Q4 2024 International Seaways Inc Earnings Call
Hello, and welcome to D International Seaways, Inc. Fourth quarter 2024 earnings Conference call. My name is Carla and I will be coordinating your call today. During the presentation you will have the opportunity to Washington's yet to register a question by pressing star followed by one like a telephone keypad. If you change your mind goods first.
Carla: Hello and welcome to the International Seaways Inc fourth quarter 2024 earnings conference call. My name is Carla and I will be coordinating your call today. During the presentation you will have the opportunity to register a question by pressing star followed by one on your telephone keypad. If you change your mind please press star followed by two.
Followed by cheap.
James Small: I would now like to hand you over to James Small, General Counsel to begin. James please go ahead when you're ready. Thank you, operator.
Speaker Change: No. That's your hand, you over to James small general counsel to begin James. Please go ahead, when you're ready.
Speaker Change: Thank you operator, good morning, everyone welcome to International Seaways earnings call the fourth quarter of 2024.
James Small: Good morning, everyone.
James Small: Welcome to International Seaways earnings call for the fourth quarter of 2020. Before we begin, I would like to start off by advising everyone with us on the call today of the following. During this call and in the accompanying presentation, management may make forward-looking statements regarding the company or the industry in which it operates, which may address, without limitation, the following topics.
Speaker Change: Before we begin I would like to start off by advising everyone with us on the call today.
Speaker Change: During this call and in the accompanying presentation.
Speaker Change: Management may make forward looking statements regarding the company or the industry in which operate.
Speaker Change: The address without limitation the following topics.
James Small: have looks for the crude and product taker market. Changes in Trading Patterns forecasts of world and regional economic activity and of the demand for and production of oil and petroleum products. Company Strategy and Business Prospects. Expectations about revenues and expenses, including vessel, charter hire, and G&A... estimated future bookings, TCE rates, and capital expenditure. Projected Dry Dock and Off-Pire Days.
Speaker Change: Outlooks for the crude and product tanker markets.
Speaker Change: Ranges in trading patterns.
Speaker Change: Forecasts of World and regional economic activity.
Speaker Change: Demand for and production.
Speaker Change: Full name products.
Speaker Change: The company's strategy and business prospects.
Speaker Change: Expectations about revenues and expenses, including vessel charter hire and G&A expenses.
Speaker Change: Estimated future bookings TCE rates and capital expenditures.
Speaker Change: Projected dry dock and off hire days.
James Small: vessels sailed and Your bill was belt for construction. The Effects of Ongoing and Threatened Conflicts Around the Globe Changing Global Regulatory Environment This company's ability to achieve its financing and other objectives and its consideration of strategic alternatives. anticipated financing transactions and plans to issue dividends The company's relationships with its stakeholders. and other political, economic, and regulatory developments global. Any such forward-looking statements take into account various assumptions made by management based on the 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 circuit.
Speaker Change: Vessel sales and purchases.
Speaker Change: Newbuild vessel construction.
Speaker Change: The effects of ongoing and threatened conflicts around the globe.
Speaker Change: Changing global regulatory environment.
Speaker Change: The company's ability to achieve its financing and other objectives and its consideration of strategic alternatives.
Speaker Change: Anticipated financing transactions.
Speaker Change: Dividends.
Speaker Change: The company's relationships with its stakeholders.
Speaker Change: Other political economic and regulatory developments in Poland.
Speaker Change: Any such forward looking statements taking into account various assumptions made by management based on the number of factors.
Speaker Change: <unk> management's experience and perception of historical trends current conditions expected future developments.
Speaker Change: Other factors that management believes are appropriate considering the circumstances.
James Small: Forward-looking statements are subject to risks, uncertainties, and assumptions, many of which are beyond the company's control. Those could cause actual results to differ materially from those implied or expressed by the state. factors, risks, and uncertainties that could cause International Seaways' actual results to differ from expectations.
Speaker Change: Forward looking statements are subject to risks uncertainties and assumptions many of which are beyond the company's control.
Speaker Change: Those could cause actual results to differ materially from those implied or expressed by the statements.
Speaker Change: 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 2024 and in other filings we have made or in the future may make with the U S Securities and exchange rate.
James Small: These include those described in our annual report on Form 10-K for 2024, and in other filings we have made, or in the future may make, with the U.S.
Lois Zabrocky: Securities and Exchange Now let me turn the call over to Ms. Lois Zabrocky, our President and Chief Executive Officer. Thank you very much. Good morning, everyone. Thank you for joining International Seaways' earnings call for the fourth quarter and the full year of 2024. on slide four of the presentation, which you can find in the investor relations section of our website. Net income for the fourth quarter was $36 million, or $0.72 per diluted share. excluding a loss on vessel sales. Adjusted net income for the fourth quarter was $45 million, 90 cents per diluted share, and our adjusted EBITDA was $95 million.
Speaker Change: Now, let me turn the call over to Mr. <unk>, <unk>, our president and Chief Executive Officer.
Speaker Change: Thank you very much Jim.
Speaker Change: Everyone. Thank you for joining international Seaways earnings call fourth quarter and full year 2024.
Speaker Change: On slide four of the presentation.
Speaker Change: You can find in the Investor Relations section of our website.
Speaker Change: Net income for the fourth quarter was $36 million or 72 cents per diluted share.
Speaker Change: Excluding a loss on vessel sales adjusted net income for the fourth quarter was $45 million.90 per diluted share.
Speaker Change: Our adjusted EBITDA was $95 million.
Lois Zabrocky: We are proud to announce today that we continue to modernize our fleet during the fourth quarter with a vessel swap as you can see in the upper right hand corner of the slide. We sold two of our oldest VLCCs and paid $3 million in cash for three EcoMRs built in 2015. The swap is less indicative of a specific preference for any one particular class of ship. but more showcases our ability. to opportunistically reduce our vessel ages across various ship classes. enhance our fleet efficiency. while limiting risk compared to a full cash transact. We have optimized earnings across our tanker segment, which gives us plenty of flexibility to execute fleet optimization.
Speaker Change: We are proud to announce today that.
Speaker Change: We continue to modernize our fleet during the fourth quarter with a vessel swap as you can see in the upper right hand corner of the slide.
Speaker Change: We sold two of our oldest vlccs and paid $3 million in cash.
Speaker Change: Three eco mr's built since 2015.
Speaker Change: This.
Speaker Change: Is less indicative of a specific.
For any one particular class of ship.
Speaker Change: But more showcases.
Speaker Change: Our ability.
Speaker Change: To opportunistically reduce our vessel age across various ship classes.
Speaker Change: He is our efficiency.
While limiting risk compared to a full cash transaction.
Speaker Change: We have optimized earnings across our tanker segment, which gives us plenty of flexibility.
Speaker Change: Execute fleet optimization.
Lois Zabrocky: The various transactions within the swap created some temporary changes to our balance sheet in the fourth quarter and the first few months of 2025. During the fourth quarter, we paid $53 million in cash for deposits and the delivery of 1M Larva. Due to this temporary timing difference, we borrowed $70 million on our revolving credit facility. which had been repaid in the first quarter following the final execution of the swap. As a result, our line of credit capacity reduced... to a still quite healthy $475 million at the end of the fourth quarter. We expect that to be around $560 million on a proforma Our balance sheet highlights are strong.
Speaker Change: The various transactions within the swap created some temporary changes to our balance sheet in the fourth quarter and the first few months of 2025 during.
Speaker Change: During the fourth quarter, we paid $53 million in cash for deposits and the delivery of one MRV.
