Scorpio Tankers Inc.
Scorpio Tankers Inc.
Scorpio Tankers Inc.
Senior Unsecured Notes Offering
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Scorpio Tankers Inc. (“Scorpio”) has filed a registration statement (including a prospectus) and a preliminary prospectus
supplement with the Securities and Exchange Commission (SEC) for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement, the preliminary prospectus supplement and other
documents Scorpio has filed with the SEC for more complete information about Scorpio and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, Scorpio, any underwriter or any dealer participating in the offering will arrange to send you the prospectus and the preliminary prospectus supplement if you request it by calling Stifel, Nicolaus & Company, Incorporated at 1-415-364-2720; Deutsche Bank Securities Inc. at 1-800-503-4611; or Jefferies & Company, Inc. at 1-877-547-6340.
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Offering Summary
Issuer: Scorpio Tankers Inc.
Security: Senior Unsecured Notes
Denomination: $25.00 and multiples thereof
Amount: $[ ] million
Coupon: [ ]%
Maturity: May 15, 2020
Optional Redemption:
Non-callable for 3 years; callable in whole or in part thereafter at par ($25.00) plus accrued and unpaid interest
Listing: NYSE
Use of Proceeds: General corporate purposes, which may include funding vessel acquisitions
Covenants:
The issuer is subject to certain covenants with respect to the Notes, including:
• Minimum Net Worth Covenant: $650 million
− Net Worth = Total Assets minus Total Borrowings
• Net Borrowings cannot equal or exceed 70% of Total Assets
Bookrunners: Stifel, Deutsche Bank Securities, Jefferies
Co-Managers BB&T, Janney, Wunderlich Securities
Expected Pricing
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Investment Highlights
Modern, fuel-efficient fleet
World’s largest fleet of ECO design product tankers
ECO type vessels have substantially lower fuel costs than prior generation vessels
Newbuilds contracted at favorable prices, relative to historical averages, and reputable
yards
Tremendous fleet growth and
operating leverage
Scorpio currently operates a fleet of 20 wholly owned tankers with an average age of 2.8
years and charters-in an additional 28 tankers
The Company has contracts for 54 newbuild product tankers which are expected to
deliver throughout 2014 (41 vessels) and 2015 (13 vessels)
Scorpio manages the fleet in commercial pools that provide substantial leverage in the
market and have historically outperformed the charter market
Positive market fundamentals
Remaining orderbook and yard capacity ensures good supply visibility
Increasing U.S. refined product exports combined with rising refinery capacity in Asia /
Middle East supports demand
Outstanding access to capital
Since its IPO in April 2010, Scorpio has raised over $1.3 billion of equity
Has secured $1.6 billion in committed debt financing from leading shipping banks
Newbuilding program fully funded at March 31, 2014
Strategy targets a conservative financial profile
Commitment towards maintaining a low leverage profile and conservative capital
structure
Flexibility to manage successfully through shipping cycles and take advantage of
strategic growth opportunities
Current leverage of 8% with a targeted leverage of 40% - 50%
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By mid 2015, Scorpio Tankers Inc. ("Scorpio" or "STNG") will own a fleet of 74 modern eco-design product tankers with an average age of 1.5 (1) at delivery
