International Seaways (INSW) 9 Aug 232023 Q2 Earnings call transcript

Hello, everyone and welcome to International Seaways Second Quarter 2023 Results Call and thank you for standing by. My name is Daisy and I'll be coordinating your call today. [Operator Instructions].

I would now like to hand the call over to your host, James Small, General Counsel to begin.

So James, please go ahead.

Daisy. you, Thank everyone. Good morning, to quarter International for welcome earnings Seaways XXXX. second of the And calls

Before would today begin, with we I us advising off on everyone by the call of following. like the to start

demand between for changes economic call, the the in other strategy; address, construction vessel, regional activity crude days; tanker other or Ukraine; G&A regarding and expenditures drydock XXXX without or rates estimated projected company's consideration and and developments alternatives; company's this of the any the political, any the to TCE statements purchases expenses expectations following the and oil and operates. and and effects and industry management other statements sales and revenues newbuild plans product recent during its bookings, company's objectives; scheduled which the transactions regulatory charter hire forward-looking period; to vessels, vessels financing During regarding in make dividends; topics: financing forecasts prospects; production company other and world limitation, and including and and stakeholders; of petroleum of of of other and and achieve Those of it in investments; with the issue Russia company ability trading the patterns; globally. products; its business off-hire and relationship the and/or capital expenses; ongoing anticipated the may economic, of may our conflict outlooks markets for and strategic

expected future in appropriate believes experience trends, number that factors statements on assumptions developments, of including such and and the made are management's and take conditions, other forward-looking by a various historical consider account of current perception to circumstances. based Any factors, into management management

of statements statements. expressed to subject and those cause which control, risks, materially could are many differ are or by actual assumptions, the results to the which beyond from company's uncertainties Forward-looking implied

to on future quarterly results second XXXX Form we include the U.S. described Seaways' or the uncertainties our cause and for those and report and XX-Q could that differ Factors, make, in other reports Securities from our Form International made in and with for actual have in XXXX, the may filings that risks on Exchange for quarter Commission. first annual expectations, XX-K

let Lois to President the turn Now, me our Chief call and Officer, Lois? over Executive Zabrocky. Ms.

you Thanks International for Thank Seaways' very second James. call the everyone. very for much, joining morning, Good earnings quarter of much XXXX.

per of earnings Relations to was X last Going Slide the quarter our the income million. of website. $XXX to million, on diluted section $X.XX Net second bringing $XXX found XX share, our Investor for over the months cumulative the presentation over

of our dividend thus Based rates was EBITDA combined on far we and second have share. $X.XX quarter, quarter, strong declared per $XXX Adjusted a strong in in the million. third the spot results

September, dividend average approximately cumulative our XX% in payment shareholders $XX period. to dividends, as to the million, combined a months equates over Following million in last $X.XX the yield as cap buybacks. the This over XX in represents market on returns include which $XXX a well

average an our net half of shareholders returned We about to have of income.

enhanced have our capital structure. We

comprised nearly million. $XXX in cash undrawn of of of million nearly an liquidity have We and $XXX $XXX revolver million

quarter, our deleveraging to of the of shareholders is In debt initiatives. $XX returns of liquidity strong and portfolio. second million Our net our prepaid our we

fleet. XX% the borrowing margin last financing months, XX and sale $XX have on unencumbered of of facility. above basis Overall, leaseback unencumbered XX modern in we in and in senior secured Two million under that interest $XX nearly rates $XXX million million This prepaid our Suezmax. bank debt, loans points had our largest vessels XXX an

contracted $X,XXX cash It applicable sharing XX% revenue per today, that This charters. is months under our aggregate XX day. profit to is breakeven Our value for about $XX,XXX to expiry. fixed on charter over per next $XXX through about million net in and includes excludes loan our day amounts the from

all pull our approach, delivered to with continue we VLCCs the May. capital and levers As in allocation final our dual-fuel third

time with earnings, but are for a the on Each over rate industry. X of base years seven next fixed share the charters the VLCCs profit

