• Net Income: $92 million or $1.84 per diluted share; adjusted net income of $78 million or $1.57 per share.
• EBITDA: Over $143 million; adjusted EBITDA at $130 million.
• Total Liquidity: Nearly $700 million, including over $540 million of undrawn revolver capacity.
• Gross Debt: $660 million; net debt at $500 million.
• Net Loan to Vessel Value: Historically low at under 14%.
• Cash Break Even: Under $13,500 per day for the spot fleet.
• Vessel Sales: Sold a vessel for $24 million in net proceeds; total of $72 million from vessel sales in 2024.
• Dividends: Combined dividend of $1.50 per share in the third quarter; announced a combined dividend of $1.20 per share.
• Share Repurchases: Purchased and retired over 500,000 shares at an average price of under $50 per share.
• Lightering Business Revenue: Nearly $13 million in the third quarter.
• Free Cash Flow: About $150 million for the third quarter, representing an annualized cash flow yield of over 20%.
• Spot TCE: Blended average spot TCE of about $27,200 per day fleetwide for the fourth quarter.
• Shareholder Returns: Nearly $100 million returned to shareholders in the third quarter, representing 84% of the prior quarter's adjusted net income.

• Warning! GuruFocus has detected 8 Warning Signs with JXN.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• International Seaways Inc (NYSE:INSW) reported a net income of $92 million for the third quarter, with an adjusted net income of $78 million, indicating strong financial performance.
• The company has nearly $700 million in total liquidity, including over $540 million of undrawn revolver capacity, providing significant financial flexibility.
• INSW returned $100 million to shareholders in the third quarter, representing 84% of the adjusted net income from the prior quarter, showcasing a strong commitment to shareholder returns.
• The tanker market outlook remains positive, with limited tanker supply expected to support strong earnings over the next few years.
• INSW's balanced capital allocation approach includes fleet renewal, enhancing the balance sheet, and maintaining a double-digit dividend yield for shareholders.

Negative Points

• The company experienced increased vessel expenses due to repairs and off-hire of older vessels, impacting TCE earnings.
• There is uncertainty in the market due to geopolitical factors, such as potential energy sanctions on Russia, which could affect tanker demand.
• Despite strong financial performance, there is a general lack of excitement in the sector, affecting equity values and potentially impacting M&A activities.
• The tanker order book has increased slightly, which could impact future market dynamics if not managed properly.
• The aging fleet presents a challenge, with a significant number of vessels approaching the end of their operational life, necessitating careful fleet management and renewal.

Q & A Highlights

Q: What is driving the current softness in the product tanker market, and what could lead to a reversal? A: Lois Zabrocky, President and CEO, explained that despite the perceived softness, the MR tankers have shown strong performance with spot rates at $29,000 per day in Q3. The U.S. is exporting a lot of product, and Russian diesel is being shipped to Brazil, which is a long haul. Looking forward, refinery closures in the EU and U.S. could impact supply, but demand remains, suggesting potential strength in 2025.

Q: How does the potential increase in energy sanctions on Russia impact the tanker market? A: Lois Zabrocky noted that increased sanctions could affect oil flows, potentially squeezing out sanctioned parties and impacting tanker demand. More U.S. drilling and exports could occur, but the specific impact on Russian flows is uncertain without detailed policy information.

Q: How is International Seaways approaching its share repurchase program given the current market conditions? A: Jeffrey Pribor, CFO, stated that while dividends remain the preferred method of returning cash to shareholders, the company has replenished its share repurchase program to $50 million to keep it as an option. There is no set guideline or price for repurchases; the company will monitor the market.

Q: What is the impact of the Los Angeles refinery closure on the West Coast Panama business? A: Derek Solon, Chief Commercial Officer, explained that the closure could lead to increased imports of clean products into the West Coast and potentially more crude being displaced to go further afield, which could be beneficial for the company.

Q: What factors could lead to higher ship recycling rates given the aging fleet? A: Lois Zabrocky mentioned that tighter sanctions could force older vessels out of trade, leading to increased recycling. The tanker market remains strong, and with an aging fleet, renewal will be necessary, potentially pushing older ships out of service.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.