Scorpio Tankers Inc.

03/21/2025 | Press release | Distributed by Public on 03/21/2025 14:20

Annual Report for Fiscal Year Ending Dec 31, 2024 (Form 20-F)

OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following presentation of management's discussion and analysis of results of operations and financial condition should be read in conjunction with our consolidated financial statements, accompanying notes thereto and other financial information appearing in "Item 18. Financial Statements." You should also carefully read the following discussion with the sections of this annual report entitled "Item 3. Key Information-D. Risk Factors," "Item 4. Information on the Company-B. Business Overview-The International Oil Tanker Shipping Industry," and "Cautionary Statement Regarding Forward-Looking Statements." Our consolidated financial statements as of December 31, 2024 and 2023 and for the years ended December 31, 2024, 2023, and 2022 have been prepared in accordance with IFRS as issued by the IASB. Our consolidated financial statements are presented in U.S. dollars ($) unless otherwise indicated. Any amounts converted from another non-U.S. currency to U.S. dollars in this annual report are at the rate applicable at the relevant date, or the average rate during the applicable period.
We generate revenues by charging customers for the transportation of their refined oil and other petroleum products using our vessels. These services are generally provided under the following basic types of contractual relationships:
•Voyage charters, which are charters for short intervals that are priced on current, or "spot," market rates.
•Time or bareboat charters, which are vessels chartered to customers for a fixed period of time at rates that are generally fixed, but may contain a variable component based on inflation, interest rates, or current market rates.
•Commercial Pools, whereby we participate with other shipowners to operate a large number of vessels as an integrated transportation system, which offers customers greater flexibility and a higher level of service while achieving scheduling efficiencies. Pools negotiate charters primarily in the spot market but may also arrange time charter agreements. The size and scope of these pools enable them to enhance utilization rates for pool vessels by securing backhaul voyages and COAs (described below), thus generating higher effective TCE revenues than otherwise might be obtainable in the spot market.
For all types of vessels in contractual relationships, we are responsible for crewing and other vessel operating costs for our owned, lease financed, or bareboat chartered-in vessels and the charterhire expense for vessels that we time or bareboat charter-in.
The table below illustrates the primary distinctions among these different employment arrangements:
Voyage Charter Time Charter Bareboat Charter Commercial Pool
Typical contract length Single voyage One year or more One year or more Varies
Hire rate basis (1)
Varies Daily Daily Varies
Voyage expenses (2)
We pay Customer pays Customer pays Pool pays
Crewing and other vessel operating costs (3)
We pay We pay Customer pays We pay
Charterhire expense or bareboat chartered-in vessels (3)
We pay We pay We pay We pay
Off-hire (4)
Customer does not pay Customer does not pay Customer pays Pool does not pay
(1)"Hire rate"refers to the basic payment from the charterer for the use of the vessel.
(2)"Voyage expenses"refers to expenses incurred due to a vessel's traveling from a loading port to a discharging port, such as fuel (bunker) cost, port expenses, agent's fees, canal dues and extra war risk insurance, as well as commissions.
(3)"Vessel operating costs" and "Charterhire expense" are defined below under "-Important Financial and Operational Terms and Concepts."
(4)"Off-hire"refers to the time a vessel is not available for service due primarily to scheduled and unscheduled repairs or drydockings. For time chartered-in vessels, we do not pay the charterhire expense when the vessel is off-hire.
As of March 20, 2025, 83 of the vessels in our operating fleet were operating in the Scorpio Pools and 16 were operating on time charter-out agreements.
Important Financial and Operational Terms and Concepts
We use a variety of financial and operational terms and concepts. These include the following:
Vessel revenues.Vessel revenues primarily include revenues from time charters, pool revenues and voyage charters (in the spot market). Vessel revenues are affected by hire rates and the number of days a vessel operates. Vessel revenues are also affected by the mix of business between vessels on time charter, vessels in pools and vessels operating on voyage charter. Revenues from vessels in pools and on voyage charter are more volatile, as they are typically tied to prevailing market rates.
Voyage charters.Voyage charters, or spot voyages, are charters under which the customer pays a transportation charge for the movement of a specific cargo between two or more specified ports. We pay all of the voyage expenses under these charters.
Voyage expenses.Voyage expenses primarily include bunkers, port charges, canal tolls, cargo handling operations and brokerage commissions paid by us under voyage charters. These expenses are subtracted from voyage charter revenues to calculate TCE revenue, a non-IFRS measure, which is defined below.
Vessel operating costs.For our owned, lease financed, and bareboat chartered-in vessels, we are responsible for vessel operating costs, which include crewing, repairs and maintenance, insurance, spares and stores, lubricating oils, communication expenses, and technical management fees. The three largest components of our vessel operating costs are crewing, spares and stores, and repairs and maintenance. Expenses for repairs and maintenance tend to fluctuate from period to period because most repairs and maintenance typically occur during periodic drydocking. Please read "Drydocking" below. We expect these expenses to increase as our fleet matures and to the extent that it expands.
Additionally, these costs include technical management fees that we paid to SSM, which is controlled by the Lolli-Ghetti family. Pursuant to our 2018 Revised Master Agreement and 2024 Revised Master Agreement, SSM provides us with technical services, and we provide them with the ability to subcontract technical management of our vessels with our approval.
Charterhire expense.Charterhire is the amount we pay the owner for time or bareboat chartered-in vessels. The amount is usually for a fixed period of time at rates that are generally fixed, but may contain a variable component based on inflation, interest rates, or current market rates. Time or bareboat chartered-in vessels are accounted for pursuant to IFRS 16 - Leases.
The responsibility for vessel operating expenses for the different types of charter agreements are as follows:
•Time chartered-in vessels. The vessel's owner is responsible for the vessel operating costs.
•Bareboat chartered-in vessels. The charterer is responsible for the vessel operating costs.
Drydocking.We periodically drydock each of our owned or lease financed vessels for inspection, repairs and maintenance and any modifications to comply with industry certification or governmental requirements. Generally, each vessel is drydocked every 30 months to 60 months. We capitalize a substantial portion of the costs incurred during drydocking and amortize those costs on a straight-line basis from the completion of a drydocking to the estimated completion of the next drydocking. We immediately expense costs for routine repairs and maintenance performed during drydocking that do not improve or extend the useful lives of the assets. The number of drydockings undertaken in a given period and the nature of the work performed determine the level of drydocking expenditures.
Depreciation.Depreciation expense typically consists of:
•charges related to the depreciation of the historical cost of our owned, or lease financed vessels (less an estimated residual value) over the estimated useful lives of the vessels;
•charges related to the depreciation of right of use assets (accounted for under IFRS 16) which is based upon the straight-line depreciation of the right of use asset over the life of the lease or the useful life of the asset, if a purchase obligation or a purchase option is reasonably certain to be exercised; and
•charges related to the amortization of drydocking expenditures over the estimated number of years to the next scheduled drydocking.
Time charter equivalent (TCE) revenue or rates.We report TCE revenues, a non-IFRS measure, because (i) we believe it provides additional meaningful information in conjunction with voyage revenues and voyage expenses, the most directly comparable IFRS measures, (ii) it assists our management in making decisions regarding the deployment and use of our vessels and in evaluating their financial performance, (iii) 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 bareboat charters) under which the vessels may be employed between the periods, and (iv) we believe that it presents useful information to investors. TCE revenue is vessel revenue less voyage expenses, including bunkers and port charges. The TCE rate achieved on a given voyage is expressed in U.S. dollars/day and is generally calculated by taking TCE revenue and dividing that figure by the number of revenue days in the period (see Item 5. Operating and Financial Review and Prospects - Important Financial and Operational Terms and Concepts for definition and reconciliation of TCE revenue).
Revenue days.Revenue days are the total number of calendar days our vessels were in our possession during a period, less the total number of off-hire days during the period associated with major repairs or drydockings. Consequently, revenue days represent the total number of days available for the vessel to earn revenue. Idle days, which are days when a vessel is available to earn revenue, yet is not employed, are included in revenue days. We use revenue days to show changes in net vessel revenues between periods.
Average number of vessels.Historical average number of owned or lease financed vessels consists of the average number of vessels that were in our possession during a period. We use average number of vessels primarily to highlight changes in vessel operating costs and depreciation and amortization.
Contract of affreightment.A contract of affreightment, or COA, relates to the carriage of specific quantities of cargo with multiple voyages over the same route and over a specific period of time which usually spans a number of years. A COA does not designate the specific vessels or voyage schedules that will transport the cargo, thereby providing both the charterer and shipowner greater operating flexibility than with voyage charters alone. The charterer has the flexibility to determine the individual voyage scheduling at a future date while the shipowner may use different vessels to perform these individual voyages. As a result, COAs are mostly entered into by large fleet operators, such as pools or shipowners with large fleets of the same vessel type. We pay the voyage expenses while the freight rate normally is agreed on a per cargo ton basis.
