International Seaways(INSW) - 2025 Q2 - Quarterly Results

Part I Highlights & Recent Developments International Seaways reported a net income of $62 million ($1.25/share) and an adjusted net income of $50 million ($1.02/share) for Q2 2025, actively optimizing its fleet and maintaining a strong balance sheet with $709 million in liquidity and a low 14% net loan-to-value ratio, while declaring a combined dividend of $0.77 per share for September 2025 Q2 2025 Key Financial Metrics | Metric | Value | Per Diluted Share | | :--- | :--- | :--- | | Net Income | $62 million | $1.25 | | Adjusted Net Income | $50 million | $1.02 | | Adjusted EBITDA | $102 million | N/A | - Fleet optimization involves selling six older vessels (average age 17.5 years) and agreeing to purchase a 2020-built scrubber-fitted VLCC for $119 million[5] - The company maintains a healthy balance sheet with total liquidity of approximately $709 million as of June 30, 2025, and a low net loan-to-value of about 14%[5] - A combined dividend of $0.77 per share was declared for September 2025, representing 75% of adjusted net income, marking the 23rd consecutive quarterly dividend[5] Management Commentary Management emphasized the successful execution of their disciplined capital allocation strategy, which includes fleet renewal, balance sheet strengthening, and significant cash returns to shareholders, expressing a positive outlook on tanker demand despite geopolitical uncertainty and highlighting the company's financial flexibility - CEO Lois K. Zabrocky highlighted the strategy of selling older vessels, purchasing modern ones, and returning cash to shareholders, noting that dividends since Q4 2022 aggregate to $15.25 per share[6] - The company expects oil demand to grow, supported by production from the Americas and OPEC+, while tanker supply may decline, creating favorable market dynamics[6] - CFO Jeff Pribor stated the company maintains financial strength with over $560 million of undrawn revolving capacity and over $700 million in total liquidity to support growth and navigate the tanker cycle[6] Second Quarter 2025 Results In Q2 2025, net income significantly decreased to $62 million from $145 million in Q2 2024, primarily due to lower Time Charter Equivalent (TCE) revenues, with spot earnings down approximately $13,000 per day across the fleet, and shipping revenues falling to $196 million from $257 million year-over-year, impacting both Crude Tankers and Product Carriers segments Q2 2025 vs Q2 2024 Consolidated Performance | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income | $62 million | $145 million | | Diluted EPS | $1.25 | $2.91 | | Shipping Revenues | $196 million | $257 million | | TCE Revenues | $189 million | $252 million | | Adjusted EBITDA | $102 million | $167 million | Crude Tankers Segment The Crude Tankers segment's TCE revenues decreased to $99 million in Q2 2025 from $121 million in the prior-year quarter, driven by lower average spot earnings across all vessel classes, with VLCCs at $39,300/day, Suezmaxes at $36,800/day, and Aframaxes at $30,700/day Crude Tankers Segment Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Shipping Revenues | $104 million | $125 million | | TCE Revenues | $99 million | $121 million | | VLCC Spot Earnings | ~$39,300/day | ~$46,400/day | | Suezmax Spot Earnings | ~$36,800/day | ~$45,000/day | | Aframax Spot Earnings | ~$30,700/day | ~$31,500/day | Product Carriers Segment The Product Carriers segment saw its TCE revenues fall to $90 million in Q2 2025 from $131 million in Q2 2024, primarily due to significantly lower average spot earnings for LR1s at $32,800/day (down from $53,000/day) and MRs at $18,900/day (down from $35,000/day) Product Carriers Segment Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Shipping Revenues | $92 million | $132 million | | TCE Revenues | $90 million | $131 million | | LR1 Spot Earnings | ~$32,800/day | ~$53,000/day | | MR Spot Earnings | ~$18,900/day | ~$35,000/day | Strategic & Financial Initiatives The company is actively managing its fleet and finances through a multi-faceted strategy, including a fleet optimization program involving the sale of older vessels and acquisition