Scorpio Tankers Inc. · NYSE:STNG
Scorpio Tankers — Q4 2020 Earnings Presentation
40 slides from Scorpio Tankers's earnings presentation, Feb 18, 2021
Slide 1: Fourth Quarter and Full Year 2020 Earnings Presentation
Scorpio Tankers Inc. Fourth Quarter and Full Year 2020 Earnings Presentation February 18, 2020
Slide 2: Disclaimer and Forward-looking Statements
Disclaimer and Forward-looking Statements This presentation includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect Scorpio Tankers Inc.’s (“Scorpio’s”) curr
Slide 3: Investment Highlights
Investment Highlights • 135 wholly owned, finance leased or bareboat chartered-in tankers on the water with an average age of 5.2 years The Largest & Most Modern Product Tanker Fleet in the • 98 product tanker vessels equipped with exhaust gas scrubbers World • Vessels trading within one of the worl
Slide 4: Scorpio Tankers at a Glance
Scorpio Tankers at a Glance Key Facts Fleet Overview Largest Product Tanker Fleet in the World • Scorpio Tankers Inc. (“Scorpio”) is the world’s largest product with 135 Vessels on the Water tanker owner, providing marine transportation of refined 18x 63x petroleum products (gasoline, diesel, jet fu
Slide 5: Largest & Most Modern Product Tanker Fleet in the World
Largest & Most Modern Product Tanker Fleet in the World • World’s largest and youngest product tanker fleet, including the leading owner in the MR and LR2 product tanker segments • While a significant portion of the global MR and LR fleets are older than 15 years of age, the Scorpio fleet has an ave
Slide 6: Q4-20 Actual & Q1-21 Guidance of Company TCE Rates
Q4-20 Actual & Q1-21 Guidance of Company TCE Rates Scorpio Fleet TCE by Segment ($/day) % of Q1-21 Days Booked as of February 17, 2021 LR2 LR1 MR HM $15,995 Q1-21 48% 58% 58% 50% $15,200 $11,739 $11,500 $11,000 $9,962 $7,769 $6,800 LR2 LR1 MR HM Q4-20 Actual Q1-21 Guidance Source: Company’s earnings
Slide 7: Bunker Prices & Forward Curve
Bunker Prices & Forward Curve • The VLSFO-HSFO spread reached $300/MT in January 2020 as the International Maritime Organization (IMO) regulatory fuel changes were implemented, requiring non scrubber fitted vessels to consume marine fuel with 0.5% sulfur content • In Q2-209 the oil demand shock caus
Slide 8: Scrubber Fuel Savings
Scrubber Fuel Savings • As of February 17, 2021 the Company has 98 vessels currently installed with exhaust gas cleaning systems (“scrubbers”) Scorpio Scrubber Fleet Scorpio TCE Savings Annual Cash Flow Benefit (Vessels installed with scrubbers) ($/day) (Millions $USD) 80 $2,509 $102.6 70 $2,091 60
Slide 9: Financials
Financials 9
Slide 10: Annual Financial Performance
Annual Financial Performance (In '000s of USD) FY-20 FY-19 Revenue $ 915,892 $ 704,325 Vessel operating costs (333,748) (294,531) Voyage expenses (7,959) (6,160) Charterhire - (4,399) Depreciation (245,818) (206,968) Impairment of vessels and goodwill (16,846) G&A (66,187) (62,295) Total operating e
Slide 11: Quarterly Financial Performance
Quarterly Financial Performance Average Fleet TCE ($/day) Revenue Millions $USD $35,000 $29,693 $400 $30,000 $346.2 $350 $25,000 $22,644 $300 $254.2 $20,000 $250 $15,100 $177.3 $15,000 $200 $11,608 $138.2 $150 $10,000 $100 $5,000 $50 $0 $0 Q1-20 Q2-20 Q3-20 Q4-20 Q1-20 Q2-20 Q3-20 Q4-20 Adjusted EBI
Slide 12: Quarterly Financial Performance & Position
Quarterly Financial Performance & Position Net Cash Inflow From Operating Activities Outstanding Debt Millions $USD Millions $USD $300 $3,250 $248 $3,220 $250 $3,200 $3,171 $200 $3,150 $150 $111 $3,109 $3,100 $3,087 $100 $44 $50 $3,050 $16 $0 Q1-20 Q2-20 Q3-20 Q4-20 $3,000 31-Mar-21 30-Jun-20 30-Sep
Slide 13: Debt Summary
Debt Summary Summary of Debt Drawdowns, Repayments and Issuance Outstanding Debt as of December 31, 2020 From January 1, 2020 through December 31, 2020 Amount ('000s $USD) Type Amount ('000s $USD) Outstanding debt January 1, 2020 $ 3,170,993 Credit facilities 993,885 Leasehold interest in four Trafi
