Q4 2022 International Seaways Inc Earnings Call
Speaker 2: The.
Speaker 1: Ladies and gentlemen, welcome to the International C-Waste 4 of Quarter 222 earnings conference call. My name is Glenn and I will be demodered for the day's call. If you would like to ask a question during the presentation, you may do so by pressing star 1 on a telephone keypad. I will now hand you over to your host, James Moell or General Consul. James, please go ahead. Thank you, Chris. Thank you.
Speaker 3: without the rotation of the following.
Speaker 3: The outlook for the crude and product tanker markets and changes in trading patterns.
Speaker 3: The forecasts of world and regional economic activity end up to demand forward production of oil and other petroleum products. The effects of the ongoing conflict between Russia and Ukraine, the company's strategy.
Speaker 3: expenses, estimated bookings, TCE rights and or capital expenditures in 2023 or any other period.
Speaker 3: Projection schedule dried up in on fire days. Purchases and sales of vessels, construction of new build vessels and other investments.
Speaker 3: The company's consideration of strategic alternatives, anticipated unreasoned financing transactions, and any plans to issue dividends.
Speaker 3: The company's relationships with its stakeholders, the company's ability to achieve its financing and other objectives, and other economic, political, and regulatory developments globally. Any such forward-looking statements taken to account various assumptions made by management based on a number of factors including experience, perception of historical trends, current conditions, expected and future developments.
Speaker 3: For looking standard or subject to risk, uncertainty and assumptions many of which are beyond the company's control, which could cause an action result to differ materially from those implied or expressed by the statements.
Speaker 3: results differ from expectations, including in particular those described in our end or report on Form 10K for 2022, and then other findings that we have made or in the future may make with the US Security Exchange Commission.
Speaker 4: Now, let me turn the call over to our president and chief executive officer, Ms. Lois Abra. Lois? Thank you very much, James. Good morning, everyone. Thank you for joining International Seaways' Erniez Call for the fourth quarter and full year of 2022. We're going to start out on page four.
Speaker 4: Today, international seaways have reported our highest earnings in our history. Net income for the fourth quarter was $218 million.
Speaker 4: $4.40 per share.
Speaker 4: And $388 million are close to $8 per share in the full year of 2022.
Speaker 4: As a result, and building upon our solid track record, a returning cash to shareholders.
Speaker 4: We have declared a combined dividend of $2 per share. We are continuing our disciplined capital allocation strategy.
Speaker 4: We have a demonstrated history of investing at low points in the cycle. Defoe assets on our books.
Speaker 4: industry of investing at low points in the cycle. That's all assets on our books are at less than $2 billion.
Speaker 4: that are today with over $3 billion. With $1 billion in debt and cash of nearly $325 million, our net loan to value is currently under 24%. In March, we will take delivery of our first dual fuel VLCC, the Sea Ways Endeavour, which, along with our two sisters ship,
Speaker 4: expected to deliver in the first half of 2023. We'll commence long-term time charters to show.
Speaker 4: These shifts are fully funded, creating another $172 million of debt in aggregate.
Speaker 4: We sold a 2008 built MR in the fourth quarter and we're delivering another to reliable buyers in the first quarter.
Speaker 4: This saves us about $4 million each from their 2023 dry docking and ballast water treatment installation. We will allocate the estimated $28 million in combined net proceeds from these two vessel sales towards the $41 million net cash cost for two affirmatives.
Speaker 4: where we have exercised glow market purchase options. These afferme access will not be further encumbered.
Speaker 4: We announced today unanimous commitment from the syndicate of our largest senior secured facility to amend terms to repay $100 million of the outstanding term loan and increase the revolver capacity to over $250 million.
Speaker 4: The amendment will also release 22 vessels from the collateral package. These 22 ships combined with the two aforementioned affirmaxes and three LRs released as results of repainting our required loan facility in the fourth quarter. The amendment will also release 22 vessels from the collateral package.
Speaker 4: positions keyway with one third of our fleet unencumbered.
Speaker 4: Highlights and recent development.
Speaker 4: Highlights and recent development. Slide five.
Speaker 4: The hottest topic in tankers today is what's happening with Russian oil exports.
Speaker 4: The hottest topic in tankers today is what's happening with Russian oil exports. The chart on the left.
