Scorpio Tankers Inc. Announces Financial Results for the Third Quarter of 2019 and Declaration of a Quarterly Dividend

MONACO, Nov. 07, 2019 (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, 2019.  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, 2019 and 2018For the three months ended September 30, 2019, the Company’s adjusted net loss (see Non-IFRS Measures section below) was $44.8 million, or $0.92 basic and diluted loss per share, which excludes from the net loss a $0.4 million, or $0.01 per basic and diluted share, write-off of deferred financing fees. For the three months ended September 30, 2019, the Company had a net loss of $45.3 million, or $0.93 basic and diluted loss per share.For the three months ended September 30, 2018, the Company’s adjusted net loss (see Non-IFRS Measures section below) was $64.9 million, or $2.09 basic and diluted loss per share, which excludes from the net loss (i) a $0.9 million loss recorded on the Company’s exchange of $15.0 million of its Convertible Notes due 2019, and (ii) a $5.9 million write-off of deferred financing fees. The adjustments resulted in an aggregate reduction of the Company’s net loss by $6.8 million, or $0.22 per basic and diluted share. For the three months ended September 30, 2018, the Company had a net loss of $71.7 million, or $2.31 basic and diluted loss per share.Results for the nine months ended September 30, 2019 and 2018For the nine months ended September 30, 2019, the Company’s adjusted net loss (see Non-IFRS Measures section below) was $59.8 million, or $1.24 basic and diluted loss per share, which excludes from the net loss a $0.7 million, or $0.01 per basic and diluted share, write-off of deferred financing fees. For the nine months ended September 30, 2019, the Company had a net loss of $60.5 million, or $1.25 basic and diluted loss per share.For the nine months ended September 30, 2018, the Company’s adjusted net loss (see Non-IFRS Measures section below) was $141.3 million, or $4.57 basic and diluted loss per share, which excludes from the net loss (i) an aggregate loss of $17.8 million recorded on the Company’s exchange of $203.5 million of its Convertible Notes due 2019, (ii) a $12.9 million write-off of deferred financing fees, and (iii) $0.3 million of transaction costs related to the merger with Navig8 Product Tankers Inc. The adjustments resulted in an aggregate reduction of the Company’s net loss by $31.1 million, or $1.00 per basic and diluted share. For the nine months ended September 30, 2018, the Company had a net loss of $172.4 million, or $5.57 basic and diluted loss per share.Declaration of DividendOn November 6, 2019, the Company’s Board of Directors declared a quarterly cash dividend of $0.10 per common share, payable on or about December 13, 2019 to all shareholders of record as of November 25, 2019 (the record date).  As of November 6, 2019, there were 58,142,400 common shares of the Company outstanding.Summary of Other Recent and Third Quarter Significant EventsAcquisition of the leasehold interests in 19 product tankers
On September 26, 2019, the Company acquired subsidiaries of Trafigura, which have leasehold interests in 19 product tankers under bareboat charter agreements with subsidiaries of an international financial institution for aggregate consideration of $803 million.  Of the 19 vessels, 15 (consisting of 11 MRs and four LR2s) were delivered during 2019 and four MRs are currently under construction.  The consideration exchanged consisted of:Each bareboat charter agreement has a term of eight years from the delivery date of the respective vessel, and the Company has purchase options beginning after the first year of each agreement. Each agreement bears interest at LIBOR plus a margin of 3.50% per annum and will be repaid in equal monthly installments of approximately $0.2 million per month per vessel.  Additionally, an aggregate prepayment of $18 million ($0.8 million for each MR and $1.5 million for each LR2) will be made in equal monthly installments over the first 12 months of each bareboat charter agreement.
