Scorpio Tankers Inc. Announces Financial Results for the Third Quarter of 2024 and the Declaration of a Dividend
MONACO, Oct. 29, 2024 (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, 2024. The Company also announced that its board of directors (the "Board of Directors") has declared a quarterly cash dividend on its common shares of $0.40 per share.
Results for the three months ended September 30, 2024 and 2023
For the three months ended September 30, 2024, the Company had net income of $158.7 million, or $3.31 basic and $3.16 diluted earnings per share.
For the three months ended September 30, 2024, the Company had adjusted net income (see Non-IFRS Measures section below) of $87.7 million, or $1.83 basic and $1.75 diluted earnings per share, which excludes from net income (i) a $69.3 million, or $1.45 per basic and $1.38 per diluted share, gain on sales of vessels, (ii) a $2.8 million, or $0.06 per basic and diluted share, gain on sale of a vessel within a joint venture, and (iii) a $1.1 million, or $0.02 per basic and diluted share, fair value loss on financial assets measured at fair value.
For the three months ended September 30, 2023, the Company had net income of $100.4 million, or $2.01 basic and $1.93 diluted earnings per share.
For the three months ended September 30, 2023, the Company had adjusted net income (see Non-IFRS Measures section below) of $99.2 million, or $1.99 basic and $1.91 diluted earnings per share, which excludes from net income (i) a $6.0 million, or $0.12 per basic and diluted share, write-off or acceleration of the amortization of deferred financing fees on certain lease financing obligations and related debt extinguishment costs, and (ii) a $7.1 million, or $0.14 per basic and diluted share, gain on the sale of a vessel.
Results for the nine months ended September 30, 2024 and 2023
For the nine months ended September 30, 2024, the Company had net income of $600.2 million, or $12.18 basic and $11.62 diluted earnings per share.
For the nine months ended September 30, 2024, the Company had adjusted net income (see Non-IFRS Measures section below) of $482.6 million, or $9.79 basic and $9.34 diluted earnings per share, which excludes from net income (i) a $124.0 million, or $2.52 per basic and $2.40 per diluted share, gain on sales of vessels, (ii) a $2.8 million, or $0.06 per basic and $0.05 per diluted share, gain on sale of a vessel within a joint venture, (iii) a $1.1 million, or $0.02 per basic and diluted share, fair value loss on financial assets measured at fair value, and (iv) a $8.1 million, or $0.16 per basic and diluted share, write-off or acceleration of the amortization of deferred financing fees related to unscheduled debt and lease payments and debt extinguishment costs on certain lease financing obligations.
For the nine months ended September 30, 2023, the Company had net income of $426.0 million, or $8.00 basic and $7.68 diluted earnings per share.
For the nine months ended September 30, 2023, the Company had adjusted net income (see Non-IFRS Measures section below) of $428.1 million, or $8.04 basic and $7.72 diluted earnings per share, which excludes from net income (i) a $9.3 million, or $0.17 per basic and diluted share, write-off or acceleration of the amortization of deferred financing fees on certain lease financing obligations and related debt extinguishment costs, and (ii) a $7.1 million, or $0.13 per basic and diluted share, gain on the sale of a vessel.
Declaration of Dividend
On October 28, 2024, the Company's Board of Directors declared a quarterly cash dividend of $0.40 per common share, with a payment date of December 13, 2024 to all shareholders of record as of November 22, 2024 (the record date). As of October 28, 2024, there were 50,525,001 common shares of the Company outstanding.
Summary of Third Quarter 2024 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 2024 as of the date hereof (See footnotes to "Other operating data" table below for the definition of daily TCE revenue):
Pool and Spot Market
Time Charters Out of the Pool
Average Daily TCE Revenue
Expected Revenue Days (1)
% of Days
Average Daily TCE Revenue
Expected Revenue Days (1)
% of Days
LR2
$
31,600
2,450
35
%
$
30,750
910
100
%
MR
$
20,800
3,750
35
%
$
22,500
500
100
%
Handymax
$
13,000
1,150
34
%
N/A
N/A
N/A
(1) Expected Revenue Days are the total number of calendar days in the quarter for each vessel, less the total number of expected off-hire days during the period associated with major repairs or drydockings. Consequently, Expected Revenue Days represent the total number of days the vessel is expected to be available to earn revenue. Idle days, which are days when a vessel is available to earn revenue, yet is not employed, are included in revenue days. The Company uses revenue days to show changes in net vessel revenues between periods.
