Earnings call transcript Q1 2023

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Operator

Ladies and gentlemen, good day, and welcome to the Scorpio Tankers Inc., First Quarter 2023 Conference Call.

I would now like to turn the call over to James Doyle, Head of Corporate Development and IR. Please go ahead, sir.

James Doyle

Thank you for joining us today. Welcome to the Scorpio Tankers’ First Quarter 2022 Earnings Conference Call.

Avella, me President; Emanuele Officer; Cameron Chief Officer; with Officer; Chief Brian call Lars Financial Bugbee, Officer; Robert Mackey, Chris the today Commercial Lauro, are Executive Lee, Dencker On Nielsen, Accounting Director. Chief Chief Operating

issued based we earnings quarter risk of XXXX materially May on on information first is discussed on and press The X, Forward-Looking involve website, as and scorpiotankers.com. forth our results information which Statements may this available may today, those Earlier from release, our in Actual call that contain statements. is such uncertainty. today, differ set

which a forward-looking available sec.gov. and risks statement For release, at and the the in should filings, earnings press review Scorpio these are of disclosure as as scorpiotankers.com uncertainties, discussion well you SEC Tankers’

advised made on that is Internet the audio approximately An archive webcast the live website our conference of for purposes. XX-days. of Relations and broadcasted being for call playback available participants the All the be are Investor is page on of also recorded being this will

available available the giving The We is The slides presentation and Investor scorpiotankers.com also under on presentation the will be today. be a Relations Presentation. short webcast. page will at Reports on

go will After the Q&A. presentation, we to

number For two. those of limit asking questions, please the to questions

rejoin If please have you any additional the queue. question,

Now our to Lauro. Chief introduce I like would Executive Officer, Emanuele

Emanuele Lauro

around million EBITDA the when XXX adjusted today. first with of $XX quarter, the last and year joining adjusted the This In Thank XXX generated James, the us you generated million thank million. an quarter you, in for and net loss first company company compares in income.

income $XXX million compared XXXX starting to in more are with adjusted we net XXXX. So

chapter lows, for forma of million liquidity. and rates, improve. near order see a market refinery dislocations, constructive refined demand with $XXX duration time high fleet, to which book aging and We have continue we an an products, pro Today, record

to continue see grow young harvest. we sheet and [CapEx] intend we We the leverage, as in intend to a and reduction most leverage, fleet company, with The and (Ph). to is we do a Tankers optimize minimal but importantly, to not rather Scorpio large balance it significant well. look operating will has

Our can still repurchase expensive $X balance can the to create loan of facility discussion lease under million new sheet and billion flexibility. while accelerate financing credit more revolving $XXX and term more

The revolver increases companies efficiency shipping managing levers leverage to of the and liquidity. flexibility two the and vital critical

and debt to be priority, overall to our financial reduction While continues start return improve shareholders. strong to has us position continues our capital to allowed to

common for Since per dividend we quarterly July, share. per up XXXX, our shares we an increase Today, our purchase to share $XXX $X.XX from security announced million of the million. renewal to have our million of of for repurchased X.X $XXX and $X.XX program

will of it Chief Lee, Officer, He who Chris September Accounting I Chief has serves Avela, today been with our year. Finally, that Brian Financial must stepping is in be the our will XXXX, this Officer. and down as company feelings since announce currently mixed that be by with replaced

has and been team the experience strongest in us the high standards. the to company company with last He with of the poised the been maintain and leadership trained Brian’s over well leaves in growth position since XX-years. and a has beginning instrumental financial development its

will Brian, miss I you.

miss will you. We

open, the ethic, I’m And the to the work miss will that if I’m retirement. and by position well-deserved on is contribution We you hire would truly company too. mind your that entire the and best grateful your Chief you in your sure way, Chris change you for a your temperament Accountant a now character heartbeat. wish

for James I the With turn to a like that, presentation. would to call brief

James Doyle

please. X Slide Emmanuel. you, Thank

has shares. in year have the million since gone EBITDA, QX to under company’s we quarters have X.X repayment, five window XXX an rate and have elevated over billion generated as we billion of XXXX, Emanuel a last mentioned, July, environment since seen debt of X.X reed We last of and the which

time, We [spot] vessels at operating on The out and per have (Ph) charter remaining was XX LRX $XX,XXX the in are vessels contract, day. market. in recent charter XX the for three-years most