World’s largest ECO-spec product tanker company
Fleet expected to include 70 fuel efficient (ECO) product tankers with low breakeven rates
Currently 28 tankers chartered-in on mainly short term charters which Scorpio intends to reduce in size as newbuilds deliver
Owns ~26% of Dorian LPG (DORIAN: Norway OTC)•
The Company raised equity to fund its fleet growth and remains committed to maintaining low leverage
Nine follow-on equity raises since its March 2010 IPO – raising $1.3 billion including $1.1 billion since December 2012
Recent purchases in Q3 and Q4 2013 (8 MR’s) with historical investors, including Valero/Ceres and York Capital, included part-payment in STNG Stock
Strong relationships with leading ship financing banks and proven track record of raising secured debt at attractive rates
$1.4 billion in secured bank debt raised in 2013 –newbuilding program is fully funded as of March 31, 2014
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Vessels employed in strong Scorpio pools•
NYSE-listed company (NSYE: STNG) offering NYSE-compliant governance and transparency•
The Company is headquartered in Monaco, registered in the Marshall Islands and is not subject to US income tax(1) As of June-30-2015 (Includes newbuildings)
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20 existing vessels, plus 54 Product Tanker Newbuilds
Fleet List (as of May 5, 2014)
(1) 4 MR’s TC-OUT to Valero + profit share (3 @ 1 year, $15.5K/ day & 1 @ 2 years, $16K/ day)
Owned vessels Q3 & Q4 2014 Delivery Schedule 2015 Delivery Schedule
Name Year DWT Type Name Year DWT Type Name Year DWT Type
STI Highlander 2007 37,145 Handymax STI Pimlico Jul-14 38,000 HM STI Queens Jan-15 52,000 MR STI Amber 2012 52,000 MR STI Benicia (1) Jul-14 52,000 MR STI Battery Jan-15 52,000 MR STI Topaz 2012 52,000 MR STI Mythos Jul-14 52,000 MR STI Gramercy Jan-15 52,000 MR STI Ruby 2012 52,000 MR STI Elysees Jul-14 114,000 LR2 STI Bronx Feb-15 52,000 MR STI Garnet 2012 52,000 MR STI Dama Jul-14 52,000 MR STI Oxford Feb-15 114,000 LR2 STI Onyx 2012 52,000 MR STI Hackney Jul-14 38,000 HM STI Pontiac Feb-15 52,000 MR STI Sapphire 2013 52,000 MR STI Olivia Aug-14 52,000 MR STI Brooklyn Mar-15 52,000 MR STI Emerald 2013 52,000 MR STI Regina Aug-14 52,000 MR STI Connaught Apr-15 114,000 LR2 STI Beryl 2013 52,000 MR STI Fulham Aug-14 38,000 HM STI Osceola Apr-15 52,000 MR STI Le Rocher 2013 52,000 MR STI Madison Aug-14 114,000 LR2 STI Notting Hill Apr-15 52,000 MR STI Larvotto 2013 52,000 MR STI Acton Aug-14 38,000 HM STI Winnie Apr-15 114,000 LR2 STI Fontvieille 2013 52,000 MR STI Park Sep-14 114,000 LR2 STI Westminster Jun-15 52,000 MR STI Ville 2013 52,000 MR STI Camden Sep-14 38,000 HM STI Seneca Jun-15 52,000 MR STI Duchessa 2014 52,000 MR STI Mayfair Sep-14 52,000 MR STI Lauren Jun-15 114,000 LR2 STI Opera 2014 52,000 MR STI Battersea Sep-14 38,000 HM
STI Texas City (1) 2014 52,000 MR STI Yorkville Sep-14 52,000 MR STI Meraux (1) 2014 52,000 MR STI Sloane Sep-14 114,000 LR2 STI Harmony 2007 73,919 LR1 STI Wembley Oct-14 38,000 HM STI Heritage 2008 73,919 LR1 STI Condotti Oct-14 114,000 LR2 Venice 2001 81,408 Post-Panamax STI Finchley Oct-14 38,000 HM STI Milwaukee Oct-14 52,000 MR
Q1 & Q2 2014 Delivery Schedule STI Clapham Nov-14 38,000 HM
Name Year DWT Type STI Veneto Nov-14 114,000 LR2