Speaker Change: Due to this temporary timing difference, we borrowed $70 million on our revolving credit facility.
Speaker Change: Which has been repaid in the first quarter following the final execution of the swap.
Speaker Change: As a result, our line of credit capacity reduced.
Speaker Change: <unk> is still quite healthy $475 million and ended the fourth quarter.
Speaker Change: We expect that to be around $560 million on a pro forma basis.
Speaker Change: Our balance sheet highlights our strong shown in the bottom left of the slide.
Lois Zabrocky: Shown in the bottom left of the slide, $632 million of total liquidity composed of $157 million of cash and $475 million on the revolving credit. We have $695 million of debt with a net loan-to-value ratio of below 16% and our spot breakeven rates are about $13,700 per day. On the lower right, we are proud to have shared, for a second consecutive year, over $300 million returned to shareholders in 2024. We paid $5.77 in dividends during 2024, representing a 12% dividend yield on our average share price over the time. We also used proceeds from that sale of an older MR to repurchase 500,000 shares for $25 million.
Speaker Change: $632 million of total liquidity.
Speaker Change: Composed of $157 million of cash and $475 million on the revolving credit facility.
Speaker Change: We have $695 million of debt with the net loan to value ratio of below 16% and our spot break even rates are about $13700 per day.
Speaker Change: On the lower right. We are proud to have shared for a second consecutive year over $300 million returned to shareholders in 2024.
Speaker Change: $5.77 and dividend during 2024, representing a 12% dividend yield.
Speaker Change: Our average share price over the time.
Speaker Change: We also used proceeds from the sale of an older Emaar to repurchase 500000 shares for $25 million.
Lois Zabrocky: during 2024. Today we announce $0.70 in dividends that we will pay in March, representing a payout ratio of about 77%. marking our highest since we've been supplementing a regular $0.12 dividend. We believe in sharing with our shareholders during this cycle, and we expect a payout ratio similar to this last two quarters of around 75% to continue into the future. We believe in our balanced capital allocation approach so that we can provide competitive returns to our shareholders. and still position the company for the future with opportunistic fleet renewal while maintaining a healthy balance sheet to support growth.
Speaker Change: During 2024.
Speaker Change: Today, we announced 70 and dividend we will pay in March representing a payout ratio of about 77%.
Speaker Change: Marking our highest since we've been supplementing our regular 12 cent dividend.
Speaker Change: We believe in sharing with our shareholders. During this cycle and we expect a payout ratio similar to this last two quarters.
Speaker Change: <unk> 75 per cent to continue into the future.
Speaker Change: We believe in our balanced capital allocation approach. So that we can provide competitive returns to our shareholders.
Speaker Change: And still position the company for the future.
Speaker Change: Opportunistic fleet renewal, while maintaining a healthy balance sheet to support growth.
Lois Zabrocky: on slide five. We've updated our standard set of bullets on tanker demand drivers with the subtle green up arrows next to the bullets represented as good for tankers. The black dash representing a neutral impact and a red down arrow meaning that particular topic is not good for tanker demand. Without reading these bullets individually, I will pull some highlights. Oil demand growth in the near term is still going to grow at its historical rate of about 1% per year, which, on 100 million barrels per day of demand, is about 1 to 1.5 million barrels of growth.
Speaker Change: On slide five.
Speaker Change: We've updated our standard set of bullets on tanker demand drivers the subtle bring up arrows next to the book represented is good for tankers.
Speaker Change: The black dash, representing a neutral impact and he read down arrow, meaning that particular topic is not good for tanker demand.
Speaker Change: Without reading these bullets individually I will pull some highlights.
Speaker Change: Oil demand growth.
Speaker Change: In the near term is still going to grow at its historical rate of about 1% per year, which.
Speaker Change: The 100 million barrels per day of demand is about one to one and a half million barrels of growth.
Lois Zabrocky: Anticipate it for 2025. Oil demand growth, specifically, is spread across the world in 2025 with no one large outlier as China has been for many years. Crude production growth is largely coming from the Americas, which is supportive for tanker demand as much as of the incremental growth will be exported to the U.S. The global economy is still settling the dots from a post-2024 election period. And there have always been headline grabbers, particularly from the United States. The geopolitical situations are not going away. they may modify, and that could have an effect on the tanker model.
Speaker Change: Anticipated for 2025.
Speaker Change: Oil demand growth specifically is spread across the world in 2025 with no one large outlier as China has been for many years.
Speaker Change: Crude production growth is largely coming from the Americas, which is supported for tanker demand as much of the incremental growth.
Speaker Change: We will be export it.
Speaker Change: The global economy is still settling the jobs from a post 2020 for election period.
Speaker Change: And there have always been headline grabbers, particularly from the United States.
Speaker Change: The geopolitical situations are not going away.
Speaker Change: You may modify and that could have an effect on the tanker market.
Lois Zabrocky: But with many moving parts, the markets will adjust. We expect the United States to take a stronger position with Iran, and we see tanker movements shadowing them.
Speaker Change: But with many moving parts.
Speaker Change: Markets will ensure.
Speaker Change: We expect United States take a stronger position with Iran, and we see tanker movements shadowing that.
Speaker Change: Unintended.
Lois Zabrocky: Connington. The Israel-Hamas conflict is still very tense, and most ships are wary of their safety in the Red Sea. Russia-Ukraine is similar, and even if there is a resolution on the horizon, we believe that the unwinding could last longer for Russian crews.
Israel Hamas conflict is still very tense and most shifts are weary of their safety in the Red Sea.
Speaker Change: Russia, Ukraine is similar and even if there is a resolution on the horizon, we believe that'd be unwinding could last longer for Russian crews.
Lois Zabrocky: Moving to the West. We embrace these tanker markets because we can't control them in any case, and we believe that sanctions and their enforcement can only help the legitimate commercial market. In the charts below on slide 5, inventory in the OECD drew about 100 million barrels in the second half of the year. This, in the short term, impacted tanker... and will refill over time based on history. The United States FPR has grown in 2024 in small chunks. President Trump has indicated refilling the SPR is a priority. to historic level. This would mean around 300 plus million barrels, which may include imports of medium sour crude, which has historically been herb meat.
Speaker Change: Moving to the west.
Speaker Change: We embraced the tanker market because we cant control them in any case, and we believe that sanctions and their enforcement can only help the legitimate commercial fleet.
In the charts on slide five inventory in the OECD.
Speaker Change: About 100 million barrels in the second half of the year.
Speaker Change: This is a short term impact of tanker rates.
Speaker Change: And we'll read spill over time based on history.
Speaker Change: The United States S. P. R has grown in 2024 in small chunks.
Speaker Change: President Trump has indicated refilling the SPR is a priority.
Speaker Change: To historic levels.
Speaker Change: This would mean around 300 plus million barrel, which may include imports of medium sour crude which has historically been heard me.
Lois Zabrocky: On slide 6, the order book popped in 2024, particularly in the middle of the... But as seen in the lower left chart, ships on order are still quite low relative to the size of the fleet in historical context. We added a weighted average tanker rate in the chart as an indicator that orders grow when the market is hot. But, as we've shown many times, not factored into the chart on the left is the longer time horizon that many of these ships on order are expected to deliver over the next four years and the corresponding age of vessels on the water over this time.
Speaker Change: On slide six.
Speaker Change: Order book popped in 2024, particularly in the middle of the year, but it is seen in the lower left chart ships on order are still quite low relative to the size of.
