International Seaways(INSW) - 2022 Q4 - Annual Report

Financial Performance - Shipping revenues for 2022 reached $864.7 million, with TCE revenues at $853.7 million, marking a significant increase from previous years[56] - Income from vessel operations improved by $554.8 million to $442.7 million in 2022, compared to a loss of $112.1 million in 2021[56] - Adjusted EBITDA for 2022 was $549.1 million, a substantial increase from $40.4 million in 2021[56] - The company raised $748.1 million from debt issuance and sales, with $99.2 million generated from vessel sales and $140.1 million from the sale of a joint venture interest[57] - Capital investments totaled $160.0 million for vessel purchases and improvements, while $69.8 million was returned to shareholders through dividends[57] Fleet and Operations - The fleet consisted of 74 vessels, with 58 owned and 16 chartered in, including 12 under sale and leaseback arrangements[76] - As of December 31, 2022, the total operating and newbuild fleet consists of 77 vessels with a total deadweight tonnage (DWT) of 9,039,301[77] - The crude tankers segment includes 27 vessels with a total DWT of 5,526,300, while the product carriers segment comprises 47 vessels with a total DWT of 2,613,001[77] - The company operates a diverse fleet that allows flexibility in responding to market opportunities, moving between trades and geographical areas[78] - INSW's vessels operate in various parts of the world, including to or from U.S. ports, but does not engage in transportation that gives rise to 100% U.S. source income[177] Market Dynamics - In 2022, voyage charters accounted for 96% of the company's aggregate Time Charter Equivalent (TCE) revenues, up from 81% in 2021, due to higher average daily spot market rates[84] - Time charters represented only 4% of TCE revenues in 2022, a significant decrease from 19% in 2021, indicating a shift towards spot market reliance[87] - The highly cyclical nature of the industry may lead to volatile changes in charter rates and vessel values, adversely affecting the Company's earnings and available cash[183] - The shipping industry remains highly competitive, with the company competing against independent shipowners, integrated oil companies, and state-owned entities[101] Compliance and Regulations - The company is required to maintain operating standards emphasizing safety, quality, and environmental stewardship, which may incur substantial costs due to changing regulations[105] - The International Maritime Organization (IMO) aims to reduce greenhouse gas emissions from international shipping by 50% by 2050 compared to 2008 levels[108] - The IMO has committed to implementing short-term measures by 2023 to reduce carbon dioxide emissions from international shipping by 40% by 2030[109] - The company is subject to the International Convention for the Control and Management of Ships' Ballast Water and Sediments, aimed at protecting marine environments[123] - Compliance with the BWM Convention and other regulations may materially impact INSW's operations and financial results[125] Risk Factors - The company faces risks from piracy, which could increase insurance premiums and operational costs if regions are classified as "war risk" zones[210] - Political instability and international hostilities could adversely affect the tanker industry, impacting INSW's charter rates and operational costs[213] - The COVID-19 pandemic has significantly affected global demand for crude oil and petroleum products, impacting INSW's business operations[216] - Disruptions due to public health threats, such as COVID-19, may lead to operational challenges and increased costs for INSW[215] - The company may encounter difficulties in enforcing contractual obligations in non-U.S. jurisdictions, affecting revenue collection[205] Financial Obligations and Debt - As of December 31, 2022, International Seaways, Inc. (INSW) had approximately $1,065.3 million of outstanding indebtedness, which includes finance lease obligations[222] - The company successfully refinanced approximately $575 million of existing indebtedness in 2022, but future financing may not be available on acceptable terms[203] - INSW's substantial indebtedness may limit its ability to capitalize on business opportunities and react to competitive pressures[226] - A decrease in vessel values or failure to meet collateral maintenance requirements could lead to breaches of covenants in existing credit facilities[229] Environmental and Safety Standards - The company is committed to safety and environmental standards, utilizing robust Safety Management Systems (SMS) certified by the International Safety Management Code[95] - The company’s vessels undergo regular safety inspections and audits by third-party managers and various governmental entities[104] - The company recognizes the importance of seafarers and has implemented health protocols and collaboration efforts to facilitate crew changes during the COVID-19 pandemic[106] - The company carries P&I insurance coverage for pollution of $1.0 billion per occurrence on every vessel in its fleet[167] Strategic Initiatives - The company has agreements with five different third-party managers for technical management, which will be streamlined to two by Q2 2023[93] - INSW's participation in commercial pools is intended to enhance financial performance, with nine of its 10 VLCCs participating in the TI pool as of December 31, 2022[242] - The company intends to finance acquisitions through available cash from operations, debt, or equity issuance, which may increase leverage ratios or dilute existing shareholders[246] - The success of acquisitions depends on effective integration into current operations, which involves risks such as realizing anticipated synergies and retaining personnel[247]