On the Middle premium a million route second the per to the [indiscernible] TCEs China TDX. per for the In $XX,XXX share day, with was $XX invested. providing quarter, the profit vessel East nice the about on

includes deliver delivery commitment aggregate into vessels in which scrubber fitted, the equipment XXXX. price market. two ships with LRX international half these certified to two LNG niche We of joint conversion. Shipbuilding K Panamax and class considerations. signed two The new generators, of premium options and has These building Upon million will the just for be under with second delivery, for $XXX broader consistently our strength index, the oversize will for LRX ships venture, for

profile. of in old very The sector have Even age, they at years vessels XX overall about per year-to-date. and Panamax average day fleet is earned age fleet has a the LRX our $XX,XXX our LRX this aged our

We joint are our in supporting this strategic critical presence venture.

align forecasts America, the million of the and the On surpass for by XXXX. Brazil. on North is of the year, expected barrels OPEC on lower of a the supply Slide deficit second the XXX Oil demand Guyana average increasing of day slide, from comes IEA and the EIA, left In oil half West X barrels in oil million for projecting the demand mostly Growth and supply recent in day X, average chart the the per year-on-year. supply to per highlights. in second half

of largely will rates. rapidly these Sentiment second the have been the half the of expect On right the showing tanker OPEC inventories, that have first early cuts draw these plus commercial as the increased chart, expected we We year, are in as inventories priced felt. lower cuts now oil OECD expected. half spot year in the are the in into stocks to

fleet price Brent has how sanctions euros back which to we It as interesting accordance the is pricing, daily to the with tightening may ships affect impact to come the impact unfold, watch and in crude the now tell will the be in to very of markets this It will part trading tanker the These that rules. observant. may due fleet into of early commercial and been still remain cap earnings.

the This a Slide despite On tanker activity. our compelling to supply X, remains story component of the ordering new side, some fundamentals.

next As should of vessels it you and can on up see years. the left represents replaced on the than make hand years less over over of order than XX that lower the fleet. And XX% chart, is old less overall the X% few be fleet

today, start over to to and These three lead - orders the easily replacing Owners' are years. continue longer because in times other next tonnage four shipping also build cannot yards spread rush are to sectors.

towards see chart. right engine building the can in evolve, you new hand to vessels types. regulations continue selecting and As creating lower uncertainty Environmental

this Flipping near Slide our to in term Americas. reiterate largely fundamentals supply the world, stance, to is We of the X. oil we IEA Since recently growth presentation XXXX. that the wanted simply that from their the through updated output map coming oil show

for you in on an green bars bars, case oil demand shown create transportation near blue Asia. As investment incredible driven the where term. is by growth, see dynamics mostly seaborne These the in the

leading result ageing, is as a of and this sanctions invasion the side changes of subsequent accepts a a with and continue future the tanker that markets on geographical the top owner the Stock the York we on flow trade Russian are compounded Exchange. stage the Seaways, strength At supply constrained we solid Layer capturing inefficiencies for our building as tanker today listed tanker New environment. of

the record possible track that of returning comprehensive all to utilizing builds upon company. cash capital allocation our and healthy the our growing With letters approach, shareholders, maintaining we sheet are shareholders, balance

I'll turn to Now, CFO, our over financial Jeff review. Pribor for it the Jeff?

Thanks, Lois.

morning, everyone. per or second the for good was On income $XXX net And million share. Slide X, $X.XX quarter

upper In the XXXX the earnings earnings. second for was we EBITDA adjusted the right Appendix a million. adjusted reconciliation quarter to from chart, On provided reported $XXX

multi quarter our point like for with expense expectations, items our a range statement. of I'd guidance out to While note balance and the of few income second

it The higher expenses due rates. share relates for timing including our as quarter. line increase is to guidance purchases unavoidably of elevated with lumpy the a is spend - ship expectations is which Vessels of in the drydock hire the Charter spares, off-hiring. to than the of when and majority given are is related were the prior profit

quarter was interest $X we've income over our was and million this largely cash maximize the of significant consisted for income. balances, to on income been Other working hard

about lightering has strong $X $X million million the business our EBITDA business G&A $XX and with quarter $X and another lightering $XX side, of revenue revenue of vessel contributed the almost in in in second quarter million earning $X hire million million in year-to-date. EBITDA On expenses, million the charter

capacity. million our We undrawn quarter and turning on and million $XXX with revolving in Now of $XXX liquidity composed cash the to XX. million $XXX Slide in cash began of bridge