Speaker Change: In historical context.
Speaker Change: We added a weighted average tanker rates in the chart as an indicator that orders grow when the market is hot.
Speaker Change: But as we've shown many times not factored into the chart on the left is the longer time horizon than many of these ships on order are expected to deliver over over the next four years.
Speaker Change: And the corresponding age of vessels on the water over this time.
Lois Zabrocky: The chart on the right reflects that 45% of the fleet is headed towards 20-plus years, the age where we identify as removed from the commercial fleet. compared to 14% of the fleet that exists on order. As you can see, there are about 900 ships that are already. And there are still another 1,500 plus vessels that are turning 20 during delivery schedules that will need replacing. This is significant for the tanker industry as the limited tanker supply continues to be supportive of strong tanker We believe this should translate into a continued upcycle over the next few years and seaways remain well positioned to capitalize on these market conditions.
Speaker Change: The chart on the right reflects at 45% of the fleet is headed towards 20 plus years.
Speaker Change: <unk>, where we identify as removed from the commercial fleet.
Speaker Change: <unk> to 14% of the fleet that exist on order.
Speaker Change: As you can see there are about 900 ships that are already 20 years old.
Speaker Change: And there are still another 1500.
Speaker Change: That are turning 20 during delivery schedule that would need replacement.
Speaker Change: This is significant for the tanker industry as the limited tanker supply continues to be supportive of strong tanker earnings.
Speaker Change: We believe this should translate into a continuous cycle over the next few years.
Speaker Change: Seaways remains well positioned to capitalize on these market conditions.
Lois Zabrocky: We will continue to execute our balanced capital allocation approach to renew our fleet and adapt to industry conditions with a strong balance sheet while returning to shareholders.
Speaker Change: We will continue to execute our balanced capital allocation approach to renew our fleet and adapt to industry conditions with a strong balance sheet, while returning to shareholders.
Jeff: I'm now turning it over to our CFO, Jeff <unk>, who will provide the financial review Jeff.
Jeffrey Pribor: I'm now turning it over to our CFO, Jeff Pribor, who will provide the financial review. Thanks, Lois, and good morning, everyone. On slide 8, net income for the fourth quarter was $36 million or $0.72 per diluted share. This includes the loss of vessel sails as a result of timing of the vessel swaps that Lois discussed earlier. Excluding this, our net income was $45 million or $0.90 per dilutive year. On the upper right chart, adjusted EBITDA for the fourth quarter of 2024 was $95 million. In the appendix, we provided a reconciliation from reporter earnings to adjust.
Jeff: Thanks, Louis and good morning, everyone.
Speaker Change: On slide eight.
Speaker Change: Net income for the fourth quarter was $36 million or 72 cents per diluted share.
Speaker Change: This includes a loss on vessel sales as a result of timing of the vessel swap.
Speaker Change: Just earlier.
Speaker Change: Excluding this our net income was $4500 or 90 cents per diluted share.
Speaker Change: On the upper right chart adjusted EBITDA for the fourth quarter of 2024 with $95 million.
Speaker Change: In the appendix, we provided a reconciliation from reported earnings to adjusted earnings.
Speaker Change: While our revenue based on market conditions was largely within expectations in the fourth quarter.
Jeffrey Pribor: While our revenue based on market conditions was largely within expectations in the 4th quarter, our expenses were a little higher than our guidance. Esso expenses were higher in the fourth quarter. Timing of stores and spares at the end of the year, and additional repairs and maintenance. GNA was hired primarily for one-off. Our lightening business continues to prosper with over $9 million in revenue in the quarter. mining this with about $3 million in vessel expenses. $3 million in charter hire, $1 million of G&A. The laundry business contributed nearly $3 million in EBITDA in the fourth quarter.
Speaker Change: These were a little higher than our guidance last quarter.
Speaker Change: <unk> expenses were higher in the fourth quarter due to the timing of stores and spares at the end of the year additional repairs and maintenance.
Speaker Change: G&A was higher primarily for one off legal matters.
Speaker Change: Our lottery business continues to prosper with over $900 in revenue in the quarter.
Speaker Change: Combining this with about $300 in vessel expenses.
Speaker Change: Dollars in charter hire one.
Speaker Change: $1 million of G&A.
Speaker Change: Lottery business contributed nearly $3 billion in EBITDA in the fourth quarter.
Jeffrey Pribor: as well as an annual EBITDA contribution of nearly $20 million.
Speaker Change: As well as an annual EBITDA contribution of nearly $20 million in 2012.
Speaker Change: Four.
Speaker Change: Turning now to our cash bridge on slide nine.
Jeffrey Pribor: Turning now to our cash bridge on slide nine. We began the quarter with total liquidity of $694 million. composed of $153 million in cash, $540 million in undraught revolving following along the chart from left to right on the cash. We first add $9,500 and adjust the deep end dial for the Ford. That's $23 million in debt service, another $18 million of dry duck and capital expenditures. offset by working capital benefit of about $24 million due to the timing of deferred revenue payables. We therefore achieved our definition of free cash flow of about 78 million dollars for the first quarter.
Speaker Change: We began the quarter with total liquidity of $694 million.
Mm 156 million in cash $540 million undrawn revolving capacity.
Speaker Change: Following along the chart from left to right on the cash bridge first at $95 million and adjusted EBITDA for the fourth quarter.
Speaker Change: About 22 billion of debt service, another $18 million of Drydock and capital expenditures offset by working capital benefit of about $24 million due to the timing of deferred revenue payables.
Speaker Change: We therefore achieved our definition of free cash flow of about $78 million from first quarter.
Jeffrey Pribor: This represents an annualized cash flow yield of over 17% on today's share price. We spent $53 million in connection with the vessel SWAT due to the timing of the deposit. of Rio, one of the MRs in the SWAT. Due to the temporary timing difference, we borrowed $70 million on our lines of credit that would be repaid in the first quarter of 2025. The remaining bars on the cash bridge reflect our capital allocation. We repaid $20 million of debt early in the fourth quarter. made $12 million in installment payments for our LR1 new buildings and also paid $59 million in dividends to shareholders equating to $1.20 per share.
Speaker Change: This represents an annualized cash flow yield of over 17% share price.
Speaker Change: We spent $53 million in connection with the vessel swap to the timing of the deposits.
Speaker Change: One of the bars in the swap.
Speaker Change: Due to the temporary timing differences, we borrowed $70 million on our lines of credit that will be paid in the first quarter of 2025.
Speaker Change: The remaining bars under cash grids reflect our capital allocation for the quarter.
Speaker Change: We repaid $20 million of debt early in the fourth quarter.
Speaker Change: A $12 million in installment payments for our <unk> new buildings.
We also paid $59 million dividends to shareholders equating to $1 20 per share.
Speaker Change: Altogether. These components led to any liquidity of $632 million with 158 million in cash and short term investments of 475 million undrawn revolving capacity.
Jeffrey Pribor: All together, these components led to ending liquidity of $630 million with $158 million in cash toward term investments.
Speaker Change: Now moving to slide 10.
Jeffrey Pribor: Now moving to 5.10. We have a strong financial position, detailed by the balance sheet on the left hand side of the page. Cash and Liquidity remains strong at $632 million. We have invested about $2.2 billion in vessels that cost... are not on the books currently at a value of $3.5 billion. And with $695 million of gross debt at the end of the year, our net mode of value is below... Our debt at December 31st was over 70% hedged or at fixed rates. equating to an all-in weighted average interest rate of about 614 basis points. or under 200 basis points about today's.
