Q1 2024 International Seaways Inc Earnings Call
Jennifer: Good morning. Thank you for attending today's International Seaways first quarter 2024 results call. My name is Jennifer, and I'll be your moderator today. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. If you'd like to ask a question, press star one on your telephone keypad. I would now like to turn the conference over to CAO and General Counsel James Small. James, please proceed.
Good morning.
For attending today's international Seaways first quarter 'twenty 'twenty four results call. My name is Jennifer and I'll be your moderator today, all lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end if you'd like to ask a question press star one on your telephone keypad.
Jennifer: I would now like to turn the conference over to C E O and General Counsel James small James. Please proceed.
James D. Small: Thank you Jeff.
James D. Small: Thank you, Jennifer. Good morning, everyone, and welcome to International Seaways' earnings call for the first quarter of 2024. Before we begin, I would like to start off by advising everyone on the call today of the following. During this call, management may make forward-looking statements regarding the company or the industry in which it operates. Those statements may address, without limitation, the following topics: Outlooks for the Crude and Product Tanker Markets and Changes in Trading Patterns, forecasts of world and regional economic activity and of the demand for and production of oil and other petroleum products, the effects of ongoing and threatened conflicts around the globe, the company's strategy, and our business prospects.
James D. Small: Good morning, everyone and welcome to International Seaways earnings call of the first quarter of 2024.
James D. Small: Expectations regarding revenues and expenses, including vessel, charter hire, and G&A expenses. Estimated bookings, TCE rates, and or capital expenditures for periods during 2024 or in any other period, projected scheduled dry dock and off-hire days. Purchases and Sales of Vessels, Construction of New Build Vessels, and Other Investments
James D. Small: Before we begin I would like to start off by advising everyone with us on the call today.
James D. Small: Right.
James D. Small: Company's Consideration of Strategic Alternatives, anticipated and recent financing transactions and any plans to issue dividends, 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 take into account various assumptions made by management based on a number of factors, including management's experience and perception of historical trends, current conditions, expected and future developments, and other factors that management believes are appropriate to consider in the circumstances.
James D. Small: During this call management may make forward looking statements regarding the company or the industry in which it operates these statements may address without limitation the following topics.
James D. Small: Outlooks for the crude and product tanker markets and changes in trading patterns.
James D. Small: Forecasts of World and regional economic activity and of the <unk>.
James D. Small: Demand for and production of oil and other petroleum products.
James D. Small: The effects of ongoing and threatened what's around the globe.
James D. Small: The company's strategy or business prospects.
James D. Small: Expectations regarding revenues and expenses, including vessel charter hire and G&A expenses.
James D. Small: Estimated bookings TCE rates and or capital expenditures for periods during 2024 or in any other period.
James D. Small: Projected scheduled dry dock and off hire days.
James D. Small: Purchases and sales of vessels constructive newbuild vessels and other investments.
James D. Small: The company's consideration of strategic alternatives.
James D. Small: Anticipated and recent financing transactions and any plans to issue dividends.
James D. Small: The company's relationships with its stakeholders.
James D. Small: The company's ability to achieve its financing and other objectives.
James D. Small: And other economic political and regulatory developments blah blah.
James D. Small: Any such forward looking statements take into account various assumptions made by management based on a number of factors, including management's experience and perception of historical trends current conditions expected future developments and other factors that management believes are appropriate to consider in the circumstances.
James D. Small: Forward-looking statements are subject to risks, uncertainties, and assumptions, many of which are beyond the company's control, which could cause actual results to differ materially from those implied or expressed by the statement. Factors, risks, and uncertainties that could cause International Seaways' actual results to differ from expectations include those described in our annual report on Form 10-K for 2023. Our report on Form 10-Q for the first quarter of 2024 and in other filings that we have made or may in the future make with the U.S. Securities Exchange. Now, let me turn the call over to our President and Chief Executive Officer, Ms. Lois Zabrocky. Lois? Thank you very much.
James D. Small: Forward looking statements are subject to risks uncertainties and assumptions many of which are beyond the company's control, which could cause actual results to differ materially from those implied or expressed by those statements.
Lois K. Zabrocky: Factors risks and uncertainties that could cause international seaways actual results to differ from expectations.
Lois K. Zabrocky: Those described in our annual report on Form 10-K for 2023.
Lois K. Zabrocky: Our report on Form 10-Q for the first quarter of 2024.
Lois K. Zabrocky: And in other filings that we have made or the future may make with the U S Securities and Exchange Commission.
Lois K. Zabrocky: Now, let me turn the call over to our President and Chief Executive Officer. This lowest the lowest thank you very much.
Lois K. Zabrocky: Thank you very much, James. Good morning, everyone.
Lois K. Zabrocky: Thank you for joining Seaways on its Earnings Call for the first quarter of 2024. You can find our presentation on our website in the Investor Relations section, starting on slide four. Our results for the first quarter represent our eighth consecutive quarter of strong earnings. Net income was $145 million, or $2.92 per diluted share.
Lois K. Zabrocky: Good morning, everyone.
Lois K. Zabrocky: You for joining <unk> earnings call first quarter of 2024.
Lois K. Zabrocky: You can find our presentation on our website in the Investor Relations section.
Lois K. Zabrocky: Starting on slide four.
Lois K. Zabrocky: Our results for the first quarter represent our eighth consecutive quarter of strong earnings.
Lois K. Zabrocky: Net income was $145 million to.
Lois K. Zabrocky: $2.92 per diluted share.
Lois K. Zabrocky: This quarter came in higher than our prior two quarters. Adjusted EBITDA was over $190 million. On the upper right-hand slide, we highlight enhancements that we have made to our already strong balance sheet. At the end of the first quarter, we had $626 million in total liquidity, including 411 million of undrawn revolvers. Now, we have consolidated our terminals and converted them into more revolver capacity. In the execution of this facility, we have saved about $80 million per year in mandatory training, for about $3,000 per day across our SWAT fleet. For some perspective on how seaways have evolved or balanced, Two years ago, in 2022, we had mandatory debt repayment of $180 million. Now, for the next 12 months, our mandatory payments are under $50,000.
Lois K. Zabrocky: This quarter came in higher than our prior two quarters.
Lois K. Zabrocky: Adjusted EBITDA was over $190 million.
Lois K. Zabrocky: On the upper right hand, slide we highlight Hansen.
Lois K. Zabrocky: We have made to our already strong balance sheet.
Lois K. Zabrocky: At the end of the first quarter.
Lois K. Zabrocky: We had $626 million in total liquidity.
Lois K. Zabrocky: Including 411.
Lois K. Zabrocky: Dry bulk.
Lois K. Zabrocky: Now we have consolidated our term loan and converted them into more revolver capacity.
Lois K. Zabrocky: And the execution of this facility, we have see about $80 million per year and mandatory payments.
Lois K. Zabrocky: <unk> $3000 per day across our spot fleet.
Lois K. Zabrocky: For some perspective on how seaway have evolved our balance sheet.