Speaker 4: shows that while crude oil exports from Russia have been fairly consistent within a range over the last few years.
Speaker 4: Russian oil that was going to Europe is now traveling longer distances to Asia, primarily India and China.
Speaker 4: and absorbing crude tonnage for longer periods of time. On the right hand chart, our data reflected here through January 2023.
Speaker 4: shows that self-sanctioning has been limited on oil products. As much of Russian oil was still heading into the EU in the months leading up to the sanctions that were implemented on February 5th.
Speaker 4: We expect that the product sanctions will create displacement. It's early days and we have limited data set.
Speaker 4: However, the changes in trade flows are anticipated to be a positive for the busy product tanker market.
Speaker 4: Journey to Slide 6. We updated our standard set of bullets on tanker-demand drivers. With the subtle green up arrow next to the bullets represented as good for tankers, the black dash representing mutual impact.
Speaker 4: and the red down arrows, meaning the factor is not positive for tanker demand. Pulling some highlights. In total, oil demand is expected to grow about 2% in 2023, a good portion of which is attributable to Chinese demand reopening after relaxing the zero COVID policies that had been applied.
Speaker 4: We saw increased travel at the beginning of the year for the New Year's holiday, and this has continued with higher congestion in major Chinese cities.
Speaker 4: If you look at the chart in the lower left hand corner, Chinese demand should increase nearly 5% or almost 700,000 barrels per day in 2023. This is especially important for the crude tanker market where Chinese import about 10 million barrels per day.
Speaker 4: It's also very helpful for the product carrier market as China has increased its product export quota
Speaker 4: Crude oil production is expected to increase primarily from the Americas.
Speaker 4: by around 1 million barrels per day. While OPEC announced their production cuts in 2022 using your reference point at peak production levels, there have been some noticeable cuts from Saudi, Iraq, and the UAE that have been offset by some of the countries that do not have limits such as Libya.
Speaker 4: where production has now resumed a more consistent level. The last key point that I'd like to bring up on this page is the inventory level. On the bottom right hand chart, slide six, you can see that we have separated the OECD crewed and product inventories which have grown recently to above their averages from 10 years ago.
Speaker 4: We expect that some of the bills has been ahead of the sanctions on Russian oil and natural abs and flows around the regional oil demand, refinery turnaround schedule, and other geopolitical
Speaker 4: These charts are commercial inventories only, and they do exclude the OECD strategic reserves, which as we know are a historic vote.
Speaker 4: On slide 7, we updated our tanker supplies statistics as we see them developing. Tanker supply remains constrained due to a lack of order and a rapidly aging fleet.
Speaker 4: Yards are busy with other shipping sectors, keeping new build prices high and limiting economic decisions on ordering.
Speaker 4: The industry is expected to face more environmental regulations ahead for their limiting conventionally-keeled new buildings for tankers.
Speaker 4: Alternative fuels for propulsion are still in the first generation in the tanker space, and we're likely to see more opportunistic partnering with sponsors along the supply chain.
Speaker 4: The world-wide oil tanker fleet age is now about 12 years old, with more than one-third of the fleet about 15 years old.
Speaker 4: As we show in the charts below for the crude and product sectors, that's over 20 years old are not going to be replaced in the coming years based on the order book we have today.
Speaker 4: The charts reflect the millions of deadweight tongues that are either 20 years old today or will be in the given years aligned with the millions of deadweight tongues that are scheduled during those years or delivery. On the crude side, there is a more complete mismatch and girth of orders. While on the product side, we have seen some MR and LR2s.
Speaker 4: in recent months. The supply outlook for tankers in the near-term is incredibly positive, combined with higher oil demand.
Speaker 4: Low inventories and disrupted trade flows, the overall outlook for tankers remained strong.
Speaker 4: Barring global economic slowdown. At international seaways, we are well positioned to capture the strong rate environment with our operational leverage from our diversified fleet of 77 tankers in both crude and product.
Speaker 4: With our healthy balance sheet and our liquidity, we expect to continue our balanced capital allocation strategy.
Speaker 4: Investing in the fleet opportunistically, reducing our debt, and very importantly, returning cash to shareholders.
Speaker 4: I will now turn it over to our CFO , Jeff Prebord, to provide the financial review. Jeff?