Slide X please.

to repurchase new to We credit margin. vessels expensive lease have continue that have facilities under these of and vessels financing some refinance interest with started bank lower

vessels the you To the repurchase can right, are and been see of list that upcoming. have

off and the So vessel. we far on repurchase XX the really is to it have given when repurchase, outstanding vessels, we notice say debt paying

As have on XXX financing LIBOR vessels and outstanding on lease XX for repurchase to new XX margin we the million. XXX lease plus XXX vessels, basis basis loan repurchase facilities in financing The the margin of from have to we of XXX debt points. XXX or on the points, will a plus today, SOFR and repaid QX ranges

new credit Given spread between The LIBOR. LIBOR our is financing The the job. XXX great team margin a adjustment SOFR around and here equivalent have done points. of basis

mean and facilities new at it lease drawing debt and vessels increasing. repurchasing between down differences Timing appears please. financing X that is times Slide on

On you the and million. new can between first on we to expect by facilities, being In this being our facilities repaid. debt draw new half drawn debt movements downs reduce the the left, of XXX.X see the year, including

and have December XXXX, of will X.X If done XXX billion with have X.X the XXth June its year, the facility, look we these new debt the billion by compared at recently, graph accelerate to purchases free by you balance right lease optimize term and billion primarily can Until on million reduced the debt cash sheet. repaid however, flow, been this revolving the refinancing. loan and the $X repayments company to with

leverage the to manage fleet interest decline. translate rates breakeven of as amortization and liquidity. will new cost lower changes us the for to After allows completed, the component and long Revolving haul

on form Since please. have new with we X.X million with pro XX, liquidity decreased Slide and has debt XX, XXXX no buildings over December on a CapEx. form XXX basis pro net a billion. a minimal order, Today

very well-positioned. are We

our would to basis, $XX almost is charters, including in so share flow a XX% Slide per averaging over flow. These or time time. are almost free cash On annual day. exciting far, per fleet XX, translate please. this cash free $XX,XXX In an QX

first Despite building maintenance refinery winter, half this ahead in in remained the a reduction significant please. imports rates year, warm inventory a XX, have Slide and of strong. after sanctions European of

levels, half to year, maintenance next. well the imports to have the considerably averages, and will decline in remain all product next increased five-year refinery remainder normalized the leads below inventories the over European few for of months, back and this of strong especially expectations global

XX has offset demand. the Slide fuel jet distillate increase we more robust do while diesel less in activity, naphtha demand slightly lower than trucking gasoline lower and the Demand expect to demand due been please. and

remainder product to QX the day million last refined to million X.X to up expect barrels demand average go than We a throughout the QX X and year. more of year from

QX high billion one and extremely billion are volumes X.X barrels per to level. remain XXXX day than averaging more

tankers consumption met the with through global barrels product will reallocating low continue increased inventories, world. imports to be Given around

please. Slide XX,

While regenerating continue last refining surge After capacity drive on demand capacity of Regional end and life in to ton exports changes for product more structural is flows the miles pre-COVID above the at levels, have year, now brief a Chinese will exports and levels. years. are in is lower dislocated. coming

the areas East been online to are most crude restrict Middle refined are Asia. and exports, export refining OPEC cuts They for barrel market of exports the of incremental while the with the products will they capacity Europe one product. these not has long being coming And and few and restrict do of haul

demand capacity As reduced mile supply and increases, ton vessel is tightened.

pre-sanction to Slide sanction, above were two the now East, And level. going they At Russian but haul sanctions, months last the to and have America. over Europe Africa, been XX the the are most of exports start longer through Latin plays. and of going declined, product exports prior Middle Asia Russian

the route, drive Turkey a and these aside is increase longer route replacement new ton significant will previous miles. every than Almost from in flows

Russian from these side, to On replace farther lost and be the the other away. has import, Europe will

are gray at has to MR increased are Russia ports, vessels vessels are which they or Russian Europe. U.S. load of that significantly to The today, Once vessels Handymax and service XXX XXX these fleet are unable vessels. the servicing

to maintain significant levels, these are The around on world. is a Russia low have is feed, able if servicing the needed current unclear very impact capabilities clear inventories impact vessels while volumes will the be the the of given to of expected global it Russia

orders but the graph, while I remains been percentage has more XX. there two book this near in some order an rates the all-time-low. a record order still of as know levels, last the reached months in building book over And was historical new December, Slide overall tanker more than probably fleet clean at lows. the and

the aging environment do rate we strong additional expect orders fleet. So given and

and still delivery until build orders there times today with will vessels. XXXX. deliver However, are busy Shipyards from long new are the not sectors, for vessels ordered of other lead

these the and levels historical a environmental to compared propulsion acting systems expensive are to and about builds of systems regulation meet new to constraint said, All ordering. concerns different as cost

thinking orders building about and Slide age growth, considered. XX new please. fleet must of fleet profile the be When the

