Quarter of 2022 and Declaration of a Quarterly Dividend
MONACO, Nov. 01, 2022 (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, 2022. 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 September 30, 2022** and **2021*
For the three months ended September 30, 2022, the Company had net income of $266.2 million, or $4.84 basic and $4.31 diluted earnings per share.
For the three months ended September 30, 2022, the Company had adjusted net income (see Non-IFRS Measures section below) of $264.8 million, or $4.81 basic and $4.29 diluted earnings per share, which excludes from net income (i) a $2.7 million, or $0.05 per basic and $0.04 per diluted share, gain on the sale of a vessel, (ii) $1.4 million, or $0.03 per basic and $0.02 per diluted share, write-off or acceleration of the amortization of deferred financing fees on certain debt or lease financing obligations and related debt extinguishment costs, and (iii) $0.1 million, or $0.00 per basic and $0.00 per diluted share, gain recorded on the repurchase of the Company's Convertible Notes due 2025.
For the three months ended September 30, 2021, the Company had a net loss of $73.3 million, or $1.34 basic and diluted loss per share.
For the three months ended September 30, 2021, the Company had an adjusted net loss (see Non-IFRS Measures section below) of $76.1 million, or $1.39 basic and diluted loss per share, which excludes from the net loss a $2.9 million, or $0.05 per basic and diluted share, gain recorded as part of the refinancing of the lease financing for five vessels.
*Results for the nine months ended September 30, 2022 and **2021*
For the nine months ended September 30, 2022, the Company had net income of $372.8 million, or $6.74 basic and $6.07 diluted earnings per share.
For the nine months ended September 30, 2022, the Company had adjusted net income (see Non-IFRS Measures section below) of $446.0 million, or $8.06 basic and $7.21 diluted earnings per share, which excludes from net income (i) a $66.5 million, or $1.20 per basic and $1.04 per diluted share, aggregate net loss on the sale of vessels, (ii) $7.1 million, or $0.13 per basic and $0.11 per diluted share, write-off or acceleration of the amortization of deferred financing fees on debt or lease financing obligations and related debt extinguishment costs and (iii) $0.5 million, or $0.01 per basic and $0.01 per diluted share, gain recorded on the repurchases of the Company's Convertible Notes due 2025.
For the nine months ended September 30, 2021, the Company had a net loss of $188.4 million, or $3.46 basic and diluted loss per share.
For the nine months ended September 30, 2021, the Company had an adjusted net loss (see Non-IFRS Measures section below) of $184.5 million, or $3.38 basic and diluted loss per share, which excludes from the net loss (i) a $2.9 million, or $0.05 per basic and diluted share, gain recorded as part of the refinancing of the lease financing for five vessels, (ii) $5.5 million, or $0.10 per basic and diluted share, of aggregate losses recorded on the March 2021 and June 2021 transactions to exchange the Company’s existing Convertible Notes Due 2022 for new Convertible Notes Due 2025, and (iii) a $1.3 million, or $0.02 per basic and diluted share, write-off of deferred financing fees related to the refinancing of certain credit facilities.
*Declaration of Dividend*
On October 31, 2022, the Company's Board of Directors declared a quarterly cash dividend of $0.10 per common share, payable on or about December 15, 2022 to all shareholders of record as of November 17, 2022 (the record date). As of November 1, 2022, there were 56,294,672 common shares of the Company outstanding.
*Summary of Third Quarter 2022 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 fourth quarter of 2022 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* *Avg. Daily* *Expected* *% of* *Avg. Daily * *Expected* *% of* *TCE Revenue* *Revenue Days*^*(1)* *Days* *TCE Revenue* *Revenue Days*^*(1)* *Days*
LR2 $58,000 2,900 55% $28,800 625 100%
MR $43,000 4,650 42% $21,700 435 100%
Handymax $44,000 1,250 36% 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. We use 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 third quarter of 2022:
*Average Daily TCE Revenue*
*Vessel class* *Pool / Spot* *Time Charters*
LR2 $ 50,765 $ 26,710
MR $ 42,463 $ 20,548
Handymax $ 46,231 N/A
· During the third and fourth quarters of 2022, the Company entered into time charter-out agreements on five vessels (four LR2s and one MR). The terms of the agreements are for three years averaging between $30,000 and $35,000 per day for the LR2s, and for three years for $25,000 per day for the MR. During 2022 and through the date of this press release, the Company has entered into a total of 13 time-charter out agreements (eight LR2s and five MRs), the terms of which are described in the fleet list below.
· The Company has given notice to exercise its purchase options on an aggregate of 17 vessels that are currently financed under sale and leaseback arrangements, consisting of two Handymax product tankers (STI Battersea and STI Wembley), nine MR product tankers (STI Ville, STI Texas City, STI Meraux, STI Brooklyn, STI Duchessa, STI Mayfair, STI San Antonio, STI St. Charles and STI Yorkville), and six LR2 product tankers (STI Alexis, STI Rose, STI Rambla, STI Sanctity, STI Steadfast and STI Supreme). The leases bear interest at LIBOR plus a margin of 3.00% – 5.40% per annum. The purchases, which are expected to occur in the fourth quarter of 2022 and in 2023, are expected to result in an aggregate debt reduction of $302.2 million.
· In October 2022, the Company repaid the outstanding debt of $17.5 million, which had financed one LR2 product tanker (STI Madison).
· In August 2022, the Company exercised its purchase options on six 2014 built MR product tankers (STI Opera, STI Virtus, STI Venere, STI Aqua, STI Dama, and STI Regina), which resulted in an aggregate debt reduction of $95.0 million.
· Since July 2022 and through the date of this press release, the Company has repurchased an aggregate of 3,120,341 of its common shares at an average price of $38.66 per share.
· In July 2022, the Company repurchased $1.5 million in aggregate principal amount of its Convertible Notes Due 2025 in the open market.
· On October 31, 2022, the Company’s Board of Directors authorized a new Securities Repurchase Program to purchase up to an aggregate of $250 million of the Company’s securities.
