International Seaways, Inc. (NYSE: INSW) (the “Company” or
“INSW”), one of the largest tanker companies worldwide providing
energy transportation services for crude oil and petroleum
products, today reported results for the first quarter 2023.
HIGHLIGHTS & RECENT DEVELOPMENTS
- Net income for the first quarter was approximately $173
million, or $3.47 per diluted share, compared to a net loss of
approximately $13 million, or $0.26 per diluted share, in the first
quarter of 2022. Cumulative net income over the last three quarters
is over $500 million.
- Adjusted EBITDA(A) for the first quarter was approximately $209
million.
- Total liquidity was approximately $519 million as of March 31,
2023, including cash and short-term investments(B) of $261 million
and $257 million of undrawn revolver capacity.
- Fleet Optimization Program:
- Took delivery of two of three newbuild, dual-fuel (LNG) VLCCs
in March and April 2023. The remaining vessel is expected to
deliver in the second quarter of 2023. Each vessel is employed on a
long-term time charter with an oil major and is financed under a
sale and leaseback arrangement with a fixed interest rate of
approximately 425 bps.
- Purchased two, 2009-built Aframaxes pursuant to options under
sale leaseback arrangement at a discount of over 45% to current
market prices. One vessel delivered in March 2023; the other in
April 2023.
- Sold a 2008-built MR in the first quarter for net proceeds
after debt repayment of approximately $10 million.
- Increased contracted revenues by over $75 million to $337
million with four new time charter agreements.
- Balance Sheet Enhancements:
- Amended senior secured credit facility (the $750 Million Credit
Facility) which resulted in the:
- $97 million prepayment of the principal outstanding on the term
loan, reducing mandatory repayments by approximately $12 million
per year.
- $40 million increase in the revolving credit facility (“RCF”),
which remains fully undrawn at nearly $260 million
- Release of 22 vessels from the collateral package. Unencumbered
vessels now represent over 35% of the total fleet.
- Repayment of approximately $75 million within the debt
portfolio is expected during the second quarter of 2023.
- Returns to Shareholders:
- Paid a cumulative $2.00 per share in regular and supplemental
dividends in March 2023.
- Declared a combined dividend of $1.62 per share composed of a
supplemental dividend of $1.50 per share in addition to regular
quarterly cash dividend of $0.12 per share to be paid in June
2023.
“After another strong quarter of earnings, Seaways continues to
build upon our track record of returning significant cash to
shareholders with a combined dividend of $1.62 per share,” said
Lois K. Zabrocky, International Seaways’ President and CEO. “Our
balanced capital allocation strategy has positioned our diverse
fleet of crude and product tankers to capitalize on the strong rate
environment as reflected in our first quarter results and second
quarter fixtures to-date. We remain focused on executing our
capital allocation strategy to create value for shareholders over
the long term.”
Ms. Zabrocky added, “Seaways has successfully invested at low
points in the cycle, including when we partnered with an oil major
in 2021 to build three dual-fuel LNG VLCCs at prices over 35% below
current values. We are pleased to have taken delivery of the first
two vessels and expect the remaining vessel to join the fleet later
this quarter. At a time when we expect positive fundamentals to
continue to drive strong tanker earnings, we are poised to benefit
from their attractive charter rates, with added upside due to
profit sharing above the base rate. While we are monitoring the
impacts of recessionary pressures on oil demand in the near term,
we are confident that higher tanker utilization from the shifting
global energy trade, combined with the lowest orderbook in more
than 30 years, will underpin a robust market during 2023.”
Jeff Pribor, the Company’s CFO stated, “During the quarter, we
pulled every possible lever in a capital allocation strategy: we
invested in the fleet with the deliveries from our newbuilding
program, purchase of two Aframaxes and sale of an MR; we de-levered
with the amendment to our credit facility that prepaid $97 million
of the term loan which saves more than $600 per day through reduced
amortization and interest; and we paid a combined dividend of $2.00
per share. After executing our capital allocation strategy, we
ended the quarter with ample liquidity of $519 million and a net
loan-to-value ratio of 21%. Together with our operating leverage
and strong financial position, Seaways is ideally positioned to
continue building our track record as good stewards of
capital.”
