Market Overview

International Seaways Reports Fourth Quarter and Full Year 2019 Results

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International Seaways, Inc. (NYSE:INSW) (the "Company" or "INSW"), one of the largest tanker companies worldwide providing energy transportation services for crude oil and petroleum products in International Flag markets, today reported results for the fourth quarter and full year 2019.

Highlights

  • Net income for the fourth quarter was $15.9 million, or $0.54 per share, compared to a net income of $7.0 million, or $0.24 per share, in the fourth quarter of 2018. Net income for the quarter reflects the impact of a $3.0 million cash gain on sale of the LNG joint venture with Qatar Gas Transport Company Ltd. (Nakilat), offset by the release of the Company's share of the unrealized losses associated with the interest rate swaps held by the LNG JV of $21.6 million into earnings from accumulated other comprehensive loss, a $0.3 million loss on sale of vessels, a $3.2 million write-off of deferred financing costs, and a $1.0 million loss from the extinguishment of debt. Net income excluding these items was $39.0 million, or $1.32 per share.
  • Time charter equivalent (TCE) revenues(A) for the fourth quarter were $117.6 million, compared to $93.0 million in the fourth quarter of 2018.
  • Adjusted EBITDA(B) for the fourth quarter was $72.2 million, compared to $46.2 million in the same period of 2018.
  • Cash(C) was $150.2 million as of December 30, 2019; total liquidity was $200.2 million, including $50.0 million undrawn revolver, compared to cash of $117.6 million and total liquidity of $167.6 million as of December 31, 2018.
  • Sold its 49.9% ownership interest in the LNG joint venture for $123 million in cash in October.
  • Made a prepayment of $100 million in October on the 2017 Term Loan Facility.
  • Agreed to purchase a 2009-built LR1, the Seaways Guayaquil, which delivered in February.
  • Sold a 2002-built Aframax, the Seaways Portland, and agreed to sell a 2001-built Aframax, Seaways Fran.
  • Subsequent to the end of the quarter, closed on new senior secured credit facilities aggregating $390 million, with proceeds used to refinance $383 million existing high-cost secured and unsecured debt of the Company and its subsidiaries.
  • Instituted a program of returning cash to shareholders, including a fixed, quarterly dividend of $0.06 per share to complement our existing $30 million share repurchase program.

"During 2019, we unlocked significant value for shareholders by monetizing our non-core investment in the LNG joint venture and allocating capital to further reduce our leverage and significantly lower our cost of capital," said Lois K. Zabrocky, International Seaways' President and CEO. "This success, together with our recently completed refinancing, transformed our capital structure and enabled us to maintain one of the lowest leverage profiles in the public company shipping sector, with our net loan to asset value of our conventional tanker fleet at 41%. The new credit facilities will reduce annual interest expense by approximately $15 million, by lowering our average interest rates on the refinanced portion of our debt by 350 basis points (or 3.5%), and our overall average interest rates by 200 basis points (or 2.0%). Our significant operating leverage and earnings power were also evident in 2019, as we capitalized on the strong market in the fourth quarter, returning to profitability and ending the year with over $200 million in total liquidity. While rates in the first quarter have come off of recent highs, primarily due to concerns around the impact of the coronavirus (COVID-19), we expect overall tanker fundamentals to remain positive and supportive of a strengthening market once the virus is contained."

Ms. Zabrocky continued, "We have successfully completed our refinancing, delevered by paying down $110 million of our debt, and renewed our fleet without issuing equity during the lower portion of the cycle over the last three years. As a result of these steps, and taking into consideration our strong liquidity position and compelling long-term prospects, we are pleased to establish a program to begin to return capital to shareholders as part of our broader capital allocation strategy. This will initially consist of a fixed, quarterly dividend of $0.06 per share which provides us flexibility to allocate capital to best serve shareholders during a time when we have the ability to act on our $30 million share repurchase program."

Jeff Pribor, the Company's CFO, added, "Proceeds from our new senior secured credit facilities, which closed in January 2020, allowed us to refinance high-cost debt, improving our capital structure for the future. In addition to eliminating restrictions that limited our ability to return capital to shareholders, the refinancing is expected to reduce our annual interest expense by approximately $15 million and enable us to maintain low cash break evens. We are proud to have collaborated with our leading banking group and Sustainalytics, a leading firm in ESG and corporate governance research, to become the first NYSE-listed ship owner and operator to include a sustainability-linked pricing mechanism in our new credit facilities. This groundbreaking sustainability feature is consistent with INSW's commitment to environmental initiatives and improving our ESG footprint."

