International Seaways, Inc., 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.
Source: International Seaways Inc.