is the left in benefit $XXX $XX million. from on of in we of capital million $XX quarter, second chart cash million repayments of million expense, less less the EBITDA adjusted along Following and working right debt service, our $XX the capital and bridge, scheduled in composed cash expenditures for drydock the quarter which interest added to and debt

on $XXX We allocation the we second for therefore the demonstrates the flows free in The call. bars remaining capital cash of announced achieved bridge quarter the about million that execution of the quarter. first earnings cash

we exactly you in $XXX used it. free how QX see million flow. cash As we a had can here And reminder, of

went in had million call, First, borrowing a unencumbered that rates. to margin time as debt to modern vessel of $XX we basis over XXX million the committed to interest points this and of $XX at million an quarter, sale-leaseback $XX to the terminate we was of which bank repaid Suezmax of

And $XXX any million These cash for led $XXX our $XX in us but million undrawn paid we then approximately of short-term revolving million $XXX finally, over capacity. liquidity $XX XXX,XXX Secondly, combined repurchase dividends of share. to $X.XX in of million, components and we per in shares and million. investments stock

with balance moving of at financial the page. a on by the we to hand Now Cash gross million illustrated strong debt, $X chart. the remains Slide in to million, billion value also versus about current hand in that's XX, books value lot about of of standard, loan a position sheet And a side that to bottom $XXX have of equates detailed book XX% values $XXX $X strong over right the approximately left market billion. net

see that current There a when of is corresponding of more under of million of debt after the just to the assets, is sale-leaseback the which a point I sheet we transaction million, payment separated all quarter two is related the element Both top, are label just one closed, I it of $XX eliminated embedded July X, that prepayment mentioned. closed. of the the you the debt. balance from issue. in portion of timing debt last down third advanced line want of the out In to $XX these

Because basis prepayments. is the of On XX% weighted margin is rates. side, these upper our we reflect in borrowing current rates debt recapped using details payments have these right all which points effectively fixed at about and is bank or X.XX LIBR average SOFR interest hand reference debt today's to rates above rate portfolio current - X.XX%, hedged

this of in a we trajectory As some $XX we cash mentioned to continue balanced capital repayment to we're around our we We do, our options in expect existing intend facilities of this Currently, expect release use morning, total debt. which million. maybe would press to but the approach. portfolio, on repay exploring we on allocation

our continue announced We consists capital the of made to dividend. third supplemental dividend they which record of combined on regular per quarter as and also $X.XX $X.XX were strategy. share, a $X.XX allocation build in of our executing payments our have These a track dividend of

the I'll levels. which I'll quarter cash which the be Starting with all remind I Slide book TCE day that cover third our now we have we sectors $XX,XXX to guidance this TCE of the XX, to reflects TCE of you Turning and our as a last call actual fixtures here forward-looking do, with aligned earnings XXXX, that referring breakeven slide blended you next a of to always date different. But so TCEs far average are see may quarter. across for

profit the of last well side see related our our hand have of share program payments principal which of and right on the vessel interest, can break-evens next we you XX through time months the shown the delivery increased long-term cash newbuilding revenues, fixed reflective as new charters. any the and our in slide, on excluding On as

be our reduced year. another to It of day International the third we've a you for can second this break-evens like When by quarter breakeven the certainly Overall, $X,XXX in compare to-date. looks quarter last Seaways. fixtures our strong quarter

left On chart guidance some a hand the there, for modelers we year. the the for bottom in expenses total of QX updated out and provide

I XXXX. quarterly our expected the schedule plan item now line-by-line, to CapEx appendix, use and for encourage in purposes. off these included also hire modelling I to We for each read you

to like for remarks. That the to comments. turn I'd closing now Lois concludes call my back