Fourth Quarter 2019 Results

Net income for the fourth quarter of 2019 was $15.9 million, or $0.54 per diluted share, compared to a net income of $7.0 million, or $0.24 per diluted share, in the fourth quarter of 2018. The increase in the fourth quarter of 2019 primarily reflects higher TCE revenues. These positive factors were partially offset by a decrease in equity in income of affiliated companies principally attributable to the Company's sale of its 49.9% ownership interest in the LNG joint venture with Qatar Gas Transport Company Ltd. (Nakilat) ("Nakilat") to Nakilat on October 7, 2019. The Company received proceeds of $123 million on this sale, excluding fees and expenses. The Company recorded a cash gain on the sale of $3.0 million and reclassified the Company's share of the unrealized losses associated with the interest rate swaps held by the LNG joint venture of $21.6 million into earnings from accumulated other comprehensive loss, which was a noncash charge.

Consolidated TCE revenues for the fourth quarter of 2019 were $117.6 million, compared to $93.0 million in the fourth quarter of 2018. Shipping revenues for the fourth quarter of 2019 were $124.0 million, compared to $100.6 million in the fourth quarter of 2018. Strong TCE rates in the fourth quarter of 2019 were driven by increasing crude oil demand on the back of improving trade conditions and the end of a prolonged period of refinery maintenance ahead of IMO 2020, as well as external geopolitical factors including U.S. sanctions imposed on certain entities owned by China Ocean Shipping Company ("COSCO") due to alleged trading with Iran and the drone attack on a Saudi Arabian crude oil processing plant at Abqaiq.

Adjusted EBITDA was $72.2 million for the quarter, compared to $46.2 million in the fourth quarter of 2018.

Crude Tankers

TCE revenues for the Crude Tankers segment were $92.5 million for the quarter compared to $71.6 million in the fourth quarter of 2018. This increase primarily resulted from the impact of higher average rates in the VLCC, Suezmax, Aframax and Panamax sectors, with average spot rates climbing to approximately $54,100, $50,900, $31,300 and $29,100 per day, respectively, aggregating approximately $32.8 million. Partially offsetting the TCE revenue increase was the impact of a 325-day decrease in VLCC and Aframax revenue days aggregating $8.5 million, and a $3.9 million decrease in revenue from our Crude Tankers Lightering business during the current period Shipping revenues for the Crude Tankers segment were $98.6 million for the fourth quarter of 2019 compared to $79.0 million in the fourth quarter of 2018.

Product Carriers

TCE revenues for the Product Tankers segment were $25.1 million for the quarter, compared to $21.5 million in the fourth quarter of 2018. This increase primarily resulted from the impact of higher average daily blended rates earned by the LR1, LR2 and MR fleets, with average spot rates rising to approximately $28,700, $23,200 and $14,000 per day, respectively, increasing TCE revenues by approximately $5.0 million in the aggregate compared to the fourth quarter of 2018. This was partially offset by a $1.4 million decline in TCE revenue arising from the net impact of a 442-day decrease in MR revenue days resulting from vessel sales and a 180-day increase in LR1 revenue days primarily driven by the commencements of a six-month time charter-in of a 2010-built LR1 in May 2019 and a two-year time charter-in of a 2006-built LR1 in August 2019. Shipping revenues for the Product Carriers segment were $25.3 million for the fourth quarter of 2019, compared to $21.6 million in the fourth quarter of 2018.

Full Year 2019 Results

Net loss for the full year ended December 31, 2019 was $0.8 million, or $0.03 per diluted share, compared with net loss of $88.9 million, or $3.05 per diluted share, for the full year 2018. During 2019, income from vessel operations increased by $109.7 million to $55.2 million from a loss of $54.5 million in 2018. This improvement resulted primarily from increased TCE revenues, decreased vessel expenses due to the sale of a number of older vessels during 2018 and 2019 and lower losses on the disposal of vessels and other property, offset partially by increased charter hire expense. In addition, there was a year-over-year decrease in equity in income of affiliated companies of $18.2 million and an increase in interest expense of $6.0 million.

Consolidated TCE revenues for the full year ended December 31, 2019 were $339.9 million, compared to $243.1 million for full year 2018. Shipping revenues for the full year ended December 31, 2019 were $366.2 million compared to $270.4 million for the prior full year.

The reduction in equity in income of affiliated companies was principally attributable to the Company's sale of its interest in the LNG joint venture, as discussed above.

The increase in interest expense was primarily attributable to interest expense incurred on the debt facilities that the Company entered into during the second quarter of 2018 in connection with the completion of its acquisition of six VLCCs. Partially offsetting this was a decrease related to the 2017 Term Loan Facility due to a $10 million prepayment made in July 2019 and a $100 million prepayment made in October 2019, both using restricted cash set aside from the proceeds of vessel sales and a portion of the proceeds from the sale of the Company's equity interest in the LNG Joint Venture and lower average LIBOR rates during the 2019 periods compared with the comparable periods in 2018.

Adjusted EBITDA was $164.7 million for the full year 2019, compared to $68.3 million for the full year 2018.