Speaker Change: We have a strong financial position detailed by the balance sheet.
Speaker Change: Out of the page.
Speaker Change: Cash and liquidity remains strong at $632 million.
Speaker Change: We have invested about $2 $2 billion of vessels at cost.
Speaker Change: Not on the books currently at a value of $3 $5 billion.
Speaker Change: And with $695 million of gross debt at the end of the year, our net loan to value is below 16%.
Speaker Change: Our debt at December 31st with over 70% hedged or fixed rates.
Speaker Change: Adding to an all in weighted average interest rate of about 640 basis points or under 200 basis points above today's silver.
Speaker Change: Following the repayment in the first quarter of 2025.
Jeffrey Pribor: followed by repayment in the first quarter of 2025. We expect our fixture hedge about to be close today. continue to enhance the balance sheet to create the financial flexibility necessary to facilitate growth and returns to shareholders. We have $475 million in undrawn revolvers at year-end, which grows to about $560 million per format of our debt repayment following the close of the swap. Our nearest maturity in the portfolio isn't until the next decade. We continue to lower our breakeven costs and we share in the upside with double digit returns.
Speaker Change: We expect our fixed or hedged about to be closer to 8%.
Speaker Change: We continue to enhance the balance sheet to create the financial flexibility necessary to facilitate growth and returns to shareholders. We.
Speaker Change: We have 400 $7500 in Undrawn revolver at year end.
Speaker Change: Close to about $560 million pro forma of our debit business.
Speaker Change: The closer the swap transaction.
Speaker Change: Our nearest maturity portfolio isn't until the next decade.
Speaker Change: To lower our breakeven cost share the upside with double digit returns to shareholders.
Speaker Change: On the last slide that I'll cover slide.
Jeffrey Pribor: On the last slide that I'll cover, slide 11 reflects our forward-looking guidance and book-to-date TCE aligned with our SPOTCASH.
Speaker Change: Slide 11 reflects our forward looking guidance are booked to date GCB spot.
Speaker Change: Spot cash breakeven.
Speaker Change: Starting with TCE pictures for the first quarter of 2025.
Jeffrey Pribor: starting with TCE pictures for the first quarter of 2025. And I'll remind you that actual TCE during our next series call may be different. Currently, we have a Glendon Everspot TC. $6,500 per day, Fleetwide. 70% of our first quarter expected rep. On the right-hand side of the slide are four spot break-even ranges of about $13,700 per day composed of a suite-wide break-even of about $16,000. That's nearly $2,500 per day in contract revenue. Based on our SPOT TC book to date and our SPOT breakevens, it looks like Seaways can continue to generate significant free cash flow during the quarter and build on our track record of returning cash to shareholders.
Speaker Change: And I'll remind you that actual TCE during our next earnings call maybe different.
Speaker Change: Currently we have a blended average spot TCE of about $26500 per day.
Speaker Change: 70% of our first quarter expected revenue base.
Speaker Change: On the right hand side of the slide our forward spot breakeven rate of about $13700 per day composed of a sweep wide breakeven of about 16200 per day.
Speaker Change: Nearly $2500 per day time charter revenues.
Speaker Change: Based on our spot TCE booked to date in our spot breakeven it looks like <unk> can continue to generate significant free cash flow during the quarter.
Speaker Change: It builds on our track record of returning cash to shareholders.
Speaker Change: On the bottom left hand chart, we provided updated guidance for expenses in the first quarter and our estimates for 2025.
Jeffrey Pribor: On the bottom left-hand chart, we provide some updated guidance for our expenses in the first quarter and our estimates for 2018. He also included in the appendix a quarterly expected off-hiring cap. I won't plan to read each item line by line, but encourage you to do so.
Speaker Change: We also included in the appendix quarterly expected off hire in Capex.
Speaker Change: I wont plan to read each item line by line, but encourage you to use that for modeling purposes.
Lois Zabrocky: That concludes my remarks, so I'd now like to turn the call back to Lois for her closing comments. Thank you so much, Jeff. On slide 12, we have provided you with Seaways Investment Highlights. which we encourage you to read in its entirety. And I will summarize. Over the last eight years, International Seaways has built a track record of returning cash to shareholders. maintaining and improving our healthy balance and Growing the Company. Our total shareholder return represents around 20% compounded annual For the second consecutive year, we've returned over $300 million to shareholders, which is about 25% combined return over the last two years.
Speaker Change: That concludes my remarks, so I'd now like to turn the call back to Lois for her closing comments.
Thank you so much Jeff.
Lois: On slide 12, we have provided you with Seaways investment highlight.
Lois: Which we encourage you to read in its entirety and I will summarize briefly.
Lois: Over the last eight years International Seaways built a track record of returning cash to shareholders.
Lois: Maintaining and improving our healthy balance sheet.
Lois: And growing the company.
Lois: Our total shareholder return represents around 20% compound annual return.
Lois: For the second consecutive year.
Lois: We returned over $300 million to shareholders, which is about 25% combined return over the last two years.
Lois: We continue to renew our fleet so that our average age is about 10 years old.
Lois Zabrocky: We continue to renew our fleet so that our average age is about 10 years old in what we see as the sweet spot for tanker investments and renewables. We've invested in a range of asset classes. to cast a wider net for growth opportunities and to supplement our scale in each class by operating in large numbers. We aim to keep our balance sheet fortified for any downside. We have over $500 million in undrawn credit capacity to support our growth. Our net debt is under 16% of the fleet's current value. and we have 36 vessels that are unencumbered.
Lois: What we see as the sweet spot for tanker investments and returns.
We've invested in a range of asset classes.
Lois: Cast a wider net growth opportunities and to supplement our scale in each class by operating in larger pools.
Lois: We aim to keep our balance sheet 45 for any down cycle.
We have over $500 million in Undrawn credit capacity to support our growth.
Lois: Our net debt is under 16% of the fleets current value.
Lois: And we have 36 vessels that are unencumbered.
Lois: Lastly, we only our spot ships to collectively earned $14000 per day to breakeven in the next 12 months.
Lois Zabrocky: Lastly, we only need our spot ships to collectively earn $14,000 per day to break even in the next 12 months. At this point in the cycle, we expect to continue generating cash that we will put to work to create value for the company. and for our shareholders.
Lois: At this point in the cycle, we expect to continue generating cash and we will put to work to create value for the company.
Lois: And for our shareholders.
Lois Zabrocky: Thank you very much.
Lois: Thank you very much and with that said operator, we'd like to open the lines for questions.
Carla: And with that said, operator, we'd like to open the lines for questions. We will now begin the question and answer session. If you'd like to ask a question, please press star, followed by one on your telephone keypad. If you change your mind, please press star, followed by two. When preparing to ask your question, please ensure your device is unmuted locally. We will make a quick pause for the questions to be registered.
Lois: We will now begin the question and answer session.
Speaker Change: You'd like to ask a question. Please press star followed by one on your telephone keypad.
Speaker Change: Change your mind. Please press star followed by T. When preparing to ask two questions. Please ensure your devices and muted locally we will make a quick pause further questions to be registered.
Speaker Change: Yeah.
Ben Nolan: Our first question comes from Ben Nolan with Default. I appreciate it. Hey, good morning, Jeff, Lois and team. So I've got a couple. The first relates to sort of maybe your charter out strategy at the moment. And I think this is particularly true for some of the crude tankers. The charter market is pretty elevated relative to certainly where you've built some of your spot vessels and generally I think spot is.