Lois K. Zabrocky: Two years ago in 2022, we had mandatory debt repayments of $180 million.
Lois K. Zabrocky: Now for the forward 12 months, our mandatory payments are under $50 million.
Lois K. Zabrocky: This is tremendous work by Jeff and his finance team, along with our valued relationship with our bank. This gives us extensive flexibility embedded in the balance. As a result of these efforts, our spot vessels need to earn $13,600 per day to break even. With 52% of our spot days booked in the second quarter, it looks like we will generate a significant amount of free cash flow again in the second quarter. We now have $559 million in undrawn revolver capacity, putting Seaways in a position to respond to market upsets. On the lower left-hand slide.
Speaker Change: This is tremendous work by Jeff and his finance team along with our valued relationships with our bank.
Lois K. Zabrocky: This gives us extensive flexibility embedded in the balance sheet.
Lois K. Zabrocky: As a result of these efforts our spot vessels need to earn $13600 per day to breakeven.
Lois K. Zabrocky: With 52% of our spot be booked in the second quarter. It looks like we will generate a significant amount of free cash flow again in the second quarter.
Lois K. Zabrocky: We now have $559 million in Undrawn revolver capacity.
Lois K. Zabrocky: Putting seaways in a position to respond to market opportunities.
Lois K. Zabrocky: On the lower left hand slide.
Lois K. Zabrocky: We give details on our fleet upgrading projects. In the last couple of weeks, we have taken delivery of three of six EcoMRs that we purchased in February. The remaining ships will be delivered before the end of May. The six vessels are under contract for $232 million in equity. We also declared our options for an additional tool to Dual Fuel Ready, LR1, expected to deliver in the third quarter of 2026. Overall, our program of building six LR1s has the first two deliveries in the second half of next year.
Lois K. Zabrocky: Hey, good detail on our fleet upgrading progress.
Lois K. Zabrocky: And the last couple of weeks, we have taken delivery of three of six eco MRI that we purchased in February.
Lois K. Zabrocky: <unk> ships delivered before the end of May.
Lois K. Zabrocky: The six vessels are under contract for $232 million.
Lois K. Zabrocky: We also declared our options for an additional tool to dual fuel ready LR, one expected to deliver in the third quarter of 2026.
Lois K. Zabrocky: Overall, our program of building six older ones.
Lois K. Zabrocky: Has the first two deliveries in the second half of next year.
Lois K. Zabrocky: The lower right-hand slide outlines our continued return to shareholders, our strong earnings, and our strong balance sheets, which allow us to return a substantial portion of our net income to our shareholders. Today, we declare a combined dividend of $1.75 per share.
Lois K. Zabrocky: The lower right hand, slide outlines our continued return to shareholders.
Lois K. Zabrocky: Our strong earnings and our strong balance sheet allow.
Lois K. Zabrocky: Allow us to return a substantial portion of our net income to our shareholders.
Lois K. Zabrocky: Today, we declared a combined dividend of $1 75 per share.
Lois K. Zabrocky: This represents 60% of our adjusted net income and another quarter of a double-digit yield for our shareholders. Over the last 12 months, we have returned an actualized greater than 13% Here at Seaways, we are focused on a balanced approach to capital allocation. This continues to create value for the company and our shareholders. We utilize the cash we're generating in this upcycle to strengthen our balance sheet and put us in position for the next opportunity.
Lois K. Zabrocky: This represents 60% of our adjusted net income.
Lois K. Zabrocky: And another quarter of double digit yield for our shareholders.
Lois K. Zabrocky: Over the last 12 months.
Lois K. Zabrocky: We have returned and actualized greater than 13% return.
Lois K. Zabrocky: Here at Seaways, we're focused on a balanced approach to capital allocation.
Lois K. Zabrocky: This continues to create value for the company and our shareholders.
Lois K. Zabrocky: We utilize the cash we're generating in this up cycle to strengthen our balance sheet and put us in position for the next opportunity.
Lois K. Zabrocky: We're now renewing our fleet by acquiring these six more modern eco-MRs. We are building vessels for our niche premium LR1 trade, and we are selling some older... These older MRs have more than paid for themselves since acquiring them. In 2021, we were able to execute each of these facets while still remaining double-digit yield to our shareholders.
Lois K. Zabrocky: We are now renewing our fleet by acquiring Mi six more modern eco M.
Lois K. Zabrocky: We are building vessels for our niche premium LR one tree.
Lois K. Zabrocky: And we are selling some older vessels.
Lois K. Zabrocky: These older Mr's have more than paid for themselves since acquiring them in.
Lois K. Zabrocky: In 2021.
Lois K. Zabrocky: We're able to execute each of these assets, while still remaining just double digit yield to our shareholders.
Lois K. Zabrocky: On slide 5, we've updated our standard set of bullets on tanker demand drives with the positive green up arrows, neutral black dashes, and red arrows for the negative tanker effect. Touching on the highlights, oil demand continues to grow with estimates of growth averaging around one and a half percent for this year of 2024 year over year, with similar projections for 2025. This represents an above average demand growth level, specifically for sea
Lois K. Zabrocky: On slide five we've updated our standard set of books on tanker demand drivers with a positive green arrows neutral black dash and red arrows for negative tanker factors.
Lois K. Zabrocky: Touching on the highlights.
Lois K. Zabrocky: Oil demand continues to grow with estimates of growth averaging around one 5% for this year of 2024 year over year.
Lois K. Zabrocky: With similar projections for 2025.
Lois K. Zabrocky: This represents an above average demand growth level.
Lois K. Zabrocky: Specifically for seaborne transportation.
Lois K. Zabrocky: Existing regional imbalances of crude oil production and the availability of refined products contrast it with distant strong demand centers, making a in the bottom chart, we highlight the difference between crude oil production expected throughput and product demand, by reach. Both Europe and Asia are structurally short of crude oils, which they source from the Americas, the Middle East, and Russia. With the enforcement of sanctions on Russian oil tightening, the disruption of traditional routes has enhanced tonnemile demand and supported the tanker market.
Lois K. Zabrocky: Existing regional imbalances of crude oil production and the availability of refined products contrast, it with distant strong demand centers.
Lois K. Zabrocky: It makes it tanker market.
Lois K. Zabrocky: In the bottom chart.
Lois K. Zabrocky: We highlight the difference between crude oil production.
Lois K. Zabrocky: Expected throughput.
Lois K. Zabrocky: And product demand.
Lois K. Zabrocky: By region.
Lois K. Zabrocky: Both Europe and Asia are structurally short crude oil, which they sourced from the America Middle East Russia.
Lois K. Zabrocky: With the enforcement of sanctions on Russia oil tightening the disruption of traditional group has enhanced.
Lois K. Zabrocky: <unk> come out.
Lois K. Zabrocky: And supported the tanker market.
