UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2022~~2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-37836-1

INTERNATIONAL SEAWAYS, INC.

(Exact name of registrant as specified in its charter)


Marshall Islands		98-0467117
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

600 Third Avenue, 39^th Floor, New York, New York		10016
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 212-578-1600

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer ☐☒	Accelerated filer ☒☐	Emerging growth company ☐

Non-accelerated filer ☐	Smaller reporting company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock (no par value)	INSW	New York Stock Exchange
Rights to Purchase Common Stock	N/A	New York Stock Exchange

Former name, former address and former fiscal year, if changed since last report

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date. The number of shares outstanding of the issuer’s common stock as of ~~November 4, 2022:~~August 7, 2023: common stock, no par value ~~49,078,418~~48,889,609 shares.

INTERNATIONAL SEAWAYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
DOLLARS IN THOUSANDS
(UNAUDITED)


	September 30, 2022		December 31, 2021		June 30, 2023		December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents	$	174,465	$	97,883	$	116,023	$	243,744
Short-term investments		80,000				120,000		80,000
Voyage receivables, net of allowance for credit losses of $161 and $31
including unbilled receivables of $225,857 and $100,137		230,141		107,096
Voyage receivables, net of allowance for credit losses of $56 and $261
including unbilled receivables of $234,392 and $279,567						241,088		289,775
Other receivables		7,891		5,651		12,840		12,583
Inventories		873		2,110		629		531
Prepaid expenses and other current assets		11,379		11,759		15,079		8,995
Advance payment on debt						46,427		—
Current portion of derivative asset		4,801		—		7,595		6,987
Total Current Assets		509,550		224,499		559,681		642,615
Restricted cash		1,060		1,050
Vessels and other property, less accumulated depreciation of $310,096 and $249,336		1,707,775		1,802,850
Vessels and other property, less accumulated depreciation of $378,341 and $331,903						1,977,639		1,680,010
Vessels construction in progress		101,701		49,291		—		123,940
Deferred drydock expenditures, net		64,013		55,753		69,887		65,611
Operating lease right-of-use assets		18,069		23,168		6,308		8,471
Investments in and advances to affiliated companies		38,109		180,331
Finance lease right-of-use assets						—		44,391
Pool working capital deposits						32,521		35,593
Long-term derivative asset		6,252		1,296		4,462		4,662
Time charter contracts acquired, net		—		842
Other assets		13,374		7,700		5,158		10,041
Total Assets	$	2,459,903	$	2,346,780	$	2,655,656	$	2,615,334

LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable, accrued expenses and other current liabilities	$	45,593	$	44,964	$	47,044	$	51,069
Current portion of operating lease liabilities		8,323		8,393		452		1,596
Current portion of finance lease liabilities						—		41,870
Current installments of long-term debt		166,965		178,715		199,785		162,854
Current portion of derivative liability		—		2,539
Total Current Liabilities		220,881		234,611		247,281		257,389
Long-term operating lease liabilities		8,087		12,522		7,539		7,740
Long-term debt		900,509		926,270		778,266		860,578
Long-term derivative liability		—		757
Other liabilities		1,594		2,288		2,296		1,875
Total Liabilities		1,131,071		1,176,448		1,035,382		1,127,582

Commitments and contingencies

Equity:
Capital - 100,000,000 no par value shares authorized; 49,058,615 and 49,612,019
Capital - 100,000,000 no par value shares authorized; 48,889,609 and 49,120,648
shares issued and outstanding		1,557,875		1,591,446		1,487,151		1,502,235
Accumulated deficit		(239,876)		(409,338)
Retained earnings/(accumulated deficit)						127,368		(21,447)
		1,317,999		1,182,108		1,614,519		1,480,788
Accumulated other comprehensive income/(loss)		10,833		(12,360)
Total equity before noncontrolling interests		1,328,832		1,169,748
Noncontrolling interests		—		584
Accumulated other comprehensive income						5,755		6,964
Total Equity		1,328,832		1,170,332		1,620,274		1,487,752
Total Liabilities and Equity	$	2,459,903	$	2,346,780	$	2,655,656	$	2,615,334

See notes to condensed consolidated financial statements

INTERNATIONAL SEAWAYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
(UNAUDITED)


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021		2023		2022		2023		2022
Shipping Revenues:
Pool revenues, including $52,722, $14,552, $107,106 and $49,656
Pool revenues, including $86,325, $31,114, $178,032 and $54,385
from companies accounted for by the equity method	$	215,240	$	50,543	$	463,729	$	101,657	$	247,591	$	164,727	$	507,169	$	248,489
Time and bareboat charter revenues		8,487		13,664		22,795		40,076
Time charter revenues										26,112		8,133		39,262		14,308
Voyage charter revenues		13,102	��	20,609		39,984		36,143		18,500		15,337		32,902		26,882
		236,829		84,816		526,508		177,876		292,203		188,197		579,333		289,679

Operating Expenses:
Voyage expenses		2,283		11,848		8,448		15,021		3,868		2,658		7,678		6,165
Vessel expenses		58,565		58,174		178,445		112,378		65,151		59,563		123,920		119,880
Charter hire expenses		7,797		5,679		22,799		17,283		10,502		7,693		19,302		15,002
Depreciation and amortization		27,728		25,806		81,984		59,639		32,445		27,256		61,993		54,256
General and administrative		11,839		8,129		32,852		23,141		11,522		10,847		22,768		21,013
Third-party debt modification fees		71		26		1,158		26		13		900		420		1,087
Merger and integration related costs		—		47,079		—		47,560
Loss/(gain) on disposal of vessels and other assets, net of impairments		139		(9,104)		(9,339)		(5,088)		26		(8,102)		(10,722)		(9,478)
Total operating expenses		108,422		147,637		316,347		269,960		123,527		100,815		225,359		207,925
Income/(loss) from vessel operations		128,407		(62,821)		210,161		(92,084)
Equity in (loss)/income of affiliated companies		(1)		5,730		434		16,573
Operating income/(loss)		128,406		(57,091)		210,595		(75,511)
Income from vessel operations										168,676		87,382		353,974		81,754
Equity in results of affiliated companies										—		(5,162)		—		435
Operating income										168,676		82,220		353,974		82,189
Other income/(expense)		360		(113)		(440)		446		3,381		(574)		7,662		(800)
Income/(loss) before interest expense and income taxes		128,766		(57,204)		210,155		(75,065)
Income before interest expense and income taxes										172,057		81,646		361,636		81,389
Interest expense		(15,332)		(10,639)		(40,630)		(24,925)		(17,914)		(12,558)		(34,861)		(25,298)
Income/(loss) before income taxes		113,434		(67,843)		169,525		(99,990)
Income before income taxes										154,143		69,088		326,775		56,091
Income tax provision		(7)		(35)		(63)		(36)		(381)		(52)		(380)		(56)
Net income/(loss)		113,427		(67,878)		169,462		(100,026)
Less: Net loss attributable to noncontrolling interests		—		(526)		—		(526)
Net income/(loss) attributable to the Company	$	113,427	$	(67,352)	$	169,462	$	(99,500)
Net income									$	153,762	$	69,036	$	326,395	$	56,035

Weighted Average Number of Common Shares Outstanding:
Basic		49,312,716		46,903,955		49,493,315		34,395,732		49,029,784		49,602,181		49,083,897		49,586,847
Diluted		49,743,700		46,903,955		49,758,196		34,395,732		49,404,837		49,878,645		49,525,282		49,754,876

Per Share Amounts:
Basic net earnings/(loss) per share	$	2.30	$	(1.44)	$	3.42	$	(2.90)
Diluted net earnings/(loss) per share	$	2.28	$	(1.44)	$	3.40	$	(2.90)
Basic net income per share									$	3.13	$	1.39	$	6.64	$	1.13
Diluted net income per share									$	3.11	$	1.38	$	6.59	$	1.12

See notes to condensed consolidated financial statements

INTERNATIONAL SEAWAYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~INCOME/(LOSS)~~INCOME
DOLLARS IN THOUSANDS
(UNAUDITED)


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021		2023		2022		2023		2022
Net income/(loss)	$	113,427	$	(67,878)	$	169,462	$	(100,026)
Other comprehensive income, net of tax:
Net income									$	153,762	$	69,036	$	326,395	$	56,035
Other comprehensive income/(loss), net of tax:
Net change in unrealized gains/(losses) on cash flow hedges		10,112		3,180		21,840		13,002		3,081		966		(757)		11,728
Defined benefit pension and other postretirement benefit plans:
Net change in unrecognized prior service costs		78		31		177		16		(30)		73		(60)		99
Net change in unrecognized actuarial losses		516		229		1,176		118		(198)		489		(392)		660
Other comprehensive income, net of tax		10,706		3,440		23,193		13,136
Comprehensive income/(loss) attributable to the Company		124,133		(64,438)		192,655		(86,890)
Less: Comprehensive loss attributable to noncontrolling interests		—		(526)		—		(526)
Comprehensive income/(loss) attributable to the Company	$	124,133	$	(63,912)	$	192,655	$	(86,364)
Other comprehensive income/(loss), net of tax										2,853		1,528		(1,209)		12,487
Comprehensive income									$	156,615	$	70,564	$	325,186	$	68,522

See notes to condensed consolidated financial statements

INTERNATIONAL SEAWAYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
DOLLARS IN THOUSANDS
(UNAUDITED)


	Nine Months Ended September 30,				Six Months Ended June 30,
		2022		2021		2023		2022
Cash Flows from Operating Activities:
Net income/(loss)	$	169,462	$	(100,026)
Items included in net income/(loss) not affecting cash flows:
Net income					$	326,395	$	56,035
Items included in net income not affecting cash flows:
Depreciation and amortization		81,984		59,639		61,993		54,256
Loss on write-down of vessels and other assets		1,697		3,497		—		1,697
Amortization of debt discount and other deferred financing costs		3,630		1,609		3,128		1,955
Amortization of time charter hire contracts acquired		842		1,743		—		684
Deferred financing costs write-off		610		—		721		261
Stock compensation		4,447		8,894		3,873		2,728
Earnings of affiliated companies		(10,017)		(16,573)
Merger and integration related costs, noncash		—		31,053
Write-off of registration statement costs		—		694
Equity in results of affiliated companies						20		(10,017)
Other – net		(774)		1,184		(1,560)		(327)
Items included in net income/(loss) related to investing and financing activities:
Items included in net income related to investing and financing activities:
Gain on disposal of vessels and other assets, net		(11,036)		(8,585)		(10,722)		(11,175)
Loss on sale of investments in affiliated companies		9,513		—		—		9,512
Cash distributions from affiliated companies		2,250		6,775		—		2,250
Payments for drydocking		(36,280)		(23,816)		(18,992)		(25,789)
Insurance claims proceeds related to vessel operations		4,545		1,184		2,698		2,035
Changes in operating assets and liabilities:				-
Increase in receivables		(123,045)		(6,232)
Increase/(decrease) in deferred revenue		1,009		(856)
Decrease/(increase) in receivables						48,687		(74,809)
Decrease in deferred revenue						(142)		—
Net change in inventories, prepaid expenses and other current assets, accounts
payable, accrued expenses and other current and long-term liabilities		7,364		(9,217)		(1,643)		5,549
Net cash provided by/(used in) operating activities		106,201		(49,033)
Net cash provided by operating activities						414,456		14,845
Cash Flows from Investing Activities:
Cash acquired, net of equity issuance costs related to merger		—		54,155
Expenditures for vessels and vessel improvements		(87,603)		(44,214)
Expenditures for vessels, vessel improvements and vessels under construction						(188,068)		(53,801)
Proceeds from disposal of vessels and other property, net		79,476		113,510		20,070		79,614
Expenditures for other property		(674)		(450)		(586)		(509)
Investments in and advances to affiliated companies, net		1,862		(6,861)
Investments in short-term time deposits						(175,000)		—
Proceeds from maturities of short-term time deposits						135,000		—
Pool working capital deposits						—		(838)
Proceeds from sale of investments in affiliated companies		138,966		—		—		140,069
Investments in short term time deposits		(80,000)		—
Net cash provided by investing activities		52,027		116,140
Net cash (used in)/provided by investing activities						(208,584)		164,535
Cash Flows from Financing Activities:
Issuance of debt, net of issuance and deferred financing costs
Borrowings on long term debt, net of lenders' fees		641,050		59,469		—		641,050
Payments of deferred financing costs		(782)		(166,640)
Repayments of debt		(744,034)		—		(192,856)		(717,913)
Proceeds from sale and leaseback financing, net of issuance and deferred financing costs		88,791		—		169,717		60,076
Payments on sale and leaseback financing		(28,640)		—
Cash payments on derivatives containing other-than-insignificant financing elements		—		(3,977)
Payments and advance payment on sale and leaseback financing and finance lease						(112,786)		(18,816)
Payments of deferred financing costs						(1,146)		(556)
Repurchase of common stock						(13,948)		—
Cash dividends paid		(14,830)		(37,920)		(177,565)		(8,941)
Repurchase of common stock		(20,017)		—
Cash paid to tax authority upon vesting or exercise of stock-based compensation		(3,174)		(1,125)		(5,009)		(1,493)
Net cash used in financing activities		(81,636)		(150,193)
Net increase/(decrease) in cash, cash equivalents and restricted cash		76,592		(83,086)
Net cash used in by financing activities						(333,593)		(46,593)
Net (decrease)/increase in cash, cash equivalents and restricted cash						(127,721)		132,787
Cash, cash equivalents and restricted cash at beginning of year		98,933		215,677		243,744		98,933
Cash, cash equivalents and restricted cash at end of period	$	175,525	$	132,591	$	116,023	$	231,720

See notes to condensed consolidated financial statements

INTERNATIONAL SEAWAYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
DOLLARS IN THOUSANDS
(UNAUDITED)


					Accumulated								Retained		Accumulated
					Other								Earnings /		Other
			Accumulated		Comprehensive		Noncontrolling						(Accumulated		Comprehensive		Noncontrolling
	Capital		Deficit		Income/(Loss)		Interests		Total		Capital		Deficit)		Income/(loss)		Interests		Total
For the nine months ended
Balance at January 1, 2022	$	1,591,446	$	(409,338)	$	(12,360)	$	584	$	1,170,332
For the six months ended
Balance at January 1, 2023											$	1,502,235	$	(21,447)	$	6,964	$	—	$	1,487,752
Net income		—		169,462		—		—		169,462		—		326,395		—		—		326,395
Other comprehensive income		—		—		23,193		—		23,193
Other comprehensive loss												—		—		(1,209)		—		(1,209)
Dividends declared		(14,827)		—		—		—		(14,827)		—		(177,580)		—		—		(177,580)
Impact of deconsolidating DASM		—		—		—		(584)		(584)
Forfeitures of vested restricted stock awards and exercised stock options		(3,174)		—		—		—		(3,174)		(5,009)		—		—		—		(5,009)
Compensation relating to restricted stock awards		902		—		—		—		902		491		—		—		—		491
Compensation relating to restricted stock units awards		2,782		—		—		—		2,782		3,043		—		—		—		3,043
Compensation relating to stock option awards		763		—		—		—		763		339		—		—		—		339
Repurchase of common stock		(20,017)		—		—		—		(20,017)		(13,948)		—		—		—		(13,948)
Balance at September 30, 2022	$	1,557,875	$	(239,876)	$	10,833	$	—	$	1,328,832
Balance at June 30, 2023											$	1,487,151	$	127,368	$	5,755	$	—	$	1,620,274

Balance at January 1, 2021	$	1,280,501	$	(275,846)	$	(32,613)		—	$	972,042
Net loss		—		(99,500)		—		(526)		(100,026)
Issuance of common stock related to merger		359,256		—		—		30,478		389,734
Balance at January 1, 2022											$	1,591,446	$	(409,338)	$	(12,360)	$	584	$	1,170,332
Net income												—		56,035		—		—		56,035
Other comprehensive income		—		—		13,136		—		13,136		—		—		12,487		—		12,487
Dividends declared		(37,924)		—		—		—		(37,924)		(8,941)		—		—		—		(8,941)
Forfeitures of vested restricted stock awards		(1,125)		—		—		—		(1,125)		(1,493)		—		—		—		(1,493)
Compensation relating to restricted stock awards		3,337		—		—		—		3,337		583		—		—		—		583
Compensation relating to restricted stock units awards		4,629		—		—		—		4,629		1,607		—		—		—		1,607
Compensation relating to stock option awards		928		—		—		—		928		538		—		—		—		538
Balance at September 30, 2021	$	1,609,602	$	(375,346)	$	(19,477)	$	29,952	$	1,244,731
Balance at June 30, 2022											$	1,583,740	$	(353,303)	$	127	$	584	$	1,231,148

For the three months ended
Balance at July 1, 2022	$	1,583,740	$	(353,303)	$	127	$	584	$	1,231,148
Balance at April 1, 2023											$	1,501,516	$	52,865	$	2,902	$	—	$	1,557,283
Net income		—		113,427		—		—		113,427		—		153,762		—		—		153,762
Other comprehensive income		—		—		10,706		—		10,706		—		—		2,853		—		2,853
Dividends declared		(5,886)		—		—		—		(5,886)
Impact of deconsolidating DASM		—		—		—		(584)		(584)
Forfeitures of vested restricted stock awards and exercised stock options		(1,681)		—		—		—		(1,681)
Compensation relating to restricted stock awards		319		—		—		—		319
Compensation relating to restricted stock units awards		1,175		—		—		—		1,175
Compensation relating to stock option awards		225		—		—		—		225
Repurchase of common stock		(20,017)		—		—		—		(20,017)
Balance at September 30, 2022	$	1,557,875	$	(239,876)	$	10,833	$	—	$	1,328,832

Balance at July 1, 2021	$	1,278,365	$	(307,994)	$	(22,917)	$	—	$	947,454
Net loss		—		(67,352)		—		(526)		(67,878)
Issuance of common stock related to merger		359,256		—		—		30,478		389,734
Other comprehensive loss		—		—		3,440		—		3,440
Dividends declared		(34,555)		—		—		—		(34,555)		—		(79,259)		—		—		(79,259)
Forfeitures of vested restricted stock awards		(95)		—		—		—		(95)		(2,390)		—		—		—		(2,390)
Compensation relating to restricted stock awards		2,877		—		—		—		2,877		223		—		—		—		223
Compensation relating to restricted stock units awards		3,437		—		—		—		3,437		1,631		—		—		—		1,631
Compensation relating to stock option awards		317		—		—		—		317		119		—		—		—		119
Balance at September 30, 2021	$	1,609,602	$	(375,346)	$	(19,477)	$	29,952	$	1,244,731
Repurchase of common stock												(13,948)		—		—		—		(13,948)
Balance at June 30, 2023											$	1,487,151	$	127,368	$	5,755	$	—	$	1,620,274

Balance at April 1, 2022											$	1,588,606	$	(422,339)	$	(1,401)	$	584	$	1,165,450
Net income												—		69,036		—		—		69,036
Other comprehensive income												—		—		1,528		—		1,528
Dividends declared												(5,963)		—		—		—		(5,963)
Forfeitures of vested restricted stock awards												(523)		—		—		—		(523)
Compensation relating to restricted stock awards												287		—		—		—		287
Compensation relating to restricted stock units awards												1,106		—		—		—		1,106
Compensation relating to stock option awards												227		—		—		—		227
Balance at June 30, 2022											$	1,583,740	$	(353,303)	$	127	$	584	$	1,231,148

See notes to condensed consolidated financial statements

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 1 — Basis of Presentation:

The accompanying unaudited condensed consolidated financial statements include the accounts of International Seaways, Inc. (“INSW”), a Marshall Islands corporation, and its wholly owned subsidiaries. Unless the context indicates otherwise, references to “INSW”, the “Company”, “we”, “us” or “our”, refer to International Seaways, Inc. and its subsidiaries. As of ~~September~~June 30, ~~2022,~~2023, the Company’s operating fleet consisted of 7574 wholly-owned ~~finance leased~~ or ~~bareboat chartered-in and time-chartered-in~~lease financed oceangoing vessels, engaged primarily in the transportation of crude oil and refined petroleum products in the International Flag trade through its wholly owned subsidiaries. In addition to its operating fleet, three dual-fuel LNG-powered VLCC newbuilds are scheduled for delivery to the Company between the first and second quarters of 2023, bringing the total operating and newbuild fleet to 78 vessels as of September 30, 2022.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and notes required by generally accepted accounting principles in the United States. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results have been included. Operating results for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2022.~~2023.

The condensed consolidated balance sheet as of December 31, ~~2021~~2022 has been derived from the audited financial statements at that date but does not include all of the information and notes required by generally accepted accounting principles in the United States for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

All intercompany balances and transactions within INSW have been eliminated. Investments in 50% or less owned affiliated companies, in which INSW exercises significant influence, are accounted for by the equity method.

~~Note 2 — Merger Transaction:~~

~~Completion~~Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of ~~Merger Transaction~~

On July 16, 2021 (the “Effective Time”), pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) dated as of March 30, 2021, by and among INSW, Diamond S Shipping Inc., a Republic of the Marshall Islands corporation (“Diamond S”), and Dispatch Transaction Sub, Inc., a Republic of the Marshall Islands corporation and wholly-owned subsidiary of INSW (“Merger Sub”), Merger Sub merged with and into Diamond S (the “Merger”), with Diamond S surviving such merger as a wholly owned subsidiary of INSW. Immediately following the Effective Time, the Company contributed all of the outstanding stock of Diamond S to International Seaways Operating Corporation, a direct wholly-owned subsidiary of the Company.

~~At the Effective Time, each common share of Diamond S (the “Diamond S Common Shares”) issued and outstanding immediately prior~~operations. An adjustment has been made to the ~~Effective Time (excluding Diamond S Common Shares owned by Diamond S, the Company, Merger Sub or any of their respective direct or indirect wholly-owned subsidiaries) was cancelled in exchange~~condensed consolidated balance sheet for the ~~right~~fiscal year ended December 31, 2022 to ~~receive 0.55375 of a share of common stock of the Company (the “INSW Common Stock”)~~reclassify $0.8 million from Pool working capital deposits (previously captioned as Investments in and cash payable in respect of fractional shares. The aforementioned 0.55375 exchange ratio set forth in the Merger Agreement resulted in the issuance of 22,536,647 shares of INSW Common Stock, with the pre-Merger INSW shareholders and the former Diamond S shareholders owning approximately 55.75% and 44.25%, respectively, of the 50,674,393 issued and advances to affiliated companies) to ~~outstanding~~Other assets ~~common stock of the Company immediately following the Effective Time.~~

As provided for under the terms of the Merger Agreement, on July 15, 2021, prior to the Effective Time, INSW paid a special dividend to its shareholders of record as of July 14, 2021 in an aggregate amount equal to $31.5 million ($1.12 per share).

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 32 — Significant Accounting Policies:

For a description of all of the Company’s material accounting policies, see Note 2, “Summary of Significant Accounting Policies,” to the Company’s consolidated financial statements as of and for the year ended December 31, ~~2021~~2022 included in the Company’s Annual Report on Form 10-K. The following is a summary of any changes or updates to the Company’s critical accounting policies for the current period:

Cash, cash equivalents and restricted cash — Interest-bearing deposits that are highly liquid investments and have a maturity of three months or less when purchased are included in cash and cash equivalents. Restricted cash ~~of $1.1 million~~is nil as of ~~September~~June 30, 2022 and December 31, 2021 represents legally restricted cash relating to the Company’s Macquarie Credit Facility (See Note 10, “Debt”). Such facilities stipulate that cash accounts be maintained which are limited in their use to pay expenses related to drydocking the vessels and servicing the debt facilities.2023.

