Scorpio Tankers Inc. · NYSE:STNG
Scorpio Tankers — Debt Investor Presentation (September 2020)
52 slides from Scorpio Tankers's debt investor presentation, Sep 24, 2020
Slide 1: Scorpio Tankers Inc. Credit Investor Presentation
September 2020 Scorpio Tankers Inc. Credit Investor Presentation
Slide 2: Disclaimer and Forward-looking Statements (1/2)
Disclaimer and Forward-looking Statements (1/2) THIS DOCUMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES OF AMERICA, ITS TERRITORIES OR POSSESSIONS, AUSTRALIA, CANADA, JAPAN, HONG KONG OR SOUTH AFRICA OR TO ANY R
Slide 3: Disclaimer and Forward-looking Statements (2/2)
Disclaimer and Forward-looking Statements (2/2) The Presentation is not intended to provide, and should not be relied upon for, legal, tax, regulatory, financial, accounting or investment advice, and does not purport to be complete on any topic addressed. The Issuer does not intend to update the inf
Slide 4: Table of Contents
Table of Contents1. Summary of Terms2. Introduction to Scorpio Tankers3. IMO 2030 Compliance and ESG Overview4. Financials5. Product Tanker Market Overview6. Risk Factors7. Appendix
Slide 5: 1. Summary of Terms
1. Summary of Terms
Slide 6: Summary of Terms
4 Issuer Scorpio Tankers Inc. Initial Issue Amount Minimum USD 100 million Maximum Issue Amount USD 150 million Interest Rate [●] percentage points per annum, semi-annual interest payments Maturity Date [●] 2024 (4 years after Issue Date) Issue Price 100.00% of the Nominal Amount Amortization The Bo
Slide 7: 2. Introduction to Scorpio Tankers
2. Introduction to Scorpio Tankers
Slide 8: Significant Market Capitalization & Trading Liquidity
Significant Market Capitalization & Trading Liquidity Largest NYSE-listed product tanker owner with a market capitalization of $632m1 and daily trading liquidity of $24 million85% free float with strong institutional ownershipSeasoned capital markets issuer with over $2.3 billion in equity raised si
Slide 9: Fleet Overview
Fleet Overview Key Facts Scorpio Tankers Inc. (“Scorpio”) is the world’s largest product tanker owner, providing marine transportation of refined petroleum products (gasoline, diesel, jet fuel and naphtha) to a diversified blue-chip customer baseNYSE-listed and compliant governance The Company’s fle
Slide 10: Company history and fleet size
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1H-20 Fleet Size - Average # of Vessels1 Scorpio Tankers Inc. is incorporated in the Republic of the Marshall Islands IPO on the NYSE under the ticker “STNG” Orders first ‘Eco” spec product tanker Took delivery of the STI Amber, the first ‘Eco’
Slide 11: Management team
Emanuele A. Lauro - CEO Robert Bugbee - President Cameron Mackey- COO Brian Lee- CFO Filippo Lauro – VP Chairman and Chief Executive Officer since IPO in 201017 years of shipping experienceDirector of the Standard Club from May 2013 to January 2019. Joined Scorpio in 2003 and has continued to serve
Slide 12: 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 segmentsWhile a significant portion of the global MR and LR fleets are older than 15 years of age, the Scorpio fleet has an average age of 4.8 years Source: Clarksons Shipping Intelligence
Slide 13: High Quality Customer Base
13 Pool Customers Top 5 customers account for 38% of earnings High Quality Customer Base
Slide 14: Fleet Managed in Scorpio Commercial Pools
Fleet Managed in Scorpio Commercial Pools Proves Benefits Scorpio MR Tanker Pool Scorpio LR2 Tanker Pool Scorpio Handymax Tanker Pool Scorpio LR1 Tanker Pool Scorpio’s trading platform operates one of the largest product tanker fleets in the marketCommercial pools provide significant economies of sc
Slide 15: COVID-19 Implications
CommercialSignificant decrease in Q2-20 oil demand as travel restrictions and other preventive measures to reduce spread of COVID-19Oil price volatility and limited land based resulted in a large increase in contracts for product tankers to be used for floating storageIncreased regional imbalance of
Slide 16: Shareholders, Market Capitalization & Trading Liquidity
Market Cap ($m) (2) Institutions (1) SSH & Insiders 10.3% Trafigura 7.8% Dimensional Fund Advisors 4.9% Scorpio Bulkers Inc. 4.5% BlackRock Fund Advisors 3.7% Jefferies 2.6% Fidelity Management & Research Company 2.3% Magallanes Value Investors 2.3% Ninety One UK Limited 2.2% Hosking Partners 2.2% S
Slide 17: 3. IMO 2030 Compliance and ESG Overview
3. IMO 2030 Compliance and ESG Overview