Lois K. Zabrocky: On the refined mark product sector, most regions are short, specific, refined products, except for the Middle East and Russia. This creates a lively trade as charters continue to take advantage of arbitrage plays to meet demand in different regions for specific grades. It remains very constructive that commercial inventories are low throughout the world. Continued disruptions within the tanker market, on top of strong phenomena, underpin an increased need for seaborne transportation. Slide six.
Lois K. Zabrocky: On the refined mark products sector. Most regions are short specific refined products, except for the middle East and Russia.
Lois K. Zabrocky: Treat a lightweight products trade as charterers continue to take advantage of arbitrage place to meet demand in different regions or specific grades.
Lois K. Zabrocky: It remains very constructive at commercial inventories are low throughout the world.
Lois K. Zabrocky: Continued disruption within the tanker market.
Lois K. Zabrocky: On top of strong fundamentals underpinning increased need for seaborne transportation.
Lois K. Zabrocky: Slide six.
Lois K. Zabrocky: The supply side has seen some ordering, with our tanker order book now at 9 percent of the existing Total Tanks. You can see this in the lower left-hand chart. These new orders stretch into 2027, as shown in the chart on the lower left-hand corner of the slide. These vessels that are on order will replace older ships, turning 20 plus years old, that at the very least, would be removed from commercial trading.
Lois K. Zabrocky: The supply side has seen some ordering.
Lois K. Zabrocky: With our tanker order book now at 9%.
Lois K. Zabrocky: Of the existing total tanker fleet.
Lois K. Zabrocky: You can see this in the lower left hand chart.
Lois K. Zabrocky: These new orders stretch into 2020 as shown in the chart on the lower left hand corner of the slide.
Lois K. Zabrocky: These vessels that are on order will replace older ship.
Lois K. Zabrocky: Turning 20 plus years old.
Lois K. Zabrocky: And at the very least would.
Lois K. Zabrocky: It would be removed from commercial trading.
Lois K. Zabrocky: As a result, the average fleet age will rise in the next few years at a faster rate than it had over the prior ten. Generally, older ships have less efficiency and lower utilization. With an increasing percentage of the fleet falling into this category, the industry will put the new ships to work covering the increasing seaborne demand. Overall, this sets the stage for a strong upcycle over the next few years, and Seaways remains well-positioned to capitalize on these market conditions.
Lois K. Zabrocky: As a result, the average fleet age will rise in the next few years at a faster rate than it has over the prior tenant.
Lois K. Zabrocky: Generally older ships have less efficiency and lower utilization.
Lois K. Zabrocky: With an increasing percentage of the fleet falling into this category the industry will put the new ships to work covering the increasing seaborne demand.
Lois K. Zabrocky: Overall this sets the stage for a strong up cycle over the next few years and Seaways remains well positioned to capitalize on these market conditions.
Lois K. Zabrocky: You can count on Seaways to utilize our balanced capital allocation approach to renew our fleet and adapt to industry conditions with a strong balance sheet while returning to shareholders. I'm now going to turn it over to our CFO, Jeff Pribor, to provide a financial review.
Lois K. Zabrocky: You can count on Seaway to utilize our balanced capital allocation approach to renew our fleet and adapt to industry conditions with a strong balance sheet, while returning to shareholders.
Jeffrey D. Pribor: I'm now going to turn it over to our CFO, Jeff <unk> to provide financial review Jeff.
Jeffrey D. Pribor: Thanks, Lois, and good morning everyone. Turning to slide eight, net income for the first quarter was just about $145 million, or $2.92 per diluted share. Justin Ybatal for the first quarter of 2024 was $192 million. In the appendix, we provided a reconciliation from reported earnings to adjustments.
Jeffrey D. Pribor: Thanks, Louis and good morning, everyone.
Jeffrey D. Pribor: Turning to slide eight.
Jeffrey D. Pribor: Net income for the first quarter. It was just about $145 million or $2 92 per diluted share.
Jeffrey D. Pribor: On the upper right chart adjusted.
Jeffrey D. Pribor: Adjusted EBITDA for the first quarter of 2024, it was 192 million.
Jeffrey D. Pribor: In the appendix, we provided a reconciliation from reported earnings to adjusted earnings.
Jeffrey D. Pribor: Our expense guidance for the first quarter fell largely within a range of expectations, but I'd like to point out a few items of note within our income statement. On the revenue side, our light rig business continues to operate, earning about $14 million in revenue and support. With about $2.5 million in vessel expenses, $3.5 million in charter hire, and $1 million in G&A, the lottery business contributed about $7 million and even died in the first quarter, just shy of its record of nearly $8 billion. Turning now to our cash bridge on slide 9.
Jeffrey D. Pribor: Our expense guidance for the first quarter fell largely at a range of expectations, but I would like to point out a few items of note within our income statement.
Jeffrey D. Pribor: On the revenue side, our lottery business continues to outperform earning about $14 million of revenue in the quarter.
Jeffrey D. Pribor: With about $2 5 million of vessel expenses $3 5 million in charter hire and one thing and a G&A layered business contributed about $7 million EBITDA in the first quarter just shy of its record.
Jeffrey D. Pribor: Apex.
Jeffrey D. Pribor: Turning now to our cash bridge on slide nine.
Jeffrey D. Pribor: We began the quarter with a total liquidity of $601 million, which was composed of $187 million in cash and 414,000,000 undrawn revolving capacitors, following along the chart from left to right on the cash bridge. We first add $192 million in adjusted EBITDA for the quarter, plus $44 million in debt service, plus our dry docking capital expenditures of about $14 million, and to draw our working capital due to timing of about 13. We therefore achieved our definition of free cash flow of about $121 million for the first quarter.
Jeffrey D. Pribor: We began the quarter with a total liquidity of $601 billion.
Jeffrey D. Pribor: Which was composed of 187 I guess cash.
Jeffrey D. Pribor: 414 million Undrawn revolving capacity.
Jeffrey D. Pribor: Following along.
Jeffrey D. Pribor: Along the chart from left to right on the cash bridge.
Jeffrey D. Pribor: First at $192 million and adjusted EBITDA for the quarter.
Jeffrey D. Pribor: That's $44 million of debt service, which is composed of scheduled debt repayments and cash interest expense.
Jeffrey D. Pribor: Our dry dock and capital expenditures of about $14 million in the quarter and the draw of working capital due to timing of about 13 banks.
Jeffrey D. Pribor: We therefore achieved our definition of free cash flow of about $121 million from the first quarter.
Jeffrey D. Pribor: This represents an annualized cash flow yield of 18% on today's share price. The remaining bars on the cash grid reflect our capital allocations. We spent $23 million as a deposit for the six eco-MRs that are delivering in the second quarter, as Lois mentioned, and we paid $1.32 per share for about $65 million in dividends. These components then led us to an ending liquidity of $626 million, with a prize of $215 million in cash and short-term investment.
Jeffrey D. Pribor: This represents an annualized cash flow yield of 18% on today's share price.
Jeffrey D. Pribor: The remaining bars on a cash basis reflect our capital allocation for the quarter.
