International Seaways(INSW) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net income for Q2 2024 was $145 million or$2.91 per share, with adjusted net income at $118 million or$2.37 per diluted share, and adjusted EBITDA at $167 million [5][11][12] - The company declared a combined dividend of$1.50 per share, representing 64% of adjusted net income, with a 12% yield over the last 12 months [7][19] Business Line Data and Key Metrics Changes - The Wyoming business generated nearly $14 million in revenue for the quarter, contributing about$6 million in EBITDA [12] - The fleet renewal involved taking delivery of six eco MR vessels while selling three aged vessels, reducing the average MR age by one year [6] Market Data and Key Metrics Changes - Oil demand is expected to grow at a rate above its 30-year average, particularly in Asia, while tanker demand is anticipated to remain strong due to geopolitical events and production growth outside OPEC+ [8][9][10] - The average age of the tanker fleet is over 13 years, with a significant portion of the fleet aging, necessitating more ships to meet increasing seaborne demand [10] Company Strategy and Development Direction - The company is focused on balanced capital allocation, fleet renewal, and enhancing its balance sheet while providing returns to shareholders [7][19] - The strategy includes opportunistic fleet renewal and maintaining a strong balance sheet to capitalize on favorable market conditions [10][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the tanker market's strength, anticipating continued demand growth and a favorable environment for the next few years [9][10] - The company expects to generate significant free cash flow in Q3 2024, with a spot breakeven rate under $13,400 per day [17] Other Important Information - The company has$682 million in total liquidity, including $506 million in undrawn revolver capacity, and a net loan-to-value ratio of around 14$720 million in gross debt and a significant portion hedged to fixed rates [15][16] Q&A Session Summary Question: Dry-docking days and future guidance - Management acknowledged that off-hire days were higher than previously guided, with some timing differences affecting the full-year outlook [21][22] Question: Aframax market performance - Management confirmed that Aframax rates have been below market levels but expect them to align more closely with market rates as the fleet is repositioned [24][26] Question: Share repurchase versus dividends - Management emphasized the importance of maintaining a consistent dividend while also having a share repurchase program in place to take advantage of attractive share prices [30] Question: Cash breakeven expectations - Management indicated that while inflation may impact operating expenses, they expect to maintain current cash breakeven levels [31] Question: Impact of Dangote refinery on crude and product flows - Management noted that the Dangote refinery is expected to influence diesel exports and overall crude flows, but it is still early to assess the full impact [42][43]