· During the first and second quarters of 2022, the Company entered into agreements to sell 18 vessels, consisting of three LR2s, 12 LR1s, and three MRs. Seven of these sales closed within the first quarter of 2022 (six LR1s and one MR), raising $91.7 million in aggregate new liquidity after the repayment of debt and selling costs, nine of these sales closed within the second quarter of 2022 (two LR2s, six LR1s, and one MR), raising $139.9 million in aggregate new liquidity after the repayment of debt and selling costs, and the remaining two of these sales closed in the third quarter of 2022, raising $33.7 million in aggregate new liquidity.*New $250 Million Securities Repurchase Program*
On October 31, 2022, the Company’s Board of Directors authorized a new 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 Convertible Notes due 2025 and Senior Unsecured Notes due 2025 (NYSE: SBBA). As of today, there is $250 Million available under the new $250 Million Securities Repurchase Program.
In September 2020, 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. This program was terminated on October 31, 2022, and any future purchases of the Company’s securities will be made under the new $250 million Securities Repurchase Program. Below are purchases of the Company’s securities made in 2022 under the September 2020 authorization.
· During the third quarter of 2022, the Company repurchased an aggregate of 2,241,881 of its common shares at an average price of $37.87 per share. These repurchases include the repurchase of 1,293,661 common shares from Eneti Inc., a related party, for $38.65 per share and 948,220 common shares in the open market for an average price of $36.80 per share.
· During the fourth quarter of 2022, the Company repurchased an aggregate of 878,460 of its common shares in the open market at an average price of $40.67 per share.
· In May and July 2022, the Company repurchased $10.8 million and $1.5 million, respectively, in aggregate principal amount of its Convertible Notes Due 2025 in the open market for $12.5 million and $1.7 million, respectively. The consideration paid includes the accreted principal balance, which has accrued since the issuance date and equaled approximately 106% and 107% of par at the May and July repurchase dates, respectively.*Debt and Lease Repayments*In August 2022, the Company exercised its purchase options on six MR product tankers (STI Opera, STI Virtus, STI Venere, STI Aqua, STI Dama and STI Regina) that were previously financed under the China Huarong Lease Financing. These transactions resulted in an aggregate debt reduction of $95.0 million.
In September 2022, the Company gave notice to exercise its purchase options on two Handymax product tankers (STI Battersea and STI Wembley) and two MR product tankers (STI Texas City and STI Meraux). These vessels are currently financed under the COSCO Lease Financing. The purchases, which are expected to occur in the fourth quarter of 2022, are expected to result in a debt reduction of $55.3 million.
In September 2022, the Company gave notice to exercise its purchase options on two MR product tankers (STI Brooklyn and STI Ville) and two LR2 product tankers (STI Rose and STI Rambla). These vessels are currently financed under the AVIC Lease Financing. The purchases, which are expected to occur in the fourth quarter of 2022, are expected to result in a debt reduction of $77.8 million.
In September 2022, the Company gave notice to exercise its purchase option on an LR2 product tanker (STI Sanctity). This vessel is currently financed under the Ocean Yield Lease Financing. The purchase, which is expected to occur in the first quarter of 2023, are expected to result in a debt reduction of $27.8 million.
In October 2022, the Company gave notice to exercise its purchase option on an LR2 product tanker (STI Alexis) and five MR product tankers (STI Duchessa, STI San Antonio, STI Mayfair, STI St. Charles, and STI Yorkville), which are currently financed under the $157.5 Million Lease Financing. The purchases, which are expected to occur in the fourth quarter of 2022, are expected to result in a debt reduction of $85.8 million.
In October 2022, the Company gave notice to exercise its purchase options on two LR2 product tankers (STI Steadfast and STI Supreme). These vessels are currently financed under the Ocean Yield Lease Financing. The purchases, which are expected to occur in the second and third quarters of 2023, are expected to result in a debt reduction of $55.6 million.
In October 2022, the Company repaid the outstanding debt on an LR2 product tanker (STI Madison), which was previously financed under the 2021 $21.0 Million Credit Facility. This transaction resulted in a debt reduction of $17.5 million.
*Diluted Weighted Number of Shares *
The computation of earnings or loss per share is determined by taking into consideration the potentially dilutive shares arising from (i) the Company’s equity incentive plan, and (ii) the Company’s Convertible Notes due 2025. These potentially dilutive shares are excluded from the computation of earnings or loss per share to the extent they are anti-dilutive.
The impact of the Convertible Notes Due 2025 on earnings or loss per share is computed using the if-converted method. Under this method, the Company first includes the potentially dilutive impact of restricted shares issued under the Company’s equity incentive plan, and then assumes that its Convertible Notes Due 2025, which were issued in March and June 2021 were converted into common shares at the beginning of each period. The impact of the Company's Convertible Notes Due 2022, which were repaid in cash upon their maturity in May 2022, are included as part of the weighted average number of shares under the if-converted method for the portion of the period that they were outstanding. The if-converted method also assumes that the interest and non-cash amortization expense associated with these notes of $4.7 million and $16.8 million during the three and nine months ended September 30, 2022, respectively, were not incurred. Conversion is not assumed if the results of this calculation are anti-dilutive.
For the three and nine months ended September 30, 2022, the Company’s basic weighted average number of shares outstanding were 55,003,149 and 55,334,147, respectively. For the three and nine months ended September 30, 2022, there were 57,666,495 and 57,917,873 weighted average shares outstanding, respectively, including the potentially dilutive impact of restricted shares issued under the Company's equity incentive plan.
For the three and nine months ended September 30, 2022, there were 62,820,207 and 64,172,301 weighted average shares outstanding, respectively, under the if-converted method.
Diluted earnings per share for both the three and nine months ended September 30, 2022 was calculated under the if-converted method.