Jeffrey D. Pribor: We spent 23 million as a deposit for the <unk> that are delivering in the second quarter as well as mentioned.
Jeffrey D. Pribor: And we paid $1 32 per share or about $65 million dividends during the quarter.
Jeffrey D. Pribor: These components that lead us to an ending liquidity of $626 million.
Jeffrey D. Pribor: Comprised of $215 million of cash short term investments and $411 million.
Jeffrey D. Pribor: $411 million dollars in undrawn revolving capacity. Now moving to slide 10, we continue to have a strong financial position detailed by the balance sheet you see on the left-hand side of the screen. Cash and Liquidity remain strong at over $626 million.
Jeffrey D. Pribor: I've drawn revolving capacity.
Jeffrey D. Pribor: Vessels on the books at costs of approximately $2 million versus current market values of nearly $3.5 million. And with $700 million in gross debt at March 31, this equates to a net loan-to-value of just about 14%. Our debt today is 85% hedged or at fixed rates, therefore equating to an all-in weighted average interest rate of about 6% or less than 100 basis points above seawater. The table on the bottom right of the slide, our debt balances as of April 30th reflect the amended extended $750 million facility, which we now call $500,000,000 RCS, as Lois mentioned earlier. This facility has no mandatory jet payments at this time, representing a savings of about $80 million per year.
Jeffrey D. Pribor: Now moving to slide 10.
Jeffrey D. Pribor: We continue to have a strong financial position detailed by the balance sheet you see on the left hand side of the page.
Jeffrey D. Pribor: Cash and liquidity remains strong at over $626 million.
Jeffrey D. Pribor: Vessels on our books at cost or approximately $2 million versus current market values of nearly $3 5 billion.
Jeffrey D. Pribor: And with $700 million and gross debt at March 31.
Jeffrey D. Pribor: This equates to a net loan to value of just about 14%.
Jeffrey D. Pribor: Our debt today is 85% hedged or fixed rates.
Jeffrey D. Pribor: Therefore, equating to an all in weighted average interest rate of about 6% or less than 100 basis points above so.
Jeffrey D. Pribor: In the table on the bottom right of the slide our debt balances as.
Jeffrey D. Pribor: As of April 30th reflect the amend and extend and $750 million facility, which we now call.
Jeffrey D. Pribor: The $500 million Rcs.
Lawrence: As Lawrence mentioned earlier.
Jeffrey D. Pribor: This facility has no mandatory debt payments at this time, representing a savings of about $80 million per year.
Jeffrey D. Pribor: We continue to enhance the balance sheet to create the financial flexibility necessary to facilitate growth and return as a shareholder. We have 559 second and after-hour revolvers. Our nearest maturity in the portfolio isn't until the next decade, so we continue to lower our breakeven costs. We share in the off-site Delaware Visitor Returns.
Jeffrey D. Pribor: We continue to enhance the balance sheet, you create the financial flexibility necessary to facilitate growth and returns to shareholders.
Jeffrey D. Pribor: We have 559 thinking about draw revolvers, our nearest maturity of the portfolio isn't until the next decade.
Jeffrey D. Pribor: To continue to lower our breakeven costs and we share in the upside with double digit returns to shareholders.
Jeffrey D. Pribor: On the last slide that I'll cover, slide 11, this reflects our forward-looking guidance and our booked-to-date TCE aligned with our spot cash break-even rate, starting with TCA pictures. For the second quarter of 2024, I'll also remind you, as I always do, that actual TC earnings that you'll see on our next earnings call may be different, but as of today, we have a blended average spot TCE of about $43,700 per day fleet-wide for the quarter.
Jeffrey D. Pribor: On the last slide that I'll cover.
Jeffrey D. Pribor: Slide 11 reflects our forward looking guidance.
Jeffrey D. Pribor: Booked to date TCE.
Jeffrey D. Pribor: Aligned with our spot cash breakeven rates.
Jeffrey D. Pribor: Starting with TCA pictures.
Jeffrey D. Pribor: For the second quarter of 2024.
Jeffrey D. Pribor: To remind you as I always do that actual TCE earned that Youll see our next earnings call.
Jeffrey D. Pribor: Maybe different but as of today, we have a blended average spot TCE of about $43700 per day fleet wide for the quarter.
Jeffrey D. Pribor: On the right-hand side of the slide, you can see how that lines up against our spot cash bridge. The methodology here is exclusively using expenses on our spot vessels less the excess of our time charter revenues above charter vessel costs and dividing that by spot days. This then relates to the average spot TCE, which, as I said, was $43,700 per day for more than half the days in the second quarter.
Jeffrey D. Pribor: On the right hand side of the slide you can see how that lines up against our spot cash breakeven rates.
Jeffrey D. Pribor: The methodology here is exclusively using expenses on our spot vessels less the excess of our time charter revenues above chartered vessel costs and dividing that by spot days.
Jeffrey D. Pribor: This relates to the average spot TCE, which as I said was $43700 per day more than half the days in the second quarter.
Jeffrey D. Pribor: Looking at the bottom left-hand chart for the modelers out there, we've provided some updated guidance on our expenses in the second quarter and our estimates for 2020. We also include in the appendix our quarterly expected off-hire and cat-back schedule for 2020. I don't plan to read these items line by line, but I want to encourage you to use them for modeling purposes. That concludes my remarks, so I'd now like to turn the call back.
Jeffrey D. Pribor: Looking at the bottom left hand chart for the.
Jeffrey D. Pribor: The modelers out there.
Jeffrey D. Pribor: We provided some updated guidance on our expenses in the second quarter and our estimates for 2024.
Jeffrey D. Pribor: We also include in the appendix, a quarterly expected off hire and Capex schedule.
Jeffrey D. Pribor: I don't plan to read these items line by line, but I want to encourage you to use that for modeling purposes.
Jeffrey D. Pribor: That concludes my remarks, so I'd now like to turn the call back to lowest for her closing comments.
Speaker Change: Thank you very much Jeff.
Lois K. Zabrocky: Slide 12 details our investment highlights. In brief, over the last seven years, International Seaways has built a track record of returning to shareholders, maintaining a healthy balance while growing the company. Our total shareholder return is over 490% since our inception, representing a 24% compounded annual return. Over the last 12 months, our combined dividends of $5.74 represent a 13% yield.
Jeffrey D. Pribor: Slide 12 details our investment highlights.
Lois K. Zabrocky: Brief.
Lois K. Zabrocky: Last seven years International Seaways has built a track record of returning to shareholders.
Lois K. Zabrocky: Maintaining a healthy balance sheet.
Lois K. Zabrocky: While growing the company.
Lois K. Zabrocky: Our total shareholder return is over 490% since our inception.
Lois K. Zabrocky: Representing 24% compounded annual return.
Lois K. Zabrocky: Over the last 12 months, our combined dividend of $5 74.
Lois K. Zabrocky: Represent a 13% yield.
