International Seaways, one of the largest tanker companies worldwide providing energy transportation services for crude oil and petroleum products, reported results for the third quarter 2024.
HIGHLIGHTS & RECENT DEVELOPMENTS
Quarterly Results:
- Net income for the third quarter of 2024 was $92 million, or $1.84 per diluted share.
- Adjusted net income (1) for the third quarter of 2024 was $78 million, or $1.57 per diluted share.
- Adjusted EBITDA (1) for the third quarter of 2024 was $130 million.
Robust Balance Sheet:
- Total liquidity was approximately $694 million as of September 30, 2024, including total cash (1) of $153 million and $541 million undrawn revolving credit capacity.
- Repaid $50 million on the Company’s $500 million RCF, increasing undrawn revolver capacity.
- Net loan-to-value remained historically low at approximately 13.5% as of September 30, 2024.
Fleet Optimization Program:
- Sold a 2008-built MR for net proceeds of approximately $24 million.
Returns to Shareholders:
- Repurchased 501,646 shares for a total cost of approximately $25 million, representing an average purchase price of $49.81 per share.
- Paid a combined $1.50 per share in regular and supplemental dividends in September 2024.
- Declared a combined dividend of $1.20 per share to be paid in December 2024, representing 75% of adjusted net income (1) for the third quarter.
“We continue to execute on our balanced capital allocation strategy, utilizing our strong cash generation in third quarter to deliver double-digit returns to our shareholders,” said Lois K. Zabrocky, International Seaways President and CEO. “Including the combined dividend of $1.20 per share declared for the fourth quarter, aggregate dividends in 2024 will total $5.77 per share, or 12% of the average share price. We remain committed to a balanced capital allocation approach, as we continue to look for attractive opportunities to enhance our fleet, while optimizing returns to shareholders.”
Ms. Zabrocky added, “Market fundamentals remain strong for tankers in the near term, supported by global oil demand growth, which is expected to be at or above historical growth rates. Ton-mile demand remains elevated due to geopolitical events that could take significant time to unwind. While newbuilding orders have risen to about 13% of the global tanker fleet, nearly half of the existing fleet is expected to be over 20 years old by the time the newbuildings deliver into the market. We expect that these dynamics will continue to drive strong earnings, positioning Seaways to generate significant free cash flow and continue building on our track record of investing in our fleet and returning substantial cash flow to shareholders.”
Jeff Pribor, the Company’s CFO stated, “We returned nearly $100 million to investors in dividends and share repurchases during the third quarter, representing 84% of the prior quarter’s adjusted net income that was returned to shareholders. With ample cash and liquidity of $694 million, a record low net loan-to-value and low spot cash break evens, we are well-positioned to continue creating value by executing our balanced capital allocation strategy.”
THIRD QUARTER 2024 RESULTS
Net income for the third quarter of 2024 was $92 million, or $1.84 per diluted share, compared to net income of $98 million, or $1.99 per diluted share, for the third quarter of 2023. The decrease was primarily driven by a decrease in TCE revenues (1) and an increase in vessel expenses and depreciation and amortization, reflecting the delivery of six modern MR vessels during the second quarter of 2024, partially offset by gains on the sale of one vessel in the third quarter of 2024.
Shipping revenues for the third quarter were $225 million, compared to $242 million for the third quarter of 2023. Consolidated TCE revenues (1) for the third quarter were $220 million, compared to $236 million for the third quarter of 2023.
Adjusted EBITDA (1) for the third quarter was $130 million, compared to $151 million for the third quarter of 2023.
Crude Tankers
Shipping revenues for the Crude Tankers segment were $103 million for the third quarter of 2024, compared to $114 million for the third quarter of 2023. TCE revenues (1) were $99 million for the third quarter, compared to $111 million for the third quarter of 2023. This decrease was attributable to a decrease in spot rates as the average spot earnings of the VLCC, Suezmax and Aframax sectors were approximately $29,700, $38,000 and $25,100 per day, respectively, compared with approximately $41,000, $38,700 and $34,000 per day, respectively, during the third quarter of 2023.