Speaker Change: Our first question comes from Ben Nolan with Stifel.
Speaker Change: Okay.
Speaker Change: I appreciate it hey, good morning, Jeff Lewis and team.
Speaker Change: So I've got a couple.
Speaker Change: First relates to sort of may.
Speaker Change: And maybe your charter out strategy at the moment and I think this is particularly true for some of the crude tankers.
Speaker Change: The charter market is pretty elevated relative to certainly where you booked some of your spot vessels and generally I think spot.
Lois Zabrocky: You know, obviously that's pointing to an inflection up in the spot market, but I'm curious if you think about, you know, just given that dislocation, maybe taking a little risk off the table and locking in some capacity just because, you know, there is a gap between the two at the moment. Okay, good morning. How are you?
Speaker Change: You know, obviously thats pointing.
Speaker Change: Pointing to an inflection up in the spot market, but I'm curious if you think about.
Speaker Change: Just given that dislocation, maybe taking a little risk off the table and locking in some capacity just because there.
Speaker Change: There is a gap.
Speaker Change: GAAP between the two at the moment.
Speaker Change: Okay. Good morning, how are you.
Derek Solon: So to answer that question, I didn't wait for your remaining questions. Let me answer that one. And then yeah, then we'll take your second one. How's that? Okay, sounds good. We have 14 time charters in our books right now out of our 78 vessels that are on the water and then we have our six museums that will be arriving. So we have nearly 20 percent of our Chinese foreign time charter present and then I would just have Derek jump in. Sheryl Owes, thanks. Good morning, Ben. Further to your question, we would continue to look at time charters, like we always do, with the right partners, the right term, and the right way.
Speaker Change: So okay.
Speaker Change: To answer that.
Speaker Change: Alright, and then I didn't wait for your remaining questions.
Speaker Change: Let me answer that one and then yes, and then we'll take your second one how's that.
Speaker Change: Okay sounds good.
Speaker Change: We have 14 time charters.
Speaker Change: It looks right now a lot of our 78 vessels.
Speaker Change: But are on the water and then we have our six new buildings that will be arriving we have nearly 20% of our tonnage on time charter and then I'll just have Terry jump in there.
Terry: Thanks, Good morning, Ben.
Speaker Change: Yes.
Speaker Change: Further to your question, we would continue to look at time charters.
Speaker Change: We do with the right partners I would like to turn in the right way.
Derek Solon: something that we're always evaluating.
Speaker Change: It's something that we're always evaluating.
Speaker Change: Okay, but there is nothing about the market at the moment that makes you more or less compelled to move in that direction I suppose is the answer.
Ben Nolan: Okay, but there's nothing about the market at the moment that makes you more or less compelled to move in that direction. I suppose it's the um okay so Oh, sorry. Go ahead.
Speaker Change: Yeah.
Speaker Change: Okay. So.
Speaker Change: <unk>.
Speaker Change: Okay.
Speaker Change: Oh, sorry go ahead go ahead.
Speaker Change: Hello.
Ben Nolan: Well, I was going to ask my next question, but if you would, we're going to add any more to that's fine. Well, my next question, just to have it out there is, in the quarter, the MR, you guys thus far in the first quarter, your MR rates were pretty decent thus far for what you already have booked. Just curious if maybe you can give a little color, like, is there a specific geographic focus? Is this, you know, how should we think about the remainder of the quarter? Is it just, you know, hey, things are things are going pretty well there at the moment?
Speaker Change: Well I was going to ask my next question, but.
Speaker Change: If you were gonna add anymore to that.
Speaker Change:
Speaker Change: Well My next question just.
Speaker Change: Just to have it out there.
Speaker Change: In the quarter.
Speaker Change: The EMR you guys, thus far in the first quarter of your EMR rates were.
Speaker Change: Were pretty decent thus.
Speaker Change: Thus far for.
Speaker Change: Or what you would have booked.
Speaker Change: Just curious if maybe you can give a little color like is there a specific.
Speaker Change: Geographic focus is this you know.
Speaker Change: How should we think about.
Speaker Change: The remainder of the quarter or is it just things are things are going pretty well there at the moment.
Speaker Change: Okay.
Derek Solon: Ben, it's Derek again, if I can take that one. Thank you, yes, the Q1 bookings we're pleased with so far. I think we're doing well when we look at our peer group. We're starting to see We're starting to see a little bit of dislocation in the MR rates, whereas we've been kind of carried by the Atlantic Basin over the last couple of quarters. We're seeing U.S. Gulf start to come down a little bit, but we do have a good deal of exposure, but we're seeing Asia come up. And luckily with an MR in need of our size and our pool employment, we have good exposure to the East Market as well.
And it's Derek again, if I can take that one.
Speaker Change: Thank you yes.
Speaker Change: Q1 bookings were pleased with so far.
Speaker Change: I think we're doing well when we look at our peer group.
Speaker Change: Thank you.
Speaker Change: We're starting to see.
Speaker Change: We're starting to see a little bit of dislocation in the MLR rates, whereas we've been kind of carried by the Atlantic basin over the last couple of quarters.
Speaker Change: U S Gulf start to come down a little bit, but we do have a good deal of exposure.
Speaker Change: We're seeing Asia come up literally within Edmar fleet of our size and our pool employment, we have good exposure to the spot rates as well. So we should be covered to capture some of that eastern upset.
Ben Nolan: So we should be covered to capture some of that eastern upside. Okay, I appreciate it. Thank you guys Thank you.
Speaker Change: Okay I appreciate it thank you guys.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Omar <unk> with Jefferies.
Omar Nokta: Our next question comes from Omar Nokta with Jeffrey. Thank you. Hey, guys. Good morning. Good update. Just wanted to ask a couple questions. Clearly, over the past few years, you've done a lot in terms of strengthening the balance sheet. Debt is now, as you say, below 16%. You have plenty of liquidity, fleet renewals, been consistent, capital returns, whether buyback dividends. Just in terms of the dividend at the moment, the 4Q payout, 77% of earnings. That's up from 75% previously, and that 50% to 60% you were doing kind of going back to the beginning in 2022.
Omar: Thank you Hey, guys good morning.
Speaker Change: Good update just wanted to ask a couple of questions.
Speaker Change: Over the past few years, you've done a lot in terms of strengthening the balance sheet that is not what you say below 16%, we have plenty of liquidity fleet renewals and consistent.
Speaker Change: Capital returns whether buyback dividend.
Speaker Change: Just in terms of the.
Speaker Change: The dividend at the moment, the <unk> payout, 77% of earnings that's up from 75%.
Speaker Change: <unk> in that 50% to 60% you were doing kind of going back to the beginning of two.
Speaker Change: 2022 how should we think about this ratio going forward I know its moving its been moving upwards, but just in general is 77%, what we should be expecting going forward and then.
Jeffrey Pribor: How should we think about this ratio going forward? I know it's moving. It's been moving upwards, but just in general, 77% of what we should be expecting going forward, and then how do we think about what that payout looks like as earnings kind of move up and down? As in, if rates strengthen materially and kind of go back to where they were in 2023, should we expect kind of a more normal payout kind of coming down closer to that 50% threshold again? Any kind of color you can give on what you're thinking of the payout ratio, especially in terms of earnings.
Speaker Change: How do we think about what that payout looks like as earnings kind of move up and down.
Speaker Change: And then if rates strengthened materially kind of go back to where they were in 23 should we expect kind of a more normal payout kind of coming down closer to that 50% threshold again any kind of color you can give on what youre thinking of the of the payout ratio, especially in terms of earnings swinging.