On XXX see XXXX, old. turn XXXX product left, and the through you that XX-years MR can from lower tankers will LR

context. is see in and that is will XXX fleet, older basis, an the MR, than turning XX% always LRXs be number will What by will low there XX LRXs of Handymax the XXXX. XX% activity, XXXX, on be ordering product XX% an XX-years that the of be means tankers, staggering prefer By to those and XX XX-years percentage we rate and older of the a the XX% vessels the older of of cheap

SlideXX, please.

levels While outlook ton constrained that remain and and decline growth. at charter record high the as seen strong one order builds the at market to the than different that order improve have is only and rate. leads typically our we and rates book of But supply levels, a often today more continues customer’s spot at to modest book is three-year increasing oversupply book evidence exports miles curve. time is very against in a rates order low, a one What are is

upcoming and grow the fleet higher free using the age, over X% is the fleet three-years scrapping Using likely minimal regulations, to scrapping shrink and to less over assumptions the risk next due than will three-years. environmental next assumptions,

and XX.X% are increasing product unlimited increase X.X% and ton X.X% in ton next dislocations factors exports flows confluence year, X% demands, exports today’s the global growth, demand Seaborne are in collectively, rerouting of fleet in miles, and outpacing low individually, The system, but are they and mile vastly to historically, and year, structural refinery inventories, constructive this unprecedented. of supply. market expected

certainly least, for has to you leader, Thank and last, last been many a us. And a of mentor, great the being you XX-years. for so at over Brian, it pleasure work to but not friend

the give You credit person last and in the the last it. the to always office, been take first have to

sense best in and the you I great hard humor humble Your work, retirement. be wish of missed. attitude will

like that, With to would I to it over Q&A. turn

Operator

with Chappell John [Operator Our Instructions] Evercore. is on you. the of Thank question first line

Jonathan Chappell

the good some you Brian, slides you pleasure kind Lars, Thank comments. and can has great in start bit little what seasonal, the of explaining couple of the more but pull you since the a real has been really than the will echo a certainly been year. James morning. especially a we happened has MR missed. months to segment extreme momentum, anticipated ago. in be some Maybe But maybe It if had here. somewhat recent of

function on in caused refinery strictly else counter weakness? is either there what a the that and recently seasonally going year back half the of Is some on a gives MR optimistic that or or has more maintenance you is market of seasonally view the it something

Brian Lee

Hi Jon.

nicely. has that in lot lining operating And seen volatile base we had things from quite certainly were putting we But context, volatility actually have for that we think current terms defines tightness. are quarter when think a think held market market. higher I a earnings. up and poorer more of I rates the that really in flat markets The I a is

saw of the basin, now for And market, the out. increased second the go for would been mid-April. or rates apart TCX Atlantic a I performed things argue think a substantial out little has the in think even particularly morning, MR are Atlantic quarter. the box. drop from Basin, A Atlantic has seeing we that XX bit in we the I of market of But coming in this from the points basins are a has lot quite the in I well by in buttoned mid-April drop in it one the right that which backdrop And

place. I of start coming about, with I’m talking the of balance we out as this good season a of second So, half also turnaround the of James into very in are constructive was environment year a rate second the and tremendous that the very for think, quarter. we personally emerging

about banting stocks positive the complex a of stronger that refines coming margins, is have is I certainly sit. - people adage got the As that James are speaking And talking on for per about the that are new low I longer was Generally valid think been you have refining where capacity from when still online.

think one been the components underpinning defining terms the a and seeing. connectivity by of here the role regional And of I tighter in that in where fundamental we this key market have supply the that is we that is markets alternative is,

So speaking lot of seeing imports knows further will the generally continue sanctions supply fields you coming to influence the are everybody a that chains. about, Russian they