Commercial pools.To increase vessel utilization and revenues, we participate in commercial pools with other shipowners and operators of similar modern, well-maintained vessels. By operating a large number of vessels as an integrated transportation system, commercial pools offer customers greater flexibility and a higher level of service while achieving scheduling efficiencies. Pools employ experienced commercial charterers and operators who have close working relationships with customers and brokers, while technical management is performed by each shipowner. Pools negotiate charters with customers primarily in the spot market but may also arrange time charter agreements. The size and scope of these pools enable them to enhance utilization rates for pool vessels by securing backhaul voyages and COAs, thus generating higher effective TCE revenues than otherwise might be obtainable in the spot market while providing a higher level of service offerings to customers.
Operating days.Operating days are the total number of available days in a period with respect to the owned, leased financed, 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, lease financed, or bareboat chartered-in vessels, not time chartered-in vessels.
Items You Should Consider When Evaluating Our Results
You should consider the following factors when evaluating our historical financial performance and assessing our future prospects:
Our vessel revenues are affected by cyclicity in the tanker markets.The cyclical nature of the tanker industry causes significant increases or decreases in the revenue we earn from our vessels, particularly those vessels we trade in the spot market or in spot market-oriented pools. We employ a chartering strategy to capture upside opportunities in the spot market while using fixed-rate time charters to reduce downside risks, depending on SCM's outlook for freight rates, oil tanker market conditions and global economic conditions. Historically, the tanker industry has been cyclical, experiencing volatility in profitability due to changes in the supply of, and demand for, tanker capacity. The supply of tanker capacity is influenced by the number and size of new vessels built, vessels scrapped, converted and lost, the number of vessels that are out of service, and regulations that may effectively cause early obsolescence of tonnage. The demand for tanker capacity is influenced by, among other factors:
•global and regional economic and political conditions;
•increases and decreases in production of and demand for crude oil and petroleum products;
•increases and decreases in OPEC oil production quotas;
•the distance crude oil and petroleum products need to be transported by sea; and
•developments in international trade and changes in seaborne and other transportation patterns.
Tanker rates also fluctuate based on seasonal variations in demand.Tanker markets are typically stronger in the winter months as a result of increased oil consumption in the northern hemisphere but weaker in the summer months as a result of lower oil consumption in the northern hemisphere and refinery maintenance that is typically conducted in the summer months. In addition, unpredictable weather patterns during the winter months in the northern hemisphere tend to disrupt vessel routing and scheduling. The oil price volatility resulting from these factors has historically led to increased oil trading activities in the winter months. As a result, revenues generated by our vessels have historically been weaker during the quarters ended June 30 and September 30, and stronger in the quarters ended March 31 and December 31.
Our expenses were affected by the fees we pay SCM, SSM, and SSH for commercial management, technical management and administrative services, respectively.SCM, SSM and SSH, companies controlled by the Lolli-Ghetti family of which our founder, Chairman and Chief Executive Officer and our Vice President are members, provide commercial, technical and administrative management services to us, respectively. We pay fees to SCM and SSM for our vessels that operate both within and outside of the Scorpio Pools. The fees charged to our vessels operating within the Scorpio Pools are identical to what SCM charges third-party owned vessels operating within the Scorpio Pools. Under the 2018 Revised Master Agreement, and during the year ended December 31, 2023, when our vessels were operating in one of the Scorpio Pools, SCM, the pool manager, charged fees of $250 per vessel per day with respect to our LR2 vessels, and $325 per vessel per day with respect to each of our Handymax and MR vessels, plus 1.50% commission on gross revenues per charter fixture. For commercial management of our vessels that were not operating in any of the Scorpio Pools, we paid SCM a fee of $250 per vessel per day for each LR2 vessel and $300 per vessel per day for each Handymax and MR vessel, plus 1.25% commission on gross revenues per charter fixture.
Pursuant to the 2018 Revised Master Agreement, the fixed annual technical management fee that we pay to SSM was reduced from $250,000 per vessel to $175,000, effective January 1, 2018 and certain services previously provided as part of the fixed fee are now itemized. The aggregate cost, including the costs that are now itemized, for the services provided under the technical management agreement did not materially differ from the annual management fee charged prior to the amendment.
Under the 2024 Revised Master Agreement, the per day fees charged by SCM were increased by $35 per vessel per day. Under this agreement, commercial management fees on vessels that are not operating in any of the Scorpio Pools will be $285 per vessel per day for each LR2 vessel and $335 per vessel per day for each Handymax and MR vessel on the effective date. For vessels operating in one of the Scorpio Pools, SCM, the pool manager, increased its fees to $285 per vessel per day with respect to our LR2 vessels, and $360 per vessel per day with respect to each of our Handymax and MR vessels as of July 1, 2024. Commissions on gross revenues per charter fixture remain unchanged. The percentage commission rates for vessels operating within or outside of the Scorpio Pools remained unchanged under the 2024 Revised Master Agreement. Under the 2024 Revised Master Agreement, the per day fees charged by SCM were increased to $187,500 plus additional amounts for certain itemized services per vessel.
We also reimburse our Administrator for the reasonable direct or indirect expenses it incurs in providing us with the administrative services described in "Item 4 - Information on the Company".
A.Operating Results
Results of Operations for the year ended December 31, 2024 compared to the year ended December 31, 2023
For the year ended December 31, Change Percentage
In thousands of U.S. dollars 2024 2023 favorable / (unfavorable) Change
Vessel revenue $ 1,243,951 $ 1,341,222 $ (97,271) (7) %
Vessel operating costs (319,147) (315,582) (3,565) (1) %
Voyage expenses (30,371) (13,243) (17,128) (129) %
Depreciation - owned or sale leaseback vessels (185,319) (178,259) (7,060) (4) %
Depreciation - right of use assets - (24,244) 24,244 100 %
General and administrative expenses (121,048) (106,255) (14,793) (14) %
Write-off of deposits on scrubbers - (10,508) 10,508 100 %
Gain on sales of vessels 176,537 12,019 164,518 1,369 %
Financial expenses (109,539) (183,231) 73,692 40 %
Dividend income and fair value loss on financial assets measured at fair value through profit or loss, net (11,176) - (11,176) (100) %
Financial income 15,947 19,112 (3,165) (17) %
Share of income from dual fuel tanker joint venture 7,664 5,950 1,714 29 %
Other income and (expenses), net 1,275 (83) 1,358 1,636 %
Net income $ 668,774 $ 546,898 $ 121,876 22 %
Net income.Net income for the year ended December 31, 2024 was $668.8 million, an increase of $121.9 million, or 22%, from net income of $546.9 million for the year ended December 31, 2023. The differences between the two periods are discussed below.
Vessel revenue.Vessel revenue for the year ended December 31, 2024 was $1,244.0 million, a decrease of $97.3 million, or 7%, from vessel revenue of $1,341.2 million for the year ended December 31, 2023. Average TCE revenue per day (a non-IFRS measure) decreased to $32,573 per day during the year ended December 31, 2024, from $32,711 per day during the year ended December 31, 2023. The decrease in revenue is discussed below by operating segment.
The following is a summary of our consolidated revenue by revenue type, in addition to TCE revenue per day and total revenue days.
For the year ended December 31, Change Percentage
In thousands of U.S. dollars 2024 2023 favorable / (unfavorable) Change
Pool and spot market revenue by operating segment
MR $ 510,880 $ 614,790 $ (103,910) (17) %
LR2 458,649 418,586 40,063 10 %
Handymax 120,541 154,586 (34,045) (22) %
Total pool and spot market revenue 1,090,070 1,187,962 (97,892) (8) %
Time charter-out revenue 153,881 153,260 621 - %
Gross revenue 1,243,951 1,341,222 (97,271) (7) %
Voyage expenses (30,371) (13,243) (17,128) (129) %
TCE revenue (1)
$ 1,213,580 $ 1,327,979 $ (114,399) (9) %
Daily pool and spot market TCE by operating segment: (1)
MR pool and spot market $ 29,708 $ 31,258 $ (1,550) (5) %
LR2 pool and spot market 43,669 39,486 4,183 11 %
Handymax pool and spot market 24,146 29,578 (5,432) (18) %
Consolidated daily pool and spot market TCE 33,344 33,477 (133) - %
Time charter-out - daily TCE 27,907 27,655 252 1 %
Consolidated daily TCE 32,573 32,711 (138) - %
Pool and spot market revenue days per operating segment
MR 16,898 19,593 (2,695) (14) %
LR2 10,253 10,561 (308) (3) %
Handymax 4,828 5,101 (273) (5) %
Total pool and spot market revenue days 31,979 35,255 (3,276) (9) %
Time charter-out revenue days 5,284 5,344 (60) (1) %
Total revenue days 37,263 40,599 (3,336) (8) %
(1) We report TCE revenues (as defined above, in the section entitled Important Financial and Operational Terms and Concepts), a non-IFRS measure, because (i) we believe it provides additional meaningful information in conjunction with voyage revenues and voyage expenses, the most directly comparable IFRS measures, (ii) it assists our management in making decisions regarding the deployment and use of our vessels and in evaluating their financial performance, (iii) 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 (spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods, and (iv) we believe that it presents useful information to investors. To arrive at daily TCE, we deduct voyage expenses from vessel revenue for each operating segment and then divide that figure by the number of revenue days in each period.