Short-term investments - — Short-term investments consist of time deposits with original maturities of between 9091 and 364 days.

Concentration of Credit Risk — The allowance for credit losses is recognized as an allowance or contra-asset and reflects our best estimate of probable losses inherent in the voyage receivables balance. Activity for allowance for credit losses is summarized as follows:

(Dollars in thousands)

Allowance for Credit Losses -
Voyage Receivables
Balance at December 31, 2021

$
31
Provision for expected credit losses

130
Balance at September 30, 2022

$
161

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


(Dollars in thousands)		Allowance for Credit Losses - Voyage Receivables
Balance at December 31, 2022	$	261
Reversal of expected credit losses		(205)
Balance at June 30, 2023	$	56

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, the Company did not have any individual customers who accounted for 10% or more of its revenues apart from the pools in which it participates. The pools in which the Company participates accounted in aggregate for 96% and ~~93%~~96% of consolidated voyage receivables at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

Deferred finance charges — Finance charges, excluding original issue discount, incurred in the arrangement and/or amendments resulting in the modification of debt are deferred and amortized to interest expense on either an effective interest method or straight-line basis over the term of the related debt. Unamortized deferred finance charges of ~~$7.1~~$3.3 million relating to the $750 Million Facility Revolving Loan (See Note 10, “Debt”) as of June 30, 2023 and $6.9 million relating to the $750 Million Facility Revolving Loan and BoComm Lease Financing as of ~~September 30, 2022 and $3.7 million relating to the $390 Million Facility Revolving Loan and BoComm Lease Financing (See Note 10, “Debt”) as of~~ December 31, ~~2021, respectively,~~2022, are included in other assets in the accompanying condensed consolidated balance sheets. Unamortized deferred financing charges of ~~$14.9~~$14.7 million and ~~$9.9~~$13.4 million as of June 30, 2023 and December 31, 2022, respectively, relating to the Company’s outstanding debt facilities, ~~as of September 30, 2022 and December 31, 2021, respectively,~~ are included in long-term debt in the ~~accompanying condensed~~ consolidated balance sheets.

Interest expense relating to the amortization of deferred financing charges amounted to ~~$1.7~~$1.3 million and ~~$3.3~~$2.6 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, and ~~$0.5~~$1.1 million and ~~$1.6~~$1.7 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively.

Vessels construction in progress — Interest costs are capitalized to vessels during the period that vessels are under construction. Interest capitalized during the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 totaled ~~$1.2~~$0.5 million and ~~$2.7~~$2.3 million, respectively, and ~~$0.2~~$0.8 million and ~~$0.2~~$1.5 million ~~for~~during the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively.

~~Time Charter Contracts Acquired~~ —The ~~Company’s intangible assets consist of charter-out contracts with contractual rates in excess of fair market charter rates that were acquired as part~~construction of the ~~Merger. These assets are amortized on a straight-line basis as a reduction of time charter revenues over~~Company’s three newbuild dual-fuel LNG VLCCs was completed and the ~~remaining term of such charters. For~~vessels were delivered to the ~~three~~Company between March 2023 and ~~nine months ended September 30, 2022, amortization totaled $0.1 million and $0.8 million, respectively.~~May 2023.

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Recently Issued Accounting Standards ~~—In March 2020,~~— The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification is the sole source of authoritative GAAP other than United States Securities and Exchange Commission (“SEC”) issued rules and regulations that apply only to SEC registrants. The FASB ~~issued ASU 2020-04,~~ ~~Reference Rate Reform~~ ~~(ASC 848), which provides relief for companies preparing for discontinuation of interest rates such as LIBOR. A contract modification is eligible~~issues Accounting Standards Updates (“ASU”) to ~~apply the optional relief to account for the modifications as a continuation of the existing contracts without additional analysis and consider embedded features to be clearly and closely related~~communicate changes to the host contract without reassessment, if all of the following criteria are met: (1) contract references a rate that will be discontinued; (2) modified terms directly replace (or have potential to replace) this reference rate; and (3) changes to any other terms that change (or have potential to change) amount and timing of cash flows must be related to replacement of the reference rate. In addition, this guidance provides relief from certain hedge accounting requirements. Hedge accounting may continue uninterrupted when critical terms change due to reference rate reform. For cash flow hedges, entities can (1) disregard potential discontinuation of a referenced interest rate when assessing whether a hedged forecasted interest payment is probable; (2) continue hedge accounting upon a change in the hedged risk as long as the hedge is still highly effective; (3) assess effectiveness of the hedge relationship in ways that essentially disregards a potential mismatch in the variable rate indices between the hedging instrument and the hedged item; and (4) disregard the requirement that individual hedged transactions must share the same risk exposure for hedges of portfolios of forecasted transactions that reference a rate affected by reference rate reform. Relief provided by this ASU is optional and expires December 31, 2022. In January 2021, the FASB issued ASU 2021-01, ~~Reference Rate Reform~~ ~~(ASC 848) to refine the scope of ASC 848 and to clarify some of its guidance.~~codification. The Company ~~has determined that its primary exposure to LIBOR is in relation to its floating rate debt facilities. On November 30, 2020,~~considered the ~~benchmark administrator for~~applicability and impact of all ASUs issued during the U.S. Dollar (“USD”) LIBOR announced a proposal to extend the publication of the most commonly used USD LIBOR settings until June 30, 2023. In light of this proposal, in an interagency statement, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency issued guidance, strongly encouraging banks to cease entering into new contracts that use USD LIBOR as a reference rate as soon as practicable and in any event by December 31, 2021. Only in limited circumstances will it be appropriate for banks to enter into new contracts referencing USD LIBOR after December 31, 2021. The principal objective, and result, of these actions appears to be that legacy USD LIBOR-based instruments (i.e., those maturing after December 31, 2021) may continue to use USD LIBOR as a reference rate throughquarter ended June 30, 2023 ~~without undermining the regulators’ determination~~and determined that ~~LIBOR should~~they were either not ~~be available for any other purpose. On January 25, 2021, the International Swaps and Derivatives Association, Inc. (“ISDA”), published new fallback provisions for derivatives linked~~applicable or not expected to key interbank offered rates (“IBOR”) which will be incorporated into all new derivatives contracts that reference ISDA’s standard interest rate derivatives definitions. Such fallback provisions will also be included in legacy non-cleared derivatives if the counterparties have bilaterally agreed to include them, or both have adhered to the IBOR fallback protocol. The Company has engaged and will continue to engage in discussions with its lending banks in advance of the June 30, 2023 sunset date for the USD LIBOR reference rate settings used in its agreements to evaluatea material impact on the Company’s options. Based on information available today, the Company’s current view is that the Secured Overnight Financing Rate (“SOFR”) will be the alternative reference rate that the Company’s LIBOR-based agreements will transition to as the sunset date draws closer.consolidated financial statements.

Note 43 — Earnings per Common Share:

Basic earnings per common share is computed by dividing earnings, after the deduction of dividends and undistributed earnings allocated to participating securities, by the weighted average number of common shares outstanding during the period.

The computation of diluted earnings per share assumes the issuance of common stock for all potentially dilutive stock options and restricted stock units not classified as participating securities. Participating securities are defined by ASC 260, Earnings Per Share, as unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents and are included in the computation of earnings per share pursuant to the two-class method.

Weighted average shares of unvested restricted common stock considered to be participating securities totaled ~~49,778~~36,668 and ~~68,945~~42,745 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, and ~~106,384~~70,350 and ~~73,172~~78,687 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively. Such participating securities are allocated a portion of income, but not losses under the two-class method. As of ~~September~~June 30, ~~2022,~~2023, there were ~~592,112~~516,252 shares of restricted stock units and ~~537,357~~257,310 stock options outstanding and considered to be potentially dilutive securities.

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Reconciliations of the numerator of the basic and diluted earnings per share computations are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)		2022		2021		2022		2021		2023		2022		2023		2022
Net income/(loss) attributable to the Company allocated to:
Net income allocated to:
Common Stockholders	$	113,313	$	(67,494)	$	169,229	$	(99,648)	$	153,659	$	68,939	$	326,124	$	55,947
Participating securities		114		142		233		148		103		97		271		88
	$	113,427	$	(67,352)	$	169,462	$	(99,500)	$	153,762	$	69,036	$	326,395	$	56,035

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 earnings per share calculations, there were ~~430,984~~375,053 and ~~264,881~~441,385 dilutive equity awards outstanding, respectively. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 earnings per share calculations, there were no276,464 and 168,029 dilutive equity awards ~~outstanding.~~outstanding, respectively. Awards of ~~1,298,016~~780,471 and ~~1,236,334~~816,387 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, and ~~1,054,691~~1,245,340 and ~~1,022,293~~1,155,756 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively, were not included in the computation of ~~diluted~~dilutive earnings per share because inclusion of these awards would be anti-dilutive.

Note 54 — Business and Segment Reporting:

The Company has two reportable segments: Crude Tankers and Product Carriers. The Company’s investments in and equity in income of the joint ventures with two floating storage and offloading service vessels, which were sold on June 7, 2022, are included in the Crude Tankers Segment. Adjusted income/(loss) from vessel operations for segment purposes is defined as income/(loss) from vessel operations before general and administrative expenses, third-party debt modification fees ~~merger and integration related costs~~ and loss/(gain) on disposal of vessels and ~~other property, including~~assets, net of impairments. The accounting policies followed by the reportable segments are the same as those followed in the preparation of the Company’s condensed consolidated financial statements.

Information about the Company’s reportable segments as of and for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 follows:


	Crude		Product						Crude		Product
(Dollars in thousands)	Tankers		Carriers		Other		Totals		Tankers		Carriers		Other		Totals
Three months ended September 30, 2022:
Three months ended June 30, 2023:
Shipping revenues	$	77,071	$	159,758	$	—	$	236,829	$	152,168	$	140,035	$	—	$	292,203
Time charter equivalent revenues		75,192		159,355		(1)		234,546		148,913		139,422		—		288,335
Depreciation and amortization		15,771		11,931		26		27,728		19,318		13,101		26		32,445
Loss on disposal of vessels and other assets, including impairments		77		62		—		139
Loss on disposal of vessels and other assets										25		1		—		26
Adjusted income/(loss) from vessel operations		30,993		109,490		(27)		140,456		96,520		83,743		(26)		180,237
Equity in loss of affiliated companies		(1)		—		—		(1)
Investments in and advances to affiliated companies at September 30, 2022		16,301		21,808		—		38,109
Adjusted total assets at September 30, 2022		1,356,386		819,768		—		2,176,154
Adjusted total assets at June 30, 2023										1,554,542		788,016		—		2,342,558

Three months ended September 30, 2021:
Three months ended June 30, 2022:
Shipping revenues	$	41,760	$	43,056	$	—	$	84,816	$	62,107	$	126,090	$	—	$	188,197
Time charter equivalent revenues		34,771		38,197		—		72,968		59,456		126,083		—		185,539
Depreciation and amortization		15,963		9,828		15		25,806		15,187		12,044		25		27,256
Gain on disposal of vessels and other property, including impairments		(224)		(8,880)		—		(9,104)
Adjusted loss from vessel operations		(9,682)		(6,994)		(15)		(16,691)
Equity in income of affiliated companies		5,730		—		—		5,730
Investments in and advances to affiliated companies at September 30, 2021		154,921		22,481		—		177,402
Adjusted total assets at September 30, 2021		1,520,767		772,880		—		2,293,647
Gain on disposal of vessels and other assets, net of impairments										(871)		(7,231)		—		(8,102)
Adjusted income/(loss) from vessel operations										15,565		75,487		(25)		91,027
Equity in results of affiliated companies										(5,162)		—		—		(5,162)
Investments in and advances to affiliated companies at June 30, 2022										15,801		24,031		—		39,832
Adjusted total assets at June 30, 2022										1,313,221		802,206		—		2,115,427

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


	Crude		Product
(Dollars in thousands)	Tankers		Carriers		Other		Totals
Six months ended June 30, 2023:
Shipping revenues	$	284,579	$	294,754	$	—	$	579,333
Time charter equivalent revenues		278,197		293,458		—		571,655
Depreciation and amortization		36,544		25,395		54		61,993
Loss/(gain) on disposal of vessels and other assets		25		(10,747)		—		(10,722)
Adjusted income/(loss) from vessel operations		181,061		185,433		(54)		366,440
Expenditures for vessels and vessel improvements		184,021		4,047		—		188,068
Payments for drydocking		3,187		15,805		—		18,992

Six months ended June 30, 2022:
Shipping revenues	$	101,717	$	187,962	$	—	$	289,679
Time charter equivalent revenues		95,932		187,582		—		283,514
Depreciation and amortization		30,339		23,885		32		54,256
Loss/(gain) on disposal of vessels and other assets, net of impairments		971		(10,449)		—		(9,478)
Adjusted income/(loss) from vessel operations		9,723		84,685		(32)		94,376
Equity in results of affiliated companies		435		—		—		435
Expenditures for vessels and vessel improvements		26,747		27,054		—		53,801
Payments for drydocking		12,369		13,420		—		25,789

Crude

Product

(Dollars in thousands)

Tankers

Carriers

Other

Totals
Nine months ended September 30, 2022:

Shipping revenues

$
178,788

$
347,720

$
—

$
526,508
Time charter equivalent revenues

171,124

346,936

—

518,060
Depreciation and amortization

46,109

35,816

59

81,984
Loss/(gain) on disposal of vessels and other assets, including impairments

1,048

(10,387)

—

(9,339)
Adjusted income/(loss) from vessel operations

40,717

194,173

(58)

234,832
Equity in income of affiliated companies

434

—

—

434
Expenditures for vessels and vessel improvements

59,101

28,502

—

87,603
Payments for drydocking

22,086

14,194

—

36,280

Nine months ended September 30, 2021:

Shipping revenues

$
111,818

$
66,058

$
—

$
177,876
Time charter equivalent revenues

101,817

61,038

—

162,855
Depreciation and amortization

42,005

17,578

56

59,639
Loss/(gain) on disposal of vessels and other assets, including impairments

3,791

(8,879)

—

(5,088)
Adjusted loss from vessel operations

(17,697)

(8,692)

(56)

(26,445)
Equity in income of affiliated companies

16,573

—

—

16,573
Expenditures for vessels and vessel improvements

40,791

3,423

—

44,214
Payments for drydocking

16,518

7,298

—

23,816

Reconciliations of time charter equivalent (“TCE”) revenues of the segments to shipping revenues as reported in the condensed statements of operations follow:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)		2022		2021		2022		2021		2023		2022		2023		2022
Time charter equivalent revenues	$	234,546	$	72,968	$	518,060	$	162,855	$	288,335	$	185,539	$	571,655	$	283,514
Add: Voyage expenses		2,283		11,848		8,448		15,021		3,868		2,658		7,678		6,165
Shipping revenues	$	236,829	$	84,816	$	526,508	$	177,876	$	292,203	$	188,197	$	579,333	$	289,679

Consistent with general practice in the shipping industry, the Company uses time charter equivalent revenues, which represent 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, provide 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.

Reconciliations of total adjusted income from vessel operations of the segments to income before income taxes, as reported in the condensed consolidated statements of operations follow:

109

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

~~Reconciliations of adjusted income/(loss) from vessel operations of the segments to loss before income taxes, as reported in the condensed consolidated statements of operations follow:~~


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)		2022		2021		2022		2021		2023		2022		2023		2022
Total adjusted income/(loss) from vessel operations of all segments	$	140,456	$	(16,691)	$	234,832	$	(26,445)
Total adjusted income from vessel operations of all segments									$	180,237	$	91,027	$	366,440	$	94,376
General and administrative expenses		(11,839)		(8,129)		(32,852)		(23,141)		(11,522)		(10,847)		(22,768)		(21,013)
Third-party debt modification fees		(71)		(26)		(1,158)		(26)		(13)		(900)		(420)		(1,087)
Merger and integration related costs		—		(47,079)		—		(47,560)		—				—		—
Gain/(loss) on disposal of vessels and other assets, including impairments		(139)		9,104		9,339		5,088
Consolidated income/(loss) from vessel operations		128,407		(62,821)		210,161		(92,084)
Equity in income/(loss) of affiliated companies		(1)		5,730		434		16,573
Other (expense)/income		360		(113)		(440)		446
(Loss)/gain on disposal of vessels and other assets, net of impairments										(26)		8,102		10,722		9,478
Consolidated income from vessel operations										168,676		87,382		353,974		81,754
Equity in results of affiliated companies										—		(5,162)		—		435
Other income/(expense)										3,381		(574)		7,662		(800)
Interest expense		(15,332)		(10,639)		(40,630)		(24,925)		(17,914)		(12,558)		(34,861)		(25,298)
Income/(loss) before income taxes	$	113,434	$	(67,843)	$	169,525	$	(99,990)
Income before income taxes									$	154,143	$	69,088	$	326,775	$	56,091

Reconciliations of total assets of the segments to amounts included in the condensed consolidated balance sheets follow:


(Dollars in thousands)	September 30, 2022		September 30, 2021		June 30, 2023		June 30, 2022
Adjusted total assets of all segments	$	2,176,154	$	2,293,647	$	2,342,558	$	2,115,427
Corporate unrestricted cash and cash equivalents		174,465		108,897		116,023		230,666
Restricted cash		1,060		23,694		—		1,054
Short-term investments		80,000		—		120,000		—
Advance payment on debt						46,427		—
Other unallocated amounts		28,224		15,595		30,648		17,094
Consolidated total assets	$	2,459,903	$	2,441,833	$	2,655,656	$	2,364,241

Note 65 — Vessels:

Impairment of Vessels and Other Property

During the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, the Company gave consideration ~~on a quarterly basis~~ as to whether events or changes in circumstances had occurred since December 31, ~~2021,~~2022, that could indicate that the carrying amounts of the vessels in the Company’s fleet may not be recoverable. ~~During the quarter ended September 30, 2022, the~~The Company ~~continued to monitor industry and market factors and intentions regarding its vessels to determine if indicators of impairment were present and~~ determined that none of the vessels in the Company’s fleet met held-for-sale criteria as of ~~September~~June 30, ~~2022~~2023 and no held-for-use impairment indicators existed for the Company’s vessels as of ~~September 30, 2022. During the quarter ended~~ March 31, 2022, the Company concluded that the contracted sales of one 2004-built Panamax and two 2006-built Handysize product carriers resulted in the recognition of impairment charges aggregating $1.7 million.2023 or June 30, 2023.

The Company ~~also~~ recognized ~~an aggregate~~a loss of approximately ~~$0.7~~$0.2 million during the ~~quarter~~first six months ended ~~March 31, 2022,~~June 30, 2023, related to the cost to terminate the purchase and installation ~~contracts~~contract for a ballast water treatment ~~systems~~system on ~~three of the Company’s MRs~~a vessel that ~~were sold during 2021.~~was sold.

Vessel Acquisitions and Construction Commitments

In December 2022 the Company tendered notice of its intention to exercise its options to purchase two 2009-built Aframaxes that it had been bareboat chartering-in. The aggregate purchase price for the two vessels was $43.0 million. On March 30, 2023 and April 4, 2023, the Company completed the purchase of the two Aframaxes.

On March 7, 2023, the first of Company’s three newbuild dual-fuel LNG VLCCs was delivered by the shipyard. The second and third of the Company’s three newbuild dual-fuel LNG VLCCs were delivered to the Company on April 11, 2023 and May 24, 2023, respectively. All three vessels commenced employment under seven-year time charter contracts with an oil major shortly after delivery.

1110

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

In January 2022, the Company entered into memoranda of agreements for the sale of a 2010-built MR for a sale price of $16.5 million and the purchase of a 2011-built LR1 for a purchase price of $19.5 million with the same counterparty. The LR1 was delivered into our niche commercial pool, Panamax International. The Company closed both transactions during the first quarter of 2022, recognizing a gain of $4.5 million on the sale of the 2010-built MR and a net cash outflow of $3.0 million representing the difference in value between the two vessels. The LR1 vessel replaced the MR as collateral under the $525 Million Credit Facility with no further mandatory principal repayment required.

On ~~March 11, 2021,~~August 8, 2023, the Company entered into agreements to construct ~~three~~two dual-fuel ~~LNG-powered VLCCs~~ready LNG 73,600 dwt LR1 Product Carriers at ~~Daewoo~~K Shipbuilding ~~and Marine Engineering’s shipyard.~~Co., Ltd.’s shipyard, subject to certain conditions customary to similar transactions. The ~~VLCCs will be able to burn LNG in their power plant, which will significantly reduce greenhouse gas emissions. Upon~~two vessels are scheduled for delivery toduring the ~~Company in the first quarter~~second half of ~~2023, the vessels will be employed on seven-year time charter contracts with an oil major – Shell.~~2025. The total construction cost for the vessels iswill be approximately ~~$290.0~~$115 million, which will be paid for through a combination of ~~cash on hand~~long-term financing and ~~funds drawn from~~available liquidity. The Company also entered into option agreements exercisable during the ~~BoComm Lease Financing (See Note 10, “Debt”).Accumulated expenditures~~third quarter of ~~$101.7 million and $49.3 million (including capitalized interest costs~~2023 to construct two other identical vessels at the same shipyard for delivery during the first quarter of ~~$2.7 million and $0.6 million) are included in vessels construction in progress~~ ~~in the accompanying condensed consolidated balance sheet~~ as of September 30, 2022 and December 31, 2021, respectively. The remaining commitments on the contracts for the construction of these vessels as of September 30, 2022 was $192.2 million, which will be funded by the BoComm Lease Financing over the course of the construction and delivery of the three vessels.2026.

Disposal/Sales of Vessels

~~In addition to~~On March 14, 2023, the ~~sale of the 2010-built MR described above, during the nine months ended September 30, 2022, the~~ Company ~~also~~ delivered a 2008-built MR ~~one 2002-built Panamax, one 2004-built Panamax and~~to its ~~remaining four 2006-built Handysize product carriers to buyers~~buyer and recognized ~~an aggregate~~a gain of ~~$7.6~~$10.9 million.

~~In addition, in November 2022, the Company entered into memorandum of agreement for the sale of a 2008-built MR, which is expected to be delivered to the buyer during the fourth quarter of 2022.~~

~~Note 7 — Equity Method Investments:~~

Investments in affiliated companies include joint ventures accounted for using the equity method, including the Company’s 50% interest in two joint ventures - TI Africa Limited (“TI Africa”) and TI Asia Limited (“TI Asia”), which operate two Floating Storage and Offloading Service vessels that were converted from two ULCCs (collectively the “FSO Joint Venture”). Pursuant to a share purchase agreement, on June 7, 2022, the Company sold its 50% ownership interest in the FSO Joint Venture, to its joint venture partner Euronav NV. The Company received, net of adjustments for working capital and expenses, approximately $140 million in cash from the sale. The Company recorded a loss on the sale of $9.5 million and reclassified the Company’s share of the unrealized losses associated with the interest rate swaps held by the FSO Joint Venture at the time of the sale of $0.1 million into earnings from accumulated other comprehensive income/(loss).