STI Chelsea May-14 52,000 MR STI Poplar Nov-14 38,000 HM STI Lexington May-14 52,000 MR STI Tribeca Nov-14 52,000 MR STI San Antonio (1) May-14 52,000 MR STI Soho Dec-14 52,000 MR STI Comandante May-14 38,000 HM STI Hammersmith Dec-14 38,000 HM STI Virtus Jun-14 52,000 MR STI Manhattan Dec-14 52,000 MR STI Aqua Jun-14 52,000 MR STI Rotherhithe Dec-14 38,000 HM STI Venere Jun-14 52,000 MR STI Orchard Dec-14 114,000 LR2 STI Brixton Jun-14 38,000 HM STI Broadway Dec-14 114,000 LR2 STI Venere Jun-14 52,000 MR
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(1) 50/50 Profit Loss agreement (2) 50/50 Profit Share agreement
Provides greater market presence while building fleet
Chartered-In Fleet (Short-term Leases)
Name Year Type DWT Charter
Expiration Option Expiry Rate ($/ day)
1 Jinan 2003 Handymax 37,285 28-Apr-15 - 12,600
2 Kraslava 2007 Handymax 37,258 18-May-14 18-May-15 12,800
3 Krisjanis Valdemars(1) 2007 Handymax 37,266 14-Apr-15 13,650
4 Histria Azure 2007 Handymax 40,394 04-Apr-15 13,550
5 Histria Coral 2006 Handymax 40,426 17-Jul-14 17-Jul-15 12,800
6 Histria Perla 2005 Handymax 40,471 15-Jul-14 15-Jul-15 12,800
7 Iver Progress 2007 Handymax 37,412 03-Mar-15 02-Mar-16 12,500 8 Iver Prosperity 2007 Handymax 37,455 20-Oct-14 20-Oct-15 12,500 9 STX Ace 6 2007 MR 46,161 17-May-14 17-May-15 14,150
10 Targale 2007 MR 49,999 17-May-15 17-May-17 14,850
11 Nave Orion 2013 MR 49,999 25-Mar-15 24-Mar-16 14,300
12 Gan-Trust 2013 MR 51,561 06-Jan-16 06-Jan-18 16,250
13 Usma 2007 MR 52,684 03-Jan-15 - 14,500
14 Gan-Triumph 2010 MR 49,999 20-May-14 - 14,150
15 SN Federica (2) 2003 LR1 72,344 15-May-15 14-May-16 11,250
16 Hellespont Promise 2007 LR1 73,669 14-Aug-14 14,250
17 FPMC P Eagle(1) 2009 LR1 73,800 09-Sep-15 - 14,525
18 King Douglas 2008 LR1 73,666 08-Aug-14 08-Aug-15 14,000
19 SN Azzura 2003 LR1 72,344 25-Dec-14 13,600 20 Hellespont Progress 2006 LR1 73,728 18-Mar-15 18-Mar-17 15,000 21 Khawr Aladid 2006 LR2 106,003 11-Jul-15 - 15,400
22 FPMC P Hero(1) 2011 LR2 99,995 01-Nov-14 02-May-15 15,250
23 FPMC P Ideal(1) 2012 LR2 99,993 09-Jul-14 09-Jan-15 15,250
24 Fair Seas 2008 LR2 115,406 21-Aug-14 21-Feb-15 16,500
25 Four Sky 2009 LR2 115,708 02-Sep-14 - 16,250
26 Densa Alligator 2013 LR2 105,708 17-Sep-14 17-Sep-15 16,500
27 Southport 2008 LR2 115,462 10-Dec-14 - 15,700
28 Swarna Jayanti 2010 LR2 104,895 11-Mar-15 11-Sep-15 15,000
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Investment In Dorian LPG
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In November 2013, Scorpio Tankers Inc. sold its entire interest (11 VLGC orders & options) in the LPG sector to DorianLPG Ltd in exchange for newly issued shares. At the time, it represented 30% of Dorian LPG (~40M Shares). Scorpio Tankers also purchased additional shares of Dorian in a private placement
At the time of the transaction, the Dorian shares were priced at 14 NOK ($1 USD ~ 6 NOK); today Dorian iscurrently trading above 21 NOK
Dorian LPG has 19 fuel-efficient VLGC newbuildings on order at Hyundai Heavy Industries Co., Ltd. andDaewoo Shipping and Marine Engineering Ltd. to be delivered between Q3 2014 and Q1 2016(1)
When fully delivered, they will be one of the industry’s largest VLGC fleets (22 VLGCs) and 86% of the VLGCfleet will be ECO vessels (19 VLGC’s) (1)
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In April 2014 , Dorian launched its initial public offering with an anticipated offering price for its shares of $18.00 -$20.00 after executing a 5-for-1 reverse stock split