Pool and spot market revenue. Pool and spot market revenue for the year ended December 31, 2024 was $1,090.1 million, a decrease of $97.9 million, or 8% from $1,188.0 million for the year ended December 31, 2023. While revenues decreased in the aggregate during the year ended December 31, 2024, the markets remained historically strong, as daily TCE was relatively flat year over year. The decrease in revenues can be attributed primarily to a decrease in revenue days. Pool and spot market revenue days decreased to 31,979 days for the year ended December 31, 2024 from 35,255 days for the year ended December 31, 2023. This aggregate decrease was driven by (i) the performance of special surveys on a total of 53 vessels for a total of 1,224 days, and (ii) the sales of 12 vessels during the year ended December 31, 2024.
MR pool and spot market revenue. MR pool and spot market revenue for the year ended December 31, 2024 was $510.9 million, a decrease of $103.9 million, or 17%, from $614.8 million for the year ended December 31, 2023, while daily TCE decreased only 5% as demand for MR vessels remained robust, period over period with their performance primarily driven by high refinery utilization and export volumes, particularly out of the U.S. Gulf. This strength was offset by weakness in European demand for refined petroleum products, which impacted imports into that region during the year.
Pool and spot market revenue days decreased to 16,898 days from 19,593 days during the years ended December 31, 2024 and 2023. This decrease was mainly driven by the sale of 11 MR product tankers as well as the performance of scheduled drydocks throughout the year.
LR2 pool and spot market revenue. LR2 pool and spot market revenue for the year ended December 31, 2024 was $458.6 million, an increase of $40.1 million, or 10%, from $418.6 million for the year ended December 31, 2023. This increase occurred despite a slight decrease in pool and spot market revenue days to 10,253 days from 10,561 days during the years ended December 31, 2024 and 2023, respectively, as we completed scheduled drydocks on eight LR2s during 2024 as compared to two during 2023. During 2024, our LR2 vessels benefited from increased ton-mile demand as vessels were re-routed around the Cape of Good Hope due to unsafe conditions in the Red Sea brought on by the conflict between Israel and Hamas. This transit route attracts a high volume of LR2 vessels carrying distillate cargoes between the Middle East and Europe. As a result, LR2 daily pool and spot market TCE increased to $43,669 per day from $39,486 per day.
Handymax pool and spot market revenue. Handymax pool and spot market revenue for the year ended December 31, 2024 was $120.5 million, a decrease of $34.0 million, or 22%, from $154.6 million for the year ended December 31, 2023. This decrease was primarily driven by a lower rate environment in the second half of the year. Reduced European export volumes (where these vessels primarily trade) led to this softer environment, reflecting weaker economic activity in Europe and lower refining margins which had a negative impact on daily spot TCE rates. As a result of these factors, daily pool and spot market TCE for our Handymax vessels decreased to $24,146 per day from $29,578 per day during the years ended December 31, 2024 and 2023, respectively. Pool and spot market revenue days decreased 5% to 4,828 days during 2024 from 5,101 days in 2023, mainly driven by the performance of special surveys and drydocks throughout the year as a result of the timing of scheduled drydocks on certain vessels.
Time charter-out revenue. Time charter-out revenue for the year ended December 31, 2024 was $153.9 million and $153.3 million for the year ended December 31, 2023 as the number of vessels on time charter-out agreements remained constant until the fourth quarter of 2024 when STI Jardinscommenced a time charter. The terms of our vessels that are on time charter-out arrangements are summarized as follows:
Vessel Vessel class Term Rate Commencement date
STI Gratitude LR2 Three years $28,000/day (1) May-22
STI Guard LR2 Five years $28,000/day (2) July-22
STI Gladiator LR2 Three years $28,000/day (3) July-22
STI Guide LR2 Three years $28,000/day (3) July-22
STI Marshall MR Three years $23,000/day (4) July-22
STI Magnetic MR Three years $23,000/day (5) July-22
STI Miracle MR Three years $21,000/day (6) August-22
STI Memphis MR Three years $21,000/day (7) June-22
STI Connaught LR2 Three years $30,000/day (8) August-22
STI Lombard LR2 Three years $32,750/day (9) September-22
STI Gauntlet LR2 Three years $32,750/day November-22
STI Duchessa MR Three years $25,000/day October-22
STI Lavender LR2 Three years $35,000/day December-22
STI Grace LR2 Three years $37,500/day (10) December-22
STI Jermyn LR2 Three years $40,000/day (11) April-23
STI Jardins MR Three years $29,550/day October-24
(1) This vessel commenced a time charter in May 2022 for three years at an average rate of $28,000 per day. In February 2025, the charterer exercised its option to extend the term of this agreement for an additional year at $31,000 per day commencing in May 2025. The charterer has an additional option to further extend the term of this agreement for an additional year at $33,000 per day.
(2) This vessel commenced a time charter in July 2022 for five years at a rate of $28,000 per day.
(3) This vessel commenced a time charter in July 2022 for three years at an average rate of $28,000 per day. The charterers have the option to extend the term of this agreement for an additional year at $31,000 per day. If this option is declared, the charterers have the option to further extend the term of this agreement for an additional year at $33,000 per day.
(4) This vessel commenced a time charter in July 2022 for three years at a rate of $23,000 per day. The charterers have the option to extend the term of this agreement for an additional year at $24,000 per day. If this option is declared, the charterers have the option to further extend the term of this agreement for an additional year at $25,000 per day. If this second option is declared, the charterers have the option to further extend the term of this agreement for an additional year at $26,000 per day.
(5) This vessel commenced a time charter in July 2022 for three years at an average rate of $23,000 per day. The daily rate is the average rate over the three year period, which is payable in years one, two, and three at $30,000 per day, $20,000 per day, and $19,000 per day, respectively. The charterers have the option to extend the term of this agreement for an additional year at $24,500 per day. If this option is declared, the charterers have the option to further extend the term of this agreement for an additional year at $26,000 per day.
(6) This vessel commenced a time charter in August 2022 for three years at an average rate of $21,000 per day. The daily rate is the average rate over the three year period, which is payable during the first six months at $30,000 per day, the next six months are payable at $20,000 per day, and years two and three are payable at $19,000 per day. The charterers have the option to extend the term of this agreement for an additional year at $22,500 per day. If this option is declared, the charterers have the option to further extend the term of this agreement for an additional year at $24,000 per day.
(7) This vessel commenced a time charter in June 2022 for three years at an average rate of $21,000 per day. The daily rate is the average rate over the three year period, which is payable during the first six months at $30,000 per day, the next six months are payable at $20,000 per day, and years two and three are payable at $19,000 per day. The charterers have the option to extend the term of this agreement for an additional year at $22,500 per day. If this option is declared, the charterers have the option to further extend the term of this agreement for an additional year at $24,000 per day.
(8) In April 2023, STI Connaughtreplaced STI Goalon a time charter which initially commenced in August 2022 for three years at a rate of $30,000 per day. The charterers have the option to extend the term of this agreement for an additional year at $32,000 per day. If this option is declared, the charterers have the option to further extend the term of this agreement for an additional year at $34,000 per day.
(9) This vessel commenced a time charter in September 2022 for three years at an average rate of $32,750 per day. The charterer has the option to extend the term of this agreement for an additional year at $34,750 per day. If this option is declared, the charterer has the option to further extend the term of this agreement for an additional year at $36,750 per day.
(10) This vessel commenced a time charter in December 2022 for three years at an average rate of $37,500 per day. The daily rate is the average rate over the three year period, which is payable during the first six months at $47,000 per day, the next six months are payable at $28,000 per day, and years two and three are payable at $37,500 per day.
(11) This vessel commenced a time charter in April 2023 for three years at an average rate of $40,000 per day. The charterer has the option to extend the term of this agreement for an additional year at $42,500 per day.