Speaker Change: Sorry for that.
Omar Nokta: Sorry for the questions.
Speaker Change: Question.
Speaker Change: Yes, no good morning and.
Jeffrey Pribor: No, no, good morning and excellent tea up for us, Omar, because we do want to highlight that. And, you know, as you know, we have steadily increased the percentage of adjusted net income that we have been returning to shareholders. And we have to have Jeff Hess and Thunder here on what you should expect going forward. Hi, Omar. You recapped it well. We raised the payout ratio gradually from 2022 until the end of last year as we were allocating free cash flow capital to D lever. Having reached a level of leverage which is sufficiently low, 50% is net loan to value 20% gross.
Speaker Change: Excellent.
Speaker Change: So mark do you want to highlight that and.
Speaker Change: You know we have steadily increased as a percentage of adjusted net income that we have been returning to shareholders and we have to have.
Speaker Change: Jeff has his thunder here on what you should expect going forward.
Speaker Change: Yes, Hi, Omar.
Speaker Change: You recapped it well we raised the payout ratio graduate from 2022 until the end of last year as we were allocating free cash flow capital to Delever.
Speaker Change: Having reached.
Speaker Change: Level of leverage versus sufficiently low 15% ish.
Speaker Change: Loan to value 20%.
Speaker Change: Gross.
Jeffrey Pribor: We were able to move up the payout ratio to 75% or a little more last quarter. And again, this quarter, as you noticed, so it's 77%. I think what I hear from shareholders, what we hear from potential shareholders most often is clarity and consistency around this return of capital to shareholders program and I think we can say clearly that shareholders should expect a minimum of 75% payout rate. It's helpful to have a round number like 70 cents per share, but I think that's the clear message. And to the second part of your question, I think if rates were to moderate or go up, Net income will go up and the payout ratio still works.
Speaker Change: We were able to move up the payout ratio to 75% or a little more last quarter and again this quarter as you would notice so at 77%.
Speaker Change: I think what I hear from shareholders here for shareholders most of it or potential shareholders. Most often is from clarity and consistency around the return of capital.
Speaker Change: To shareholders.
Speaker Change: Program and.
We can say clearly that shareholders expect.
Speaker Change: 75%, 75% payout ratio.
Speaker Change: I mean, it's helpful to have a round number like 70 so.
Speaker Change: Thats for sure, but I think that's clear.
Speaker Change: A clear message to the second part of your question I think if rates were to moderate or go up.
Speaker Change: Net income will go up in that.
Speaker Change: Payout ratios.
Speaker Change: Still work.
Omar Nokta: You know, the payout will go up or down depending on how the year develops. So I think it's fair to say that we put ourselves in a position to have a payout ratio of a minimum of 75 percent and that's the message. Okay, that's clear. I appreciate that. And that's really helpful.
Speaker Change: It will go up or down depending on how the year develops. So I think it's fair to say that we put ourselves in a position to have a payout ratio a bit about 75% of it.
Speaker Change: That's the message.
Speaker Change: Okay.
Speaker Change: Okay, that's clear I appreciate that.
Speaker Change: No that's really helpful and maybe just a second question.
Lois Zabrocky: And maybe just second question, you know, the VLCC MR swap. certainly been innovative. And we've been, you know, hearing about that for for a while, at least in shipping circles is something that was in the hopper. Just in general, as we think about that transaction, how should we think about it in terms of what your plan has been? Is it be emphasizing the VLCCs in favor of products? Or is it really be emphasizing older tankers? And then That's one sort of part one. And then part two, I guess, would be as you think about further transactions from here, what part of the fleet profile do you look to try to increase the ratio up?
Speaker Change: OCC EMR swap.
Certainly been innovative and we've been hearing about that for a while at least in shipping circles as something that was in the hopper.
Speaker Change: Just in general as we think about that transaction.
Speaker Change: How should we think about it in terms of.
Speaker Change: What your plan has been deemphasizing the vlccs in favor of products or is it really deemphasizing older tankers and then.
Speaker Change: One sort of part one and then part two I guess it would be as you think about further transactions from here what part of the the fleet profile do you look to try to increase the ratio up.
Lois Zabrocky: Thank you. Yeah, Omar, it would be the latter of your, you know, what you were opining, you know, essentially, we really want to drive down the age of the fleet going forward. And because we're in each of these sectors, and we have a very broad network, we were able to come up with what I think was a pretty creative deal from the team and execute that pretty flawlessly here. And, you know, our overall age on the fleet is right around 10 years. And, you know, selling ships that are, you know, 210 and then bringing in 215, you know, you just, you're buying yourself that longer horizon to capture that.
Speaker Change: Thank you.
Speaker Change: Yeah Omar it it would be the ladder of your.
Speaker Change: What were opining essentially.
Speaker Change: We really want to drive down the age of the fleet going forward and because were.
Speaker Change: Each of these sectors and we have a very broad network.
Speaker Change: We're able to come up with what I think was a pretty creative deal team and execute that pretty flawlessly here and.
Speaker Change: Our overall age of the fleet is right around 10 years.
Speaker Change: <unk>.
Speaker Change: Selling shifts that are.
Speaker Change: <unk> 10, and then bringing in 2015.
Speaker Change: Ryan yourself that longer horizon.
Speaker Change: To capture that upside.
Speaker Change: I think that would come into the foundation and then when you were not deemphasizing crude at all it simply happened to be an opportunity for us to shed some older inefficient ships.
Lois Zabrocky: I think that would kind of do the summation and then when you we're not de-emphasizing crude at all it simply happens to be an opportunity for us to shed some older inefficient shit.
Speaker Change: Okay. Thanks, Louis and just quickly.
Lois Zabrocky: Okay, thanks, Lois. And just quickly, in terms of thinking about expansion or adding vessels or fine tuning further, is there any part of the fleet that you want to bolster? Or is it just kind of It'll depend on what the opportunity set is at the time. It certainly will depend upon the opportunities set at the time, and, you know, over time, you should look for us to add to the big crude sign, you know, which is, you know, where we've had a little bit of attrition now, right? So that'll be a focus as and when that suits us.
Speaker Change: In terms of is it.
Speaker Change: Thinking about expansion or adding vessels are fine tuning further.
Speaker Change: Is there any part of the fleet that you wanted to bolster or is it just kind of.
Speaker Change: It is.
Speaker Change: It will depend on what the opportunity set is at the time.
Speaker Change: It certainly will depend upon the opportunities that at the time.
Speaker Change: And over time, you should look for us to add to the crude side.
Speaker Change: Which is where we had a little bit of attrition now so that'll be a focus.
Speaker Change: And when.
Speaker Change: Very good alright, thanks, Louis and thanks, Jeff I'll pass it back.
Omar Nokta: Very good. All right. Thanks, Lois. And thanks, Jeff.
Christopher Robertson: I'll pass it back. Our next question comes from Chris Robertson with Deutsche Bank. Hey, good morning, Lois and Jeff. Thank you for taking my questions. Jeff, this might be a question for you. Just turning to the break even, just broadly speaking, looking at what makes that up.
Speaker Change: Thanks, Sean.
Speaker Change: Our next question comes from Chris Robertson with Deutsche Bank.
Chris Robertson: Hey, good morning, Louis and Jeff. Thank you for taking my questions.
Chris Robertson: Jeff This might be a question for you just turning to the breakeven just broadly speaking we're looking at what makes that up.