At the mid-point of the range, Scorpio’s shares are valued at $243 million
This compares to Scorpio’s cost basis of $209.5 million8
Scorpio Pools and Commercially Managed Fleet
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Scorpio Commercial Management S.A.M., owned by the family of our CEO, Emanuele Lauro, commercially manages 147(1) tanker and dry bulk vessels for over a dozen customers; mainly through four pools in the Handymax, MR, LR1 and LR2 segmentsRepresentative Customers
Scorpio Group’s Managed Fleet
Scorpio pools and commercially managed fleet provide economies of scale
Lemos Oceanbulk
(1) Includes vessels to be delivered by Q2-2015
Class STNG vessels Non-STNG
vessels Total Handy 23 14 37 MR 50 17 67 LR1/Panamax 9 13 22 LR2/Aframax 20 1 21 Total 102 45 147
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Benefits to a new ECO product tanker:
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Revenue benefits (MRs: Greater than $3,000/ day) due to greater fuel efficiency PLUS
Cost benefits (Lower operating expenses, estimated at $500-$750/ day)
Intangible benefits (Charterer preferences for a ‘greener’ vessel)
Higher residual value (non-ECO vessels expected drop faster in value during the next cycle
downturn)
Early-mover advantage as among first to order - and among first to stop ordering
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The Company’s product tankers deliver in 2014-2015 while new vessel orders available in 2016+
Large newbuilding program provides scale to STNG in key pools
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No environmental restriction on where its vessels can trade
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The Company has the largest independent ECO newbuilding fleet
Summary of ECO Based Newbuilding Program
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Environmental Regulations: A Great Reason to Have an ‘‘ECO’’ Ship
• North America Coasts ECA-SOx August
2012, MAX 1.0%
• US Caribbean ECA-SOx from Jan 2014
• North America & US Caribbean ECA’s will also be ECA-NOx from 2016
Source: IMO, DNV
In 2015, W. Coast Norway, might be 0.1% MAX SOx
MGO Required at Berth
Europe
MGO or MDO Required 24 miles from California coastal baseline and at Berth MAX 0.1% SOx
STNG’s newbuildings meet future heightened environmental regulations today
ECA Sulfur Limits MAX S0x
As of July 2010 1.00%
As of January 1,2015 0.10%
Global Sulfur Cap MAX S0x
As of January 1,2012 3.50%
11 $20 $30 $40 $50 $60 $70 $80 $90 ($ M ill io n s) LR2 LR1 MR Handy
Source: Clarksons Research Services, May-14
Scorpio’s Newbuildings Ordered at Historical Lows
Newbuilding Orders
Vessel Costs ($ Millions)
LR2 LR1 MR Handy
High $85 $68 $54 $52
Low $36 $30 $26 $28
Average $57 $47 $38 $35
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Scorpio Well Positioned When Rates Recover
LR2, LR1, MR, & Handy Daily Time Charter Rates Since 2004
Vessel Class Current Average Max Min Median
LR2 $15,392 $28,992 $87,863 $5,584 $26,197 LR1 $21,143 $24,833 $74,498 $2,311 $21,143 Clean MR $10,832 $18,767 $44,505 $4,773 $16,339 Clean Handy $14,743 $21,920 $60,732 $1,971 $17,986 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000
Feb-04 Jan-05 Dec-05 Nov-06 Oct-07 Sep-08 Aug-09 Jul-10 Jun-11 May-12 Apr-13 Mar-14
LR2 LR1 MR Handy