The Trafigura transaction was accounted for as an asset acquisition, with the acquisition of the leasehold interests accounted for under IFRS 16, Leases, which was effective from January 1, 2019.  Accordingly, the Company recorded lease liabilities and corresponding right of use assets for the delivered vessels upon the closing date of the Trafigura Transaction.  The right of use assets were measured based on (i) the present value of the minimum lease payments under each lease (which assumes the exercise of the purchase options at expiration), (ii) the value of the equity issued for each lease (as an initial direct cost) and (iii) other initial direct costs as part of the Trafigura Transaction.The lease liabilities and corresponding right of use assets for the four undelivered vessels will be recorded upon the commencement date of each lease.  The value of the Company’s common shares issued for the leasehold interests on the four undelivered vessels was recorded within ‘Other long-term assets’ on the balance sheet at the closing date of the Trafigura Transaction and will be reclassified to ‘Right of use assets’ upon the commencement date of each lease.$250 Million Securities Repurchase ProgramIn 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 Unsecured Senior Notes due 2020 (NYSE: SBNA), which were issued in May 2014, and Convertible Notes due 2022, which were issued in May and July 2018.No securities were repurchased under this program during the third quarter of 2019 and through the date of this press release.As of the date hereof, the Company has the authority to purchase up to an additional $121.6 million of its securities under its Securities Repurchase Program. The Company may repurchase its securities in the open market, at times and prices that are considered to be appropriate by the Company, but is not obligated under the terms of the Securities Repurchase Program to repurchase any of its securities.Diluted Weighted Number of SharesDiluted earnings per share is determined using the if-converted method. Under this method, the Company assumes that its Convertible Notes due 2022, which were issued in May and July 2018, were converted into common shares at the beginning of each period and the interest and non-cash amortization expense associated with these notes of $3.7 million and $10.9 million during the three and nine months ended September 30, 2019, 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, 2019, the Company’s basic weighted average number of shares were 48,529,024 and 48,251,159, respectively.  For the three and nine months ended September 30, 2019, the Company’s diluted weighted average number of shares were 50,169,591 and 49,735,327 respectively, excluding the impact of the Convertible Notes due 2022, and 55,394,037 and 55,890,573, respectively, under the if-converted method.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, 2019 as the Company incurred net losses during those periods.The Company’s Convertible Notes due 2019 matured in July 2019, and the outstanding balance of $142.7 million was fully repaid in cash upon maturity.  As of the date hereof, the Company’s trading stock price is below the conversion price of the Convertible Notes due 2022.Conference CallThe Company has scheduled a conference call on November 7, 2019 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) 861-2416International Dial-In Number:  +1 (703) 736-7422Conference ID:  3557977Participants 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/warnvpgyCurrent LiquidityAs of November 6, 2019, the Company had $200.8 million in unrestricted cash and cash equivalents.Drydock, Scrubber and Ballast Water Treatment UpdateSet forth below is a table summarizing the drydock, scrubber and ballast water treatment system activity that occurred during the third quarter of 2019Set forth below are the estimated expected payments for the Company’s drydocks, ballast water treatment system installations, and scrubber installations through 2020 (which also include actual payments made during the fourth quarter of 2019 through the date of this press release):