Speaker 5: Thanks, folks, and good morning, everyone. Let's go straight to reviewing our record earnings in greater detail.
Speaker 5: We turned this slide 9. Adjusted net income for the full year 2022 reflected in the upper left hand chart was $380 million, which he clips is our next highest earnings from 2020 on the adjusted basis. We provided in the appendage reconciliation from reported net income to adjusted net income. We provided in the upper left hand chart was $380 million, which he clips is our next highest earnings from 2020 on the adjusted basis.
Speaker 5: But, it's largely the major non-vacuring item such as change your loss of the mental sales, right off of deferred financing costs and the care.
Speaker 5: Generally, on the upper right chart, adjusted EBITDA, which will lose the diamonds as well, for the full year 2022 with nearly 550 million dollars. These results clearly show the significant operating levels of our 77 vessels.
Speaker 5: At the bottom of the page you can see our TCE revenues by segment along with our spot earnings
Speaker 5: Before year 2022, TC revenues were $854 million. And you can really see the tremendous contribution of private makers to that record. So highlighting again the benefits of the time S. First.
Speaker 5: Overall, spot earnings get all of our asset class in the Parts and BLCCs with highest and highest expected charge. Not only are earnings per day higher, but we have significantly more assets in each class that we had in prior years due to the successful execution of our capital allocation strategy.
Speaker 5: renewing the fleet at the bottom of the cycle. Side 10 reflects our historical earnings sequentially over the last five quarters.
Speaker 5: In Q4, adjusted net income nearly doubled over the previous record bubble from Q3 at over $200 million. Adjusted EBITDAQ in a minute, $254 million for the quarter, which was higher than any prior full year history.
Speaker 5: Regarding expenses during our QSR20022 earnings call, we advise that that's what expenses would be approximately $57 million, which is at the high end of the range for Q4 2022. Actual, that's expected for the Q4 to work approximately $62 million.
Speaker 5: The $5 million increases primarily due to timing of stores and spares on board and higher repairs and maintenance Opera just we perform during items Total G&A was approximately 13.5 million during the fourth quarter of the cartoon because about Too many higher than expected due to timing of certain projects
Speaker 5: and cost for other shareholder matters. All remaining spent to sell within the guidance previously. Now turning to our cash bridge on slide 11.
Speaker 5: We finished the third quarter with $254 million cash and $250 dollars for all the best. Following the chart then from left to right, the cash bridge, we add $254 million in just to see the chance of fourth quarter.
Speaker 5: plus $58 million in debt service, which is composed of scheduled debt repayments, cash interest expense, less our guard on-concafax of $16 million in quarter, and it would be capable of a huge of cash of $51.
Speaker 5: which gets us to free cash flow about $135.4. Continuing on, we sold one 2008.MR for net proceeds of $14 million and a minor reduction of $3 million in our revolving capacity. Related to that. During the fourth quarter, we repaid our highest margin credit facility.
Speaker 5: the inquiry loan from about $18 million, which had the effect on the complaint to the
Speaker 5: And lastly, I'm now serving our last 30th call in a fourth-query paid $1 at $12.00 given that $1.00 supplemental 12-sets break a nine-to-prox 55-year-old in the process. These can part us, let it, then lead us to the ending liquidity you see on the right of over 550 points.
Speaker 5: $324 cash and short-term investments plus $270, $5,000 on-front fall and fall. Now moving to slide 12, we talk about a value sheet. We continue to answer already strong value sheet in 2022. Cash increased dramatically from the prior year at going from 98 to 324 minutes. That holds on the books, stand at approximately 1.9 million at the end of 2022 similar to the prior year, but far less than the current market value of all the three-day products that flow. That also goes much and that low to value is under 24% and that total cash is approximately 33%.
Speaker 5: One last point I'd like to make on balance sheet is the accounting treatment of the two apple factors for which we exercise our purchase options for quarter delivery of those vessels in fact Russian Q1 2002. The accounting treatment for these vessels up to the date of the exercise of the options was grandfathered under previous accounting rules as property bases or right-of-use assets.
Speaker 5: The corresponding liability was the bareboat rate to Rexbury. On the date of the exercise options, they on the asset side, these rate to financial means, right, these assets for about $44 million to see and your balance sheet and a corresponding current portion.