Below is a summary of the average daily TCE revenue earned by the Company's vessels during the third quarter of 2024:
Average Daily TCE Revenue
Vessel class
Pool / Spot
Time Charters
LR2
$
38,011
$
30,872
MR
$
25,146
$
21,824
Handymax
$
19,605
N/A
In October 2024, the Company entered into an agreement to sell its 2019 built scrubber fitted LR2 product tanker, STI Lily for $73.5 million. The sale is expected to close within the fourth quarter of 2024. This vessel was collateralized under the 2023 $1.0 Billion Credit Facility and the Company recently repaid $22.9 million of debt on this facility in anticipation of the closing of the sale. This debt repayment did not impact the undrawn amount of $288.2 million that is currently available under the revolving portion of this facility.
During the third quarter of 2024, the Company entered into agreements to sell two 2014 built scrubber fitted MR product tankers, STI San Antonio and STI Texas City, for $42.5 million per vessel. These sales are expected to close within the fourth quarter of 2024. There will be no debt repayments as a result of these sales as (i) STI San Antonio was recently replaced by STI Memphis as collateral on the 2023 $225.0 million Credit Facility and (ii) STI Texas City was released from the collateral package on the 2023 $117.4 Million Credit Facility given the sufficient headroom under the leverage covenant with the six remaining collateralized vessels under the facility.
During the third quarter of 2024, the Company invested $89.1 million for a passive, minority interest in DHT Holdings Inc. ("DHT"), a publicly traded crude tanker shipping company which owns a fleet of 28 Very Large Crude Carriers. The Company purchased 7,982,480 common shares in DHT, or 4.9% of the outstanding shares, in the open market at an average price of $11.17 per share during this period. This investment reflects the Company's constructive outlook in this sector.
During the third quarter of 2024, the Company entered into a three-year time charter-out agreement for the 2018 built MR product tanker, STI Jardins, for $29,550 per day. This vessel is not scrubber-fitted and the time charter commenced in October 2024.
On July 29, 2024, the Company's Board of Directors replenished and increased the 2023 Securities Repurchase Program to purchase up to an aggregate of $400 million of the Company's securities which, in addition to its common shares also consist of its Unsecured Senior Notes Due 2025 (NYSE:SBBA).
In July 2024, the Company executed an agreement with the lenders on its 2023 $225.0 Million Credit Facility to convert the then $174.2 million outstanding balance on this facility from a term loan to a revolving credit facility. While the repayment schedule remains unchanged, this amendment gives the Company the flexibility to make unscheduled repayments that can be re-drawn in the future subject to a quarterly amortization profile.
In September 2024, the Company repaid the outstanding balance of $64.2 million on its BNPP Sinosure Credit Facility. The facility was collateralized by five vessels and bore interest at SOFR plus a blended margin (between the Commercial and Sinosure facilities) of 2.91% per annum.
During the third quarter of 2024, the Company closed on the sales of six MR product tankers. The 2012 built vessels, STI Garnet, STI Onyx, STI Ruby, and STI Topaz, were sold for $142.5 million in aggregate to three separate buyers. The 2013 built vessel, STI Beryl (which is not scrubber fitted), was sold for $36.6 million and the 2015 built MR product tanker, STI Manhattan, was sold for $40.8 million. The Company did not make any debt repayments as a result of these sales as STI Garnet, STI Onyx, STI Ruby, STI Topaz, and STI Beryl were unencumbered at the time of the sales and STI Manhattan was replaced by STI Notting Hill as collateral for the 2023 $1.0 Billion Credit Facility.
Securities Repurchase Program
From July 1, 2024 through October 28, 2024, the Company repurchased 3,362,410 of its common shares in the open market at an average price of $73.34 per share under the 2023 Securities Repurchase Program. Since April 1, 2024, the Company has repurchased an aggregate of 4,049,064 of its common shares in the open market at an average price of $74.17 per share.
There is $208.9 million available under the 2023 Securities Repurchase Program as of October 28, 2024.
Diluted Weighted Number of Shares
The computation of earnings per share is determined by taking into consideration the potentially dilutive shares arising from the Company's equity incentive plan. These potentially dilutive shares are excluded from the computation of earnings per share to the extent they are anti-dilutive.