*Conference Call *
The Company has scheduled a conference call on November 1, 2022 at 8:30 AM Eastern Daylight Time and 1:30 PM Central European Time. The dial-in information is as follows:
US Dial-In Number: 1 (833) 636-1321
International Dial-In Number: +1 (412) 902-4260
Conference ID: 10172092
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/84fjfw9f
*Current Liquidity*
As of October 28, 2022, the Company had $490.9 million in unrestricted cash and cash equivalents. Within the next two weeks, the Company is expected to receive approximately $105 million from the Scorpio pools with respect to the monthly cash distribution for October.
*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 third quarter of 2022 and the estimated expected payments to be made, and offhire days that are expected to be incurred, for the Company's drydocks, ballast water treatment system installations, and scrubber installations through 2023:
Number of^(3) Aggregate costs
in millions of
USD^(1) Aggregate
offhire days^(2) LR2s MRs Handymax
Q3 2022 - actual (a) 3.6 71 — 4 —
Q4 2022 - estimated (b) 12.5 139 — 5 —
Q1 2023 - estimated (c) 12.8 150 — 4 —
Q2 2023 - estimated (d) 9.3 190 — 5 —
Q3 2023 - estimated 3.2 — — — —
Q4 2023 - estimated (e) 2.0 40 — 1 —
^(1) These costs include 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) 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 two BWTS installations
(b) Includes three BWTS installations
(c) Includes four scrubber installations
(d) Includes five scrubber installations
(e) Includes one scrubber installation
*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
June 30, 2022* *Outstanding
Principal as of
September 30,
2022* *Outstanding
Principal as of
October 28, 2022*
1
Hamburg Commercial Credit Facility 35,378 34,555 34,555
2
Prudential Credit Facility 42,059 40,672 40,210
3
2019 DNB / GIEK Credit Facility 41,894 40,116 40,116
4
BNPP Sinosure Credit Facility 86,030 86,030 80,576
5
2020 $225 Million Credit Facility^(1) 60,306 39,049 39,049
6
2021 $21.0 Million Credit Facility^(2) 18,075 17,490 —
7
Ocean Yield Lease Financing 121,604 118,687 117,689
8
BCFL Lease Financing (LR2s) 73,783 71,030 70,122
9
CSSC Lease Financing 128,562 124,920 123,706
10
BCFL Lease Financing (MRs) 61,183 57,195 55,888
11 2018 CMBFL Lease Financing 105,482 102,230 102,230
12
AVIC Lease Financing 83,467 80,618 80,618
13
China Huarong Lease Financing^(3) 95,000 — —
14
$157.5 Million Lease Financing 88,822 85,772 85,772
15
COSCO Lease Financing 57,200 55,275 55,275
16
2020 CMBFL Lease Financing 39,711 38,900 38,900
17
2020 TSFL Lease Financing 42,267 41,437 41,437
18
2020 SPDBFL Lease Financing 86,758 85,135 85,135
19
2021 AVIC Lease Financing 88,260 86,448 86,448
20
2021 CMBFL Lease Financing 71,305 69,675 69,270
21
2021 TSFL Lease Financing 52,187 51,092 51,092
22
2021 CSSC Lease Financing 51,262 49,946 49,508
23
2021 $146.3 Million Lease Financing 140,288 136,994 133,699
24
2021 Ocean Yield Lease Financing 66,882 65,407 64,910
25
2022 AVIC Lease Financing 118,388 116,096 116,096
26
IFRS 16 - Leases - 3 MR 25,277 23,209 22,531
27
$670.0 Million Lease Financing 498,312 487,127 483,375
28
Unsecured Senior Notes Due 2025 70,571 70,571 70,571
29
Convertible Notes Due 2025^(4) 202,111 203,209 204,057 *Gross debt outstanding* *2,652,424* *2,478,885* *2,442,835* *Cash and cash equivalents* 359,528 467,635 490,903 *Net debt* *$* *2,292,896* *$* *2,011,250* *$* *1,951,932*
^(1) In August 2022, the Company repaid $20.0 million on the 2020 $225.0 Million Credit Facility as a result of the sale of STI Nautilus.
^(2) In October 2022, the Company prepaid $17.5 million on the 2021 $21.0 Million Credit Facility that was originally scheduled to mature in December 2022.
^(3) In August 2022, the Company exercised the repurchase options on STI Opera, STI Virtus, STI Venere, STI Aqua, STI Dama and STI Regina on the China Huarong Lease Financing and repaid the aggregate outstanding lease obligation of $95.0 million as part of these transactions.
^(4) The outstanding principal balance reflects the par value of the Convertible Notes Due 2025 of $187.7 million plus the accreted principal balance as of each date presented. The balances presented also reflect the May and July 2022 open market repurchases of $10.8 million and $1.5 million in aggregate principal amount, respectively. The Convertible Notes Due 2025 are scheduled to accrete at an annualized rate of approximately 5.52% per annum, with the total balance due at maturity equal to 125.3% of par. The Convertible Notes Due 2025 also bear interest at a cash coupon rate of 3.0% per annum, which is calculated based upon the par value of the instrument.
Set forth below are the estimated expected future principal repayments on the Company's outstanding indebtedness as of September 30, 2022, which includes principal amounts due under the Company's secured credit facilities, Convertible Notes Due 2025, lease financing arrangements, Senior Notes Due 2025, and lease liabilities under IFRS 16 (which also include actual scheduled payments made during the third quarter of 2022 through October 28, 2022):
*As of September 30, 2022*^*(1)*
In millions of U.S. dollars *Total* *Repayments/maturities
of unsecured
debt* *Vessel financings -
2022 and 2023
maturities,
including
announced vessel
repurchases* *Vessel financings -
scheduled
repayments, in
addition to
maturities in 2024
and thereafter*
Q4 2022 - principal payments made through October 28, 2022^(2) *$* *36.9* $ — $ 17.5 $ 19.4
Q4 2022^(3) *259.2* — 218.8 40.4
Q1 2023^(3) *78.9* — 27.8 51.1
Q2 2023^(3) *84.1* — 27.8 56.3
Q3 2023^(3) *77.4* — 27.8 49.6
Q4 2023 *54.8* — — 54.8
2024 and thereafter *1,887.6* 273.8 — 1,613.8 *$* *2,478.9* $ 273.8 $ 319.7 $ 1,885.4
^(1) Amounts represent the principal payments due on the Company’s outstanding indebtedness as of September 30, 2022.
