Friday, February 23, 2018America's Leading Online Business Magazine

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

MONACO, Feb. 14, 2018 (GLOBE NEWSWIRE) — Scorpio Tankers Inc. (NYSE:STNG) (“Scorpio Tankers,” or the “Company”) today reported its results for the three months and year ended December 31, 2017.

Results for the three months ended December 31, 2017 and 2016

For the three months ended December 31, 2017, the Company’s adjusted net loss (see Non-IFRS Measures section below) was $39.2 million, or $0.14 basic and diluted loss per share, which excludes from the net loss (i) $1.3 million of transaction costs related to the previously announced merger with Navig8 Product Tankers Inc (“NPTI”) (see Merger with Navig8 Product Tankers Inc below) and (ii) a $1.0 million write-off of deferred financing fees. The adjustments resulted in an aggregate reduction of the Company’s net loss by $2.3 million, or $0.01 per basic and diluted share. For the three months ended December 31, 2017, the Company had a net loss of $41.5 million, or $0.15 basic and diluted loss per share.

For the three months ended December 31, 2016, the Company’s adjusted net loss (see Non-IFRS Measures section below) was $29.4 million, or $0.18 basic and diluted loss per share, which excludes a $0.2 million, or $0.00 per basic and diluted share, unrealized loss on derivative financial instruments. For the three months ended December 31, 2016, the Company had a net loss of $29.7 million, or $0.18 basic and diluted loss per share.

Results for the years ended December 31, 2017 and 2016

For the year ended December 31, 2017, the Company’s adjusted net loss was $101.7 million (see Non-IFRS Measures section below), or $0.47 basic and diluted loss per share, which excludes from the net loss (i) a $23.3 million loss on sales of vessels, (ii)  $36.1 million of transaction costs related to the previously announced merger with NPTI, (iii) a $5.4 million gain recorded on the previously announced purchase of the four NPTI subsidiaries that own four LR1 tankers, and (iv) a $2.5 million write-off of deferred financing fees. The adjustments resulted in an aggregate reduction of the Company’s net loss by $56.5 million, or $0.26 per basic and diluted share.  For the year ended December 31, 2017, the Company had a net loss of $158.2 million, or $0.73 basic and diluted loss per share.

For the year ended December 31, 2016, the Company’s adjusted net loss (see Non-IFRS Measures section below) was $10.7 million, or $0.07 basic and diluted loss per share, which excludes (i) a $2.1 million loss on sales of vessels, (ii) an aggregate write-off of $14.5 million of deferred financing fees, (iii) a $1.4 million unrealized gain on derivative financial instruments and (iv) a $1.0 million aggregate gain recorded on the repurchase of $10.0 million aggregate principal amount of the Company’s Convertible Notes. The adjustments resulted in an aggregate decrease of the Company’s net loss by $14.2 million, or $0.08 per basic and diluted share. For the year ended December 31, 2016, the Company had a net loss of $24.9 million, or $0.15 basic and diluted loss per share.

Emanuele Lauro, chief executive officer and chairman of the board commented, “During the fourth quarter of 2017, we incurred some additional costs and reductions in revenue from the integration of the NPTI fleet.  We believe that these steps were important in order to better capitalize on the improving product tanker market fundamentals. This improvement is being reflected in higher asset values and higher spot and forward time charter rates.”

Declaration of Dividend

On February 13, 2018, the Company’s Board of Directors declared a quarterly cash dividend of $0.01 per share, payable on or about March 27, 2018 to all shareholders as of March 12, 2018 (the record date).  As of February 13, 2018, there were 326,507,544 shares outstanding.

Diluted Weighted Number of Shares

Diluted earnings per share is determined using the if-converted method. Under this method, the Company assumes that the Convertible Notes (which were issued in June 2014) were converted into common shares at the beginning of each period and the interest and non-cash amortization expense associated with these notes of $5.6 million and $22.3 million during the three months and year ended December 31, 2017, respectively, were not incurred. Conversion is not assumed if the results of this calculation are anti-dilutive.

For the three months and year ended December 31, 2017, the Company’s basic weighted average number of shares were 283,668,720 and 215,333,402, respectively.  The weighted average number of shares, both diluted and under the if-converted method, were anti-dilutive for the three months and year ended December 31, 2017 as the Company incurred net losses.

For the three months and year ended December 31, 2016, the Company’s basic weighted average number of shares were 161,868,161 and 161,118,654, respectively. The weighted average number of shares, both diluted and under the if-converted method, were anti-dilutive for the three months and year ended December 31, 2016 as the Company incurred net losses.

 As of the date hereof, the Convertible Notes are not eligible for conversion.

Summary of Recent and Fourth Quarter Significant Events

  • Below is a summary of the average daily TCE revenue (see Non-IFRS Measures section below) and duration for voyages fixed for the Company’s vessels thus far in the first quarter of 2018 as of the date hereof (See ‘Other operating data’ table below for definition of daily TCE revenue):

    • For the LR2s in the pool: approximately $15,000 per day for 60% of the days.
    • For the LR1s in the pool: approximately $9,500 per day for 60% of the days.
    • For the MRs in the pool: approximately $14,750 per day for 60% of the days.
    • For the ice-class 1A and 1B Handymaxes in the pool: approximately $12,000 per day for 60% of the days.
  • Below is a summary of the average daily TCE revenue earned on the Company’s vessels during the fourth quarter of 2017:
    • For the LR2s in the pools: $15,465 per revenue day (includes the LR2s purchased from NPTI and operated in the Navig8 Alpha8 pool for a portion of the fourth quarter 2017).
    • For the LR1s in the pools: $11,408 per revenue day (includes the LR1s purchased from NPTI and operated in the Navig8 LR8 pool for a portion of the fourth quarter 2017).
    • For the MRs in the pool: $12,012 per revenue day.
    • For the ice-class 1A and 1B Handymaxes in the pool: $10,140 per revenue day.
  • Raised estimated net proceeds of $99.5 million in an underwritten public offering of 34.5 million shares of common stock (including 4.5 million shares of common stock that were issued when the underwriters fully exercised their option to purchase additional shares) at an offering price of $3.00 per share. Scorpio Services Holding Limited (a related party affiliate) purchased 6.7 million of these shares at the offering price.  This offering, including the exercise of the underwriters’ overallotment option, closed in December 2017.
  • Accepted delivery of STI Donald C Trauscht, STI Esles II and STI Jardins, three MR product tankers that were under construction, from Hyundai Mipo Dockyard Co. Ltd. of South Korea (“HMD”).  STI Donald C Trauscht was delivered in October 2017; STI Esles II and STI Jardins were both delivered in January 2018.  As part of these deliveries, the Company drew down $20.7 million, $21.5 million and $21.5 million in October 2017, December 2017, and January 2018, respectively, from its 2017 Credit Facility to partially finance the purchase of these vessels.
  • Closed on the previously announced finance lease arrangements for STI Onyx and STI Amber in October and November 2017, respectively, which raised $15.2 million in additional liquidity after the repayment of debt.
  • Paid a quarterly cash dividend on the Company’s common stock of $0.01 per share in December 2017.