Speaker 5: illustration frame of the
Speaker 5: that's 22. Sorry, it's a little granular, but just important for the bi-wing that after delivery, a payment of approximately $41 million to be in the first quarter of 2023, the accounting changes again, these two that I suppose will move from right of use assets to the vessels line and add amount that we're paying for. And it was on the books, a 44, 45% discount approach to curb market value. There will be no corresponding debt for the two more vessels added to our fund coming through.
Speaker 5: So now, starting to slide 13, last slide that I'll cover, for turning back to lowest, flex our forward looking guidance, and booked to date, TCE's, along with cash break even better. Starting with the TCE pictures from the first quarter of 23, I'll remind you as I always do that the TCE's we ask for the report through our next earnings call.
Speaker 5: It will be different one way or another. However, the important point is that the marketing team is the strong and the first quarter London advocacy team on $44,000 to $45,000 per day. I'm fighting them on the various classes as you can see. This said well to the right side of the slide, we can see our cash break even. We can show pro format for the additional debt profile from both our new building program and the proposed amendment to our 750 people need to operate at the show. As Lois mentioned, we expect all the dual fuel BLCCs to deliver it in the first half of the year.
Speaker 5: They're fully financed and they're adding approximately $172 million of both assets and debt. The excess is scheduled to be on time charter, therefore increasing the break even from fixed In connection with the commitment for a match to amend the $750 million credit facility, we expect to make.
Speaker 5: You pay nearly $100 million cash for tape. In turn, the capacity of our revolving credit facility will be by approximately $40 million therefore that reduction of the amount of $60 million total.
Speaker 5: The scheduled debt repayment of this facility going forward for your final date will be approximately $28 million for quarter down to $31 million dollars. And we also expect three and other 22,000 for the collateral package, which along with the exercise of purchase option, two FMACs and a favor for the glory loan in the before, each will have a total of 27 vessels out of cover during the last six months. The net impact of the amendment expected to reduce our cash breakage by about $600 a day down to $17,500 a day. And this figure would actually be...
Speaker 5: even lower by about 350 dollars back for the interest income, which is our 100% on cash and toward terms. But you compared this pro-former, even pro-former break even to our fixtures today, it certainly looks like the first quarter the shape of the up to generate strong free cash. On the bottom left hand chart, we up to provide updated guidance for expenses in 2021 and all of 2023 and we will continuously update them to here. The increase in the pandemic are quarterly expected off-wire and catacletics for 2020.
Speaker 5: No need to go to the line by line, but I encourage you to use that from my purposes and call for that question. That concludes my remarks. I now would turn the call back to lowest for a closing comment. All right.
Speaker 4: On slide 14, we provide you with C-Way's investment highlights, which I encourage you to read in its entirety, summarizing briefly, international C-Way in our history as a public company has grown a proven track record of building value without sacrificing the balance sheet.
Speaker 4: Well, goods do it the capital, balancing our consistent returns to shareholders with future forward fleet growth and healthy financial metrics. We have a focus and flexible operating model that has allowed us to expand and contract at appropriate moments in the cycle under a disciplined approach.
Speaker 4: The company is positioned today with significant operating leverage to capitalize in what we expect to be a robust tanker cycle over the next few years. Regional imbalances of oil are expected to continue and to grow in distance from sources to consumer. Creating she-born demand.
Speaker 4: while a supply of vessels remain limited and likely to shrink as vessels age and eventually are removed from the commercial trading fleet. We're staying in front of the growing ESG mandate, investing in the fleet to reduce our carbon footprint, keeping our seafarers safe and building a corporate culture of diversity with appropriate checks and balances.
Speaker 4: And we're willing to back this message up with transparent ESG reporting and sustainability links incentives in our debt portfolio. We strive to continue to evolve these principles and to provide a meaningful platform for all of our stakeholders. Thank you very much. And with that said, Glenn, we'd like to open it up for questions.
Speaker 1: Thank you. Ladies and gentlemen, if you would like to ask any question, please press star, follow by one on your telephone keypad now. When preparing to ask your question, please ensure your phone is a muted locally.