Slide 18: Fleet Energy Efficiency Existing Index
Scorpio Tankers Fleet Energy Efficiency Existing Index1 “EEXI” (By Class) Design Reductions Prescient of IMO 2030 Emission Regulations, Scorpio is dedicated to operating a modern fleet that remains in line with the Energy Efficiency Design Index2 “EEDI” requirements put forth by the International Ma
Slide 19: Sustainability Reporting
Sustainability Reporting https://www.scorpiotankers.com/about-scorpio-tankers/sustainability/ First annual report published in June 2020 Download the 2019 annual report at: “At our core, we strive to be a responsible and ethical service provider, carefully weighing the interests of all our stakehold
Slide 20: 4. Financials
4. Financials
Slide 21: Historical Company TCE Rates
Historical Company TCE Rates LR2 ($/day) LR1 ($/day) MR ($/day) Handymax ($/day)
Slide 22: Recent Financial Performance
Avg Number of Vessels1 Millions $USD Revenue EBITDA Net Debt Cash & Cash Equivalents Shareholders’ Equity Millions $USD Millions $USD Millions $USD Millions $USD Recent Financial Performance Excludes time chartered in vessels
Slide 23: Track Record of Issuance & Repayment of Fixed Income Notes
Issuance Date Security Issuance Coupon Maturity Outstanding Today May-14 Unsecured Notes $53.8 6.75% May-20 $0.0 Oct-14 Unsecured Notes $51.8 7.50% May-17 $0.0 Mar-17 Unsecured Notes $57.5 8.25% Jun-19 $0.0 Jun-14 Convertible Bond $360.0 2.375% Jul-19 $0.01 May/Jul-18 Convertible Bond $203.5 3.00% M
Slide 24: Limited Debt Maturities through 2024
Limited Debt Maturities through 2024 Annual Debt Repayment Schedule Balloon payments expected to be refinanced given the young age of the vessels Millions $USD
Slide 25: Limited Capex Commitments Going Forward
Limited Capex Commitments Going Forward Since 2018, the Company completed $362.4 million in capex payments for drydock, ballast water treatment systems and scrubbers Remaining capex for 2H-20 and FY-21 is $82.2 million for which the company has $56 million of available scrubber finance that has yet
Slide 26: Leverage Overview
Leverage Overview Financial Institutions ECAs Banks Lessors *Based on June 30 broker values1) Excludes seven operating leased vessels under IFRS 16 Excellent relationships and enhanced reputation with creditors Strong (non-transactional) direct relationships with Chinese and Norwegian Lessors All se
Slide 27: Potential Cash Flow Generation
Potential Cash Flow Generation Note: Annual revenue calculated as TCE Rate x 365 days x number of vessels. Based on 134 vessels and assumes vessel cash breakeven of $17,100 per day and debt repayment of $279m from Q4-20 through Q3-21 (1) TCE Rate reflects a market TCE Rate for a non-scrubber ECO ves
Slide 28: Scrubber Investment
Scrubber Investment As of August 5, 2020 the Company had 86 vessels with exhaust gas cleaning systems “scrubbers”34 LR2s, 6 LR1s and 46 MRsThe company has plans to install an additional 30 scrubbers on its vessels2H-201: 11 vessels (7 LR2s, 1 LR1 and 3 MRs)FY-21: 9 vessels (1 LR2s and 8 MRs)FY-22: 1
Slide 29: 5. Product Tanker Market Overview
5. Product Tanker Market Overview
Slide 30: Product Tanker Overview, Cargos and Segments
Product tankers provide marine transportation of refined petroleum products or “clean products” (gas oil/diesel, gasoline, jet fuel and naphtha), while crude tankers transport “dirty products” (crude oil and fuel oil) Product tankers have coated tanks, typically epoxy, making them easy to clean and
Slide 31: Product Tanker Demand Drivers
Oil consumption growth Refinery marginsRefinery throughput Dislocation between refinery and consumerRefining capacity expansions have moved closer to the well head and further away from the consumer Arbitrage opportunities from price volatilityLow inventory levelsGrowing regional imbalances from cru
Slide 32: Refined Product Floating Storage and Refinery Runs
Refined Product Floating Storage (million barrels) (1) Oversupply of refined products as a result of COVID-19 and subsequent increase in floating storage pushed product tanker rates to record levelsA strong recovery in global demand for refined products coupled with lower refinery utilization rates
Slide 33: Market tightening and outlook
Since Q4-18, year over year quarterly Company TCE rates have been higher every quarter suggesting that the market has continued to tighten Seaborne refined product exports and ton mile demand are estimated to increase 6.1% and 7% in 2021, respectively (1)IMF forecasts world real GDP increasing by 5.