Merger with Navig8 Product Tankers Inc

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

  • On May 30, 2017, the Company issued 50 million shares of common stock in an underwritten public offering at an offering price of $4.00 per share for net proceeds of approximately $188.7 million, after deducting underwriters’ discounts and offering expenses.  The completion of this offering was a condition to closing the merger with NPTI. 

  • On June 14, 2017, the Company acquired certain of NPTI’s subsidiaries that own four LR1 tankers for an aggregate acquisition price of $156.0 million, consisting of $42.2 million of cash and $113.8 million of assumed indebtedness (including accrued interest).  The cash portion of the acquisition price (after considering cash flows from operations) formed part of the balance sheet of the combined company upon the closing of the merger on September 1, 2017. 
     
  • On September 1, 2017, the Company acquired the remaining eight LR1 and 15 LR2 tankers upon the closing of the merger.
  • During the fourth quarter of 2017, certain vessels acquired from NPTI transitioned technical managers and/or transitioned from trading crude oil to clean products.  The Company incurred approximately $3.1 million of additional costs as a result of these transitions and also incurred delays as the cargo tanks were cleaned.  In addition, for a portion of the quarter, certain of these vessels operated outside of the Scorpio pools in the spot market at below market rates before regaining their vettings. The costs are discussed below under ‘Explanation of Variances on the Fourth Quarter of 2017 Financial Results Compared to the Fourth Quarter of 2016′.

Finance Lease Agreements

In September 2017, the Company entered into finance lease agreements for five 2012 built MR product tankers (STI Amber, STI Topaz, STI Ruby, STI Garnet and STI Onyx) with an unaffiliated third party for a sales price of $27.5 million per vessel.  The financing for STI Topaz, STI Ruby and STI Garnet closed in September 2017. The financing for STI Onyx closed in October 2017 and the financing for STI Amber closed in November 2017. The Company’s liquidity increased by $36.5 million in aggregate ($21.3 million in the third quarter of 2017 and $15.2 million in the fourth quarter of 2017), after the repayment of outstanding debt, as a result of the closing of these transactions.

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

As a result of these transactions, the Company repaid the outstanding debt balance of (i) $44.6 million in aggregate for three vessels on its 2016 Credit Facility in September 2017, (ii) $13.8 million on its HSH Credit Facility for one vessel in October 2017 and (iii) $14.9 million on its 2016 Credit Facility for one vessel in November 2017. These agreements are being accounted for as financing transactions.

Time Charter-in Update

In February 2018, the Company entered into a new time charter-in agreement on a 2013 built, LR2 product tanker for six months at $14,300 per day.  The Company has an option to extend the charter for an additional six months at $15,310 per day.  This vessel is expected to be delivered before the end of March 2018.

In January 2018, the Company entered into a new time charter-in agreement on a 2012 built, MR product tanker for one year at $14,000 per day.  The Company has an option to extend the charter for an additional year at $14,400 per day.  This vessel is expected to be delivered before the end of March 2018.

In November 2017, the Company exercised the option to extend the time charter on a 2013 built, MR product tanker for an additional six months at $13,250 per day effective December 2017.  The Company also has an option to extend the charter for an additional year at $14,500 per day.

In November 2017, the Company exercised the option to extend the charter on a 2015 built, LR2 product tanker that is currently time chartered-in for an additional six months at $15,750 per day effective January 2018.

In November 2017, the Company entered into a new time charter-in agreement on a 2013 built, MR product tanker that was previously time chartered-in by the Company for one year at $13,950 per day effective January 2018.  The Company has an option to extend the charter for an additional year at $15,750 per day.

$250 Million Securities Repurchase Program

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

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

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

Conference Call

The Company has scheduled a conference call on February 14, 2018 at 9:00 AM Eastern Standard Time and 3:00 PM Central European Time.  The dial-in information is as follows:

US Dial-In Number: 1 (855) 861-2416

International Dial-In Number: +1 (703) 736-7422

Conference ID:  5389004

Participants should dial into the call 10 minutes before the scheduled time. The information provided on the teleconference is only accurate at the time of the conference call, and the Company will take no responsibility for providing updated information.

Slides and Audio Webcast:

There will also be a simultaneous live webcast over the internet, through the Scorpio Tankers Inc. website www.scorpiotankers.com.  Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

Webcast URL: https://edge.media-server.com/m6/p/568uhhv6 

Current Liquidity

As of February 13, 2018, the Company had $187.9 million in unrestricted cash and cash equivalents.

Drydock Update

Five of the Company’s 2012 built MR product tankers were drydocked in accordance with their scheduled, class required special survey during the third quarter of 2017 and a portion of October 2017.  These vessels were offhire for an aggregate of 102 days and the aggregate drydock cost was $6.4 million.

