Monday, 21 October 2019 | 18:01
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International Seaways Reports Second Quarter Net Loss of $16.5 Million

Friday, 09 August 2019 | 00:00

International Seaways, Inc., one of the largest tanker companies worldwide providing energy transportation services for crude oil and petroleum products in International Flag markets, reported results for the second quarter 2019.

Highlights

– Net loss for the second quarter was $16.5 million, or $0.57 per share, compared to a net loss of $18.8 million, or $0.65 per share, in the second quarter of 2018. Net loss for the quarter reflects the impact of a loss on vessel sales of $1.6 million. Net loss excluding these items was $15.0 million, or $0.51 per share.
– Time charter equivalent (TCE) revenues(A) for the second quarter were $62.5 million, compared to $50.0 million in the second quarter of 2018.
– Adjusted EBITDA(B) for the second quarter was $21.3 million, compared to $9.2 million in the same period of 2018.
– Cash(C) was $150.3 million as of June 30, 2019; total liquidity was $200.3 million, including $50.0 million undrawn revolver, compared to cash of $117.6 million and total liquidity of $167.6 million as of December 31, 2018.
– Sold a 2004-built MR and agreed to sell another 2004-built MR during the quarter, which was delivered to the buyer in July.
– Made a prepayment of $10 million in July on the 2017 Term Loan Facility using restricted cash set aside from the proceeds of vessel sales.
– Chartered-in a 2010-built Panamax for six months.
– Subsequent to the end of the quarter, exercised an option to extend the charter-in on a 2006-built MR for an additional 6-month period expiring in February 2020, and agreed to charter-in a 2006-built Panamax for a two-year period with no options to extend.

“During the second quarter, our fleet of crude and product tankers performed in-line with our expectations, as increased refinery maintenance ahead of the IMO 2020 low sulfur regulations contributed to rates that were lower than the strong levels reached in the first quarter of 2019 but higher than the comparable period last year,” said Lois K. Zabrocky, International Seaways' president and CEO. “We are pleased to have further enhanced our balance sheet in the second quarter, as we increased total liquidity to $200.3 million, up $32.7 million year to date. With our highest cash and liquidity position since inception, we have also taken steps to reduce debt, consistent with our disciplined and balanced capital allocation strategy.”

Ms. Zabrocky continued, “Underlying tanker fundamentals remain supportive of a recovering market during a time when we continue to expect incremental demand from IMO 2020 to positively affect the product and crude tanker rate environment in the second half of 2019 and into 2020. With our modern, sizeable fleet and significant operating leverage, we are well positioned to capitalize on strengthening market conditions. As we focus on enhancing long-term shareholder value, we also maintain a commitment to ESG principles, accretive capital allocation and provision of safe, reliable service to leading energy companies.”

Second Quarter 2019 Results

Net loss for the second quarter of 2019 was $16.5 million, or $0.57 per diluted share, compared to a net loss of $18.8 million, or $0.65 per diluted share, in the second quarter of 2018. The decreased loss in the second quarter of 2019 primarily reflects higher TCE revenues, a reduction in third-party debt modification fees and an increase in other income principally because the second quarter of 2018 included a loss on extinguishment of debt and a write-off of deferred finance costs aggregating $3.6 million. These positive factors were partially offset by a loss on disposal of vessels and other property, net of impairments of $1.6 million, compared to a gain on disposal of vessels in the second quarter of 2018 of $6.7 million, an increase in charter hire expenses principally attributable to increased activity in the Company's Lightering business, and increased interest expense. Net loss for the first half of 2019 was $5.6 million, or $0.19 per share, compared to a net loss of $48.1 million, or $1.65 per share, for the first half of 2018.

Consolidated TCE revenues for the second quarter of 2019 were $62.5 million, compared to $50.0 million in the second quarter of 2018. Shipping revenues for the second quarter of 2019 were $69.0 million, compared to $56.9 million in the second quarter of 2018. Consolidated TCE revenues for the first half of 2019 were $156.5 million, compared to $98.8 million for the first half of last year. Shipping revenues for the first half of 2019 were $170.9 million compared to $108.9 million in the prior year period.