~~The share purchase agreement contains specified representations, warranties, covenants and indemnification provisions of the parties customary for transactions of this type~~

~~Note 8 — Variable Interest Entities (“VIEs”):~~

~~Consolidated VIEs~~

~~Diamond Anglo Ship Management Pte. Ltd. —~~ Diamond Anglo Ship Management Pte. Ltd. (“DASM”) was formed in January 2018 by Diamond S and Anglo Eastern Investment Holdings Ltd. (“AE Holdings”), a third-party, to provide ship management services to some of Diamond S’ vessels.

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

On July 1, 2022, the Company and AE Holding terminated their joint venture agreement, which resulted in the Company selling its 51% interest in DASM to AE Holdings. The Company received $0.8 million in cash for the sale of its interest, after certain deductions, and recognized a $0.1 million gain on the sale of the joint venture.

~~Prior to July 1, 2022, DASM was owned 51% by the Company and 49% by AE Holdings, AE Holdings did not participate in the income or equity of DASM, and the~~ ~~Company was considered to be the primary beneficiary of DASM~~ ~~as the Company had the ability to direct the activities that most significantly impacted DASM’s economic performance~~. The results of operations of DASM were included in the accompanying condensed consolidated financial statements through June 30, 2022 and the balance sheet of DASM was included in the accompanying condensed consolidated financial statements as of December 31, 2021.Note 6 — Variable Interest Entities (“VIEs”):

Unconsolidated VIEs

As of ~~September~~June 30, ~~2022,~~2023, all of the six commercial pools in which the Company participates were determined to be VIEs for which the Company is not considered a primary beneficiary.

The following table presents the carrying amounts of assets and liabilities in the condensed consolidated balance sheet related to the unconsolidated VIEs as of ~~September~~June 30, ~~2022:~~2023:


(Dollars in thousands)	Condensed Consolidated Balance Sheet		Condensed Consolidated Balance Sheet
Investments in Affiliated Companies	$	36,708
Pool working capital deposits			$	32,521

In accordance with accounting guidance, the Company evaluated its maximum exposure to loss related to these unconsolidated VIEs by assuming a complete loss of the Company’s investment in these VIEs. The table below compares the Company’s liability in the condensed consolidated balance sheet to the maximum exposure to loss at ~~September~~June 30, ~~2022:~~2023:


(Dollars in thousands)		Condensed Consolidated Balance Sheet	Maximum Exposure to Loss			Condensed Consolidated Balance Sheet	Maximum Exposure to Loss
Other Liabilities	$	–	$	36,708	$	–	$	32,521

In addition, as of ~~September~~June 30, ~~2022,~~2023, the Company had approximately ~~$218.2~~$225.6 million of trade receivables from the pools that were determined to be a VIE. These trade receivables, which are included in voyage receivables in the accompanying condensed consolidated balance sheet, have been excluded from the above tables and the calculation of INSW’s maximum exposure to loss. The Company does not record the maximum exposure to loss as a liability because it does not believe that such a loss is probable of occurring as of ~~September~~June 30, ~~2022.~~

2023.

1311

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 97 — Fair Value of Financial Instruments, Derivatives and Fair Value Disclosures:

The estimated fair values of the Company’s financial instruments, other than derivatives that are not measured at fair value on a recurring basis, categorized based upon the fair value hierarchy, are as follows:

(Dollars in thousands)

September 30, 2022

December 31, 2021

Fair Value Level
Cash and cash equivalents⁽¹⁾

$
175,525

$
98,933

Level 1
Short-term investments⁽²⁾

80,000

n/a

Level 1
$750 Million Facility Term Loan

(530,000)

n/a

Level 2
$390 Million Facility Term Loan

n/a

(191,050)

Level 2
$525 Million Facility Term Loan

n/a

(216,289)

Level 2
$525 Million Facility Revolving Loan

n/a

(44,193)

Level 2
$360 Million Facility Term Loan

n/a

(105,325)

Level 2
$360 Million Facility Revolving Loan

n/a

(38,889)

Level 2
Macquarie Credit Facility

(17,750)

(19,475)

Level 2
ING Credit Facility

(23,438)

(25,000)

Level 2
Ocean Yield Lease Financing

(348,466)

(370,305)

Level 2
BoComm Lease Financing

(52,841)

(9,608)

Level 2
Toshin Lease Financing

(16,028)

(16,995)

Level 2
Hyuga Lease Financing

(15,744)

n/a

Level 2
COSCO Lease Financing

(48,986)

(52,746)

Level 2
Kaiyo Lease Financing

(14,511)

n/a

Level 2
Kaisha Lease Financing

(14,622)

n/a

Level 2
8.5% Senior Notes

n/a

(25,940)

Level 1


(Dollars in thousands)	June 30, 2023		December 31, 2022		Fair Value Level
Cash and cash equivalents ⁽¹⁾	$	116,023	$	243,744		Level 1
Short-term investments ⁽²⁾		120,000		80,000		Level 1
$750 Million Facility Term Loan ⁽³⁾		(301,751)		(493,565)		Level 2
ING Credit Facility ⁽³⁾		(21,875)		(22,917)		Level 2
Ocean Yield Lease Financing ⁽³⁾		(326,626)		(341,106)		Level 2
BoComm Lease Financing ⁽⁴⁾		(209,044)		(63,598)		Level 2
Toshin Lease Financing ⁽⁴⁾		(13,877)		(14,744)		Level 2
Hyuga Lease Financing ⁽⁴⁾		(13,980)		(14,853)		Level 2
COSCO Lease Financing ⁽³⁾		(45,225)		(47,732)		Level 2
Kaiyo Lease Financing ⁽⁴⁾		(12,842)		(13,797)		Level 2
Kaisha Lease Financing ⁽⁴⁾		(12,934)		(13,704)		Level 2

(1)	~~Includes~~Current restricted cash ~~of $1.1 million~~was nil at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

(2)	Short-term investments consist of time deposits with original maturities of between 9091 and 180 days.

(3)	Floating rate debt – the fair value of floating rate debt has been determined using level 2 inputs and is considered to be equal to the carrying value since it bears a variable interest rate, which is reset every three months.

(4)	Fixed rate debt – the fair value of fixed rate debt has been determined using level 2 inputs by discounting the expected cash flows of the outstanding debt.

Derivatives

In May 2022, in connection with the refinancing of its $390 Million Facility Term Loan and $525 Million Facility Term Loan, the Company terminated all of its existing in-the-money LIBOR based interest swaps with an aggregate notional amount of approximately $358.6 million and received net cash proceeds of approximately $9.6 ~~million, with $4.6~~million. As of June 30, 2023, approximately $3.4 million of the gain is expected to amortize out of accumulated other comprehensive income to earnings ~~within~~over the next 12 months.

~~With regards~~Also, as of June 30, 2023, approximately $1.8 million of the loss with regard to the hybrid instrument associated with the Sinosure Credit Facility that was terminated in November 2021, ~~$2.1 million of the loss~~ is expected to amortize out of accumulated other comprehensive income to earnings ~~within~~over the next 12 months.

On June 2, 2022, the Company entered into amortizing interest rate swap agreements covering a notional amount of $475 million of the $750 Million Facility Term Loan with major financial institutions participating in such facility that effectively converts the Company’s interest rate exposure from a three-month SOFR floating rate to a fixed rate of 2.84% through the maturity date of February 22, 2027, effective August 22, 2022. The interest rate swap agreements, which contain no leverage features, are designated and qualify as cash flow hedges.

1412

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Derivatives are recorded on a net basis by counterparty when a legal right of offset exists. The Company had the following amounts recorded on a ~~gross~~net basis by transaction in the accompanying unaudited condensed consolidated balance sheets related to the Company’s use of derivatives as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021:~~2022:


(Dollars in thousands)		Current portion of derivative asset		Long-term derivative assets		Current portion of derivative liabilities		Long-term derivative liabilities			Current portion of derivative asset		Long-term derivative assets		Current portion of derivative liabilities		Long-term derivative liabilities		Other receivables
September 30, 2022:
June 30, 2023:
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:									Derivatives designated as hedging instruments:
Interest rate swaps		$	4,801	$	6,252	$	—	$	—		$	7,595	$	4,462	$	—	$	—	$	942
Total		$	4,801	$	6,252	$	—	$	—		$	7,595	$	4,462	$	—	$	—	$	942

December 31, 2021:
December 31, 2022:
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:									Derivatives designated as hedging instruments:
Interest rate swaps		$	—	$	1,296	$	(2,539)	$	(757)		$	6,987	$	4,662	$	—	$	—	$	547
Total		$	—	$	1,296	$	(2,539)	$	(757)		$	6,987	$	4,662	$	—	$	—	$	547

The following tables present information with respect to gains and losses on derivative positions reflected in the condensed consolidated statements of operations or in the condensed consolidated statements of comprehensive income.

The effect of cash flow hedging relationships recognized in other comprehensive income excluding amounts reclassified from accumulated other comprehensive ~~income/(loss),~~income, including hedges of equity method investees, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)			2022		2021		2022		2021			2023		2022		2023		2022
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:									Derivatives designated as hedging instruments:
Interest rate swaps		$	10,559	$	568	$	21,491	$	5,333		$	5,848	$	1,873	$	4,393	$	10,932

Other-than-insignificant financing element of derivatives:
Interest rate swaps			—		(435)		—		(1,351)
Total other comprehensive income		$	10,559	$	133	$	21,491	$	3,982		$	5,848	$	1,873	$	4,393	$	10,932

The effect of cash flow hedging relationships on the condensed consolidated statement of operations is presented excluding hedges of equity method investees. The effect of the Company’s cash flow hedging relationships on the condensed consolidated statement of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)			2022		2021		2022		2021			2023		2022		2023		2022
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:									Derivatives designated as hedging instruments:
Interest rate swaps		$	261	$	1,293	$	(226)	$	3,558		$	(2,204)	$	(1,478)	$	(3,985)	$	(487)

Discontinued hedging instruments:	Discontinued hedging instruments:									Discontinued hedging instruments:
Interest rate swap			(708)		—		445		—			(563)		571		(1,165)		1,153

Other-than-insignificant financing element of derivatives:
Interest rate swaps			—		1,528		—		4,681
Total interest expense		$	(447)	$	2,821	$	219	$	8,239		$	(2,767)	$	(907)	$	(5,150)	$	666

See Note 11, “Accumulated Other Comprehensive Income,” for disclosures relating to the impact of derivative instruments on accumulated other comprehensive income/(loss).

1513

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

~~See Note 13, “Accumulated Other Comprehensive Income/(Loss),” for disclosures relating to the impact of derivative instruments on accumulated other comprehensive loss.~~

The following table presents the fair values, which are pre-tax, for assets and liabilities measured on a recurring ~~basis (excluding investments in affiliated companies):~~basis:


(Dollars in thousands)	September 30, 2022		December 31, 2021		Fair Value Level		June 30, 2023		December 31, 2022		Fair Value Level
Derivative Assets (interest rate swaps)	$	11,053	$	1,296		Level 2⁽¹⁾	$	12,999	$	12,196		Level 2⁽¹⁾
Derivative Liabilities (interest rate swaps)		—		(3,296)		Level 2⁽¹⁾

(1)

For the interest rate swaps, fair values are derived using valuation models that utilize the income valuation approach. These valuation models take into account contract terms such as maturity, as well as other inputs such as interest rate yield curves and creditworthiness of the counterparty and the Company.

~~The following table summarizes the fair values of assets for which impairment charges were recognized for the nine months ended September 30, 2022:~~

(Dollars in thousands)

Fair Value

Level 2

Total Impairment
Charges
Crude Tankers - Vessels held for sale ⁽¹⁾⁽²⁾

$
7,561

$
7,561

$
(1,019)
Product Carriers - Vessels held for sale^{(1) (2)}

9,850

9,850

(207)
Product Carriers - Vessels held for use ^{(1) (2)}

9,575

9,575

(471)

~~(1)~~

A pre-tax held for sale impairment charge of $1.0 million related to one Panamax in the Crude Tankers segment was recorded during the first quarter of 2022, including a charge of $0.9 million to write the value of the vessel down to its estimated fair value, and estimated costs to sell the vessel of $0.1 million. A pre-tax held for sale impairment charge of $0.2 million related to one MR in the Product Carriers segment was recorded during the first quarter of 2022, consisting of $0.2 million costs to sell the vessel. A pre-tax held for use impairment charge of $0.5 million related to one Handysize product carrier was recorded during the first quarter of 2022 to write the value of the vessel down to its estimated fair value.

~~(2)~~

Fair value measurement of $27.0 million at March 31, 2022 used to determine the impairments for the vessels was based upon a market approach, which considered the sale prices of the vessels based on the executed memoranda of agreements as discussed in Note 6, "Vessels." The sales prices are considered to be Level 2 because sales of vessels occur somewhat infrequently.

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 108 — Debt:

Debt consists of the following:

(Dollars in thousands)

September 30, 2022

December 31, 2021
$750 Million Facility Term Loan, due 2027, net of unamortized deferred finance costs of $7,269

$
522,732

$
—
Macquarie Credit Facility, due 2025, net of unamortized deferred finance costs of $573 and $755

17,177

18,720
ING Credit Facility, due 2026, net of unamortized deferred finance costs of $448 and $546

22,990

24,454
$390 Million Facility Term Loan, due 2025, net of unamortized deferred finance costs of $2,357

—

188,693
$525 Million Facility Term Loan, due 2024

—

216,289
$525 Million Facility Revolving Loan, due 2024

—

44,193
$360 Million Facility Term Loan, due 2024

—

105,325
$360 Million Facility Revolving Loan, due 2024

—

38,889
Ocean Yield Lease Financing, due 2031, net of unamortized deferred finance costs of $3,341 and $3,799

345,125

366,506
BoComm Lease Financing, due 2030, net of unamortized deferred finance costs of $691 and $114

52,150

9,494
Toshin Lease Financing, due 2031, net of unamortized deferred finance costs of $387 and $428

15,642

16,567
COSCO Lease Financing, due 2028, net of unamortized deferred finance costs of $1,253 and $1,353

47,732

51,393
Hyuga Lease Financing, due 2031, net of unamortized deferred finance costs of $338

15,406

—
Kaiyo Lease Financing, due 2030, net of unamortized deferred finance costs of $300

14,211

—
Kaisha Lease Financing, due 2030, net of unamortized deferred finance costs of $313

14,309

—
8.5% Senior Notes, due 2023, net of unamortized deferred finance costs of $538

—

24,462

1,067,474

1,104,985
Less current portion

(166,965)

(178,715)
Long-term portion

$
900,509

$
926,270


(Dollars in thousands)	June 30, 2023		December 31, 2022
$750 Million Facility Term Loan, due 2027, net of unamortized deferred finance costs of $4,673 and $6,400	$	297,078	$	487,164
ING Credit Facility, due 2026, net of unamortized deferred finance costs of $355 and $416		21,520		22,501
Ocean Yield Lease Financing, due 2031, net of unamortized deferred finance costs of $2,924 and $3,198		323,702		337,908
BoComm Lease Financing, due 2030, net of unamortized deferred finance costs of $4,537 and $917		236,037		71,140
Toshin Lease Financing, due 2031, net of unamortized deferred finance costs of $333 and $370		14,572		15,215
COSCO Lease Financing, due 2028, net of unamortized deferred finance costs of $1,060 and $1,187		44,165		46,544
Hyuga Lease Financing, due 2031, net of unamortized deferred finance costs of $294 and $323		14,450		15,093
Kaiyo Lease Financing, due 2030, net of unamortized deferred finance costs of $256 and $285		13,212		13,884
Kaisha Lease Financing, due 2030, net of unamortized deferred finance costs of $267 and $298		13,315		13,983
		978,051		1,023,432
Less current portion		(199,785)		(162,854)
Long-term portion	$	778,266	$	860,578

Capitalized terms used hereafter have the meaning given in these condensed consolidated financial statements or in the respective transaction documents referred to below, including subsequent amendments thereto.

$750 Million Credit Facility

On ~~May 20, 2022, International Seaways Operating Corporation (“ISOC”),~~March 10, 2023, the ~~borrower, and certain of their subsidiaries~~Company entered into a credit agreement comprising $750 million of secured debt facilities (the “$750 Million Credit Facility”) with Nordea Bank Abp, New York Branch (“Nordea”), Crédit Agricole Corporate & Investment Bank (“CA-CIB”), BNP Paribas, DNB Markets Inc. and Skandinaviska Enskilda Banken AB (PUBL) (or their respective affiliates), as mandated lead arrangers and bookrunners; Danish Ship Finance A/S and ING Bank N.V., London Branch (or their respective affiliates), as mandated lead arrangers; and National Australia Bank Limited, as co-arranger. Nordea is acting as administrative agent, collateral agent and security trustee underan amendment to the credit agreement, and CA-CIB is acting as sustainability coordinator. Capitalized terms used in this paragraph and elsewhere not otherwise defined herein shall have the meanings set forth in the credit agreement.

~~The~~ $750 Million Credit ~~Facility consists~~Facility. Pursuant to the amendment, the Company (a) prepaid $97 million of ~~(i) a five-year senior secured term loan facility in an aggregate~~outstanding principal amount of $530 million (the “$750 Million Facility Term Loan”) and (ii) a five-year revolving credit facility in an aggregate principal amount of $220 million (the “750 Million Facility Revolving Loan). The $750 Million Facility Term Loan contains an uncommitted accordion feature whereby, for a period of up to 24 months following the closing date, the amount of the loan thereunder may be increased up to an additional incremental $250 million (in increments of at least $10 million) for the acquisition of Additional Vessels, subject to certain conditions.

The $750 Million Credit Facility is secured by a first lien on 55 of the Company’s vessels, along with their earnings, insurances and certain other assets. In addition, both facilities are secured by liens on certain additional assets of ISOC.

~~On May 24, 2022, the available amount of $530 million~~ under the $750 Million Facility Term Loan; (b) obtained a release of collateral vessel mortgages over 22 MR product carriers; (c) received from the lenders additional revolving credit commitments in an aggregate amount of $40 million, which additional commitments constitute an increase to, and are subject to the same terms and conditions as, the previously-existing revolving credit commitments; and (d) made certain other amendments to the credit agreement and ancillary documents, including amendments relating to certain hedging obligations related to the credit agreement and to repayment schedules. Following the effectiveness of the amendment, (a) the aggregate outstanding principal amount under the $750 Million Facility Term Loan was ~~drawn in full, and $70~~$366.3 million, of(b) the ~~$220 million~~aggregate principal commitments available under the $750 Million Facility Revolving Loan was ~~also drawn. The loan proceeds, together with~~

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

~~available cash, were used to repay (i)~~$257.4 million (none of which was outstanding), and (c) the ~~$163 million outstanding~~scheduled future quarterly principal balance under the $390 Million Credit Facility; (ii) the $284 million outstanding principal balance under the $525 Million Credit Facility; and (iii) the $127.8 million outstanding principal balance under the $360 Million Credit Facility; and to pay certain expenses related to the refinancing, including certain structuring and arrangement fees, legal and administrative fees totaling $10.5 million.

~~The $70 million drawn~~amortization under the $750 Million Facility ~~Revolving~~Term Loan ~~was repaid on June 15, 2022, using a portion of the proceeds~~decreased from ~~the sale of the FSO Joint Venture (see Note 7, “Equity Method Investments”).~~$30.2 million to $27.7 million.

Interest on the $750 Million Credit Facility is calculated based upon Adjusted Term SOFR plus the Applicable Margin. The Applicable Margin is currently 2.40%. The facilities also include a sustainability-linked pricing mechanism. The adjustment in pricing will be linked to three factors:

●

~~a Fleet Sustainability Score Target, reflecting the carbon efficiency of the INSW fleet as it relates to reductions in CO~~₂ emissions year-over-year, such that it aligns with the International Maritime Organization’s 50% industry reduction target in GHG emissions by 2050, to be 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 relative to established de-carbonization trajectories)

●

a Sustainability-Linked Investment Target, reflecting targeted spending of $3 million per annum on investments in energy efficiency improvements, decarbonization, and other environmental, social and corporate governance-related initiatives; and

●

~~a Lost Time Incident Frequency Target, reflecting performance against a Lost Time Incident Frequency average published by Intertanko.~~

~~The Company is required to deliver annually, commencing in July~~On March 14, 2023, ~~a sustainability certificate for the preceding calendar year setting out the sustainability-related calculations required under the credit agreement. If~~ the Company ~~achieves all~~sold a 2008-built MR for approximately $20.2 million. The sale also resulted in a mandatory principal prepayment of ~~the targets set out in the credit agreement, the Applicable Margin will be decreased by 0.05% per annum, while if the Company fails to achieve any~~approximately $9.7 million of the targets set out in the credit agreement, the Applicable Margin will be increased by that same amount (but in no case will any such adjustment result in the Applicable Margin being increased or decreased from the otherwise-applicable Applicable Margin by more than 0.05% per annum in the aggregate).

~~The~~ $750 Million Facility Term Loan ~~amortizes in 19 quarterly installments of approximately $30.6~~and a $0.4 million (other than the final payment of $9.8 million) commencing November 20, 2022. The maturity date of the $750 Million Credit Facility is May 20, 2027, and is subject to acceleration upon the occurrence of certain events (as describedfurther reduction in the ~~credit agreement).~~

The $750 Million Credit Facility contains customary representations, warranties, restrictions and covenants applicable to the Company, ISOC and the subsidiary guarantors (and in certain cases, other subsidiaries).

~~Hyuga Lease Financing~~

On January 14, 2022, the Company entered into a lease financing arrangement with Hyuga Kaiun Co., Ltd (“Hyuga”) for the sale and leaseback of a 2011-built MR, which was a $390 Million Facility Collateral Vessel, for a net sale price of $16.7 million (the “Hyuga Lease Financing”). The transaction generated net proceeds of $5.7 million, after prepaying $11.0 million of the $390 Million Facility Term Loan. Under the lease financing arrangement, the vessel is subject to a nine-year bareboat charter at a bareboat rate of $6,300 per day for the first three years, $6,200 per day for the second three years, and $6,000 per day for the last three years, with purchase options exercisable commencing at the end of the fourth year and a $2.0 million purchase obligation at the end of the nine-year term.

~~Kaiyo Lease Financing~~

On April 25, 2022, the Company entered into a lease financing arrangement with Kaiyo Ltd. (“Kaiyo”) for the sale and leaseback of a 2010-built MR, which was a $390 Million Facility Collateral Vessel, for a net sale price of $15.2 million (the “Kaiyo Lease Financing”). The transaction generated net proceeds of $5.4 million, after prepaying $9.8 million of the $390 Million Facility Term Loan. Under the lease financing arrangement, the vessel is subject to an eight-year bareboat charter at a bareboat rate of $6,250 perscheduled future quarterly principal amortization.

1814

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

~~day for~~On May 19, 2023, the Company made another mandatory prepayment of $28.9 million towards the $750 Million Facility Term Loan, which resulted in the release of one 2017-built Suezmax vessel from the collateral package. The scheduled future quarterly principal amortization under the $750 Million Facility Term Loan further decreased from $27.3 million to $26.0 million.