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

Debt

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

In millions of U.S. dollars   Outstanding
as of
September 30, 2017
Drawdowns
and
(repayments), net
Outstanding
as of
December 31, 2017
Drawdowns
and
(repayments), net
Outstanding
as of
February 13, 2018
K-Sure Credit Facility(1)   $ 283.5   $ (43.5 ) $ 240.0   $   $ 240.0  
KEXIM Credit Facility   333.0     333.0   (4.3 ) 328.7  
Credit Suisse Credit Facility   53.5     53.5     53.5  
ABN AMRO Credit Facility   115.5   (2.2 ) 113.3   (1.7 ) 111.6  
ING Credit Facility   109.9     109.9     109.9  
BNP Paribas Credit Facility (1)   31.0   11.6   42.6     42.6  
Scotiabank Credit Facility   28.8     28.8     28.8  
NIBC Credit Facility   34.7     34.7     34.7  
2016 Credit Facility (2)   216.2   (20.2 ) 196.0     196.0  
HSH Nordbank Credit Facility (3)   29.7   (14.3 ) 15.4   (0.4 ) 15.0  
2017 Credit Facility (4)   101.8   40.0   141.8   20.3   162.1  
DVB 2017 Credit Facility   79.9   (1.5 ) 78.4   (1.5 ) 76.9  
Credit Agricole Credit Facility   110.0   (2.1 ) 107.9     107.9  
ABN AMRO/K-Sure Credit Facility   54.3   (0.9 ) 53.4     53.4  
Citi/K-Sure Credit Facility   114.1   (2.0 ) 112.1     112.1  
Ocean Yield Sale and Leaseback   173.3   (2.7 ) 170.6   (0.9 ) 169.7  
CMBFL Sale and Leaseback   68.0   (1.1 ) 66.9     66.9  
BCFL Sale and Leaseback (LR2s)   109.9   (1.8 ) 108.1   (0.6 ) 107.5  
CSSC Sale and Leaseback   268.1   (4.3 ) 263.8   (1.4 ) 262.4  
BCFL Sale and Leaseback (MRs)(5)   66.6   42.6   109.2   (0.9 ) 108.3  
2020 senior unsecured notes   53.8     53.8     53.8  
2017 senior unsecured notes (6)   45.5   (45.5 )      
2019 senior unsecured notes   57.5     57.5     57.5  
Convertible Notes   348.5     348.5     348.5  
    $ 2,887.1   $ (47.9 ) $ 2,839.2   $ 8.6   $ 2,847.8  
  1. In December 2017, the Company refinanced the amounts borrowed relating to STI Soho under its K-Sure Credit Facility by repaying $13.3 million on the K-Sure Credit Facility and drawing $13.2 million on the BNP Paribas Credit Facility.  The BNP Paribas Credit Facility was amended and restated to upsize its availability for purposes of this refinancing.  The upsized portion of the credit facility bears interest at LIBOR plus a margin of 2.30%, and the remaining terms and conditions, including financial covenants, are similar to the facility that was in place prior to the refinancing.  The Company wrote off $0.5 million of deferred financing fees during the fourth quarter of 2017 as a result of this transaction.

  2. In November 2017, the Company repaid $14.9 million on its 2016 Credit Facility as a result of the closing of the previously announced finance lease for STI Amber.  The Company wrote off $0.2 million of deferred financing fees during the fourth quarter of 2017 as a result of this transaction.
  3. In October 2017, the Company repaid $13.8 million on its HSH Credit Facility as a result of the closing of the previously announced finance lease for STI Onyx.  The Company wrote off $0.2 million of deferred financing fees during the fourth quarter of 2017 as a result of this transaction.
  4. The Company drew down $20.7 million, $21.5 million and $21.5 million from its 2017 Credit Facility in October 2017, December 2017 and January 2018, respectively, to partially finance the purchases of STI Donald C Trauscht, STI Esles II and STI Jardins, respectively.
  5. In September 2017, the Company entered into finance lease agreements with BCFL for five 2012 built MR product tankers (STI Amber, STI Topaz, STI Ruby, STI Garnet and STI Onyx) for a sales price of $27.5 million per vessel. The financing for three of the vessels closed in September 2017. The financing for one of the vessels closed in October 2017, and the financing for the remaining vessel closed in November 2017.  Each agreement is for a fixed term of seven years at a bareboat rate of $9,025 per vessel per day, and the Company has three consecutive one year options to extend each charter beyond the initial term. The Company also has the option to purchase these vessels beginning at the end of the fifth year of each agreement through the end of the tenth year of each agreement.  A deposit of $5.1 million per vessel was retained by the buyer and will either be applied to the purchase price of the vessel if a purchase option is exercised, or refunded to the Company at the expiration of the agreement (as applicable).  These agreements are being accounted for as financing transactions.
  6. In October 2017, the Company’s Unsecured Senior Notes due 2017 matured and were repaid in full.

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

     In millions of U.S.
dollars
                Q1 2018 – principal payments made to date $ 12.9  
  Q1 2018 – remaining principal payments 33.8  
  Q2 2018 33.2  
  Q3 2018 51.1  
  Q4 2018 39.0  
  Q1 2019 63.6  
  Q2 2019 123.2  
  Q3 2019 411.9  
  Q4 2019 38.7  
  2020 and thereafter 2,053.2  
     
    $ 2,860.6  

Newbuilding Program

As of December 31, 2017, the Company had two MR product tankers under construction with HMD. Both of these vessels, STI Esles II and STI Jardins, were delivered in January 2018. The Company refers to these vessels as its Newbuilding Program, which concluded upon the delivery of STI Jardins.

During the fourth quarter of 2017, the Company made installment payments of $54.1 million relating to vessels under its Newbuilding Program, which included the delivery of STI Donald C Trauscht in October 2017 and the final installment for STI Esles II, which was paid in December 2017 in advance of its delivery in January 2018.

During January 2018, the Company paid $23.5 million as the final installment for the delivery of STI Jardins.

As part of these deliveries, the Company drew down $20.7 million, $21.5 million and $21.5 million in October 2017, December 2017 and January 2018, respectively, from its 2017 Credit Facility to partially finance the purchase of these vessels.

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

For the three months ended December 31, 2017, the Company recorded a net loss of $41.5 million compared to a net loss of $29.7 million for the three months ended December 31, 2016. The following were the significant changes between the two periods:

  • Time charter equivalent, or TCE revenue, a Non-IFRS measure, is vessel revenues less voyage expenses (including bunkers and port charges). TCE revenue is included herein because it is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company’s performance irrespective of changes in the mix of charter types (i.e., spot charters, time charters, and pool charters), and it provides useful information to investors and management. The following table depicts TCE revenue for the three months ended December 31, 2017 and 2016:
      For the three months ended December 31,
In thousands of U.S. dollars   2017   2016
  Vessel revenue       $ 148,394     $ 106,068  
  Voyage expenses   (3,013 )   (420 )
  TCE revenue   $ 145,381     $ 105,648  
  • TCE revenue increased $39.7 million to $145.4 million from $105.6 million for the three months ended December 31, 2017 and 2016, respectively. This increase was driven by the growth of the Company’s fleet to an average of 125.5 operating vessels during the three months ended December 31, 2017 from an average of 92.7 operating vessels during the three months ended December 31, 2016.  This growth was the result of the merger with NPTI, which closed on September 1, 2017, and the delivery of eight vessels under our Newbuilding Program throughout 2017.  TCE revenue per day remained consistent with the fourth quarter of 2016, which reflects unfavorable market conditions that have been driven by an unfavorable supply and demand imbalance that began in 2016 and has persisted throughout 2017.

