Scorpio Tankers Inc. (STNG) Earnings

Management highlights

### Core Financial Results & Balance Sheet Transformation - Q2 2026 was the strongest quarter in company history, with adjusted EBITDA exceeding $300 million and adjusted net income reaching $243.7 million - Net debt has been reduced by $4.2 billion since end-2021, shifting from a $2.9 billion net debt position to a $1.3 billion net cash position as of Q2 2026, equal to ~$26 per share - Completed a $605 million convertible bond issuance with a yield to maturity below 1%, using proceeds to repay $589 million of higher-cost debt carrying 5-7.5% interest rates, further lowering the company's cost of capital - Total available liquidity reaches $2.4 billion, consisting of $2.2 billion in cash and $483 million in undrawn revolving credit capacity; the company can pay for all outstanding newbuilding and joint venture commitments in cash today without additional financing - Cash break-even rate is now below $11,000 per vessel per day, the lowest in company history, driven by interest savings from recent debt repayments ### Capital Return to Shareholders - Repurchased ~2 million shares for $155 million during Q2 2026 - Board declared a quarterly dividend of 45 cents per share; total capital returned to shareholders in Q2 exceeded $175 million ### Fleet Optimization & Renewal - Sold 19 older vessels (mostly 11-12 years old) year-to-date 2026, all at prices above original purchase prices; recent LR2 sales were above the cost of current newbuild orders - Fleet renewal plan calls for 13 new fuel-efficient newbuilds, with the first MR newbuilding delivering tomorrow ### Commercial Operations - Secured three-year time charter contracts for three MR vessels entering service in December 2026, allowing the company to benefit from the current strong spot market while locking in long-term revenue certainty - Opportunistically moved a small number of LR2s into the crude trade to capture current elevated dirty Aframax rates, consistent with a flexible vessel-by-vessel strategy

Guidance

- Management expects long-term structural tightness in the product tanker market, driven by structural refinery dislocation: refining capacity has shifted farther from end consumers, and demand for refined products has outpaced net refining capacity additions since 2019, a trend that will continue due to long lead times for new refinery construction - Effective fleet growth is expected to average 3% to 4% annually over the next three years, potentially lower, after adjusting for aging vessels, sanctioned tonnage, and LR2s moving to the crude trade, so ton-mile demand is expected to outpace fleet growth long-term - Management expects that as global inventories rebuild after 400 million barrels of drawdowns since the start of the recent Middle East conflict, higher refinery runs will increase seaborne exports and support higher rates - Geopolitical disruption that leads to vessel rerouting around the Cape of Good Hope would generate incremental ton-mile demand that further supports freight rates if conflict in the Red Sea and Middle East escalates

Segment performance

Scorpio Tankers is a product and crude tanker shipping firm with no explicit breakdown of separate product segment revenue in absolute terms, but operational and market performance is detailed by vessel type: 1. **Product Tankers (MR, LR1, clean LR2):** Product tanker rates remain above $30,000 per day even in the typical seasonally slow summer period, generating strong free cash flow. Rates have recently rebounded to multi-month highs, supported by high U.S. Gulf refinery utilization, low global inventories, and geopolitical dislocation that increases ton-mile demand. 21% of the current product tanker fleet is over 20 years old, rising to 31% by 2028, tightening effective supply. 2. **Aframax / Dirty LR2:** The Aframax LR2 crude tanker market has benefited from Middle East disruption and rising crude production from the U.S., Canada, and Latin America, pushing spot rates above $100,000 per day. Currently 66% of the global LR2 fleet trades crude rather than clean product, meaning the effective product tanker order book (where over half of total LR2 newbuild orders are counted in headline fleet growth) is smaller than headline numbers suggest.

Risks & headwinds

- Geopolitical instability in the Middle East (including Strait of Hormuz and Red Sea/Houthi attacks) creates significant market uncertainty, as developments cannot be accurately predicted and may lead to unexpected volatility in freight rates - The shipping industry is inherently cyclical, with markets that rise and fall, and unpredictable geopolitical events add additional uncertainty to future market conditions - Persistent geopolitical volatility creates unplanned shifts in trade routes and market dynamics that require constant operational adjustment

Analyst Q&A

• Q: Is LR2 vessel fungibility between clean product and dirty crude trade a new permanent shift, and what has driven recent rate strength across vessel segments? /

  A: Scorpio Tankers has always opportunistically moved LR2s between markets on a vessel-by-vessel basis, and fungibility between LR2 and Aframax crude trading has been apparent for a couple of years. Vessels move to whichever market offers higher spreads, and will quickly shift back to clean trade if clean rates outpace crude. Recent summer rate strength is abnormal for the season, driven by high refining margins, high U.S. Gulf utilization, ongoing geopolitical trade disruptions, low global inventories, and rising crude exports from the Americas that underpin the dirty crude market.

• Q: Will the current large share of LR2s trading dirty remain a lasting dynamic, or is it only temporary due to geopolitical disruption? /

  A: The dynamic is entirely driven by spread differentials between clean and crude rates, not just geopolitics. When crude rates offer far higher earnings than clean LR2 rates, owners move vessels into crude. If the spread flips and clean rates become more attractive, vessels will quickly move back to clean product trading, as has happened in past market cycles.

• Q: Do recent geopolitical events structurally change the LR2 market long-term, and what is the outlook for supply and demand over the next 12 months? /

  A: Longer voyage distances from trade disruption will continue to tighten supply, a fundamental trend that has held for years. Sanctioned older vessels are unlikely to ever return to primary trade, and the overall fleet is aging, which further tightens effective supply. While ongoing political uncertainty creates constant short-term volatility, the combination of underlying supply dynamics and demand growth leaves management constructive on the segment medium-term.

• Q: What is the rationale for the DLTC VLCC joint venture investment, and what is the expected equity commitment? /

  A: The financial exposure of the investment is not meaningful relative to Scorpio Tankers' balance sheet. The deal is primarily strategic: the partner is the owner of China's largest private shipbuilder, a relationship Scorpio has held for many years, and the opportunity provided gradual exposure to the VLCC sector after the company divested its DHT holdings in 2025. The vessels will not deliver for years, so market expectations are not discussed at this stage.