Q2 2025 International Seaways Inc Earnings Call
Thank you for your patience, everyone. The international seaways conference call Will begin in 1 minute time. In the meantime, you can get yourself in the Cuba press star, followed by 1 on your telephone keypad to ask you a question.
Good morning everyone and welcome to the international seaways in second quarter 2025 earnings conference call. My name is Carla and I will be coordinating your call today during the presentation. You can register to ask questions by pressing star. Followed by 1 on your telephone keypad. If you change your mind, please press star followed by 2. I've not like to hand over to your house, James, small General console to begin. Please go ahead when you're ready,
Thank you, operator.
Good morning everyone and welcome to International seaways earnings.
2025.
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.
My address without limitation the following topics.
Outlooks for the crude and product tanker markets.
Changes in trading patterns.
Forecasts of world and Regional economic activity.
Forecasts of the demand for and production of oil and petroleum products.
The company strategy and business prospects.
Expectations about revenues and expenses including vessel Charter higher and GNA expenses.
Estimated future, bookings, tce rates and capital expenditures?
Projected Dry Dock and off higher days.
New build vessel Construction.
Vessel purchases and sales.
Anticipated. Financing transactions and plans to issue dividends
The effects of ongoing and threatened conflicts around the globe.
Economic Regulatory and political developments in the United States and globally.
The company's ability to achieve its financing and other objectives and its consideration of strategic alternatives.
And the company's relationships with its stakeholders.
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 in future developments and other factors that management believes are appropriate to consider in the circumstances.
We're looking statements are subject to risks uncertainties and assumptions. Many of which are beyond the company's control that could cause actual results to differ materially from those implied or expressed by the statements.
Factors risks and uncertainties that could cause the company's actual results to differ from expectations.
Include those described in our annual report on form. 10K for 2024.
And our quarterly reports on form, 10 Q for the first and second quarters of 2025.
As well as in other filings, we have made or in the future may make with the U.S. Securities and Exchange Commission.
Now, let me turn the call over to our president and chief executive officer. Louis the bride Louis.
Thank you Jane. Good morning everyone. Thank you all for joining International seaways earnings call for the second quarter of 2025.
On slide 4 of the presentation found in the investor relations section of our website. Net income for the second quarter was 62 million.
For $1.25 per diluted share.
Adjusted net income for the second quarter was fifty million dollars.
Or 1 dollar and 2 cents per diluted share.
An adjusted Eva was 102 million.
Today, we also announced a combined dividend of 77 cents per share.
To be paid in September, as you can see in the lower left section of the slide.
This is our fourth consecutive quarter of a payout ratio of, at least 75%.
We can continue to believe in building on our track record of returning to shareholders as part of our consistent and balanced Capital allocation strategies.
Since we started supplementing, our regular 12 cents per share dividend in the fourth quarter of 2022.
We have paid combined dividends of $15.25 per share.
Which equates to a dividend yield of about 14% per year.
Our average market cap.
Share repurchases remain an option for seaways and this would be additive to our payout ratio.
On the upper right hand side. We have sold or agreed to sell 6 of our oldest vessels with an average age of 17 and a half years.
2 were sold within the second quarter for proceeds of 28 million.
The other full.
We have also taken steps to utilize. Those proceeds, with our agreement to purchase a 2020 build scrubber fitted blcc delivering in the fourth quarter.
The impact of these sales and purchase reduced or age by a half a year.
Fleet renewal is always part of our strategy and we expect to execute sales and purchases throughout the tanker cycle.
We continue to work through our time Charter book as well.
Have over 260 million dollars in future contract at revenues on 12 V, with an average duration of around 2 years.
We do believe demand, fundamentals are solid and continue to support a constructive outlook for seaborne transportation.
For delivered share.
Our blcc rates were impacted by a long haul strategy that didn't allow us to fully capture short Spanx during the quarter.
Mrs, were more heavily weighted to the weaker Western Market and positioning for a significant number of dry dockings.
We're seeing the benefits of those already.
Quarter bookings.
Strengthen.
Our mining business had over 9 million dollars in Revenue in the quarter.