13 (0.8) (0.6) (0.4) (0.2) 0.0 0.2 0.4 0.6 2008 2009 2010 2011 2012 2013 2014 2015 m . bpd North America (1.0) (0.5) 0.0 0.5 2008 2009 2010 2011 2012 2013 2014 2015 m . bpd Western Europe 0.0 0.2 0.4 0.6 0.8 1.0 1.2 2008 2009 2010 2011 2012 2013 2014 2015 m . bpd Middle East 0.0 0.5 1.0 1.5 2.0 2.5 2008 2009 2010 2011 2012 2013 2014 2015 m . bpd Asia (1.0) 1.0 3.0 5.0 2008 2009 2010 2011 2012 2013 2014 2015 m . bpd Global Total
Source: Clarksons Research Services, IEA
Refinery capacity is being added further away from consuming regions
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According to International Energy Agency (“IEA”), refinery capacity is expected to increase by 7 million barrels a day between 2012-2017; ~90% will be added in the broader Asian and Middle East regions•
New low-cost capacity in Asia and Middle East is increasingly forcing rationalization of old high-cost capacity in the West, structurally favoring more long-haul products trade•
Due to refinery closures (USAC, Caribs, Europe), refined oil products ton mile growth is expected to outpace the demand for refined oil products, increasing the demand for product tankers14
The U.S. is Becoming the Major Refined Products Exporter
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Average U.S. domestic crude oil production has increased from 4.7 MBPD since end 2008 to 7.8 MBPD end 2013•
Rising U.S. oil production is spurring calls to lift the congressional restriction on oil exports•
U.S. Crude production increases along with refinery expansions in U.S. Gulf have lead to product exports from the U.S.rising by 316% since beginning 2002. Majority of exports went to Latin America/Caribs
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U.S. Gulf product exports rising from 460 mbpd in Q4-12 to 2,348 mbpd in Q4-13 (410% increase)•
The U.S. has become a net exporter of Petroleum Products•
Exports surpassed Imports by 373M barrels in end 2012 and by 2,260M barrels in end 2013Source: EIA
U.S. Crude Production increased by 3.1 MBPD 2008-2013 U.S. Imports / Exports of Petroleum Products ‘01-‘13
3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0 Jan -200 4 Oct-200 4 Ju l-20 05 Ap r-2006 Jan -200 7 Oc t-20 0 7 Ju l-20 08 Ap r-2009 Jan -201 0 Oct-201 0 Ju l-20 11 Ap r-2012 Jan -201 3 Oct-201 3 M B PD US Crude Production 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 Ja n -01 Ja n -02 Ja n -03 Ja n -04 Ja n -05 Ja n -06 Ja n -07 Ja n -08 Ja n -09 Ja n -10 Ja n -11 Ja n -12 Ja n -13
Total Exports Total Imports
M
B
PD
15 Caribbean-N. America Gasoline Naptha Jet Fuel S. Korea-Japan Gas Oil Gasoline Intra-Asia Gas Oil Naptha M. East-Europe Gas Oil Jet Fuel M. East-F. East Naptha
M. East & India-U.S. West Coast
New ROUTES Traditional ROUTES U.S. W.C-S. America Diesel Asia-Australia Jet Fuel Gas Oil Diesel
Map Key:
Increase In New Routes Leading To Greater Ship Demand
16 11 14 21 15 19 12 21 31 24 28 0 5 10 15 20 25 30 35 2011 2012 2013 Q1 2013 Q1 2014
Owned Vessels Chartered-in Vessels
Financial Highlights
Time Charter Equivalent Revenue
(1)Adjusted EBITDA
(1)Dividends per Share
$75,229 $93,637 $202,734 $43,724 $72,760 $0 $50,000 $100,000 $150,000 $200,000 $250,000 2011 2012 2013 Q1 2013 Q1 2014 $12,715 $11,883 $34,852 $13,051 $15,896 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 2011 2012 2013 Q1 2013 Q1 2014 $0.025 $0.035 $0.070 $0.080 $0.090 $0.000 $0.020 $0.040 $0.060 $0.080 $0.100 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014
Fleet Size
(1) See appendix (pg. 26) for calculation and reconciliation of non-GAAP numbers. Note: Dollars in thousands except for per share data.