^(2) Repayments include the prepayment of the outstanding debt related to one vessel under the 2021 $21.0 Million Credit Facility for $17.5 million that was originally scheduled to mature in December 2022.
^(3) Repayments include the Company's exercise of its purchase options on two Handymax product tankers (STI Battersea and STI Wembley), nine MR product tankers (STI Ville, STI Texas City, STI Meraux, STI Brooklyn, STI San Antonio, STI St. Charles, STI Yorkville, STI Mayfair and STI Duchessa), and six LR2 product tankers (STI Rose, STI Rambla, STI Sanctity, STI Steadfast, STI Supreme and STI Alexis). These vessels are currently financed under the AVIC Lease Financing, the COSCO Lease Financing, the Ocean Yield Lease Financing and the $157.5 Million Lease Financing. The purchases are expected to occur in the fourth quarter of 2022 and the first, second and third quarters of 2023.
*Explanation of Variances on the Third Quarter of 2022 Financial Results Compared to the Third Quarter of 2021 *
For the three months ended September 30, 2022, the Company recorded net income of $266.2 million compared to a net loss of $73.3 million for the three months ended September 30, 2021. 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 September 30, 2022 and 2021: *For the three months ended September 30,*
In thousands of U.S. dollars *2022* *2021* Vessel revenue $ 489,996 $ 119,271 Voyage expenses (33,721 ) (661 ) *TCE revenue* *$* *456,275* *$* *118,610*
· TCE revenue for the three months ended September 30, 2022 increased by $337.7 million to $456.3 million, from $118.6 million for the three months ended September 30, 2021. Overall average TCE revenue per day increased to $44,222 per day during the three months ended September 30, 2022, from $10,139 per day during the three months ended September 30, 2021. The average number of vessels was 113.5 during the three months ended September 30, 2022 as compared to 131.0 during the three months ended September 30, 2021. The decrease in the average number of vessels was due to the sales of vessels during 2022 as described above.
· TCE revenue for the three months ended September 30, 2022 reflected the continued momentum in the product tanker market that began in the first quarter of 2022 and has continued through the date of this press release. Initially, the easing of COVID-19 restrictions around the globe resulted in increased personal mobility which served as a catalyst for underlying demand for refined petroleum products. This buoyant demand, combined with low global refined petroleum product inventories and strong refining margins, have incentivized refiners to increase and maintain high utilization levels thus driving substantial increases in refined petroleum product export volumes throughout the world. Lastly, the volatility brought on by the ongoing conflict in Ukraine has continued to disrupt supply chains for crude oil and refined petroleum products, changing volumes and trade routes, and thus increasing ton-mile demand for the seaborne transportation of refined petroleum products.
· TCE revenue for the three months ended September 30, 2021 reflected the continued adverse market conditions brought on by the COVID-19 pandemic. While underlying demand for crude and refined petroleum products improved throughout 2021, it still remained below pre-pandemic levels thus keeping pressure on daily spot TCE rates. These conditions were exacerbated by longer than expected refinery maintenance along with drawdowns of existing inventories during the third quarter of 2021, which negatively affected the demand for the seaborne transportation of refined petroleum products.The Company also had an increased number of vessels operating outside of the Scorpio pools during the three months ended September 30, 2022 which led to an increase in voyage revenue and voyage expenses for this period.
· Vessel operating costs for the three months ended September 30, 2022 decreased by $10.1 million to $75.8 million, from $85.9 million for the three months ended September 30, 2021. Vessel operating costs per vessel per day increased to $7,256 for the three months ended September 30, 2022 from $7,126 for the three months ended September 30, 2021. Vessel operating costs per day increased across all vessel classes, driven by generalized inflationary pressures, with the largest increases affecting repairs and maintenance, and spares and stores expenses. The overall decrease relates to the sale of 18 vessels during 2022, which resulted in a decrease in the average number of vessels in the Company's fleet to 113.5 during the three months ended September 30, 2022 from 131.0 during the three months ended September 30, 2021.
· Depreciation expense – owned or sale leaseback vessels for the three months ended September 30, 2022 decreased by $8.3 million to $41.4 million, from $49.7 million for the three months ended September 30, 2021. This decrease was attributable to 18 of the Company's owned or sale leaseback vessels being designated as held for sale or sold during the nine months ended September 30, 2022. These vessels were written down to their net realizable value upon being designated as held for sale, and depreciation expense ceased being recorded upon that designation.
· Depreciation expense - right of use assets for the three months ended September 30, 2022 decreased by $0.8 million to $9.6 million from $10.4 million for the three months ended September 30, 2021. Depreciation expense - right of use assets reflects the straight-line depreciation expense recorded under IFRS 16 - Leases. This decrease is attributable to the sale of one of the Company's right of use asset vessels. This vessel was written down to its net realizable value upon being designated as held for sale during the first quarter of 2022, and depreciation expense ceased being recorded upon that designation. The Company had four LR2s and 17 MRs that were accounted for under IFRS 16 - Leases during the three months ended September 30, 2022.
· General and administrative expenses for the three months ended September 30, 2022, increased by $13.4 million to $26.5 million, from $13.1 million for the three months ended September 30, 2021. This increase was primarily due to an increase in compensation related costs.
· Financial expenses for the three months ended September 30, 2022 increased by $6.5 million to $42.3 million, from $35.8 million for the three months ended September 30, 2021. This increase was primarily attributable to significant increases in LIBOR rates during the three months ended September 30, 2022 as compared to the three months ended September 30, 2021. The increases attributable to the increases in LIBOR rates were partially offset by the overall reductions in the Company's indebtedness arising from the aforementioned sales of 18 vessels (and repayments of the related debt or lease financing obligations) along with the exercise of purchase options on six 2014 built MR product tankers in August 2022 and the maturity of the Convertible Notes Due 2022 in May 2022.