BoComm Lease Financing Relating to Dual-Fuel LNG VLCC Newbuilds

On November 15, 2021, the Company and three of its vessel-owning indirect subsidiaries entered into a series of sale and leaseback arrangements with entities affiliated with the Bank of Communications Limited (“BoComm”) in connection with the construction of three dual-fuel LNG VLCC newbuilds (the “BoComm Lease Financing”). BoComm’s obligation to provide funding pursuant to the terms of the sale and leaseback agreements commenced when construction began on the first ~~four years,~~vessel in November 2021. The three newbuilds were delivered to the Company on March 7, 2023, April 11, 2023, and ~~$6,150~~May 24, 2023, respectively. The BoComm Lease Financing provided the funding of $244.8 million in aggregate ($81.6 million each vessel) over the course of the construction and delivery of the three vessels. Under the lease financing arrangements, each vessel is subject to a seven-year bareboat charter commencing on delivery of each vessel at a bareboat rate of $21,700 per day, ~~for the remaining four years,~~ with purchase options exercisable commencing at the end of the ~~fourth year and a $1.5 million purchase obligation at the end of the eight-year term.~~second year.

~~Kaisha~~Ocean Yield Lease Financing

~~On May 12, 2022, the Company entered into a~~The lease financing ~~arrangement~~arrangements with ~~Kabushiki Kaisha (“Kaisha”) for~~Ocean Yield were amended on February 21, 2023, to change the sale and leaseback of a 2010-built MR, which was a $525 Million Facility Collateral Vessel, for a net sale price of $15.2 million (the “Kaisha Lease Financing”). The transaction generated net proceeds of $10.6 million, after prepaying $4.6 million of the $525 Million Facility Term Loan. Under the lease financing arrangement, the vessel is subjectreference rate from three-month LIBOR to an ~~eight-year bareboat charter at a bareboat~~adjusted three-month Term SOFR rate, ~~of $6,250 per day for~~effective on the first four years, and $6,150 per day for the remaining four years, with purchase options exercisable commencing at the end of the fourth year and a $1.5 million purchase obligation at the end of the eight-year term.interest rate reset date on May 7, 2023.

~~8.5%~~ ~~Senior Notes~~ING Credit Facility

~~On August 5, 2022,~~The ING Credit Facility was amended on March 27, 2023, to change the ~~Company redeemed~~reference rate from three-month LIBOR to an adjusted three-month Term SOFR rate, effective on the ~~$25 million aggregate principal outstanding of the 8.5% Senior Notes due June~~interest rate reset date on May 12, 2023.

COSCO Lease Financing

In May 2023, the Company tendered notice of its intention to exercise its options to purchase one 2013-built Aframax and one 2014-built LR2, which were bareboat chartered-in under COSCO Lease Financing arrangements as at June 30, 2023. The aggregate purchase price for the two vessels of $46.4 million, consisted of the $45.2 million remaining debt balance and $1.2 million of purchase option premiums. The Company made an advance payment on June 30, 2023 and the purchase closed on July 3, 2023.

Debt Covenants

The Company was in compliance with the financial and non-financial covenants under all of its financing arrangements as of ~~September~~June 30, ~~2022.~~2023.

The $750 Million Credit Facility, the Macquarie Credit Facility, the ING Credit Facility and certain of the Company’s lease financing arrangements contain customary representations, warranties, restrictions and covenants applicable to the Company, the Borrower and the subsidiary guarantors (and in certain cases, other subsidiaries), including financial covenants that require the Company (i) to maintain a minimum liquidity level of the greater of $50 million and 5% of the Company’s Consolidated Indebtedness; (ii) to ensure the Company’s and its consolidated subsidiaries’ Maximum Leverage Ratio will not exceed 0.60 to 1.00 at any time; (iii) to ensure that Current Assets exceeds Current Liabilities (which is defined to exclude the current potion of Consolidated Indebtedness); and (iv) to ensure the aggregate Fair Market Value of the Collateral Vessels will not be less than 135% of the aggregate outstanding principal amount of the Term Loans and Revolving Loans of each Facility.

The 8.5% Senior Notes Indenture (the “Indenture”), which was terminated in conjunction with the August 5, 2022 redemption described above, contained certain covenants that required the Company to (i) not permit Total Borrowings (as defined in the Indenture) to equal or exceed 70% of Total Assets (as defined in the Indenture), and (ii) ensure that Net Worth (defined as Total Assets, less Intangible Assets and Total Borrowings, as defined in the Indenture) exceeded $600 million pursuant to the Minimum Net Worth covenant in the Indenture.

The Company’s credit facilities also require it to comply with a number of covenants, including the delivery of quarterly and annual financial statements, budgets and annual projections; maintaining required insurances; compliance with laws (including environmental); compliance with the Employee Retirement Income Security Act of 1974 (“ERISA”); maintenance of flag and class of the collateral vessels; restrictions on consolidations, mergers or sales of assets; limitations on liens; limitations on issuance of certain equity interests; limitations on transactions with affiliates; and other customary covenants and related provisions.

Interest Expense

Total interest expense before the impact of capitalized interest, including amortization of issuance and deferred financing costs (for additional information related to deferred financing costs see Note 3,2, “Significant Accounting Policies”), commitment, administrative and other fees for all of the Company’s debt facilities for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was ~~$16.4~~$18.2 million and ~~$43.0~~$36.5 million, respectively, and for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 was ~~$10.7~~$13.3 million and ~~$24.8~~$26.6 million, ~~respectively~~.respectively. Interest paid for the Company’s debt facilities for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was ~~$14.0~~$16.9 million and ~~$36.6~~$36.0 million, respectively, and for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 was $10.8 million and ~~$23.2~~$22.6 million, respectively. Interest paid for the three and six months ended June 30, 2023 also included $0.7 million and $2.0 million, respectively, of the pre-delivery interest expense paid for the three dual-fuel LNG VLCC newbuilds.

1915

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Debt Modifications, Repurchases and Extinguishments

During the first ~~quarter~~six months of ~~2022,~~2023, the Company recognized a net loss of ~~$0.1~~$0.7 million, which is included in other ~~expense~~income/(expense) in the accompanying condensed consolidated statement of operations. The net loss reflects (i) a write-off of $0.1 million of unamortized deferred financing costs associated with the $11.0 million principal prepayment of the $390 Million Facility Term Loan in January 2022 (in connection with the Hyuga Lease Financing transaction described above), which was treated as a ~~partial extinguishment.~~

~~During the second quarter of 2022, the Company recognized a net loss of~~ $0.2 million ~~which is included in other expense in the accompanying condensed consolidated statement of operations. The net loss reflects a~~ write-off of unamortized deferred financing costs associated with the ~~$10.0 million~~mandatory principal prepayment of the ~~$390~~$750 Million Facility Term Loan in ~~April 2022 (in~~March 2023 in connection with the ~~Kaiyo Lease Financing transaction described above), which was treated as~~sale of a ~~partial extinguishment.~~

~~During the third quarter of 2022, the Company recognized a net loss of~~2008-built MR (see Note 5, “Vessels”); and (ii) $0.4 million ~~which is included in other expense in the accompanying condensed consolidated statement of operations. The net loss reflects a~~ write-off of unamortized deferred financing costs associated with the ~~$25.0 million~~mandatory principal prepayment of the ~~8.5% Senior Notes~~$750 Million Facility Term Loan in ~~August 2022.~~May 2023 in connection with the release of a 2017-built Suezmax from vessel collateral package.

Note 119 — Taxes:

The Company derives substantially all of its gross income from the use and operation of vessels in international commerce. The Company’s entities that own and operate vessels are primarily domiciled in the Marshall Islands and Liberia, which do not impose income tax on shipping operations. The Company also has or had subsidiaries in various jurisdictions that perform administrative, commercial or technical management functions. These subsidiaries are subject to income tax based on the services performed in countries in which their offices are located; current and deferred income taxes are recorded accordingly.

A substantial portion of income earned by the Company is not subject to income tax. With respect to subsidiaries not subject to income tax in their respective countries of incorporation, no deferred taxes are provided for the temporary differences in the bases of the underlying assets and liabilities for tax and accounting purposes.

~~The~~As of June 30, 2023, the Company qualifies for an exemption from U.S. federal income taxes under Section 883 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) and U.S. Treasury Department regulations for the ~~2022~~2023 calendar year, as less than 50 percent of the total value of the Company’s stock ~~was~~is held by one or more shareholders who own 5% or more of the Company’s stock for more than half of the days of ~~2022.~~2023.

The Company reviews its freight tax obligations on a regular basis and may update its assessment of its tax positions based on available information at that time. Such information may include additional legal advice as to the applicability of freight taxes in relevant jurisdictions. Freight tax regulations are subject to change and interpretation; therefore, the amounts recorded by the Company may change accordingly.

The Marshall Islands and Liberia impose tonnage taxes, which are assessed on the tonnage of certain of the Company’s vessels. These tonnage taxes are included in vessel expenses in the accompanying condensed consolidated statements of operations.

Note 1210 — Capital Stock and Stock Compensation:

The Company accounts for stock-based compensation expense in accordance with the fair value method required by ASC 718, Compensation – Stock Compensation. Such fair value method requires share-based payment transactions to be measured according to the fair value of the equity instruments issued.

Restricted Common Stock

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

~~During the nine months ended September 30, 2022,~~In June 2023, the Company awarded a total of ~~41,718~~26,878 restricted common stock shares to its non-employee directors. The weighted average fair market value of INSW’s stock on the measurement date of such awards was ~~$24.45~~$37.94 per share. Such restricted share awards vest in full on the earlier of the next annual meeting of the stockholders or June ~~3, 2023,~~6, 2024, subject to each director continuing to provide services to INSW through such date. The restricted share awards granted may not be transferred, pledged, assigned or otherwise encumbered prior to vesting. Prior to the vesting date, a holder of restricted share awards otherwise has all the rights of a shareholder of INSW, including the right to vote such shares and the right to receive dividends paid with respect to such shares at the same time as common shareholders generally.

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Restricted Stock Units and Stock Options

During the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, the Company granted ~~327,906~~52,890 time-based restricted stock units (“RSUs”) to certain of its senior officers and employees. The weighted average grant date fair market value of these awards was ~~$19.65~~$51.37 per RSU. Each RSU represents a contingent right to receive one share of INSW common stock upon vesting. ~~304,650~~All of the time-based RSUs awarded will vest in equal installments on each of the first three anniversaries of the grant ~~date and 23,256 of the RSUs awarded will cliff vest on September 30, 2023.~~date.

During the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, the Company also awarded ~~124,590~~52,890 performance-based RSUs to certain of its senior officers and employees. Each ~~performance stock unit~~performance-based RSU represents a contingent right to receive ~~RSUs~~shares of INSW common stock based upon the covered employees being continuously employed through the end of the period over which the performance goals are measured and shall vest as follows: (i) one-half of the target RSUs shall vest on December 31, ~~2024,~~2025, subject to INSW’s return on invested capital (“ROIC”) performance in the three-year ROIC performance period relative to a target rate (the “ROIC Target”) set forth in the award agreements; and (ii) one-half of the target RSUs shall vest on December 31, ~~2024,~~2025, subject to INSW’s three-year total shareholder return (“TSR”) performance relative to that of a performance peer group over a three-year performance period (“TSR Target”). Vesting is subject in each case to the Human Resources and Compensation Committee of the Company’s Board of Directors’ certification of achievement of the performance measures and targets no later than March 15, ~~2025.~~2026. The weighted average grant date fair value of the awards with performance conditions was determined to be ~~$19.63~~$51.37 per RSU. The weighted average grant date fair value of the ~~TSR based~~TSR-based performance awards which have a market condition was estimated using a Monte Carlo probability model and determined to be ~~$20.65~~$53.65 per RSU.

During the ~~nine~~six months ended ~~September~~June 30, ~~2022, 274,549~~2023, 12,940 stock options were exercised by certain senior officers and employees at an average exercise price of ~~$18.52~~$22.54 per share. After withholdings for taxes and exercise costs, the Company issued a total of ~~51,075~~3,319 shares in conjunction with these transactions.

Dividends

On February 28, 2022, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.06 per share. Pursuant to such declaration, the Company made dividend payments totaling $3.0 million on March 28, 2022 to stockholders of record as of March 14, 2022.

On June 7, 2022, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.12 per share. Pursuant to such declaration, the Company made dividend payments totaling $6.0 million on June 29, 2022 to stockholders of record as of June 17, 2022.

On August 4, 2022, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.12 per share. Pursuant to such declaration, the Company made dividend payments totaling $6.0 million on September 28, 2022 to stockholders of record as of September 14, 2022.

~~On November 7, 2022,~~27, 2023, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.12 per share of common stock and a ~~special~~supplemental cash dividend of ~~$1.00~~$1.88 per ~~share.~~share of common stock. Pursuant to such ~~declaration,~~dividend declarations, the Company ~~will make both~~made dividend payments totaling $98.3 million on ~~December 22, 2022~~March 28, 2023.

On May 4, 2023, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.12 per share of common stock and a supplemental dividend of $1.50 per share of common stock. Pursuant to such dividend declarations, the Company made dividend payments totaling $79.3 million on June 28, 2023.

On August 8, 2023, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.12 per share of common stock and a supplemental dividend of $1.30 per share of common stock. Both dividends will be paid on September 27, 2023 to stockholders of record as of ~~December 8, 2022.~~September 13, 2023.

Share Repurchases

During the three months ended June 30, 2023, the Company repurchased and retired 366,483 shares of its common stock in open-market purchases, at an average price of $38.03 per share, for a total cost of $13.9 million. As of June 30, 2023, the remaining buyback authorization under the Company’s $60.0 million stock repurchase program expiring in December 2023 was $26.1 million. No shares were acquired under repurchase programs during the six months ended June 30, 2022. In August 2023, the Company’s Board of Directors authorized an increase in the share repurchase program to $50.0 million from $26.1 million.

In connection with the settlement of vested restricted stock units and the exercise of stock options, the Company repurchased 62,045 and 121,337 shares of common stock during the three and six months ended June 30, 2023, respectively, at an average cost of $38.52 and $46.65, respectively, per share (based on the market prices on the dates of vesting or exercise) from employees and certain

2117

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

~~Share Repurchases~~

~~In August 2022, the Company’s Board~~members of ~~Directors authorized an increase in the share repurchase program~~management to ~~$60.0 million from $33.3 million and extended the expiration of the program to December 31, 2023.~~ ~~During the three months ended September 30, 2022,~~cover withholding taxes. Similarly, the Company repurchased 26,753 and ~~retired 687,740 shares of its common stock in open-market purchases, at an average price of $29.08 per share, for a total cost of $20.0 million.~~ ~~As of September 30, 2022, the~~ ~~remaining buyback authorization under the Company’s~~ ~~$60.0 million stock repurchase program expiring in December 2023~~ ~~was $40.0 million.~~ ~~No shares were acquired under repurchase programs during the nine months ended September 30, 2021.~~

~~In connection with the settlement of vested restricted stock units and exercise of stock options, the Company repurchased 223,926 and 308,405~~84,479 shares of common stock during the three and ~~nine~~six months ended ~~September~~June 30, 2022, respectively, at an average cost of ~~$30.22~~$19.54 and $26.78, respectively, per share (based on the market prices on the dates of vesting) from employees and certain members of management to cover withholding taxes and cost of options exercised. Similarly, the Company repurchased 5,090 and 56,065 shares of common stock during the three and nine months ended September 30, 2021, respectively, at an average cost of $18.62 and $20.06,$17.67, respectively, per share.

Rights Agreement

On ~~May 8, 2022,~~April 11, 2023, the ~~Company entered into a shareholder rights plan in~~Company’s Board of Directors approved the ~~form of a~~Amended and Restated the Rights Agreement (the ““A&R Rights Agreement”), which amends and restates the Original Rights Agreement~~”),~~ dated as of May 8, ~~2022, between the Company and Computershare Trust Company, N.A., as rights agent.~~2022. The A&R Rights Agreement ~~was approved by~~implements substantially the ~~Company’s Board~~same features and protective measures of ~~Directors. In connection with~~ the Original Rights ~~Agreement,~~Agreements and includes the following revised or additional provisions:

(i)

extends the expiration date from May 7, 2023 to April 10, 2026;

(ii)

increases the “Acquiring Person” trigger threshold from 17.5% to 20%;

(iii)

increases the “Purchase Price” from $25 to $50; and

(iv)

includes a qualifying offer provision with a shareholder redemption feature.

The Company’s Board of Directors ~~authorized~~adopted the Original Rights Agreement and ~~declared a dividend distribution~~the A&R Rights Agreement to enable all stockholders of ~~one right (a “Right”) for each outstanding share~~the Company to realize the full potential value of ~~common stock, no par value, of~~their investment in the Company. The ~~dividend was payable on May 19, 2022 to stockholders of record at the close of business on such date. While the~~A&R Rights Agreement ~~was effective immediately, the Rights become exercisable only if a person~~is designed to prevent any individual stockholder or group ~~acquires beneficial ownership, as defined in~~of stockholders from gaining control of the Company through open market accumulation without paying a control premium to all stockholders or by otherwise disadvantaging other stockholders. The A&R Rights Agreement ~~of 17.5%~~is not intended to prevent a takeover or ~~more~~deter fair offers for securities of the ~~Company’s common stock in~~Company that deliver value to all stockholders on an equal basis. It is designed, instead, to encourage anyone seeking to acquire the Company to negotiate with the Board prior to attempting a transaction not approved by the Company's Board of Directors. In that situation, each holder of a Right (other than the acquiring person or group) will have the right to purchase, upon payment of the then-current exercise price, a number of shares of Company common stock having a market value of twice the exercise price of the Right. In addition, at any time after a person or group acquires 17.5% or more of the Company’s common stock (unless such person or group acquires 50% or more), the Company’s Board of Directors may exchange onetakeover.

share of the Company’s common stock for each outstanding Right (other than Rights owned by such person or group, which would have become null and void). The Rights Agreement will expire on May 7, 2023.

The Company’s Board of Directors may consider an earlier termination of the A&R Rights Agreement if market and other conditions warrant.

The Company’s Board of Directors adopted the Rights Agreement to enable all stockholders of the Company to realize the long-term value of their investment in the Company. The Rights Agreement is not intended to prevent an acquisition of the Company on terms that the Board considers favorable to, and in the best interests of, all stockholders. Rather, the Rights Agreement aims to reduce the likelihood that any person or group gains control of the Company through open market accumulation, or other tactics potentially disadvantaging the interests of all stockholders, without paying all stockholders an appropriate control premium or providing the Company’s Board of Directors sufficient time to make informed decisions in the best interest of all stockholders.

Note 1311 — Accumulated Other Comprehensive ~~Income/(Loss):~~Income:

The components of accumulated other comprehensive ~~income/(loss),~~income, net of related taxes, in the condensed consolidated balance sheets follow:


(Dollars in thousands)	September 30, 2022		December 31, 2021		June 30, 2023		December 31, 2022
Unrealized gains/(losses) on derivative instruments	$	16,977	$	(4,863)
Unrealized gains on derivative instruments					$	16,155	$	16,912
Items not yet recognized as a component of net periodic benefit cost (pension plans)		(6,144)		(7,497)		(10,400)		(9,948)
	$	10,833	$	(12,360)	$	5,755	$	6,964

2218

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The changes in the balances of each component of accumulated other comprehensive income/(loss), net of related taxes, during the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 follow:

(Dollars in thousands)

Unrealized gains/(losses) on cash flow hedges

Items not yet recognized as a component of net periodic benefit cost

Total
Balance as of June 30, 2022

$
6,865

$
(6,738)

$
127
Current period change, excluding amounts reclassified

from accumulated other comprehensive income/(loss)

10,559

594

11,153
Amounts reclassified from accumulated other comprehensive income/(loss)

(447)

—

(447)
Balance as of September 30, 2022

$
16,977

$
(6,144)

$
10,833

Balance as of June 30, 2021

$
(14,276)

(8,641)

(22,917)
Current period change, excluding amounts reclassified

from accumulated other comprehensive income/(loss)

133

260

393
Amounts reclassified from accumulated other comprehensive income/(loss)

3,047

—

3,047
Balance as of September 30, 2021

$
(11,096)

$
(8,381)

$
(19,477)


(Dollars in thousands)	Unrealized gains/(losses) on cash flow hedges		Items not yet recognized as a component of net periodic benefit cost		Total
Balance as of March 31, 2023	$	13,074	$	(10,172)	$	2,902
Current period change, excluding amounts reclassified
from accumulated other comprehensive income		5,848		(228)		5,620
Amounts reclassified from accumulated other comprehensive income		(2,767)		—		(2,767)
Balance as of June 30, 2023	$	16,155	$	(10,400)	$	5,755

Balance as of March 31, 2022	$	5,899		(7,300)		(1,401)
Current period change, excluding amounts reclassified
from accumulated other comprehensive loss		1,873		562		2,435
Amounts reclassified from accumulated other comprehensive loss		(907)		—		(907)
Balance as of June 30, 2022	$	6,865	$	(6,738)	$	127

(Dollars in thousands)

Unrealized gains/(losses) on cash flow hedges

Items not yet recognized as a component of net periodic benefit cost

Total
Balance as of December 31, 2021

$
(4,863)

$
(7,497)

$
(12,360)
Current period change, excluding amounts reclassified

from accumulated other comprehensive income/(loss)

21,491

1,353

22,844
Amounts reclassified from accumulated other comprehensive income/(loss)

349

—

349
Balance as of September 30, 2022

$
16,977

$
(6,144)

$
10,833

Balance as of December 31, 2020

$
(24,098)

(8,515)

$
(32,613)
Current period change, excluding amounts reclassified

from accumulated other comprehensive income/(loss)

3,982

134

4,116
Amounts reclassified from accumulated other comprehensive income/(loss)

9,020

—

9,020
Balance as of September 30, 2021

$
(11,096)

$
(8,381)

$
(19,477)


(Dollars in thousands)	Unrealized losses on cash flow hedges		Items not yet recognized as a component of net periodic benefit cost		Total
Balance as of December 31, 2022	$	16,912	$	(9,948)	$	6,964
Current period change, excluding amounts reclassified
from accumulated other comprehensive income		4,393		(452)		3,941
Amounts reclassified from accumulated other comprehensive income		(5,150)		—		(5,150)
Balance as of June 30, 2023	$	16,155	$	(10,400)	$	5,755

Balance as of December 31, 2021	$	(4,863)		(7,497)	$	(12,360)
Current period change, excluding amounts reclassified
from accumulated other comprehensive loss		10,932		759		11,691
Amounts reclassified from accumulated other comprehensive loss		796		—		796
Balance as of June 30, 2022	$	6,865	$	(6,738)	$	127

2319

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Amounts reclassified out of each component of accumulated other comprehensive income/(loss) follow:



	Three Months Ended September 30,				Nine Months Ended September 30,				Statement of Operations	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)		2022		2021		2022		2021	Line Item		2023		2022		2023		2022	Statement of Operations Line Item
Reclassifications of losses on cash flow hedges:
Interest rate swaps entered into by the Company's									Equity in income of
Reclassifications of (gains)/losses on cash flow hedges:
Interest rate swaps entered into by the Company’s																		Equity in results of
equity method joint venture investees	$	—	$	226	$	130	$	781	affiliated companies	$	—	$	—	$	—	$	130	affiliated companies
Interest rate swaps entered into by the Company's subsidiaries		261		1,293		(226)		3,558	Interest expense
Interest rate swaps entered into by the Company’s subsidiaries											(2,204)		(1,478)		(3,985)		(487)	Interest expense

Reclassifications of losses on discontinued hedging instruments
Interest rate swap entered into by the Company's subsidiaries		(708)		—		445		—	Interest expense

Reclassifications of losses on other-than-insignificant
financing element of derivatives:
Interest rate swaps entered into by the Company's subsidiaries		—		1,528		—		4,681	Interest expense
Interest rate swap entered into by the Company’s subsidiaries											(563)		571		(1,165)		1,153	Interest expense
Total before and net of tax	$	(447)	$	3,047	$	349	$	9,020		$	(2,767)	$	(907)	$	(5,150)	$	796

At ~~September~~June 30, ~~2022,~~2023, the Company expects that it will reclassify ~~$5.3~~$8.2 million (gross and net of tax) of net gain on derivative instruments from accumulated other comprehensive ~~income/(loss)~~income to earnings during the next twelve months attributable to interest rate swaps held by the Company.