Crude Tankers

TCE revenues for the Crude Tankers segment were $259.5 million for the full year 2019, compared to $175.5 million for the full year 2018. This increase resulted primarily from the impact of significantly higher average blended rates in the VLCC, Suezmax, Aframax and Panamax sectors, with average spot rates increasing to approximately $31,700, $29,800, $20,000 and $16,300, respectively, aggregating approximately $77.1 million. Further contributing to the increase was the impact of a 259-day increase in VLCC revenue days, aggregating $4.7 million, and a $13.7 million increase in revenue in the Lightering business during the current year, which reflects in part the re-deployment of the Company's 2002-built Aframax into the Lightering business. The net increase in VLCC days was the result of the acquisitions of one 2015-built and five 2016-built VLCCs which were delivered to the Company in June 2018, partially offset by the disposals of one 2000-built and one 2001-built VLCC in 2018, and 294 more drydock, repair and other off-hire days in 2019. Partially offsetting the revenue increases was a 961-day decrease in revenue days for the Aframax and Panamax sectors, which accounted for a revenue decrease of approximately $11.5 million, and was driven primarily by the sale of two 2001-built Aframaxes and a 2002-built Panamax between May and October 2018, along with the re-deployment of the Company's 2002-built Aframax into the Lightering business noted above. The increase in revenue in the Lightering business in 2019 compared to 2018 was substantially offset by an increase in spot and short-term time chartered-in vessels in the Lightering business to support an anticipated increase in full service lightering activity.

Shipping revenues for the Crude Tankers segment were $285.4 million for the full year 2019, compared to $202.4 million for the full year 2018.

Product Carriers

TCE revenues for the Product Carriers segment were $80.4 million for the full year 2019, compared to $67.6 million for the full year 2018. This increase was primarily attributable to higher average daily blended rates earned by the MR, LR1 and LR2 fleets in 2019, with average spot rates increasing to approximately $12,600, $21,500 and $20,200, respectively, aggregating approximately $22.6 million. This was partially offset by a 1,242-day decrease in segment revenue days, which reflected the impact of (i) a 1,585-day decrease in MR revenue days in the current period, resulting primarily from the sales of seven MRs between the first quarter of 2018 and the third quarter of 2019, and the redeliveries of one time chartered-in MR during the third quarter of 2019 and two bareboat chartered-in MRs during the second quarter of 2018, partially offset by (ii) a 367-day increase in LR1 revenue days in the current year primarily due to the commencement of a six-month time charter-in of a 2010-built LR1 in May 2019 and a two-year time charter-in of a 2006-built LR1 in August 2019.

Shipping revenues for the Product Carriers segment were $80.8 million for the full year 2019, compared to $68.0 million for the full year 2018.

Vessel Acquisitions and Sales

During the quarter, the Company acquired a 2009-built LR1, the Seaways Guayaquil, which was delivered in February 2020.

Additionally, the Company sold a 2002-built Aframax, which delivered to its buyer in January, and a 2001-built Aframax for delivery to buyer sometime before April 2020.

Refinancing and Closing of New Senior Secured Credit Facilities

In January, the Company closed on senior secured credit facilities (the "Facilities"), in an aggregate principal amount of $390 million. The Facilities consists of a 5-year $300 million senior secured term loan facility (the "Core Term Loan Facility"), a 5-year $40 million revolving credit facility (the "Core Revolving Facility"), of which $20 million has been drawn, and a 2.5-year $50 million senior secured term loan credit facility (the "Transition Facility").

The proceeds from the Facilities were used to refinance $383 million existing high-cost secured and unsecured debt of the Company and its subsidiaries. This included repaying the Company's 2017 Term Loan Facility and its senior secured credit agreement with ABN AMRO and repurchasing the Company's outstanding 10.75% subordinated notes.

Borrowings under the Core Term Loan Facility and the Core Revolving Facility initially bear interest at LIBOR plus 2.60%, while borrowings under the Transition Facility bear interest at LIBOR plus 3.50%. The margin on the Core Facilities may adjust by 0.20%, based on whether the Company meets certain leverage ratios. The Company currently anticipates the margin on these facilities will decrease to 2.40% by the third quarter of 2020.

The 2020 Debt Facilities will reduce annual interest expense by approximately $15 million by lowering the Company's average interest rates on the refinanced portion of the debt by 3.5% and the overall average interest rates by 2%.

In addition, the Core Facilities include a sustainability-linked pricing mechanism, which is the first of its kind for a NYSE-listed ship owner and operator, which has been certified by an independent, leading firm in ESG and corporate governance research as meeting sustainability-linked loan principles. The adjustment in pricing is linked to the carbon efficiency of the INSW fleet as it relates to reductions in CO2 emissions year-over-year, such that it aligns with the International Maritime Organization's 50% industry reduction target in GHG emissions by 2050. This key performance indicator is calculated in a manner consistent with the de-carbonization trajectory outlined in the Poseidon Principles, the global framework by which financial institutions can assess the climate alignment of their ship finance portfolios.