*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 data *2022* *2021* *2022* *2021*
*Revenue* Vessel revenue $ 489,996 $ 119,271 $ 1,069,116 $ 392,878
*Operating expenses* Vessel operating costs (75,801 ) (85,881 ) (237,556 ) (249,781 ) Voyage expenses (33,721 ) (661 ) (59,229 ) (3,442 ) Depreciation - owned or sale leaseback vessels (41,422 ) (49,707 ) (126,581 ) (147,713 ) Depreciation - right of use assets (9,567 ) (10,408 ) (29,055 ) (32,449 ) General and administrative expenses (26,490 ) (13,054 ) (61,747 ) (39,938 ) Net gain / (loss) on sale of vessel sales 2,732 — (66,486 ) — Total operating expenses (184,269 ) (159,711 ) (580,654 ) (473,323 )
*Operating income / (loss)* 305,727 (40,440 ) 488,462 (80,445 )
*Other (expense) and income, net* Financial expenses (42,302 ) (35,810 ) (121,012 ) (105,783 ) Loss on Convertible Notes exchange — — — (5,504 ) Financial income 2,183 3,041 3,207 3,453 Other income and (expense), net 557 (58 ) 2,191 (164 ) Total other expense, net (39,562 ) (32,827 ) (115,614 ) (107,998 )
*Net income / (loss)* $ 266,165 $ (73,267 ) $ 372,848 $ (188,443 )
*Earnings / (Loss) per share* Basic $ 4.84 $ (1.34 ) $ 6.74 $ (3.46 ) Diluted $ 4.31 $ (1.34 ) $ 6.07 $ (3.46 ) Basic weighted average shares outstanding 55,003,149 54,757,241 55,334,147 54,512,767 Diluted weighted average shares outstanding^(1) 62,820,207 54,757,241 64,172,301 54,512,767
^(1) The computation of diluted earnings per share for the three and nine months ended September 30, 2022 includes the effect of potentially dilutive unvested shares of restricted stock and the effect of the Convertible Notes Due 2022 and Convertible Notes Due 2025 under the if-converted method. The computation of diluted loss per share for the three and nine months ended September 30, 2021 excludes the effect of potentially dilutive unvested shares of restricted stock and the Convertible Notes Due 2022 and Convertible Notes Due 2025 because their effect would have been anti-dilutive.
*Scorpio Tankers Inc. and Subsidiaries*
*Condensed Consolidated Balance Sheets*
*(unaudited)*
*As of*
In thousands of U.S. dollars *September 30, 2022* *December 31, 2021*
*Assets*
*Current assets*
Cash and cash equivalents $ 467,635 $ 230,415
Accounts receivable 247,010 38,069
Prepaid expenses and other current assets 21,187 7,954
Inventories 15,280 8,781
Restricted cash — 4,008
*Total current assets* 751,112 289,227
*Non-current assets*
Vessels and drydock 3,107,291 3,842,071
Right of use assets for vessels 699,598 764,025
Other assets 84,808 108,963
Goodwill 8,197 8,900
Restricted cash 783 783
*Total non-current assets* 3,900,677 4,724,742
*Total assets* $ 4,651,789 $ 5,013,969
*Current liabilities*
Current portion of long-term debt $ 48,935 $ 235,278
Lease liability - sale and leaseback vessels 297,998 178,062
Lease liability - IFRS 16 52,429 54,515
Accounts payable 18,813 35,080
Accrued expenses 70,408 24,906
*Total current liabilities* 488,583 527,841
*Non-current liabilities*
Long-term debt 471,063 666,409
Lease liability - sale and leaseback vessels 1,113,844 1,461,929
Lease liability - IFRS 16 456,918 520,862
*Total non-current liabilities* 2,041,825 2,649,200
*Total liabilities* 2,530,408 3,177,041
*Shareholders' equity*
Issued, authorized and fully paid-in share capital:
Share capital 669 659
Additional paid-in capital 2,852,286 2,855,798
Treasury shares (565,065 ) (480,172 )
Accumulated deficit (166,509 ) (539,357 )
*Total shareholders' equity* 2,121,381 1,836,928
*Total liabilities and shareholders' equity* $ 4,651,789 $ 5,013,969
*Scorpio Tankers Inc. and Subsidiaries*
*Condensed Consolidated Statements of Cash Flows *
*(unaudited)*
*For the nine months ended September 30,*
In thousands of U.S. dollars *2022* *2021*
*Operating activities*
Net income / (loss) $ 372,848 $ (188,443 )
Depreciation - owned or sale leaseback vessels 126,581 147,713
Depreciation - right of use assets 29,055 32,449
Amortization of restricted stock 16,148 18,231
Amortization of deferred financing fees 5,039 5,663
Write-off of deferred financing fees and unamortized discounts on debt 5,506 1,326
Gain on sale and leaseback amendment — (2,851 )
Accretion of convertible notes 10,858 9,179
Net loss on sales of vessels 66,486 —
Accretion of fair value measurement on debt assumed in business combinations 1,756 2,582
(Gain) / loss on Convertible Notes transactions (481 ) 5,504
Share of income from dual fuel tanker joint venture (695 ) — 633,101 31,353
Changes in assets and liabilities:
(Increase) / decrease in inventories (7,183
) 723
Increase in accounts receivable (208,941 ) (7,736 )
(Increase) / decrease in prepaid expenses and other current assets (13,232 ) 2,528
Decrease / (increase) in other assets 16,705 (448 )
(Decrease) / increase in accounts payable (12,975 ) 2,697
Increase / (decrease) in accrued expenses 45,513 (6,037 ) (180,113 ) (8,273 )
