Net Income: $50 million or $1 per diluted share for Q1 2025. Adjusted Net Income: $40 million or $0.80 per diluted share, excluding gains on vessel sales. Adjusted EBITDA: $91 million for Q1 2025. Total Liquidity: $673 million, including $550 million of undrawn revolver capacity. Gross Debt: Just over $600 million at the end of Q1 2025. Free Cash Flow: Approximately $56 million for Q1 2025. Dividend: $0.60 per share, representing 75% of adjusted net income. Cash Breakeven Rate: Approximately $13,500 per day. Spot TCE Rate: Blended average of about $31,200 per day fleet-wide for Q2 2025. Debt Hedging: Nearly 80% hedged to fixed rates with an average interest rate of 617 basis points. Unencumbered Vessels: 34 vessels.

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Release Date: May 08, 2025

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 $50 million for the first quarter of 2025, translating to $1 per diluted share. The company ended the first quarter with $673 million in total liquidity, including $550 million of undrawn revolver capacity. INSW announced a dividend representing 75% of its adjusted net income, equating to $0.60 per share, continuing its commitment to return cash to shareholders. The company executed a strategic swap of two older VLCCs for three eco MRs, enhancing its fleet efficiency. INSW has a strong financial position with a net loan to value below 15% and 34 unencumbered vessels, providing flexibility for future growth.

Negative Points

The tanker market faces uncertainty due to geopolitical tensions and regulatory changes, which could impact demand. OECD inventories have drawn down by 100 million barrels since August 2024, muting short-term tanker market performance. The company faces potential challenges from the aging global tanker fleet, with 47% expected to be over 20 years old by the time new orders are delivered. INSW's cash flow is sensitive to fluctuations in TCE rates, which could impact its ability to generate free cash flow. The company is evaluating financing options for its new build installments, indicating potential financial uncertainty or increased leverage.

Q & A Highlights

Q: Do you plan to use the undrawn capacity for financing the remaining installments on the six LR1s, or will you secure separate financing? A: (Jeffrey Pribor, CFO) We are still evaluating our options. The revolver provides us with flexibility, but we are considering other financing possibilities that offer attractive terms.

Story Continues

Q: Regarding the refinancing of a $250 million facility, what impact will this have on your breakeven rates? A: (Jeffrey Pribor, CFO) We expect to refinance at a savings of at least a couple of hundred basis points on interest, which could reduce our breakeven by several hundred dollars a day.

Q: Has the recent OPEC+ production increase impacted tanker demand, or is there a lag? A: (Lois Zabrocky, CEO) There is a bit of a lag currently, but we anticipate increased lifting as we move into the next quarter.

Q: Is there a leverage target you aim for, considering recent deleveraging and upcoming new build payments? A: (Jeffrey Pribor, CFO) We are comfortable with our current leverage level, which is below 15% net loan to value. This gives us the flexibility to add leverage when necessary for growth.

Q: What are your views on the LR2 market and the potential for new builds to trade dirty? A: (Lois Zabrocky, CEO) We see Aframax and LR2s as a combined fleet. While many LR2s are on order, the fleet is aging, and modern vessels tend to trade clean. The sector is experiencing strong growth in ton miles.

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

This article first appeared on GuruFocus.