International Seaways(INSW) - 2025 Q2 - Quarterly Report

Part I - Financial Information Item 1. Financial Statements Unaudited Q2 2025 financial statements reflect decreased net income and revenues, with reduced assets and liabilities, and lower operating cash flow Condensed Consolidated Balance Sheets The balance sheet as of June 30, 2025, shows a decrease in total assets and liabilities, while total equity slightly increased Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $332,394 | $376,323 | | Total Assets | $2,523,215 | $2,636,397 | | Total Current Liabilities | $350,333 | $130,935 | | Total Liabilities | $623,436 | $780,349 | | Total Equity | $1,899,779 | $1,856,048 | Condensed Consolidated Statements of Operations Net income for Q2 2025 significantly decreased from the prior year, primarily driven by a substantial drop in shipping revenues Statement of Operations Summary (in thousands, except per share amounts) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Shipping Revenues | $195,641 | $257,409 | $379,035 | $531,810 | | Income from vessel operations | $69,367 | $154,788 | $128,540 | $309,211 | | Net income | $61,646 | $144,723 | $111,211 | $289,213 | | Diluted net income per share | $1.25 | $2.91 | $2.25 | $5.83 | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, operating cash flow decreased, investing activities provided cash, and financing activities used more cash for debt and dividends Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 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 | Notes to Condensed Consolidated Financial Statements The notes detail accounting policies, segment performance declines, active fleet management, debt reduction, and significant capital returns to shareholders - The company operates a fleet of 75 vessels and has six LR1 newbuilds scheduled for delivery between Q3 2025 and Q3 2026[12] Segment Adjusted Income from Vessel Operations (in thousands) | Segment | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Crude Tankers | $46,474 | $67,147 | $81,146 | $137,040 | | Product Carriers | $23,951 | $73,396 | $51,743 | $170,249 | - The company has commitments for six new LR1 Product Carriers for an aggregate cost of approximately $359 million, with $300 million remaining as of June 30, 2025[32] - During the first six months of 2025, the company sold four vessels (two VLCCs and two MRs) and recognized an aggregate gain of $21.3 million[36] - Total debt decreased from $688.4 million at year-end 2024 to $547.3 million at June 30, 2025, primarily due to repayments on the $500 Million Revolving Credit Facility[49][52] Dividends Paid in 2025 (in thousands) | Payment Date | Regular per Share | Supplemental per Share | Total Paid | | :--- | :--- | :--- | :--- | | March 28, 2025 | $0.12 | $0.58 | $34,495 | | June 26, 2025 | $0.12 | $0.48 | $29,620 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes decreased income from vessel operations to lower TCE revenues, while maintaining strong liquidity and focusing on fleet renewal, debt reduction, and shareholder returns Operations & Oil Tanker Markets The company operates a 75-vessel fleet primarily in the spot market, with global oil consumption and tanker fleet size increasing, and Q2 2025 tanker rates remaining above breakeven levels - The company's operating fleet consists of 75 vessels, with six additional LR1 newbuilds scheduled for delivery, bringing the total to 81 vessels[107] - Approximately 82% of total TCE revenues were derived from the spot market in Q2 2025, compared to 88% in Q2 2024[111] - The global tanker fleet (over 10,000 dwt) increased by a net 3.7 million dwt during Q2 2025, with the crude fleet growing by 2.9 million dwt and the product carrier fleet by 0.8 million dwt[120] Results from Vessel Operations Income from vessel operations significantly decreased in Q2 2025 due to a 25% drop in TCE revenues, driven by lower average daily rates and reduced revenue days TCE Revenue and Income from Vessel Operations (in millions) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | TCE Revenues | $188.8 | $251.8 | $(63.0) | | Income from Vessel Operations | $69.4 | $154.8 | $(85.4) | Crude Tankers Segment - Average Daily TCE Rate | Period | 2025 ($/day) | 2024 ($/day) | | :--- | :--- | :--- | | Q2 | $39,627 | $46,698 | | H1 | $37,093 | $46,846 | Product Carriers Segment - Average Daily TCE Rate | Period | 2025 ($/day) | 2024 ($/day) | | :--- | :--- | :--- | | Q2 | $21,500 | $34,857 | | H1 | $21,780 | $37,310 | Adjusted EBITDA Reconciliation (in thousands) | Period | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $61,646 | $144,723 | $111,211 | $289,213 | | EBITDA | $112,756 | $193,665 | $213,478 | $385,195 | | Adjusted EBITDA | $101,527 | $166,956 | $192,228 | $358,435 | Liquidity and Sources of Capital The company maintained strong liquidity of $709.2 million as of June 30, 2025, with improved net debt to capital, and actively managed capital through dividends, debt repayment, and fleet renewal - Total liquidity as of June 30, 2025, was $709.2 million, consisting of $148.8 million in cash and $560.4 million in undrawn revolver capacity[171] - Net debt to capital was 17.3% as of June 30, 2025, compared to 22.2% at December 31, 2024[175] - The company plans to exercise purchase options in November 2025 on six VLCCs for an estimated aggregate price of $257.7 million, which can be funded by its revolving credit facilities[180] - As of June 30, 2025, the company has 32 unencumbered vessels (excluding newbuilds), providing significant financial flexibility[183] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during Q2 2025 - Management concluded that disclosure controls and procedures were effective as of June 30, 2025[194] - No material changes to internal control over financial reporting occurred during the three months ended June 30, 2025[195] Part II - Other Information Item 1. Legal Proceedings The company is involved in various lawsuits, with a favorable arbitration ruling in March 2025 for a commercial dispute, though the ruling is subject to appeal - In a commercial dispute from 2023, an arbitration tribunal ruled in the company's favor in March 2025, dismissing the opposing party's claims and awarding monetary damages to the company. The ruling is currently subject to an appeal filed in April 2025[97] Item 1A. Risk Factors No new risk factors are disclosed in this report, with the company referring to previously filed risk factors in its 2024 Form 10-K and Q1 2025 Form 10-Q - The report directs readers to previously filed risk factors in the 2024 Form 10-K and the Q1 2025 Form 10-Q, indicating no material updates in the current period[198] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No stock repurchases occurred under the formal program during Q2 2025, though shares were withheld to cover tax liabilities from vested restricted stock units - No shares were acquired under the stock repurchase program during Q2 2025. Shares were withheld from employees to cover withholding taxes related to vested equity awards[199][61] Item 5. Other Information The CEO and CFO entered Rule 10b5-1 trading plans in March and May 2025, respectively, for potential stock sales beginning in August 2025 - CEO Lois K. Zabrocky entered a Rule 10b5-1 trading plan on March 14, 2025, for the sale of up to 24,000 shares[203] - CFO Jeffrey D. Pribor entered a Rule 10b5-1 trading plan on May 23, 2025, for the sale of up to 12,000 shares[204]