*Net cash inflow from operating activities* 452,988 23,080
*Investing activities*
Net proceeds from sales of vessels 607,894 —
Distributions from dual fuel tanker joint venture 493 —
Investment in dual fuel tanker joint venture — (6,701 )
Drydock, scrubber, ballast water treatment system and other vessel related payments (owned, leased financed and bareboat-in vessels) (26,418 ) (41,008 )
*Net cash inflow / (outflow) from investing activities* 581,969 (47,709 )
*Financing activities*
Debt repayments (670,108 ) (404,123 )
Issuance of debt 122,638 388,885
Debt issuance costs (1,701 ) (14,080 )
Principal repayments on lease liability - IFRS 16 (66,030 ) (43,080 )
Repurchase / repayment of convertible notes (83,968 ) —
Issuance of convertible notes — 119,419
Decrease in restricted cash 4,008 —
Dividends paid (17,683 ) (17,483 )
Repurchase of common stock (84,893 ) —
*Net cash (outflow) / inflow from financing activities* (797,737 ) 29,538
*Increase in cash and cash equivalents* 237,220 4,909
Cash and cash equivalents at January 1, 230,415 187,511
*Cash and cash equivalents at September 30,* $ 467,635 $ 192,420
*Scorpio Tankers Inc. and Subsidiaries*
*Other operating data for the three and **nine months ended September 30, 2022** and **2021*
*(unaudited)*
*For the three months ended September 30,* *For the nine months ended September 30,* *2022* *2021* *2022* *2021*
*Adjusted EBITDA*^*(1)**(in thousands of U.S. dollars except Fleet Data)* *$* *360,013* *$* *25,365* *$* *728,923* *$* *117,784*
*Average Daily Results*
Fleet
TCE per revenue day^(2) $ 44,222 $ 10,139 $ 31,485 $ 11,083
Vessel operating costs per day^(3) $ 7,256 $ 7,126 $ 7,199 $ 6,926
Average number of vessels 113.5 131.0 120.9 132.1
LR2
TCE per revenue day^(2) $ 48,152 $ 10,871 $ 32,812 $ 11,586
Vessel operating costs per day^(3) $ 7,349 $ 7,168 $ 7,288 6,849
Average number of vessels 39.4 42.0 41.1 42.0
LR1
TCE per revenue day^(2) N/A $ 10,015 $ 13,724 $ 10,953
Vessel operating costs per day^(3) N/A $ 7,322 $ 7,429 $ 6,761
Average number of vessels N/A 12.0 4.4 12.0
MR
TCE per revenue day^(2) $ 41,143 $ 10,262 $ 30,694 $ 11,330
Vessel operating costs per day^(3) $ 7,258 $ 7,150 $ 7,197 $ 7,013
Average number of vessels 60.1 63.0 61.3 63.0
Handymax
TCE per revenue day^(2) $ 46,231 $ 7,458 $ 34,934 $ 8,716
Vessel operating costs per day^(3) $ 6,835 $ 6,726 $ 6,873 $ 6,912
Average number of vessels 14.0 14.0 14.0 15.1
*Capital Expenditures*
Drydock, scrubber, ballast water treatment system and other vessel related payments (in thousands of U.S. dollars) $ 3,639 $ 13,700 $ 26,418 $ 41,008
^(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, sale leasebacked, 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, sale leasebacked 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 owned, sale leasebacked, or bareboat chartered-in vessels, not time chartered-in vessels.
*Fleet list as of October 31, 2022*
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 Yes
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 Ville 2013 49,990 — SMRP (2) MR Not Yet Installed
21 STI Duchessa 2014 49,990 — Time Charter (4) MR Not Yet Installed
22 STI Opera 2014 49,990 — SMRP (2) MR Not Yet Installed
23 STI Texas City 2014 49,990 — SMRP (2) MR Yes
24 STI Meraux 2014 49,990 — SMRP (2) MR Yes
25 STI San Antonio 2014 49,990 — SMRP (2) MR Yes
26 STI Venere 2014 49,990 — SMRP (2) MR Yes
27 STI Virtus 2014 49,990 — SMRP (2) MR Yes
28 STI Aqua 2014 49,990 — SMRP (2) MR Yes
29 STI Dama 2014 49,990 — SMRP (2) MR Yes
30 STI Regina 2014 49,990 — SMRP (2) MR Yes
31 STI St. Charles 2014 49,990 — SMRP (2) MR Yes
32 STI Mayfair 2014 49,990 — SMRP (2) MR Yes
33 STI Yorkville 2014 49,990 — SMRP (2) MR Yes
34 STI Milwaukee 2014 49,990 — SMRP (2) MR Yes
35 STI Battery 2014 49,990 — SMRP (2) MR Yes
36 STI Soho 2014 49,990 — SMRP (2) MR Yes
37 STI Memphis 2014 49,990 — Time Charter (5) MR Yes
38 STI Tribeca 2015 49,990 — SMRP (2) MR Yes
39 STI Gramercy 2015 49,990 — SMRP (2) MR Yes
40 STI Bronx 2015 49,990 — SMRP (2) MR Yes
41 STI Pontiac 2015 49,990 — SMRP (2) MR Yes
42 STI Manhattan 2015 49,990 — SMRP (2) MR Yes
43 STI Queens 2015 49,990 — SMRP (2) MR Yes
44 STI Osceola 2015 49,990 — SMRP (2) MR Yes
45 STI Notting Hill 2015 49,687 1B SMRP (2) MR Yes
46 STI Seneca 2015 49,990 — SMRP (2) MR Yes
47 STI Westminster 2015 49,687 1B SMRP (2) MR Yes
48 STI Brooklyn 2015 49,990 — SMRP (2) MR Yes
49 STI Black Hawk 2015 49,990 — SMRP (2) MR Yes
50 STI Galata 2017 49,990 — SMRP (2) MR Yes
51 STI Bosphorus 2017 49,990 — SMRP (2) MR Not Yet Installed
52 STI Leblon 2017 49,990 — SMRP (2) MR Yes
53 STI La Boca 2017 49,990 — SMRP (2) MR Yes
54 STI San Telmo 2017 49,990 1B SMRP (2) MR Not Yet Installed
55 STI Donald C Trauscht 2017 49,990 1B SMRP (2) MR Not Yet Installed