I big um, question in playing been the seen, has we have is we seen to a your think regions So, substantial lot that have all a turnaround answer just role. three

those I of think numbers, refining refining you will in June, had topping think, return X.X global six the And million to capacity July, at I’m I at million barrels. by market. April, maintenance looking if my

on to have XX% quarter. is Design is Azure, third up moment, at additional the then the as running add from capacity going train to in You which increase well. is new that its and the AL third at going

of of strong the think is this there just, is is to turnaround correction that been there a terms additional So, that a to honest refining And product market particular moved. in be I be has in April. plenty

Jonathan Chappell

Super I you, of and look MR a the come James for have been for is or it the like the Slide XX from and one-year if last helpful. slowed It But for has half three-year of back second And question, three-year bit pace your one-year hand if contract I the Lars. maybe the one don’t Okay. the side, or on at for back Robert year. right upper rate charter Lars. little and pretty my LRXs you, stable. time to the seems know Thank

laid go decision that there, rates spot or in liquidity we just of little is of back but the is a the on year a to strategic out more hold exposure, So that maybe into just those more been the half to as Lars up dried holding bit?

Robert Bugbee

partly it that. I think is Well,

that, if quarter take think time that be thermal may all averaging than think to the question, XX,XXX slightly that, as point would the a we is just weaker the describe that bookings I weakness relative highs, all I day is weak. I the market hardly its the second record market but first in

points very of to for John, during odd that on as are actual Lars is steep And is, we and that year. this a pointed is stock first annualized out, important indicating correctly quarter mean, run XX balance rate I this the huge because very the seeing spot is you actual rate of many a three-year charter discount $XX what you thank market, much. in the

it. we or and doing a requirement balance at sheet And the seek spot our getting need market when and is And same the to stronger therefore, time stronger. actual less security or the in of charters is the such the are confirmation the wish getting, three-year

simply growth balance are year. single continue the that mean, we going every demand tanker to product in an have headline I demand, report to reading of are indicates around we where see that, we for world incredible the product the situation,

multipliers Regardless, related that fixed, about someone know binary thinking that to reading world ton is that we is are know it And itself the - in fleet very those we recession. recession and the continue. pessimistic or mile who actual going is we into the economy

what because it three-months. is have happening. point I our we these guess charters is our record a no LRXs have optimistic need and think about we over is choosy on more is that - of I of really a are But So the rate hit there lot less we last there three-year been each

we of and you really see through basis quarter the been mean is What in quarter. right doubt second I this forward. end the have have been first we talking could what think that in about a going all we that terrific up now

Jonathan Chappell

make Yes. will sense. That

Robert Bugbee

And we forma have pro cash. $XXX million of

refinancing. an to do about are just We incredible

really now. create to balance that is So Charter just Security on going

Jonathan Chappell

Thank you, Thanks, Lars. Robert.

Operator

Instructions] is go [Operator question Nokta Omar next from ahead. line Our you. with Jefferies. the Thank Please of

Omar Nokta

Thank on good Also guys morning. retirement. you. congrats the Brian, Hey

with working miss you. will We

shape. obviously leaving the company in are You great

We Emanuele, have of sort priorities, you early this outlined ask XXX got Wanted and cash pro of to of sort on. have here. of think about kind million forma just I

to? the that of number billion get you net priorities to have You and Can got use of debt. rank a of would cash in for net of X.X next your guys have the few left you quarters, maybe you terms set yet the what debt if target

Robert Bugbee

haven’t the don’t We for go but the that zero. to said net intend target we debt, fixed to have we

probably up lending going point, a is facilities, of then also of probably debt kind to would you if you base no creating amortization We debt on there normal those some give facility and from set. but you commercial yet top have which other target that added position, would are are

we lease So quarters, last to going going we to continue And that we going new down our accelerate to back that buying too. we basis. sale those are are what prioritize to the back debt closed, have are really the when and take really total is is with going done facility for

remains. But and do very our we ample shareholders are see still at the still through value opportunity have we able as to things those buying we what continue capacity we take for and If stock. value back advantage create creating all levels to

And have buyback. share we why gone that is the we back increased the and increased

market not they that increasing I think, are the increasing have used. buybacks be we are can share for so we buybacks that share the we shown show,

Omar Nokta

Robert. Thanks Yes.

go that Does bumped the And values the maybe the higher to indication to have think here. do asset assets today about versus, say, be, You have context? then this been business? clear on the just would all the change question monetizing that continue there. line? Does your at second from how you recharged dividend then the in down How buyback, it conducting push you move harvesting view you