  • Vessel operating costs increased $27.9 million to $74.8 million from $46.9 million for the three months ended December 31, 2017 and 2016, respectively.  This increase was the result of an increase in the average number of owned and bareboat chartered-in vessels to 116.7 vessels from 77.0 vessels for the three months ended December 31, 2017 and 2016, respectively.  This fleet growth was primarily the result of the merger with NPTI, which closed on September 1, 2017 in addition to the delivery of eight vessels under the Company’s Newbuilding Program throughout 2017.  Additionally, the Company incurred approximately $1.2 million of take over costs for 10 vessels acquired from NPTI that transitioned technical management during the fourth quarter.  These costs include additional crew severance and repatriation costs along with the costs for new spares, stores and other supplies but exclude termination fees of $0.4 million which were charged by the various technical managers and have been recorded as Merger transaction related costs, discussed below. 
  • Voyage expenses increased $2.6 million to $3.0 million from $0.4 million for the three months ended December 31, 2017 and 2016, respectively.  This increase was primarily the result of certain vessels acquired from NPTI that traded in the spot market during the fourth quarter of 2017 as these vessels transitioned technical managers or transitioned from trading crude oil to clean products.  The vessels that transitioned from trading crude oil to clean products incurred approximately $0.7 million of bunker costs and port charges while their tanks were cleaned over an aggregate period of 72 days.  These vessels also incurred an additional $0.7 million of directly attributable tank cleaning costs (such as labor and materials), which have been recorded as Merger transaction related costs, discussed below. 
  • Charterhire expense decreased $5.6 million to $18.0 million from $23.5 million for the three months ended December 31, 2017 and 2016, respectively.  This decrease was driven by lower average daily base rates on the Company’s time chartered-in fleet to an average of $13,681 per vessel per day from an average of $16,262 per vessel per day for the three months ended December 31, 2017 and 2016, respectively.  The Company’s time and bareboat chartered-in fleet increased to an average of 18.8 vessels, (8.8 time chartered-in vessels and 10.0 bareboat chartered-in vessels) from an average of 15.7 time chartered-in vessels for the three months ended December 31, 2017 and 2016, respectively.  There were no bareboat chartered-in vessels during the three months ended December 31, 2016.  The average daily base rate for the Company’s bareboat chartered-in fleet was $7,362 per vessel per day for the three months ended December 31, 2017. 
  • Depreciation expense increased $12.8 million to $43.5 million from $30.7 million for the three months ended December 31, 2017 and 2016, respectively. This increase was primarily driven by the delivery of two LR2 and six MR tankers under the Company’s Newbuilding Program during the year ended December 31, 2017, the delivery of the four LR1 vessels acquired from NPTI in June 2017, and the delivery of eight LR1 and 15 LR2 vessels acquired from NPTI in September 2017.  These deliveries were offset by the sales of five MR vessels during 2017.
  • Merger transaction related costs of $1.3 million during the three months ended December 31, 2017 represent (i) $0.4 million of termination fees incurred to transition the technical management of certain vessels acquired from NPTI, (ii) approximately $0.7 million of costs directly attributable to the cleaning of the cargo tanks of certain vessels acquired from NPTI in order to transition these vessels from trading crude oil to trading clean products (includes directly attributable labor and materials costs but excludes bunker and port costs) and (iii) legal and advisory costs incurred as part of the merger with NPTI.
  • Financial expenses increased $17.0 million to $38.6 million from $21.7 million for the three months ended December 31, 2017 and 2016, respectively. Financial expenses during the three months ended December 31, 2017 reflect a $1.0 million write-off of deferred financing fees that was recorded during the three months ended December 31, 2017.  There were no write-offs of deferred financing fees during the three months ended December 31, 2016.  The increase in financial expenses, after removing the effect of deferred financing fee write-offs, was primarily a result of (i) increased interest expense incurred as a result of the assumption of $806.4 million of indebtedness upon the closing of the merger with NPTI on September 1, 2017 and (ii) increases in LIBOR rates when compared to the fourth quarter of 2016.
   
  Scorpio Tankers Inc. and Subsidiaries
  Condensed Consolidated Statements of Income or Loss
  (unaudited)
         
    For the three months ended
December 31,
  For the year ended
December 31,
In thousands of U.S. dollars except per share and share data 2017   2016   2017   2016
Revenue              
  Vessel revenue $ 148,394     $ 106,068     $ 512,732     $ 522,747  
                 
Operating expenses              
  Vessel operating costs (74,824 )   (46,933 )   (231,227 )   (187,120 )
  Voyage expenses (3,013 )   (420 )   (7,733 )   (1,578 )
  Charterhire (17,959 )   (23,521 )   (75,750 )   (78,862 )
  Depreciation (43,535 )   (30,686 )   (141,418 )   (121,461 )
  General and administrative expenses (11,370 )   (12,306 )   (47,511 )   (54,899 )
  Loss on sales of vessels         (23,345 )   (2,078 )
  Merger transaction related costs (1,299 )       (36,114 )    
  Bargain purchase gain         5,417      
  Total operating expenses (152,000 )   (113,866 )   (557,681 )   (445,998 )
Operating (loss) / income (3,606 )   (7,798 )   (44,949 )   76,749  
Other (expense) and income, net              
  Financial expenses (38,619 )   (21,667 )   (116,240 )   (104,048 )
  Realized loss on derivative financial instruments         (116 )    
  Unrealized (loss) / gain on derivative financial instruments     (229 )       1,371  
  Financial income 384     50     1,538     1,213  
  Other expenses, net 332     (22 )   1,527     (188 )
  Total other expense, net (37,903 )   (21,868 )   (113,291 )   (101,652 )
Net loss $ (41,509 )   $ (29,666 )   $ (158,240 )   $ (24,903 )
                 
Loss per share              
                 
  Basic $ (0.15 )   $ (0.18 )   $ (0.73 )   $ (0.15 )
  Diluted $ (0.15 )   $ (0.18 )   $ (0.73 )   (0.15 )
  Basic weighted average shares outstanding 283,668,720     161,868,161     215,333,402     161,118,654  
  Diluted weighted average shares outstanding (1) 283,668,720     161,868,161     215,333,402     161,118,654  

(1) The dilutive effect of (i) unvested shares of restricted stock and (ii) the potentially dilutive securities relating to the Company’s Convertible Notes were excluded from the computation of diluted earnings per share for the three months and year ended December 31, 2017 because their effect would have been anti-dilutive. Weighted average shares under the if-converted method (which includes the potential dilutive effect of both the unvested shares of restricted stock and our Convertible Notes) were 321,904,030 and 255,402,180 for the three months and year ended December 31, 2017, respectively. 