Jeff. lot, a Thanks

now can out you laid highlights. I'll XX, our where summarize on investment details the see Slide

six International years returning constantly our last the of track healthy a growing our a improving and and shareholders sheet to For balance half Seaways has company. record

time return over is XXX% and our Our total over this shareholder peers. surpasses

months cash $XXX very XX have last of a returns supplemental quarterly share and in repurchasing, the through Over represents opportunistic This dividend, we yield. million million. XX% returned consistent $XXX earnings dividends payout with regular

have We sheet product time, this balance improved tanker with the in and vessels markets. over our XX crude

fleet. in debt the in over and XX unencumbered worth are on the of assets representing that We We have prepaid $X books $X today. billion XX% vessels our billion market

now breakeven Importantly, is level day. our below per $XX,XXX cash

created with imbalances. tanker robust transportation We have this by a for positioned growing regional strategically sustained need a seaborne for company market

transportation We're focused a to we on industry Collectively, much. of that in focused meaningful you reliability to our ESG. evolving provide regulations. with remain leader an and principles being we continue platform very stakeholders. Thank will evolve on have these And all our safe, for strive in environmental

questions. Daisy, it Operator up would, you please if open for

today ahead. Our please Bank. comes Robertson [Operator Instructions] course. from question Chris Deutsche Of go from Chris,

open. is line Your

Hi, just to last quarter. our this out guidance into day is due are the Lois drydocking looks taking was Jeff, Since slightly. forward some for it I wondering thanks if there? QX, delays third if the any hire this take for is update, like to that and just it due XXXX This the to Or good the around is morning, up time ticked off questions. pulling

from the third is drydocking, think pushed second Some That quarter. only change, our quarter of the it got into I our Jeff? isn't

in 'XX. back looked for looked And will go so doing we of from and also some haven't to a begin And to we've we've But end 'XX also then year, - bit look the we're later some have it. I both. got and of forwards.

will quarter, point expect mark we and anticipate quarter. hopefully, rates year. pick the this of third we in the And And the up the the fourth low

concentration the of bit the there. that So

lightering be Yes, Thanks Do on dredging for ship some channel is the have by positive you that impact think on impact this maybe the just business? second any VLCC makes sense. around more project. Corpus Or will it question offset Christi that. demand? My could

VLCC. for, you been the up top it can load is - think, still very the last couple case I years, and That forward, the safety channel a need has project levels. the for you the of has Suezmax, moved successfully, now then that, dredging, an case to nice clearance allows a still under feel

lighterings. the don't So, And increasingly we that of big that port, Corpus actually consequently, business, fact on of increases, impact see for except the from is really busier. and Christi a amount some that exports just the lightering the

all Yes segments. seems like, all-around it's for good

Okay. Yes. Thank much. I'll you it over. very turn

Thank you, Chris.

much. Thank you very

go ahead. today Nokta question Omar, please next Our comes from Jefferies. from Omar

Your open. line is

the you that you really I'd Clearly times clearly attractive you've doesn't pretty like has be in of business really about at a broad Hello, feeling the asking I'm the perhaps seems LRXs Wanted year and I cuts half. of got Panamaxes of feel looking least average your piece schedule, and averages delivery the the a the to double two XXXX. ask market just effects with so ordered like just say your for seasonality well good been. or that's XX,XXX That OPEC about. morning. to far that at lot done but and has at this probably first seem LRX

$X calculate that million. $XX that's across just So your over a share. If or a fleet we

that crowd there the this out bring niche past here the owners you able guys. pretty been several over premium, question achieve vessels to to consistently start and So is, for meaningful market are you've risks quarters? into My especially outperformance

this enhance in I that the of the you trade Well, from, all of the ton-miles has trade us. and fleet the Panamaxes are would of sector what in especially class say mid benefited the Americas Omar, that market engaged I overall and on with base think vessels know, trade. benefited as the the in these there lots also sanctions But this tanker

And in overall look be nearly forward And been the XXXX, that to joint it's that years XX in we sector, and ageing and is was we're trade sure supporting forward. venture, an this very been it'll going we've base joint our It's she We're making strong. trade, years we're partners. venture, our supporting that and customer successful. XX our

you maybe trade. perhaps Lois. Thanks into deeper that And it like you're to two those ships ordering sounds clearly get

right say, more looking activity in how about the MRs, about can broader tonnage sense? Are the hand plans recently, are in a there as been And segment? adding to or that thinking is the as renewal LRXs fleet that you guess, bit think due there? in where a maybe of you now? in market? opportunities In Any your has you appropriate seen give terms terms think reinvest we've you general, of to that are at second it similar color LRXs make Any of newbuildings in I more the

opportunities Omar would looking I really those where book is have are so Panamaxes took what in delivery two that environment I have And very an of, mean, value what been the We're we common, high. you're levels for, is feel it's sectors asset cyclically VLCCs strong, or that overall, in level, fundamentals we highly X%. that, those and just their that strategic. say selected, for where the we LRXs just looking we are ordered, order do