Lois K. Zabrocky: We continue to upgrade our fleet, purchasing six EcoMRs and building six LR1s for our strong niche Panamax International joint venture. We've taken advantage of strong values by selling some of our older MRs, with gains on the sale that are higher than what we paid for the vouchers.
Lois K. Zabrocky: We continue to upgrade our fleet purchasing six eco Mr's and building six LR ones for our strong niche Panamax International joint venture.
Lois K. Zabrocky: We've taken advantage of a strong balance sheet.
Lois K. Zabrocky: By selling some of our older Mr's.
Lois K. Zabrocky: These <unk> have gains on the sales that are higher than what we paid for the vessel.
Lois K. Zabrocky: This is all while quietly improving our balance sheet. We now have 36 unencumbered vessels and are under 700 million in debt. We have $559 million in undrawn credit capacity, which we will carefully utilize to opportunistically grow our balanced fleet. Finally, our balanced fleet of spot ships now needs to earn below $14,000 per day to break even in the forward 12 months. At this point in the cycle, we expect to continue generating cash that we will put to work creating value for the company and, most importantly, for our shareholders. Thank you very much. And with that said, Jen, we'd like to open up the lines for questions.
Lois K. Zabrocky: This is all well quietly improving our balance sheet.
Jen: We now have 36 unencumbered vessels and then there's $700 million in debt.
Jen: We have $559 million and Undrawn credit capacity.
Lois K. Zabrocky: Which we will carefully utilized to opportunistically grow our balanced fleet.
Lois K. Zabrocky: Finally, our balanced fleet spot ships now need earn below $14000 per day to breakeven in the forward 12 months.
Lois K. Zabrocky: This point in the cycle, we expect to continue generating cash and we will put to work trading value of the company and most importantly for our shareholders.
Jen: Thank you very much and with that said, Jim we'd like to open up the lines for questions.
Jen: Thank you we will now begin the question and answer session. If you would like to ask a question. Please press star followed by one on your telephone keypad. If your question has been answered or you wish to remove your question. Please press star followed by two.
Jennifer: We will now begin the question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If your question has been answered or you wish to remove your question, please press star followed by two. As a reminder, if you are using a speakerphone, please pick up your handset before asking your question. Our first question comes from the line of Omar Nokta with Jeffrey's. Omar, your line is now open.
Jennifer: As a reminder, if youre using a speakerphone please pick up your handset before asking your question.
Omar Mostafa Nokta: Our first question comes from the line of Omar Knockdown with Jefferies. Your line is now open.
Omar Mostafa Nokta: Thank you. Hey guys, good morning.
Omar Mostafa Nokta: Thank you Hey, guys good morning.
Omar Mostafa Nokta: Congrats on another strong quarter.
Lois K. Zabrocky: Congratulations on another strong quarter. I apologize in advance because I'm going to ask this question about the Panamax LR1s, which I feel like I'm asking habitually on your calls, but here we are again with a very strong performance in the mid-60s, you know, in the first quarter and again here into 2Q, well above global averages, whether it's Panamax on the dirty side or clean LR1. Is there a seasonal element underway?
Omar Mostafa Nokta: I apologize in advance because I'm going to ask this question about the Panamax LR ones, which I feel like I'm asking.
Lois K. Zabrocky: Virtually on your calls.
Lois K. Zabrocky: But here we are again with a very strong performance in the mid sixties, the first quarter and again here.
Lois K. Zabrocky: <unk> well above global averages whether it's in Panamax is on the dirty side or clean LR ones.
Lois K. Zabrocky: Is there a seasonal element underway and that's why we're seeing the strong performance at the moment and then also just kind of thinking about that.
Lois K. Zabrocky: And that's why we're seeing this strong performance at the moment. And then also just kind of thinking about that in terms of, I know it's a niche trade in South America, you've added to the LR1 new building tally, you're up to six shifts now. Are those planned to all be deployed in that market on delivery?
Lois K. Zabrocky: I know, it's a niche trade in South America, you've added to the LR, one new building Tyler Youre up to six ships now.
Lois K. Zabrocky: Are those planned to all be.
Lois K. Zabrocky: Deployed into that into that market on delivery.
Lois K. Zabrocky: Good morning, Omar. Thank you for the compliment on the performance in that sector. You know, I would say that in the first quarter, you again saw very strong performance across the midsize sector. And you're now seeing, in the spot market, the Vs sort of assert themselves for the first time, really, and kind of have a little liftoff for the first time in a couple of years. So I think the seasonality of the first quarter is generally quite a strong quarter in the tanker market, and you see that on the LR1s, which, as you know, are trading in the Americas in their niche trade, and we look forward to.
Speaker Change: Good morning Omar.
Speaker Change: Thank you for the compliment on the performance on that sector.
Lois K. Zabrocky: I would say that in the first quarter you against a very strong performance across the mid size sector Youre now seeing in the spot market.
Lois K. Zabrocky: These sort of assert themselves or the first time really in kind of have a little lift off for the first time in a couple of years. So.
Speaker Change: Thank you.
Lois K. Zabrocky: Seasonality.
Lois K. Zabrocky: The first quarter is generally quite a strong quarter in the tanker market and you see that on the LR ones, which as you know our.
Lois K. Zabrocky: Trading in the Americas in their niche trades, and we look forward to.
Lois K. Zabrocky: The additional barrels that will be coming out of Vancouver with the TMX pipeline will probably add even more to Aframex, but mostly, but you know also to the base trade on the for Panamaxis as well. And as far as, you know, the building of the LR1s, the intention is to add those to that particular customer base and joint venture. You know, if you look at the LR1 space, it is not a big growth trade. However, they have a very strong customer base there. And the age profile of that sector is quite diverse.
Lois K. Zabrocky: The additional barrels that will be coming out of Vancouver with the <unk> pipeline.
Lois K. Zabrocky: To even add probably four to acrobat was mostly but.
Lois K. Zabrocky: Also to the base trade.
Lois K. Zabrocky: For Panamaxes as well.
Lois K. Zabrocky: And as far as.
Lois K. Zabrocky: Building on the LR ones. The intention is to add those into that particular customer base in joint venture.
Lois K. Zabrocky: If you look at the LR one space it is not.
Lois K. Zabrocky: Big growth trade, however, it's a very strong customer base there.
Lois K. Zabrocky: And the age profile of that sector is quite old.
Lois K. Zabrocky: Thanks, Lois. Okay, that's interesting. So a lot of the TMX discussion has been about afrimaxes, but you see potential, at least afrimaxes that seem like they won't be fully loaded. So perhaps kind of what you're talking about, the LR1s or the panamaxes may start to capture some of that.
Speaker Change: Oh, Thanks, Louis Okay. That's interesting so a lot of the <unk> discussion has been on Aframax is that you see potential at.
Lois K. Zabrocky: At least the Aframax is that seem like they won't be fully loaded so perhaps kind of what youre talking about the other ones are the panamaxes may start to capture some of that.