Vessel operating costs.Vessel operating costs for the year ended December 31, 2024 were $319.1 million, an increase of $3.6 million, from $315.6 million for the year ended December 31, 2023. This increase was in spite of a decrease in vessel operating days to 38,900 days from 41,028 days for the years ended December 31, 2024 and 2023, respectively, which was mainly the result of the sale of 12 vessels during the year ended December 31, 2024. Average vessel operating costs per day increased to $8,204 per day during the year ended December 31, 2024 from the average of $7,692 per day during the year ended December 31, 2023. The increase was driven primarily by higher repairs and maintenance costs, coupled with disruptions in trading patterns that have impacted the costs of sourcing and transporting spare parts within the LR2 segment. Vessel operating costs by operating segment are discussed below.
The following table is a summary of our vessel operating costs by operating segment:
For the year ended December 31, Change Percentage
In thousands of U.S. dollars 2024 2023 favorable / (unfavorable) change
Vessel operating costs
MR $ 152,433 $ 163,047 $ 10,614 7 %
LR2 127,540 114,595 (12,945) (11) %
Handymax 39,174 37,940 (1,234) (3) %
Total vessel operating costs $ 319,147 $ 315,582 $ (3,565) (1) %
Vessel operating costs per day
MR $ 7,794 $ 7,523 $ (271) (4) %
LR2 8,971 8,051 (920) (11) %
Handymax 7,645 7,423 (222) (3) %
Consolidated vessel operating costs per day 8,204 7,692 (512) (7) %
Operating days
MR 19,558 21,683 (2,125) (10) %
LR2 14,218 14,235 (17) - %
Handymax 5,124 5,110 14 - %
Total operating days 38,900 41,028 (2,128) (5) %
MR vessel operating costs.Vessel operating costs for our MR segment were $152.4 million for the year ended December 31, 2024, a decrease of $10.6 million, or 7%, from $163.0 million for the year ended December 31, 2023. Operating days decreased by 2,125 days to 19,558 days from 21,683 days during the years ended December 31, 2024 and 2023, respectively, primarily as a result of the sale of 11 MR product tankers during the year ended December 31, 2024 and two MR product tankers during the year ended December 31, 2023. Operating costs per day increased to $7,794 per day from $7,523 per day, for the years ended December 31, 2024 and 2023, respectively. The increase in daily vessel operating costs is primarily due to general inflationary pressures, with increases in crewing related costs as the most impacted.
LR2 vessel operating costs.Vessel operating costs for our LR2 segment were $127.5 million for the year ended December 31, 2024, an increase of $12.9 million, or 11%, from $114.6 million for the year ended December 31, 2023. LR2 operating costs per day increased to $8,971 per day from $8,051 per day for the years ended December 31, 2024 and 2023, respectively. While the general inflationary pressures also impacted this vessel class, in particular crewing related costs, the aforementioned disruptions in trading patterns due to the effective closure of the Red Sea also impacted the costs of repairs and maintenance and the costs of sourcing and transporting spare parts. LR2 operating days were relatively flat year over year at 14,218 days and 14,235 days during the years ended December 31, 2024 and 2023, respectively.
Handymax vessel operating costs.Vessel operating costs for our Handymax segment were $39.2 million for the year ended December 31, 2024, an increase of $1.2 million, or 3%, from $37.9 million for the year ended December 31, 2023. Handymax operating days remained consistent at 5,124 days and 5,110 days during the years ended December 31, 2024 and 2023, respectively. Daily operating costs for our Handymax vessels increased slightly to $7,645 per day during the year ended December 31, 2024 from $7,423 per day during the year ended December 31, 2023, which was the result of general inflationary pressures across most sub-categories.
Voyage expenses.Voyage expenses were $30.4 million for the year ended December 31, 2024, an increase of $17.1 million, or 129%, from $13.2 million for the year ended December 31, 2023. This was primarily driven by our compliance with the European Emissions Trading System ("EU ETS") which was expanded to the maritime industry as of January 1, 2024. Under the EU ETS requirements, we acquire EU allowances ("EUAs") related to greenhouse gas emissions from our vessels that trade to, from, and within the EU and European Economic Area. During the year ended December 31, 2024, we incurred $12.6 million of expense related to the acquisition of EUAs, for which the cost was passed along to customers in full and recognized as part of revenue.
Depreciation - Owned and lease financed vessels.Depreciation expense for owned and lease financed vessels was $185.3 million for the year ended December 31, 2024, an increase of $7.1 million, or 4%, from $178.3 million for the year ended December 31, 2023. Throughout 2023, we exercised purchase options on 21 lease financed vessels, which were previously accounted for under IFRS 16 - Leases, as reflected by the decrease of $24.2 million in "Depreciation - Right of use assets." The combined decrease in total depreciation is the result of the sale of 12 and two vessels during the years ended December 31, 2024 and 2023, respectively.
General and administrative expenses.General and administrative expenses were $121.0 million for the year ended December 31, 2024, an increase of $14.8 million, or 14%, from $106.3 million for the year ended December 31, 2023. This increase was primarily due to an increase in non-cash restricted stock amortization resulting from grants made during the years ended December 31, 2024 and 2023. The stock price on the date of the grant is used as the fair value for the accounting of the awards under IFRS, which is amortized to expense over the awards' vesting periods. The awards granted to employees vest ratably in years three, four and five following the initial grant. The grants made during the years ended December 31, 2024 and 2023, have a higher fair value than those grants that are vesting and becoming fully amortized given the increase in stock price over those periods. This increase was partially offset by the $8.4 million of accelerated amortization which was triggered by the departure of the Company's former CFO in October 2023 and by an aggregate decrease in cash compensation related costs.
Write-off of deposits on scrubbers.Write-off of deposits on scrubbers of $10.5 million during the year ended December 31, 2023, relates to the write-off of previously incurred deposits and installation costs for scrubbers on 11 MR product tankers which was triggered by the expiration of the Company's option to purchase these scrubbers.
Net gain on sales of vessels. Net gain on sales of vessels was a gain of $176.5 million for the year ended December 31, 2024 compared to a net gain of $12.0 million for the year ended December 31, 2023. During the year ended December 31, 2024, we sold 11 MRs and one LR2 compared to the year ended December 31, 2023 when we sold two MRs.
Financial expenses.Financial expenses were $109.5 million for the year ended December 31, 2024, a decrease of $73.7 million, or 40%, from $183.2 million for the year ended December 31, 2023. This decrease was primarily attributable to the overall reduction in interest expense on debt and sale leaseback arrangements resulting from the Company's focus on deleveraging during these periods. Given the strong market conditions and cash flow generation during the years ended December 31, 2022, 2023 and 2024, we have been able to allocate a significant amount of capital towards debt reduction over these periods. Our average debt decreased to $1.2 billion during the year ended December 31, 2024 from $1.9 billion during the year ended December 31, 2023.
Financial expenses for the year ended December 31, 2024 primarily consisted of (i) interest payable on debt of $91.7 million, (ii) amortization of loan fees of $9.2 million, (iii) the loss on extinguishment of debt and write-off of deferred financing fees of $8.5 million, and (iv) accretion of the premiums and discounts primarily recorded as part of the purchase price allocation on the indebtedness assumed from Navig8 Product Tankers Inc. in 2017 of $0.1 million.
Financial expenses for the year ended December 31, 2023 primarily consisted of (i) interest payable on debt of $158.3 million, (ii) amortization of loan fees of $7.3 million, (iii) the loss on extinguishment of debt and write-off of deferred financing fees of $16.5 million and (iv) accretion of the premiums and discounts recorded as part of the purchase price allocation on the indebtedness assumed from Navig8 Product Tankers Inc. in 2017 of $1.1 million.
The decrease in interest expense during the year ended December 31, 2024 when compared to the year ended December 31, 2023, was primarily attributable to the decrease in the average carrying value of our debt during these periods.
The loss on extinguishment of debt and write-off of deferred financing fees during the years ended December 31, 2024 and 2023, respectively, were as follows:
•During the year ended December 31, 2024, our loss on extinguishment of debt and write-off of deferred financing fees was $8.5 million, which related to unscheduled debt and lease repayments during the year and consisted of (i) $2.3 million in extinguishment costs, and (ii) $6.2 million of write-offs of deferred financing fees.
•During the year ended December 31, 2023, our loss on extinguishment of debt and write-off of deferred financing fees was $16.5 million, which related to unscheduled debt and lease repayments during the year and consisted of (i) $10.2 million in extinguishment costs, (ii) $4.3 million of write-offs of deferred financing fees, (iii) $2.7 million of write-offs of the discounts which were initially recorded upon the assumption of the debt, (iv) $0.8 million of accelerated effective interest on right of use liabilities, offset by (v) a gain of $1.5 million related to the adjustment of the carrying values of certain sale and leaseback arrangements related to the notifications to exercise purchase options.