Robert Bugbee

have especially our has our or very has or only the think, NAV I the between cash in. months is you have you large come calculated and mean NAV when increased I now, seen three the spread last stock four price in got spreads the

And look, it such indeed and it the we smart a are when discussions and couple, two, comes the of say and at prepared selling taking be vessels. whatever - to discrepancy think we or got you that open, four just a I maybe That do wide are would a have three, moment. to thing to advantage older with in when fair are is

Omar Nokta

Yes. well I That it is sense. Alright, makes turn Robert. thanks will over.

Operator

Thank you.

line question next the Morgan. Bland JP is from Our of Sam with

Samuel Bland

Yes, taking questions. the thanks for

The first midterm then we have effects like comments, you in and you one supply of you and I of guess shorter got these maintenance opening is, different I are but demand levels. Could the all aware those but on refinery that just sort talk, touched we effects where know of picture, sort where inventory sort in the term here, you the more think starts we term refineries are is phase of shorter peak do of Thanks. sort tailwind roughly roughly think of on activity at cycle? increasing are of it in do headwind you are we from or those kind terms and

Emanuele Lauro

Lars, James?

James Doyle

but the exports they in long-term. inventory Russia Sam. if almost look start. has to will will be able now we pre two unclear more sanction have question, export draws able massive in market it years we for a Look, level to and maintain where at Good those than is levels, product seen of been I think, right I

But average a average. is the out because US there And below diesel being is look specifically inventory the below comes market. five-year the around it at X% those five-year something the you gasoline assumptions weekly, if lot the data, moved of volumes XX% do is think I like into

a think it increase to so continue distillate going a say to despite and decline to we move and is volumes in gasoline year, inventories perspective from seeing So demand to back this jet slight higher drop the as trucking. from are much be we demand half of more I going than NATA is

are the shown expect on for and flows that extremely in we anything volumes and or a So half we graph stronger whether as in is back outlook lower are haven’t the market, bullish demand do our year. it we still things this suggest seen

Samuel Bland

I Maybe the on It Okay. book could, number. a ask order is second one.

the that number to the orders Thank market moment? happy is is up was see any to of that mean, it suppose, have and to is at healthy? you demand What think presentation. the would or slightly. supply I still think, X% quite sort I participants, you. for be your a And very in subdued of starting it are in where is I say sense feeling you real X% would we come quite you on do still go acceleration that

Robert Bugbee

one. Maybe I can try that

they that, as in the I orders go further think away. come

more - filling the pickings end would pickings in would I say the been the early gone easy So or in and the to the less have easy XXXX. XXXX

on now I think each expected when you order things until step to to XX% to more more is each even to now total X% you that, really think would the about years, be that, itself market in, wouldn’t you even and be up just go and much, even is very X.X historic year don’t just expensive So out forward think booking I terms. that are in begin that a and that are

of graph, grain aging is up. This the the where that situation you to terms has product at of the a in industry, look real put fleet. have in change if we the Now out over stress

old, that older more over going So XX-years you context is four, how the and they be XX%. to five-year the in that got way turning to have turning than three, this of period set are many next ships huge,

is, acceleration that concerned So that now acceleration, I actual the it ongoing But perspective I little The is is bit all. dramatic are kind headlines. we that get look is of happening. be we put is is - the what headlines in there oh when at the god it something think not you fleet, as it my about and if a there of an can of

And as fleet XX terms, is is cross or the or XX you general once in acceptable to type moved or all have But what fleet shipping tanker whether not. safe. any you forward, fleet up acceptable at the likely But perspective you then put going pretty is XX to be here, XX. it in want of look to we think of that above to are I until in

Lars Dencker Nielsen

also, the to Robert, you introduced would like shifts meet are being be add just think of going Lars in here. regulations that talking I they right. They I mean, that to I coming are the about. new also struggling the years, carbon kind are just to

So the also kind will along there of kind move it we line. be more of inefficient, will as the and potentially to element increase scrapping

Samuel Bland

Understood.