For the three and nine months ended September 30, 2024, the Company's basic weighted average number of shares outstanding were 47,941,734 and 49,285,618, respectively. For the three and nine months ended September 30, 2024, the Company's diluted weighted average number of shares outstanding were 50,150,721 and 51,644,038, respectively, which included the potentially dilutive impact of restricted shares issued under the Company's equity incentive plan.
Conference Call
Title: Scorpio Tankers Inc. Third Quarter 2024 Conference Call
Date: Tuesday October 29, 2024
Time: 9:00 AM Eastern Daylight Time and 2:00 PM Central European Time
The conference call will be available over the internet, through the Scorpio Tankers Inc. website www.scorpiotankers.com and the webcast link:
https://edge.media-server.com/mmc/p/bcz8upph
Participants for the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.
The conference will also be available telephonically:
US/CANADA Dial-In Number: 1-833-636-1321
International Dial-In Number: 1-412-902-4260
Please ask to join the Scorpio Tankers Inc. call.
Participants should dial into the call 10 minutes before the scheduled time.
Current Liquidity
As of October 25, 2024, the Company had $220.5 million in unrestricted cash and cash equivalents and $288.2 million of availability under the revolving portion of the 2023 $1.0 Billion Credit Facility. The sale of STI Lily is expected to close within the next two weeks. The sale price is $73.5 million and the debt related to this vessel of $22.9 million has already been repaid in anticipation of closing. The sales of STI Texas City and STI San Antonio are expected to close within the fourth quarter of 2024 for $42.5 million per vessel. There is no debt repayment associated with these sales.
Debt
The following table sets forth the unscheduled debt repayments that the Company recently completed.
Facility
Repayment date
Principal balance repaid (in millions)
Vessels
BNPP Sinosure Credit Facility
Sept-24
$
64.2
STI Park, STI Orchard, STI Elysees, STI Fulham, STI Hackney
Total unscheduled repayments - Q3 2024
$
64.2
2023 $1.0 Billion Credit Facility
Oct-24
$
22.9
STI Lily
Total unscheduled repayments - Q4 2024
$
22.9
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, 2024
Outstanding Principal as of September 30, 2024
Outstanding Principal as of October 25, 2024
1
BNPP Sinosure Credit Facility (1)
$
64,212
$
—
$
—
2
2023 $225.0 Million Credit Facility (2)
182,625
174,150
174,150
3
2023 $49.1 Million Credit Facility
43,318
42,164
42,164
4
2023 $117.4 Million Credit Facility
100,386
96,134
96,134
5
2023 $1.0 Billion Credit Facility (3)
374,128
374,128
351,213
6
2023 $94.0 Million Credit Facility
88,075
85,658
85,658
7
Ocean Yield Lease Financing
23,871
23,095
22,830
8
2021 Ocean Yield Lease Financing
55,166
53,691
53,194
9
Unsecured Senior Notes Due 2025
70,571
70,571
70,571
Gross debt outstanding
1,002,352
919,591
895,914
Cash and cash equivalents
224,649
201,001
220,527
Net debt
$
777,703
$
718,590
$
675,387
(1)
Refer to the preceding table for a description of unscheduled payment activity that has recently occurred.
(2)
In July 2024, the Company amended its 2023 $225.0 Million Credit Facility to convert this credit facility from a term loan to a revolving credit facility. The amendment gives the Company the flexibility to make unscheduled repayments on this facility that can be re-drawn in the future. As of October 25, 2024 there is $174.2 million outstanding on this facility and under the amendment, the outstanding and/or availability of the revolving credit facility will continue to amortize quarterly under the same schedule as the original term loan.
(3)
In October 2024, the Company gave notice on the 2023 $1.0 Billion Credit Facility to prepay $22.9 million of debt related to STI Lily in anticipation of the closing of the sale of the vessel. This debt repayment did not impact the undrawn amount of $288.2 million that is currently available under the revolving portion of this facility.
Set forth below are the estimated expected future principal repayments on the Company's outstanding indebtedness as of September 30, 2024, which includes principal amounts due under the Company's secured credit facilities, lease financing arrangements and Unsecured Senior Notes Due 2025 (which also include actual scheduled payments made from October 1, 2024 through October 25, 2024):
In millions of U.S. dollars
Repayments/maturities of unsecured debt
Vessel financings - maturities in 2024 and 2025, including announced prepayments (2)
Vessel financings - scheduled repayments, in addition to maturities in 2026 and thereafter
Total (1)
October 1, 2024 to October 25, 2024
$
—
$
22.9
$
0.8
$
23.7
Remaining Q4 2024
—
—
17.8
17.8
Q1 2025
—
—
18.5
18.5
Q2 2025
70.6
—
14.6
85.2
Q3 2025
—
—
14.6
14.6
Q4 2025
—
—
14.7
14.7
2026 and thereafter
—
—
745.1
745.1
$
70.6
$
22.9
$
826.1
$
919.6
(1) Amounts represent the principal payments due on the Company's outstanding indebtedness as of September 30, 2024.