Combined with less than 3 million dollars. In vessel expenses, just under 4 million in Charter higher and 1 million of DNA.
Wider business contributed to about 2 million dollars in Iva Dawn.
Returning to our cash bridge on slide 9.
Began the quarter with total liquidity of $673 million.
549 is undrawn revolving capacity.
Following along the chart from left to right on the cache Bridge.
at 102 million dollars is adjusted, even though the second quarter,
$22 million in debt service and another $29 million note?
Due to the timing of payables.
We therefore achieved our definition of free cash. Flows of just about 71 million for the second quarter.
This represents an annualized, cash flow yield of nearly 15% on today's share price.
We received $28 million in proceeds from the two vessel sales at the end of the quarter.
We paid about 16 million dollars in lr1. New building, installments.
as previously announced on the last call, we repaid 36 million down on our revolver for the
Center capacity, production.
The remaining 30 million dollars represents our 60 cents per share dividend that we paid in June.
The latter few bars on the chart. Reflect our balance Capital, allocation approach where we utilize all the pillars.
But, you know, if you're leveraging and returns to shareholders,
$71 million of free cash flow plus $28 million of vessel sales.
Plus 82 million in capital, allocation.
This gives us a net positive change in cash of $15 million, and an increase in undrawn RCM of $20 million.
This equates to ending cash of 149 million with 566 million in undrafted revolvers. A total of 30 of over 700 million.
Moving to slide 10.
We have a strong financial position detailed by the balance sheet, on the left hand side of the page.
Cash and liquidity is the main strong at 790 million.
We have invested about 2 billion dollars in vessels and costs
We're currently valued at about 3 billion dollars.
And with 553 million dollars of gross debt. At the end of the second quarter,
our net load of value is below 14%.
an important highlight to also mention,
As we previously announced, it is our intention to repay the Ocean Yield loans in November.
Under the accounting, guidelines.
We are required to classify the outstanding debt of 268 million as current debt.
Which impacts our current ratio.
I want to be clear that this is not affect our financial covenants or our ability to fund my abilities.
While we continue to evaluate numerous financing alternatives for this refinancing
We can simply draw on the RCs to fully fund the repayment.
We expected this for financing should.
Lower our ranking costs.
On the lower right hand table.
We have detailed our debt portfolio as of June 30th.
Since then.
We repay the remaining 27 million outstanding on the RCF during the third quarter.
By the time of our next earnings call, we'll expect to have completed documentation and gone down on a new export agency, back facility.
We'd like to thank our partners at Kure and DME for their effort.
240 million dollars on our lr1 new buildings.
Effectively achieves a 20 year amortization profile in a margin of about 125 basis points of the next 12 years.
We've been excited about our dual fuel ready, lr1 new building today. We're very proud to be in the final stages of the financing before our scheduled deliveries.
We continue to enhance our balance sheet to maintain the financial flexibility necessary to facilitate growth.
As well as returning to shareholders.
Our nearest maturity in the portfolio, isn't until the next decade.
We have 32 uncovered vessels.
And we have ample undrawn.
Involving credit facility capacity.
Continue to explore ways to lower our break. Even costs even more and share any upside with continued double digit returns this shareholders
And the last slide that I'll cover slide 11 reflection, our forward-looking guidance and book today TC.
The line with our spot cash breaking great.
Starting with tce pictures, from the third quarter of 2005. I'll remind you as I always do that actual TC, during our next Journeys, call may be different
But as of today, the currently have a blended average spot TC about 28,000 per day lead wide.
40% of our third quarter, expectations.
On the right hand side are forward spot Break. Even rate is about 13,000 dollars per day.
Around 2,600 per day profit.
Based on our spot tce book today and our spot Break. Even, it looks like seaways can continue to generate significant free, cash, flows during the third quarter and build on our track record and returning cash to shareholders.
On the bottom left hand chart. We provide some updated guidance for expenses in the third quarter and our estimates for 2025.
We also include in the appendix. Our quarterly expected off, buyer.
And I don't plan to read each item line by line.
You.
That concludes my remarks and I'd like to now turn the call back to Louis for her closing comments.
Thank you so much Jeff.
Just providing you with details. See, ways investment highlights.
