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Scorpio Tankers Inc. Reports Net Loss of $15 Million

Scorpio Tankers Inc. reported its results for the three and six months ended June 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 June 30, 2019 and 2018

For the three months ended June 30, 2019, the Company’s net loss was $29.7 million, or $0.62 basic and diluted loss per share. There were no Non-IFRS adjustments to the net loss for the three months ended June 30, 2019.

For the three months ended June 30, 2018, the Company’s adjusted net loss (see Non-IFRS Measures section below) was $44.9 million, or $1.45 basic and diluted loss per share, which excludes from the net loss (i) a $17.0 million loss recorded on the Company’s exchange of its Convertible Notes due 2019 for newly issued Convertible Notes due 2022 (the “Convertible Notes Exchange”), and (ii) a $7.0 million write-off of deferred financing fees. The adjustments resulted in an aggregate reduction of the Company’s net loss by $24.0 million or $0.78 per basic and diluted share. For the three months ended June 30, 2018, the Company had a net loss of $68.9 million, or $2.23 basic and diluted loss per share.

Results for the six months ended June 30, 2019 and 2018

For the six months ended June 30, 2019, the Company’s adjusted net loss (see Non-IFRS Measures section below) was $15.0 million, or $0.31 basic and diluted loss per share, which excludes from the net loss a $0.3 million, or $0.01 per basic and diluted share, write-off of deferred financing fees. For the six months ended June 30, 2019, the Company had a net loss of $15.2 million, or $0.32 basic and diluted loss per share.

For the six months ended June 30, 2018, the Company’s adjusted net loss was $76.4 million (see Non-IFRS Measures section below), or $2.47 basic and diluted loss per share, which excludes from the net loss (i) a $17.0 million loss recorded on the Convertible Notes Exchange, (ii) a $7.0 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 $24.3 million or $0.79 per basic and diluted share. For the six months ended June 30, 2018, the Company had a net loss of $100.7 million, or $3.26 basic and diluted loss per share.

Declaration of Dividend

On July 30, 2019, the Company’s Board of Directors declared a quarterly cash dividend of $0.10 per common share, payable on or about September 27, 2019 to all shareholders of record as of September 10, 2019 (the record date). As of July 30, 2019, there were 51,845,390 common shares of the Company outstanding.

Summary of Other Recent and Second Quarter Significant Events

• Below is a summary of the average daily Time Charter Equivalent (TCE) revenue (see Non-IFRS Measures section below) and duration for voyages fixed for the Company’s vessels thus far in the third quarter of 2019 as of the date hereof (See footnotes to ‘Other operating data’ table below for the definition of daily TCE revenue):

For the LR2s in the pool: an average of approximately $14,200 per day for 50% of the days.
For the LR1s in the pool: an average of approximately $15,000 per day for 40% of the days.
For the MRs in the pool: an average of approximately $14,300 per day for 40% of the days.
For the ice-class 1A Handymaxes in the pool: an average of approximately $10,200 per day for 35% of the days.
• Below is a summary of the average daily TCE revenue earned on the Company’s vessels during the second quarter of 2019:

For the LR2s in the pool: an average of $16,974 per revenue day.
For the LR1s in the pool: an average of $14,527 per revenue day.
For the MRs in the pool: an average of $13,436 per revenue day.
For the ice-class 1A Handymaxes in the pool: an average of $11,802 per revenue day.
• The Company has received commitments for seven different facilities to partially finance the purchase and installation of exhaust gas cleaning systems, or “scrubbers” on certain of the Company’s vessels. These commitments are expected to increase the Company’s liquidity by approximately $87 million. Additionally, the Company is in discussions with a different group of financial institutions to finance the purchase of scrubbers which, if consummated, expect to increase the Company’s liquidity by an additional $35 million. All of these agreements are expected to be signed in the next few months and the drawdowns will occur as the scrubbers are installed throughout the remainder of 2019 and 2020.

• In June 2019, the Company paid a quarterly cash dividend with respect to the first quarter of 2019 on the Company’s common stock of $0.10 per common share.

• In July 2019, the Company’s Convertible Notes due 2019 matured and the outstanding balance of $142.7 million was fully repaid in cash upon maturity.

$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 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.

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 Shares

Diluted earnings per share is determined using the if-converted method. Under this method, the Company assumes that its Convertible Notes due 2019, which were issued in June 2014 (and matured in July 2019), and 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 $6.1 million and $12.1 million during the three and six months ended June 30, 2019, respectively, were not incurred. Conversion is not assumed if the results of this calculation are anti-dilutive.

For the three and six months ended June 30, 2019, the Company’s basic weighted average number of shares were 48,148,885 and 48,109,924, respectively. For the three and six months ended June 30, 2019, the Company’s diluted weighted average number of shares were 49,446,801 and 49,194,463 respectively, excluding the impact of the Convertible Notes due 2019 and Convertible Notes due 2022, and 56,104,777 and 55,822,804, 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 six months ended June 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.

Full Report

Source: Scorpio Tankers Inc.

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