(2) Reflects the October 2024 prepayment of the 2023 $1.0 Billion Credit Facility in anticipation of the sale of STI Lily.
Drydock Update
Set forth below is a table summarizing the drydock activity that occurred during the third quarter of 2024 and the estimated expected payments to be made, and off-hire days that are expected to be incurred, for the Company's drydocks through 2024 and 2025:
Number of (3)
Aggregate costs in millions of USD (1)
Aggregate off-hire days (2)
LR2s
MRs
Handymax
Q3 2024 - actual
$
30.4
481
4
9
5
Q4 2024 - estimated
43.3
356
4
8
6
Q1 2025 - estimated
8.1
176
3
3
0
Q2 2025 - estimated
12.7
180
4
5
0
Q3 2025 - estimated
7.1
100
2
3
0
Q4 2025 - estimated
1.6
20
1
0
0
(1) These costs include estimated cash payments for drydocks. These amounts may include costs incurred for previous projects for which payments may not be due until subsequent quarters, or payments that are due in advance of the scheduled service and may be scheduled to occur in quarters prior to the actual drydocks. The timing of the payments set forth are estimates only and may vary as the timing of the related drydocks finalize.
(2) Represents the total estimated off-hire days during the period for drydockings or major repairs, including vessels that commenced work in a previous period.
(3) Represents the number of vessels scheduled to commence drydock. It does not include vessels that commenced work in prior periods but will be completed in the subsequent period. Additionally, the timing set forth in these tables may vary as drydock times are finalized.
Explanation of Variances on the Third Quarter of 2024 Financial Results Compared to the Third Quarter of 2023
For the three months ended September 30, 2024, the Company recorded net income of $158.7 million compared to net income of $100.4 million for the three months ended September 30, 2023. 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, 2024, and 2023:
For the three months ended September 30,
In thousands of U.S. dollars
2024
2023
Vessel revenue
$
267,986
$
291,179
Voyage expenses
(9,785)
(1,985)
TCE revenue
$
258,201
$
289,194
TCE revenue for the three months ended September 30, 2024 decreased by $31.0 million to $258.2 million, from $289.2 million for the three months ended September 30, 2023. Overall, the average daily TCE revenue increased to $28,488 per vessel during the three months ended September 30, 2024, from $28,313 per vessel during the three months ended September 30, 2023. The average number of vessels was 104.8 during the three months ended September 30, 2024 as compared to 112.1 during the three months ended September 30, 2023.
TCE revenue for the three months ended September 30, 2024 declined as compared to the same period in the previous year. This was mainly attributable to a decrease in the average number of vessels in the Company's fleet during each period. Additionally, a combination of seasonality, reduced product exports in certain regions, and competition from crude tankers added pressure to daily spot TCE rates during the third quarter of 2024. During the first half of 2024, daily spot TCE rates for the Company's LR2 vessels benefited from strong global distillate demand and increasing ton miles as vessels re-routed around the Cape of Good Hope due to conditions in the Red Sea. The resultant spike in daily spot TCE rates on this route, coupled with weak demand for crude oil tankers, drew the attention of larger crude tanker owners (VLCCs and Suezmaxes) who underwent the costly process to clean the cargo tanks of their vessels and temporarily enter the clean trade. While LR2 daily TCE rates have improved as compared to the third quarter of 2023, the entry of crude vessels into the LR2 trade captured longer ton-mile clean tanker demand that would have otherwise gone to LR2s, consequently suppressing daily spot TCE rates for the Company's LR2 vessels as compared to the second quarter of 2024. Additionally, seasonality and reduced refinery throughput attributable to lower refining margins led to decreased volumes from Asia and Europe, which had a negative impact on daily spot TCE rates earned by the Company's MR and Handymax vessels.
TCE revenue for the three months ended September 30, 2023 was impacted by extended refinery maintenance, lower refining margins, and a reduction in arbitrage opportunities, which all led to reduced refinery throughput and decreased volumes from major export regions. These conditions improved in the latter part of the quarter and daily TCE rates strengthened as a result. On a seasonally adjusted basis, demand for the Company's vessels during the third quarter of 2023 was supported by growing underlying consumption for refined petroleum products against the backdrop of low inventory levels and a modest newbuilding orderbook.
