What International Seaways (INSW) Said on Its Q3 Earnings Call

Key Points

• Strong Q3 results: International Seaways reported adjusted net income of about $291 million, or $5.84 per diluted share, and declared a $5.05-per-share dividend. The company said it remains committed to distributing at least 85% of adjusted net income.
• Spot rates surged: More than half of expected Q4 spot revenue days were booked at a blended TCE rate above $172,000 per day, versus $67,700 in Q3. Management cautioned that the rate could change as more voyages are fixed.
• Fleet and market outlook: The company is adding four newbuild VLCCs while selling older vessels, and ended Q3 with about $964 million in total liquidity. Management cited oil demand and aging vessels as potential supports for tanker markets, while acknowledging a larger order book and geopolitical uncertainty.

International Seaways NYSE: INSW reported strong third-quarter earnings and declared a $5.05-per-share dividend as tanker rates surged, with management saying more than half of expected fourth-quarter spot revenue days had already been booked at substantially higher rates.

Chief Financial Officer Jeff Pribor said third-quarter net income was $344 million, or $6.90 per share, while adjusted net income was approximately $291 million, or $5.84 per diluted share. Adjusted earnings before interest, taxes, depreciation and amortization were $345 million.

President and Chief Executive Officer Lois Zabrocky had earlier described third-quarter net income as $290 million, a figure close to the adjusted net income subsequently cited by Pribor. The transcript did not explain the difference.

The newly declared dividend matches the company’s previous record quarterly payment. Zabrocky said International Seaways remains committed to paying out at least 85% of adjusted net income, allowing shareholders to participate in the strong tanker market.

Fourth-Quarter Bookings Climb

Pribor said the company had booked more than half of its expected fourth-quarter spot revenue days at a blended time charter equivalent, or TCE, rate of more than $172,000 per day across the fleet. That compares with a blended spot TCE of $67,700 per day in the third quarter and $29,400 a year earlier.

The CFO cautioned that the fourth-quarter figure reflects fixtures booked as of the call and that the reported rate could change as additional voyages are fixed.

Third-quarter crude tanker revenue reached $321 million, including about $77 million in profit sharing from dual-fuel very large crude carriers, or VLCCs. Pribor said those arrangements lifted blended VLCC earnings across spot and time-charter vessels to more than $200,000 per day.

Asked about product tanker rates, Zabrocky pointed to high U.S. refinery utilization and exports from the U.S. Gulf, as well as Russian refinery outages and rerouting of vessels. She described the company’s medium-range tanker rate of close to $56,000 per day as “super strong.”

Fleet Renewal and Capital Returns

Zabrocky discussed the recently announced transaction to add four newbuild VLCCs, saying the company is using shares as its primary currency to preserve financial resources. She said International Seaways had sold four older VLCCs over the past two years and was working to complete the remaining steps of the transaction.

Chief Commercial Officer Derek Solon said the company had sold six ships so far this year, including a 2012-built Suezmax, and would continue to consider selling older vessels into the firm market. Pribor said the Suezmax sale generated $74 million in proceeds during the third quarter.

Pribor said the latest quarter was the fourth consecutive quarter in which the company paid at least 85% of adjusted net income to shareholders. Asked whether the company might retain more cash given the strength of fourth-quarter rates, he said investors should expect that practice to continue.

International Seaways ended the third quarter with $454 million in cash and $510 million in undrawn revolving credit capacity, for total liquidity of about $964 million. Gross debt was $716 million, and net debt was approximately $250 million, Pribor said.

Market Outlook

Zabrocky said geopolitics remained a major influence on tanker markets, but she also pointed to underlying demand from oil production growth in the Americas and consumption growth in the East. She said rebuilding low OECD oil inventories could support tanker demand even if the current conflict eases.

On vessel supply, Zabrocky acknowledged that the tanker order book has grown. She said a large number of older vessels remain in operation, however, and that some aging tonnage serving sanctioned trades could leave the fleet if geopolitical tensions ease.

About International Seaways (NYSE:INSW)

International Seaways, Inc NYSE: INSW is a maritime transportation company that owns and operates oceangoing tankers. Its vessels transport crude oil, refined petroleum products and other energy-related cargoes for oil companies, commodity traders, refiners and other customers in international markets.

The company's fleet includes large crude carriers and product tankers serving a range of transportation needs. International Seaways operates vessels on the global waterborne energy transportation network, with routes connecting major oil-producing regions, refining centers and consuming markets.

International Seaways was established as an independent public company in 2016 following its spin-off from Overseas Shipholding Group.

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