See Note 9,7, “Fair Value of Financial Instruments, Derivatives and Fair Value Disclosures,” for additional disclosures relating to derivative instruments.

Note 1412 — Revenue:

Revenue Recognition

The majority of the ~~Company's~~Company’s contracts for pool revenues, time ~~and bareboat~~ charter revenues, and voyage charter revenues are accounted for as lease revenue under ASC 842. The ~~Company's~~Company’s contracts with pools are short term which are cancellable with up to 90 ~~days'~~days’ notice. As of ~~September~~June 30, ~~2022,~~2023, the Company is a party to time charter out contracts with customers on ~~one MR,~~four VLCCs, two Suezmaxes, one LR2 ~~one Suezmax,~~ and ~~one VLCC~~four MRs, with expiry dates ranging from ~~March~~July 2023 to ~~August 2024.~~April 2030. The ~~Company's~~Company’s contracts with customers for voyage charters are short term and vary in length based upon the duration of each voyage. Lease revenue for non-variable lease payments is recognized over the lease term on a straight-line basis and lease revenue for variable lease payments (e.g., demurrage) is recognized in the period in which the changes in facts and circumstances on which the variable lease payments are based occur.

Lightering services provided by the ~~Company's~~Company’s Crude Tanker Lightering Business, and voyage charter contracts that do not meet the definition of a lease are accounted for as service revenues under ASC 606. In accordance with ASC 606, revenue is recognized when a customer obtains control of or consumes promised services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services.

2420

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The following ~~table presents~~tables present the Company’s revenues from leases accounted for under ASC 842 and revenues from services accounted for under ASC 606 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021:~~2022:


	Crude		Product				Crude		Product
(Dollars in thousands)	Tankers		Carriers		Totals		Tankers		Carriers		Totals
Three months ended September 30, 2022:
Three months ended June 30, 2023:
Revenues from leases
Pool revenues	$	60,710	$	154,530	$	215,240	$	119,639	$	127,952	$	247,591
Time and bareboat charter revenues		6,575		1,912		8,487
Voyage charter revenues from non-variable lease payments⁽¹⁾		567		3,312		3,879
Time charter revenues								18,570		7,542		26,112
Voyage charter revenues from non-variable lease payments								1,417		4,541		5,958
Voyage charter revenues from variable lease payments		—		4		4		66		—		66
Revenues from services
Voyage charter revenues from lightering services		9,219		—		9,219		12,476		—		12,476
Total shipping revenues	$	77,071	$	159,758	$	236,829	$	152,168	$	140,035	$	292,203

Three months ended September 30, 2021:
Three months ended June 30, 2022:
Revenues from leases
Pool revenues	$	18,763	$	31,780	$	50,543	$	45,166	$	119,561	$	164,727
Time and bareboat charter revenues		9,900		3,764		13,664
Time charter revenues								6,204		1,929		8,133
Voyage charter revenues from non-variable lease payments		6,696		7,389		14,085		2,237		4,593		6,830
Voyage charter revenues from variable lease payments		450		123		573		48		7		55
Revenues from services
Voyage charter revenues from lightering services		5,951		—		5,951		8,452		—		8,452
Total shipping revenues	$	41,760	$	43,056	$	84,816	$	62,107	$	126,090	$	188,197

Crude

Product

(Dollars in thousands)

Tankers

Carriers

Totals
Nine months ended September 30, 2022:

Revenues from leases

Pool revenues

$
133,186

$
330,543

$
463,729
Time and bareboat charter revenues

16,503

6,292

22,795
Voyage charter revenues from non-variable lease payments⁽¹⁾

5,648

10,952

16,600
Voyage charter revenues from variable lease payments

62

(67)

(5)
Revenues from services

Voyage charter revenues from lightering services

23,389

—

23,389
Total shipping revenues

$
178,788

$
347,720

$
526,508

Nine months ended September 30, 2021:

Revenues from leases

Pool revenues

$
51,666

$
49,991

$
101,657
Time and bareboat charter revenues

33,054

7,022

40,076
Voyage charter revenues from non-variable lease payments⁽²⁾

8,423

8,871

17,294
Voyage charter revenues from variable lease payments

450

174

624
Revenues from services

Voyage charter revenues from lightering services

18,225

—

18,225
Total shipping revenues

$
111,818

$
66,058

$
177,876


	Crude		Product
(Dollars in thousands)	Tankers		Carriers		Totals
Six months ended June 30, 2023:
Revenues from leases
Pool revenues	$	228,438	$	278,731	$	507,169
Time and bareboat charter revenues		28,256		11,006		39,262
Voyage charter revenues from non-variable lease payments		3,655		4,867		8,522
Voyage charter revenues from variable lease payments		66		150		216
Revenues from services
Voyage charter revenues from lightering services		24,164		—		24,164
Total shipping revenues	$	284,579	$	294,754	$	579,333

Six months ended June 30, 2022:
Revenues from leases
Pool revenues	$	72,476	$	176,013	$	248,489
Time and bareboat charter revenues		9,928		4,380		14,308
Voyage charter revenues from non-variable lease payments⁽¹⁾		5,081		7,640		12,721
Voyage charter revenues from variable lease payments		62		(71)		(9)
Revenues from services
Voyage charter revenues from lightering services		14,170		—		14,170
Total shipping revenues	$	101,717	$	187,962	$	289,679

(1)

Includes $0.9 ~~million and $1.8~~ million of loss of hire proceeds received during the ~~three and nine months ended September 30, 2022, respectively.~~

~~(2)~~

~~Includes $0.5 million of loss of hire proceeds received during the first~~second quarter of ~~2021.~~2022.

2521

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Contract Balances

The following table provides information about receivables, contract assets and contract liabilities from contracts with customers, and significant changes in contract assets and liabilities balances, associated with revenue from services accounted for under ASC 606. Balances related to revenues from leases accounted for under ASC 842 are excluded from the table below.


(Dollars in thousands)	Voyage receivables - Billed receivables		Contract assets (Unbilled voyage receivables)		Contract liabilities (Deferred revenues and off hires)		Voyage receivables – Billed receivables		Contract assets (Unbilled voyage receivables)		Contract liabilities (Deferred revenues and off hires)
Opening balance as of January 1, 2022	$	2,306		225	$	—
Closing balance as of September 30, 2022		3,170		5,302		—
Opening balance as of January 1, 2023							$	9,452	$	1,866	$	—
Closing balance as of June 30, 2023								2,887		3,536		—

We receive payments from customers based on the schedule established in our contracts. Contract assets relate to our conditional right to consideration for our completed performance obligations under contracts and decrease when the right to consideration becomes unconditional or payments are received. Contract liabilities include payments received in advance of performance under contracts and are recognized when performance under the respective contract has been completed. Deferred revenues allocated to unsatisfied performance obligations will be recognized over time as the services are performed.

Performance Obligations

All of the Company’s performance obligations ~~and associated revenue,~~ are generally transferred to customers over time. The expected duration of services is less than one year. ~~Adjustments to revenue primarily relate to changes in estimates of performance obligations related to voyage charters. Adjustments~~There were no material adjustments in revenues from performance obligations satisfied in previous periods recognized ~~were nil~~ during the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

Costs to Obtain or Fulfill a Contract

As of ~~September~~June 30, ~~2022,~~2023, there were no unamortized deferred costs of obtaining or fulfilling a contract.

2622

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 1513 — Leases:

As permitted under ASC 842, the Company has elected not to apply the provisions of ASC 842 to short term leases, which include: (i) tanker vessels chartered-in where the duration of the charter was one year or less at inception; (ii) workboats employed in the Crude Tankers Lightering business which have a lease term of 12-months or less; and (iii) short term leases of office and other space.

Contracts under which the Company is a Lessee

The Company currently has two major categories of leases -– chartered-in vessels and leased office and other space. The expenses recognized during the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 for the lease component of these leases are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)		2022		2021		2022		2021		2023		2022		2023		2022
Operating lease cost
Vessel assets
Charter hire expenses	$	2,849	$	2,108	$	7,748	$	6,999	$	678	$	2,481	$	1,745	$	4,899

Finance lease cost
Vessel assets
Amortization of right-of-use assets										16		—		731		—
Interest on lease liabilities										3		—		124		—

Office and other space
General and administrative		228		501		683		1,048		228		228		456		455
Voyage expenses		43		43		129		127		45		43		90		86

Short-term lease cost
Vessel assets⁽¹⁾
Charter hire expenses		1,737		1,322		4,749		3,278		5,154		1,533		9,423		3,012
Total lease cost	$	4,857	$	3,974	$	13,309	$	11,452	$	6,124	$	4,285	$	12,569	$	8,452

(1)

Excludes vessels spot chartered-in under operating leases and employed in the Crude Tankers Lightering business for periods of less than one month each, totaling ~~$0.7~~$1.6 million and ~~$1.2~~$1.7 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, compared with ~~$0.1~~$0.7 million and ~~$0.3~~$1.1 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively, including both lease and non-lease components.

Supplemental cash flow information related to leases was as follows:

Nine Months Ended September 30,
(Dollars in thousands)

2022

2021
Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows used for operating leases

$
7,952

$
8,058

~~Supplemental balance sheet information related to leases was as follows:~~

(Dollars in thousands)

September 30, 2022

December 31, 2021
Operating lease right-of-use assets

$
18,069

$
23,168

Current portion of operating lease liabilities

$
(8,323)

$
(8,393)
Long-term operating lease liabilities

(8,087)

(12,522)
Total operating lease liabilities

$
(16,410)

$
(20,915)

Weighted average remaining lease term - operating leases

5.49 years

5.15 years
Weighted average discount rate - operating leases

5.16%

5.42%


	Six Months Ended June 30,
(Dollars in thousands)		2023		2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used for operating leases	$	1,685	$	5,035
Finance cash flows used for finance leases		42,284		—

2723

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Supplemental balance sheet information related to leases was as follows:


(Dollars in thousands)	June 30, 2023		December 31, 2022
Operating lease right-of-use assets	$	6,308	$	8,471
Finance lease right-of-use assets		—		44,391

Current portion of operating lease liabilities	$	(452)	$	(1,596)
Current portion of finance lease liabilities		—		(41,870)
Long-term operating lease liabilities		(7,539)		(7,740)
Total operating and finance lease liabilities	$	(7,991)	$	(51,206)

Weighted average remaining lease term – operating leases⁽¹⁾		9.65 years		8.56 years
Weighted average discount rate – operating leases⁽¹⁾		4.44%		4.13%

(1)

The weighted average remaining lease term and discount rate as of December 31, 2022 exclude finance lease liabilities. Such finance leases had weighted average remaining lease terms of 0.20 years at December 31, 2022 and the annualized weighted average discount rate was 4.78% as of December 31, 2022.

1. Charters-in of vessel assets:

~~As of September 30, 2022, INSW had commitments~~In June 2023, the Company entered a two-year time charter-in contract for one LR1 The vessel was delivered to ~~charter~~the Company on July 12, 2023. The minimum lease payments (including both lease and non-lease components) due under this time charter-in will be $5,937, $12,627, and $5,624 in ~~two Aframaxes~~2023, 2024 and ~~two LR1s.~~ ~~All of the charters-in, of which the two Aframaxes are bareboat charters with expiry dates ranging from December 2023 to March 2024~~ ~~and the two LR1s are time charters~~ ~~with expiring dates ranging from March 2023 to~~ ~~April 2023~~, are accounted for as operating leases. The Company’s bareboat charters contain purchase options. The Company determined on the lease commencement dates that the purchase options were not reasonably certain of being exercised. As of September 30, 2022, events have not occurred that would require a reassessment of such determinations.2025, respectively.

~~Payments of lease liabilities and related number of operating days under these operating leases as of September 30, 2022 are as follows:~~

~~Bareboat Charters-in:~~

(Dollars in thousands)

Amount

Operating Days
2022

$
1,582

184
2023

4,532

556
Total lease payments

6,114

740
less imputed interest

(225)

Total operating lease liabilities

$
5,889

~~Time Charters-in:~~

(Dollars in thousands)

Amount

Operating Days
2022

$
1,215

184
2023

1,381

210
Total lease payments (lease component only)

2,596

394
less imputed interest

(13)

Total operating lease liabilities

$
2,583

2. Office and other space:

The Company has operating leases for offices and lightering workboat dock space. These leases have expiry dates ranging from July 2023 to May 2033. The lease for the workboat dock space contains renewal options executable by the Company for periods through December 2027. We have determined that the options through December 2024 are reasonably certain to be executed by the Company, and accordingly the options are included in the lease liability and right of use asset calculations for such lease.

Payments of lease liabilities for office and other space as of ~~September~~June 30, ~~2022~~2023 are as follows:


(Dollars in thousands)		Amount		Amount
2022	$	68
2023		229
2023⁽¹⁾			$	(105)
2024		973		1,167
2025		998		998
2026		1,024		1,024
2027				1,077
Thereafter		6,908		5,831
Total lease payments		10,200		9,992
less imputed interest		(2,262)		(2,001)
Total operating lease liabilities	$	7,938	$	7,991

⁽¹⁾Reflects the impact of lease incentives expected to be received during the second half of 2023 being greater than rental payments due for the balance of 2023.

Contracts under which the Company is a Lessor

See Note ~~14,~~12, “Revenue,” for discussion on the Company’s revenues from operating leases accounted for under ASC 842.

2824

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The future minimum revenues, before ~~reduction for~~the deduction of brokerage commissions, expected to be received on non-cancelable time charters for four VLCCs, two Suezmaxes, one ~~MR,~~Aframax, one LR2 ~~one Suezmax~~ and ~~one VLCC~~four MRs, and the related revenue days as of ~~September~~June 30, ~~2022~~2023 are as follows:

(Dollars in thousands)

Amount

Revenue Days
2022

$
9,940

332
2023

22,055

809
2024

7,280

224
Future minimum revenues

$
39,275

1,365


(Dollars in thousands)	Amount		Revenue Days
2023	$	50,500	1,764
2024		91,515	3,152
2025		58,926	1,922
2026		42,098	1,336
2027		33,945	1,095
Thereafter		75,051	2,421
Future minimum revenues	$	352,035	11,690

Future minimum revenues do not include the Company’s share of time charters entered into by the pools in which it ~~participates.~~participates or profit-sharing above the base rate on the newbuild dual-fuel LNG VLCCs. Revenues from a time charter are not generally received when a vessel is off-hire, including time required for normal periodic maintenance of the vessel. In arriving at the minimum future charter revenues, an estimated time off-hire to perform periodic maintenance on each vessel has been deducted, although there is no assurance that such estimate will be reflective of the actual off-hire in the future.

Note 1614 — Contingencies:

INSW’s policy for recording legal costs related to contingencies is to expense such legal costs as incurred.

Multi-Employer Plans

The Merchant Navy Officers Pension Fund (“MNOPF”) is a multi-employer defined benefit pension plan covering British crew members that served as officers on board INSW’s vessels (as well as vessels of other owners). The trustees of the plan have indicated that, under the terms of the High Court ruling in 2005, which established the liability of past employers to fund the deficit on the Post 1978 section of MNOPF, calls for further contributions may be required if additional actuarial deficits arise or if other employers liable for contributions are not able to pay their share in the future. As the amount of any such assessment cannot be reasonably estimated, no reserves have been recorded for this contingency in INSW’s consolidated financial statements as of ~~September~~June 30, ~~2022. Assuming that the preliminary results of the deficit valuation~~2023. The MNOPF annual actuarial report as of ~~June 30, 2021 are confirmed during~~March 31, 2022, ~~showing that~~showed the pension scheme funded status as being in surplus and no ~~deficit~~additional employer contributions ~~would be required,~~ ~~the~~were due. The next ~~deficit~~full actuarial valuation will be as of March 31, 2024.

The Merchant Navy Ratings Pension Fund (“MNRPF”) is a multi-employer defined benefit pension plan covering British crew members that served as ratings (seamen) on board INSW’s vessels (as well as vessels of other owners) more than 20 years ago. Participating employers include current employers, historic employers that have made voluntary contributions, and historic employers such as INSW that have made no deficit contributions. Calls for contributions may be required if additional actuarial deficits arise or if other employers liable for contributions are unable to pay their share in the future. As the amount of any such assessment cannot be reasonably estimated, no reserves have been recorded in INSW’s consolidated financial statements as of ~~September~~June 30, ~~2022.~~2023. The ~~next~~ deficit valuation ~~will be~~ as of March 31, ~~2023.~~2023 is expected to be finalized by June 30, 2024.

Spin-Off Related Agreements

On November 30, 2016, INSW was spun off from OSG as a separate publicly traded company. In connection with the spin-off, INSW and OSG entered into several agreements, including a separation and distribution agreement, an employee matters agreement and a

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

transition services agreement. While most of the obligations under those agreements were subsequently fulfilled, certain provisions (including in particular mutual indemnification provisions under the separation and distribution agreement and the employee matters agreement) continue in force.

Legal Proceedings Arising in the Ordinary Course of Business

The Company is a party, as plaintiff or defendant, to various suits in the ordinary course of business for monetary relief arising principally from personal injuries, wrongful death, collision or other casualty and to claims arising under charter parties and other

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

contract disputes. A substantial majority of such personal injury, wrongful death, collision or other casualty claims against the Company are covered by insurance (subject to deductibles not material in amount). Each of the claims involves an amount which, in the opinion of management, should not be material to the Company’s financial position, results of operations and cash flows.

In late July 2023, one of the Company’s vessels was arrested in connection with a commercial dispute arising earlier in the year, with the arresting party seeking approximately $24 million in security. The Company is defending itself vigorously against the arrest. As this matter is in the early stages, the Company is currently unable to predict the outcome of this complaint, and no estimate of liability has been accrued for this matter at this time.

3026

INTERNATIONAL SEAWAYS, INC.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. Such forward-looking statements represent the Company’s reasonable expectation with respect to future events or circumstances based on various factors and are subject to various risks and uncertainties and assumptions relating to the Company’s operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Accordingly, there are or will be important factors, many of which are beyond the control of the Company, that could cause the Company’s actual results to differ materially from those indicated in these statements. Undue reliance should not be placed on any forward-looking statements and consideration should be given to the following factors when reviewing any such statement. Such factors include, but are not limited to:

●

the highly cyclical nature of INSW’s industry;

●

fluctuations in the market value of vessels;

●

declines in charter rates, including spot charter rates or other market deterioration;

●

an increase in the supply of vessels without a commensurate increase in demand;

●

the impact of adverse weather and natural disasters;

●

the adequacy of INSW’s insurance to cover its losses, including in connection with maritime accidents or spill events;

●

constraints on capital availability;

●

changing economic, political and governmental conditions in the United States and/or abroad and general conditions in the oil and natural gas industry;

●

the impact of changes in fuel prices;

●

acts of piracy on ocean-going vessels;

●

terrorist attacks and international hostilities and instability;

●

the war between Russia and Ukraine could adversely affect INSW’s business;

●

the impact of public health threats and outbreaks of other highly communicable diseases, including ~~the effects of the current COVID-19 pandemic;~~COVID-19;

●

the effect of the Company’s indebtedness on its ability to finance operations, pursue desirable business opportunities and successfully run its business in the future;

●

an event occurs that causes the rights issued under the A&R Rights Agreement adopted by the Company on ~~May 8, 2022~~April 11, 2023 to become exercisable;

●

the Company’s ability to generate sufficient cash to service its indebtedness and to comply with debt covenants;

●

the Company’s ability to make capital expenditures to expand the number of vessels in its fleet, and to maintain all of its vessels and to comply with existing and new regulatory standards;

●

the ~~possibility that costs or difficulties related to the integration of the operations of INSW and Diamond S as a result of the Merger will be greater than expected;~~

●

~~the risk that stockholder litigation in connection with the Merger may result in significant costs of defense, indemnification and liability;~~

●

~~the risk that the anticipated tax treatment of the Merger is not obtained;~~

●

~~the~~ availability and cost of third-party service providers for technical and commercial management of the Company’s fleet;

●

~~fluctuations in the contributions of the Company’s joint ventures to its profits and losses;~~

●

the Company’s ability to renew its time charters when they expire or to enter into new time charters;

●

termination or change in the nature of the Company’s relationship with any of the commercial pools in which it participates and the ability of such commercial pools to pursue a profitable chartering strategy;

●

competition within the Company’s industry and INSW’s ability to compete effectively for charters with companies with greater resources;

●

the loss of a large customer or significant business relationship;

●

the Company’s ability to realize benefits from its past acquisitions or acquisitions or other strategic transactions it may make in the future;

~~INTERNATIONAL SEAWAYS, INC.~~

●

increasing operating costs and capital expenses as the Company’s vessels age, including increases due to limited shipbuilder warranties or the consolidation of suppliers;

●

the Company’s ability to replace its operating leases on favorable terms, or at all;

●

changes in credit risk with respect to the Company’s counterparties on contracts;

●

the failure of contract counterparties to meet their obligations;

●

~~the impact of the discontinuance of LIBOR on interest rates of our debt that reference LIBOR;~~

●

the Company’s ability to attract, retain and motivate key employees;

●

work stoppages or other labor disruptions by employees of INSW or other companies in related industries;

INTERNATIONAL SEAWAYS, INC.