Lois K. Zabrocky: Well, we're going to, you know, we're going to have to see here as that trade emerges how many barrels go down to the West Coast, how many get exported to Asia. For sure, the Aprimax is the largest size that you can load directly at birth there. But, you know, overall, it's increased volumes in that.
Lois K. Zabrocky: Well, we're going to you know we're going to have to be here at that trade emerges how many barrels go down to the West Coast company get exported to Asia.
Lois K. Zabrocky: For sure the Aframax is the.
Lois K. Zabrocky: Largest size that you can load directly at the first there.
Lois K. Zabrocky: But overall, it's increased volume.
Lois K. Zabrocky: In that arena.
Omar Mostafa Nokta: Yeah, yeah. Okay, and then just to follow up, you've obviously been adding more and more charger cover. You still have predominantly a lot of spot exposure, but you added the charger on the lone LR2 you have, and then you added a couple on the 09 built MRs. What are you thinking here in terms of more cover? Clearly, it sounds like there are opportunities to continue to put ships away if you wanted to.
Speaker Change: Yep Yep, Okay, and then just a follow up obviously, you've been adding more and more charter cover you still have predominantly a lot of spot exposure, but you added the charge on the the loan LR. Two you have and then you had a couple on the online build mr's.
Omar Mostafa Nokta: What are you thinking here in terms of more cover clearly it sounds like there's opportunities to continue to put ships away. If you wanted.
Lois K. Zabrocky: Is that something you want to do? And is there a particular segment you'd like to add more cover in? Yeah, any color there, please. Thank you.
Omar Mostafa Nokta: Is that something you wanted to do.
Lois K. Zabrocky: And is there a particular segment you'd like to add more coverage.
Speaker Change: Yes, any color there. Thank you.
Derek G. Solon: I'm going to start that, and then I'm going to have our Chief Commercial Officer, Derek, complete the question. And, you know, we have around 15 percent of the fleet on time charter at the moment, so we maintain a significant operating leverage in this very strong market. And when we see outside returns, outsized returns for a longer period, you know, somewhere, certainly more than a year, you know, heading towards three years at a high level that we can lock in, we tend to seek those opportunities.
Speaker Change: I'm going to start that and then I'm going to have our chief commercial officer, Derek complete the question and we have around 15% of the fleet on time charter at the moment. So we maintain a significant.
Derek G. Solon: Operating leverage to this very strong market and when we see outside returns.
Derek G. Solon: This return score.
Derek G. Solon: Along longer periods somewhere.
Derek G. Solon: Certainly more than a year heading towards three years at a high level that we can lock in we tend to seek those opportunities and then Derek.
Derek G. Solon: And then Derek. Thanks, Lois.
Derek G. Solon: Thanks Lois, good morning Omar. I'm going to piggyback on Lois to say, you know, we've been able to sort of crystallize the value on some of the 15-plus MRs for two years and, recently, three years. So we've been happy to sort of lock in that value for the 15-plus shifts. And thanks for highlighting LR2 as well. Like you say, she's our lone LR2. So putting her away for three years seemed like the right move. But to your point with any specific sector, not necessarily. We'll just continue to look for, as Lois said, outsized returns for longer.
Derek: Thanks Louis.
Derek: Morning, Omar I just.
Derek G. Solon: Get you back on lowest we've been.
Derek G. Solon: We've been able to sort of crystallize the value in some of the <unk>.
Derek G. Solon: <unk> plus <unk>.
Derek G. Solon: For two years.
Derek G. Solon: Recently three years, so we've been happy to sort of lock in that value for the.
Derek G. Solon: 15, plus ships and thanks for highlighting the yellow too as well like you say she's our loan.
Derek G. Solon: So putting her away for three years it.
Derek G. Solon: It seemed like the right move.
Derek G. Solon: Two.
Derek G. Solon: To your point.
Derek G. Solon: Any specific sector not necessarily we will just continue to look for is lowest had outsized returns for longer periods.
Omar Mostafa Nokta: Okay, sounds good. Thank you. Thanks for the color. I'll turn it over.
Speaker Change: Okay sounds good. Thank you thanks for the color.
Omar Mostafa Nokta: I'll turn it over.
Speaker Change: Thanks Omar.
Liam Dalton Burke: Thank you. Our next question comes from the line of Liam Burke with B Riley. Liam, your line is now open. All right, thanks.
Speaker Change: Thank you. Our next question comes from the line of Liam Burke with B Riley Liam Your line is now open.
Liam Dalton Burke: Thank you. Good morning, Lois. Good morning, Jeff. Good morning. Lois, has there been any pushback from your shipping customers on your older MRs? Any trouble chartering them as, you know?
Liam Dalton Burke: Thank you and good morning, Louis Good morning, Jeff.
Liam Dalton Burke: Good morning.
Liam Dalton Burke: Although it doesn't look like it but has there been any pushback from your shipping customers on your older Mr's have you had.
Liam Dalton Burke: Any trouble chartering them.
Liam Dalton Burke: They move into that 15 to 20 year range.
Liam Dalton Burke: Thank you for that question, Leo, because that really sets Derek up to say, you know, if you look at this sector,
Liam Dalton Burke: Thank you for that question Leo because that really sets Derrick to say if you look at this sector.
Liam Dalton Burke: The strength of those rates.
Derek G. Solon: Right, Liam. So, good morning. This is Derek. Yeah, you know, to your point, we're looking at several ships in our fleet that trade spot that are 15 years older, but we're, you know, coming in at 38 a day for the quarter and continuing to show strong rates into Q1, sorry, correction, into Q2. So at the moment, with the freight market like this, no, we're not really seeing too much discrimination on.
Liam Dalton Burke: Right.
Derek: This is Derek.
Derek G. Solon: Yeah.
Derek G. Solon: To your point, we're looking at.
Derek G. Solon: Several ships in our fleet that trade spot that are 15 years older but where.
Derek G. Solon: Coming in at 38, a day for the quarter and continuing to show strong rates into Q1, I'm, sorry correction into Q2.
Derek G. Solon: At the moment with the freight market like this no were not really seeing too much discrimination on age.
Liam Dalton Burke: Great. Thank you, Derek. Jeff, on the dividend policy, it seems investors are very comfortable with the fact that you have a variable quarterly, but your cash costs are coming down, and your cash flow is accelerating. Any thought to moving the 12 cents up, or are you comfortable with the base dividend plus the variable right now?
Liam: Great. Thank you Derrick.
Derek G. Solon: Jeff on the dividend policy.
Liam Dalton Burke: It seems to be the investors are very comfortable with the fact that you have a variable quarterly but your cash costs are coming down your cash flow is accelerating any thought to moving the 12 cents up or are you comfortable with the base dividend plus a bus a variable right now.
Liam Dalton Burke: Okay.
Jeffrey D. Pribor: All right, Liam. Yeah, I do.
Speaker Change: Hi, Liam.