Okay. very Thank much. you

Robert Bugbee

where can’t would or I inventories, product we trying is going And god, one get to jet a don’t to to my like just two - for this new especially thing headline we continued is is ships these building tanker refill is lines with The And see. thing around in red fuel These lines the everybody. Yes. highlight which seeing do the recession and demand. quarters, along tremendously demand. that oh we even just see without orders increase dealing other Because to important is just for - the the are market, whatever new the which the is you is red get are required. scenario world, we in product

Samuel Bland

Thanks.

Robert Bugbee

please? have the next question Can we

Operator

you. Thank

of line the Hoexter is ahead. Our next of question from from America. go Bank Please Ken

Kenneth Hoexter

the all Brian, It about and business. Great. learning a education you phase good has Good thank help definitely the the the years. luck over morning. great in been for next and

team, and you to good you thank and the luck. So

you about market? are talking Robert at selling starting maybe vessels we fleet then see the orders just are selling maybe some peak overall some you the how you the Maybe selling the very orders think Are vessels, on, those of the to kind and some aging you looking are talking or step fleet, about at Emanuele, some new that in, new fleet at the should looking coming slim are peak coming or back are that? we If oldest of about vessels. harvesting

go need strong something just maybe would that that, it do right but is Is second of you it need starts simply is renewal you the here, fleet. fleet not your as it to monetizing then or it to And just and do is expansion, more to to part you at as age at look the levels? renew in

Emanuele Lauro

to show paid We show return Welch] me they what manage. do and is largest provide how how Tankers. are a and shareholders need insiders said, need [Jack to can shareholder is selfish I it. Well, we will get Well, we of you Scorpio person our to (Ph) a with the

manage So we don’t all is do which market to to of pointed not spelling whether become out, that has the has is idea nothing older the couple market are we with years. peaked, the to the Lars that It or think all fact vessel, the harder the as think over vessels peaked. next going about of

no at going for happily its fleet here. But with a if to for that be age Whereas continues can the is debt there massively us accelerate years through NAV. older vessels, to on depending we forward the repayment to capital use could accelerate to repurchase, could quite or simply all, stock and renew sell the you older requirement our vessels go discounted us to and stock and many

Kenneth Hoexter

is then to bring want run I half. off. in Brian, OpEx obviously, on And through, second could given it into COVID what back happen thoughts forward, Maybe you Okay. maybe, going if I about OpEx guess your costs of in was just you going inflation with vessels. the talk the to I XQ and down OpEx fewer noted came because

Brian Lee

some there delivered. costs is are goods things right. and still delivery inflationary pressure Inflation, so being that like and exactly is That

is from little So we where think take it it a is here. bit going, it higher may up

year, because cost this and do it this year, between if average again, was in less the quarter less quarter disclose So, we that so year vessels, is in last but this there. is last daily

over next again, bit I to that the few that, going little up think quarters here. a is move

Kenneth Hoexter

that parameters or. on Can we put

Brian Lee

is to much to our where be know, X%,X% I here. Maybe it. going How you inflation around now. equipment’s going So be for delivered? look don’t at can

Kenneth Hoexter

it time and thanks great that for guess. alright, is Okay. I the

Brian Lee

Ken. Thanks

Operator

Thank you.

with Morkedal Securities. Next question Clarkson Please is line Frode from of go ahead. the

FrodeMorkedal

the My arbitrage say to many have barrel could you. it demand question high four the at resold to times inventories, fuel trading. maybe guess, a jet it very refinery least let’s I oil and discussion compared multiplier terms five times was I see, on turnarounds high be of I in level was after fascinating guess or on Thank that led product times one produced. trade. historically to And this

to no, and something phenomenal resold today? other New So is to curious or on this how actually say, or and being so is destinations moving from, that be see barrels I’m let’s to prevalent You Europe this see could forthcoming? York then

Lars Dencker Nielsen

is is here. I’m going Ford, product is a that. general, doubt to in different seen throughout we times a of try that you or Hi we stab trading that have that no and the give at have and mean, there change perspective arbitrage particular and there where a is is. orders trading from depending multiple a I it multiple times Lars traded behavior market on

destined late and of storage New cargos and putting lot York of on been come seen the structure and then the you from or different sewers see then that car mean, I a a of Caribbean you going have pricing some there to have has where them been is more bulk because that moving them places. product that east breaking from whatever, into has initially spreads India

of Gulf. West Mexico sourced on we been coast and a see previously seen have suddenly moved U.S. cargo would We the been first coast Southeast into out And the west of the the that there, which particular in west China cargos cargo and being Mexico out into general. coast north have into the Asia in had U.S. moving and more lot quarter throughout

that this in talking we we to base of the the market large disparity see obviously how moves around, the enjoy, diversity extent, have triangulate tanker able see healthy and at we level before. things of terms very So really in of is of a product been and terms that is in to have about one ability I around of and this and - a cargo certainly that been

mover. a arbitrage from in particular one-dimensional moved has been how into have latent In true unit - LRXs the that type vessel seeing particular a being of we