Product Carriers
Shipping revenues for the Product Carriers segment were $122 million for the third quarter of 2024, compared to $127 million for the third quarter of 2023. TCE revenues (1) were $121 million for the third quarter, compared to $125 million for the third quarter of 2023. This decrease is primarily attributable to a decline in LR1 spot earnings to approximately $46,900 per day from $56,300 per day partially offset by an increase in MR spot earnings to $29,000 per day from $26,600 per day.
YEAR-TO-DATE 2024 RESULTS
Net income for the nine months ended September 30, 2024 was $381 million, or $7.66 per diluted share, compared to net income of $424 million, or $8.58 per diluted share, for the first nine months of 2023.
Shipping revenues for the nine months ended September 30, 2024 were $757 million, compared to $821 million for the first nine months of 2023. Consolidated TCE revenues (1) for the first nine months of 2024 were $743 million, compared to $808 million for the first nine months of 2023.
Adjusted EBITDA (1) for the nine months ended September 30, 2024 was $488 million, compared to $565 million for the first nine months of 2023.
Crude Tankers
Shipping revenues for the Crude Tankers segment were $355 million for the first nine months of 2024, compared to $399 million for the first nine months of 2023. TCE revenues (1) for the Crude Tankers segment were $344 million for the first nine months of 2024, compared to $389 million for the first nine months of 2023.
Product Carriers
Shipping revenues for the Product Carriers segment were $402 million for the first nine months of 2024, compared to $422 million for the first nine months of 2023. TCE revenues (1) for the Product Carriers segment were $399 million for the first nine months of 2024 compared to $419 million for the first nine months of 2023.
BALANCE SHEET ENHANCEMENTS
During the third quarter of 2024, the Company repaid $13 million in mandatory payments required under its existing debt facilities and sale leaseback arrangements. For the nine months ended September 30, 2024, the Company repaid $56 million of mandatory debt payments.
In April 2024, the Company amended and extended the $750 Million Facility, under which the Company had a remaining term loan balance of $95 million and undrawn revolver capacity of $257 million prior to closing. The new agreement consists of a $500 million revolving credit facility (the “$500 Million RCF”) that matures in January 2030. Under the terms of the $500 Million RCF, capacity is reduced on a quarterly basis by approximately $13 million, based on a 20-year age-adjusted profile of the collateral vessels. The $500 Million RCF bears an interest rate based on term SOFR +185bps (the “margin”) and includes similar sustainability-linked features as included in the $750 Million Credit Facility, which could impact the margin by five basis points. The sustainability-linked features are aimed at reducing the Company’s carbon footprint, targeting expenditures toward energy efficiency improvements and maintaining a safety record above the industry average. Prior to executing the agreement, the Company prepaid the outstanding balance on the ING Credit Facility of $20 million and included the collateral vessel in the $500 Million RCF. The $500 Million RCF saves approximately $20 million per quarter in mandatory debt repayments and reduces future interest expense through a margin reduction of over 85 basis points.
In June 2024, the Company borrowed $50 million under the $500 Million RCF, which was repaid during the third quarter. Following the repayments and amortizing capacity during the third quarter, aggregate undrawn revolving capacity was $541 million at September 30, 2024.
FLEET OPTIMIZATION PROGRAM
In July 2024, the Company sold a 2008-built MR for net proceeds of approximately $24 million. During 2024, the Company sold three vessels for aggregate net proceeds of $72 million. In the second quarter of 2024, a 2009-built MR and a 2008-built MR were sold for aggregate net proceeds of $48 million. In connection with vessel sales, the Company recorded gains of $41 million in aggregate during 2024.