FIRST QUARTER 2023 RESULTS
Net income for the first quarter of 2023 was $172.6 million, or
$3.47 per diluted share, compared to a net loss of $13.0 million,
or $0.26 per diluted share, for the first quarter of 2022. Net
income for the quarter reflects the impact of the disposal of an
older vessel, debt modification fees and the write-off of deferred
finance costs aggregating $10.2 million. Net income excluding these
items was $162.5 million, or $3.27 per diluted share. The increase
in the first quarter of 2023 was primarily driven by a $185.3
million increase in TCE revenues(C) as a result of higher demand
for tankers due to regional imbalances of oil and refined oil
products and the effects of sanctions on Russian oil that disrupted
trading patterns leading to longer voyages and higher tanker
utilization.
Shipping revenues for the first quarter were $287.1 million,
compared to $101.5 million for the first quarter of 2022.
Consolidated TCE revenues for the first quarter were $283.3
million, compared to $98.0 million for the first quarter of
2022.
Adjusted EBITDA for the first quarter was $209.0 million,
compared to $26.0 million for the first quarter of 2022.
Crude Tankers Shipping revenues for the Crude Tankers
segment were $132.4 million for the first quarter of 2023, compared
to $39.6 million for the first quarter of 2022. TCE revenues were
$129.3 million for the first quarter, compared to $36.5 million for
the first quarter of 2022. This increase was primarily attributable
to an increase in spot rates as the average spot earnings of the
VLCC, Suezmax and Aframax sectors were approximately $46,400,
$58,200 and $50,800 per day, respectively, compared with
approximately $12,300, $13,600 and $13,200 per day, respectively,
during the first quarter of 2022.
Product Carriers Shipping revenues for the Product
Carriers segment were $154.7 million for the first quarter,
compared to $61.9 million for the first quarter of 2022. TCE
revenues were $154.0 million for the first quarter, compared to
$61.5 million for the first quarter of 2022. This significant
increase is attributable to substantially higher spot rates with
average spot earnings for the LR1 and MR sectors of approximately
$70,800 and $31,500 per day, respectively, in the first quarter of
2023 compared with approximately $20,300 and $14,000 per day,
respectively, in the first quarter of 2022.
FLEET OPTIMIZATION PROGRAM
The first of three dual-fuel VLCCs in the Company’s newbuilding
program was delivered in March 2023. A second vessel was delivered
in April 2023 and the final vessel is scheduled for delivery later
in the second quarter. The vessels were ordered for an aggregate
contract price of $288 million and have approximately $115 million
in remaining payments as of March 31, 2023, which are fully
financed under sale leaseback arrangements. Upon delivery, the
vessels will commence long term time charters with an oil major for
the next seven years.
In December 2022, the Company exercised its purchase options on
two 2009-built Aframax vessels under sale leaseback arrangement,
which were accounted for as operating leases prior to declaration
of the options. The aggregate purchase price, net of prepaid
charter hire of both vessels was approximately $41 million,
representing a discount of approximately 45% to the current market
value of these vessels. One vessel was delivered in March 2023
while the other was delivered in April 2023.
In the first quarter of 2023, the Company sold a 2008-built MR,
which generated approximately $10 million in net proceeds after
debt repayment.
During the quarter, the Company entered into four additional
time charter agreements on three 2008-built MRs and one 2012-built
Suezmax for two to three years. The new charters increased
contracted revenues by approximately $75 million to $337 million,
excluding any applicable profit share from April 1, 2023 through
charter expiry.