Declaration of Dividend

The Company has declared a quarterly cash dividend of $0.06 per share of common stock. The dividend will be payable March 30, 2020 to shareholders of record at the close of business on March 17, 2020.

Conference Call

The Company will host a conference call to discuss its fourth quarter and full year 2019 results at 9:00 a.m. Eastern Time ("ET") on March 3, 2020.

To access the call, participants should dial (855) 940-9471 for domestic callers and (412) 317-5211 for international callers. Please dial in ten minutes prior to the start of the call.

A live webcast of the conference call will be available from the Investor Relations section of the Company's website at www.intlseas.com.

An audio replay of the conference call will be available starting at 12:00 p.m. ET on March 3, 2020 through 11:59 p.m. ET on March 10, 2020 by dialing (877) 344-7529 for domestic callers and (412) 317-0088 for international callers, and entering Access Code 10139583.

About International Seaways, Inc.

International Seaways, Inc. (NYSE:INSW) is one of the largest tanker companies worldwide providing energy transportation services for crude oil and petroleum products in International Flag markets. International Seaways owns and operates a fleet of 42 vessels, including 13 VLCCs, two Suezmaxes, five Aframaxes/LR2s, 13 Panamaxes/LR1s and 7 MR tankers. Through joint ventures, it has ownership interests in two floating storage and offloading service vessels. International Seaways has an experienced team committed to the very best operating practices and the highest levels of customer service and operational efficiency. International Seaways is headquartered in New York City, NY. Additional information is available at www.intlseas.com.

Forward-Looking Statements

This release contains forward-looking statements. In addition, the Company may make or approve certain statements in future filings with the Securities and Exchange Commission (SEC), in press releases, or in oral or written presentations by representatives of the Company. All statements other than statements of historical facts should be considered forward-looking statements. These matters or statements may relate to the Company's plans to issue dividends, its prospects, including statements regarding vessel acquisitions, trends in the tanker markets, and possibilities of strategic alliances and investments. Forward-looking statements are based on the Company's current plans, estimates and projections, and are subject to change based on a number of factors. Investors should carefully consider the risk factors outlined in more detail in the Annual Report on Form 10-K for 2019 for the Company, and in similar sections of other filings made by the Company with the SEC from time to time. The Company assumes no obligation to update or revise any forward-looking statements. Forward-looking statements and written and oral forward-looking statements attributable to the Company or its representatives after the date of this release are qualified in their entirety by the cautionary statements contained in this paragraph and in other reports previously or hereafter filed by the Company with the SEC.

Consolidated Statements of Operations

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Fiscal Year Ended

 

 

 

December 31,

 

 

December 31,

 

 

2019

 

 

2018

 

 

2019

 

2018

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

 

 

 

 

Shipping Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Pool revenues

 

$

 

95,427

 

 

$

 

71,370

 

 

$

 

254,055

 

 

$

 

177,206

 

Time and bareboat charter revenues

 

 

7,926

 

 

 

5,508

 

 

 

27,625

 

 

 

25,961

 

Voyage charter revenues

 

 

20,669

 

 

 

23,670

 

 

 

84,504

 

 

 

67,194

 

Total Shipping Revenues

 

 

124,022

 

 

 

100,548

 

 

 

366,184

 

 

 

270,361

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Voyage expenses

 

 

6,427

 

 

 

7,514

 

 

 

26,265

 

 

 

27,261

 

Vessel expenses

 

 

31,571

 

 

 

32,384

 

 

 

123,205

 

 

 

135,003

 

Charter hire expenses

 

 

12,913

 

 

 

14,825

 

 

 

57,512

 

 

 

44,910

 

Depreciation and amortization

 

 

18,945

 

 

 

18,683

 

 

 

75,653

 

 

 

72,428

 

General and administrative

 

 

7,279

 

 

 

6,777

 

 

 

26,798

 

 

 

24,304

 

Provision for credit losses, net

 

 

(14

)

 

 

-

 

 

 

1,245

 

 

 

-

 

Third-party debt modification fees

 

 

-

 

 

 

13

 

 

 

30

 

 

 

1,306

 

Loss on disposal of vessels and other property, net

of impairments

 

 

280

 

 

 

2,487

 

 

 

308

 

 

 

19,680

 

Total operating expenses

 

 

77,401

 

 

 

82,683

 

 

 

311,016

 

 

 

324,892

 

Income/(loss) from vessel operations

 

 

46,621

 

 

 

17,865

 

 

 

55,168

 

 

 

(54,531

)

Equity in (loss)/income of affiliated companies

 

 

(13,346

)

 

 

6,932

 

 

 

11,213

 

 

 