●

unexpected drydock costs;

●

the potential for technological innovation to reduce the value of the Company’s vessels and charter income derived therefrom;

●

the impact of an interruption in or failure of the Company’s information technology and communication systems upon the Company’s ability to operate;

●

seasonal variations in INSW’s revenues;

●

government requisition of the Company’s vessels during a period of war or emergency;

●

the Company’s compliance with complex laws, regulations and in particular, environmental laws and regulations, including those relating to ballast water treatment and the emission of greenhouse gases and air contaminants, including from marine engines;

●

legal, regulatory or market measures to address climate change, including proposals to restrict emissions of greenhouse gases (“GHGs”) and other sustainability initiatives, could have an adverse impact on the Company’s business and results of operations;

●

increasing scrutiny and changing expectations from investors, lenders, and other market participants with respect to our Environmental, Social and Governance policies;

●

any non-compliance with the U.S. Foreign Corrupt Practices Act of 1977 or other applicable regulations relating to bribery or corruption;

●

the impact of litigation, government inquiries and investigations;

●

governmental claims against the Company;

●

the arrest of INSW’s vessels by maritime claimants;

●

changes in laws, including governing tax laws, treaties or regulations, including those relating to environmental and security matters;

●

changes in worldwide trading conditions, including the impact of tariffs, trade sanctions, boycotts and other restrictions on trade; and

●

~~the war between Russia~~Pending and ~~Ukraine could adversely affect INSW’s business.~~future tax law changes may result in significant additional taxes to INSW.

The Company assumes no obligation to update or revise any forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q and written and oral forward-looking statements attributable to the Company or its representatives after the date of this Quarterly Report on Form 10-Q are qualified in their entirety by the cautionary statement contained in this paragraph and in other reports hereafter filed by the Company with the Securities and Exchange Commission.

INTRODUCTION

This Management’s Discussion and Analysis, which should be read in conjunction with our accompanying condensed consolidated financial statements, provides a discussion and analysis of our business, current developments, financial condition, cash flows and results of operations. It is organized as follows:

●

General. This section provides a general description of our business, which we believe is important in understanding the results of our operations, financial condition and potential future trends.

●

Operations & Oil Tanker Markets. This section provides an overview of industry operations and dynamics that have an impact on the Company’s financial position and results of operations.

3228

INTERNATIONAL SEAWAYS, INC.

●

Critical Accounting Estimates and Policies. This section identifies any updates to those accounting policies that are considered important to our results of operations and financial condition, require significant judgment and involve significant management estimates.

●

Results from Vessel Operations. This section provides an analysis of our results of operations presented on a business segment basis. In addition, a brief description of significant transactions and other items that affect the comparability of the results is provided, if applicable.

●

Liquidity and Sources of Capital. This section provides an analysis of our cash flows, outstanding debt and commitments. Included in the analysis of our outstanding debt is a discussion of the amount of financial capacity available to fund our ongoing operations and future commitments as well as a discussion of the Company’s planned and/or already executed capital allocation activities.

●

Risk Management. This section provides a general overview of how the interest rate, currency and fuel price volatility risks are managed by the Company.

General:

We are a provider of ocean transportation services for crude oil and refined petroleum products. We operate our fleet of VLCC, Suezmax, and Aframax crude tankers and LR1, LR2, and MR product carriers in the International Flag market. Our business includes two reportable segments: Crude Tankers and Product Carriers. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, we derived ~~68%~~52% and ~~67%~~49%, respectively, of our TCE revenues from our ~~Product Carriers~~Crude Tankers segment compared with ~~52%~~32% and ~~37%~~34% for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively. Revenues from our ~~Crude Tankers~~Product Carriers segment constituted the balance of our TCE revenues in the ~~2022~~2023 and ~~2021~~2022 periods.

As of ~~September~~June 30, ~~2022,~~2023, the Company’s operating fleet consisted of 7574 wholly-owned ~~finance leased~~ or ~~bareboat chartered-in and time-chartered-in~~lease financed vessels aggregating ~~8.2~~8.8 million deadweight tons (“dwt”). ~~In addition to our operating fleet of 75 vessels, three~~ ~~dual-fuel LNG-powered VLCC newbuilds are scheduled for delivery to the Company between the first and second quarters of 2023, bringing the total operating and newbuild fleet to 78 vessels.~~

The Company’s revenues are highly sensitive to patterns of supply and demand for vessels of the size and design configurations owned and operated by the Company and the trades in which those vessels operate. Rates for the transportation of crude oil and refined petroleum products from which the Company earns a substantial majority of its revenues are determined by market forces such as the supply and demand for oil, the distance that cargoes must be transported, and the number of vessels expected to be available at the time such cargoes need to be transported. The demand for oil shipments is significantly affected by the state of the global economy, levels of U.S. domestic and international production and OPEC exports. The number of vessels available to transport cargo is affected by newbuilding deliveries and by the removal of existing vessels from service, principally through storage, recycling or conversions. The Company’s revenues are also affected by its vessel employment strategy, which seeks to achieve the optimal mix of spot (voyage charter) and long-term (time or bareboat charter) charters. Because shipping revenues and voyage expenses are significantly affected by the mix between voyage charters and time charters, the Company measures the performance of its fleet of vessels based on TCE revenues. Management makes economic decisions based on anticipated TCE rates and evaluates financial performance based on TCE rates achieved. ~~In order to take advantage of market conditions and optimize economic performance, management employs all of~~

~~the Company’s LR1 product carriers, which currently operate in the Panamax International pool, in the transportation of crude oil cargoes.~~

Our revenues are derived predominantly from spot market voyage charters and our vessels are predominantly employed in the spot market via market-leading commercial pools. We derived approximately ~~96%~~91% and 93% of our total TCE revenues in the spot market for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, compared with ~~80%~~96% and ~~76%~~95% for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively. The future minimum revenues, before reduction for brokerage commissions, expected to be received on non-cancelable time charters for four VLCCs, two Suezmaxes, one Aframax, one LR2 and four MRs, as of June 30, 2023 are as follows:

INTERNATIONAL SEAWAYS, INC.


(Dollars in millions)	Amount⁽¹⁾
2023	$	50.5
2024		91.5
2025		58.9
2026		42.1
2027		33.9
Thereafter		75.1
Future minimum revenues	$	352.0

(1)

Future minimum revenues do not include the Company’s share of time charters entered into by the pools in which it participates or profit-sharing above the base rate on the newbuild dual-fuel LNG VLCCs. In arriving at the minimum future charter revenues, an estimated time off-hire to perform periodic maintenance on each vessel has been deducted, although there is no assurance that such estimate will be reflective of the actual off-hire in the future.

The following is a discussion and analysis of our financial condition as of ~~September~~June 30, ~~2022~~2023 and results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021.~~2022. You should consider the foregoing when reviewing the condensed consolidated financial statements and this discussion and analysis. You should read this section together with the condensed consolidated financial statements, including the notes thereto. This Quarterly Report on Form 10-Q includes industry data and forecasts that we have prepared based, in part, on information obtained from industry publications and surveys. Third-party industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. In addition,

~~INTERNATIONAL SEAWAYS, INC.~~

certain statements regarding our market position in this report are based on information derived from internal market studies and research reports. Unless we state otherwise, statements about the Company’s relative competitive position in this report are based on our management’s beliefs, internal studies and management’s knowledge of industry trends.

INTERNATIONAL SEAWAYS, INC.

Operations and Oil Tanker Markets:

The International Energy Agency (“IEA”) estimates global oil consumption for the ~~third~~second quarter of ~~2022~~2023 at ~~100.0~~101.4 million barrels per day (“b/d”), up ~~1.2%~~2.8% from the same quarter in ~~2021.~~2022. The estimate for global oil consumption infor 2023 is ~~101.3~~102.1 million b/d, an increase of ~~1.7%~~2.2% over ~~2022’s estimated 99.6 million b/d.~~2022. OECD demand in 2023 is estimated to increase by ~~0.2%~~0.4% to ~~46.4~~46.1 million b/d, while non-OECD demand is estimated to increase by ~~2.4%~~3.9% to ~~54.8~~56.0 million b/d.

Global oil production in the ~~third~~second quarter of ~~2022~~2023 was ~~100.7~~101.0 million b/d, an increase of ~~4.6%~~2.4% from the ~~third~~second quarter of ~~2021.~~2022. OPEC crude oil production averaged ~~29.4~~28.3 million b/d in the ~~third~~second quarter of ~~2022, an increase~~2023, a decrease of ~~0.8~~0.5 million b/d from the first quarter of 2023, and a decrease of 0.3 million b/d from the second quarter of ~~2022, and an increase of 2.5 million b/d from the third quarter of 2021.~~2022. Non-OPEC production increased by ~~1.6~~2.6 million b/d to ~~65.9~~67.2 million b/d in the ~~third~~second quarter of ~~2022~~2023 compared with the ~~third~~second quarter of ~~2021.~~2022. Oil production in the U.S. in the ~~third~~second quarter of ~~2022~~2023 increased by ~~1.1%~~0.4% to ~~11.8~~12.6 million b/d compared to the first quarter of 2023 and by 8.1% from the second quarter of ~~2022 and increased by 4.0% from the third quarter of 2021.~~2022.

U.S. refinery throughput increased by ~~0.8~~0.9 million b/d to ~~16.9~~16.5 million b/d in the ~~third~~second quarter of ~~2022~~2023 compared with the first quarter of 2023. U.S. crude oil imports in the second quarter of 2023 increased by 0.1 million b/d to 6.2 million b/d compared with the second quarter of ~~2022. U.S. crude oil imports in the third quarter of~~ 2022, ~~increased by 0.2 million b/d to 6.6 million b/d compared~~ with ~~the third quarter of 2021, with imports from non-OPEC countries remaining flat and~~ imports from OPEC countries increasing by 0.2 million b/d and imports from non-OPEC countries decreasing by 0.1 million b/d.

~~After continuing pandemic-related lockdowns, and refinery maintenance,~~ China’s average crude oil imports ~~rebounded~~increased to ~~10.2~~12.7 million b/d in ~~September 2022,~~June 2023, an increase of 45.3% year over year and a new monthly record high. First half 2023 crude oil imports were up ~~0.7 million b/d from August 2022, and~~11.7% compared with the ~~highest level since May~~first half of 2022.

~~As a result of continued rising oil demand outpacing production of crude oil and refined products and the resulting increases~~Total commercial inventory stocks in the ~~prices of~~OECD increased by 86 million barrels for crude ~~oil, global inventories continued to be drawn down during~~and 53 million barrels for products in the ~~third~~second quarter of ~~2022 to levels that are significantly below~~2023 compared with the ~~average over the last five years. In the OECD, total crude stocks have remained steady but product stocks have declined by approximately 110 million barrels in the 12 months ending August~~second quarter of 2022.

During the ~~third~~second quarter of ~~2022,~~2023, the tanker fleet of vessels over 10,000 dwt increased, net of vessels recycled, by ~~5.5~~3.1 million ~~dwt. The~~dwt as the crude fleet increased by ~~5.0~~2.5 million dwt, with VLCCs, Suezmaxes and Aframaxes growing by ~~2.1~~1.5 million dwt, ~~Suezmaxes by 1.7~~0.3 million dwt and ~~Aframaxes by 1.2~~0.7 million ~~dwt.~~dwt, respectively. The product carrier fleet increased by ~~0.5~~0.6 million dwt, with MRs growing 0.6 million dwt. Year-over-year, the size of the tanker fleet increased by ~~17.5~~19.5 million dwt with the VLCCs, Suezmaxes, Aframaxes, Panamaxes and MRs increasing by ~~9.5~~9.1 million dwt, ~~4.1~~2.8 million dwt, ~~2.0~~4.3 million dwt, 0.3 million dwt and ~~2.3~~3.1 million dwt, respectively. ~~The LR1/Panamax fleet declined by 0.5 million dwt.~~

During the ~~third~~second quarter of ~~2022,~~2023, the tanker orderbook ~~declined~~increased by ~~4.7~~5.6 million dwt overall compared with the ~~second~~first quarter of ~~2022.~~2023. The crude tanker orderbook ~~decreased~~increased by ~~4.5~~4.3 million dwt, with ~~decreases~~a decrease in the VLCC orderbook of 1.5 million dwt, and increases in the Suezmax and Aframax ~~sectors~~orderbooks of ~~1.8 million dwt, 1.9~~2.7 million dwt and ~~0.8~~3.1 million dwt, respectively. The product carrier orderbook ~~decreased~~increased by ~~0.2~~1.3 million dwt, with ~~LR1s declining by 0.2~~increases in the LR1 and MR sectors of 0.5 million dwt and ~~MRs remaining flat.~~0.9 million dwt, respectively. Year-over-year, the total tanker orderbook decreased by ~~20.8~~2.4 million dwt, with ~~all sectors seeing declines.~~VLCC decreasing by 9.7 million dwt and increases in Suezmaxes, Aframaxes, Panamaxes and LR1s of 2.1 million dwt, 3.1 million dwt, 0.4 million dwt and 1.8 million dwt, respectively.

~~All segments enjoyed better markets during the third quarter compared with the second~~Second quarter of ~~2022. Continued~~2023 rates were somewhat lower than in the first quarter of 2023, largely due to OPEC cuts announced in April 2023, although still significantly over 10-year average rates and cash breakeven levels, reflecting the impact of the disruptions ~~to global crude and product~~in trade flows ~~resulting from~~caused by the Russian invasion of Ukraine had positive impacts on rates for all of our segments during the third quarter of 2022 due to the continued trade flow inefficiencies in the market. (See Item 1A, Risk Factors in our March 31, 2022 Form 10-Q - ~~The war between Russia and Ukraine could adversely affect INSW’s business~~~~). The recently announced OPEC+ production cut of 2.0 million b/d from quotas could have a negative impact~~ on tanker earnings going forward. However, some market participants anticipate that the actual production cut will only be around 1.3 million b/d, and the impacts of this cut could also be tempered by increased production in the West.demand.

~~INTERNATIONAL SEAWAYS, INC.~~

The pandemic involving the novel coronavirus (COVID-19) has adversely affected the Company’s business, operations and financial results, and will likely continue to do so. See Item 1A, Risk Factors in our December 31, 2021 Form 10-K – ~~The current pandemic involving the novel coronavirus (COVID-19) has adversely affected the Company’s business, operations and financial results, and will likely continue to do so~~.

Update on Critical Accounting Estimates and Policies:

The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require the Company to make estimates in the application of its accounting policies based on the best assumptions, judgments and opinions of management. For a description of all of the Company’s material accounting policies, see Note 2,3, “Summary of Significant Accounting Policies,” to the Company’s consolidated financial statements as of and for the year ended December 31, ~~2021~~2022 included in the Company’s Annual Report on Form 10-K. See Note 3,2, “Significant Accounting Policies,” to the accompanying condensed consolidated financial statements for any changes or updates to the Company’s critical accounting policies for the current period.

INTERNATIONAL SEAWAYS, INC.

Results from Vessel Operations:

During the ~~third~~second quarter of ~~2022, results~~2023, income from vessel operations increased by ~~$191.2~~$81.3 million to ~~income of $128.4~~$168.7 million from ~~a loss of $62.8~~$87.4 million in the ~~third~~second quarter of ~~2021.~~2022. Such increase resulted principally from a ~~$161.6~~$102.8 million ~~period-over-period~~quarter-over-quarter increase in TCE revenues, ~~and $47.1 million in merger and integration related costs incurred in the third quarter of 2021 related to the Company’s Merger with Diamond S. Such items were~~ partially offset by ~~$9.1~~a $8.1 million decrease in ~~gain~~net gains on the disposal of vessels ~~recorded~~and other assets, and increased vessel expenses and depreciation and amortization in the ~~prior year’s~~current quarter.

The increase in TCE revenues in the ~~third~~second quarter of 2023 of $102.8 million, or 55%, to $288.3 million from $185.5 million in the second quarter of 2022 reflects an aggregate $100.3 million rates-based increase resulting from higher average daily rates earned across all of ~~$161.6~~INSW’s various fleet sectors, with the exception of the MR fleet.

During the first half of 2023, income from vessel operations increased by $272.2 million ~~or 221%,~~ to ~~$234.5~~$354.0 million from ~~$73.0~~$81.8 million in the ~~corresponding quarter~~first half of 2022. Such increase was driven principally by a $288.1 million increase in TCE revenues, partially offset by increased depreciation and amortization in the ~~prior year~~current period.

The increase in TCE revenues in the first half of 2023 of $288.1 million, or 102%, to $571.7 million from $283.5 million in the first half of 2022 reflects ~~a net~~an aggregate ~~$156.9~~$280.7 million rates-based increase resulting from higher average daily rates earned across all of INSW’s various fleet sectors.

During the first nine months of 2022, results from vessel operations increased by $302.2 million to income of $210.2 million from a loss of $92.1 million in the first nine months of 2021. Such increase resulted principally from a $355.2 million period-over-period increase in TCE revenues and the 2021 merger and integration related costs described above, offset by increased vessel expenses and depreciation and amortization, which are reflective of the Company’s larger post-Merger fleet.

The increase in TCE revenues in the first nine months of 2022 of $355.2 million, or 218%, to $518.1 million from $162.9 million in the corresponding period of the prior year reflects a net aggregate $273.7 million rates-based increase resulting from higher average daily rates earned across all of INSW’s fleet sectors. Significant days-based increases in the Suezmax and MR fleets, which reflects the growth in the vessel count in these fleets that resulted from the Merger, also contributed a total of $75.5 million to the increase in TCE revenues.

See Note 5,4, “Business and Segment Reporting,” to the accompanying condensed consolidated financial statements for additional information on the Company’s segments, including equity in ~~income~~results of affiliated companies and reconciliations of (i) time charter equivalent revenues to shipping revenues and (ii) adjusted income/(loss) from vessel operations for the segments to income/(loss) before income taxes, as reported in the condensed consolidated statements of operations.

3532

INTERNATIONAL SEAWAYS, INC.

Crude Tankers


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands, except daily rate amounts)		2022		2021		2022		2021		2023		2022		2023		2022
TCE revenues	$	75,192	$	34,771	$	171,124	$	101,817	$	148,913	$	59,456	$	278,197	$	95,932
Vessel expenses		(24,713)		(24,384)		(72,525)		(65,327)		(29,015)		(24,588)		(54,042)		(47,811)
Charter hire expenses		(3,715)		(4,106)		(11,773)		(12,182)		(4,060)		(4,116)		(6,550)		(8,059)
Depreciation and amortization		(15,771)		(15,963)		(46,109)		(42,005)		(19,318)		(15,187)		(36,544)		(30,339)
Adjusted income/(loss) from vessel operations ^(a)	$	30,993	$	(9,682)	$	40,717	$	(17,697)
Adjusted income from vessel operations ^(a)									$	96,520	$	15,565	$	181,061	$	9,723
Average daily TCE rate	$	33,993	$	12,845	$	24,700	$	15,710	$	56,750	$	25,279	$	55,628	$	20,342
Average number of owned vessels ^(b)		18.0		30.5		18.7		24.2		20.0		18.2		19.0		19.1
Average number of vessels chartered-in		9.0		2.0		9.1		2.0		9.5		9.1		9.4		9.1
Number of revenue days ^(c)		2,212		2,707		6,928		6,481		2,624		2,352		5,001		4,716
Number of ship-operating days: ^(d)
Owned vessels		1,656		2,810		5,114		6,611		1,816		1,658		3,438		3,458
Vessels bareboat chartered-in under operating leases ^(e)		828		184		2,457		546
Vessels bareboat chartered-in under leases ^(e)										846		819		1,679		1,629
Vessels spot chartered-in under operating leases ^(f)		1		—		14		—		16		13		16		13

(a)	Adjusted ~~income/(loss)~~income from vessel operations by segment is before general and administrative expenses, third-party debt modification fees ~~merger and integration related costs~~ and loss/(gain) on disposal of vessels and other property, net of impairments.

(b)	The average is calculated to reflect the addition and disposal of vessels during the period.

(c)	Revenue days represent ship-operating days less days that vessels were not available for employment due to repairs, drydock or lay-up. Revenue days are weighted to reflect the Company’s interest in chartered-in vessels.

(d)	Ship-operating days represent calendar days.

(e)	~~Includes six~~Represents VLCCs and ~~one Aframax~~Aframaxes that secure lease financing arrangements.

(f)	The Company’s Crude Tankers Lightering business spot chartered-in one vessel under an operating lease during the three and ~~nine~~six months ended ~~September~~June 30, 2023 and 2022, respectively, for a full service lightering ~~job.~~jobs.

3633

INTERNATIONAL SEAWAYS, INC.

The following tables provide a breakdown of TCE rates achieved for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, between spot and fixed earnings and the related revenue days. The information in this table is based, in part, on information provided by the commercial pools in which the segment’s vessels participate and excludes commercial pool fees/commissions averaging approximately ~~$985~~$690 and ~~$667~~$806 per day for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$837~~$977 and ~~$635~~$768 per day for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, as well as activity in the Crude Tankers Lightering business and revenue and revenue days for which recoveries were recorded by the Company under its loss of hire insurance policies.


	2022				2021				2023				2022
	Spot Earnings		Fixed Earnings		Spot Earnings		Fixed Earnings		Spot Earnings		Fixed Earnings		Spot Earnings		Fixed Earnings
Three Months Ended September 30,
Three Months Ended June 30,
VLCC:
Average rate	$	24,427	$	43,905	$	10,686	$	43,893	$	52,307	$	43,056	$	16,441	$	43,903
Revenue days		812		92		761		92		781		294		808		91
Suezmax ⁽¹⁾:
Suezmax:
Average rate	$	34,244	$	27,685	$	10,650	$	26,604	$	61,267	$	30,990	$	23,684	$	26,698
Revenue days		849		92		748		90		988		181		963		91
Aframax:
Average rate	$	38,287	$	—	$	11,361	$	25,746	$	53,482	$	—	$	34,116	$	—
Revenue days		366		—		276		76		364		—		326		—
Panamax:
Average rate	$	—	$	—	$	9,755	$	11,054
Revenue days		—		—		151		264

Nine Months Ended September 30,
Six Months Ended June 30,
VLCC:
Average rate	$	17,739	$	44,111	$	13,345	$	45,517	$	49,342	$	44,452	$	14,364	$	44,260
Revenue days		2,421		218		2,170		338		1,561		406		1,609		126
Suezmax ⁽¹⁾:
Suezmax:
Average rate	$	23,090	$	27,004	$	12,189	$	26,604	$	59,723	$	31,163	$	18,405	$	26,658
Revenue days		2,872		273		1,110		90		1,984		312		2,023		181
Aframax:
Aframax⁽¹⁾:
Average rate	$	29,215	$	—	$	10,554		25,746	$	52,184	$	—	$	23,979	$	—
Revenue days		999		—		812	$	76		694		—		633		—
Panamax:
Average rate	$	20,166	$	—	$	12,812	$	11,046	$	—	$	—	$	20,356	$	—
Revenue days		70		—		332		1,303		—		—		70		—

(1)

During the ~~three~~six months ended ~~September~~June 30, ~~2021, Suezmaxes acquired by~~2023, one of the ~~Company through the Merger were~~Company’s Aframaxes was employed on a transitional ~~voyages~~voyage in the spot market ~~prior to delivering to Penfield Maritime’s Suezmax~~outside of its ordinary course operations in the Dakota Tankers’ Aframax Pool. ~~These~~Such transitional ~~voyages are~~voyage is excluded from the ~~tables~~table above.