DELEVERAGING INITIATIVES
In March 2023, the Company amended the $750 Million Credit
Facility, which included a prepayment of $97 million on the term
loan, an increase in the capacity of the revolving credit facility
by $40 million and a release of 22 vessels from the collateral
package.
RETURNING CASH TO SHAREHOLDERS
In March 2023, the Company paid a combined dividend of $2.00 per
share of common stock, composed of a regular quarterly dividend of
$0.12 per share of common stock and a supplemental dividend of
$1.88 per share.
The Company’s share repurchase program has approximately $40
million remaining and expires at the end of 2023.
The Company’s Board of Directors declared a regular quarterly
dividend of $0.12 per share of common stock and a supplemental
dividend of $1.50 per share of common stock on May 4, 2023. Both
dividends will be paid on June 28, 2023, to shareholders with a
record date at the close of business on June 14, 2023.
CONFERENCE CALL
The Company will host a conference call to discuss its first
quarter 2023 results at 9:00 a.m. Eastern Time (“ET”) on Friday,
May 5, 2023. To access the call, participants should dial (833)
470-1428 for domestic callers and (929) 526-1599 for international
callers and entering 455645. Please dial in ten minutes prior to
the start of the call. A live webcast of the conference call will
be available from the Investor Relations section of the Company’s
website at https://www.intlseas.com.
An audio replay of the conference call will be available until
May 12, 2023, by dialing (866) 813-9403 for domestic callers and
+44 204 525 0658 for international callers, and entering Access
Code 829218.
ABOUT INTERNATIONAL SEAWAYS, INC.
International Seaways, Inc. (NYSE: INSW) is one of the largest
tanker companies worldwide providing energy transportation services
for crude oil and petroleum products in International Flag markets.
International Seaways owns and operates a fleet of 76 vessels,
including 13 VLCCs (including one newbuilding), 13 Suezmaxes, five
Aframaxes/LR2s, eight LR1s and 37 MR tankers. International Seaways
has an experienced team committed to the very best operating
practices and the highest levels of customer service and
operational efficiency. International Seaways is headquartered in
New York City, NY. Additional information is available at
https://www.intlseas.com.
Forward-Looking Statements This release contains
forward-looking statements. In addition, the Company may make or
approve certain statements in future filings with the U.S.
Securities and Exchange Commission (SEC), in press releases, or in
oral or written presentations by representatives of the Company.
All statements other than statements of historical facts should be
considered forward-looking statements. These matters or statements
may relate plans to issue dividends, the Company’s prospects,
including statements regarding vessel acquisitions, expected
synergies, trends in the tanker markets, and possibilities of
strategic alliances and investments. Forward-looking statements are
based on the Company’s current plans, estimates and projections,
and are subject to change based on a number of factors. Investors
should carefully consider the risk factors outlined in more detail
in the Annual Report on Form 10-K for 2022 for the Company, the
Quarterly Report on Form 10-Q for the quarter ended March 31, 2023,
and in similar sections of other filings made by the Company with
the SEC from time to time. The Company assumes no obligation to
update or revise any forward-looking statements. Forward-looking
statements and written and oral forward-looking statements
attributable to the Company or its representatives after the date
of this release are qualified in their entirety by the cautionary
statements contained in this paragraph and in other reports
previously or hereafter filed by the Company with the SEC.