 
Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(unaudited)
   
  As of
In thousands of U.S. dollars December 31, 2017   December 31, 2016
Assets      
Current assets      
Cash and cash equivalents $ 186,462     $ 99,887  
Accounts receivable 65,458     42,329  
Prepaid expenses and other current assets 17,720     9,067  
Derivative financial instruments     116  
Inventories 9,713     6,122  
Total current assets 279,353     157,521  
Non-current assets      
Vessels and drydock 4,090,094     2,913,254  
Vessels under construction 55,376     137,917  
Other assets 50,684     21,495  
Goodwill 11,482      
Restricted cash 11,387      
Total non-current assets 4,219,023     3,072,666  
Total assets $ 4,498,376     $ 3,230,187  
Current liabilities      
Current portion of long-term debt $ 113,036     $ 353,012  
Finance lease liability 50,146      
Accounts payable 13,044     9,282  
Accrued expenses 32,838     23,024  
Total current liabilities 209,064     385,318  
Non-current liabilities      
Long-term debt 1,937,018     1,529,669  
Finance lease liability 666,993      
Total non-current liabilities 2,604,011     1,529,669  
Total liabilities 2,813,075     1,914,987  
Shareholders’ equity      
Issued, authorized and fully paid-in share capital:      
Share capital 3,766     2,247  
Additional paid-in capital 2,283,591     1,756,769  
Treasury shares (443,816 )   (443,816 )
Accumulated deficit (158,240 )    
Total shareholders’ equity 1,685,301     1,315,200  
Total liabilities and shareholders’ equity $ 4,498,376     $ 3,230,187  

 
Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(unaudited)
   
  For the year ended December 31,
In thousands of U.S. dollars 2017   2016
Operating activities      
Net loss $ (158,240 )   $ (24,903 )
Loss on sales of vessels 23,345     2,078  
Depreciation 141,418     121,461  
Amortization of restricted stock 22,385     30,207  
Amortization of deferred financing fees 13,381     14,149  
Write-off of deferred financing fees 2,467     14,479  
Bargain purchase gain (5,417 )    
Share-based transaction costs 5,973      
Unrealized gain on derivative financial instruments     (1,371 )
Amortization of acquired time charter contracts     65  
Accretion of Convertible Notes 12,211     11,562  
Accretion of fair value measurement on debt assumed from NPTI 1,478      
Gain on repurchase of Convertible Notes     (994 )
  59,001     166,733  
Changes in assets and liabilities:      
(Increase) / decrease in inventories (1,319 )   564  
(Increase) / decrease in accounts receivable (1,478 )   26,688  
Decrease / (increase) in prepaid expenses and other current assets 12,219     (5,546 )
(Increase) / decrease in other assets (22,651 )   2,045  
Increase / (decrease) in accounts payable 3,694     (2,487 )
Decrease in accrued expenses (7,665 )   (9,486 )
  (17,200 )   11,778  
Net cash inflow from operating activities 41,801     178,511  
Investing activities      
Acquisition of vessels and payments for vessels under construction (258,311 )   (126,842 )
Proceeds from disposal of vessels 127,372     158,175  
Net cash paid for the merger with NPTI (23,062 )    
Drydock payments (5,922 )    
Net cash (outflow) / inflow from investing activities (159,923 )   31,333  
Financing activities      
Debt repayments (546,296 )   (753,431 )
Issuance of debt 525,642     565,028  
Debt issuance costs (11,758 )   (10,679 )
Increase in restricted cash (2,279 )    
Repayment of Convertible Notes     (8,393 )
Gross proceeds from issuance of common stock 303,500      
Equity issuance costs (15,056 )   (24 )
Dividends paid (9,561 )   (86,923 )
Redemption of NPTI Redeemable Preferred Shares (39,495 )    
Repurchase of common stock     (16,505 )
Net cash inflow / (outflow) from financing activities 204,697     (310,927 )
Increase / (decrease) in cash and cash equivalents 86,575     (101,083 )
Cash and cash equivalents at January 1, 99,887     200,970  
Cash and cash equivalents at December 31, $ 186,462     $ 99,887  

 

 
Scorpio Tankers Inc. and Subsidiaries
Other operating data for the three months and year ended December 31, 2017 
(unaudited) 
 
    For the three months ended
December 31,
  For the year ended
December 31,
    2017   2016   2017   2016
Adjusted EBITDA(1)  (in thousands of U.S. dollars)   $ 46,464     $ 29,997     $ 174,307     $ 230,307  
                 
Average Daily Results                
Time charter equivalent per day(2)   $ 12,805     $ 12,465     $ 13,146     $ 15,783  
Vessel operating costs per day(3)   $ 6,971     $ 6,623     $ 6,559     $ 6,576  
                 
LR2                
TCE per revenue day (2)   $ 15,005     $ 14,523     $ 14,849     $ 20,280  
Vessel operating costs per day(3)   $ 7,187     $ 6,916     $ 6,705     $ 6,734  
Average number of owned or finance leased vessels   38.0     21.0     27.5     20.3  
Average number of time chartered-in vessels   1.0     2.0     1.2     2.0  
                 
LR1                
TCE per revenue day (2)   $ 11,275     $ 14,856     $ 11,409     $ 17,277  
Vessel operating costs per day(3)   $ 7,488     $     $ 7,073     $  
Average number of owned or finance leased vessels   12.0         4.9      
Average number of time chartered-in vessels       1.0     0.4     0.9  
                 
MR                
TCE per revenue day (2)   $ 12,377     $ 11,981     $ 12,975     $ 14,898  
Vessel operating costs per day(3)   $ 6,662     $ 6,510     $ 6,337     $ 6,555  
Average number of owned or finance leased vessels   42.7     42.0     41.7     43.4  
Average number of time chartered-in vessels   5.9     7.7     6.7     5.2  
Average number of bareboat chartered-in vessels   3.0         2.1      
                 
Handymax                
TCE per revenue day (2)   $ 10,747     $ 11,129     $ 11,706     $ 12,615  
Vessel operating costs per day(3)   $ 6,956     $ 6,522     $ 6,716     $ 6,404  
Average number of owned or finance leased vessels   14.0     14.0     14.0     14.0  
Average number of time chartered-in vessels   2.0     5.0     2.0     4.6  
Average number of bareboat chartered-in vessels   7.0         6.1      
                 
Fleet data                
Average number of owned or finance leased vessels   106.7     77.0     88.0     77.7  
Average number of time chartered-in vessels   8.8     15.7     10.3     12.7  
Average number of bareboat chartered-in vessels   10.0         8.2      
                 
Drydock                
Expenditures for drydock (in thousands of U.S. dollars)   $ 1,197     $     $ 6,353     $  

(1 ) See Non-IFRS Measures section below.
(2 ) Freight rates are commonly measured in the shipping industry in terms of time charter equivalent per day (or TCE per day), which is calculated by subtracting voyage expenses, including bunkers and port charges, from vessel revenue and dividing the net amount (time charter equivalent revenues) by the number of revenue days in the period. Revenue days are the number of days the vessel is owned or chartered-in less the number of days the vessel is off-hire for drydock and repairs.
(3 ) Vessel operating costs per day represent vessel operating costs divided by the number of operating days during the period. Operating days are the total number of available days in a period with respect to the owned or bareboat chartered-in vessels, before deducting available days due to off-hire days and days in drydock. Operating days is a measurement that is only applicable to our owned, finance leased or bareboat chartered-in vessels, not our time chartered-in vessels.