Speaker 1: With our first question comes from Chris Robertson from Deutsche Bahn. Chris, the light is now open. Thank you operator, good morning, Lowe, I think Jeff, how are you?
Speaker 1: With our first question comes from Chris Robertson from Deutsche Bahn. Chris, the life now open. Thank you operator, good morning, Loweis and Jeff, how are you? Good, thank you, good morning.
Speaker 6: Yes, Lois, you mentioned the potential for having partners or sponsors, I guess, for new buildings in the future, not just as it relates to C-Ways but also others as well. So as you think about the future of the tanker market here, do you think that the new building order future is going to happen when ships are being de-risk to some degree with these medium to long-term time charters? And I guess the...
Speaker 6: The point of my question is that I'm trying to figure out how will the next ordering cycle be different compared to the 2007-2008 periods? Yeah, no. I think that we have, you know, the industry has an opportunity and, you know, trying to work more closely with customers so that...
Speaker 4: Together we can decarbonize and de-risk some of the new technology that's on the horizon. I do think there will be some conventional orders place, but I think there will be many owners like ourselves that are going to be very reluctant to order a conventional engine in the market today.
Speaker 6: Okay, yeah, that makes a lot of sense. Jeff, this might be a question for you, but I guess going over to the dividend, which looks like the shares are up today, the market's responding well to that announcement. But as I know you guys don't have a formula driven approach, but looking at the combined dividend here, roughly 45% of adjusted that income.
Speaker 6: When thinking about it, are you coming at that from the perspective of looking at adjusting that income or are you assessing it based on free cash flow after debt repayment? And is there a minimum cash balance that you're trying to target in order to hold back enough cash to fund potential growth in the future and how do you think about balancing all that? Chris, what if I just said yes? I know, not anything yes. So you hit the point. We do always look at
Speaker 5: in Q4 based on Q3 results, it's in the neighborhood of just a little bit, a percent of income and 75 percent of pre-cash plus, which is laid out there for you. So I think it's a pretty consistent allocation of the combined supplemental and regular dividend.
Speaker 5: So we kind of look at everything and it's up to the board based on recommendations from management, but that's how we're looking at. I hope that's clear. All right. Yeah, it's very clear. I'll turn it over. Thank you.
Thanks guys.
Thanks, Chris. Thank you. Thank you, Chris.
Next question comes from Omar Lukta from Jeffries. Omar, you're nice and open. Thank you. Hey guys, good morning. Congrats on a obviously another record result.
Morning, lowest yet. So between the BLCC, the mid-sized crude business, and your MRs, I think you've got all your bases covered here in this market. I wanted to ask maybe just about the fleet and how it is now. You sold an MR here recently, followed another one back in the fourth quarter.
If I heard you correctly, low, it's you're going to take the proceeds from those two sales and use those to exercise the option on the afras. What are you thinking? Yeah, so what are you thinking kind of going forward with the fleet as it is? You clearly have got the critical math across the main segments. But do you look to sell more ships here, more of the older ones in the MR fleet? Are you looking to replace sales with acquisitions? How are you thinking about that big picture learning? No, absolutely, Omar. So thank you for giving me that opportunity.
You know, these 3D LCCs that we're going to take in the first half of the year and then combine with those two Affirmaxes, brings on to our balance sheet $500 million worth of assets at today's market level. So that represents a couple of years of depreciation, amortization, and cap-axe. So that's a nice...
And we are earning a lot of money on them, and you make a lot of money when you sell them. So we're just, you know, we're really being very prudent and just doing that very judiciously, not in a big movement. So I guess that's how I would respond to that. You know, at present, you know, every one of the ships that's on the wall.
notice here of the past maybe a year is, you know, at least on the bigger shifts that go into dry dock. Looking to install scrubbers, not a substantial amount, but either a few companies that are doing one or two here or there. How are you thinking about that? I know you, I think just looking at the grid at the end of your appendix, you've got a few ships going into dry dock. Any interest in just taking maybe a flyer on a handful of scrubbers when those go in.
So, you know, of course, our 10 DLCCs that are on the water, have scrubbers. We have two of our Suez Maxis that have scrubbers. One of those scrubbers we put on last year.