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Scorpio Tankers Fleet Delivery Schedule
0 10 20 30 40 50 60 70 80 Q1-2010 Q3-2010 Q1-2011 Q3-2011 Q1-2012 Q3-2012 Q1-2013 Q3-2013 Q1-2014 Q3-2014 Q1-2015 # o f Vessels MR Handymax LR1 LR218
Credit Capacity and Newbuilding Program
Credit Capacity
(1)Newbuilding Program
As of April 28, 2014
In millions of U.S. dollars
Amount Outstanding
Amount Available
2010 Revolving Credit Facility $47.8 $0.0
STI Credit Facility (2) -
-2011 Credit Facility 114.9
-Newbuilding Credit Facility 82.3 -2013 Credit Facility 84.7 440.3 K-Sure Credit Facility - 458.3
KEXIM Credit Facility - 429.6
Total $329.7 $1,328.2
Cash & Cash Equivalents $151.7 $151.7
Total Credit Capacity and
Cash and Cash Equivalents $1,479.90
(1) These are estimates only and are subject to change as construction progresses. (2) In April 2014, the Company repaid the outstanding balance under its STI Spirit
Credit Facility of $21.4 million as a result of the sale of STI Spirit. (3) Calculated at the mid-point of the $18-$20 IPO range.
As of March 31, 2014 ($ in millions) Amount Outstanding Q2 2014 $347.9 Q3 2014 477.4 Q4 2014 258.3 Q1 2015 186.8 Q2 2015 147.4 Total $1,417.8
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Debt Amortization Profile
$330 $1,603 $1,273 $78 $137 $112 $197 $104 $422 $298 $254 $35 $35 $35 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 1 2 2 d e f g h i j k USDm Balance as of April 28, 2014 Total future drawdowns Total Debt 2014 2015 2016 2017 2018 2019 2020 2021Well-balanced debt amortization schedule at attractive terms
Notes from this offering
Notes from this
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Investment Highlights
Modern, fuel-efficient fleet
World’s largest fleet of ECO design product tankers
ECO type vessels have substantially lower fuel costs than prior generation vessels
Newbuilds contracted at favorable prices, relative to historical averages, and reputable
yards
Tremendous fleet growth and
operating leverage
Scorpio currently operates a fleet of 20 wholly owned tankers with an average age of 2.8
years and charters in an additional 28 tankers
The Company has contracts for 54 newbuild product tankers which are expected to
deliver throughout 2014 (41 vessels) and 2015 (13 vessels)
Scorpio manages the fleet in commercial pools that provide substantial leverage in the
market and have historically outperformed the charter market
Positive market fundamentals
Remaining orderbook and yard capacity ensures good supply visibility
Increasing U.S. refined product exports combined with rising refinery capacity in Asia /
Middle East supports demand
Outstanding access to capital
Since its IPO in April 2010, Scorpio has raised over $1.3 billion of equity
Has secured $1.6 billion in committed debt financing from leading shipping banks
Newbuilding program fully funded at March 31, 2014
Strategy targets a conservative financial profile
Commitment towards maintaining a low leverage profile and conservative capital
structure
Flexibility to manage successfully through shipping cycles and take advantage of
strategic growth opportunities
Current leverage of 8% with a targeted leverage of 40% - 50%
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Financial Statements – Balance Sheet
As of As of
In thousands of U.S. dollars March 31, 2014 December 31, 2013 March 31, 2014 December 31, 2013
Assets Current liabilities
Current assets Bank loans $27,744 $10,453
Cash and cash equivalents $194,987 $78,845 Accounts payable 21,977 20,696