Fleet list as of February 13, 2018
                       
  Vessel Name   Year Built   DWT   Ice class   Employment   Vessel type
  Owned or finance leased vessels                    
1   STI Brixton   2014   38,734     1A    SHTP (1)   Handymax
2   STI Comandante   2014   38,734     1A    SHTP (1)   Handymax
3   STI Pimlico   2014   38,734     1A   Time Charter (5)   Handymax
4   STI Hackney   2014   38,734     1A    SHTP (1)   Handymax
5   STI Acton   2014   38,734     1A    SHTP (1)   Handymax
6   STI Fulham   2014   38,734     1A    SHTP (1)   Handymax
7   STI Camden   2014   38,734     1A    SHTP (1)   Handymax
8   STI Battersea   2014   38,734     1A    SHTP (1)   Handymax
9   STI Wembley   2014   38,734     1A    SHTP (1)   Handymax
10   STI Finchley   2014   38,734     1A    SHTP (1)   Handymax
11   STI Clapham   2014   38,734     1A    SHTP (1)   Handymax
12   STI Poplar   2014   38,734     1A   Time Charter (5)   Handymax
13   STI Hammersmith   2015   38,734     1A    SHTP (1)   Handymax
14   STI Rotherhithe   2015   38,734     1A    SHTP (1)   Handymax
15   STI Amber   2012   49,990       SMRP (2)   MR
16   STI Topaz   2012   49,990       SMRP (2)   MR
17   STI Ruby   2012   49,990       SMRP (2)   MR
18   STI Garnet   2012   49,990       SMRP (2)   MR
19   STI Onyx   2012   49,990       SMRP (2)   MR
20   STI Fontvieille   2013   49,990       SMRP (2)   MR
21   STI Ville   2013   49,990       SMRP (2)   MR
22   STI Duchessa   2014   49,990       SMRP (2)   MR
23   STI Opera   2014   49,990       SMRP (2)   MR
24   STI Texas City   2014   49,990       SMRP (2)   MR
25   STI Meraux   2014   49,990       SMRP (2)   MR
26   STI San Antonio   2014   49,990       SMRP (2)   MR
27   STI Venere   2014   49,990       SMRP (2)   MR
28   STI Virtus   2014   49,990       SMRP (2)   MR
29   STI Aqua   2014   49,990       SMRP (2)   MR
30   STI Dama   2014   49,990       SMRP (2)   MR
31   STI Benicia   2014   49,990       SMRP (2)   MR
32   STI Regina   2014   49,990       SMRP (2)   MR
33   STI St. Charles   2014   49,990       SMRP (2)   MR
34   STI Mayfair   2014   49,990       SMRP (2)   MR
35   STI Yorkville   2014   49,990       SMRP (2)   MR
36   STI Milwaukee   2014   49,990       SMRP (2)   MR
37   STI Battery   2014   49,990       SMRP (2)   MR
38   STI Soho   2014   49,990       SMRP (2)   MR
39   STI Memphis   2014   49,995       SMRP (2)   MR
40   STI Tribeca   2015   49,990       SMRP (2)   MR
41   STI Gramercy   2015   49,990       SMRP (2)   MR
42   STI Bronx   2015   49,990       SMRP (2)   MR
43   STI Pontiac   2015   49,990       SMRP (2)   MR
44   STI Manhattan   2015   49,990       SMRP (2)   MR
45   STI Queens   2015   49,990       SMRP (2)   MR
46   STI Osceola   2015   49,990       SMRP (2)   MR
47   STI Notting Hill   2015   49,687     1B   Time Charter (6)   MR
48   STI Seneca   2015   49,990       SMRP (2)   MR
49   STI Westminster   2015   49,687     1B   Time Charter (6)   MR
50   STI Brooklyn   2015   49,990       SMRP (2)   MR
51   STI Black Hawk   2015   49,990       SMRP (2)   MR
52   STI Galata   2017   49,990       SMRP (2)   MR
53   STI Bosphorus   2017   49,990       SMRP (2)   MR
54   STI Leblon   2017   49,990       SMRP (2)   MR
55   STI La Boca   2017   49,990       SMRP (2)   MR
56   STI San Telmo   2017   49,990     1B   SMRP (2)   MR
57   STI Donald C Trauscht   2017   49,990     1B   SMRP (2)   MR
58   STI Esles II   2018   49,990     1B   Spot (7)   MR
59   STI Jardins   2018   49,990     1B   Spot (7)   MR
60   STI Excel   2015   74,000       SLR1P (3)   LR1
61   STI Excelsior   2016   74,000       SLR1P (3)   LR1
62   STI Expedite   2016   74,000       SLR1P (3)   LR1
63   STI Exceed   2016   74,000       SLR1P (3)   LR1
64   STI Executive   2016   74,000       SLR1P (3)   LR1
65   STI Excellence   2016   74,000       SLR1P (3)   LR1
66   STI Experience   2016   74,000       SLR1P (3)   LR1
67   STI Express   2016   74,000       SLR1P (3)   LR1
68   STI Precision   2016   74,000       SLR1P (3)   LR1
69   STI Prestige   2016   74,000       SLR1P (3)   LR1
70   STI Pride   2016   74,000       SLR1P (3)   LR1
71   STI Providence   2016   74,000       SLR1P (3)   LR1
72   STI Elysees   2014   109,999       SLR2P (4)   LR2
73   STI Madison   2014   109,999       SLR2P (4)   LR2
74   STI Park   2014   109,999       SLR2P (4)   LR2
75   STI Orchard   2014   109,999       SLR2P (4)   LR2
76   STI Sloane   2014   109,999       SLR2P (4)   LR2
77   STI Broadway   2014   109,999       SLR2P (4)   LR2
78   STI Condotti   2014   109,999       SLR2P (4)   LR2
79   STI Rose   2015   109,999       Time Charter (8)   LR2
80   STI Veneto   2015   109,999       SLR2P (4)   LR2
81   STI Alexis   2015   109,999       SLR2P (4)   LR2
82   STI Winnie   2015   109,999       SLR2P (4)   LR2
83   STI Oxford   2015   109,999       SLR2P (4)   LR2
84   STI Lauren   2015   109,999       SLR2P (4)   LR2
85   STI Connaught   2015   109,999       SLR2P (4)   LR2
86   STI Spiga   2015   109,999       SLR2P (4)   LR2
87   STI Savile Row   2015   109,999       SLR2P (4)   LR2
88   STI Kingsway   2015   109,999       SLR2P (4)   LR2
89   STI Carnaby   2015   109,999       SLR2P (4)   LR2
90   STI Solidarity   2015   109,999       SLR2P (4)   LR2
91   STI Lombard   2015   109,999       SLR2P (4)   LR2
92   STI Grace   2016   109,999       SLR2P (4)   LR2
93   STI Jermyn   2016   109,999       SLR2P (4)   LR2
94   STI Sanctity   2016   109,999       SLR2P (4)   LR2
95   STI Solace   2016   109,999       SLR2P (4)   LR2
96   STI Stability   2016   109,999       SLR2P (4)   LR2
97   STI Steadfast   2016   109,999       SLR2P (4)   LR2
98   STI Supreme   2016   109,999       SLR2P (4)   LR2
99   STI Symphony   2016   109,999       SLR2P (4)   LR2
100   STI Selatar   2017   109,999       SLR2P (4)   LR2
101   STI Rambla   2017   109,999       SLR2P (4)   LR2
102   STI Gallantry   2016   113,000       SLR2P (4)   LR2
103   STI Goal   2016   113,000       SLR2P (4)   LR2
104   STI Nautilus   2016   113,000       SLR2P (4)   LR2
105   STI Guard   2016   113,000       SLR2P (4)   LR2
106   STI Guide   2016   113,000       SLR2P (4)   LR2
107   STI Gauntlet   2017   113,000       SLR2P (4)   LR2
108   STI Gladiator   2017   113,000       SLR2P (4)   LR2
109   STI Gratitude   2017   113,000       SLR2P (4)   LR2
                       