strong. very that's think I And

fundamentals. those study, broader as markets that up and all being a not more think may we all different something an having in but of in present looking sectors, about, to strong depth beauties look diversified, our something knowledge it's And forward. of be And being of these will repeat will that is we is that for at MR the I one going to It's that we're provide for today. return. continue opportunities the of

follow-up, highlighting one Thanks the profit Lois. those VLCCs. share on on And quick just three just just Thank you're you. final, the

know, component? bunker LNG that You general there based that is fillers TDX, off is basis, just fuel based the price, LNG of

Chief Commercial Officer is handle our Solon, to Derek that. going

Hi not that It's the on some able charter, with pricing. Omar. pricing, the in Derek. based negotiation work advantages we but to it's were VLSFO LNG pricing, to VLSFO Yes,

it. Got

Derek. Thanks, thanks Okay. And Lois.

you. Thank

Thank you.

Our B. Burke from from go Liam. Liam comes Please next question Riley. ahead.

open. line is Your

Good you. Jeff. Good morning, Thank morning, Lois.

Liam. morning, Good

a earning think that And out are crude function will continue? that do the of VLCCs. Is Suezmax the supply? Lois the redistribution you of

take Derek, that. we'll Yes,

Derek That's it's Yes, of as around Liam, Ukraine, that's LRXs a we've the the Hi the here. long as why trading Solon where and patterns larger function adopted a mid-sector in it to crude. function. a answer as so it Russian and changing seen invasion is, Suez outperformed

to while these Europe. continued So continue expect that in we hostilities have

your side? on allocation newbuilds of newbuilds now? new and in does And, much how Great. capital Jeff, the after ordered allocation capital balancing you've How do two LRXs come

Lois pricing, end they're Well, I you touched think we as at the this of today, look on we know. as know, assets generally if it, of cyclical high

there's a and financial going in DCFs. work is them into when the to newbuilding conversion account future a ready, there newbuilding, value specific LRXs has allocation found we with it the metrics the that is if of be to that's considering making they going a out respect conversion even to taking well, to in be So these be what a proposition. And

proposition. specific value a that's So

time. other that So that evaluate I but anything at I this as sectors, will - low not we're don't in expecting as

Thank Jeff. you, you, Derek. Thank Great.

you. Thank

comes from question Stifel. Ben Nolan from Ben, go please next Our ahead.

open. is line Your

about Yes, ordered. just Actually, talking could if thanks. the your LRXs you The to raise up I Yes. curious. LNG quarter. you're just follow that on Good

a about pattern. those why trade on thought tilt go LNG any full them ahead pretty there go and actually just making and not that? just can distinct You in equipped Was

question. my me Let to that what ask answer colleagues

our Nugent, how Officer would, and Head highlight this us Yes, you of Operational future. preparing you Bill with for Sustainability, just multi-fuel Chief you if order

ships make announcements you. quality Derek we a latest as to them look ships sure reliable trade. and of those We regulations rules as the tightening to thank So right, may multitude And to with Lois and to scenarios. consider My provide we're is of IMO responsibility we and forward how for trade, different as and of kind and prepared evolve, restrictions. the that want change, to safe

you operate LNG have fuel, viable to becomes for can made a viable the biofuel So the also we as as in And these in carbon for we considerations know, ability drop ships then potential that capture, logistical design technology. considered a on the the fuel. if have technology,

flexible as you know, is tried make possible. what as So, to do I've the ships

So them, to ability so. has whatever do wishes in the to way he the Derek trade

I answered So sort there. that all of questions the have realized

Ben so Yes, again. Jeff is

to program. about, fully we be a people can future it you as decision And what we question. is flushed built in factored case optionality answers Hope have table. bought what that costs whatever, talk future something not So a and hear be the these And you that out back our already. this that into of of making can lot got into your ships,

be helpful. something it's price of just LNG it one, actually, I ready could incremental for versus And assume just, around that having framework the even equipped No, like any that? what's I if cost now

Okay, for mean, to I we're the say is carry - certified Bill distinctions of that ahead the what a achieve with we team to LNG Right, that I one that go maybe classification. have yes, conversion. the is led Bill would

that ready I fuel dual not it's important is Yes. lip mean, just service.