Jeffrey D. Pribor: Yeah, we moved the fixed component from 6 cents to 12 cents two years ago. So, you know, I think it's something we'll evaluate from time to time. It's sort of a natural thing as the company's growing, but there's no set timetable for that. So, I think it's a good question and it's something we always consider. And, you know, in the fullness of time, I think that's probably the case.
Jeff: Yeah, we moved it.
Jeffrey D. Pribor: The fixed component from six to 12.
Jeffrey D. Pribor: It was two years ago.
Jeffrey D. Pribor: So I think it's something we'll evaluate from time to time.
Jeffrey D. Pribor: Sort of a natural thing of it is the company's growing but there's no set.
Jeffrey D. Pribor: Timetable for that so I think its good question and it's something we always.
Jeffrey D. Pribor: We always consider in the fullness of time.
Jeffrey D. Pribor: I think thats probably likely.
Jeffrey D. Pribor: Okay.
Liam Dalton Burke: Fair enough. Thank you.
Speaker Change: Fair enough. Thank you.
Jeffrey D. Pribor: Yes.
Christopher Warren Robertson: Thank you. Our next question comes from the line of Chris Robertson with Deutsche Bank. Chris, your line is now open.
Liam Dalton Burke: Thank you. Our next question comes from the line of Chris Robertson with Deutsche Bank, Chris. Your line is now open.
Christopher Warren Robertson: Hey, good morning, everybody. I apologize for my voice in advance.
Christopher Warren Robertson: I've been a little bit under the weather, but Jeff Now that you have 14% net loan to value, the cash breakeven's been lowered, especially around this consolidation of the senior secured facilities. I mean, it seems like the company's in a very good place to kind of just sit back here and harvest and return capital. I guess, would you characterize it that way?
Christopher Warren Robertson: Hey, good morning, everybody I apologize for my voice in advance I've been a little bit.
Christopher Warren Robertson: Under the weather, but.
Christopher Warren Robertson: Jeff now that you know you have 14% net loan to value the cash breakeven has been lowered.
Christopher Warren Robertson: Especially around this consolidation of the senior secured facilities.
Christopher Warren Robertson: It seems like the company is in a very good place to kind of just sit back here and harvest and return capital.
Jeff: I guess would you characterize it that way is there anything more to do to further lower the cash breakeven.
Christopher Warren Robertson: Is there anything more to do to further lower the cash breakeven, whether it comes to something that you can do with the financing, or the cap structure, or targeting OpEx, things like that? I mean, where are we at with the cash break even level? Do we plan to lower it further? Or are we just kind of steady as she goes from this point forward?
Christopher Warren Robertson: Whether it comes through something that you can do with the financing.
Christopher Warren Robertson: The cap structure or targeting Opex things like that I mean, where are we at just with the cash breakeven level plans.
Christopher Warren Robertson: Plans to lower it further or are we just kind of steady as she goes from from this point forward.
Jeffrey D. Pribor: Yeah, hey, Chris. I think we're... Um... I'm pleased that we've been able to achieve what we have on... cash break evens where they are today. You know, I think we're, uh, you know, getting, it's all kind of works together. Like we're not heading or aiming even for zero debt, but getting, you know, debt that's below the recycling value. The Middle Teens range enables us to do things like the new facility where we switch or transform the term debt to a revolver that, at these levels, doesn't require any fixed amortization.
Speaker Change: Yeah, Hey, Chris.
Christopher Warren Robertson: Yeah.
Jeffrey D. Pribor: I think we're.
Jeffrey D. Pribor: Im.
Jeffrey D. Pribor: Pleased that we've been able to achieve what we have.
Jeffrey D. Pribor: The cash breakeven is where they are today I think we're.
Jeffrey D. Pribor: Getting it's all kind of works together like we're not heading our Amy even for zero debt, but getting.
Jeffrey D. Pribor: Thats below recycled value.
Jeffrey D. Pribor: Middle teens range enables us to do things like the new facility, where we.
Jeffrey D. Pribor: Switch or transform the term debt.
Jeffrey D. Pribor: <unk>.
Jeffrey D. Pribor: These levels does it require any fixed amortization, we may choose to advertise both brick by brick.
Jeffrey D. Pribor: We may choose to amortize, but the break-evens are lower, which produces more cash as well as puts us in a place where, you know, it's hard to remember, and it's an up market, but it wasn't only a couple of years ago that we had a terrible market. So, you know, having your break-evens such that you would still do well, even in a bad market is one of our objectives. So we're really happy about that.
Jeffrey D. Pribor: Humans are lower.
Jeffrey D. Pribor: <unk> produces more cash as well as puts us in a place where it's hard to remember in this market, but it was only a couple of years ago that we had a terrible market. So.
Jeffrey D. Pribor: Having your breakeven such that Youre, you would still do well.
Jeffrey D. Pribor: Even in a low market is one of our objectives. So we're really happy about that so yes, we will always look for ways to do even a little better.
Jeffrey D. Pribor: So yeah, we'll always look for ways to do even a little better. But you know, I think. With the debt that we have now, I don't see major changes in the next year or so, uh, it's kind of, high-quality debt, we like to say, some of it's below the rates of earning and interest, and others of it, this is naturally not, you know, in place for a while. So I don't know, Chris. I guess one way of saying it is that I think we're not sitting back.
Jeffrey D. Pribor: But I think.
Jeffrey D. Pribor: With the debt that we have now.
Chris: Yeah, I don't see major.
Jeffrey D. Pribor: Changes in the next year or so it's kind of.
Jeffrey D. Pribor: High quality that we like to say you know some of it's below the rates of earning an interest and others of it is actually not in place for a while so I.
Jeffrey D. Pribor: I don't know, Chris I guess, a long way of saying I think we're not sitting back.
Jeffrey D. Pribor: I don't think that would characterize the company, and you have seen Lois talk about it pretty extensively. We do find opportunities to use cash flow in addition to returns to shareholders. We've found some good opportunities to use the cash flow to renew the fleet and grow the fleet. So I think we are harvesting, but we're also looking selectively to grow.
Chris: I don't think that would characterize the company that you have.
Jeffrey D. Pribor: <unk> seen.
Jeffrey D. Pribor: <unk> talked about it pretty extensively we do find opportunities to use cash flow. In addition to the returns to shareholders. We've found some good opportunities to use the cash flow to renew the fleet and motor fleet. So.
Jeffrey D. Pribor: I think we are harvesting.
Jeffrey D. Pribor: We're also.
Jeffrey D. Pribor: Looking selectively to growth.
Christopher Warren Robertson: Yeah, fair enough. Yeah, thank you. Thank you, Jeff, for clarifying that that categorization as well. Yeah, speaking of the fleet renewal efforts, and just kind of looking at the portion of the MRs that are still a little bit dated, you've had that recent sale. Should we be looking forward to some potential sales of the other MR assets at this point? What's the secondhand market looking like today?
Speaker Change: Okay, that's fair enough.
Speaker Change: Yeah. Thank you. Thank you, Jeff for clarifying that categorization as well.