29,432

 

Operating income/(loss)

 

 

33,275

 

 

 

24,797

 

 

 

66,381

 

 

 

(25,099

)

Other (expense)/income

 

 

(3,102

)

 

 

249

 

 

 

(943

)

 

 

(3,715

)

Income/(loss) before interest expense and income

taxes

 

 

30,173

 

 

 

25,046

 

 

 

65,438

 

 

 

(28,814

)

Interest expense

 

 

(14,281

)

 

 

(18,204

)

 

 

(66,267

)

 

 

(60,231

)

Income/(Loss) before income taxes

 

 

15,892

 

 

 

6,842

 

 

 

(829

)

 

 

(89,045

)

Income tax (provision)/benefit

 

 

(1

)

 

 

116

 

 

 

(1

)

 

 

105

 

Net Income/(loss)

 

$

 

15,891

 

 

$

 

6,958

 

 

$

 

(830

)

 

$

 

(88,940

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Number of Common Shares

Outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

29,250,103

 

 

 

29,155,028

 

 

 

29,225,483

 

 

 

29,136,634

 

Diluted

 

 

29,493,575

 

 

 

29,222,543

 

 

 

29,225,483

 

 

 

29,136,634

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Amounts:

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net income/(loss) per share

 

$

 

0.54

 

 

$

 

0.24

 

 

$

 

(0.03

)

 

$

 

(3.05

)

Consolidated Balance Sheets

 

 

 

 

 

 

($ in thousands)

 

 

 

 

 

 

 

 

December 31,

 

December 31,

 

 

2019

 

2018

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

 

89,671

 

$

 

58,313

Voyage receivables

 

 

83,845

 

 

94,623

Other receivables

 

 

3,938

 

 

5,246

Inventories

 

 

3,896

 

 

3,066

Prepaid expenses and other current assets

 

 

5,994

 

 

5,912

Current portion of derivative asset

 

 

-

 

 

460

Total Current Assets

 

 

187,344

 

 

167,620

 

 

 

 

 

 

 

Restricted Cash

 

 

60,572

 

 

59,331

Vessels and other property, less accumulated depreciation

 

 

1,292,516

 

 

1,330,795

Deferred drydock expenditures, net

 

 

23,125

 

 

16,773

Total Vessels, Deferred Drydock and Other Property

 

 

1,315,641

 

 

1,347,568

Operating lease right-of-use assets

 

 

33,718

 

 

-

Investments in and advances to affiliated companies

 

 

153,292

 

 

268,322

Long-term derivative asset

 

 

-

 

 

704

Other assets

 

 

2,934

 

 

5,056

Total Assets

 

$

 

1,753,501

 

$

 

1,848,601

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable, accrued expenses and other current liabilities

 

$

 

27,554

 

$

 

23,008

Current portion of operating lease liabilities

 

 

12,958

 

 

-

Current installments of long-term debt

 

 

70,350

 

 

51,555

Current portion of derivative liability

 

 

3,614

 

 

707

Total Current Liabilities

 

 

114,476

 

 

75,270

Long-term operating lease liabilities

 

 

17,953

 

 

-

Long-term debt

 

 

590,745

 

 

759,112

Long-term derivative liability

 

 

6,545

 

 

1,922

Other liabilities

 

 

1,489

 

 

2,442

Total Liabilities

 

 

731,208

 

 

838,746

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

Total Equity

 

 

1,022,293

 

 

1,009,855

Total Liabilities and Equity

 

$

 

1,753,501

 

$

 

1,848,601

On January 1, 2019, the Company adopted the provisions of ASU 2016-02, Leases (ASC 842), using the modified retrospective transition approach. Accordingly, the consolidated balance sheet as of December 31, 2019 reflects right of use assets of $33,718 and corresponding lease liabilities aggregating $30,911. The adoption of this new standard did not have an impact on our lease expenses for the fiscal year ended December 31, 2019.

Consolidated Statements of Cash Flows

 

 

 

 

 

 

($ in thousands)

 

 

 

 

 

 

 

 

Fiscal Year Ended December 31,

 

 

2019

 

2018

 

 

 

 

 

 

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

Net loss

 

$

 

(830

)

 

$

 

(88,940

)

Items included in net loss not affecting cash flows:

 

 

 

 

 

 

Depreciation and amortization

 

 

75,653

 

 

 

72,428

 

Loss on write-down of vessels and other assets

 

 

-

 

 

 

19,037

 

Amortization of debt discount and other deferred financing costs

 

 

6,920

 

 

 

6,212

 

Deferred financing costs write-off

 

 

3,558

 

 

 

2,400

 

Stock compensation, non-cash

 

 

4,278

 

 

 

3,162

 

Earnings of affiliated companies

 

 

(30,266

)

 

 

(29,201

)

Release other comprehensive loss upon sale of investment in affiliated

companies

 