Chris Robertson: As you look forward.
Jeffrey Pribor: As you look forward, and there's maybe a bit of a de-emphasis here on further delevering, so maybe, you know, there's not more savings with regards to the break-even there, but as you look at OPEX and other components to it, where do you see kind of the floor that you could theoretically get to? Hi Chris, how are you? That's a good question. You know, I think that we're always working on keeping. costs in line and from going up too much. I don't think you'd expect us to be driving down OPEX. We'll be holding as low as we can.
Chris Robertson: And there's maybe a bit of a de emphasis here on further delevering. So maybe theres not more savings with regards to the breakeven there, but as you look at Opex and other components to it.
Chris Robertson: Where do you see kind of the floor that you could theoretically you get two.
Chris Robertson: Yep.
Chris Robertson: Hi, Chris that's a good how are you.
That's a good question.
Chris Robertson: I think that.
Chris Robertson: We're always.
Chris Robertson: Working on keeping.
Chris Robertson: Costs.
Chris Robertson: In line and from growing up too much I don't think you can expect us to be.
Chris Robertson: Moving down Opex will be cold involved CAD G&A, we're always working on that to make sure.
Jeffrey Pribor: G&A, we're always working on that to make sure it's on a per-ship basis, you know, that that's a good number. And then if we were, if we find ourselves growing as we have done in the past, at the right time, that does bring you a little lower per day cost on G&A. In terms of, you know, interest, I think we're Interested in the debt cost. I think there's a little bit that you can look forward to in the future Without necessarily leveraging further just as you know, we have a little bit of debt that's the higher price that will roll off We have the ability to think about more revolvers As opposed to more advertising debt, you know as we look out to the towards the end of this year and into next year So it's kind of incremental.
Chris Robertson: Per ship basis.
Chris Robertson: Uh huh.
Chris Robertson: That's a good number at that if we were.
Chris Robertson: Yes.
Chris Robertson: If we find ourselves growing as we have done.
Chris Robertson: In the past.
Chris Robertson: That does.
Chris Robertson: Bring your little lower per day.
Chris Robertson: Cost in our G&A in terms of interests I think we are.
Chris Robertson: Interest the debt costs, I think just a little bit that you can look forward to the future.
Chris Robertson: Sorry, deleveraging further just as we have a little bit of debt, that's higher price that will roll off.
Chris Robertson: We have the ability to think about more revolvers.
Chris Robertson: It caused some more advertising that as you look out towards the end of this year and into next year. So it's kind of incremental.
Jeffrey Pribor: I think we feel good about our break evens right now, right? So I think when you look at a fleet that has Everything from BLCCs down to MRs to have a break-even rate of 16,000 before taking account time charters and under 14,000 when taking account time charters. I feel good about that But we'll always like to find incremental ways to lower it even more Okay, great.
Chris Robertson: We feel good about our breakeven is right now right. So.
Chris Robertson: I think when you look at it.
Chris Robertson: Yes.
Chris Robertson: Everything from VLCC is down to <unk> to have a breakeven maintenance 16000 before taking into account time charters of under 14000, we're taking into account tax charge I feel good about that but we will always liked about the incremental ways to save even more okay.
Chris Robertson: Okay, great Yeah, that's what I like to hear on that.
Christopher Robertson: Yeah, that's what I like to hear on that.
Lois Zabrocky: Turning to the the LR1 segment, I know this is a segment that you guys have outperformed, historically speaking. So I was wondering if you could just talk about that particular segment for a moment, what the current market dynamics there are, and do you still have a kind of a competitive advantage there? I'll leave that at Lois and then I'll turn to Derek. You know, I think you can see when you stack up the LR1-Panamax sector against the competition in the fourth quarter, we continue to... out earn our competition. And that market continues to be a strong niche.
Chris Robertson: Turning to the LR one segment I know this is a segment that you guys have outperformed.
Chris Robertson: Historically speaking so I was wondering if you could just talk about that particular segment for a moment with the current market dynamics. There are and do you still have kind of a competitive.
Chris Robertson: Advantage there.
Chris Robertson: Yes.
Chris Robertson: I'll read that its slowest and then I'll turn to Derek I think you can see.
Chris Robertson: When you stack up the LR, one panamax sector against the competition in the fourth quarter, we continued to.
Chris Robertson: Our earn our competition.
And that market continues to be strong niche sure.
Derek Solon: Derek? Thanks, Lois. Yeah, as you said, it continues to be a strong niche. And, Chris, you know, I think you're probably raising the question because the rates from sort of the start of the year to the end of the year have come down a good deal. But, you know, like you said, like you said, it's still a good niche for us. A lot of the decrease in rates have to do with overall market, but also a little bit from Ecuador. And we're seeing a little bit of Ecuador sending more of their barrels out to China.
Chris Robertson: Thanks, Robert as you say it continues to be strong niche.
Chris Robertson: And Chris I think you're probably reading the question what is the rates from sort of started the year at the end of the year have come down.
Chris Robertson: Good deal.
Speaker Change: Okay. Thank you Scott.
Chris Robertson: Good niche for us.
Chris Robertson: A lot of decrease in rates at the overall market, but also a little bit from Ecuador, and we're seeing a little bit.
Chris Robertson: What are we spending more of their barrels out of China, So that will be some bigger ships.
Derek Solon: So that'll be a bigger shift. With that dynamic shift to come back to sort of the west coast of the Americas, we expect that market to pick up even more.
Chris Robertson: Dynamic shifts to come back.
Chris Robertson: The west is the Americas, we expect that market to pick up even even more again.
Christopher Robertson: I hope that answers your question. Yes, thank you very much.
Chris Robertson: Hope that answers your question Chris.
Chris Robertson: Yes, Thank you very much I'll turn it over.
Carla: I'll turn it over. Just as a reminder, if you'd like to ask a question, please press star followed by 1 on your telephone keypad.
Speaker Change: Just as a reminder, if you like to ask a question. Please press star followed by one on your telephone keypad. Our next question comes from Liam Burke with B Riley.
Liam Burke: Our next question comes from Liam Burke with B Riley. Thank you. Good morning, Lois. Good morning, Jeff. Good morning. Hi.
Speaker Change: Thank you and good morning, Louis Good morning, Jeff.
Speaker Change: Good morning.
Liam Burke: Lois, there's lots of puts and takes out there in terms of sanctions, redistribution of production, and most of the discussion has been on the effect on VLCCs. Specifically, how are you looking at the outlook for the Suez Maximum? So, the Suez Maxis had, you know, prior to, I would say, the last three years, had a very tight correlation, pretty systematically with the LCCs with, you know, something along 85 to 90% correlation with the V's. And I think that, you know, as you see the component of coming into place piece by piece with a lot of the political news that we read every day and the over 450 ships or like 100 of these on OPAC lists.
Speaker Change: Lewis.
Speaker Change: Lots of puts and takes out there in terms of sanctions redistribution of production.
Speaker Change: And most of the discussion has been on the effect on Vlccs.
Speaker Change: Specifically how are you looking at the outlook for the Suezmax.
Speaker Change: So.
Speaker Change: Max has had.
Speaker Change: Two I would say the last three years had a very tight correlation.
Speaker Change: <unk> vlccs with something along the 85% to 90%.
Speaker Change:
Speaker Change: Correlation with these and I think that you know as you see the components of <unk>.
Speaker Change: You're right coming into place.
Speaker Change: By piece with a lot of the political.