56 STI Esles II 2018 49,990 1B SMRP (2) MR Not Yet Installed
57 STI Jardins 2018 49,990 1B SMRP (2) MR Not Yet Installed
58 STI Magic 2019 50,000 — SMRP (2) MR Yes
59 STI Mystery 2019 50,000 — SMRP (2) MR Yes
60 STI Marvel 2019 50,000 — SMRP (2) MR Yes
61 STI Magnetic 2019 50,000 — Time Charter (6) MR Yes
62 STI Millennia 2019 50,000 — SMRP (2) MR Yes
63 STI Magister 2019 50,000 — SMRP (2) MR Yes
64 STI Mythic 2019 50,000 — SMRP (2) MR Yes
65 STI Marshall 2019 50,000 — Time Charter (7) MR Yes
66 STI Modest 2019 50,000 — SMRP (2) MR Yes
67 STI Maverick 2019 50,000 — SMRP (2) MR Yes
68 STI Miracle 2020 50,000 — Time Charter (8) MR Yes
69 STI Maestro 2020 50,000 — SMRP (2) MR Yes
70 STI Mighty 2020 50,000 — SMRP (2) MR Yes
71 STI Maximus 2020 50,000 — SMRP (2) MR Yes
72 STI Elysees 2014 109,999 — SLR2P (3) LR2 Yes
73 STI Madison 2014 109,999 — SLR2P (3) LR2 Yes
74 STI Park 2014 109,999 — SLR2P (3) LR2 Yes
75 STI Orchard 2014 109,999 — SLR2P (3) LR2 Yes
76 STI Sloane 2014 109,999 — SLR2P (3) LR2 Yes
77 STI Broadway 2014 109,999 — SLR2P (3) LR2 Yes
78 STI Condotti 2014 109,999 — SLR2P (3) LR2 Yes
79 STI Rose 2015 109,999 — SLR2P (3) LR2 Yes
80 STI Veneto 2015 109,999 — SLR2P (3) LR2 Yes
81 STI Alexis 2015 109,999 — SLR2P (3) LR2 Yes
82 STI Winnie 2015 109,999 — SLR2P (3) LR2 Yes
83 STI Oxford 2015 109,999 — SLR2P (3) LR2 Yes
84 STI Lauren 2015 109,999 — SLR2P (3) LR2 Yes
85 STI Connaught 2015 109,999 — SLR2P (3) LR2 Yes
86 STI Spiga 2015 109,999 — SLR2P (3) LR2 Yes
87 STI Kingsway 2015 109,999 — SLR2P (3) LR2 Yes
88 STI Solidarity 2015 109,999 — SLR2P (3) LR2 Yes
89 STI Lombard 2015 109,999 — Time Charter (9) LR2 Yes
90 STI Grace 2016 109,999 — SLR2P (3) LR2 Yes
91 STI Jermyn 2016 109,999 — SLR2P (3) LR2 Yes
92 STI Sanctity 2016 109,999 — SLR2P (3) LR2 Yes
93 STI Solace 2016 109,999 — SLR2P (3) LR2 Yes
94 STI Stability 2016 109,999 — SLR2P (3) LR2 Yes
95 STI Steadfast 2016 109,999 — SLR2P (3) LR2 Yes
96 STI Supreme 2016 109,999 — SLR2P (3) LR2 Yes
97 STI Symphony 2016 109,999 — SLR2P (3) LR2 Yes
98 STI Gallantry 2016 113,000 — SLR2P (3) LR2 Yes
99 STI Goal 2016 113,000 — Time Charter (10) LR2 Yes
100 STI Guard 2016 113,000 — Time Charter (11) LR2 Yes
101 STI Guide 2016 113,000 — Time Charter (12) LR2 Yes
102 STI Selatar 2017 109,999 — SLR2P (3) LR2 Yes
103 STI Rambla 2017 109,999 — SLR2P (3) LR2 Yes
104 STI Gauntlet 2017 113,000 — Time Charter (13) LR2 Yes
105 STI Gladiator 2017 113,000 — Time Charter (12) LR2 Yes
106 STI Gratitude 2017 113,000 — Time Charter (14) LR2 Yes
107 STI Lobelia 2019 110,000 — SLR2P (3) LR2 Yes
108 STI Lotus 2019 110,000 — SLR2P (3) LR2 Yes
109 STI Lily 2019 110,000 — SLR2P (3) LR2 Yes
110 STI Lavender 2019 110,000 — Time Charter (15) LR2 Yes
111 STI Beryl 2013 49,990 — SMRP (2) MR Not Yet Installed
112 STI Le Rocher 2013 49,990 — SMRP (2) MR Not Yet Installed
113 STI Larvotto 2013 49,990 — SMRP (2) MR Not Yet Installed Total Fleet DWT 7,852,182
(1) This vessel operates in, or is expected to operate 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, 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.
(4) This vessel commenced a time charter in October 2022 for three years at an average rate of $25,000 per day.
(5) This vessel commenced a time charter in June 2022 for three years at an average rate of $21,000 per day. The daily rate is the average rate over the three year period, which is payable during the first six months at $30,000 per day, the next 6 months are payable at $20,000 per day, and years two and three are payable at $19,000 per day. The charterers have the option to extend the term of this agreement for an additional year at $22,500 per day. If this option is declared, the charterers have the option to further extend the term of this agreement for an additional year at $24,000 per day.
(6) This vessel commenced a time charter in July 2022 for three years at an average rate of $23,000 per day. The daily rate is the average rate over the three year period, which is payable in years one, two, and three at $30,000 per day, $20,000 per day, and $19,000 per day, respectively. The charterers have the option to extend the term of this agreement for an additional year at $24,500 per day. If this option is declared, the charterers have the option to further extend the term of this agreement for an additional year at $26,000 per day.
(7) This vessel commenced a time charter in July 2022 for three years at a rate of $23,000 per day. The charterers have the option to extend the term of this agreement for an additional year at $24,000 per day. If this option is declared, the charterers have the option to further extend the term of this agreement for an additional year at $25,000 per day. If this second option is declared, the charterers have the option to further extend the term of this agreement for an additional year at $26,000 per day.
