International Seaways(INSW) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2021, the company reported a net loss of $29 million or $0.57 per share, excluding merger-related costs and gains on vessel sales, while the full-year net loss was $86 million or $2.24 per share [13][20] - Adjusted EBITDA for Q4 was $12 million, and for the full year, it was $40 million, reflecting a challenging rate environment [13][20] Business Line Data and Key Metrics Changes - The decrease in revenue and EBITDA for Q4 and the last 12 months was primarily due to lower average blended rates in both crude oil and product sectors [22] - The company booked 64% of available spot days for VLCCs at an average of approximately $12,400 per day, and 73% of available Panamax spot days at an average of approximately $22,800 per day for Q1 2022 [23][24] Market Data and Key Metrics Changes - Oil demand is projected to increase by over 3 million barrels per day to nearly 101 million barrels per day by the end of 2022, with oil production expected to reach all-time highs [15][16] - The global fleet has grown by 3.8% since the start of the pandemic, while the average age of the tanker fleet has increased to nearly 12 years [17][18] Company Strategy and Development Direction - The merger with Diamond S in 2021 nearly doubled the company's net asset value and tripled its fleet size, positioning it as the largest U.S. listed diversified tanker company [11][36] - The company aims to realize over $35 million in synergies in 2022 from the merger, focusing on optimizing its fleet and enhancing its capital structure [11][27] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about an improved tanker rate environment due to recovering oil demand and inventory levels at their lowest since 2014 [7][8] - The ongoing geopolitical situation, particularly the conflict in Ukraine, is creating volatility in energy markets, but the company is closely monitoring the situation and adapting its strategies accordingly [14][46] Other Important Information - The company returned $58 million to shareholders in 2021, including share repurchases and dividends, while maintaining a strong balance sheet [10][37] - The company has a total liquidity of approximately $340 million, positioning it well for long-term success [13][41] Q&A Session Summary Question: Current rates and cargoes in Russia/Ukraine - The company has not booked any fresh cargoes loading in Russian ports since the invasion, focusing on safety and legal compliance [46] Question: Implications of the Russia/Ukraine conflict on tanker trade - Management noted that demand for Western-based barrels is spiking, and trading patterns are changing, which could strain oil supply but also incentivize increased production from non-OPEC sources [53] Question: Incremental liquidity plans - Returning capital to shareholders remains a priority, with ongoing discussions about fleet optimization and potential vessel sales [54] Question: Performance of various asset classes - The Panamax sector has seen increased earnings due to strong performance in the Caribbean, differentiating it from larger vessels under pressure [61] Question: Liquidity and debt refinancing - The company has fully funded its newbuilding payments and is satisfied with its current liquidity position, while remaining open to optimizing its balance sheet [64] Question: Recycling practices and environmental standards - The company emphasizes compliance with environmental standards in vessel recycling, which incurs a cost differential but is deemed worthwhile for safety and regulatory adherence [78]