Scorpio Tankers has expanded its stock buyback programme to $400m after beating analyst earnings expectations for the past quarter.
The New York-listed product tanker giant has made share repurchases its top priority in capital allocation and sent a strong signal to the market by increasing a fund that previously has been no larger than $250m.
At the same time, Scorpio reported adjusted net income of $188.4m and $3.77 per basic share, or $3.60 per diluted share. This topped the consensus $3.58 per share expected by equity analysts.
The Emanuele Lauro-led outfit reported adjusted Ebitda of $259m, which trailed analyst consensus of $263m.
Vessel revenue of $380.66m topped the $329.3m reported in the second quarter of 2023.
The performance improved on figures for the second quarter of 2023, when Scorpio’s net income of $1.33m translated into $2.51 per basic share and $2.41 per diluted share.
Scorpio was active with share buybacks in the past quarter, although most have been previously reported. It splashed out about $109m, taking in 1.4m shares at an average price of $78.16.
The company also detailed the previously disclosed sale of five of its older MRs for $179.1m, with no debt repayments on the vessels.
Scorpio has reported seasonal weakening of time charter equivalent figures across its three vessel classes in the current quarter compared with earnings in the past three months.
LR2s are averaging $44,000 per day with 43% of days fixed against $52,807 in the second quarter.
MRs are returning $34,000 per day with 35% of days committed compared with $37.019 in the previous three months.
Handymaxes have averaged $25,000 per day compared with $28,011 in the quarter past.
But as a result of aggressive debt repayments, Scorpio has continued to bring down its fleet-wide operating costs to a previously cited goal of $12,500 per day, with an even lower target in sight.
“The company’s balance sheet and cash flow generation potential continue to improve. In the second quarter, we repaid $399 million of debt and reduced our daily cash breakevens to $12,500,” chief executive Lauro said in the earnings statement.
Scorpio brought its net debt down to $758m from $1bn at the end of the quarter. It had a cash position of $279.5m at 29 June with $288.2m available under its revolving credit facility.
“Additionally, we’ve agreed to convert our 2023 $225m credit facility to a revolving credit facility and committed to prepaying our $64m credit facility with BNP Paribas and Sinosure. These initiatives could potentially reduce our daily cash breakeven rates by over $1,000.”
Scorpio shares shot up more than 2% to $76 in trading before the open of markets in New York.