of modern ones, alongside constructing six new dual-fuel ready LR1s, while repaying debt and securing financing for newbuilds, demonstrating a strong commitment to shareholder returns through consistent dividends Fleet Optimization Program The company is executing a fleet renewal strategy by selling older vessels and acquiring modern tonnage, having sold two 2007-built vessels for $28 million in Q2, with four more expected to be sold in Q3 for $57 million, while agreeing to purchase a 2020-built VLCC for $119 million and having six new dual-fuel ready LR1 vessels under construction for delivery starting in Q3 2025 - Sold two 2007-built vessels in Q2 for net proceeds of ~$28 million and expects to sell four more vessels in Q3 for gross proceeds of ~$57 million[13] - Agreed to purchase a 2020-built, scrubber-fitted VLCC for $119 million, with delivery expected in Q4 2025[14] - Has contracts to build six dual-fuel (LNG) ready LR1 vessels for a total price of ~$359 million, with deliveries scheduled from Q3 2025 through Q3 2026[17] Balance Sheet Enhancements The company strengthened its balance sheet by repaying a total of $144 million on its revolving credit facilities in the first half of 2025 and July, plans to exercise purchase options on six VLCCs for $258 million in November 2025 using its $560 million in available revolving credit capacity, and has secured a new $240 million financing commitment for its LR1 newbuildings - In the first half of 2025, the company repaid $117 million on its revolving credit facilities, with an additional $27 million repaid in July 2025[18] - Intends to exercise purchase options on six VLCCs for an aggregate of $258 million in November 2025, with funding available from its revolving credit facilities[19] - Secured a $240 million financing commitment for its LR1 newbuildings with a blended margin of 125 basis points over a 12-year maturity[5] Returning Cash to Shareholders International Seaways continues its commitment to shareholder returns, having paid a combined dividend of $0.60 per share in June 2025, and declaring another combined dividend of $0.77 per share (consisting of a $0.12 regular and a $0.65 supplemental dividend) payable in September 2025, while maintaining a $50 million share repurchase program authorized through the end of 2025 - Paid a combined dividend of $0.60 per share in June 2025[20] - Declared a combined dividend of $0.77 per share ($0.12 regular, $0.65 supplemental) to be paid in September 2025[21] - A $50 million share repurchase program remains authorized until the end of 2025[22] Financial Statements The consolidated financial statements detail the company's performance, showing a year-over-year decline in revenues and net income for both the second quarter and first half of 2025, a slight decrease in total assets and a reduction in total liabilities compared to year-end 2024, and lower cash from operations with significant cash usage in financing activities Consolidated Statements of Operations For the three months ended June 30, 2025, total shipping revenues were $195.6 million, down from $257.4 million in 2024, with net income for the quarter at $61.6 million ($1.25/share), a significant decrease from $144.7 million ($2.91/share) in the prior-year period, and six-month net income at $111.2 million compared to $289.2 million in 2024 Statement of Operations Highlights (Three Months Ended June 30) | ($ in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Total Shipping Revenues | $195,641 | $257,409 | | Income from vessel operations | $69,367 | $154,788 | | Net income | $61,646 | $144,723 | | Diluted net income per share | $1.25 | $2.91 | Consolidated Balance Sheets As of June 30, 2025, the company reported total assets of $2.52 billion, down from $2.64 billion at year-end 2024, with cash and cash equivalents at $148.8 million, total liabilities decreased to $623.4 million from $780.3 million primarily due to a reduction in long-term debt, and total equity increased to $1.90 billion Balance Sheet Summary | ($ in thousands) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $148,807 | $157,506 | | Total Assets | $2,523,215 | $2,636,397 | | Total Liabilities | $623,436 | $780,349 | | Total Equity | $1,899,779 | $1,856,048 | Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities was $155.7 million, a decrease from $324.4 million in the same period of 2024, net cash from investing activities was $46.5 million driven by proceeds from vessel sales, and net cash used in financing activities was $210.9 million, primarily for debt repayments ($137.2 million) and dividend payments ($64.1 million) Cash Flow Summary (Six Months Ended June 30) | ($ in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $155,726 | $324,381 | | Net cash provided by/(used in) investing activities | $46,486 | $(96,415) | | Net cash used in financing activities | $(210,911) | $(178,585) | | Net (decrease)/increase in cash | $(8,699) | $49,381 | Operational Data & Fleet Information Operational data for Q2 2025 shows a general decline in spot TCE rates across most vessel classes compared to Q2 2024, with LR1 and MR product carriers experiencing significant drops in spot earnings, while the company's total fleet consisted of 81 vessels as of June 30, 2025, including 75 operating vessels and 6 newbuilds on order Spot and Fixed TCE Rates In Q2 2025, average spot TCE rates for VLCCs were $39,303/day and Suezmaxes were $36,830/day, both down from the prior year, with the Product Carriers segment seeing more significant declines, as LR1 spot rates were $32,802/day (vs. $53,066 in Q2 2024) and MR spot rates were $18,941/day (vs. $35,007 in Q2 2024) Q2 2025 Average Spot TCE Rates | Vessel Class | Average Spot TCE Rate ($/day) | | :--- | :--- | | VLCC | $39,303 | | Suezmax | $36,830 | | Aframax | $30,747 | | Panamax (LR1) | $32,802 | | MR | $18,941 | Fleet Information As of June 30, 2025, International Seaways' fleet comprised 81 vessels, including a total operating fleet of 75 vessels (61 owned, 14 chartered-in) and a newbuild fleet of 6 LR1 vessels, with the operating fleet divided into 28 crude tankers and 47 product carriers Fleet Composition as of June 30, 2025 | Fleet Category | Vessels Owned | Vessels Chartered-in | Total Vessels | | :--- | :--- | :--- | :--- | | Operating Fleet | 61 | 14 | 75 | | Newbuild Fleet | 6 | - | 6 | | Total Fleet | 67 | 14 | 81 | Non-GAAP Financial Measures Reconciliation This section provides reconciliations for key non-GAAP measures, where GAAP net income of $61.6 million for Q2 2025 was adjusted (primarily for an $11.2 million gain on vessel disposal) to arrive at an Adjusted Net Income of $50.4 million, and similarly reconciled to an EBITDA of $112.8 million and an Adjusted EBITDA of $101.5 million, while shipping revenues of $195.6 million were reconciled to TCE revenues of $188.8 million Adjusted Net Income Reconciliation For the second quarter of 2025, the company's GAAP net income of $61.6 million was adjusted for a $11.2 million gain on the disposal of vessels, resulting in an adjusted net income of $50.4 million, or $1.02 per diluted share Q2 2025 Adjusted Net Income Reconciliation | ($ in thousands) | Amount | | :--- | :--- | | Net income | $61,646 | | Gain on disposal of vessels and other assets, net | $(11,229) | | Adjusted net income | $50,417 | EBITDA and Adjusted EBITDA Reconciliation In Q2 2025, GAAP net income of $61.6 million was reconciled to EBITDA of $112.8 million by adding back interest and depreciation/amortization, and after further adjusting for an $11.2 million gain on vessel disposal, Adjusted EBITDA for the quarter was $101.5 million Q2 2025 Adjusted EBITDA Reconciliation | ($ in thousands) | Amount | | :--- | :--- | | Net income | $61,646 | | Interest expense | $9,761 | | Depreciation and amortization | $41,349 | | EBITDA | $112,756 | | Gain on disposal of vessels and other assets, net | $(11,229) | | Adjusted EBITDA | $101,527 | Time Charter Equivalent (TCE) Revenues Reconciliation For the second quarter of 2025, the company's GAAP shipping revenues of $195.6 million were reconciled to Time Charter Equivalent (TCE) revenues of $188.8 million by subtracting voyage expenses of $6.8 million Q2 2025 TCE Revenues Reconciliation | ($ in thousands) | Amount | | :--- | :--- | | Shipping revenues | $195,641 | | Less: Voyage expenses | $(6,819) | | Time charter equivalent revenues | $188,822 |