Accounts receivable 84,448 72,542 Accrued expenses 7,940 7,251
Prepaid expenses and other current assets 3,855 2,277 Derivative financial instruments 482 689 Inventories 4,553 2,857 Bank loan related to vessels held for sale 27,617 21,397 Vessels held for sale 61,410 82,649 Total current liabilities $85,760 $60,486
Total current assets $349,253 $239,170
Non-current liabilities
Non-current assets Bank loans $289,273 $135,279
Vessels and drydock $631,385 $530,270 Derivative financial instruments 51 188 Vessels under construction 649,718 649,526 Total non-current liabilities $289,324 $135,467
Other assets 30,213 17,907
Investment in associate 209,479 209,803 Total liabilities $375,084 $195,953 Total non-current assets $1,520,795 $1,407,506
Shareholders’ equity
Total assets $1,870,048 $1,646,676 Issued, authorized and fully paid in share capital:
Share capital $2,021 $1,999
Additional paid in capital 1,527,802 1,536,945
Treasury shares (7,938) (7,938)
Hedging reserve (188) (212)
Accumulated deficit (26,733) (80,071)
Total shareholders’ equity $1,494,964 $1,450,723 Total liabilities and shareholders’ equity $1,870,048 $1,646,676
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Financial Statements – Income Statement
For the year ended December 31, For the quarter ended March 31,
In thousands of U.S. dollars except per share and share data 2013 2012 2011 2014 2013 Revenue
Vessel revenue $207,580 $115,381 $82,110 $76,734 $44,924
Operating expenses
Vessel operating costs ($40,204) ($30,353) ($31,370) ($13,070) ($7,971)
Voyage expenses (4,846) (21,744) (6,881) (3,974) (1,200)
Charterhire (115,543) (43,701) (22,750) (40,173) (20,496)
Impairment — — (66,611) — —
Depreciation (23,595) (14,818) (18,460) (5,953) (4,767)
General and administrative expenses (25,788) (11,536) (11,637) (10,966) (2,759)
Write down of vessels held for sale and loss from sales of vessels (21,187) (10,404) — — —
Gain on sale of VLGCs 41,375 — — 51,419 —
Total operating expenses ($189,788) ($132,556) ($157,709) ($22,717) ($37,193)
Operating income / (loss) $17,792 ($17,175) ($75,599) $54,017 $7,731
Other (expense) and income, net
Financial expenses ($2,705) ($8,512) ($7,060) ($399) ($1,399)
Realized gain/(loss) on derivative financial instruments 3 443 — 17 68
Unrealized gain/(loss) on derivative financial instruments 567 (1,231) — 47 44
Financial income 1,147 35 51 27 181
Share of profit from associate 369 — — (324) —
Other expenses, net (158) (97) (119) (47) (15)
Total other income/(expense), net (777) (9,362) (7,128) (679) (1,121)
Net income / (loss) $17,015 ($26,537) ($82,727) $53,338 $6,610
Earnings / (loss) per share
Basic $0.12 ($0.64) ($2.88) $0.28 $0.08
Diluted $0.11 ($0.64) ($2.88) $0.28 $0.08
Basic weighted average shares outstanding 146,504,055 41,413,339 28,704,876 199,718,567 123,511,846 Diluted weighted average shares outstanding 148,339,378 41,413,339 28,704,876 199,718,567 123,511,846
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Financial Statements – Statement of Cash Flows
For the year ended December 31, For the quarter ended March 31,
In thousands of U.S. dollars 2013 2012 2011 2014 2013
Operating activities
Net income / (loss) $17,015 ($26,537) ($82,727) $53,338 $6,610
Gain on sale of VLGCs (41,375) — — (51,419) —
Write down of vessels held for sale and loss from sales of vessels 21,187 10,404 — — —
Depreciation 23,595 14,818 18,460 5,953 4,767
Impairment — — 66,611 — —
Amortization of restricted stock 13,142 3,490 3,362 6,955 500 Amortization of deferred financing fees 332 4,093 986 155 255 Write off of vessel purchase options — — 126 — — Straight-line adjustment for charterhire expense 53 41 84 3 (31)