I will summarize briefly.
Over the last eight years, International Seaways has built a track record of returning cash to shareholders.
Maintaining a healthy balance sheet and growing the company.
Our total shareholder return represents around, 20% compounded annual returns.
We continue to renew our Fleet so that our average age is close to 10 years old and what we see as a sweet spot for tanker Investments and returns.
We have invested in a range of asset classes.
Casting a wider net for growth opportunities and supplementing our scale in each class by operating in larger pools.
We aim to keep our balance sheet fortified for any down cycle.
We have nearly 600 million dollars in undrawn credit capacity to support our growth.
Our net debt is under 15% of the fleet's, current value and we have 32 vessels that are unencumbered.
Lastly, our spot shifts, only need to earn 13,000 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
Thank you very much. And with that said, operator, we'd like to open up the lines for questions.
Of course, we will now begin the question and answer session. If you would like to ask a question, please press star. Followed by 1 on your telephone keypad. If you change your mind, please press star followed by you. When preparing to ask your question, please, ensure your devices and muted locally. We will make a quick pause here for the questions to be registered.
And our first question comes from the line of Chris Robertson with ducha bank.
Hi, good morning. Thank you for taking my questions. I have, uh, just 1 simple modeling. Type question in a market question. Um, the first is Jeff. Could you clarify on the 4 vs expected to be delivered in the third quarter here on for 57 million? Is that 57 million of net proceeds or is that prior to uh, Debbie payment?
Um,
Chris, I think goes that should be considered to be debt process.
Because they're part of our uncovered Suite.
Got it. Yeah, thank you for that. Um, second question, then on the the recent sanctions package, um and then kind of some of the more recent threats by President Trump uh, with regards to India and taking Russian crude volumes, um, I guess, could you provide some color on your your thoughts around what impact the sanctions package will have? And then if there are, uh, an increase in in sanctions us, sanctions against India, uh, or a certain refiners there, something like that. What do you expect to happen in the market with regards to trade patterns
Hey Chris, this is Louis.
Definitely, you know, definitely never. Uh, never a dull day and we're already seeing India, only take compliance tonnage for exports. They certainly have enjoyed a massive discount on copious volumes of Russian Imports.
Um, you know, so I I think this is uh in the midst of negotiations, likely behind the scene you have seen India. Take
More uh us Gulf crude in the last 6 months than what we had seen previously. So, you know, um, this Administration and they they seem to be uh, highly tactical in in their trading. So we're we're going to see how this is all going to. Um,
Next. 30 days.
Yeah, I agree with that. All right, thank you for the color.
Thank you. So the next question comes from Sheriff Elmer Grabby with BTIG.
Thanks for taking.
Out, they're going to finish unwinding those uh voluntary production costs roughly a year ahead of schedule.
That's a lot of crude and a lot will probably flow on bees, but, uh, can you speak to where we may see a benefit for smaller tankers?
Yeah, absolutely. Um I'm going to turn that over to Derek. Salone, our chief commercial officer
Thanks, Lois. Uh, Sherice. Thanks for the question.
I mean, I think you,
You hit the nail on the head. The the easy answer is a lot of that will move on vcc's, so that should be beneficial to the V Market. We're seeing already an uptick in activity at a Arabian Gulf over the last day or so,
Uh, on the back of this news.
And then to your questions, specifically.
The vlcc is being much more engaged in moving. Crude out of the Arabian Gulf will be beneficial to the smaller segments, because there's less cannibalization of the vcc's in the sewers Max routes and the afro Max routes. So all in should be very beneficial for uh, recruit tankers as a whole.
Thanks and and sticking with that. Um,
Vessel mix thematic, I guess, um, you guys are buying that modern V at the end of the year opportunities like that. Don't come around often. Um, but uh, how are you thinking about the balance of crude versus product and your own Fleet? Particularly given product tanker rates being resurgent as far in Q3
So Chris, you know, uh, we brought in 9 more modern Mrs, throughout 2024 and those vessels, you know, as you see with our days booked in the uh, third quarter of 23,800 per day. Um, even though we're selling, uh, and it pains me to sell those older uh, Mrs. Because they're earning incredibly, you know, we have shored up uh, with more modern Fleet profile across our mrr space and a as you know, you know, we will be taking in September, our first lr1 of our
6, uh, new building delivery, uh, built in Korea in a sector where there's been 5 Ricci, which.