Category: Earnings
Consolidated Statements of
Operations
($ in thousands, except per share
amounts)
Three Months Ended
March 31,
2023
2022
(Unaudited)
(Unaudited)
Shipping Revenues:
Pool revenues
$
259,578
$
83,762
Time and bareboat charter revenues
13,150
6,175
Voyage charter revenues
14,402
11,545
Total Shipping Revenues
287,130
101,482
Operating Expenses:
Voyage expenses
3,810
3,507
Vessel expenses
58,769
60,317
Charter hire expenses
8,800
7,309
Depreciation and amortization
29,548
27,000
General and administrative
11,246
10,166
Third-party debt modification fees
407
187
Gain on disposal of vessels and other
assets, net of impairments
(10,748
)
(1,376
)
Total operating expenses
101,832
107,110
Income/(loss) from vessel operations
185,298
(5,628
)
Equity in results of affiliated
companies
-
5,597
Operating income/(loss)
185,298
(31
)
Other income/(expense)
4,281
(226
)
Income/(loss) before interest expense and
income taxes
189,579
(257
)
Interest expense
(16,947
)
(12,740
)
Income/(loss) before income taxes
172,632
(12,997
)
Income tax benefit/(provision)
1
(4
)
Net income/(loss)
$
172,633
$
(13,001
)
Weighted Average Number of Common
Shares Outstanding:
Basic
49,138,613
49,571,337
Diluted
49,646,331
49,571,337
Per Share Amounts:
Basic net income/(loss) per share
$
3.51
$
(0.26
)
Diluted net income/(loss) per share
$
3.47
$
(0.26
)
Consolidated Balance Sheets
($ in thousands)
March 31,
December 31,
2023
2022
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents
$
156,220
$
243,744
Short-term investments
105,000
80,000
Restricted cash
18,329
-
Voyage receivables
248,029
289,775
Other receivables
11,559
12,583
Inventories
698
531
Prepaid expenses and other current
assets
16,491
8,995
Current portion of derivative asset
6,274
6,987
Total Current Assets
562,600
642,615
Vessels and other property, less
accumulated depreciation
1,775,653
1,680,010
Vessels construction in progress
85,662
123,940
Deferred drydock expenditures, net
72,874
65,611
Operating lease right-of-use assets
7,085
8,471
Finance lease right-of-use assets
22,001
44,391
Pool working capital deposits
34,076
35,593
Long-term derivative asset
2,138
4,662
Other assets
9,441
10,041
Total Assets
$
2,571,530
$
2,615,334
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable, accrued expenses and
other current liabilities
$
53,197
$
51,069
Current portion of operating lease
liabilities
430
1,596
Current portion of finance lease
liabilities
18,326
41,870
Current installments of long-term debt
155,525
162,854
Total Current Liabilities
227,478
257,389
Long-term operating lease liabilities
7,738
7,740
Long-term debt
777,154
860,578
Other liabilities
1,877
1,875
Total Liabilities
1,014,247
1,127,582
Equity:
Total Equity
1,557,283
1,487,752
Total Liabilities and Equity
$
2,571,530
$
2,615,334
Consolidated Statements of Cash
Flows
($ in thousands)
Three Months Ended March
31,
2023
2022
(Unaudited)
(Unaudited)
Cash Flows from Operating
Activities:
Net income/(loss)
$
172,633
$
(13,001
)
Items included in net income/(loss) not
affecting cash flows:
Depreciation and amortization
29,548
27,000
Loss on write-down of vessels and other
assets
—
1,697
Amortization of debt discount and other
deferred financing costs
1,556
855
Amortization of time charter hire
contracts acquired
—
340
Deferred financing costs write-off
166
133
Stock compensation
1,900
1,108
Earnings in results of affiliated
companies
20
(5,597
)
Other – net
(823
)
580
Items included in net income/(loss)
related to investing and financing activities:
Gain on disposal of vessels and other
assets, net
(10,748
)
(3,073
)