During the nine months ended September 30, 2024, the Company took delivery of six modern MR vessels for an aggregate consideration of $232 million. In connection with the acquisitions, the Company issued 623,778 common shares to the sellers, representing 15% of the aggregate consideration with the remaining funding provided by cash on hand.
During 2024, the Company entered into three time charter agreements on two 2009-built MRs and a 2014-built LR2. The charters have durations of around three years and were delivered to the charterers during the third quarter. From October 1, 2024 through expiry, total future contracted revenues aggregate to approximately $345 million, excluding any applicable profit share.
The Company has contracts to build six scrubber-fitted, dual-fuel (LNG) ready, LR1 vessels in Korea with K Shipbuilding Co, Ltd at a price in aggregate of approximately $359 million. The vessels are expected to be delivered beginning in the second half of 2025 through the third quarter of 2026. These vessels are expected to deliver into our niche Panamax International Pool, which has consistently outperformed the market.
RETURNS TO SHAREHOLDERS
In September 2024, the Company paid a combined dividend of $1.50 per share of common stock, composed of a regular quarterly dividend of $0.12 per share of common stock and a supplemental dividend of $1.38 per share.
On November 6, 2024, the Company’s Board of Directors declared a combined dividend of $1.20 per share of common stock, composed of a regular quarterly dividend of $0.12 per share of common stock and a supplemental dividend of $1.08 per share of common stock. Both dividends will be paid on December 27, 2024, to shareholders with a record date at the close of business on December 13, 2024.
During the third quarter of 2024, the Company repurchased and retired 501,646 shares of its common stock in open market purchases, at an average price of $49.81 for an aggregate cost of approximately $25 million. In November 2024, the Company’s Board of Directors authorized an increase to $50 million for the share repurchase program that expires at the end of 2025.
(1) This is a non-GAAP financial measure used throughout this press release; please refer to the section “Reconciliation to Non-GAAP Financial Information” for explanations of our non-GAAP financial measures and the reconciliations of reported GAAP to non-GAAP financial measures.
International Seaways, one of the largest tanker companies worldwide providing energy transportation services for crude oil and petroleum products, reported results for the third quarter 2024.
HIGHLIGHTS & RECENT DEVELOPMENTS
Quarterly Results:
- Net income for the third quarter of 2024 was $92 million, or $1.84 per diluted share.
- Adjusted net income (1) for the third quarter of 2024 was $78 million, or $1.57 per diluted share.
- Adjusted EBITDA (1) for the third quarter of 2024 was $130 million.
Robust Balance Sheet:
- Total liquidity was approximately $694 million as of September 30, 2024, including total cash (1) of $153 million and $541 million undrawn revolving credit capacity.
- Repaid $50 million on the Company’s $500 million RCF, increasing undrawn revolver capacity.
- Net loan-to-value remained historically low at approximately 13.5% as of September 30, 2024.
Fleet Optimization Program:
- Sold a 2008-built MR for net proceeds of approximately $24 million.
Returns to Shareholders:
- Repurchased 501,646 shares for a total cost of approximately $25 million, representing an average purchase price of $49.81 per share.
- Paid a combined $1.50 per share in regular and supplemental dividends in September 2024.
- Declared a combined dividend of $1.20 per share to be paid in December 2024, representing 75% of adjusted net income (1) for the third quarter.
“We continue to execute on our balanced capital allocation strategy, utilizing our strong cash generation in third quarter to deliver double-digit returns to our shareholders,” said Lois K. Zabrocky, International Seaways President and CEO. “Including the combined dividend of $1.20 per share declared for the fourth quarter, aggregate dividends in 2024 will total $5.77 per share, or 12% of the average share price. We remain committed to a balanced capital allocation approach, as we continue to look for attractive opportunities to enhance our fleet, while optimizing returns to shareholders.”