 

21,615

 

 

 

-

 

Change in fair value of interest rate collar recorded through earnings

 

 

(923

)

 

 

-

 

Other – net

 

 

1,461

 

 

 

448

 

Items included in net loss related to investing and financing activities:

 

 

 

 

 

 

Loss on disposal of vessels and other assets, net

 

 

308

 

 

 

643

 

Gain on sale of investments in affiliated companies

 

 

(3,033

)

 

 

-

 

Loss on extinguishment of debt

 

 

1,100

 

 

 

1,295

 

Cash distributions from affiliated companies

 

 

13,855

 

 

 

43,622

 

Payments for drydocking

 

 

(19,546

)

 

 

(4,520

)

Insurance claims proceeds related to vessel operations

 

 

2,179

 

 

 

5,436

 

Changes in operating assets and liabilities

 

 

11,157

 

 

 

(44,502

)

Net cash provided by/(used in) operating activities

 

 

87,486

 

 

 

(12,480

)

Cash Flows from Investing Activities:

 

 

 

 

 

 

Expenditures for vessels and vessel improvements

 

 

(36,607

)

 

 

(148,946

)

Proceeds from disposal of vessels and other property

 

 

15,767

 

 

 

169,292

 

Expenditures for other property

 

 

(574

)

 

 

(1,096

)

Proceeds from sale of investment in affiliated companies

 

 

122,755

 

 

 

-

 

Investments in and advances to affiliated companies, net

 

 

2,338

 

 

 

3,679

 

Repayments of advances from joint venture investees

 

 

4,195

 

 

 

100,780

 

Net cash provided by investing activities

 

 

107,874

 

 

 

123,709

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

Issuance of debt, net of issuance and deferred financing costs

 

 

(100

)

 

 

70,120

 

Payments on debt

 

 

(49,911

)

 

 

(71,610

)

Extinguishment of debt

 

 

(110,000

)

 

 

(62,069

)

Premium on extinguishment of debt

 

 

(2,092

)

 

 

-

 

Cash paid to tax authority upon vesting of stock-based compensation

 

 

(369

)

 

 

(410

)

Other – net

 

 

(289

)

 

 

(222

)

Net cash used in financing activities

 

 

(162,761

)

 

 

(64,191

)

Net increase in cash, cash equivalents and restricted cash

 

 

32,599

 

 

 

47,038

 

Cash, cash equivalents and restricted cash at beginning of year

 

 

117,644

 

 

 

70,606

 

Cash, cash equivalents and restricted cash at end of year

 

$

 

150,243

 

 

$

 

117,644

 

Spot and Fixed TCE Rates Achieved and Revenue Days

The following tables provides a breakdown of TCE rates achieved for spot and fixed charters and the related revenue days for the three months and fiscal year ended December 31, 2019 and the comparable periods of 2018. Revenue days in the quarter ended December 31, 2019 totaled 3,343 compared with 3,883 in the prior year quarter. Revenue days in the fiscal year ended December 31, 2019 totaled 13,850 compared with 15,748 in the prior year. A summary fleet list by vessel class can be found later in this press release. The information in these tables excludes commercial pool fees/commissions averaging approximately $491 and $651 per day for the three months and fiscal year ended December 31, 2019 and $602 and $596 per day for the three months and fiscal year ended December 31, 2018.

 

 

 

Three Months Ended December

31, 2019

 

 

Three Months Ended December

31, 2018

 

 

 

Spot

 

 

Fixed

 

 

Total

 

 

Spot

 

 

Fixed

 

 

Total

Crude Tankers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VLCC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average TCE Rate

 

$

54,102

 

$

-

 

 

 

 

$

31,728

 

$

-

 

 

 

Number of Revenue Days

 

 

986

 

 

-

 

 

986

 

 

1,187

 

 

-

 

 

1,187

Suezmax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average TCE Rate

 

$

50,871

 

$

-

 

 

 

 

$

30,606

 

$

-

 

 

 

Number of Revenue Days

 

 

183

 

 

-

 

 

183

 

 

184

 

 

-

 

 

184

Aframax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average TCE Rate

 

$

31,302

 

$

-

 

 

 

 

$

18,968

 

$

-

 

 

 

Number of Revenue Days

 

 

303

 

 

-

 

 

303

 

 

425

 

 

-

 

 

425

Panamax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average TCE Rate

 

$

29,144

 

$

14,350

 

 

 

 

$

14,866

 

$

11,184

 

 

 

Number of Revenue Days

 

 

92

 

 

549

 

 

641

 

 

139

 

 

457

 

 

596

Total Crude Tankers Revenue Days

 

 

1,564

 

 

549

 

 

2,113

 

 

1,935

 

 

457

 

 

2,392

Product Carriers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LR2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average TCE Rate

 

$

23,222

 

$

-

 