For this year's a lot and there's been no deliveries in 3 and a half years.
So, if you look at, you know, the uh, smaller smaller part of our Fleet and the product carriers, and as we bubble up its time,
Okay, thanks for taking my question.
Just as a reminder, we start with 1 on your telephone keypad. Ask you a question. The next question comes from Omar Nocta with Jeffrey.
Thank you. Good morning. Hello Louis. Hi, Jeff. Um, just a a couple questions and maybe just a little bit of a follow-up to start with, with Sheriff's last question, you know, clearly, you know, you you earlier in the year, you rolled those older vlc's into modern, Mrs. And then recently, you did the reverse, uh, by kind of rolling the older Mrs into a new, uh, modern v. Um, do you see yourselves doing more of this type of action within those specific segments? Um, or are there any other segments you need or have a desire, um, to tweak in a similar fashion?
No, thank you. Uh Omar. You know definitely you know the um prices we received on those, you know 15 year old DLCs were really you know, strongly above uh mid-cycle levels, you know? So we look very opportunistically at constantly improving our Fleet profile. We're very deliberate. Um,
With the moves that we're making. And, you know, we do see, uh,
On, um, the vlcc that, you know, people have been waiting for that and kind of maybe move prematurely where we have a more balanced Fleet. We think that um, the opportunity is coming on the horizon there.
they may not be able to get the same type of package given, they're not new buildings, but if you have an idea of what the what that type of financing package could look like,
Hi Omar.
Well, first of all, you know, we're pleased about this.
K shore financing for the LR1, who goes I think.
marrying up a new buildings in Korea with with
Uh, financing that backed by government agencies. There is, is a, is it?
A good way to do things in a good new uh Avenue to open up for us. So it was really appropriate.
for those ships in particular, um,
Regarding the six ships that will be.
Freed up or unencumbered by paying off ocean yields. There are numerous...
Options uh we we really uh are in the the middle of evaluating all of that. First of all we can just you know we have enough revolver to Simply stroke a check right but we'll use this as an opportunity to see whether or not we can you know tweak get a further tweak on our balance sheet to lower our break even so we're evaluating sort of everything so I really can't tell you much more than that, but we feel very fortunate that there will be a lot of good opportunities for the for that
Okay. Thanks Jeff. And maybe just a quick follow-up to that. You know, the we've generally seen whenever a refinancing takes place of you know the vessels on the water tends to be maybe a 5 year term and we're seeing these new buildings. Get 12 years is 5 years, still the more
kind of that, is that what can be expected or do you see that extending
look, I think that
There's usually trade-offs involved. Like if you could certainly possibly get 6 or 7 years. Uh, but depending upon the age, you may of of the vessel is securing, its name right now, I'm making a trade-off for that, you know, if you look at the age of the vessels that are that are coming off, you know, it it's certainly not going to be a 12 year term on those vessels that are relatively minor pick up close to 10 years old. But uh, uh, you know, I, I think that it should be 1 of the factors, the other things that go into it are obviously margin, everyone looks at margins and that's important. Uh and they've been coming down, but it's also profile like we have a 20 year profile.
on this, uh,
ETA financing and and uh that's a lot of our other financing sales that's really helpful. In terms of of reducing the the amortization. Therefore lowering your your your daily cash break even. So
we as a as a company kind of look at all of these factors as part of the
The fabric.
But you know, what's the right choice? So any one of them is.
Relevant, but you kind of look at them all together and make the best choice. So
Uh, I hope that kind of answers your question, Omar.
That's helpful. I appreciate your your comments Jeff. Thank you and and thanks Lois.
Thank you.
Okay. All right, we want to thank you everyone for joining us, for our earnings call today. And, as as we sit here, uh, in the middle of August, we're starting to see a synchronized uptick in the spot markets on both crude and products. So we look forward to uh having you join us on the next quarter. Thank you so very much.
Thank you, everyone. This concludes today's call. You may now just go on.