Set forth below are the expected, estimated number of ships and estimated off-hire days for the Company’s drydocks, ballast water treatment system installations, and scrubber installations ⁽²⁾:

Debt
Set forth below is a summary of the Company’s outstanding indebtedness as of the dates presented:
Set forth below are the estimated expected future principal repayments on the Company’s outstanding indebtedness as of September 30, 2019, which includes principal amounts due under lease financing arrangements and lease liabilities under IFRS 16 (which also include actual payments made during the fourth quarter of 2019 through the date of this press release):
Explanation of Variances on the Third Quarter of 2019 Financial Results Compared to the Third Quarter of 2018
For the three months ended September 30, 2019, the Company recorded a net loss of $45.3 million compared to a net loss of $71.7 million for the three months ended September 30, 2018. The following were the significant changes between the two periods:

Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Statements of Income or Loss
(unaudited) 
Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(unaudited)
Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(unaudited)As described in the preceding sections, on September 26, 2019, the Company acquired subsidiaries of Trafigura which have leasehold interests in 19 product tankers under bareboat charter agreements with subsidiaries of an international financial institution for aggregate consideration of $803 million.  Of the 19 vessels, 15 (consisting of 11 MRs and four LR2s) were delivered during 2019 and four MRs are currently under construction.  For the delivered vessels, the Company assumed the obligations under the bareboat charter agreements of $531.5 million and issued 3,981,619 shares of common stock at $29.00 per share to a nominee of Trafigura with an aggregate market value of $115.5 million.  For the four vessels under construction, the Company assumed the commitments on the bareboat charter agreements of $138.9 million and issued 591,254 shares of common stock at $29.00 per share to a nominee of Trafigura with an aggregate market value of $17.1 million. The obligations under the bareboat charter agreements for the undelivered vessels will be recorded upon the delivery of each vessel (the lease commencement date).This transaction represents a significant non-cash transaction that occurred during the nine months ended September 30, 2019.Scorpio Tankers Inc. and Subsidiaries
Other operating data for the three and nine months ended September 30, 2019 and 2018
(unaudited)
Fleet list as of November 6, 2019

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 2018 and 2019 were as follows:On November 6, 2019, the Company’s Board of Directors declared a quarterly cash dividend of $0.10 per share, payable on or about December 13, 2019 to all shareholders of record as of November 25, 2019 (the record date).  As of November 6, 2019, there were 58,142,400 common shares of the Company outstanding.Securities Repurchase ProgramIn 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 Unsecured Senior Notes due 2020 (NYSE: SBNA), which were issued in May 2014, and Convertible Notes due 2022, which were issued in May and July 2018.No securities were repurchased under this program during the third quarter of 2019 and through the date of this press release in the fourth quarter of 2019.As of the date hereof, the Company has the authority to purchase up to an additional $121.6 million of its securities under its Securities Repurchase Program. The Company may repurchase its securities in the open market, at times and prices that are considered to be appropriate by the Company, but is not obligated under the terms of the Securities Repurchase Program to repurchase any of its securities.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 124 product tankers (42 LR2 tankers, 12 LR1 tankers, 56 MR tankers and 14 Handymax tankers) with an average age of 3.8 years and bareboat charters-in 10 product tankers (three MR tankers and seven Handymax tankers). In addition, the Company will bareboat charter-in four MR tankers that are currently under construction and are scheduled to be delivered in 2020 (two in January, one in March, and one in September). 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 InformationThis 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 is reconciled above in the section entitled ‘Explanation of Variances on the Third Quarter of 2019 Financial Results Compared to the Third Quarter of 2018’.Reconciliation of Net Loss to Adjusted Net Loss


(1) Summation differences due to rounding.Reconciliation of Net Loss to Adjusted EBITDAForward-Looking StatementsMatters discussed in this press release may constitute forward‐looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward‐looking statements in order to encourage companies to provide prospective information about their business. Forward‐looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “target,” “project,” “likely,” “may,” “will,” “would,” “could” and similar expressions identify forward‐looking statements.The forward‐looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in the Company’s records and other data available from third parties. Although management believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond the Company’s control, there can be no assurance that the Company will achieve or accomplish these expectations, beliefs or projections. The Company undertakes no obligation, and specifically declines any obligation, except as required by law, to publicly update or revise any forward‐looking statements, whether as a result of new information, future events or otherwise.In addition to these important factors, other important factors that, in the Company’s view, could cause actual results to differ materially from those discussed in the forward‐looking statements include, unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies for the management, expansion and growth of the Company’s operations, risks relating to the integration of assets or operations of entities that it has or may in the future acquire and the possibility that the anticipated synergies and other benefits of such acquisitions may not be realized within expected timeframes or at all, the failure of counterparties to fully perform their contracts with the Company, the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for tanker vessel capacity, changes in the Company’s operating expenses, including bunker prices, drydocking and insurance costs, the market for the Company’s vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain financing and comply with covenants in such financing arrangements, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off‐hires, and other factors. Please see the Company’s filings with the SEC for a more complete discussion of certain of these and other risks and uncertainties.Scorpio Tankers Inc.
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