International Seaways(INSW) - 2021 Q4 - Annual Report

Available Information The company provides SEC filings and corporate governance documents free on its website and the SEC's website - The Company makes its SEC filings (10-K, 10-Q, 8-K) and amendments available free of charge on its website (www.intlseas.com) as soon as practicable after electronic filing[10] - The SEC also maintains a website (https://www.sec.gov) where the public can access the Company's reports[11] - Corporate governance guidelines, Code of Business Conduct and Ethics, insider trading policy, anti-bribery and corruption policy, and committee charters are available on the Company's website[12] Forward-Looking Statements The report contains forward-looking statements subject to risks and uncertainties, cautioning investors against undue reliance - The report contains forward-looking statements, identified by words like 'may', 'will', 'expects', 'estimates', and 'plans', which represent the Company's reasonable expectations for future events[13] - These statements are subject to various risks, uncertainties, and assumptions that could cause actual results to differ materially from those indicated[13] - Key risk factors include the cyclical nature of the industry, fluctuations in vessel market value and charter rates, increased vessel supply, adverse weather, insurance adequacy, capital availability constraints, geopolitical conditions, fuel price changes, piracy, and the impact of the COVID-19 pandemic[14][16] Supplementary Financial Information The company uses non-GAAP measures (TCE, EBITDA, Adjusted EBITDA) to supplement GAAP, offering additional insights into performance and condition - The Company uses non-GAAP financial measures (TCE revenues, EBITDA, Adjusted EBITDA) to supplement GAAP reporting, believing they offer useful information for management and investors[18] - TCE revenues represent shipping revenues less voyage expenses, used to compare revenue from voyage charters to time charters[19] - EBITDA is net income/(loss) before interest, income taxes, depreciation, and amortization; Adjusted EBITDA further adjusts EBITDA for items not indicative of ongoing operating performance[19] Glossary The glossary defines key shipping and financial terms used in the Annual Report, providing a reference for industry-specific terminology - The glossary defines various shipping terms such as Aframax, Bareboat charter, VLCC, Suezmax, Time Charter, Voyage Charter, and Time Charter Equivalent (TCE)[21][22][44][46][47][51][52] - It also includes definitions for operational and regulatory terms like Classification Societies, Commercial management, Drydocking, Emission Control Area, IMO, and MARPOL[23][24][30][31][35][39] - Financial and corporate terms such as Consolidated Net Debt to Book Capital, Consolidated Net Debt to Assets Value, Diamond S (referring to Diamond S Shipping Inc. post-merger), and LIBOR are also defined[26][29][36] PART I Item 1. Business International Seaways transports crude oil and petroleum products with an 83-vessel fleet, focusing on stockholder value, fleet management, and ESG initiatives Our Business International Seaways owns and operates 83 vessels for crude oil and petroleum product transportation, including newbuilds, serving major oil companies - International Seaways, Inc. (INSW) owns and operates 83 International Flag vessels (9.3 million dwt) for crude oil and petroleum product transportation, with two segments: Crude Tankers and Product Carriers[55] - The fleet includes VLCC, Suezmax, Aframax, Panamax crude tankers, and LR2, LR1, MR, and Handysize product carriers, plus two FSO service vessels through joint ventures[55] - Three dual-fuel LNG VLCC newbuilds are scheduled for delivery in Q1 2023, increasing the total fleet to 86 vessels[55] - Customers include major independent and state-owned oil companies, oil traders, refinery operators, and international government entities, with vessels chartered at spot rates (via pools) or fixed daily rates (time/bareboat charters)[56] 2021 in Review In 2021, income from vessel operations decreased significantly due to lower rates and merger costs, despite a transformative merger and strategic fleet actions 2021 Financial Performance Highlights | Metric | 2021 (Millions USD) | 2020 (Millions USD) | Change (Millions USD) | | :----------------------- | :------------------ | :------------------ | :-------------------- | | Shipping Revenues | 272.5 | 421.6 | (149.1) | | TCE Revenues | 255.8 | 402.0 | (146.2) | | Income from Vessel Ops | (112.1) | 39.9 | (152.0) | | Adjusted EBITDA | 40.4 | 220.1 | (179.7) | - Completed a transformative stock-for-stock merger with Diamond S Shipping Inc. on July 16, 2021, adding 64 vessels and creating one of the largest U.S.-listed diversified tanker companies. Expected to generate over $25 million in cost synergies by 2022[60][61] - Returned capital to shareholders by paying $40.9 million in dividends (including a $1.12/share special dividend) and repurchasing 1,077,070 common shares for $16.7 million[58][63] - Entered agreements to construct three dual-fuel LNG VLCCs for Q1 2023 delivery, chartered for seven years with Shell, offering significant efficiency improvements and 22% lower CO2 emissions[63] - Executed a post-Merger asset optimization program, selling 16 older tankers for $165.2 million in net proceeds, used partly to repay $73.5 million in debt[63] - Diversified financing through new term loan facilities (Macquarie, ING) and lease financing arrangements (Ocean Yield, BoComm, Toshin, COSCO Shipping), generating $195.3 million in net proceeds after debt prepayments[63] Our Strategy The strategy focuses on maximizing stockholder value and cash returns through market exposure, active fleet management, flexible financing, and ESG commitment - Primary objectives include maximizing stockholder value, generating strong cash flows through a blend of spot and period market exposure, growing the Crude Tankers Lightering business, maintaining cash flows from joint ventures, actively managing fleet size and composition, entering value-creating transactions, and reducing environmental footprint[64] - The Company deploys most of its fleet on a spot rate basis through commercial pools (TI, DAKOTA, PENFIELD, PI, CPTA, NPP) to benefit from market volatility, complemented by selective time charters for consistent cash flows[65][66][67] - Fleet management involves opportunistic accretive acquisitions (e.g., newbuild LNG VLCCs) and dispositions of older vessels to maintain a diverse, high-quality, and modern fleet with enhanced return on invested capital[68] - Committed to ESG practices, including establishing a Performance and Sustainability team, implementing data analytics for fuel consumption and emissions reduction, and incorporating sustainability-linked pricing mechanisms in credit facilities aligned with IMO's GHG reduction targets[70][71][72] Liquidity and Debt Ratios (as of December 31, 2021) | Metric | Amount (Millions USD) | | :-------------------------------- | :-------------------- | | Total Liquidity | 238.9 | | Cash (including restricted cash) | 98.9 | | Undrawn Revolver Capacity | 140.0 | | Consolidated Net Debt to Assets Value | 44.5% | | Consolidated Net Debt to Book Capital | 46.2% | Fleet Operations The company operates an 83-vessel fleet across crude and product segments, utilizing commercial pools and third-party technical management, with FSO joint ventures Fleet Summary The fleet comprises 83 operating vessels and 3 newbuilds, diversified across crude and product carriers, with some chartered-in vessels International Seaways Fleet Summary (as of December 31, 2021) | Vessel Fleet and Type | Number (Owned) | Number (Chartered-in) | Total Number | Total Dwt (Millions) | | :-------------------- | :------------- | :-------------------- | :----------- | :------------------- | | Operating Fleet | | | | | | Crude Tankers | 20 | 9 | 29 | 5.67 | | Product Carriers | 49 | 3 | 52 | 2.77 | | JV Vessels (FSO) | 2 | — | 2 | 0.86 |