Dividend income and fair value loss on financial assets measured at fair value through profit or loss, netwas $11.2 million, which consisted of an unrealized loss of $15.0 million for the year ended December 31, 2024, offset by $3.8 million of dividends received related to the investment in DHT. During the year ended December 31, 2024, we invested $89.1 million for a passive, minority interest in DHT, a publicly traded crude tanker shipping company which owns a fleet of 27 Very Large Crude Carriers, including four newbuildings on order. We purchased 7,982,480 common shares in DHT in the open market at an average price of $11.17 per share during this period.
Financial income. Financial income was $15.9 million for the year ended December 31, 2024, a decrease of $3.2 million, or 17%, from $19.1 million for the year ended December 31, 2023. Financial income is mainly derived from interest earned on our cash deposits. This decrease was driven by a decrease in our average cash balance during the year ended December 31, 2024 as compared to the prior year.
Results of Operations for the year ended December 31, 2023 compared to the year ended December 31, 2022
For a discussion of our results for the year ended December 31, 2023 compared to the year ended December 31, 2022, please see "Item 5 - Operating and Financial Review and Prospects - A. Operating Results - Results of Operations for the Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022" contained in our annual report on Form 20-F for the year ended December 31, 2023, filed with the SEC on March 22, 2024.
B. Liquidity and Capital Resources
Our primary source of funds for our short-term and long-term liquidity needs is expected to be the cash flows generated from our vessels, which primarily operate in the Scorpio Pools, in the spot market or on time charter, in addition to our cash on hand and availability under revolving lines of credit. We believe that the Scorpio Pools reduce volatility because (i) they aggregate the revenues and expenses of all pool participants and distribute net earnings to the participants based on an agreed upon formula and (ii) some of the vessels in the pool are on time charter. Furthermore, spot charters provide flexibility and allow us to fix vessels at prevailing rates.
We currently project that we will have adequate financial resources to continue in operation and meet our financial commitments (including but not limited to debt service obligations and obligations under sale and leaseback arrangements) for a period of at least 12 months from the date of this annual report.
Our revenues are earned via the seaborne transportation of crude oil and refined petroleum products in the international shipping markets. We have benefited from a cyclical uptrend in the product tanker market over the past three years. The cash flows generated during these years have enabled us to accumulate liquidity, repay debt and deleverage our balance sheet.
From December 31, 2024 through the date of this report, we have executed the 2025 $500.0 Million Revolving Credit Facility, placed $200.0 million of new senior unsecured bonds in the Nordic bond market (the "Unsecured Senior Notes Due 2030") and redeemed the $70.6 million outstanding under Unsecured Senior Notes Due 2025.
We do not have any other debt or leasing financing arrangements that are scheduled to mature or expire within twelve months from the date of this report.
While we believe our current financial position is adequate to address these cash outflows, a deterioration in economic conditions could cause us to breach the covenants under our financing arrangements and could have a material adverse effect on our business, results of operations, cash flows and financial condition. These circumstances could cause us to seek covenant waivers from our lenders and to pursue other means to raise liquidity, such as through the sale of vessels or in the capital markets, to meet our obligations. A discussion and analysis of our key risks, including sensitivities thereto, can be found in "Item 3. Key Information - D. Risk Factors" and "Item 11. Quantitative and Qualitative Disclosures About Market Risk".
We continuously evaluate potential transactions that we believe will be accretive to earnings, enhance shareholder value or are in the best interests of the Company, which may include the pursuit of additional vessel sales, business combinations, the acquisition of vessels or related businesses, the expansion of our operations, repayment of existing debt, share repurchases, short-term investments or other uses. Any funds received may be used by us for any corporate purpose. In connection with any transaction, we may enter into additional financing arrangements, refinance existing arrangements or raise capital through public or private debt or equity offerings of our securities. Any funds raised by us may be used for any corporate purpose. There is no guarantee that we will grow the size of our fleet or enter into transactions that are accretive to our shareholders.
As of December 31, 2024, our cash and cash equivalents balance was $332.6 million, which was less than our cash and cash equivalents balance of $355.6 million as of December 31, 2023. As of December 31, 2024, we had $288.2 million of availability under the revolving portion of the 2023 $1.0 Billion Credit Facility. The changes in our cash balance are discussed below under the section entitled Cash Flows. As of March 20, 2025 and December 31, 2024, we had approximately $1.0 billion and $878.1 million in aggregate outstanding indebtedness, respectively (which reflects the amounts payable under term loan and revolving credit facilities and lease financing arrangements, and excludes unamortized deferred financing fees or other premiums and discounts). As of March 20, 2025, we had $288.2 million of availability under the revolving portion of the 2023 $1.0 Billion Credit Facility and $500.0 million of availability under the 2025 $500.0 Million Revolving Credit Facility. All of our credit facilities are described below under "Long-Term Debt Obligations and Credit Arrangements."
As of December 31, 2024, our long-term liquidity needs were primarily comprised of our debt repayment obligations for our secured credit facilities and lease financing arrangements.
Equity
2023 Securities Repurchase Program
On February 15, 2023, our Board of Directors authorized a new securities repurchase program to purchase up to an aggregate of $250 million of securities which, in addition to our common shares, consisted of our Unsecured Senior Notes Due 2025 (NYSE: SBBA) at the date of authorization.
During the year ended December 31, 2023, we repurchased an aggregate of 8,069,020 of our common shares at an average price of $48.90 per share under the 2023 Securities Repurchase Program.
On each of May 1, 2023, May 31, 2023, and November 9, 2023, the Board of Directors authorized resetting the amount available to repurchase the Company's securities and unsecured senior notes under the 2023 Securities Repurchase Program up to an aggregate of $250 million.
On July 29, 2024, our Board of Directors replenished and increased the 2023 Securities Repurchase Program to purchase up to an aggregate of $400 million of the Company's securities which, in addition to our common shares also consist of our unsecured senior notes.
During the year ended December 31, 2024, we repurchased an aggregate of 4,653,189 of our common shares in the open market at an average price of $72.12 per share.
We had $173.7 million remaining under our 2023 Securities Repurchase Program as of December 31, 2024.
There were 26,042,709 and 21,389,520 common shares held in treasury at December 31, 2024 and 2023, respectively.
Shares outstanding
We currently have 175,000,000 registered shares authorized of which 150,000,000 are designated as common shares with a par value of $0.01 and 25,000,000 are designated as preferred shares with a par value of $0.01.
As of December 31, 2024, we had 49,923,042 common shares outstanding. These shares provide the holders with rights to dividends and voting rights.
2013 Equity Incentive Plan
For a description of issuances of our common shares pursuant to our 2013 Equity Incentive Plan, see "Item 6. Directors, Senior Management and Employees - B. Compensation - 2013 Equity Incentive Plan."
Cash Flows
The table below summarizes our sources and uses of cash for the periods presented:
For the year ended December 31,
In thousands of U.S. dollars 2024 2023
Cash flow data
Net cash inflow/(outflow)
Operating activities $ 825,180 $ 865,492
Investing activities 307,991 43,611
Financing activities (1,156,142) (930,422)
Cash flow from operating activities
Fiscal year ended December 31, 2024 compared to fiscal year ended December 31, 2023
Operating cash flows are driven by our results of operations along with movements in working capital. The following table sets forth the components of our operating cash flows for the years ended December 31, 2024 and December 31, 2023:
For the year ended December 31, Change Percentage
In thousands of U.S. dollars 2024 2023 favorable / (unfavorable) Change
Vessel revenue (1)
$ 1,243,951 $ 1,341,222 $ (97,271) (7) %
Vessel operating costs (1)
(319,147) (315,582) (3,565) (1) %
Voyage expenses (1)
(30,371) (13,243) (17,128) (129) %
General and administrative expenses - cash (1)(2)
(58,539) (58,915) 376 1 %
Financial expenses - cash (1) (3)
(96,760) (166,491) 69,731 42 %
Change in working capital (4)
68,824 59,472 9,352 (16) %
Financial income - cash 15,947 19,112 (3,165) (17) %
Other 1,275 (83) 1,358 (1,636) %
Operating cash flow $ 825,180 $ 865,492 $ (40,312) (5) %
(1)See "Item 5. Operating and Financial Review and Prospects- A. Operating Results" for information on these variations for the years ended December 31, 2024 and 2023.
(2)Cash general and administrative expenses are general and administrative expenses from our consolidated statements of operations excluding the amortization of restricted stock of $62.5 million and $47.3 million for the years ended December 31, 2024 and 2023, respectively.