During the ~~third~~second quarter of ~~2022,~~2023, TCE revenues for the Crude Tankers segment increased by ~~$40.4~~$89.5 million, or ~~116%~~150%, to ~~$75.2~~$148.9 million from ~~$34.8~~$59.5 million in the ~~third~~second quarter of ~~2021.~~2022. Such increase principally resulted from (i) an aggregate rates-based increase in the VLCC, Suezmax ~~VLCC~~ and Aframax fleets of ~~$42.5~~$79.3 million due to significantly higher average daily blended rates in these ~~sectors. Such increase was partially offset by~~sectors, (ii) a ~~$4.3~~$3.9 million increase in the Crude Tankers Lightering business, (iii) an aggregate $3.9 million days-based ~~decrease~~increase in the ~~Panamax~~Suezmax and Aframax fleets, which reflected 153 fewer off-hire days in the current period and (iv) a $3.2 million days-based increase in the VLCC fleet, ~~driven by~~which reflected the ~~sale~~delivery of ~~four 2002-built Panamaxes~~three dual-fuel LNG VLCC newbuilds between March 2023 and ~~one 2003-built Panamax between August and December 2021 and the Company taking advantage of the strong demand for steel to recycle its two remaining Panamaxes in April 2022.~~May 2023.

Vessel expenses increased by ~~$0.3~~$4.4 million to ~~$24.7~~$29.0 million in the ~~third~~second quarter of ~~2022~~2023 from ~~$24.4~~$24.6 million in the ~~third~~second quarter of ~~2021.~~2022. Such increase ~~was driven by larger drydock deviation and average daily crewing costs, and~~reflects the ~~timing and cost of stores and spares, offset substantially by the impact of the sales in the Panamax fleet~~VLCC newbuild deliveries described above. Charter hire expenses decreased marginally due to the impact of the bareboat charters for two of the Company’s Aframaxes being classified as finance leases subsequent to the Company providing notice in December 2022 of its intention to exercise its purchase options under the bareboat charters (such options were ultimately executed in March 2023 and April 2023), offset to a large extent by ~~$0.4~~increased charter hire expense in the Crude Tankers Lightering business. Depreciation and amortization increased by $4.1 million to ~~$3.7 million from $4.1~~$19.3 million in the ~~third~~current quarter from $15.2 million in the first quarter of ~~2021 due to lower charter hire expense spend in our Crude Tankers Lightering~~2022 principally as a result of (i) the impact of drydockings and ballast water treatment system and

3734

INTERNATIONAL SEAWAYS, INC.

~~business.~~ Depreciation and amortization decreased by $0.2 million to $15.8 million in the current quarter from $16.0 million in the third quarter of 2021. Such decrease resulted principally from the impacts of the Panamax sales noted above, offset to a large degree by the impacts of drydockings and ballast water treatment system and scrubber installations performed during ~~2021~~2022 and ~~2022. The scrubber installation~~the first two quarters of 2023, (ii) $0.7 million in depreciation in the second quarter of 2023 relating to the two Aframaxes purchased by the Company as noted above, and (iii) $2.0 million relating to the commencement of depreciation on ~~one of~~ the Company’s ~~2012-built Suezmaxes was completed in September 2022.~~three dual-fuel LNG VLCC newbuilds.

Excluding depreciation and amortization and general and administrative expenses, operating income for the Crude Tankers Lightering business was ~~$4.1~~$5.2 million for the ~~third~~second quarter of ~~2022~~2023 compared ~~to $1.3~~with $3.1 million for the ~~third~~second quarter of ~~2021,~~2022. The increase reflects an increase in the average rate earned per operation in the 2023 period compared with the ~~increase principally attributable to performing 126~~comparable period in 2022. Activity levels were largely consistent period-over-period, with 103 service support only lighterings ~~during the three months ended September 30, 2022, which is an increase of 39 when compared to the 87~~and one full-service lightering being performed during the three months ended ~~September~~June 30, ~~2021.~~2023 compared to the 104 service support only lighterings and one full-service lightering that were performed during the three months ended June 30, 2022.

During the first ~~nine~~six months of ~~2022,~~2023, TCE revenues for the Crude Tankers segment increased by ~~$69.3~~$182.3 million, or ~~68%~~190%, to ~~$171.1~~$278.2 million from ~~$101.8~~$95.9 million in the first ~~nine~~six months of ~~2021.~~2022. Such increase principally resulted from (i) an aggregate rates-based increase in the VLCC, Suezmax ~~Aframax, VLCC~~ and ~~Panamax~~Aframax fleets of ~~$61.2~~$167.7 million due to significantly higher average daily blended rates in these sectors, ~~and~~ (ii) a ~~$18.0~~$9.5 million increase in the Crude Tankers Lightering business, (iii) an aggregate $3.7 million days-based increase in the Suezmax and Aframax fleets, which reflected 181 fewer off-hire days in the current period and (iv) a $3.6 million days-based increase in the VLCC fleet, which reflected the ~~Company’s acquisition~~delivery of ~~13 Suezmaxes as a part of the Merger, two of which have been subsequently disposed of by the Company.~~three dual-fuel LNG VLCC newbuilds noted above. These increases were partially offset by (v) a ~~$17.0~~$2.3 million days-based decrease in the Panamax fleet ~~driven by~~due to the ~~sale~~Company’s recycling of ~~all seven vessels~~its two remaining Panamaxes in ~~this fleet between August 2021 and~~ April ~~2022 described above.~~2022.

Vessel expenses increased by ~~$7.2~~$6.2 million to ~~$72.5~~$54.0 million in the first ~~nine months~~half of ~~2022~~2023 from ~~$65.3~~$47.8 million in the first ~~nine months~~half of ~~2021.~~2022. Such increase was principally driven by the ~~vessels acquired~~VLCC newbuild deliveries described above, along with increased costs of stores, lubricating oils and spares due to the timing of delivery. Charter hire expenses decreased by $1.5 million in the ~~Merger, partially offset by~~current year’s period principally due to the impact of the ~~vessel sales described above.~~transactions relating to the two previously bareboat chartered-in Aframaxes detailed above, partially offset by a $1.6 million increase of charter hire expense in the Crude Tankers Lightering business. Depreciation and amortization increased by ~~$4.1~~$6.2 million to ~~$46.1~~$36.5 million in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 from ~~$42.0~~$30.3 million in the prior year’s comparable period. ~~Such increase resulted principally from the net impact~~The drivers of the ~~changes in~~increase were consistent with those which drove the ~~Suezmax and Panamax fleets noted~~quarter-over-quarter increase described above.

Excluding depreciation and amortization and general and administrative expenses, operating income for the Crude Tankers Lightering business was ~~$8.1 million during the first nine months of 2022 compared to $3.6~~$11.1 million for the first ~~nine months~~half of ~~2021.~~2023 compared to $4.0 million for the first half of 2022, with the increase reflecting an increase in the average rate earned per operation in the 2023 period compared with the comparable period in 2022. Incremental lightering activity levels in the current year’s period ~~drove~~also contributed to the increase, as one full-service lightering and ~~310~~225 service support only lighterings were performed in the ~~current year’s period,~~first half of 2023, as compared ~~to 253~~with one full-service lightering and 184 service support only lighterings in the ~~prior year’s period.~~first half of 2022.

INTERNATIONAL SEAWAYS, INC.

Product Carriers


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands, except daily rate amounts)		2022		2021		2022		2021		2023		2022		2023		2022
TCE revenues	$	159,355	$	38,197	$	346,936	$	61,038	$	139,422	$	126,083	$	293,458	$	187,582
Vessel expenses		(33,852)		(33,790)		(105,921)		(47,050)		(36,136)		(34,975)		(69,878)		(72,069)
Charter hire expenses		(4,082)		(1,573)		(11,026)		(5,102)		(6,442)		(3,577)		(12,752)		(6,943)
Depreciation and amortization		(11,931)		(9,828)		(35,816)		(17,578)		(13,101)		(12,044)		(25,395)		(23,885)
Adjusted income/(loss) from vessel operations	$	109,490	$	(6,994)	$	194,173	$	(8,692)
Adjusted income from vessel operations									$	83,743	$	75,487	$	185,433	$	84,685
Average daily TCE rate	$	35,186	$	9,448	$	26,135	$	10,267	$	33,507	$	28,244	$	35,597	$	21,448
Average number of owned vessels		41.0		47.3		44.4		22.6		39.0		44.0		39.4		46.1
Average number of vessels chartered-in		8.0		1.3		6.8		1.3		7.6		6.9		7.7		6.2
Number of revenue days		4,529		4,043		13,275		5,945		4,161		4,464		8,244		8,746
Number of ship-operating days:
Owned vessels		3,772		4,354		12,118		6,164		3,549		4,005		7,131		8,346
Vessels bareboat chartered-in under operating leases ^(a)		460		—		1,099		—
Vessels time chartered-in under operating leases		277		124		768		368
Vessels bareboat chartered-in under leases ^(a)										455		382		905		639
Vessels time chartered-in under leases										234		246		497		491

(a)	~~Includes one~~Represents an LR2 and ~~four~~ MRs that secure lease financing arrangements.

~~INTERNATIONAL SEAWAYS, INC.~~

INTERNATIONAL SEAWAYS, INC.

for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, as well as revenue and revenue days for which recoveries were recorded by the Company under its loss of hire insurance policies.


	2022				2021				2023				2022
	Spot Earnings		Fixed Earnings		Spot Earnings		Fixed Earnings		Spot Earnings		Fixed Earnings		Spot Earnings		Fixed Earnings
Three Months Ended September 30,
LR2:
Three Months Ended June 30,
LR2⁽¹⁾:
Average rate	$	—	$	17,149	$	—	$	17,797	$	25,594	$	17,829	$	—	$	17,143
Revenue days		—		89		—		92		41		50		—		91
LR1⁽¹⁾:
LR1⁽²⁾:
Average rate	$	40,973	$	—	$	12,476	$	—	$	63,608	$	—	$	25,910	$	—
Revenue days		830		—		523		—		780		—		787		—
MR⁽²⁾:
MR⁽³⁾:
Average rate	$	35,986	$	—	$	10,000	$	15,730	$	28,331	$	20,819	$	30,436	$	19,175
Revenue days		3,411		—		2,668		124		2,954		309		3,386		19
Handy:
Average rate	$	—	$	—	$	6,311	$	—	$	—	$	—	$	19,521	$	—
Revenue days		—		—		319		—		—		—		126		—

Nine Months Ended September 30,
LR2:
Six Months Ended June 30,
LR2⁽¹⁾:
Average rate	$	—	$	17,146	$	—	$	17,787	$	25,594	$	18,588	$	—	$	17,144
Revenue days		—		270		—		273		41		140		—		181
LR1⁽¹⁾:
LR1⁽²⁾:
Average rate	$	29,701	$	—	$	13,634	$	—	$	67,271	$	—	$	23,314	$	—
Revenue days		2,294		—		1,438		—		1,580		—		1,465		—
MR⁽²⁾:
MR⁽³⁾:
Average rate	$	27,191	$	21,023	$	9,797	$	15,730	$	29,934	$	20,283	$	22,576	$	16,148
Revenue days		9,912		75		3,453		124		6,041		399		6,501		75
Handy:
Average rate	$	14,167	$	—	$	6,311	$	—	$	—	$	—	$	14,200	$	—
Revenue days		469		—		319		—		—		—		469		—

(1)

During the ~~2022~~three and ~~2021 periods, each of~~six months ended June 30, 2023, the Company’s ~~LR1s participated~~LR2 was employed on a transitional voyage in the ~~Panamax International Pool~~spot market subsequent to the expiry of its time charter and ~~transported crude oil cargoes exclusively.~~prior to joining the Hafnia LR2 Pool.

(2)	In order to take advantage of market conditions and optimize economic performance, during the 2023 and 2022 periods, management employed all of the Company’s LR1 product carriers, which currently operate in the Panamax International pool, exclusively in the transportation of crude oil cargoes.

(3)

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2022 and the three months ended September 30, 2021, MRs acquired by the Company through the Merger were~~2023 one MR was employed on transitional voyages ~~prior~~in the spot market outside of its ordinary course operations in Norden’s MR Pool due to ~~delivering to pools. These~~a change in technical management. Such transitional voyages are excluded from the ~~tables~~table above.

During the ~~third~~second quarter of ~~2022,~~2023, TCE revenues for the Product Carriers segment increased by ~~$121.2~~$13.3 million, or ~~317%~~11%, to ~~$159.4~~$139.4 million from ~~$38.2~~$126.1 million in the ~~third~~second quarter of ~~2021.~~2022. The growth in TCE revenues was primarily as a result of ~~substantial period-over-period increases~~a significant quarter-over-quarter increase in average daily ~~blended~~ rates earned byin the ~~MR and~~ LR1 fleet ~~sectors,~~sector, which accounted for a rates-based increase of ~~approximately $114.5~~$29.2 million. ~~Also contributing~~Partially offsetting such increase was (i) an $8.5 million rates-based decrease in the MR sector due to lower daily rates earned in the current quarter, (ii) a $5.0 million days-based decline in the MR sector, which reflected the sales of three MRs between May 2022 and March 2023, and (iii) a $2.4 million decrease in TCE revenues due to the ~~increased TCE revenues were days-based increases. In conjunction with the Merger, the Company acquired 44 MRs. The Company subsequently sold seven~~sales of the ~~MRs during the third quarter of 2021, one during March 2022, and one~~Company’s four remaining Handysize vessels during the second quarter of 2022. ~~The net effect of these transactions, and 305 fewer off-hire days~~

3937

INTERNATIONAL SEAWAYS, INC.

~~during the current period, were the primary drivers of a 501-day increase in MR revenue days during the current year’s quarter, which contributed a $4.6~~Vessel expenses increased by $1.2 million ~~days-based increase in TCE revenues. Additionally, there was a $3.7~~to $36.1 million ~~days-based increase~~ in the LR1 fleet, which reflected (i) the deliveries of two time chartered-in 2008-built LR1s between August and October 2021, and one time chartered-in 2009-built LR1 in February 2022, and (ii) the purchase of a 2011-built LR1 in February 2022, partially offset by (iii) the redelivery of a 2006-built LR1 to its owners at the expiry of its two year charter in August 2021. The Company also acquired six Handysize vessels in the Merger, and subsequently sold two in the fourthsecond quarter of ~~2021, and the remaining four during~~2023 from $35.0 million in the second quarter of 2022. ~~These Handysizes contributed a total of $1.6 million in TCE revenues during the third quarter of 2021, and no TCE revenues during the third quarter of 2022.~~

~~Vessel expenses increased by $0.1 million to $33.9 million in the third quarter of 2022 from $33.8 million in the third quarter of 2021.~~ Such increase reflects ~~the impacts of the net~~an increase in ~~MR operating days~~costs for stores and ~~the purchase of the 2011-built LR1 described above,~~spares, partially offset ~~in large part~~ by the MR and Handysize sales ~~noted~~referenced above. Charter hire expenses increased by ~~$2.5~~$2.9 million to ~~$4.1~~$6.4 million in the current quarter from ~~$1.6~~$3.6 million in the ~~third~~second quarter of ~~2021,~~2022, primarily as a result of ~~the~~increased daily rates for two time chartered-in LR1s ~~described above.~~upon the Company’s extension of such time charters in October 2022 and May 2023, respectively. Depreciation and amortization increased by ~~$2.1~~$1.1 million to ~~$11.9~~$13.1 million in the current quarter from ~~$9.8~~$12.0 million in the prior year’s quarter. Such increase resulted primarily from ~~the additions to the MR and LR1 fleets noted above,~~increased drydock amortization, offset by the impact of the sales of the MR and Handysize ~~vessels.~~vessels described above.

During the first ~~nine months~~half of ~~2022,~~2023, TCE revenues for the Product Carriers segment increased by ~~$285.9~~$105.9 million, or ~~468%~~56%, to ~~$346.9~~$293.5 million from ~~$61.0~~$187.6 million in the first ~~nine months~~half of ~~2021.~~2022. The ~~net effect of the Merger and subsequent vessel sales discussed above, partially offset by 354 more off-hire days during the current period (primarily drydock related), were the primary drivers~~growth in TCE revenues was primarily as a result of a ~~6,348-day~~substantial period-over-period increases in average daily blended rates earned in the LR1 and MR fleet sectors, which accounted for a rates-based increase ~~in MR revenue days during~~of $112.5 million. Also contributing to the ~~current year’s period, which contributed a $57.6 million days-based increase in~~increased TCE ~~revenues. Additionally, there~~revenues was a ~~$11.1~~$2.6 million days-based increase in the LR1 fleet, which reflected (i) a net increase in time chartered-in days, and (ii) the ~~transactions described above and 149 fewer off-hire days~~purchase of a 2011-built LR1 in February 2022. Partially offsetting such increases was a $9.7 million days-based decrease in the ~~current period. The~~MR and Handysize vessels that were acquired as part of the Merger and subsequently sold contributed a total of $6.4 million in TCE revenues during the first nine months of 2022, versus $1.6 million in the prior year’s period. Consistent with the quarter-over-quarter discussion above, the strong rate environment for Product Carriers in 2022 accounted for a rates-based increase in TCE revenues of approximately $212.6 million for the nine months ended September 30, 2022 comparedsectors, principally due to ~~the equivalent 2021 period.~~vessel sales noted above.

~~Vessel expenses increased by $58.9 million to $105.9 million in the first nine months of 2022 from $47.1 million in the first nine months of 2021.~~ ~~Such increase reflects additions to the fleet as a result of the Merger.~~ Charter hire expenses increased by ~~$5.9~~$5.8 million in the first six months of 2023 to $12.8 million compared to $6.9 million in the corresponding 2022 period, due to an increase in LR1 chartered-in days and their associated daily rates in the current year’s period as discussed above. Depreciation and amortization increased by $1.5 million to ~~$11.0~~$25.4 million in the current period from ~~$5.1 million in the prior year’s period, primarily as a result of the time chartered-in LR1s described above.~~ ~~Depreciation and amortization increased by $18.2 million to $35.8 million in the current period from $17.6~~$23.9 million in the prior year’s period. Such increase resulted ~~primarily~~ from the ~~net vessel additions noted~~purchase of the LR1, increased drydock amortization, and the MR and Handysize sales described above.

General and Administrative ~~Expenses:~~Expenses

During the ~~third~~second quarter of ~~2022,~~2023, general and administrative expenses increased by ~~$3.7~~$0.7 million to ~~$11.8~~$11.5 million from ~~$8.1~~$10.8 million in the ~~third~~second quarter of ~~2021.~~2022. The primary driver for such increase was higher compensation and benefits costs of $0.5 million, of which $0.4 million relates to non-cash stock compensation.

For the six months ended June 30, 2023, general and administrative expenses increased by $1.8 million to $22.8 million from $21.0 million for the same period in 2022. The primary drivers for such increase ~~were comprised of (i) increased~~was higher compensation and benefits costs of $1.8 million, of which ~~$2.1 million relates to increases in the estimated annual employee bonus accrual based upon the Company’s strong operating and financial performance thus far in 2022, and $0.4~~$1.1 million relates to non-cash stock compensation, ~~(ii) $0.5 million of costs relating to shareholder activism-related matters,~~ and ~~(iii)~~ increased travel and entertainment ~~expenses~~costs of $0.4 million, reflecting ~~the impact~~further easing of ~~the lifting of COVID-19~~COVID related travel ~~restrictions.~~

~~For~~restrictions in 2023 compared to the ~~nine months ended September 30, 2022, general and administrative expenses increased by $9.7 million to $32.9 million from $23.1 million for the same period in 2021. The primary drivers~~first half of the increase were comprised of (i) increased compensation and benefits costs of $5.2 million, of which $2.1 million relates to increases in the estimated annual employee bonus accrual based upon the Company’s strong operating and financial performance thus far in 2022, and $0.9 million relates to non-cash stock compensation, (ii) $2.0 million of costs relating to shareholder activism-related matters, financing and corporate projects that were ultimately not pursued to completion, and increased insurance costs, and (iii) increased travel and entertainment expenses of $0.8 million reflecting the impact of the lifting of COVID-19 related travel restrictions.2022.

~~INTERNATIONAL SEAWAYS, INC.~~

~~Equity in Income of Affiliated Companies:~~

~~During the three and nine months ended September 30, 2022, equity~~

Equity in ~~income~~Results of ~~affiliated companies decreased by $5.7 million and $16.1 million compared with the corresponding 2021 periods. These decreases were attributable to the sale of the Company’s~~Affiliated Companies

The Company sold its interest in the FSO joint ventures on June 7, 2022. ~~The Company recorded~~During the three and six months ended June 30, 2022, equity in results of affiliated companies was a loss of $5.2 million and income of $0.4 million, respectively, which reflected the Company’s recognition of a loss on ~~such~~the sale of $9.5 million.

Other Income/(Expense)

Other income was $3.4 million and $7.7 million for the three and six months ended June 30, 2023, respectively, compared with $0.6 million and $0.8 million of other expenses for the three and six months ended June 30, 2022. Other income for the current 2023 periods includes $3.5 million and $7.6 million, respectively, of interest income on invested cash, which reflects the impact of a significant increase in the average balance of invested cash and the rates earned on such investments during three and six months ended June 30, 2023 compared to the corresponding periods of 2022. Both periods also reflect net actuarial gains and currency gains (2023 period) or losses (2022 period) associated with the retirement benefit obligation in the United Kingdom. See Note 8, “Debt,” in the accompanying condensed consolidated financial statements for information related to the write-off of unamortized deferred financing costs associated with mandatory principal prepayments included in other income/(expense) in the 2023 periods.

INTERNATIONAL SEAWAYS, INC.

Interest ~~Expense:~~Expense

The components of interest expense are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)		2022		2021		2022		2021		2023		2022		2023		2022
Interest before items shown below	$	16,872	$	7,897	$	42,766	$	16,631	$	21,007	$	14,193	$	41,749	$	25,895
Interest cost on defined benefit pension obligation		109		95		351		287		215		117		545		241
Impact of interest rate hedge derivatives		(447)		2,821		220		8,239		(2,767)		(907)		(5,151)		667
Capitalized interest		(1,202)		(174)		(2,707)		(232)		(541)		(845)		(2,282)		(1,505)
Interest expense	$	15,332	$	10,639	$	40,630	$	24,925	$	17,914	$	12,558	$	34,861	$	25,298

Interest expense was $15.3 million and $10.6 million for the three months ended September 30, 2022 and 2021, respectively, and $40.6 million and $24.9 million for the nine months ended September 30, 2022 and 2021, respectively. These increases are attributable to higher average outstanding debt balancesincreased in the ~~current year~~2023 periods compared to the ~~2021~~corresponding 2022 periods ~~principally attributable to~~presented in the ~~debt~~ ~~that was assumed in connection with the Merger, the Macquarie Credit Facility and the refinancing~~ table above as a result of ~~then existing debt between November 2021 and May 2022 with resulting higher principal amounts outstanding. In addition,~~(i) higher average floating interest rates during the ~~second~~three and ~~third quarters of 2022~~six months ended June 30, 2023 compared with the corresponding ~~periods~~period of ~~2021 contributed~~2022, (ii) the impact of two lease financings entered into during the second quarter of 2022 and (iii) the post-delivery interest expense related to ~~such increase.~~BoComm Lease Financing. See Note ~~10,~~8, “Debt,” in the accompanying condensed consolidated financial statements for further information on the Company’s debt facilities.