Speaker Change: News that we read every day and the over 450 ships are about 100 of these on on Oh backlist.
Lois Zabrocky: You know, as you see those components start to build, and the beads can, you know, hopefully get a little bit more of a ground swell here and continue to improve, you're going to see the Suez Maxis come along for that ride.
Speaker Change: No.
Speaker Change: Do you see those components start to build.
Speaker Change: And these can hopefully get a little bit more of a ground swell here and continuing to improve you're going to see the suezmax is come along for that right.
Speaker Change: Yeah.
Speaker Change: Okay.
Jeffrey Pribor: Great, thank you. Jeff, with your liquidity situation, you have a tremendous amount of flexibility. Are opportunistic buybacks in the mix or is the payout ratio your primary method of returning cash to shareholders? Liam, is the simple answer not to be queued in both. You're right. I mean, the payout ratio is the primary. method that we anticipate that we have been returning and expect to continue returning cash. However, as you asked, shared purchases aren't in the mix in the sense that we have a $50 million shared purchase program. We did $25 million of shared purchasing right after we sold the ship for roughly the same amount in last year, third quarter.
Speaker Change: Great. Thank you.
Speaker Change: Jeff.
Speaker Change: With your liquidity situation, you have a tremendous amount of flexibility.
Speaker Change: Our opportunistic buybacks in the mix or is the.
Speaker Change: Payout ratio your primary method of returning cash to shareholders.
Speaker Change: Lamb is the simple answer not to be cute in bulk.
Speaker Change: Right.
Speaker Change: Payout ratio is the primary.
Speaker Change: That's it.
Speaker Change: We anticipate that we have an attorney and expect to continue returning cash however.
Speaker Change: Sure.
Speaker Change: Share repurchases.
Speaker Change: Sure.
Speaker Change: In the mix.
Speaker Change: I said that we have a $50 million share repurchase program.
Speaker Change: He did $25 million of share repurchases right.
Speaker Change: After we sold the ship are often the same amount.
Speaker Change: Last year third quarter.
Jeffrey Pribor: So we have the ability to look at that again. But I'd say the primary plan is dividends, so focus on a payout ratio, but we have the flexibility to do shared purchase as well.
Speaker Change: So we have the ability to look at that again.
Speaker Change: But I'd say the primary plan is.
Speaker Change: Dividends, so focused on the payout ratio, but we have the flexibility to do share repurchase as well.
Speaker Change: Great.
Liam Burke: Great. Thank you, Lois. Thank you, Jeff. Thank you.
Speaker Change: Thank you Louis Thank you Jeff.
Speaker Change: Thank you. Thank you ma'am.
Speaker Change: Our next question comes from Sharaf Mcrobbie bid.
Sherif Elmaghrabi: Our next question comes from Sherif Elmaghrabi with VTIG. Hey, good morning. Thanks for taking my questions.
Speaker Change: T.
Speaker Change: Hey, good morning, Thanks for taking my questions.
Speaker Change: So a couple on I guess charter sentiment.
Lois Zabrocky: So a couple on, I guess, charter sentiment. You highlighted that nearly 20% of the tanker fleet is over 20 years old, but given that new-build deliveries aren't gonna replace those older vessels at the same rate, do you think we could see charters relaxing their? Specification requirements, if there isn't as much modern tonnage available. I would say that you do see a bit of flex on the margin from charters depending upon what the tonnage availability is and what the strength of the overall markets are, right? So, you know, very well-maintained vessels, I think, could retain their, you know, ability to trade and their efficiency.
Highlighted that nearly 20% of the tanker fleet is over 20 years old, but given that newbuild deliveries arent going to replace those older vessels at the same rate do you think we could see charters relaxing their.
Speaker Change: Specification requirements, if there isn't that much modern tonnage available.
Speaker Change: I would say that you do see a bit of <unk>.
Speaker Change: On the margin from charters depending upon.
Speaker Change: What the tonnage availability is and what the strength of the overall markets are right. So.
Speaker Change: Very well maintained.
Speaker Change: I think you could retain their bill.
Speaker Change: Ability to trade in their efficiency other hand.
Lois Zabrocky: On the other hand, You know, the OPEC list of 100 B's, it's a rare exception that there's 100, you know, a few there that are under 20 years old. Right?
Speaker Change: The OPEC with 100, B I believe so.
Speaker Change: It's a rare exception that there's one.
Speaker Change: A few there that are under 20 years old right. So you do tend to see these shifts that are.
Lois Zabrocky: So, you know, you do tend to see the ships that are on the water and yeah highly inefficient and really marginalized being you know older and certainly controlled by by those that are not doing a high level of maintenance so I think it'll be incremental from the charters it's never going to be wholesale.
Speaker Change: On the water and yeah, hi, lean efficient and really marginalized.
Speaker Change: Older and certainly controlled by by those that are not doing the high level.
Speaker Change: I think it'll be incremental from the charterers.
Speaker Change: We're gonna be wholesale.
Speaker Change: And then on.
Bill Nugent: And then on Red Sea transits, I appreciate nobody wants to be the first mover in the Red Sea and everyone has a different opinion on when transits could resume, but is this something that charters are pushing for at this time? I'm going to turn it over to our head of ops, Bill Nugent, and just have him give a little bit of an opinion there. Thank you, Lois. We don't talk about specific security measures or policies. What I can say, I think, is that the whole market is looking for a bit more of a sustained stability in the region and a de-escalation.
Speaker Change: On Redfin transits I appreciate nobody wants to be the first mover in the Red Sea and everyone has a different opinion on when changes could resume but is this something that charters are pushing for at this time.
Speaker Change: Yeah.
Speaker Change: I'm going to turn it over to <unk>.
Speaker Change: Hello, Bob.
Speaker Change: And just have him give a little bit of an opinion there.
Speaker Change: Thank you.
Speaker Change: Lewis.
Speaker Change: Yes, we don't talk about our specific security.
Speaker Change: Here's or policies.
Speaker Change: What I can say.
Speaker Change: The whole market is looking for a.
Speaker Change: A bit more of a sustained stability in the region and the escalation so to answer your question.
Bill Nugent: To answer your question, I'm not aware of any pressure or inquiries from charters to go through, and I'm grateful for their support and like thinking. Thank you. Thanks Lois, and thanks Bill.
Speaker Change: I'm not aware of any pressure or inquiries from charterers to go through.
Speaker Change: I'm.
Speaker Change: Grateful for their support and like thank you.
Speaker Change: Got it.
Speaker Change: Thanks Bose.
Speaker Change: Thanks Bill.
Speaker Change: And that was our final question, so I'll hand.
Lois Zabrocky: And that was our final question, so I will hand back over to you, Lois, for any final remarks.
Louise: And back over to you Louise for any final remarks.
Lois Zabrocky: I would just like to thank everyone for joining us today. And we live in very interesting times and are watching the news frequently, right? So we see an overall construction in the tanker market to be really rather robust.
Speaker Change: I would just like to thank everyone for joining us today and we live in very interesting times and are watching the news frequently right. So we see an overall construction on the tanker market to be really rather robust.
Louise: And we hope to hear from you next quarter.
Lois Zabrocky: and we hope to hear from you next quarter. Thank you very much.
Speaker Change: You very much.
Speaker Change: So this concludes today's call. Thank you everyone for joining us for participating have a great day you may now disconnect.
Carla: So this concludes today's call. Thank you everyone for joining and for participating. Have a great day.
Carla: You may now disconnect.
Speaker Change: [music].
Speaker Change: Yeah.