International Seaways Reports Strong Earnings and Positive Outlook

International Seaways ((INSW)) has held its Q1 earnings call. Read on for the main highlights of the call.

International Seaways’ recent earnings call conveyed a strong financial performance and a positive outlook for the tanker industry. Despite challenges such as geopolitical uncertainties and fleet aging concerns, the company demonstrated robust liquidity and a strategic approach to fleet renewal. The overall sentiment was optimistic, with highlights significantly outweighing any concerns, indicating a favorable business environment and promising growth prospects.

Strong Net Income and Adjusted EBITDA

International Seaways reported a net income of $50 million, or $1 per diluted share, for the first quarter. Excluding gains on vessel sales, the adjusted net income was $40 million, or $0.80 per diluted share. The adjusted EBITDA stood at $91 million, consistent with the previous quarter, showcasing the company’s stable financial performance.

Increased Time Charter and Fixed Revenue

The company secured a one-year time charter on a Suezmax, contributing to a fixed revenue of $295 million, with most of this revenue expected over the next two years. This strategic move underscores International Seaways’ ability to secure long-term revenue streams.

Dividend Announcement and Shareholder Returns

International Seaways announced a dividend representing 75% of its adjusted net income, with a combined dividend to be paid in June equating to $0.60 per share. The company has returned over $300 million to shareholders in consecutive years, highlighting its commitment to delivering shareholder value.

Strong Liquidity Position

The company ended the first quarter with $673 million in total liquidity, including nearly $550 million of undrawn revolver capacity. This strong liquidity position allows International Seaways to navigate market uncertainties and invest in strategic opportunities.

Positive Outlook for Tanker Demand

The outlook for tanker demand remains positive, with oil production in 2025 and 2026 expected to increase by over 1 million barrels per day. Changes in tanker routing are also supportive of the industry, providing a favorable backdrop for growth.

Fleet Renewal and Low Breakeven

International Seaways continues its fleet renewal strategy, maintaining an average fleet age of about 10 years and a spot cash breakeven rate of approximately $13,500 per day. This approach ensures operational efficiency and competitiveness.

Geopolitical Uncertainties

The company acknowledged ongoing geopolitical tensions, such as uncertainties surrounding USPR legislation on Chinese vessels and the volatile situation in the Red Sea, which could impact tanker markets. However, International Seaways remains vigilant in navigating these challenges.

Fleet Aging Concerns

With 47% of the fleet expected to be over 20 years old by the time current orders are delivered, there are concerns about a potential shortage of vessels for commercial trading. The company is aware of these challenges and is actively managing its fleet renewal strategy.

Potential Impact of Low Oil Prices

Low oil prices may lead to Russian barrels being transported on legitimate tonnage, affecting business dynamics. International Seaways is monitoring these market conditions closely to mitigate any adverse impacts.

Forward-Looking Guidance

CEO Lois Zabrocky highlighted several key financial metrics and strategic moves during the earnings call. The company achieved a weighted average rate of over $30,000 per day on 45% of its revenue days, significantly above its cash breakeven of about $13,500 per day. With a net loan-to-value ratio of approximately 15% and a strategic swap of older vessels for newer ones, International Seaways is well-positioned to capitalize on favorable market conditions while continuing to return value to shareholders.

In conclusion, International Seaways’ earnings call reflected a strong financial performance and a positive outlook for the future. The company’s strategic initiatives, robust liquidity, and commitment to shareholder returns underscore its resilience and growth potential in the tanker industry. Despite challenges such as geopolitical uncertainties and fleet aging concerns, International Seaways remains well-equipped to navigate the evolving market landscape.