(3)Cash financial expenses represent interest payable on our outstanding indebtedness and lease financing obligations. These amounts are derived from Financial expenses from our consolidated statements of operations excluding (i) the amortization of deferred financing fees of $9.2 million and $7.3 million for the years ended December 31, 2024 and 2023, respectively, (ii) non-cash debt extinguishment costs, primarily the write-off of deferred financing fees and unamortized discounts on sale and leaseback facilities, of $3.5 million and $8.3 million over these same periods, and (iii) accretion of $0.1 million and $1.1 million related primarily to the premiums and discounts recorded as part of the purchase price allocation on the indebtedness assumed from a historical acquisition during the years ended December 31, 2024 and 2023. Cash financial expense decreased due to the overall reduction in interest expense on debt and sale leaseback arrangements resulting from the Company's focus on deleveraging during these periods. Given the strong market conditions and cash flow generation during the years ended December 31, 2022, 2023 and 2024, we have been able to allocate a significant amount of capital towards debt reduction over these periods. Our average debt decreased to $1.2 billion during the year ended December 31, 2024 from $1.9 billion during the year ended December 31, 2023.
(4)The change in working capital in 2024 was the result of a decrease in accounts receivable and an increase in accounts payable. The decrease in accounts receivable is primarily driven by a decrease in revenue from last year. Our revenues during the year ended December 31, 2024 were primarily derived from the Scorpio Pools and vessels time chartered-out. Receivables from time charter-out arrangements are generally received in advance on a monthly basis. Accounts receivable due from the Scorpio Pools are driven by market conditions in the months preceding the end of the period. The revenues earned by vessels operating in the Scorpio Pools in the months preceding December 31, 2024 were less than the months preceding December 31, 2023, thus leading to a decrease in account receivable. The increase in accounts payable relates to our compliance with the European Emissions Trading System ("EU ETS") which was expanded to the maritime industry as of January 1, 2024. The EU ETS sets a cap on the total amount of certain greenhouse gases that can be emitted by covered entities, and these entities are allocated or required to purchase permits (allowances) for their emissions. Under the EU ETS requirements, we buy EU allowances to offset the greenhouse gas emissions from our vessels that trade to, from, and within the European Union and European Economic Area and submit these allowances to regulators as proof of compliance. Our vessels incur the costs of carbon emissions and these costs are passed along to the customers in most cases. The remaining changes in working capital were driven primarily by timing.
The change in working capital in 2023 was primarily driven by a decrease in accounts receivable, accrued expenses, accounts payable, prepaid expenses and inventories. The decrease in accounts receivable is primarily driven by a decrease in revenue from 2022. The decrease in accrued expenses at December 31, 2023 was primarily the result of a decrease in accrued compensation costs along with decreases in supplier related amounts due. The remaining changes in working capital were driven primarily by timing.
Cash flow from investing activities
The following table sets forth the components of our investing cash flows for the years ended December 31, 2024 and December 31, 2023:
For the year ended December 31, Change Percentage
In thousands of U.S. dollars 2024 2023 favorable / (unfavorable) Change
Cash inflows
Net proceeds from disposal of vessels (1)
479,778 64,878 414,900 640 %
Distributions from dual fuel tanker joint venture (2)
8,851 1,822 7,029 386 %
Dividend from DHT Holdings, Inc. (4)
3,803 - 3,803 N/A
Total investing cash inflows 492,432 66,700 425,732 638 %
Cash outflows
Investment in dual fuel tanker joint venture (2)
(1,937) - (1,937) N/A
Drydock, scrubber and BWTS payments (owned, lease financed, and bareboat chartered-in vessels) (3)
(93,367) (23,089) (70,278) 304 %
Investment in DHT Holdings, Inc. (4)
(89,137) - (89,137) N/A
Total investing cash outflows (184,441) (23,089) (161,352) 699 %
Net cash inflow from investing activities $ 307,991 $ 43,611 $ 264,380 606 %
(1)During the year ended December 31, 2024, we sold 11 MR and one LR2 product tanker for aggregate net proceeds of $479.8 million, which excludes $0.2 million of accrued and unpaid selling costs as of December 31, 2024. During the year ended December 31, 2023, we sold two MR product tankers for aggregate net proceeds of $64.9 million which excludes $0.3 million of accrued and unpaid selling costs as of December 31, 2023.
(2)In August 2021, we acquired a minority interest in a portfolio of nine product tankers, which at the time consisted of five dual-fuel MR methanol tankers (built between 2016 and 2021) which, in addition to traditional petroleum products, are designed to carry methanol both as a cargo and to consume it as a fuel, along with four ice class 1A LR1 product tankers (two of which were sold during the fourth quarter of 2021 and one of which was sold during the third quarter of 2024). The dual-fuel MR methanol tankers are currently on long-term time charter contracts with initial terms of greater than five years. As part of this agreement, we acquired a 50% interest in a joint venture that ultimately has a minority interest in the entities that own the vessels for final consideration of $6.7 million. We account for our interest in this joint venture using the equity method pursuant to IFRS 11 - Joint arrangements. Under this guidance, the investment is initially measured at cost, and the carrying amount of the investment is adjusted in subsequent periods based on our share of profits or losses from the joint venture (adjusted for any fair value adjustments made upon initial recognition). Any distributions received from the joint venture reduce the carrying amount.
In 2024, we contributed an additional $1.9 million to the joint venture to fund the joint venture's purchase of an additional vessel.
The joint venture issued cash distributions of $8.9 million and $1.8 million during the years ended December 31, 2024 and 2023, respectively.
(3)Drydock, scrubber, ballast water treatment system and other vessel related payments represent the cash paid in 2024 and 2023 for the drydocking of our vessels along with payments made as part of the agreements to purchase and install scrubbers and ballast water treatment systems and other vessel equipment.
(4)During 2024, we invested $89.1 million for passive, minority interest in DHT Holdings Inc. ("DHT"), a publicly traded crude tanker shipping company which owns a fleet of 27 Very Large Crude Carriers. We purchased 7,982,480 common shares in DHT in the open market at an average price of $11.17 per share during this period. We received dividends of $3.8 million from this investment during the year ended December 31, 2024.
Cash flow from financing activities
Cash flows from financing activities during the year ended December 31, 2024 primarily consist of the issuance, repayment and costs related to our secured and unsecured debt and sale and leaseback liabilities, the payment of dividends to our common shareholders, and the activity within our securities repurchase programs (defined below). The following table sets forth the components of our financing cash flows for the years ended December 31, 2024 and December 31, 2023:
For the year ended December 31, Change Percentage
In thousands of U.S. dollars 2024 2023 favorable / (unfavorable) Change
Cash inflows
Drawdowns from our secured credit facilities (1)
$ 99,000 $ 1,386,482 $ (1,287,482) (93) %
Decrease in restricted cash (2)
- 783 (783) (100) %
Total financing cash inflows 99,000 1,387,265 (1,288,265) (93) %
Cash outflows
Repayments on our secured credit facilities (1)
(481,290) (500,866) 19,576 4 %
Repayments under sale and leaseback liabilities (1)
(354,390) (723,663) 369,273 51 %
Repayments under IFRS 16 lease liabilities (1)
- (516,127) 516,127 100 %
Dividend payments (3)
(83,515) (57,660) (25,855) (45) %
Common stock repurchases (4)
(335,593) (489,680) 154,087 31 %
Debt issuance costs (5)
(354) (29,691) 29,337 99 %
Total financing cash outflows (1,255,142) (2,317,687) 1,062,545 46 %
Net cash outflow from financing activities $ (1,156,142) $ (930,422) $ (225,720) (24) %
(1)The following table sets forth the cash drawdowns and repayments on our secured credit facilities, sale and leaseback liabilities, and IFRS 16 lease liabilities during the years ended December 31, 2024 and 2023. During these periods, certain credit facilities, and lease financing arrangements were either entered into, drawn, or repaid in full. We refer to Note 12 of our Consolidated Financial Statements included in Item 18 of this Annual Report on Form 20-F for further details of all of our financing arrangements, including the activity that occurred during the years ended December 31, 2024 and 2023.