Ms. Zabrocky added, “Market fundamentals remain strong for tankers in the near term, supported by global oil demand growth, which is expected to be at or above historical growth rates. Ton-mile demand remains elevated due to geopolitical events that could take significant time to unwind. While newbuilding orders have risen to about 13% of the global tanker fleet, nearly half of the existing fleet is expected to be over 20 years old by the time the newbuildings deliver into the market. We expect that these dynamics will continue to drive strong earnings, positioning Seaways to generate significant free cash flow and continue building on our track record of investing in our fleet and returning substantial cash flow to shareholders.”
Jeff Pribor, the Company’s CFO stated, “We returned nearly $100 million to investors in dividends and share repurchases during the third quarter, representing 84% of the prior quarter’s adjusted net income that was returned to shareholders. With ample cash and liquidity of $694 million, a record low net loan-to-value and low spot cash break evens, we are well-positioned to continue creating value by executing our balanced capital allocation strategy.”
THIRD QUARTER 2024 RESULTS
Net income for the third quarter of 2024 was $92 million, or $1.84 per diluted share, compared to net income of $98 million, or $1.99 per diluted share, for the third quarter of 2023. The decrease was primarily driven by a decrease in TCE revenues (1) and an increase in vessel expenses and depreciation and amortization, reflecting the delivery of six modern MR vessels during the second quarter of 2024, partially offset by gains on the sale of one vessel in the third quarter of 2024.
Shipping revenues for the third quarter were $225 million, compared to $242 million for the third quarter of 2023. Consolidated TCE revenues (1) for the third quarter were $220 million, compared to $236 million for the third quarter of 2023.
Adjusted EBITDA (1) for the third quarter was $130 million, compared to $151 million for the third quarter of 2023.
Crude Tankers
Shipping revenues for the Crude Tankers segment were $103 million for the third quarter of 2024, compared to $114 million for the third quarter of 2023. TCE revenues (1) were $99 million for the third quarter, compared to $111 million for the third quarter of 2023. This decrease was attributable to a decrease in spot rates as the average spot earnings of the VLCC, Suezmax and Aframax sectors were approximately $29,700, $38,000 and $25,100 per day, respectively, compared with approximately $41,000, $38,700 and $34,000 per day, respectively, during the third quarter of 2023.
Product Carriers
Shipping revenues for the Product Carriers segment were $122 million for the third quarter of 2024, compared to $127 million for the third quarter of 2023. TCE revenues (1) were $121 million for the third quarter, compared to $125 million for the third quarter of 2023. This decrease is primarily attributable to a decline in LR1 spot earnings to approximately $46,900 per day from $56,300 per day partially offset by an increase in MR spot earnings to $29,000 per day from $26,600 per day.
YEAR-TO-DATE 2024 RESULTS
Net income for the nine months ended September 30, 2024 was $381 million, or $7.66 per diluted share, compared to net income of $424 million, or $8.58 per diluted share, for the first nine months of 2023.
Shipping revenues for the nine months ended September 30, 2024 were $757 million, compared to $821 million for the first nine months of 2023. Consolidated TCE revenues (1) for the first nine months of 2024 were $743 million, compared to $808 million for the first nine months of 2023.
Adjusted EBITDA (1) for the nine months ended September 30, 2024 was $488 million, compared to $565 million for the first nine months of 2023.
Crude Tankers
Shipping revenues for the Crude Tankers segment were $355 million for the first nine months of 2024, compared to $399 million for the first nine months of 2023. TCE revenues (1) for the Crude Tankers segment were $344 million for the first nine months of 2024, compared to $389 million for the first nine months of 2023.
Product Carriers
Shipping revenues for the Product Carriers segment were $402 million for the first nine months of 2024, compared to $422 million for the first nine months of 2023. TCE revenues (1) for the Product Carriers segment were $399 million for the first nine months of 2024 compared to $419 million for the first nine months of 2023.