Share of profit from associate (369) — — 324 —
Unrealized (gain) / loss on derivative financial instruments (567) 1,231 — (47) (44) $33,013 $7,540 $6,902 $15,262 $12,057 Changes in assets and liabilities:
Drydock payments ($1,469) ($1,702) ($2,516) — ($1,202) (Increase)/decrease in inventories (687) 526 (1,410) (1,700) (719) Increase in accounts receivable (36,104) (16,052) (13,031) (11,906) (11,211) (Increase)/decrease in prepaid expenses and other current assets (823) 547 (1,075) (935) (1,006) (Increase)/decrease in other assets (1,849) 2,443 (1,374) (47) — (Decrease)/increase in accounts payable (2,021) 3,966 (954) 3,125 593 Increase in accrued expenses 4,285 804 1,006 1,759 (88) Interest rate swap termination payment — — — (274) — ($38,668) ($9,468) ($19,354) ($9,978) ($13,633)
Net cash outflow from operating activities ($5,655) ($1,928) ($12,452) $5,284 ($1,576) Investing activities
Acquisition of vessels and payments for vessels under construction ($767,448) ($191,490) ($122,573) ($199,055) ($155,180) Proceeds from disposal of vessels — 101,335 — 162,950 —
VLGC installment payments (83,070) — — — —
Investment in associate (84,583) — — — —
Net cash outflow from investing activities ($935,101) ($90,155) ($122,573) ($36,105) ($155,180) Financing activities
Bank loan repayment ($28,410) ($129,076) ($109,638) ($27,674) ($1,838) Bank loan drawdown 52,050 124,172 115,308 209,100 34,375 Debt issuance costs (14,693) (3,293) (4,134) (18,345) (343) Gross proceeds from issuance of common stock 983,537 159,002 110,950 — 465,037 Equity issuance costs (35,695) (5,950) (5,964) (42) (15,774) Purchase of treasury shares — (2,440) (2,851) — —
Dividends paid (24,353) — — (16,076) —
Net cash inflow from financing activities $932,436 $142,415 $103,671 $146,963 $481,457 (Decrease)/increase in cash and cash equivalents ($8,320) $50,332 ($31,354) $116,142 $324,701 Cash and cash equivalents at January 1, 87,165 36,833 68,187 78,845 87,165 Cash and cash equivalents at December 31, $78,845 $87,165 $36,833 $194,987 $411,866 Supplemental information:
25
Capitalization
As of March 31, 2014
($ in millions) Actual As Adjusted
Cash $194,987 $170,367 Current debt: Bank loans $55,361 34,005 Non-current debt: Bank loans 289,273 289,273 Total debt $344,634 $323,278 Shareholders' equity:
Additional paid-in capital 1,527,802 1,527,802 Accumulated deficit (26,733) (26,733) Other equity (6,105) (17,018) Total shareholders' equity $1,494,964 $1,484,051
Total capitalization $1,839,598 $1,807,329
Current Capitalization and Pro-forma for the Notes
26
Reconciliation of Non-US GAAP Items
Time-Charter Equivalent Revenue
Adjusted EBITDA
($ in thousands) 2011 2012 2013 Q1 2013 Q1 2014 Vessel revenue $82,110 $115,381 $207,580 $44,925 $76,734 Voyage expenses (6,881) (21,744) (4,846) (1,200) (3,974) TCE Revenue $75,229 $93,637 $202,734 $43,724 $72,760 ($ in thousands) 2011 2012 2013 Q1 2013 Q1 2014 Net income ($82,727) ($26,537) $17,015 $6,610 $53,338 Financial expenses 7,060 8,512 2,705 1,399 399Unrealized gain on derivative financial instruments 1,231 (567) (44) (47)
Financial income (51) (35) (1,147) (181) (27)
Depreciation 18,460 14,818 23,595 4,767 5,953
Depreciation component of out net loss from associate 0 0 297 0 744
Amortization of restricted stock 3,362 3,490 13,142 500 6,955
Write down of vessels held for sale 0 10,404 21,187 0 0
Impairment 66,611 0 0 0 0
Gain on sale of VLCCs 0 0 0 0 (51,419)
Gain on sale of VLGCs 0 0 (41,375) 0 0