Slide 34: Spot Rates Have Continued to Improve
Scorpio Average Fleet TCE ($/day) Since Q4-18, year over year quarterly Company TCE rates have been higher every quarter (1) 1) Based on Q3-19 guidance as of September 9, 2020 Spot Rates Have Continued to Improve
Slide 35: Crude & Product Tanker Differentiation
The LR2 product tanker and aframax crude tanker are structurally similar ships, but the LR2 has coated tanks and the aframax does notHistorically crude and product tanker rates have been strongly correlated. However, recently we have seen a deviation in the correlation between crude and product tank
Slide 36: Middle Eastern Refining Capacity
Middle Eastern Refining Capacity Saudi Domestic Refining Capacity Middle eastern refining capacity continues to expandSince investing in new domestic refining capacity, Saudi Arabia has increased refined product exports 400% since 2013The last of Saudi’s 400 kb/d mega refinery series, Jazan, is expe
Slide 37: Orderbook as % of Fleet Remains Near Historical Low
Orderbook as % of Fleet Newbuilding Orders Limited newbuilding orders coupled with a low orderbook has kept orderbook as % of fleet near historical lowRegulatory uncertainty around IMO 2030/2050 emission reductions and propulsions systems to act as a constraint on newbuilding activity until regulati
Slide 38: Demand Expected to Outpace Supply in 2021
Demand Expected to Outpace Supply in 2021 Source: Clarksons Shipping Intelligence, September 2020Note: Supply slippage on scheduled newbuilding deliveries of 20% for 2020/2021, Scrapping assumptions for 2020/2021 is 2.0 million dwt per year.
Slide 39: Significant % of the Fleet Turning 15 Years & Older
Including the newbuilding orderbook, a significant % the product tanker fleet will turn 15 years and older during the next three years Fleet Age Profile Today vs 2023 (Including Newbuilding Orders) Source: Clarksons Research Intelligence, September 2020 Significant % of the Fleet Turning 15 Years &
Slide 40: A Liquid Secondhand Market Throughout The Cycles
A Liquid Secondhand Market Throughout The Cycles Number of Vessel Sales in Secondhand Market # of vessel sales
Slide 41: 6. Risk Factors
6. Risk Factors
Slide 42: Risk Factors
Risk Factors Investing in the Bonds involves a high degree of risk. A prospective investors should consider carefully all of the information set forth in this presentation, and in particular, the specific risk factors set out below. An investment in the Bonds is suitable only for investors who under
Slide 43: Risk Factors (cont'd) - Over-supply of tanker capacity
Risk Factors (cont’d) An over-supply of tanker capacity may lead to a reduction in charter rates, vessel values, and profitabilityThe market supply of tankers is affected by a number of factors, such as supply and demand for energy resources, including oil and petroleum products, supply and demand f
Slide 44: Risk Factors (cont'd) - Economic volatility
Risk Factors (cont’d) Volatility in economic conditions throughout the world could have an adverse impact on our results of operations and financial condition.Our business and profitability are affected by the overall level of demand for our vessels, which in turn is affected by trends in global eco
Slide 45: Risk Factors (cont'd) - Risks related to our company
Risk Factors (cont’d) RISKS RELATED TO OUR COMPANYWe operate secondhand vessels, which exposes us to increased operating costs which could adversely affect our earnings and, as our fleet ages, the risks associated with older vessels could adversely affect our ability to obtain profitable chartersWe
Slide 46: Risk Factors (cont'd) - Vessel market values
Risk Factors (cont’d) The market values of our vessels may decrease, which could limit the amount of funds that we can borrow or trigger certain financial covenants under our current or future debt facilities and we may incur a loss if we sell vessels following a decline in their market valueThe fai
Slide 47: 7. Appendix
7. Appendix
Slide 48: Scorpio Group of Companies
Scorpio Group of Companies Commercial Management Technical Management Administrative Services Description Employment of the vessels, business development, commercial operation and administration Part of daily opex. Includes: Crewing, maintenance and repair (incl. attendance at drydocking), supplies
Slide 49: Historical Financials – Income Statement
Historical Financials – Income Statement (In '000s of USD) 1H-20 FY-19 FY-18 Revenue $ 600,407 $ 704,325 $ 585,047 Vessel operating costs (161,221) (294,531) (280,460) Voyage expenses (7,125) (6,160) (5,146) Charterhire - (4,399) (59,632) Depreciation (121,749) (206,968) (176,723) G&A (36,010) (62,2
Slide 50: Historical Financials – Cash Flow
Historical Financials – Cash Flow (In '000s of USD) 1H-20 FY-19 FY-18 Net Income (Loss) $ 190,568 $ (48,490) $ (190,071) Depreciation and amortization 140,190 241,430 212,811 Other 6,620 16,456 48,054 Changes in working Capital (45,283) 116 (13,004) Net cash inflow from operating activities $ 292,09
Slide 51: Historical Financials – Balance Sheet
Historical Financials – Balance Sheet (In '000s of USD) June 30,2020 December 31, 2019 December 31, 2018 Cash and cash equivalents $ 250,529 $ 202,303 $ 593,652 Accounts receivable 114,925 78,174 69,718 Other current assets 21,662 22,501 23,971 Vessels and drydock 4,062,574 4,008,158 3,997,789 Right
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