International Seaways(INSW) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net income for Q4 2024 was $36 million or $0.72 per diluted share, with adjusted net income at $45 million or $0.90 per diluted share, and adjusted EBITDA at $95 million [10][26] - The company reported a total liquidity of $632 million, consisting of $157 million in cash and $475 million in undrawn revolving credit [13][33] - The net loan-to-value ratio is below 16%, with a breakeven rate of approximately $13,700 per day [14][34] Business Line Data and Key Metrics Changes - The lightering business generated over $9 million in revenue for the quarter, contributing nearly $3 million in EBITDA for Q4 and approximately $20 million for the full year [28] - The company executed a vessel swap, selling two older VLCCs and acquiring three ECO MRs, which is part of a strategy to modernize the fleet [11][24] Market Data and Key Metrics Changes - Oil demand growth is expected to continue at a historical rate of about 1% per year, with a projected increase of 1 to 1.5 million barrels per day for 2025 [16][17] - The geopolitical landscape remains complex, affecting tanker movements, particularly with tensions involving the U.S. and Iran, as well as the ongoing Israel-Hamas conflict [18][19] Company Strategy and Development Direction - The company aims to modernize its fleet, maintaining an average age of around ten years, which is seen as optimal for tanker investments [42] - A balanced capital allocation approach is emphasized, focusing on fleet renewal while providing competitive returns to shareholders [15][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the tanker market's resilience, anticipating continued strong earnings due to limited tanker supply and a favorable demand environment [24][42] - The company expects to maintain a payout ratio of at least 75% going forward, reflecting a commitment to returning capital to shareholders [72] Other Important Information - The company returned over $300 million to shareholders in 2024, representing a 12% dividend yield on the average share price [14][41] - The company has a strong financial position with $475 million in undrawn credit capacity, allowing for flexibility in growth opportunities [42] Q&A Session Summary Question: Charter-out strategy in the current market - Management indicated that they have fourteen time charters in their fleet and are continuously evaluating opportunities in the charter market [50][53] Question: Outlook for MR rates and geographic focus - Management noted that Q1 bookings are strong, with good exposure to the East market, while the U.S. Gulf rates are showing some decline [61] Question: Dividend payout ratio expectations - Management confirmed that shareholders should expect a minimum payout ratio of 75%, with flexibility to adjust based on earnings fluctuations [72][73] Question: VLCC MR swap strategy - The swap was aimed at reducing the average age of the fleet rather than deemphasizing VLCCs, with a focus on maintaining a balanced fleet profile [76][80] Question: Breakeven rate components and future cost management - Management stated that they are focused on keeping costs in line and are optimistic about maintaining current breakeven rates [88] Question: Suez Max outlook - Management indicated that Suez Max rates are expected to improve as the VLCC market strengthens [98] Question: Share repurchase plans - Management confirmed that while the payout ratio is the primary method of returning cash, opportunistic buybacks are also considered [102] Question: Charter specifications and older vessels - Management noted that charterers may show some flexibility depending on market conditions and vessel availability [108] Question: Red Sea transit inquiries - Management stated that there are currently no pressures from charters to resume transits through the Red Sea [113]