Japan we North into Africa, of down North or AG Australia. into load et to cetera. up and West reloading out out and or Asia, load West then the Australia it LRXs take You Then in Africa into even know, to Asia then we are North today or back again and then moving China Asia

way this products is of there. certainly still fungible market and whole kind of So a

think a to and we is with place, the going of double handling ton are in of will logistical miles well. as to what this I that Russian on seen see sanctions very of obviously remain back cargos to lot start more increase it the because of we the constrained it say, will chains and have kind

FrodeMorkedal

you the forward? any My do tank as new second the what question product since market going you on refineries an in last time and is Middle see about the effect that the update talked East, on incremental

Lars Dencker Nielsen

are three the up So, officially, and I mean trains that it we have is heard the have I of that two [indiscernible] running, to is but reported cetera, third third that out in what this only running quarter. something heard, kind and going that is the train is become et of up not and I -- the know

incremental of these of vessels sense. out And obviously to to substantial. which again being - will ends for as going going of all part, year, turn of end QX are start learning are light seeing positive will which vessels, going the is out we east, XXX,XXX of product the going in is long-haul make per and be barrel at supply mile huge that to - influence a sewers the going very be going the QX, particularly the large be the a is change will That marginal in marginal day barrels shipped of west

and that up I and set the we now running - as is also is increasing out that around the XX% refinery half year. have second heard the of

So, made is see. impact and are and something LRX, MRs. to Red a already there fundamental the will in they again of certainly up out has second only in the of about the tankers, And year. Sea are not QX happy the but already just of that see is that volumes lot very are - can a product capacity with open. we on additional also running increase That the that half on is on to is that and of come both of out coming We

FrodeMorkedal

market great color. is Thank That Perfect. you.

Operator

Thank you.

ahead. the is BTIG. go Al Our next (Ph) question with from line Megrali] of Please [Cherif

Unidentified Analyst

are other got my a free to capital cash like more thinking flows boost going looking are line dividend Thanks repurchase of morning. sight on returning saw for activities? share forward, the which reset. I have Obviously, it how a want now, question. the standard of leasebacks nice for taking program are Good is a priority, that ask the but about because you you and also

Lars Dencker Nielsen

did. Sure. And think of just was is that to is or first and X% we stock nowhere. X%, cash projected than high was Well, be back at going what lot I remember bought and exactly of of quarter we and stocks higher, what but is I and as company. we the it see rate the the the it in liquidity moved was, first it quarter guidance can’t down a We recently look the the beginning the can higher

would priority be allocation So debt continued the you taking of combined that expect a that, at with the capital strategy would strong of moment, down. of

you thank regular the for raising we dividend. before are said our observing We that, We dividend.

and doing always are required to guide dividends. but leave We in can to of be it the if go we positions, payout are going that would increments we to future open, some not kind do extraordinary percentage to it

value on is But price. stock all depends the really that in the these, where

now of forget is between major way it. dislocation that don’t right a You actual measuring have NAV one -

view on market. basis largest run fleet, combine annualized the James on something are nearly rate, $XX, a that of is and As pointed share that an new a and pretty cash present the in we to $XX with we flow then the out making

you the that, indicating If company isn’t going quarter that at are cash has - that priority you high to forgot the or discounted that in first moment, but more flow, overwhelmingly value because the in going that, is period. forward, of going been be to basically even is

Unidentified Analyst

much. very you Thank

Operator

you. Thank

line Liam Burke is of next Riley B. with the from question Our FBR. Please go ahead.