exactly. that Correct,

I but even yes beyond right. mean, So that,

certified on other actual dual equipment has operates the ships fuel. converting provided is been on or So

future and for the service. deliver that boilers, the specifically a Right, the somewhere engine, ship do engine distinction, adder generators it that range. dual main so in So market is that fuel, to sized key can are for $XX that, $XX the million million that's today all that to

in for prepared would that the We again, estimate then cost, the future. be we but

today. are that undertaking not We

impact Panama is business at value lot you having that with the Is Again, sense But and thought have with little maybe Understand, the and the you that question. and would bit particular it and in about quantify it Coast bit, the in My then West and a but the Gulf of little Coast specific any in hear or low guys frame curious to LRs if and congestion everything. to all sort do be that. on not how any a is? of of all you if impact both waters noise if more just on a about that. that appreciate EMRs, proposition the trying over Pacific last

The Panama trading the the Canal an for Panamaxes the venture within of, of of routes. trade piece integral joint is International,

We I you are calling the to talk do constantly there. Derek, mean. And want about delays

point think delays you're I Ben's specifically the has I at speaking been think to about Panama the building most recent area. Canal

Yes. mean, but it's months just now, Well, right? getting worse worse yes it's I and

Right.

yes larger for in Panamax delays at seen increasing and old delays canal So the some at the instances, we grown have EMRs being Neo canal. think I the restricted both is, than have the

we you the the that's can waited an as continue picked delays have the to Panama beam Canal. to XX.X built with But why So so LRXs use TCEs go had up term on know, longer we've of the older longer impact the meter through. they some delays

sent instance, ship Horn. West one from we've didn't We the Coast, Argentina utilize Cape around in So, went seen that the canal. we a and to over

game play think and versus I interpretive impact delay in yes, that seen So it each us. voyage, you've cost and play determined that every that of

Interesting.

Okay. thanks me good All right. it and does quarter That for again, guy.

Thank you.

you. Thank

go question is Please last Our ahead. [indiscernible]. from

open. is Your line

Are seeing you buying you something crude? pool and I to Asia question. leave a quickly? for on that morning. lot realize that tankers but return Russian bit crude? early the that a full see impact, Middle taking trade have as Is the my as East can dark pool started Eastern it's to unfold? Good more visibility of Or trading though regular will Thanks the happen

I I can Sharif hi, maybe this Solon. answer Again, Derek one. it's can

in increased overall, to has her crude starting crude above As Lois on the see as think I we're touched and set. crude U.S. increased has remarks, U.S.

willing There's You there's load at who us, in group And the within will carry will, know, unlike cost. to with voters then we're are that who a comfortable sanctions crude but it are busting, Russia load trading fleet, price a fleet. to Russian any differentiation there's it's more Russia, you the cap compliant if the great provided the willing set. accordance of there's

some customers, called price don't lot a So keen to lot that completely of when they take because for who Russia. back. back of - a come come up goes there's come necessarily charters ships shifts as They the efficient, of those are have back, not though

- disadvantaged cargo business to So to clean history. their of sort to they'll up take have take they'll have

I bit to think of a the will your that I So to market. see little take how point time impacts

That's helpful. exercised during to the just of then And Thanks, options I'm gauge kind trying the repurchase really, volatility quarter. two you there.

how repurchases leaseback of capital forward, strategy? more sale versus thinking parts exercising we are the about Going other allocation

Hi. It’s Jeff.

are I think the just while that there. that sale based you other a might out see terms repurchases the for is probably leasebacks last the the of on of

of this we're debt, of instruments we have we nothing terms continue other incremental we imminent. down So whole portfolio prepayment that been breakeven. to do our and And as as said in March, in doing cash - brings our will we'll look we've the at nicely debt

else debt will in the portfolio. spread it be probably somewhere So

Okay. Thanks for taking my question.

you. Thank

We Instructions] have no Thank you. further [Operator questions.

any like So back to remarks. for to hand Lois I'd closing

everyone joining us for our I very you on thank to strong very quarter. much. quarter second a conference call much. very you and want today Thank Thank

everyone, joining for Thank today's you, call.

may now a You your have lovely disconnect lines. And day.