  Total owned or finance leased DWT       7,883,195              
                       

  Vessel Name   Year Built   DWT   Ice class   Employment   Vessel type   Charter type   Daily Base Rate   Expiry (9)  
  Time or bareboat
chartered-in vessels
                                 
110   Kraslava   2007   37,258     1B    SHTP (1)   Handymax   Time charter   $ 11,250     13-May-18 (10 )
111   Krisjanis Valdemars   2007   37,266     1B    SHTP (1)   Handymax   Time charter   $ 11,250     13-Mar-18 (10 )
112   Silent   2007   37,847     1A    SHTP (1)   Handymax   Bareboat   $ 7,500     31-Mar-19 (11 )
113   Single   2007   37,847     1A    SHTP (1)   Handymax   Bareboat   $ 7,500     31-Mar-19 (11 )
114   Star I   2007   37,847     1A    SHTP (1)   Handymax   Bareboat   $ 7,500     31-Mar-19 (11 )
115   Sky   2007   37,847     1A    SHTP (1)   Handymax   Bareboat   $ 6,000     31-Mar-19 (11 )
116   Steel   2008   37,847     1A    SHTP (1)   Handymax   Bareboat   $ 6,000     31-Mar-19 (11 )
117   Stone I   2008   37,847     1A    SHTP (1)   Handymax   Bareboat   $ 6,000     31-Mar-19 (11 )
118   Style   2008   37,847     1A    SHTP (1)   Handymax   Bareboat   $ 6,000     31-Mar-19 (11 )
119   Miss Benedetta   2012   47,499       SMRP (2)   MR   Time charter   $ 14,000     31-Mar-19 (12 )
120   STI Beryl   2013   49,990       SMRP (2)   MR   Bareboat   $ 8,800     18-Apr-25 (13 )
121   STI Le Rocher   2013   49,990       SMRP (2)   MR   Bareboat   $ 8,800     21-Apr-25 (13 )
122   STI Larvotto   2013   49,990       SMRP (2)   MR   Bareboat   $ 8,800     28-Apr-25 (13 )
123   Vukovar   2015   49,990       SMRP (2)   MR   Time charter   $ 17,034     01-May-18  
124   Zefyros   2013   49,999       SMRP (2)   MR   Time charter   $ 13,250     08-June-18 (14 )
125   Gan-Trust   2013   51,561       SMRP (2)   MR   Time charter   $ 13,950     06-Jan-18 (15 )
126   CPO New Zealand   2011   51,717       SMRP (2)   MR   Time charter   $ 15,250     12-Sep-18 (16 )
127   CPO Australia   2011   51,763       SMRP (2)   MR   Time charter   $ 15,250     01-Sep-18 (16 )
128   Ance   2006   52,622       SMRP (2)   MR   Time charter   $ 13,500     12-Oct-18 (17 )
129   Densa Alligator   2013   105,708       SLR2P (4)   LR2   Time charter   $ 14,300     08-Sep-18 (18 )
130   Densa Crocodile   2015   105,408       SLR2P (4)   LR2   Time charter   $ 15,750     06-Jul-18 (19 )
                                     
  Total time or bareboat chartered-in DWT       1,055,690                            
                                     
                                     
  Total Fleet DWT       8,938,885                            
                                     

(1 ) This vessel operates in or is expected to operate in the Scorpio Handymax Tanker Pool, or SHTP. SHTP is operated by Scorpio Commercial Management, or SCM. SHTP and SCM are related parties to the Company.
(2 ) This vessel operates in the Scorpio MR Pool, or SMRP. SMRP is operated by SCM. SMRP is a related party to the Company.
(3 ) This vessel operates in the Scorpio LR1 Pool, or SLR1P. SLR1P is operated by SCM. SLR1P is a related party to the Company.
(4 ) This vessel operates in or is expected to operate in the Scorpio LR2 Pool, or SLR2P. SLR2P is operated by SCM. SLR2P is a related party to the Company.
(5 ) This vessel is currently time chartered-out to an unrelated third-party for three years at $18,000 per day. This time charter is scheduled to expire in January 2019.
(6 ) This vessel is currently time chartered-out to an unrelated third-party for three years at $20,500 per day. This time charter is scheduled to expire in December 2018.
(7 ) This vessel is currently employed under a short-term time charter-out agreement with an unrelated third party, following which this vessel is expected enter the SMRP.  We consider short-term time charters (less than one year) as spot market voyages.
(8 ) This vessel is currently time chartered-out to an unrelated third-party for three years at $28,000 per day. This time charter is scheduled to expire in February 2019.
(9 ) Redelivery from the charterer is plus or minus 30 days from the expiry date.
(10 ) We have an option to extend the charter for an additional year at $13,250 per day.
(11 ) This agreement includes a purchase option which can be exercised through December 31, 2018.  If the purchase option is not exercised, the bareboat-in agreement will expire on March 31, 2019.
(12 ) In January 2018, we entered into a time charter-in agreement for one year at $14,000 per day.  We have an option to extend the charter for an additional year at $14,400 per day.  This vessel is expected to be delivered before the end of March 2018. 
(13 ) In April 2017, we sold and leased back this vessel, on a bareboat basis, for a period of up to eight years for $8,800 per day.  The sales price was $29.0 million and we have the option to purchase this vessel beginning at the end of the fifth year of the agreement through the end of the eighth year of the agreement, at market based prices. Additionally, a deposit of $4.35 million was retained by the buyer and will either be applied to the purchase price of the vessel if a purchase option is exercised, or refunded to us at the expiration of the agreement.
(14 ) In November 2017, we declared the option to extend this charter for an additional six months at $13,250 per day effective December 2017.  We have an option to extend the charter for an additional year at $14,500 per day.
(15 ) In November 2017, we extended the time charter-in agreement for one year at $13,950 per day.  We have an option to extend the charter for an additional year at $15,750 per day.
(16 ) We have an option to extend the charter for an additional year at $16,000 per day.
(17 ) We have an option to extend the charter for an additional year at $15,000 per day.
(18 ) In February 2018, we entered into a time charter-in agreement for six months at $14,300 per day.  We also have an option to extend the charter for an additional six months at $15,310 per day. This vessel is expected to be delivered before the end of March 2018. 
(19 ) In November 2017, we declared the option to extend this charter for an additional six months at $15,750 per day effective January 2018.