Slide 14: Limited Capex & Upcoming Maturities Have Been Refinanced
Limited Capex & Upcoming Maturities Have Been Refinanced • Since 2018, the Company completed $410.6 million in capex payments for drydock, ballast water treatment systems and scrubbers • Remaining capex for FY-21 is $36.2 million • The Company has $20 million of committed scrubber financing that has
Slide 15: Liquidity
Liquidity • As of February 17, 2021, the Company had $204.1 million in unrestricted cash Liquidity and cash equivalents. Millions $USD • The Company has committed financing to increase liquidity by approximately $350.0 $20.8 million, $306.1 $306.1 $300.0 • $18.9 million from the refinancing of two v
Slide 16: Potential Cash Flow Generation
Potential Cash Flow Generation Potential Annual Cash Flow Generation Excluding Debt Repayment Potential Annual Cash Flow Generation Including Debt Repayment Millions $USD Millions $USD $2,500 $2,500 $2,000 $2,000 $1,500 $1,500 $1,128 $882 $1,416 $636 $1,170 $1,000 $389 $1,000 $924 $143 $677 $431 $28
Slide 17: Market Fundamentals
Market Fundamentals 17
Slide 18: Short Term Market Update
Short Term Market Update Refined Product Floating Storage (million barrels) (1) • Despite a significant recovery in oil demand since April, global demand continues to balance its recovery with the impact of the pandemic 120 107.3 • Asia demand for refined products has surged and expected to continue
Slide 19: Asia Has Led the Demand Recovery in Refined Products
Asia Has Led the Demand Recovery in Refined Products • Asia’s ability to reduce COVID outbreaks has led to a strong recovery in economic activity, increased demand for refined products and consequently higher freight rates for vessels trading East of the Suez canal COVID Cases (1) MR Avg Spot TCE Ea
Slide 20: West to Follow Asian Demand Recovery with Vaccine Rollout
West to Follow Asian Demand Recovery with Vaccine Rollout • Limitations on personal mobility in Europe, North America and South America has led to a slower recovery in demand for refined products and consequently lower freight rates for vessels trading West of the Suez canal • However, increasing va
Slide 21: LR2 Rates Have Been a Leader in the Tanker Space
LR2 Rates Have Been a Leader in the Tanker Space • While product and crude tanker rates declined from the conclusion of floating storage contracts and lower exports due the 2nd wave of COVID lockdowns, LR2 spot rates outperformed all other tanker classes in Q4-20 • The LR2’s have benefited from incr
Slide 22: Product Tanker Demand Drivers
Product Tanker Demand Drivers Increased Volumes Voyage Distance Product Tanker (Seaborne Trading Activity Demand Exports) (Ton Mile Demand) • Oil consumption • Dislocation • Arbitrage opportunities growth between refinery from price volatility and consumer • Refinery margins • Low inventory levels •
Slide 23: Long Term Fundamentals
Long Term Fundamentals Oil and Refined Product Demand Expected to Continue to Recover through 2021 • Oil demand expected to continue to recover and the IEA expects oil demand to increase 5.5 mb/d in 2021 to 96.6 mb/d (1) • Seaborne refined product exports and ton mile demand are estimated to increas
Slide 24: Global Refinery Closures Accelerate
Global Refinery Closures Accelerate • Older inefficient refineries face a wave of closures due to weak refining margins, tightening environmental rules and overseas competition, prompting some owners to opt for closure or converting plants for storage or biofuels production • After closing, the lost
Slide 25: Impact of Closing Australia's Kwinana & Altona Refinery
Impact of Closing Australia’s Kwinana & Altona Refinery Australia Refining Capacity • BP announced that they are closing their 146 kb/d Kwinana refinery in Australia at the end of 2020 Refinery Owner Capacity (kb/d) Status Altona Exxon Mobil 90 Closing • In February 2021 Exxon Mobil announced that t
Slide 26: Regional Diesel & Gasoline Balances