BALANCE SHEET ENHANCEMENTS
During the third quarter of 2024, the Company repaid $13 million in mandatory payments required under its existing debt facilities and sale leaseback arrangements. For the nine months ended September 30, 2024, the Company repaid $56 million of mandatory debt payments.
In April 2024, the Company amended and extended the $750 Million Facility, under which the Company had a remaining term loan balance of $95 million and undrawn revolver capacity of $257 million prior to closing. The new agreement consists of a $500 million revolving credit facility (the “$500 Million RCF”) that matures in January 2030. Under the terms of the $500 Million RCF, capacity is reduced on a quarterly basis by approximately $13 million, based on a 20-year age-adjusted profile of the collateral vessels. The $500 Million RCF bears an interest rate based on term SOFR +185bps (the “margin”) and includes similar sustainability-linked features as included in the $750 Million Credit Facility, which could impact the margin by five basis points. The sustainability-linked features are aimed at reducing the Company’s carbon footprint, targeting expenditures toward energy efficiency improvements and maintaining a safety record above the industry average. Prior to executing the agreement, the Company prepaid the outstanding balance on the ING Credit Facility of $20 million and included the collateral vessel in the $500 Million RCF. The $500 Million RCF saves approximately $20 million per quarter in mandatory debt repayments and reduces future interest expense through a margin reduction of over 85 basis points.
In June 2024, the Company borrowed $50 million under the $500 Million RCF, which was repaid during the third quarter. Following the repayments and amortizing capacity during the third quarter, aggregate undrawn revolving capacity was $541 million at September 30, 2024.
FLEET OPTIMIZATION PROGRAM
In July 2024, the Company sold a 2008-built MR for net proceeds of approximately $24 million. During 2024, the Company sold three vessels for aggregate net proceeds of $72 million. In the second quarter of 2024, a 2009-built MR and a 2008-built MR were sold for aggregate net proceeds of $48 million. In connection with vessel sales, the Company recorded gains of $41 million in aggregate during 2024.
During the nine months ended September 30, 2024, the Company took delivery of six modern MR vessels for an aggregate consideration of $232 million. In connection with the acquisitions, the Company issued 623,778 common shares to the sellers, representing 15% of the aggregate consideration with the remaining funding provided by cash on hand.
During 2024, the Company entered into three time charter agreements on two 2009-built MRs and a 2014-built LR2. The charters have durations of around three years and were delivered to the charterers during the third quarter. From October 1, 2024 through expiry, total future contracted revenues aggregate to approximately $345 million, excluding any applicable profit share.
The Company has contracts to build six scrubber-fitted, dual-fuel (LNG) ready, LR1 vessels in Korea with K Shipbuilding Co, Ltd at a price in aggregate of approximately $359 million. The vessels are expected to be delivered beginning in the second half of 2025 through the third quarter of 2026. These vessels are expected to deliver into our niche Panamax International Pool, which has consistently outperformed the market.
RETURNS TO SHAREHOLDERS
In September 2024, the Company paid a combined dividend of $1.50 per share of common stock, composed of a regular quarterly dividend of $0.12 per share of common stock and a supplemental dividend of $1.38 per share.
On November 6, 2024, the Company’s Board of Directors declared a combined dividend of $1.20 per share of common stock, composed of a regular quarterly dividend of $0.12 per share of common stock and a supplemental dividend of $1.08 per share of common stock. Both dividends will be paid on December 27, 2024, to shareholders with a record date at the close of business on December 13, 2024.
During the third quarter of 2024, the Company repurchased and retired 501,646 shares of its common stock in open market purchases, at an average price of $49.81 for an aggregate cost of approximately $25 million. In November 2024, the Company’s Board of Directors authorized an increase to $50 million for the share repurchase program that expires at the end of 2025.
(1) This is a non-GAAP financial measure used throughout this press release; please refer to the section “Reconciliation to Non-GAAP Financial Information” for explanations of our non-GAAP financial measures and the reconciliations of reported GAAP to non-GAAP financial measures.