2024 2023
Drawdowns Repayments Drawdowns Repayments
In thousands of U.S. dollars
Hamburg Commercial Bank Credit Facility - - - (33,732)
Prudential Credit Facility - (33,740) - (5,546)
2019 DNB / GIEK Credit Facility - - - (38,338)
BNPP Sinosure Credit Facility - (69,667) - (10,909)
2020 $225.0 Million Credit Facility - - - (37,765)
2023 $225.0 Million Credit Facility - (33,900) 225,000 (25,425)
2023 $49.1 Million Credit Facility - (4,616) 49,088 (3,462)
2023 $117.4 Million Credit Facility - (17,007) 117,394 (8,504)
2023 $1.0 Billion Credit Facility 99,000 (312,694) 901,000 (336,093)
2023 $94.0 Million Credit Facility - (9,666) 94,000 (1,092)
Total Secured Credit Facilities $ 99,000 $ (481,290) $ 1,386,482 $ (500,866)
Ocean Yield Lease Financing - (3,067) - (89,484)
BCFL Lease Financing (LR2s) - (21,653) - (68,310)
CSSC Lease Financing - - - (121,279)
BCFL Lease Financing (MRs) - - - (31,068)
AVIC Lease Financing - - - (77,769)
2020 CMBFL Lease Financing - - - (38,090)
2020 TSFL Lease Financing - (45,617) - (40,607)
2020 SPDBFL Lease Financing - (36,863) - (43,753)
2021 AVIC Lease Financing - (76,410) - (7,252)
2021 CMBFL Lease Financing - (61,525) - (6,520)
2021 TSFL Lease Financing - - - (4,380)
2021 CSSC Lease Financing - - - (48,631)
2021 $146.3 Million Lease Financing - - - (133,699)
2021 Ocean Yield Lease Financing - (5,867) - (5,850)
2022 AVIC Lease Financing - (103,451) - (9,169)
Prepaid interest expense - 63 - 2,198
Total Sale and Leaseback Liabilities $ - $ (354,390) $ - $ (723,663)
IFRS 16 - Leases - 3 MRs - - - (36,933)
IFRS 16 - Leases - $670.0 Million - - - (480,396)
Prepaid interest expense - - - 1,202
Total IFRS 16 Lease Liabilities $ - $ - $ - $ (516,127)
(2) During the year ended December 31, 2023, we exercised the purchase options on the vessels under the BCFL Lease Financing (LR2s) and repaid the outstanding indebtedness. During the year ended December 31, 2022, we repaid Citi / K-Sure Credit Facility in connection with the sales of the vessels collateralized under that facility.As a result of these transactions, $0.8 million was released during the years end December 31, 2023.
(3) Dividend payments to shareholders were $83.5 million and $57.7 million for the years ended December 31, 2024 and 2023, respectively. These amounts represent dividends of $1.60 per share and $1.05 per share (based on the number of shares outstanding on each of the record dates) for the years ended December 31, 2024 and 2023, respectively.
(4) Common stock repurchases during the year ended December 31, 2024 represent the repurchase of 4,653,189 of our common shares at an average price of $72.12 per share for a total of $335.6 million. Common stock repurchases during the year ended December 31, 2023 represent the repurchase of 9,960,323 of our common shares at an average price of $49.16 per share for a total of $489.7 million.
(5) Debt issuance costs relate to costs incurred for our secured credit facilities and lease financing arrangements which are described in Note 12 of our Consolidated Financial Statements included in Item 18 of this Annual Report on Form 20-F.
Long-Term Debt Obligations and Lease Financing Arrangements
We refer to Note 7, Note 12 and Note 23 of our Consolidated Financial Statements included in Item 18 of this Annual Report on Form 20-F for further details on our secured credit facilities, sale and leaseback liabilities, IFRS 16 lease liabilities, Unsecured Senior Notes Due 2025, and Unsecured Senior Notes Due 2030.
Our secured credit facilities may be secured by, among other things:
•a first priority mortgage over the relevant collateralized vessels;
•a first priority assignment of earnings, insurances and charters from the mortgaged vessels for the specific facility;
•a pledge of earnings generated by the mortgaged vessels for the specific facility; and
•a pledge of the equity interests of each vessel owning subsidiary under the specific facility.
Our debt and lease financing agreements may require us to comply with a number of covenants, including financial covenants related to liquidity, consolidated net worth, maximum leverage ratios, loan to value ratios and collateral maintenance, informational requirements, including the delivery of quarterly and annual financial statements and annual projections, and restrictive covenants, including maintenance of adequate insurances; compliance with laws (including environmental); compliance with the Employee Retirement Income and Security Act, or ERISA; maintenance of flag and class of the vessels; restrictions on consolidations, mergers or sales of assets; approvals on changes in the manager of the vessels; limitations on liens; limitations on additional indebtedness; prohibitions on paying dividends if a covenant breach or an event of default has occurred or would occur as a result of payment of a dividend; prohibitions on transactions with affiliates; and other customary covenants. Furthermore, our debt and lease financing agreements contain customary events of default, including cross-default provisions, as well as subjective acceleration clauses under which the debt could become due and payable in the event of a material adverse change in our business.
The following is a table summarizing our indebtedness as of December 31, 2024 and March 20, 2025. The balances set forth below reflect the principal amounts due under each facility or lease financing arrangement as of each date and do not reflect any: (i) unamortized deferred financing fees; (ii) discounts / premiums attributable to the debt, either assumed in a business combination that was recorded as part of the purchase price allocation or as part of the market issuance of a security; and (iii) deposits held by the lessor. The balances for the Unsecured Senior Notes Due 2025 and the Unsecured Senior Notes Due 2030 represent the face value of these instruments.
In thousands of U.S. dollars Amount outstanding at December 31, 2024 Amount outstanding at March 20, 2025
2023 $225.0 Million Credit Facility (1)
$ 165,675 $ 157,200
2023 $49.1 Million Credit Facility 41,010 39,856
2023 $117.4 Million Credit Facility 91,883 87,631
2023 $1.0 Billion Credit Facility 351,213 351,213
2023 $94.0 Million Credit Facility 83,242 80,825
2025 $500.0 Million Revolving Credit Facility (2)
- -
Ocean Yield Lease Financing 22,309 21,548
2021 Ocean Yield Lease Financing 52,216 50,773
Unsecured Senior Notes Due 2025 (3)
70,571 -
Unsecured Senior Notes Due 2030 (4)
- 200,000
Total $ 878,119 $ 989,046
(1)In July 2024, we amended our 2023 $225.0 Million Credit Facility to convert this credit facility from a term loan to a revolving credit facility. The amendment gives us the flexibility to make unscheduled repayments on this facility that can be re-drawn in the future. The outstanding amount and/or availability of the revolving credit facility continues to amortize quarterly under the same schedule as the original term loan. As of March 20, 2025, there have been no unscheduled prepayments and there is no drawdown availability on this facility.
(2)In February 2025, we executed the 2025 $500.0 Million Revolving Credit Facility. There is $500.0 million available to be drawn on this facility as of the date of this filing. The 2025 $500.0 Million Revolving Credit Facility is a 100% revolving loan, which has a final maturity of seven years from the signing date and gives the Company the flexibility to draw down or repay the loan during the loan tenor. The 2025 $500.0 Million Revolving Credit Facility bears interest at SOFR plus a margin of 1.85% per annum for any drawn amounts and a commitment fee of 0.74% per annum applies for any undrawn amounts. The 2025 $500.0 Million Revolving Credit Facility is collateralized by 26 product tankers and will amortize/reduce in quarterly installments (starting after the second anniversary of the signing date) with a balloon payment due at maturity. The remaining terms and conditions, including financial covenants, are similar to those set forth in our existing credit facilities.
(3)In January 2025, we gave notice of redemption for the Unsecured Senior Notes Due 2025. We redeemed the Unsecured Senior Notes Due 2025, which were scheduled to mature on June 30, 2025, in March 2025.
(4)In January 2025, we successfully placed $200.0 million of new senior unsecured bonds in the Nordic bond market (the "Unsecured Senior Notes Due 2030"). The Unsecured Senior Notes Due 2030 are due to mature in January 2030 and bear interest at a fixed coupon rate of 7.50% per annum, payable semi-annually in arrears.
The Unsecured Senior Notes Due 2030 contain certain financial covenants, including (i) a minimum consolidated tangible net worth of not less than $1.0 billion, (ii) minimum liquidity of no less than the greater of (a) $25.0 million and (b) $500,000 per each owned vessel and $250,000 per each time chartered-in vessel, and (iii) the ratio of net debt to total capitalization of no greater than 0.70 to 1.00. Additionally, we must maintain minimum liquidity (which includes undrawn amounts under revolving credit facilities with a remaining maturity date in excess of 12 months where no event of default or termination event has occurred or is continuing and there is no restriction on borrowing under those revolving credit facilities) of $100.0 million after making any distributions in the form of dividends or stock repurchases.
Capital Expenditures
Vessel acquisitions and payments for vessels under construction
We did notenter into any agreements to construct vessels during the years ended December 31, 2024, 2023, or 2022.
Sales of vessels
During the year ended December 31, 2024, we closed on the sale of 11 MR product tankers (STI Tribeca, STI Le Rocher, STI Larvotto, STI Manhattan, STI Garnet, STI Onyx, STI Ruby, STI Topaz, STI Beryl, STI San Antonio, STI Texas City)and one LR2 product tanker (STI Lily)for aggregate net proceeds of $479.8 million. The aggregate net book value of the vessels was $307.3 million on the dates they were held for sale and we recorded an aggregate gain of $176.5 million during the year ended December 31, 2024 as a result of these sales.