(8) This vessel commenced a time charter in August 2022 for three years at a rate of $21,000 per day. The daily rate is the average rate over the three year period, which is payable during the first six months at $30,000 per day, the next 6 months are payable at $20,000 per day, and years two and three are payable at $19,000 per day. The charterers have the option to extend the term of this agreement for an additional year at $22,500 per day. If this option is declared, the charterers have the option to further extend the term of this agreement for an additional year at $24,000 per day.
(9) This vessel commenced a time charter in September 2022 for three years at an average rate of $32,750 per day. The charterer has the option to extend the term of this agreement for an additional year at $34,750 per day. If this option is declared, the charterer has the option to further extend the term of this agreement for an additional year at $36,750 per day.
(10) This vessel commenced a time charter in August 2022 for three years at a rate of $30,000 per day. The charterers have the option to extend the term of this agreement for an additional year at $32,000 per day. If this option is declared, the charterers have the option to further extend the term of this agreement for an additional year at $34,000 per day.
(11) This vessel commenced a time charter in July 2022 for five years at a rate of $28,000 per day. The charterers have the option to convert the term of this agreement to three years at $30,000 per day, which must be declared within 30 months after the delivery date.
(12) This vessel commenced a time charter in July 2022 for three years at an average rate of $28,000 per day. The charterers have the option to extend the term of this agreement for an additional year at $31,000 per day. If this option is declared, the charterers have the option to further extend the term of this agreement for an additional year at $33,000 per day.
(13) This vessel is expected to commence a time charter in the fourth quarter 2022 for three years at an average rate of $32,750 per day.
(14) This vessel commenced a time charter in May 2022 for three years at an average rate of $28,000 per day. The charterers have the option to extend the term of this agreement for an additional year at $31,000 per day. If this option is declared, the charterers have the option to further extend the term of this agreement for an additional year at $33,000 per day.
(15) This vessel is expected to commence a time charter in the fourth quarter 2022 for three years at an average rate of $35,000 per day.
*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 2021 and 2022 were as follows:
*Date paid* *Dividends per common*
*share*
March 2021 $0.10
June 2021 $0.10
September 2021 $0.10
December 2021 $0.10
March 2022 $0.10
June 2022 $0.10
September 2022 $0.10
On October 31, 2022, the Company's Board of Directors declared a quarterly cash dividend of $0.10 per common share, payable on or about December 15, 2022 to all shareholders of record as of November 17, 2022 (the record date). As of November 1, 2022, there were 56,294,672 common shares of the Company outstanding.
*COVID-19 *
Since the beginning of calendar year 2020, the outbreak of the COVID-19 virus has resulted in a significant reduction in global economic activity and extreme volatility in the global financial markets, the effects of which continued throughout 2021. The easing of restrictive measures that were put in place to combat the spread of the virus, and the successful roll-out of vaccines has served as a catalyst for an economic recovery in many countries throughout the world, which has, in part, led to a vastly improved financial performance during the second quarter of 2022. Nevertheless, the Company expects that the COVID-19 virus will continue to cause volatility in the commodities markets in the future. In particular, the spread of more contagious and vaccine resistant variants, along with the continued implementation of restrictive measures by governments in certain parts of the world, have hampered a full re-opening of the global economy. The scale and duration of these circumstances is unknowable but could have a material impact on the Company's earnings, cash flow and financial condition. An estimate of the impact on the Company's results of operations, financial condition, and future performance cannot be made at this time.
*Conflict in Ukraine*
The ongoing military conflict in Ukraine has had a significant direct and indirect impact on the trade of refined petroleum products. This conflict has resulted in the United States, United Kingdom, and the European Union, among other countries, implementing sanctions and executive orders against citizens, entities, and activities connected to Russia. Some of these sanctions and executive orders target the Russian oil sector, including a prohibition on the import of oil from Russia to the United States or the United Kingdom, and the European Union's recent ban on Russian crude oil and petroleum products which took effect, or are scheduled to take effect in December 2022 and February 2023, respectively. The Company cannot foresee what other sanctions or executive orders may arise that affect the trade of petroleum products. Furthermore, the conflict and ensuing international response has disrupted the supply of Russian oil to the global market, and as a result, the price of oil and petroleum products has experienced significant volatility. The Company cannot predict what effect the higher price of oil and petroleum products will have on demand, and it is possible that the current conflict in Ukraine could adversely affect the Company's financial condition, results of operations, and future performance.
*About Scorpio Tankers Inc. *
Scorpio Tankers Inc. is a provider of marine transportation of petroleum products worldwide. Scorpio Tankers Inc. currently owns, lease finances or bareboat charters-in 113 product tankers (39 LR2 tankers, 60 MR tankers and 14 Handymax tankers) with an average age of 6.8 years. 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 or loss 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 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 TCE revenue, adjusted net income or loss with 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.
TCE revenue, on a historical basis, is reconciled above in the section entitled "Explanation of Variances on the Third Quarter of 2022 Financial Results Compared to the Third Quarter of 2021". 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 September 30, 2022* *Per share* *Per share*
In thousands of U.S. dollars except per share data *Amount* *basic* *diluted* Net income $ 266,165 $ 4.84 $ 4.31 Adjustments: Net gain on sales of vessels (2,732 ) (0.05 ) (0.04 ) Write-offs of deferred financing fees and debt extinguishment costs 1,443 0.03 0.02 Gain on repurchase of Convertible Notes (69 ) $ — $ — Adjusted net income $ 264,807 $ 4.81 $ 4.29
*For the three months ended September 30, 2021* *Per share* *Per share*
In thousands of U.S. dollars except per share data *Amount* *basic* *diluted* Net loss $ (73,267 ) $ (1.34 ) $ (1.34 ) Adjustment: Gain on sale and leaseback amendment (2,851 ) $ (0.05 ) $ (0.05 ) Adjusted net loss $ (76,118 ) $ (1.39 ) $ (1.39 )
*For the nine months ended September 30, 2022* *Per share* *Per share*
In thousands of U.S. dollars except per share data *Amount* *basic* *diluted* Net income $ 372,848