Liam Burke

there I on longer the out there as chartering MRs sort has - been you. customers to but for them a been Thank there of charter durations activity age that know recognition either or impending shortage time is time flattened any higher by has rates? Has start here,

Lars Dencker Nielsen

TC to is want the slowdown slow there kind a inquiry brief say - very for business, even that that the just I of with we still the decent have seen.

share last across I end last. levels compared still for five type constructive is I at And market see coming longer-term charters probably think, it of rates. mid to three fair plenty to to users seen of this that is questions have the elevated of rates time time the view And same we say interest XXXXs. year

interest So is there there. out of plenty

Liam Burke

an you balance, the talked price? And stock about buybacks but looking at there you the terms great. fleet just or your in balance, for I dividend of and mean, it your is that consider when the NAV Okay, is buybacks,

Lars Dencker Nielsen

No, there to of down balance NAV, look going and not this and and going look we go to we be we you the course. is zero. We we is the what at the look at sheet, to what at can mean, to cash to debt I are before. the see afford can in flow, - take back happening questionnaire

the a that of bank be $XXX and negotiate You That billion you to idea going whole up down million the massively a and would don’t thing year. pay then credit with are inefficient. negotiate to go in

to are debt. base have a level we So, going of

to but even book is than is. low where substantially to That of compared value is level going loan the real going it be to to loan-to-value, company, the value not lower to be the is the very very which low

When income you have to of that coming we all in ,obviously, happening. become which is still then if reached got amount have of cash, is a to would too, the hope what point surplus huge

guide. is only measuring are you buybacks, when So the one net value asset

end for the worth to is the company We are model in the year. of trying where

also trying - were three or trying we years, let’s in terms years, to that two we something. something account values it there if of can’t are say wrong, to and got also We if we in model something are downXX% is for

way to too look you So moment, it at the calculation way. is either at difficult that it not

Liam Burke

Great. Lars. Thank you

Operator

you. Thank

Please Our ahead. next Chris question go with from Deutsche is Bank. Robertson

Christopher Robertson

just effect? down thanks a a future. a comment good retirement. luck for seasonal driving ask is I here change my Brian, this question the you scrubber that? the about what’s think you months. Can over few come guys, into taking the been spreads Best Hey is structural to and you towards or last bit Do wanted wishes around with fuel this

Lars Dencker Nielsen

is I that one. Chris. think will don’t Hey, I take it structural.

and for sulfur demand fuel I Middle think it scrubbers predominantly if for generation for is oil, East. you with in the power the look high at vessels

have of think and last parts diesel down, down, pressure the reversal it have have I distillate from prices for what you years. seen and kind seen coming we a distillate come the come you two just is of seen is

You had distillate a strong have very, tight very and market.

a that. about it high in are worried think not, past? and spread. s probably still XXX reasonable so has is that the the hit been XXX, But as it have future, people I but for know, You is XXX foreseeable we an to a the Maybe range. on shortages, Does overreaction it constructive

Christopher Robertson

Okay, thanks orders, really the of capacity. and shipyard for that. to kind new few relates And just around following-up building on earlier this from questions a

are be fleet, what capacity to but our market you in as well not also look fleet on the product only side on kind handle of side, So as at to your crude and able aging there that thoughts the do be efforts the be drywall need which these that can the or renewal these growth? kind up done crunch seem over you fleet capacity coming to years of ramped think limits to all be the accommodate shipyard a and to will further things

Emanuele Lauro

James?

James Doyle

delivered if was looking products, I at looking is today, looking the historical down. really compare Well, you other or since you look I if XXX wasn’t certainly like to at water levels, capacity, actually on and MR it at think I that actually. but is sectors, I at fleet something shipyard the was

no think active. chips, I X,XXX that of out longer are So are from XXX shipyards

but ship XXXX. is So is to order XXXX wouldn’t there capacity you wanted and come certainly your question the if that the a of you lot till today, last And I best think they is couple with what are seeing orders answer is to full.

hundreds of to will next to site. delivered there there be be of then the couple constraint capacity it even ships be were think do is distribution the more turning old, going to XX-years order the ships But XX-years if you to given age fleet, on I so going over the years. a is And

Christopher Robertson

I it. time, thanks appreciate Got for it. Alright, your

Emanuele Lauro

Chris. Thanks

Operator

concludes Thank session. Lauro Emanuele I question would any our back remarks. you. closing and to over answer to the for turn This conference like

Emanuele Lauro

today. We Rather don’t remarks. have time closing than for the thanking everybody any

So will concluded. The we soon. lot. be speak Thanks may a to call you

Operator

The is concluded. now conference for presentation. attending today’s you Thank

disconnect. now may You

Scorpio Tankers (STNG) 2 May 232023 Q1 Earnings call transcript