 

 

 

$

15,575

 

$

-

 

 

 

Number of Revenue Days

 

 

92

 

 

-

 

 

92

 

 

92

 

 

-

 

 

92

LR1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average TCE Rate

 

$

28,652

 

$

-

 

 

 

 

$

22,165

 

$

-

 

 

 

Number of Revenue Days

 

 

534

 

 

-

 

 

534

 

 

354

 

 

-

 

 

354

MR

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average TCE Rate

 

$

14,028

 

$

-

 

 

 

 

$

12,905

 

$

5,294

 

 

 

Number of Revenue Days

 

 

604

 

 

-

 

 

604

 

 

978

 

 

67

 

 

1,045

Total Product Carriers Revenue Days

 

 

1,230

 

 

-

 

 

1,230

 

 

1,424

 

 

67

 

 

1,491

Total Revenue Days

 

 

2,794

 

 

549

 

 

3,343

 

 

3,359

 

 

524

 

 

3,883

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year Ended December

31, 2019

 

 

Fiscal Year Ended December

31, 2018

 

 

 

Spot

 

 

Fixed

 

 

Total

 

 

Spot

 

 

Fixed

 

 

Total

Crude Tankers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VLCC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average TCE Rate

 

$

31,726

 

$

-

 

 

 

 

$

18,881

 

$

13,221

 

 

 

Number of Revenue Days

 

 

4,254

 

 

-

 

 

4,254

 

 

3,854

 

 

97

 

 

3,951

Suezmax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average TCE Rate

 

$

29,762

 

$

-

 

 

 

 

$

18,973

 

$

-

 

 

 

Number of Revenue Days

 

 

729

 

 

-

 

 

729

 

 

730

 

 

-

 

 

730

Aframax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average TCE Rate

 

$

20,011

 

$

-

 

 

 

 

$

12,808

 

$

-

 

 

 

Number of Revenue Days

 

 

1,386

 

 

-

 

 

1,386

 

 

2,020

 

 

-

 

 

2,020

Panamax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average TCE Rate

 

$

16,263

 

$

13,471

 

 

 

 

$

12,988

 

$

11,419

 

 

 

Number of Revenue Days

 

 

330

 

 

2,031

 

 

2,361

 

 

685

 

 

1,984

 

 

2,669

Total Crude Tankers Revenue Days

 

 

6,699

 

 

2,031

 

 

8,730

 

 

7,289

 

 

2,081

 

 

9,370

Product Carriers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LR2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average TCE Rate

 

$

20,242

 

$

-

 

 

 

 

$

12,729

 

$

-

 

 

 

Number of Revenue Days

 

 

341

 

 

-

 

 

341

 

 

365

 

 

-

 

 

365

LR1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average TCE Rate

 

$

21,490

 

$

-

 

 

 

 

$

14,875

 

$

-

 

 

 

Number of Revenue Days

 

 

1,766

 

 

-

 

 

1,766

 

 

1,416

 

 

-

 

 

1,416

MR

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average TCE Rate

 

$

12,590

 

$

-

 

 

 

 

$

10,125

 

$

5,294

 

 

 

Number of Revenue Days

 

 

3,013

 

 

-

 

 

3,013

 

 

4,257

 

 

340

 

 

4,597

Total Product Carriers Revenue Days

 

 

5,120

 

 

-

 

 

5,120

 

 

6,038

 

 

340

 

 

6,378

Total Revenue Days

 

 

11,819

 

 

2,031

 

 

13,850

 

 

13,327

 

 

2,421

 

 

15,748

The average rate achieved by the Company's modern VLCCs during the quarter ended December 31, 2019 is $57,174 per day compared with $33,276 per day in the quarter ended December 31, 2018. Revenue days in the above tables exclude days related to full service lighterings and days for which recoveries were recorded under the Company's loss of hire insurance policies.

Fleet Information

As of December 31, 2019, INSW's owned and operated 42 vessels, 34 of which were owned, 6 of which were chartered in, and 2 FSOs were held through joint venture partnerships.

 

 

Vessels Owned

 

Vessels Chartered-in

 

Total at December 31, 2019

Vessel Type

 

Number

 

Weighted

by

Ownership

 

Number

 

Weighted

by

Ownership

 

Total

Vessels

 

Vessels

Weighted

by

Ownership

 

Total Dwt

Operating Fleet

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FSO

 

2

 

1.0

 

-

 

-

 

2

 

1.0

 

864,046

VLCC

 

13

 

13.0

 

-

 

-

 

13

 

13.0

 

3,950,103

Suezmax

 

2

 

2.0

 

-

 

-

 

2

 

2.0

 

316,864

Aframax

 

3

 

3.0

 

2

 

2.0

 

5

 

5.0

 

562,943

Panamax

 

7

 

7.0

 

-

 

-

 

7

 

7.0

 