Regional Diesel & Gasoline Balances FSU Europe 1.1 (1.3) North America 0.1 1.2 0.8 Asia 0.1 0.8 Middle East (0.3) Africa 0.8 (1.1) (0.2) (0.8) Latin America (1.1) (1.3) Diesel surplus / (deficit) in mb/d Gasoline surplus / (deficit) in mb/d Source: Energy Aspects, estimates are for FY-21 26
Slide 27: Orderbook as % of Fleet Remains Near Historical Low
Orderbook as % of Fleet Remains Near Historical Low • Limited newbuilding orders coupled with a low orderbook has kept orderbook as % of fleet near historical lows Newbuilding Orders Orderbook as % of Fleet MR LR1 LR2 25.0% Product Tanker 10K+ Orderbook % Fleet 450 433 5 Yr Avg 400 78 10 Yr Avg 350
Slide 28: Seaborne Ton Mile Demand to Outpace Supply in 2021
Seaborne Ton Mile Demand to Outpace Supply in 2021 Ton Mile Demand vs Product Tanker Fleet Growth Product Tanker Net Fleet Growth Seaborne Refined Products Exports 10.0% 8.0% 7.4% 6.0% 6.3% 6.1% 4.8% 5.7% 4.5% 4.7% 4.0% 3.9% 4.2% 2.5% 2.0% 2.6% 1.5% 1.9% 2.4% 1.1% 1.0% 0.0% -0.2% -1.0% -2.0% -4.0% -
Slide 29: Significant % of the Fleet Turning 15 Years & Older
Significant % of the Fleet Turning 15 Years & Older • Certain key customers will only employ product tankers 15 years & younger • This limits trading opportunities for older tonnage and creates a two-tiered market where; • Owners consider continuing to carry refined products, switching from products
Slide 30: MR Vessels Turning 15 Years Old Exceeds Newbuild Deliveries
MR Vessels Turning 15 Years Old Exceeds Newbuild Deliveries • Prior to 2018, newbuilding MR vessel deliveries had never exceeded the number of vessels turning 15 years old each year • During the next four years, 456 MRs will turn 15 years and older which is significantly greater than the total MR or
Slide 31: Increasing Environmental Regulations to Benefit Modern Vessels
Increasing Environmental Regulations to Benefit Modern Vessels • The EU has put pressure on the IMO to accelerate it’s 2030 GHG emission targets and implement and may implement its own ETS system by 2023 • It’s unclear how the timeline of these plans will accelerate, but the focus on reducing GHG em
Slide 32: Appendix
Appendix 32
Slide 33: Product Tankers in the Oil Supply Chain
Product Tankers in the Oil Supply Chain • Crude Tankers provide the marine transportation of the crude oil to the refineries. • Product Tankers provide the marine transportation of the refined products to areas of demand. • Structural demand drivers in the product tanker industry: • US has emerged a
Slide 34: What is in a Barrel of Crude Oil?
What is in a Barrel of Crude Oil? Source: Valero & EIA, December 2019 34
Slide 35: Product & Crude Tankers
Product & Crude Tankers Tankers “Dirty” “Clean” Crude Products Vessel VLCC Suezmax Aframax Panamax Handysize LR2 LR1 Hmx/MR Handysize (200,000 + (120,000 - (80,000 - (60,000 - (< 60,000 (80,000- (60,000- (25,000- (<25,000 Size DWT) 200,000 DWT) 120,000 DWT) 80,000 DWT) DWT) 120,000 DWT) 80,000 DWT)
Slide 36: Product Tanker Specifications
Product Tanker Specifications IMO Classes I, II, & III IMO Class I Chemical IMO Class I refers to the transportation of the most hazardous, Tankers very acidic, chemicals. The tanks can be stainless steel, epoxy or marine-line coated. IMO Class II Chemical & Product Tankers IMO Class II carries Veg
Slide 37: Design Features on Scorpio Product Tankers
Design Features on Scorpio Product Tankers 37
Slide 38: Scrubber Fuel Savings
Scrubber Fuel Savings Consumption figures below assume that: • Scrubbers do not operate during any port activities • Each voyage has a load and discharge port in an ECA, i.e. scrubber does not operate in ECA waters Annual ECO Vessel Fuel Consumption (MT/year) (1) Sailing (Ballast & Laden) MR LR1 LR2
Slide 39: Fleet List
Fleet List Owned & Finance Lease Vessels Name Year DWT Type Name Year DWT Type Name Year DWT Type STI Comandante May-14 38,734 HM STI Manhattan Mar-15 49,990 MR STI Elysees Jul-14 109,999 LR2 STI Brixton Jun-14 38,734 HM STI Queens Apr-15 49,990 MR STI Madison Aug-14 109,999 LR2 STI Pimlico Jul-14 3
Slide 40: www.scorpiotankers.com
www.scorpiotankers.com