Dividend Policy

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

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

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

On February 13, 2018, the Company’s Board of Directors declared a quarterly cash dividend of $0.01 per share, payable on or about March 27, 2018 to all shareholders as of March 12, 2018 (the record date).  As of February 13, 2018, there were 326,507,544 shares outstanding.

Securities Repurchase Program

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

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

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

About Scorpio Tankers Inc.

Scorpio Tankers Inc. is a provider of marine transportation of petroleum products worldwide. Scorpio Tankers Inc. currently owns or finance leases 109 product tankers (38 LR2 tankers, 12 LR1 tankers, 45 MR tankers, 14 Handymax tankers) with an average age of 2.5 years and time or bareboat charters-in 21 product tankers (two LR2 tankers, ten MR tankers and nine Handymax tankers). 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 (i.e. “Non-IFRS” measures). The Non-IFRS measures are presented in this press release as we believe that they provide investors and other users of our financial statements, such as our lenders, with a means of evaluating and understanding how the Company’s management evaluates the Company’s operating performance. These Non-IFRS measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with IFRS.

The Company believes that the presentation of time charter equivalent 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 time charter equivalent 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 time charter equivalent revenue, adjusted net income or loss with the adjusted earnings or loss per share, basic and diluted, and adjusted EBITDA may not be the same as reported by other companies in the shipping industry or other industries.

Time charter equivalent revenue is reconciled above in the section entitled ‘Explanation of Variances on the Fourth Quarter of 2017 Financial Results Compared to the Fourth Quarter of 2016′.

Reconciliation of Net Loss to Adjusted Net Loss

      For the three months ended December 31, 2017
          Per share   Per share
In thousands of U.S. dollars except per share data   Amount    basic    diluted
  Net loss   $ (41,509 )   $ (0.15 )   $ (0.15 )
  Adjustments:            
    Deferred financing fees write-off   970       0.00       0.00  
    Merger transaction related costs   1,299       0.00       0.00  
  Adjusted net loss   $ (39,240 )   $ (0.14 ) (1 ) $ (0.14 )

      For the three months ended December 31, 2016
          Per share   Per share
In thousands of U.S. dollars except per share data   Amount    basic    diluted
  Net loss   $ (29,666 )   $ (0.18 )   $ (0.18 )
  Adjustment:            
    Unrealized loss on derivative financial instruments   229          
  Adjusted net loss   $ (29,437 )   $ (0.18 )   $ (0.18 )

      For the year ended December 31, 2017
          Per share   Per share
In thousands of U.S. dollars except per share data   Amount    basic    diluted
  Net loss   $ (158,240 )   $ (0.73 )   $ (0.73 )
  Adjustments:            
    Deferred financing fees write-off   2,467     0.01     0.01  
    Merger transaction related costs   36,114     0.17     0.17  
    Bargain purchase gain   (5,417 )   (0.03 )   (0.03 )
    Loss on sales of vessels   23,345     0.11     0.11  
  Adjusted net loss   $ (101,731 )   $ (0.47 )   $ (0.47 )

      For the year ended December 31, 2016
          Per share   Per share
In thousands of U.S. dollars except per share data   Amount    basic    diluted
  Net loss   $ (24,903 )   $ (0.15 )   $ (0.15 )
  Adjustments:            
    Deferred financing fees write-off   14,479     0.09     0.09  
    Unrealized gain on derivative financial instruments   (1,371 )   (0.01 )   (0.01 )
    Gain on repurchase of Convertible Notes   (994 )   (0.01 )   (0.01 )
    Loss on sales of vessels   2,078     0.01     0.01  
  Adjusted net loss   $ (10,711 )   $ (0.07 )   $ (0.07 )

(1) Summation differences due to rounding

Reconciliation of Net Loss to Adjusted EBITDA

      For the three months ended
December 31,
  For the year ended
December 31,
In thousands of U.S. dollars   2017   2016   2017   2016
  Net loss   $ (41,509 )   $ (29,666 )   $ (158,240 )   $ (24,903 )
    Financial expenses   38,619     21,667     116,240     104,048  
    Unrealized loss / (gain) on derivative financial instruments       229         (1,371 )
    Financial income   (384 )   (50 )   (1,538 )   (219 )
    Depreciation   43,535     30,686     141,418     121,461  
  Merger transaction related costs   1,299         36,114      
  Bargain purchase gain           (5,417 )    
    Amortization of restricted stock   4,904     7,131     22,385     30,207  
    Loss on sales of vessels           23,345     2,078  
    Gain on repurchase of Convertible Notes (recorded within Financial income)               (994 )
  Adjusted EBITDA   $ 46,464     $ 29,997     $ 174,307     $ 230,307  

Forward-Looking Statements

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

The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management’s examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. We undertake no obligation, and specifically decline any obligation, except as required by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

In addition to these important factors, other important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include, unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies for the management, expansion and growth of our operations, risks relating to the integration of the operations of Navig8 Product Tankers Inc. (“NPTI”) and the possibility that the anticipated synergies and other benefits of the acquisition of NPTI will not be realized or will not be realized within the expected timeframe, the outcome of any legal proceedings related to the merger with NPTI and the related transactions, the failure of counterparties to fully perform their contracts with us, the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for tanker vessel capacity, changes in our operating expenses, including bunker prices, drydocking and insurance costs, the market for our vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain financing and comply with covenants in such financing arrangements, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off-hires, and other factors. Please see Scorpio Tankers’ filings with the U.S. Securities and Exchange Commission for a more complete discussion of certain of these and other risks and uncertainties.

Scorpio Tankers Inc.
212-542-1616