487,365

Crude Tankers

 

27

 

26.0

 

2

 

2.0

 

29

 

28.0

 

6,181,321

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LR2

 

1

 

1.00

 

-

 

-

 

1

 

1.0

 

112,691

LR1

 

4

 

4.00

 

1

 

1.0

 

5

 

5.0

 

368,078

MR

 

4

 

4.00

 

3

 

3.0

 

7

 

7.0

 

354,879

Product Carriers

 

9

 

9.00

 

4

 

4.0

 

13

 

13.0

 

835,648

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Operating Fleet

 

36

 

35.0

 

6

 

6.0

 

42

 

41.0

 

7,016,969

Reconciliation to Non-GAAP Financial Information

The Company believes that, in addition to conventional measures prepared in accordance with GAAP, the following non-GAAP measures may provide certain investors with additional information that will better enable them to evaluate the Company's performance. Accordingly, these non-GAAP measures are intended to provide supplemental information, and should not be considered in isolation or as a substitute for measures of performance prepared with GAAP.

(A) Time Charter Equivalent (TCE) Revenues

Consistent with general practice in the shipping industry, the Company uses TCE revenues, which represents shipping revenues less voyage expenses, as a measure to compare revenue generated from a voyage charter to revenue generated from a time charter. Time charter equivalent revenues, a non-GAAP measure, provides additional meaningful information in conjunction with shipping revenues, the most directly comparable GAAP measure, because it assists Company management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance. Reconciliation of TCE revenues of the segments to shipping revenues as reported in the consolidated statements of operations follow:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Fiscal Year Ended December 31,

 

($ in thousands)

 

2019

 

2018

 

2019

 

2018

 

Time charter equivalent

revenues

 

$

 

117,595

 

$

 

93,034

 

$

 

339,919

 

$

 

243,100

 

Add: Voyage expenses

 

 

6,427

 

 

7,514

 

 

26,265

 

 

27,261

 

Shipping revenues

 

$

 

124,022

 

$

 

100,548

 

$

 

366,184

 

$

 

270,361

 

(B) EBITDA and Adjusted EBITDA

EBITDA represents net income/(loss) before interest expense, income taxes and depreciation and amortization expense. Adjusted EBITDA consists of EBITDA adjusted for the impact of certain items that we do not consider indicative of our ongoing operating performance. EBITDA and Adjusted EBITDA do not represent, and should not be a substitute for, net income or cash flows from operations as determined in accordance with GAAP. Some of the limitations are: (i) EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; (ii) EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; and (iii) EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt. While EBITDA and Adjusted EBITDA are frequently used as a measure of operating results and performance, neither of them is necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation. The following table reconciles net income/(loss) as reflected in the condensed consolidated statements of operations, to EBITDA and Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

December 31,

Fiscal Year Ended

December 31,

($ in thousands)

 

2019

 

2018

 

2019

 

2018

Net income/(loss)

 

$

 

15,891

 

 

$

 

6,958

 

 

$

 

(830

)

 

$

 

(88,940

)

Income tax provision/(benefit)

 

 

1

 

 

 

(116

)

 

 

1

 

 

 

(105

)

Interest expense

 

 

14,281

 

 

 

18,204

 

 

 

66,267

 

 

 

60,231

 

Depreciation and amortization

 

 

18,945

 

 

 

18,683

 

 

 

75,653

 

 

 

72,428

 

EBITDA

 

 

49,118

 

 

 

43,729

 

 

 

141,091

 

 

 

43,614

 

Third-party debt modification fees

 

 

-

 

 

 

13

 

 

 

30

 

 

 

1,306

 

Loss on disposal of vessels and other property,

 

 

 

 

 

 

 

 

 

 

 

 

including impairments

 

 

280

 

 

 

2,487

 

 

 

308

 

 

 

19,680

 

Gain on sale of investment in affiliated companies

 

 

(3,033

)

 

 

-

 

 

 

(3,033

)

 

 

-

 

Release of other comprehensive loss upon sale of

 

 

 

 

 

 

 

 

 

 

 

 

investment in affiliated companies

 

 

21,615

 

 

 

-

 

 

 

21,615

 

 

 

-

 

Write-off of deferred financing costs

 

 

3,215

 

 

 

-

 

 

 

3,558

 

 

 

2,400

 

Loss on extinguishment of debt

 

 

1,000

 

 

 

-

 

 

 

1,100

 

 

 

1,295

 

Adjusted EBITDA

 

$

 

72,195

 

 

$

 

46,229

 

 

$

 

164,669

 

 

$

 

68,295

 

(C) Total Cash

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

December 31,

($ in thousands)

2019

 

2018

Cash and cash equivalents

$

89,671

 

$

58,313

Restricted cash

 

60,572

 

 

59,331

Total Cash

$

150,243

 

$

117,644

 

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