The increase in interest expense in the second quarter of 2019 compared to the second quarter of 2018 was primarily attributable to the impact of debt facilities entered into by the Company during the second quarter of 2018 in connection with the completion of the acquisition of six VLCCs.

Adjusted EBITDA was $21.3 million for the quarter, compared to $9.2 million in the second quarter of 2018. Adjusted EBITDA was $68.6 million for the first half of 2019, compared to $15.7 million for the first half of 2018.

Crude Tankers

TCE revenues for the Crude Tankers segment were $45.7 million for the current quarter compared to $34.4 million in the second quarter of 2018. This increase primarily resulted from the impact of higher average rates in the VLCC, Suezmax and Aframax sectors, with spots rates climbing to approximately $20,000, $20,800, and $13,500 per day, respectively, aggregating approximately $9.3 million. The impact of increased revenue days in the VLCC sector accounted for $2.6 million and reflected the acquisitions of one 2015-built and five 2016-built VLCCs, which were delivered to the Company in June 2018, partially offset by the disposals of one 2000-built and one 2001-built VLCC in 2018, and 91 more drydock days in the current quarter. The balance of the increase in TCE revenues was substantially attributable to higher activity in the Company's Lightering business in the 2019 quarter compared with the second quarter of 2018, which accounted for $3.1 million in TCE revenues. Partially offsetting the TCE revenue increases was a $3.8 million decrease in TCE revenue due to a 319-day reduction in Aframax and Panamax revenue days, which was driven primarily by the sale of two 2001-built Aframaxes and a 2002-built Panamax between May and October 2018. Shipping revenues for the Crude Tankers segment were $52.1 million for the second quarter of 2019 compared to $41.2 million in the second quarter of 2018. TCE revenues for the Crude Tankers segment were $118.2 million for the first half of 2019, compared to $63.6 million for the first half of 2018. Shipping revenues for the Crude Tankers segment were $132.5 million for the first half of 2019, compared to $73.5 million in the first half of 2018.

Product Carriers

TCE revenues for the Product Tankers segment were $16.8 million for the current quarter, compared to $15.6 million in the second quarter of 2018. This increase primarily resulted from the impact of higher average daily blended rates earned by the LR1, LR2 and MR fleets, with spot rates rising to approximately $17,300, $17,700 and $11,600 per day, respectively, increasing TCE revenues by approximately $3.7 million in the aggregate compared to the second quarter of 2018. This was partially offset by the impact of a decline in revenue days in the MR sector accounting for $2.3 million arising from the net impact of (i) a 287-day decrease in MR revenue days in the current period, resulting primarily from the sales of three MRs between the second and fourth quarters of 2018, one MR during the second quarter of 2019 and the redeliveries of two MRs to their owners during the second quarter of 2018 at the expiry of their respective bareboat charters, offset by (ii) a 78-day reduction in repair days as compared to the prior second quarter of 2018. Shipping revenues for the Product Carriers segment were $16.9 million for the second quarter of 2019, compared to $15.8 million in the second quarter of 2018. TCE revenues for the Product Carriers segment were $38.3 million for the first half of 2019, compared to $35.2 million for the first half of 2018. Shipping revenues for the Product Carriers segment were $38.4 million for the first half of 2019, compared to $35.4 million for the first half of 2018.

Vessel Sales and Charters-in of Vessels

During the second quarter, the Company sold and delivered a 2004-built MR to its buyer. The Company also agreed to sell another 2004-built MR, which was delivered to its buyer in July. In May, the Company chartered-in a 2010-built Panamax for a period of six months.

Additionally, subsequent to the end of the quarter, the Company exercised an option to extend the charter-in on a 2006-built MR for an additional 6-month period expiring in February 2020; and agreed to charter-in a 2006-built Panamax for a two-year period.

Debt Prepayment

On July 31, 2019, the Company made a prepayment of $10 million on the 2017 Term Loan Facility using restricted cash set aside from the proceeds of vessel sales. This prepayment will result in a $350 thousand reduction of interest expense for the remainder of 2019 as well as a $135 thousand proportional reduction in future quarterly principal amortization payments from $6.1 million to $6.0 million and is consistent with our stated capital allocation strategy.

Full Report

Source: International Seaways, Inc.

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