Christopher Warren Robertson: Speaking of the frequent renewal efforts and just kind of looking at the portion of the mix that are still a little bit dated you've had that recent sale.
Christopher Warren Robertson: Looking forward to some potential sales of the other more assets at this point or.
Christopher Warren Robertson: What's the what's the secondhand market looking like today.
Lois K. Zabrocky: So, you know, the secondhand market is very strong, 38 a day in the first quarter and thus far booked in the second quarter, very strong, putting six, seven of these on multi-year time charters, very strong, historically strong rates. We will selectively prune and, you know, and we do it carefully because, you know, it's a balance in his very strong work.
Jeff: So Chris.
Christopher Warren Robertson: Second hand market is very strong.
Lois K. Zabrocky: 38, a day in the first quarter and thus far booked in the second quarter very strong.
Lois K. Zabrocky: Putting.
Lois K. Zabrocky: Six seven of these on multiyear time charters very strong historically strong rate.
Lois K. Zabrocky: We will selectively prune and we do it carefully because.
Lois K. Zabrocky: It's a balance.
Lois K. Zabrocky: It has very strong market.
Lois K. Zabrocky: Definitely. And Lois, would the proceeds from any potential vessel sales be used for, you know, further renewal efforts on maybe some acquisitions or even orders?
Lois K. Zabrocky: Definitely.
Lois K. Zabrocky: Both on the proceeds from any potential vessel sales.
Lois: That then in turn be used for.
Lois: Further renewal efforts.
Lois: Maybe some acquisitions or even ordering.
Lois K. Zabrocky: You know, we don't specifically bucket it exactly that way, but it does tend to be how we execute and how we look to continue to hydrate.
Lois: We don't we don't specifically bucket it exactly that way.
Lois K. Zabrocky: Right.
Lois K. Zabrocky: It does it does tend to be how we execute and how we look to continue to high grade.
Jeffrey D. Pribor: I'd say you get free cash flow from operations, and you get free cash flow from monetizing older vessels at a significant profit. It all becomes cash to be allocated.
Lois K. Zabrocky: Yes.
Lois K. Zabrocky: You get free cash flow free cash flow from operations free cash flow from monetizing older vessels at a significant profit.
Jeffrey D. Pribor: All becomes cash to be allocated.
Christopher Warren Robertson: Yeah, thank you. Thank you, Jeff. I'll turn it over. Thanks for taking the time.
Speaker Change: Yes. Thank you. Thank you, Jeff I'll turn it over thanks for taking the time.
Speaker Change: Thank you.
Sherif Ehab Elmaghrabi: Before our next question, a quick reminder, if you would like to ask a question, it is star one on your telephone keypad. Our next question comes from the line of Sherif Elmaghrabi with BTIG. Sherif, your line is now open.
Speaker Change: Before our next question a quick reminder, if you would like to ask a question. It is star one on your telephone keypad.
Sherif Ehab Elmaghrabi: Our next question comes from the line of Sri <unk> with <unk> Suisse. Your line is now open.
Sherif Ehab Elmaghrabi: Hey, good morning. Thanks for taking my question. So these LR1 new builds are a pretty unique opportunity, given how early their delivery is. And I'm curious, if you were to go to a yard today and order a tanker... First, when would that be delivered, and do you have any insight into how many similar open slots for delivery?
Sherif Ehab Elmaghrabi: Hey, good morning, Thanks for taking my question.
Sherif Ehab Elmaghrabi: So these LR one newbuild, they're pretty unique opportunity given how early they are delivery is and I'm curious if you were to go to a yard today in order of tanker.
Sherif Ehab Elmaghrabi: First when would that be delivered and do you have any insight into how many similar open slots for delivery before 2027 may exist that yard.
Sherif Ehab Elmaghrabi: Hum.
Lois K. Zabrocky: I'm going to try a little bit of that, and I'll give it to Derek as well, our commercial man. So, yes, we knew, you know, obviously, this has been a strong sector for us for some time. So, you know, we wanted to take advantage of those slots as we found them. Most slots today are into 2027, really kind of across the takerspace. Maybe you can get some MRs in 2026, and Derek, would you give me a little?
Speaker Change: I'm going to I'm going to try a little bit of that and then I'll give it to derik as well our commercial van.
Derek: So yes, we knew obviously this has been a strong sector for us for some time so.
Lois K. Zabrocky: Wanted to take advantage of those slots as we found them.
Derek: Most slots today or into 2027.
Derek: Really kind of across the tanker space, maybe you can get some mr's and 2026.
Lois K. Zabrocky: And Derek would you give a little more color on that or sure. Louis Thanks, Jerry the only color I can really add to what Louis said is.
Derek G. Solon: Sure, Lois. Thanks, Sheriff. The only color I could really add to what Lois said is... you know, there are. Most of the births available will be in 2027, and then for us on these other ones specifically, what we try to highlight is that, while there are other LR1s being built at other yards, our LR1s are still built on the old Panamax Canal beam, that 32.2 meter beam. So that's been part of the reason for our strong earnings; being able to go.
Derek G. Solon: There are like.
Derek G. Solon: If it goes to the first available will be in 2027, and then for US on these other ones specifically, what we tried to highlight is.
Derek G. Solon: While there are there are other ones being built at other yards or LR ones are still billed to the old panamax can narrow beam that $32 two meter beam so thats been.
Derek G. Solon: Part of the reason for our strong earnings as being able to go through the canal.
Derek G. Solon: trade on both sides, the Pacific and the Atlantic. And these new buildings will do the same, while most of the new Build LR1s are around $38 million. So they're really built for that clean trade and can't really compete with us on the crude trade in the Americas. That's an interesting color, thanks.
Derek G. Solon: Trade on both sides of the Pacific and the Atlantic and these new buildings will do the same.
Derek G. Solon: Most of the Newbuild dollar ones are around 38 meter beam, so really built for that clean trade.
Derek G. Solon: Can't really compete with us.
Derek G. Solon: On the.
Derek G. Solon: On the crude trade in the Americas.
Derek G. Solon: That's interesting color thanks closer there.
Derek G. Solon: Yeah.
Speaker Change: Thank you.
Lois K. Zabrocky: There are no questions registered at this time, so I will pass the call back over to CEO Lois Zabrocky for any closing remarks.
Speaker Change: There are no questions registered at this time.
Lois K. Zabrocky: I'll pass the call back over to CEO Lewis <unk> for any closing remarks.
Lois K. Zabrocky: I just want to thank everyone for joining us for our first quarter earnings call at International Seaways, and we'll talk to you soon.
Lois K. Zabrocky: I just wanted to thank everyone for joining us for our first quarter earnings call International Speedway, and we'll talk to you soon.
Lois K. Zabrocky: Thank you.
Jennifer: That concludes today's call. Thank you for your participation. You may now disconnect your line.
Speaker Change: That concludes today's call. Thank you for your participation you may now disconnect your lines.