International Seaways, Inc. Q2 FY2025 earnings call

• Net income, adjusted net income, and adjusted EBITDA were reported for the second quarter.
• A combined dividend of $0.77 per share was announced to be paid in September, with a payout ratio of at least 75% for four consecutive quarters.
• 6 oldest vessels were sold, and a 2020-built VLCC was purchased, reducing the fleet age by half a year.
• Over $260 million in future contracted revenues on 12 vessels, with the first LR1 newbuilding set to deliver in September.
• Received secured commitments for export agency financing for LR1 newbuildings, with expected financing of up to $240 million.
• Cash bridge showed starting liquidity of $673 million, ending with over $700 million in total liquidity, and free cash flow of about $71 million for the second quarter.

Net income for the second quarter was $62 million or $1.25 per diluted share. Excluding gains on vessel sales, adjusted net income was $50 million or $1.02 per diluted share, and adjusted EBITDA was $102 million. The company sold 6 oldest vessels with an average age of 17.5 years, with 2 sold in the second quarter for $28 million and 4 in the third quarter for around $57 million. They also purchased a 2020-built scrubber-fitted VLCC. The time charter book has over $260 million in future contracted revenues on 12 vessels. The Lightering business had over $9 million in revenue in the second quarter, contributing about $2 million in EBITDA.

• Blended average spot TCE fleet-wide was about $28,000 per day at 40% of third quarter expected revenue.
• Forward spot breakeven rate was about $13,000 per day.
• Expected to generate significant free cash flows during the third quarter.

• Geopolitical tensions such as the Strait of Hormuz escalation can impact tanker rates.
• Regulatory and environmental developments may affect the tanker industry.
• Market uncertainties including price fluctuations and changes in trade patterns can impact results.

Q: Could you clarify on the 4 vessels expected to be delivered in the third quarter for $57 million, is that $57 million of net proceeds?

A: Jeff said those should be considered net proceeds as they're part of the unencumbered fleet.

Q: What impact will the recent sanctions package have on trade patterns?

A: Lois said India is taking compliant tonnage, and trading is tactical, with India taking more U.S. Gulf crude recently.

Q: Can you speak to where the benefit of OPEC+ production cuts will be for smaller tankers?

A: Derek said the cuts will benefit smaller tankers as VLCCs moving crude out of the Arabian Gulf reduce cannibalization of other routes.

Q: Do you see yourselves doing more of rolling older vessels into modern ones within specific segments?

A: Lois said they are opportunistically improving fleet profile, seeing upside on VLCCs.

Q: How will the 6 VLCCs coming off leases later be refinanced?

A: Jeff said they are evaluating options, considering using revolver and looking to tweak the balance sheet to lower breakeven.