Vessel operating costs for the three months ended September 30, 2024 increased by $1.8 million to $80.9 million, from $79.1 million for the three months ended September 30, 2023. Overall, the average daily vessel operating costs increased to $8,395 per vessel for the three months ended September 30, 2024 from $7,669 per vessel for the three months ended September 30, 2023. The increase was seen across all vessel classes, with the LR2 segment having the largest increase, which was driven by higher repairs and maintenance and spare parts costs, coupled with disruptions in trading patterns that have impacted the costs of sourcing and transporting spare parts.
Depreciation expense, owned or sale leaseback vessels for the three months ended September 30, 2024 decreased by $1.5 million to $45.5 million, from $47.0 million for the three months ended September 30, 2023. Depreciation - right of use assets also decreased by $4.1 million over the same period. This combined decrease was primarily attributable to a decrease in the average number of owned vessels, which was 104.8 during the three months ended September 30, 2024 as compared to 112.1 during the three months ended September 30, 2023.
General and administrative expenses for the three months ended September 30, 2024 increased by $5.3 million to $30.0 million, from $24.6 million for the three months ended September 30, 2023 due to an increase in non-cash restricted stock amortization resulting primarily from grants made in the second quarter of 2024. The stock price on the dates of the grants is used as the fair value for the accounting of the awards under IFRS. The awards granted to employees vest ratably in years three, four and five following the initial grant.
Financial expenses for the three months ended September 30, 2024 decreased by $28.8 million to $20.9 million, from $49.7 million for the three months ended September 30, 2023. This decrease was primarily attributable to the overall reduction in interest expense on debt and sale leaseback arrangements due to the Company's deleveraging efforts over the past twelve months. The Company's average indebtedness decreased to $1.0 billion during the three months ended September 30, 2024, as compared to $2.0 billion during the three months ended September 30, 2023. Additionally:
The Company recorded nominal debt extinguishment related costs during the three months ended September 30, 2024, as compared to $6.0 million during the three months ended September 30, 2023.
The amortization of deferred financing fees was $2.0 million during the three months ended September 30, 2024, as compared to $1.9 million during the three months ended September 30, 2023.
Dividend income and fair value loss on financial assets measured at fair value through profit or loss, net includes $2.0 million of dividends received and an unrealized loss of $1.1 million for the three months ended September 30, 2024 related to the investment in DHT. During the third quarter of 2024, the Company invested $89.1 million for a passive, minority interest in DHT, a publicly traded crude tanker shipping company which owns a fleet of 28 Very Large Crude Carriers. The Company purchased 7,982,480 common shares in DHT, or 4.9% of the outstanding shares, in the open market at an average price of $11.17 per share during this period.
Scorpio Tankers Inc. and SubsidiariesCondensed Consolidated Statements of Income(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
2024
2023
2024
2023
Revenue
Vessel revenue
$
267,986
$
291,179
$
1,039,982
$
1,004,909
Operating expenses
Vessel operating costs
(80,943
)
(79,113
)
(238,335
)
(231,645
)
Voyage expenses
(9,785
)
(1,985
)
(18,547
)
(10,998
)
Depreciation - owned or sale leaseback vessels
(45,512
)
(47,016
)
(140,099
)
(129,704
)
Depreciation - right of use assets
—
(4,136
)
—
(22,139
)
General and administrative expenses
(29,991
)
(24,647
)
(97,188
)
(74,127
)
Gain on sales of vessels
69,306
7,127
123,961
7,127
Total operating expenses
(96,925
)
(149,770
)
(370,208
)
(461,486
)
Operating income
171,061
141,409
669,774
543,423
Other (expenses) and income, net
Financial expenses
(20,883
)
(49,698
)
(91,204
)
(136,950
)
Financial income
2,859
6,071
12,977
14,615
Share of income from dual fuel tanker joint venture
3,706
2,544
6,552
4,940
Dividend income and fair value loss on financial assets measured at fair value through profit or loss, net
957
—
957
—
Other income and (expenses), net
1,005
42
1,161
(20
)
Total other expense, net
(12,356
)
(41,041
)
(69,557
)
(117,415
)
Net income
$
158,705
$
100,368
$
600,217
$
426,008