Cash distributions from affiliated
companies
—
2,250
Payments for drydocking
(12,978
)
(17,570
)
Insurance claims proceeds related to
vessel operations
950
954
Changes in operating assets and
liabilities
38,598
(15,457
)
Net cash provided by/(used in) operating
activities
220,822
(19,781
)
Cash Flows from Investing
Activities:
Expenditures for vessels, vessel
improvements and vessels under construction
(66,722
)
(37,989
)
Proceeds from disposal of vessels and
other property, net
20,021
24,257
Expenditures for other property
(524
)
(390
)
Investments in short-term time
deposits
(90,000
)
—
Proceeds from maturities of short-term
time deposits
65,000
—
Pool working capital deposits
—
(527
)
Net cash used in investing activities
(72,225
)
(14,649
)
Cash Flows from Financing
Activities:
Repayments of debt
(137,449
)
(46,265
)
Proceeds from sale and leaseback
financing, net of issuance and deferred financing costs
55,722
20,401
Payments on sale and leaseback financing
and finance lease
(34,619
)
(9,085
)
Payments of deferred financing costs
(514
)
—
Borrowings on revolving credit
facilities
—
50,000
Cash dividends paid
(98,313
)
(2,980
)
Cash paid to tax authority upon vesting or
exercise of stock-based compensation
(2,619
)
(970
)
Net cash (used in)/provided by financing
activities
(217,792
)
11,101
Net decrease in cash, cash equivalents and
restricted cash
(69,195
)
(23,329
)
Cash, cash equivalents and restricted cash
at beginning of year
243,744
98,933
Cash, cash equivalents and restricted cash
at end of period
$
174,549
$
75,604
Spot and Fixed TCE Rates Achieved and Revenue Days The
following tables provides a breakdown of TCE rates achieved for
spot and fixed charters and the related revenue days for the three
months ended March 31, 2023 and the comparable period of 2022.
Revenue days in the quarter ended March 31, 2023 totaled 6,416
compared with 6,645 in the prior year quarter. A summary fleet list
by vessel class can be found later in this press release. The
information in these tables excludes commercial pool
fees/commissions averaging approximately $955 and $661 per day for
the three months ended March 31, 2023 and 2022, respectively.
Three Months Ended March 31,
2023
Three Months Ended March 31,
2022
Spot
Fixed
Total
Spot
Fixed
Total
Crude Tankers
VLCC
Average TCE Rate
$
46,371
$
48,118
$
12,269
$
45,179
Number of Revenue Days
780
112
892
801
35
836
Suezmax
Average TCE Rate
$
58,191
$
31,402
$
13,610
$
26,618
Number of Revenue Days
996
131
1,127
1,060
90
1,150
Aframax
Average TCE Rate
$
50,756
$
-
$
13,216
$
-
Number of Revenue Days
330
-
330
307
-
307
Panamax
Average TCE Rate
$
-
$
-
$
20,551
$
-
Number of Revenue Days
-
-
-
70
-
70
Total Crude Tankers Revenue
Days
2,106
243
2,349
2,238
125
2,363
Product Carriers
Aframax (LR2)
Average TCE Rate
$
-
$
19,108
$
-
$
17,145
Number of Revenue Days
-
90
90
-
90
90
Panamax (LR1)
Average TCE Rate
$
70,838
$
-
$
20,300
$
-
Number of Revenue Days
800
-
800
678
-
678
MR
Average TCE Rate
$
31,468
$
18,434
$
14,030
$
15,119
Number of Revenue Days
3,087
90
3,177
3,115
56
3,171
Handy
Average TCE Rate
$
-
$
-
$
12,251
$
-
Number of Revenue Days
-
-
-
343
-
343
Total Product Carriers Revenue
Days
3,887
180
4,067
4,136
146
4,282
Total Revenue Days
5,993
423
6,416
6,374
271
6,645
During the 2023 and 2022 periods, each of the Company’s LR1s
participated in the Panamax International Pool and transported
crude oil cargoes exclusively.
Fleet Information As of March 31, 2023, INSW’s fleet
totaled 76 vessels, including two newbuilds and 74 operating
vessels, of which 58 were owned and 16 were chartered in.