And it is providing a good return. We don't, you know, we like to target the largest vessels. That's where you're going to get your biggest alpha from. We don't have any of the two S-Mex is going into dock this year, but we're constantly, that's a...
arguments that I have with Bill all the time we go back and forth on, you know, whether or not we would put in more at this juncture. But definitely the scrubber investment that we've done, we're very happy with that. Yeah, definitely. All right, Lois, we'll thank you. I'll do one more if you don't mind. Just as you know, the VLCC New Building. Yeah, so those VLCCs that come on here in the next several months.
You know, the obviously bought those at the absolute right time if we look back at the price level and yet even though they're on time charter, they do have the profit share component if I remember correctly. How should we... Can't remember exactly. How should we think about the profit share? Should we just simply assume that 50% of the upside above like prevailing market spot rate averages, is there an LNG price component to that? How should we just model those profit shares? You know...
Basically, I don't think we've ever gone out with what the actual base was, but you can assume that the base has a three in front of it, but not a lot more. And then just run a calculation on the monthly TD3, which is AGE, and 50% above that run on, run on low-fall for bunkers will come to the owner and half will go to Shell.
Okay. Is there a clap? There is no clap. Sorry. I'll turn it over. Thank you. Thanks so much. Thank you.
Okay, and is there a clap? No. There is no clap, sorry. Thank you. All right, I'll turn it over. Thank you. Thanks, Omar. Thank you, Alma.
The next question comes from Ben Norton from Stangful. Back your life now open. Thank you, HF loss. You guys, once again, crushed it on the LR1s or Pam Access. That's a pretty nice sweet spot for you. But I did notice in the appendix that I think three of the charter and vessels are coming up for renewal. How should we think about your position there? Obviously it costs more to charter and vessels today. You'd be taking a long position, but you make a lot of money. I simply put, should we model in that you'll continue to be chartering and vessels for the LR1 trade?
We're working on it, but I almost would not have modeled and falling off and then let us surprise you when we manage to secure some renewal. It's a frothy market out there, Ben. But we're working. I'm sure it is. Okay. Well, it did extend that it's a frothy market. I mean, do you put any of your other assets on longer trial? You know, you have a handful, but you know, take advantage of the froth in the other direction. Okay.
Yes, no, absolutely. And as the market has increased, you know, the team is starting to, you know, layer that in. Q1, we put out, you know, one, two as max for a couple of years, you know, and it's just building on itself. So, yes, we will. We don't have a huge target somewhere between, you know, 10, 15 percent at the moment that we would look to put on time chart. Thank you very much. Fine. Let's do it.
Okay. And then lastly for me, sort of in keeping with the chartering aspect of things, on again, I think it was page 21 of the presentation. There was a note about chartering and the work votes for the lightering. Just curious, maybe think a little bit about the sort of where, how you think about the lightering business. It's always been this little sort of quiet add on. Where does that fit into the profile for you guys going forward? Well, you know,
Basically, the lightering is a very low cost base. It takes a small amount of capital. And it's essentially a very high-touch business, so it keeps us very close to customers. And they really outdid themselves to the upside in 2022. Now, a piece of that, the SBR released a tremendous amount of barrels. And that also created a lot of activity.
You know, when we're looking at the lightering and we see, okay, how does that fit into everything? In Q1, you know, if you were to put a million and a half of EBITDA on Q1 for lightering and try to, you know, keep that steady, that could be a potential plug number. I think trying to build it up from the workboats is really very fraught because the lightering business is, you know, responds to the tanker market as well, right? So when you have a tremendous amount of, you know, exports imports, you know, and not only US Gulf, but in Panaman, the US West Coast, it's really been a little gem for international seaways and it's a team that's really pulling more than their weight. But that would be...
potential impact for what that has on the fleet. Any thoughts you can share with us about vessel efficiency as really EXXI kind of flows through the crew tanker fleet? Yeah, absolutely. In fact, I'm going to, Greg, I'm going to.
throw that one to Phil Nugent, who is the head of our technical department. Hi, how are you today? I'm doing great. It's EEXI. Great. EEXI is really interesting. It is a one-time measure, right? So all ships are measured this year against that benchmark and have to implement, most ships have to implement some sort of power limitation on the engine.