STI Tribecaand STI Manhattanwere replaced by STI Galataand STI Notting Hill, respectively, as collateral on the 2023 $1.0 Billion Credit Facility. STI Larvotto, STI Le Rocher, STI Beryl,STI Onyx,STI Garnet, STI Ruby andSTI Topazwere unencumbered at the time of sale. STI San Antonio was replaced bySTI Memphis as collateral on the 2023 $225.0 Million Credit Facility, while the 2023 $117.4 Million Credit Facility was amended in October 2024, releasing STI Texas Cityas collateral under the loan as the residual collateral value of the remaining vessels under the facility provided for sufficient headroom under the leverage covenant of the agreement. In October 2024, we repaid the $22.9 million outstanding related to STI Lilyunder the 2023 $1.0 Billion Credit Facility. This debt repayment did not impact the undrawn amount of $288.2 million available under the revolver.
During the year ended December 31, 2023, we closed on the sale of two MR vessels, STI Villeand STI Amber, in July 2023 and November 2023, respectively, for aggregate net proceeds of $64.6 million. The aggregate net book value of the vessels was $52.6 million on the dates they were held for sale and we recorded an aggregate gain of $12.0 million during the year ended December 31, 2023 as a result of these sales. Additionally, we repaid the outstanding sale and leaseback obligation of $8.2 million with respect to STI Amberas a result of this sale. There was no debt associated with the STI Ville at the time of sale.
Drydock
Duringthe years ended December 31, 2024, 2023, and 2022, we completed the following drydocks, as described below:
Drydock Total
Costs in thousands of U.S. dollars Vessels Off-hire days Cost
Drydock in-progress at December 31, 2021 $ 1,973
Costs incurred in 2022 19,657
Drydock completed in 2022 (1)
15 497 20,922
Drydock in-progress at December 31, 2022 $ 708
Costs incurred in 2023 16,738
Drydock completed in 2023 (1)
8 212 14,403
Drydock in-progress at December 31, 2023 $ 3,043
Costs incurred in 2024 105,329
Drydock completed in 2024 (1)
48 1,135 98,027
Drydock in-progress at December 31, 2024 $ 10,345
(1)Drydocks completed in 2022 includes 34 off-hire days from drydocks which commenced in 2021. Drydocks completed in 2023 includes one off-hire day from drydocks which commenced in 2022. Drydocks completed in 2024 includes 18 off-hire days from drydocks which commenced in 2023. Off-hire days also include off-hire days for installations of BWTS and / or scrubbers.
As our fleet matures and expands, our drydock expenses will likely increase. Ongoing costs for compliance with environmental regulations and society classification survey costs are a component of our vessel operating costs. With the exception of the recent ratification of the ballast water treatment convention as described in "Item 3. Key Information - D. Risk Factors", we are not currently aware of any regulatory changes or environmental liabilities that we anticipate will have a material impact on our results of operations or financial condition.
Charter-free market value of our fleet
Historically, the charter-free market values, or basic market value, of our vessels have been volatile and have, at times, declined below their carrying values. At December 31, 2024 and 2023, our operating fleet consisted of 99 and 111 owned or sale and leaseback vessels, respectively. All of the vessels in our operating fleet had basic market values greater than their carrying amount at these dates.
Our estimate of basic market value assumes that our vessels are all in good and seaworthy condition without need for repair and if inspected would be certified in class without notations of any kind. Our estimates are based on information available from various industry sources, including:
•reports by industry analysts and data providers that focus on our industry and related dynamics affecting vessel values;
•news and industry reports of similar vessel sales;
•news and industry reports of sales of vessels that are not similar to our vessels where we have made certain adjustments in an attempt to derive information that can be used as part of our estimates;
•approximate market values for our vessels or similar vessels that we have received from ship brokers, whether solicited or unsolicited, or that ship brokers have generally disseminated;
•offers that we may have received from potential purchasers of our vessels; and
•vessel sale prices and values of which we are aware through both formal and informal communications with shipowners, shipbrokers, industry analysts and various other shipping industry participants and observers.
As we obtain information from various industry and other sources, our estimates of basic market value are inherently uncertain. In addition, vessel values and revenues are highly volatile; as such, our estimates may not be indicative of the current or future basic market value of our vessels or prices that we could achieve if we were to sell them.
Material Cash Requirements
The following table sets forth our material cash requirements as of December 31, 2024:
Less than 1 to 3 3 to 5 More than
In thousands of U.S. dollars 1 year years years 5 years
Principal obligations under secured credit facilities (1)
$ 53,412 $ 201,946 $ 477,665 $ -
Principal obligations under sale and leaseback liabilities (1)
8,992 18,260 24,323 22,950
Estimated interest payments on secured bank loans (2)
46,795 76,979 13,603 -
Estimated interest payments on sale and leaseback liabilities (2)
6,351 10,000 6,132 2,941
Technical management fees (3)
12,816 - - -
Commercial management fees (4)
17,380 - - -
Senior unsecured notes (5)
70,571 - - -
Senior unsecured notes - estimated interest payments (6)
2,470 - - -
Total $ 218,787 $ 307,185 $ 521,723 $ 25,891
(1)Represents principal and maturity payments due on our secured credit facilities and sale and leaseback liabilities which are described in Note 12 of our Consolidated Financial Statements included in Item 18 of this Annual Report on Form 20-F. These payments are based on amounts outstanding as of December 31, 2024.
(2)Represents estimated interest payments on our secured credit facilities and sale and leaseback liabilities. These payments were estimated by taking into consideration: (i) the margin on each financing arrangement, (ii) the forward interest rate curve calculated from interest swap rates, as published by a third party, as of December 31, 2024; and (iii) commitment fees on available revolving credit.
The forward curve was calculated as follows as of December 31, 2024:
Year 1 4.18 %
Year 2 4.00 %
Year 3 4.02 %
Year 4 4.01 % (A)
Year 5 3.98 %
Year 6 4.06 % (A)
Year 7 4.07 %
Year 8 4.10 % (A)
Year 9 4.12 % (A)
Year 10 4.13 %
(A)Third party published interest swap rates were unavailable. As such, we interpolated these rates using the averages of the years in which swap rates were published.
Interest was then estimated using the rates mentioned above multiplied by the amounts outstanding under our various financing arrangements using the balance as of December 31, 2024 and taking into consideration the scheduled amortization of such arrangements going forward until their respective maturities. As of December 31, 2024, the weighted-average margin on our variable rate financing was (i) 1.92% on our secured credit facilities and (ii) 4.68% on our sale and leaseback liabilities.
(3)Our technical manager, SSM, charges fees for its services pursuant to a 2024 Revised Master Agreement. Pursuant to this agreement, the fixed annual technical management fee is $187,500, and certain other services are itemized. The aggregate cost, including the costs that are itemized, are approximately $262,500 per year. Under the terms of the 2024 Revised Master Agreement, the termination fees are subject to a notice period of three months and a payment equal to three months of management fees which would be due and payable upon the sale of a vessel, so long as such termination does not amount to a change of control of the Company, including a sale of all or substantially all vessels, in which case, a payment equal to 24 months of management fees will apply.
(4)Our commercial manager, SCM, charges fees for its services pursuant to a 2024 Revised Master Agreement. Pursuant to this agreement, SCM charges $285 per vessel per day for LR2 vessels, $360 per vessel per day for MR and Handymax vessels plus a 1.50% commission on gross revenue for vessels that operate in one of the Scorpio Pools. When the vessels are not in the Scorpio Pools, SCM charges fees of $285 per vessel per day for LR2 vessels and $335 per vessel per day for Handymax and MR vessels plus a 1.25% commission on gross revenue.
These fees are subject to a notice period of three months and a payment equal to three months of management fees which would be due and payable upon the sale of a vessel, so long as such termination does not amount to a change of control of the Company, including a sale of all or substantially all vessels, in which case, a payment equal to 24 months of management fees will apply.
(5) Represents the principal due at maturity on our Unsecured Senior Notes Due 2025 as of December 31, 2024.
(6) Represents estimated coupon interest payments on our Unsecured Senior Notes Due 2025 as of December 31, 2024. The Unsecured Senior Notes Due 2025 bear interest at a coupon rate of 7.00% per annum and were scheduled to mature in June 2025.
Off-Balance Sheet Arrangements
As of December 31, 2024, there are no off-balance sheet arrangements.
See "Item 5. Operating and Financial Review and Prospects - B. Liquidity and Capital Resources" and "Item 7. Major Shareholders and Related Party Transactions - B. Related Party Transactions" for further information.
C. Research and Development, Patents and Licenses, Etc.
Not applicable.
D. Trend Information
See "Item 4. Information on the Company - B. Business Overview - The International Oil Tanker Shipping Industry."
E. Critical Accounting Estimates
Our consolidated financial statements are prepared in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards"). In preparing our consolidated financial statements, we make judgements, estimates and assumptions about the application of our accounting policies which affect the reported amounts of assets, liabilities, revenue and expenses. Our critical accounting judgements and sources of estimation uncertainty are described in Note 1 to our consolidated financial statements, which are included elsewhere in this Annual Report.