Total at March 31, 2023
Vessel Fleet and Type
Vessels Owned
Vessels Chartered-in1
Total Vessels
Total Dwt
Operating Fleet
VLCC
4
7
11
3,311,536
Suezmax
13
-
13
2,061,754
Aframax
2
2
4
452,375
Crude Tankers
19
9
28
5,825,665
LR2
-
1
1
112,691
LR1
6
2
8
595,134
MR
33
4
37
1,853,675
Product Carriers
39
7
46
2,561,500
Total Operating Fleet
58
16
74
8,387,165
Newbuild Fleet
VLCC
2
-
2
600,000
Total Newbuild Fleet
2
-
2
600,000
Total Operating and Newbuild
Fleet
60
16
76
8,987,165
(1) Includes both bareboat charters and
time charters, but excludes vessels chartered in where the duration
of the charter was one year or less at inception.
Reconciliation to Non-GAAP Financial Information The
Company believes that, in addition to conventional measures
prepared in accordance with GAAP, the following non-GAAP measures
may provide certain investors with additional information that will
better enable them to evaluate the Company’s performance.
Accordingly, these non-GAAP measures are intended to provide
supplemental information, and should not be considered in isolation
or as a substitute for measures of performance prepared with
GAAP.
(A) EBITDA and Adjusted EBITDA EBITDA represents net
income/(loss) before interest expense, income taxes, depreciation
and amortization expense and noncontrolling interest. Adjusted
EBITDA consists of EBITDA adjusted for the impact of certain items
that we do not consider indicative of our ongoing operating
performance. EBITDA and Adjusted EBITDA do not represent, and
should not be a substitute for, net income or cash flows from
operations as determined in accordance with GAAP. Some of the
limitations are: (i) EBITDA and Adjusted EBITDA do not reflect our
cash expenditures, or future requirements for capital expenditures
or contractual commitments; (ii) EBITDA and Adjusted EBITDA do not
reflect changes in, or cash requirements for, our working capital
needs; and (iii) EBITDA and Adjusted EBITDA do not reflect the
significant interest expense, or the cash requirements necessary to
service interest or principal payments, on our debt. While EBITDA
and Adjusted EBITDA are frequently used as a measure of operating
results and performance, neither of them is necessarily comparable
to other similarly titled captions of other companies due to
differences in methods of calculation. The following table
reconciles net income/(loss) as reflected in the condensed
consolidated statements of operations, to EBITDA and Adjusted
EBITDA:
Three Months Ended March
31,
($ in thousands)
2023
2022
Net income/(loss)
$
172,633
$
(13,001
)
Income tax (benefit)/provision
(1
)
4
Interest expense
16,947
12,740
Depreciation and amortization
29,548
27,000
EBITDA
219,127
26,743
Amortization of time charter contracts
acquired
-
340
Third-party debt modification fees
407
187
Gain on disposal of vessels and other
assets, net of impairments
(10,748
)
(1,376
)
Write-off of deferred financing costs
166
133
Adjusted EBITDA
$
208,952
$
26,027
(B) Cash
March 31,
December 31,
($ in thousands)
2023
2022
Cash and cash equivalents
$
156,220
$
243,744
Short-term investments
105,000
80,000
Total Cash
$
261,220
$
323,744
(C) Time Charter Equivalent (TCE) Revenues Consistent
with general practice in the shipping industry, the Company uses
TCE revenues, which represents shipping revenues less voyage
expenses, as a measure to compare revenue generated from a voyage
charter to revenue generated from a time charter. Time charter
equivalent revenues, a non-GAAP measure, provides additional
meaningful information in conjunction with shipping revenues, the
most directly comparable GAAP measure, because it assists Company
management in making decisions regarding the deployment and use of
its vessels and in evaluating their financial performance.
Reconciliation of TCE revenues of the segments to shipping revenues
as reported in the consolidated statements of operations
follow:
Three Months Ended March
31,
($ in thousands)
2023
2022
Time charter equivalent revenues
$
283,320
$
97,975
Add: Voyage expenses
3,810
3,507
Shipping revenues
$
287,130
$
101,482
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230505005075/en/
Investor Relations & Media: Tom Trovato,
International Seaways, Inc. (212) 578-1602
ttrovato@intlseas.com
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