And I could say for our fleet, the impact of that on current trading speeds and profiles, minor if nonexistent. So it's something we have to do. It's a good thing to do. It's going to affect other shipping segments more than it's going to impact tankers. And I could say for our fleet, the impact of that on current trading speed.
efficiency, which goes every dollar we spend on trying to save a fuel goes right back to the bottom line in terms of fuel costs and everything else that comes back. That's been ongoing focus for us for a long time. That really carries forward in the form of the CII measures, which is our carbon intensity.
measures and I think we're in a good place for that. We're working closely with our commercial partners. We're working with our technical partners to make sure that every day we're focused on all the little bits that add up to that ton of fuel that gets saved and the three tons of emissions that get saved as a result of that. I hope that answered your question.
Yeah, absolutely. Great. And then, and then, Lewis, I did want to talk, you know, follow up on Ben's question around the chartered-in vessels in your, you know, your West Coast Panamax trade. In the event, in the event, in the event INSW does not opt the charter in those vessels. Those vessels, then, just given that relationship with one of the flow-pack, they-they-they-
to grow that tool in particular per se. However, there are many baffles, you know, Panamaxes and Afermaxes that trade on the west coast and and let's car goes in and out of Ecuador. So it's an open trade that's for sure, you know, if you know some of our charterins are for some European based owners. So
those vessels, you know, may trade here, but they were also trading clean before we chartered them in. So, you know, there's a real...
strengths in LR1s right now and that's whether they're being traded clean or dirty with a lot of opportunity. In particular, I've mentioned before, United States was importing 600,000 barrels a day from Russia. A lot of that was heavy, VGO fuel that was going into the refineries. So that's really helped keep not only the afferers in the Suez-Mexes very strong, but the Panamaxes as well. Okay, and then just following up on that, I know in the past we've talked, but there's always that.
ahead. I mean, are we kind of agnostic, you know, maybe you...
whether we're going to, you know, for that trade, whether we decide to charter in or buy? Yes, agnostic. Yes. Just look for the opportunity. Yeah. Okay, great. Thank you for the questions. Thank you for the answers.
whether we're going to, for that trade, whether we decide to charter in or buy. Yes, agnostic. Yes. Just look to the opportunity. Okay, great. Thank you for the question. Thank you for the answers. No, thank you, Greg.
Thank you, Greg. As a reminder, ladies and gentlemen, if you would like to ask any further questions, please press star for about one month ahead on keypad now. The next question comes from Ian Bird from Realey. Ian, your life is now open. Thank you. Good morning, Lowes. Good morning, Jeff.
Thank you, Van. Look, most serious interest as some of these vessels or classes start getting frothy rates to start time-shortening certain ones out, or do you like prefer to write them into the spot market? Well, you know, we love having that spot market presence at the moment, obviously.
We will opportunistically look to lay in some of these time charters. Remembering that the 3Ds that are coming into the fleet, yes, they have a profit share, but they do have a base time charter rate, so we sort of put those in the time charter bucket. And then we look to add some other vessel classes into that, some MRs, potentially some Suez-Maxes.
That's sort of our approach at the moment. And I was saying, probably 10 to 15%. We would look to put on, one-year time charter doesn't really do a lot at the moment. Maybe multi-year time charter is provided we can get enough alpha in that to make that look very good on our balance sheet. Great. Thank you. And Jeff, on the variable component of the dividend, I mean, he's not to share with us, but do you?
Do you have any percentage of cash flow that you allocate to that variable dividend or how do you think about that internally? Yeah, yeah, hi Liam. So so we'll stick with the terminology of a regular dividend with a supplemental dividend quarter by quarter as
board sees fit for a combined total. And what we point out from our presentation is that we had free cash flow of about $130 million. That's in that cash bridge in the deck. And if you look at the combined evident, it's just a right around 75% of that. So it's a substantial portion of free cash.
way as well. But I think maybe look at the three cash flow. That's a good guide to what we've done last year. Great. Thank you, Lois. Thank you, Jeff.
Thank you, Lynn. Thank you, Lynn.
We have no further questions on the line. I will now hand back to Louis for closing remarks. Thank you very much, Glenn. Thank you, everyone, for your interest in international seaways, the Taker Company for today and tomorrow. Thank you very much.
Thank you, Ladies and gentlemen. This concludes today's call. Thank you for toring and how disconnect your lines?