• Adjusted EBITDA: $166 million for Q3 2024.
• Adjusted Net Income: $87.7 million for Q3 2024.
• Debt Reduction: Reduced by $150 million since July 2024.
• Liquidity: $463 million on a pro forma basis.
• Share Repurchases: Over $300 million repurchased since April 1, 2024, representing over 7% of the company.
• Dividends and Shareholder Returns: $7.13 per share returned to shareholders in 2024, including a declared quarterly dividend of 40 per share.
• Daily Cash Break-even: Reduced to $12,500 per day.
• Fleet Performance: LR2 fleet generates $18,000 per day, MR fleet generates $8,000 per day in Q4 2024.
• Vessel Sales: Completed sale of six vessels, announced sale of three more expected to close in Q4 2024.
• Adjusted EBITDA (7 Quarters): $1.7 billion.
• Adjusted Net Income (7 Quarters): $1.1 billion.
• Debt Reduction (7 Quarters): $1 billion.
• Dividends Paid (7 Quarters): $121 million.
• Stock Repurchases (7 Quarters): $786 million at an average price of $56 per share.
• Net Debt: Below $520 million on a pro forma basis.
• Cash Flow Potential: Up to $994 million per year at $40,000 per day rates.

• Warning! GuruFocus has detected 3 Warning Sign with BP.

Release Date: October 29, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Scorpio Tankers Inc (NYSE:STNG) reported strong financial results for Q3 2024, with $166 million in adjusted EBITDA and $87.7 million in adjusted net income.
• The company has significantly reduced its debt by $150 million since July and has decreased its share count, enhancing shareholder value.
• Scorpio Tankers Inc (NYSE:STNG) has strategically positioned itself to generate more cash even at lower rates by reducing daily cash break-even costs to $12,500 per day.
• The company has returned $7.13 per share to shareholders in 2024 through share buybacks and dividends, demonstrating a strong commitment to shareholder returns.
• Scorpio Tankers Inc (NYSE:STNG) acquired a 4.9% stake in DHT, a crude tanker company, to capitalize on the improving crude tanker sector, indicating strategic investment decisions.

Negative Points

• The company experienced a seasonal dip in rates during the quarter, although they remained above historical averages.
• Scorpio Tankers Inc (NYSE:STNG) faced challenges such as elevated refinery maintenance and competition from crude tankers, impacting fleet performance.
• The ongoing dry-docking program, which will see almost 60% of the fleet dry-docked by year-end, may temporarily affect operational efficiency.
• The product tanker order book accounts for 20% of the fleet, with a significant portion being LR2 vessels, which could impact future fleet growth.
• The company is still facing inflationary pressures, which have led to slight upward movements in running costs.

Q & A Highlights

Q: How does Scorpio Tankers view its investment in DHT Holdings, and is it a short-term or long-term strategy? A: Robert Bugbee, Director and President, explained that the investment in DHT Holdings is a strategic move, leveraging Scorpio's liquidity without restricting its ability to buy back its own stock. The investment is seen as a long-term position due to the attractive supply-demand balance in the VLCC market, and it's not intended as a short-term trading vehicle.

Q: What is the impact of larger crude ships entering and exiting the product trades, and how does this affect Scorpio's strategy? A: Lars Dencker Nielsen, Commercial Director, noted that larger ships like VLCCs and Suezmaxes have entered the product trades due to favorable spreads but are now returning to crude trades as the spread narrows. This shift is expected to benefit Scorpio's LR2 segment as these larger ships exit the clean trade.

Q: How does Scorpio Tankers view the current sales and purchase market for vessels, and what is the strategy for asset sales? A: Emanuele Lauro, CEO, stated that the market remains stable, and Scorpio aims to sell vessels at increasing prices, focusing on quality over quantity. The company has found more depth in the MR market compared to LR2s and avoids selling to buyers with unclear backgrounds.

Q: What is Scorpio Tankers' approach to managing its debt, and is there a target for debt reduction? A: Robert Bugbee, Director and President, mentioned that Scorpio has achieved its target of having net debt around the scrap value of the fleet. The company continues to focus on reducing debt to enhance cash flow and shareholder returns.

Q: How does Scorpio Tankers view the current and future market dynamics for MR and LR2 vessels, considering the seasonal and structural factors? A: James Doyle, Head of Corporate Development & Investor Relations, highlighted that the MR and LR2 markets are expected to benefit from seasonal demand increases and the exit of larger crude vessels from the clean trade. The company remains constructive on the market outlook, with potential upside from refinery capacity changes and geopolitical factors.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.