~~Taxes:~~Taxes

The Company qualifies for an exemption from U.S. federal income taxes under Section 883 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) and U.S. Treasury Department regulations for the ~~2022~~2023 calendar year as less than 50 percent of the total value of the Company’s stock is held by one or more shareholders who own 5% or more of the Company’s stock for more than half of the days of ~~2022.~~ 2023. There can be no assurance at this time that INSW will continue to qualify for the Section 883 exemption beyond calendar year ~~2022.~~2023. Should the Company not qualify for the exemption in the future, INSW will be subject to U.S. federal income taxation of 4% of its U.S. source shipping income on a gross basis without the benefit of deductions. Shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the U.S. will be considered to be 50% derived from sources within the United States. Shipping income attributable to transportation that both begins and ends in the U.S. would be considered to be 100% derived from sources within the United States, but INSW does not and cannot engage in transportation that gives rise to such income.

EBITDA and Adjusted ~~EBITDA:~~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 are presented to provide investors with meaningful additional information that management uses to monitor ongoing operating results and evaluate trends over comparative periods. EBITDA and Adjusted EBITDA do not represent, and should not be considered a substitute for, net income or cash flows from operations determined in accordance

~~INTERNATIONAL SEAWAYS, INC.~~

with GAAP. EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of our results reported under GAAP. Some of the limitations are:

●

EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;

●

EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; and

●

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 by companies as a measure of operating results and performance, neither of those items as prepared by the Company is necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation.

INTERNATIONAL SEAWAYS, INC.

The following table reconciles net ~~income/(loss),~~income, as reflected in the condensed consolidated statements of operations, to EBITDA and Adjusted EBITDA:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)		2022		2021		2022		2021		2023		2022		2023		2022
Net income/(loss)	$	113,427	$	(67,878)	$	169,462	$	(100,026)
Net income									$	153,762	$	69,036	$	326,395	$	56,035
Income tax provision		7		35		63		36		381		52		380		56
Interest expense		15,332		10,639		40,630		24,925		17,914		12,558		34,861		25,298
Depreciation and amortization		27,728		25,806		81,984		59,639		32,445		27,256		61,993		54,256
Noncontrolling interests		—		(312)		—		(312)
EBITDA		156,494		(31,710)		292,139		(15,738)		204,502		108,902		423,629		135,645
Amortization of time charter contracts acquired		159		1,743		842		1,743		—		344		—		684
Third-party debt modification fees		71		26		1,158		26		13		900		420		1,087
(Loss)/gain on disposal of vessels and other assets, net of impairments										26		(8,102)		(10,722)		(9,478)
Loss on sale of investments in affiliated companies		1		—		9,513		—		—		9,512		—		9,512
Loss/(gain) on disposal of vessels and other property, including impairments		139		(9,104)		(9,339)		(5,088)
Gain on sale of interest in DASM		(135)		—		(135)		—
Write-off of deferred financing costs		349		—		610		—		555		128		721		261
Merger and integration related costs		—		47,079		—		47,560
Adjusted EBITDA	$	157,078	$	8,034	$	294,788	$	28,503	$	205,096	$	111,684	$	414,048	$	137,711

Liquidity and Sources of Capital:

Our business is capital intensive. Our ability to successfully implement our strategy is dependent on the continued availability of capital on attractive terms. In addition, our ability to successfully operate our business to meet near-term and long-term debt repayment obligations is dependent on maintaining sufficient liquidity.

Liquidity

As of June 30, 2023, we had total liquidity on a consolidated basis of $493.5 million comprised of $116.0 million of cash, $120.0 million of short-term investments, and $257.4 million of undrawn revolver capacity.

Working capital at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 was ~~positive $288.7~~$312.4 million and ~~negative $10.1~~$385.2 million, respectively. Current assets are highly liquid, consisting principally of cash, interest-bearing deposits, short-term investments consisting of time deposits with original maturities of between 9091 and 180 days, receivables, and ~~receivables.~~an advance payment on debt. Current liabilities include current installments of long-term debt and finance lease liabilities of ~~$167.0~~$199.8 million and ~~$178.7~~$204.7 million at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

The Company’s total cash ~~increased~~decreased by ~~$76.6~~$127.7 million during the ~~nine~~six months ended ~~September~~June 30, ~~2022.~~2023. This ~~increase~~decrease reflects (i) $177.6 million of cash ~~provided by operating activities~~dividends paid to shareholders, (ii) $13.9 million of ~~$106.2~~shares repurchased, (iii) a $97.0 million ~~proceeds~~debt prepayment made in conjunction with an amendment to the $750 Million Credit Facility, (iv) a $28.9 million debt prepayment made to $750 Million Credit Facility, which resulted in the release of one Suezmax vessel from the ~~sale~~collateral package, (v) a $46.4 million of advance payment on the ~~Company’s 50% ownership interest in the FSO Joint Venture of $140.1, proceeds from disposal of vessels and other assets of $79.5 million, and proceeds from issuance of lease financing,~~

~~INTERNATIONAL SEAWAYS, INC.~~

~~net of issuance and deferred financing costs, of $88.8 million. Such cash inflows were partially offset by $87.6~~COSCO Lease Financing on June 30, 2023, (vi) $18.9 million in expenditures for vessels and other property including construction costs for three dual-fuel ~~LNG-powered~~LNG VLCCs, a net ~~outflow~~ of ~~$106.6~~proceeds from the issuance of related lease financing, (vii) $81.4 million ~~related to debt extinguishment,~~in scheduled principal amortization for the Company’s secured debt facilities and lease financing arrangements, and the refinancing of the $390 Million Credit Facility, $525 Million Credit Facility and $360 Million Credit Facility, and $25.0 million to redeem the aggregate principal outstanding of the 8.5% Senior Notes that were due in June 2023, $20.0(viii) $40.0 million in ~~expenditures made under the Company’s stock repurchase program, $80.0 million of~~net cash invested in ~~the~~ short-term investments, ~~described above~~ and (ix) $42.3 million in finance lease liability extinguishments relating to the Company exercising its options to purchase two 2009-built Aframaxes that it had been bareboat chartering-in. Such cash ~~dividends~~outflows were offset to a large extent by (i) cash provided by operating activities of ~~$14.8 million.~~$414.5 million, and (ii) proceeds from the disposal of vessels and other assets of $10.7 million, net of the prepayment of associated debt.

INTERNATIONAL SEAWAYS, INC.

Our cash and cash equivalents ~~balance~~balances generally exceed Federal Deposit Insurance Corporation insured limits. We place our cash and cash equivalents in what we believe to be credit-worthy financial institutions. In addition, certain of our money market accounts invest in U.S. Treasury securities or other obligations issued or guaranteed by the U.S. government or its agencies, floating rate and variable demand notes of U.S. and foreign corporations, commercial paper rated in the highest category by Moody’s Investor Services and Standard & Poor’s, certificates of deposit and time deposits, asset-backed securities, and repurchase agreements.

As of ~~September~~June 30, 2022, we had total liquidity on a consolidated basis of $475.5 million comprised of $175.5 million of cash (including $1.1 million of restricted cash), $80.0 million of short-term investments and $220.0 million of undrawn revolver capacity. Restricted cash of $1.1 million as of September 30, 2022 and December 31, 2021, respectively, represents legally restricted cash relating to the Macquarie Credit Facility, which is collateralized by three LR1 product carriers.

~~As of September 30, 2022,~~2023, we had total debt outstanding (net of original issue discount and deferred financing costs) of ~~$1,067.5~~$978.1 million and net debt to total capitalization of ~~37.9%~~30.0%, compared with ~~46.2%~~33.3% at December 31, ~~2021.~~2022.

Sources, Uses and Management of Capital

~~We have maintained a strong balance sheet, which has allowed us to take advantage of attractive strategic opportunities during the low end of~~During 2022, as the tanker cycle recovered from the historical lows of 2021, we increased our overall liquidity with vessel sales, a refinancing that increased the capacity of our revolving credit and cash from operations. With strong market conditions continuing in 2023, we have ~~maintained what we believe~~used incremental liquidity generated from operations to ~~be a prudent financial leverage for the current point~~invest in the ~~tanker cycle.~~fleet, reduce debt levels and make returns to shareholders.

In addition to future operating cash flows, our other future sources of funds are proceeds from issuances of equity securities, additional borrowings as permitted under our loan agreements and proceeds from the opportunistic sales of our vessels. Our current uses of funds are to fund working capital requirements, maintain the quality of our vessels, purchase vessels, pay newbuilding construction costs, comply with international shipping standards and environmental laws and regulations, repay or repurchase our outstanding loan facilities, pay a regular quarterly cash dividend, and from ~~time-to-time,~~time to time, repurchase shares of our common ~~stock.~~stock and pay supplemental cash dividends.

The following is a summary of the significant capital allocation activities the Company executed during the first ~~nine~~six months of ~~2022~~2023 and sources of capital the Company has at its disposal for future use as well as the Company’s current commitments for future uses of capital:

~~During~~On February 27, 2023, the first quarter of 2022, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.06 per share. The regular quarterly dividend was subsequently doubled to $0.12 per share for the second and third quarters of 2022. Pursuant to such dividend declarations, the Company made dividend payments totaling $14.8 million during the nine months ended September 30, 2022. The Company’s Board of Directors declared a regular quarterly cash dividend of $0.12 per share of common stock and a ~~special~~supplemental cash dividend of ~~$1.00~~$1.88 per share of common stock. Pursuant to such dividend declarations, the Company made dividend payments totaling $98.3 million on March 28, 2023. On May 4, 2023, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.12 per share of common stock and a supplemental dividend of $1.50 per share of common stock. Pursuant to such dividend declarations, the Company made dividend payments totaling $79.3 million on ~~November 7, 2022.~~June 28, 2023. On August 8, 2023, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.12 per share of common stock and a supplemental dividend of $1.30 per share of common stock. Both dividends will be paid on ~~December 22, 2022~~September 27, 2023 to stockholders of record as of ~~December 8, 2022.~~September 13, 2023.

~~Continuing our post-merger fleet optimization program, in January 2022,~~During the three months ended June 30, 2023, the Company ~~entered into memoranda~~repurchased and retired 366,483 shares of ~~agreements for the sale~~its common stock in open-market purchases, at an average price of ~~a 2010-built MR~~$38.03 per share, for a ~~sale price~~total cost of $16.5 million and the purchase of a 2011-built LR1 for a purchase price of $19.5 million with the same counterparty. The LR1 was delivered into our niche commercial pool, Panamax International, which has historically outperformed the market. The Company closed both transactions during the first quarter of 2022, recognizing a gain of $4.5 million on the sale of the 2010-built MR and a net cash outflow of $3.0 million representing the difference in value between the two vessels. The LR1 vessel replaced the MR as collateral under the $525 Million Credit Facility with no further mandatory principal repayment required. During the nine months ended September 30, 2022, the Company also delivered a 2008-built MR, one 2002-built Panamax,

~~INTERNATIONAL SEAWAYS, INC.~~

one 2004-built Panamax and four 2006-built Handysize product carriers to buyers. The aggregate net proceeds from the sale of these seven vessels after the prepayment of associated debt was approximately $54.0$13.9 million.

On May 12, 2022, the Company entered into a lease financing arrangement with Kabushiki Kaisha (“Kaisha”) for the sale and leaseback of a 2010-built MR, which was a $525 Million Facility Collateral Vessel, for a net sale price of $15.2 million (the “Kaisha Lease Financing”). The transaction generated net proceeds of $10.6 million, after prepaying $4.6 million of the $525 Million Facility Term Loan. Under the lease financing arrangement, the vessel is subject to an eight-year bareboat charter at a bareboat rate of $6,250 per day for the first four years, and $6,150 per day for the remaining four years, with purchase options exercisable commencing at the end of the fourth year and a $1.5 million purchase obligation at the end of the eight-year term.

On May 20, 2022, International Seaways Operating Corporation, the borrower, and certain of their subsidiaries entered into a credit agreement comprising $750 million of secured debt facilities (the “$750 Million Credit Facility”) with Nordea Bank Abp, New York Branch (“Nordea”), Crédit Agricole Corporate & Investment Bank (“CA-CIB”), BNP Paribas, DNB Markets Inc. and Skandinaviska Enskilda Banken AB (PUBL) (or their respective affiliates), as mandated lead arrangers and bookrunners; Danish Ship Finance A/S and ING Bank N.V., London Branch (or their respective affiliates), as mandated lead arrangers; and National Australia Bank Limited, as co-arranger. Nordea is acting as administrative agent, collateral agent and security trustee under the credit agreement, and CA-CIB is acting as sustainability coordinator. Capitalized terms used in this paragraph and elsewhere not otherwise defined herein shall have the meanings set forth in the credit agreement.

The $750 Million Credit Facility consists of (i) a five-year senior secured term loan facility in an aggregate principal amount of $530 million (the “$750 Million Facility Term Loan”) and (ii) a five-year revolving credit facility in an aggregate principal amount of $220 million (the “750 Million Facility Revolving Loan. The $750 Million Facility Term Loan contains an uncommitted accordion feature whereby, for a period of up to 24 months following the closing date, the amount of the loan thereunder may be increased up to an additional incremental $250 million (in increments of at least $10 million) for the acquisition of Additional Vessels, subject to certain conditions.

On May 24, 2022, the available amount of $530 million under the $750 Million Facility Term Loan was drawn in full, and $70 million of the $220 million available under the $750 Million Facility Revolving Loan was also drawn. Those proceeds, together with available cash, were used (i) to repay the $163 million outstanding principal balance under the $390 Million Credit Facility; (ii) to repay the $284 million outstanding principal balance under the $525 Million Credit Facility; (iii) to repay the $128 million outstanding principal balance under the $360 Million Credit Facility; and to pay certain expenses related to the refinancing, including certain structuring and arrangement fees, legal and administrative fees totaling $10.5 million.

The $750 Million Facility Term Loan amortizes in 19 quarterly installments of approximately $30.6 million (other than the final payment of $9.8 million) commencing November 20, 2022. The maturity date of the $750 Million Credit Facility is May 20, 2027, and is subject to acceleration upon the occurrence of certain events (as described in the credit agreement).

~~INTERNATIONAL SEAWAYS, INC.~~

~~The $70 million drawn under the $750 Million Facility Revolving Loan was repaid on June 15, 2022, using a portion of the proceeds from the sale of the FSO Joint Venture.~~

In August ~~2022,~~2023, the Company’s Board of Directors authorized an increase in the share repurchase program to ~~$60.0~~$50.0 million from ~~$33.3~~$26.1 million.

In December 2022 the Company tendered notice of its intention to exercise its options to purchase two 2009-built Aframaxes that it had been bareboat chartering-in. The aggregate purchase price for the two vessels was $43.0 million, ~~and extended~~representing an approximately 45% discount to the ~~expiration~~market price of the ~~program~~vessels. The first of the two vessels was purchased in March 2023, and the second in early April 2023.

On March 10, 2023 the Company entered into an amendment to ~~December 31, 2023. During~~ the ~~third quarter~~$750 Million Credit Facility agreement. Pursuant to the amendment, the Company (a) prepaid $97 million of ~~2022, share repurchases~~outstanding principal under the $750 Million Facility Term Loan; (b) obtained a release of ~~$20.0~~collateral vessel mortgages over 22 MR product carriers; and (c) received from the lenders additional revolving credit commitments in an aggregate amount of $40 million, ~~were executed~~which additional commitments constitute an increase to, and are subject to the same terms and conditions as, the previously-existing revolving credit commitments. Following the effectiveness of the amendment, the aggregate principal commitments available under ~~such program.~~the $750 Million Facility Revolving Loan was $257.4 million (none of which

INTERNATIONAL SEAWAYS, INC.

was outstanding) and the scheduled future quarterly principal amortization under the $750 Million Facility Term Loan decreased from $30.2 million to $27.7 million.

On ~~August 5, 2022,~~March 14, 2023 the Company ~~redeemed~~sold a 2008-built MR for approximately $20.5 million, saving the ~~$25~~Company the cost of having to conduct a third special survey and install a ballast water treatment system on the vessel. The sale also resulted in a mandatory principal prepayment of approximately $9.7 million of the $750 Million Facility Term Loan and a $0.4 million further reduction in the scheduled future quarterly principal amortization.

On May 19, 2023, the Company made another mandatory principal prepayment of $28.9 million towards the $750 Million Facility Term Loan, which resulted in the release of a 2017-built Suezmax vessel from the collateral package and the further reduction in the scheduled future quarterly principal amortization under the $750 Million Facility Term Loan from $27.3 million to $26.0 million.

In May 2023, the Company tendered notice of its intention to exercise its options to purchase one 2013-built Aframax and one 2014-built LR2, which were bareboat chartered-in under the COSCO Lease Financing arrangement as at June 30, 2023. The $46.4 million aggregate ~~principal outstanding~~purchase price for the two vessels consisted of the ~~8.5% Senior Notes due~~$45.2 million remaining debt balance of the COSCO Lease Financing and $1.2 million of purchase option premiums. The Company paid the aggregate purchase price in advance on June 30, 2023 and the transaction closed on July 3, 2023.

As of ~~September~~June 30, ~~2022,~~2023, the Company ~~has vessel construction commitments for three dual-fuel LNG-powered VLCCs. The Company also~~ has contractual commitments for the purchase and installation of 1911 ballast water treatment systems and ten Mewis ducts, and the final outstanding installment payments due for ~~the installation of a scrubber on one Suezmax and six~~four ballast water treatment systems that ~~have~~had been installed as of ~~September~~June 30, ~~2022~~2023. The Company’s debt service commitments and aggregate purchase commitments for vessel ~~construction and~~ betterments as of ~~September~~June 30, ~~2022,~~2023, are presented in the Aggregate Contractual Obligations Table below.

On August 8, 2023, the Company entered into agreements to construct two dual-fuel ready LNG 73,600 dwt LR1 Product Carriers at K Shipbuilding Co., Ltd.’s shipyard, subject to certain conditions customary to similar transactions. The two vessels are scheduled for delivery during the second half of 2025. The total construction cost for the vessels will be approximately $115 million, which will be paid for through a combination of long-term financing and available liquidity. The Company also entered into option agreements exercisable during the third quarter of 2023 to construct two other identical vessels at the same shipyard for delivery during the first quarter of 2026.

Outlook

~~We executed various~~Our strong balance sheet, as evidenced by a substantial level of liquidity, ~~enhancing initiatives during 2021~~30 unencumbered vessels, and ~~2022 that significantly~~ diversified ~~our~~ financing sources ~~and spread our~~with debt maturities spread out between ~~2025~~2026 and 2031, ~~putting the Company in a strong position to navigate through any period of weaker rates. Our balance sheet and diverse fleet,~~ positions us to support our operations over the next twelve months as we continue to advance our vessel employment strategy, which seeks to achieve the optimal mix of spot (voyage charter) and long-term (time charter) charters and our disciplined capital allocation strategy of fleet renewal, incremental debt reduction and ~~provides us with flexibility~~returns to ~~continue pursuing~~shareholders and pursue potential strategic opportunities that may arise within the diverse sectors in which we operate.

Off-Balance Sheet Arrangements

Pursuant to an agreement between INSW and the trustees of the OSG Ship Management (UK) Ltd. Retirement Benefits Plan (the “Scheme”), INSW guarantees the obligations of INSW Ship Management UK Ltd., a subsidiary of INSW, to make payments to the Scheme.

INTERNATIONAL SEAWAYS, INC.

Aggregate Contractual Obligations

A summary of the Company’s long-term contractual obligations as of ~~September~~June 30, ~~2022~~2023 follows:

Beyond

(Dollars in thousands)

2022

2023

2024

2025

2026

2027

Total
$750 Million Facility Term Loan - floating rate⁽¹⁾

$
37,651

$
152,127

$
143,438

$
134,699

$
127,349

$
9,945

$
605,209
Macquarie Credit Facility - floating rate⁽²⁾

1,000

3,680

3,055

12,885

—

—

20,620
ING Credit Facility - floating rate⁽²⁾

822

3,182

3,087

2,980

17,459

—

27,530
Ocean Yield Lease Financing - floating rate⁽²⁾

13,460

52,138

50,242

48,075

46,047

277,185

487,147
COSCO Lease Financing - floating rate⁽²⁾

2,158

8,457

8,072

7,697

7,321

30,819

64,524
BoComm Lease Financing - fixed rate⁽³⁾

—

24,255

23,827

23,761

23,761

211,756

307,360
Toshin Lease Financing - fixed rate⁽³⁾

558

2,418

2,223

2,160

2,160

11,308

20,827
Hyuga Lease Financing - fixed rate⁽³⁾

567

2,268

2,456

2,232

2,232

10,808

20,563
Kaiyo Lease Financing - fixed rate⁽³⁾

750

2,063

2,250

2,250

2,410

8,769

18,492
Kaisha Lease Financing - fixed rate⁽³⁾

563

2,250

2,250

2,437

2,225

8,929

18,654
Operating lease obligations⁽⁴⁾

Bareboat Charter-ins

1,582

4,532

—

—

—

—

6,114
Time Charter-ins

1,777

3,053

—

—

—

—

4,830
Office and other space

68

229

973

998

1,024

6,908

10,200
Vessel and vessel betterment commitments⁽⁵⁾

8,531

13,314

914

—

—

—

22,759
Total

$
69,487

$
273,966

$
242,787

$
240,174

$
231,988

$
576,427

$
1,634,829

~~INTERNATIONAL SEAWAYS, INC.~~


												Beyond
(Dollars in thousands)		2023		2024		2025		2026		2027		2027		Total
$750 Million Facility Term Loan - floating rate⁽¹⁾	$	60,584	$	116,622	$	110,364	$	42,645	$	—	$	—	$	330,215
ING Credit Facility - floating rate⁽²⁾		1,859		3,579		3,424		17,852		—		—		26,714
Ocean Yield Lease Financing - floating rate⁽³⁾		29,340		56,325		53,501		51,063		49,512		247,309		487,050
COSCO Lease Financing - floating rate⁽⁴⁾		45,225		—		—		—		—		—		45,225
BoComm Lease Financing - fixed rate⁽⁵⁾		11,978		23,826		23,762		23,762		23,762		189,860		296,950
Toshin Lease Financing - fixed rate⁽⁵⁾		1,116		2,223		2,160		2,160		2,151		9,157		18,967
Hyuga Lease Financing - fixed rate⁽⁵⁾		1,134		2,456		2,232		2,232		2,232		8,576		18,862
Kaiyo Lease Financing - fixed rate⁽⁵⁾		1,125		2,250		2,250		2,410		2,214		6,555		16,804
Kaisha Lease Financing - fixed rate⁽⁵⁾		1,125		2,250		2,438		2,225		2,214		6,715		16,967
Operating lease obligations
Time Charter-ins		5,937		12,627		5,624		—		—		—		24,188
Office and other space⁽⁶⁾		(105)		1,167		998		1,024		1,077		5,831		9,992
Vessel betterment commitments⁽⁷⁾		8,582		1,254		—		—		—		—		9,836
Total	$	167,900	$	224,579	$	206,753	$	145,373	$	83,162	$	474,003	$	1,301,770

(1)

Amounts shown include contractual interest obligations on $301.8 millionof outstanding floating rate debt estimated based on the applicable margin for the $750 Million Facility Term Loan of 2.40%, plus the fixed rate stated in the related interest rate swaps of 2.84% ~~for the $475 million notional amount and the effective three-month term SOFR of 3.05% for the remaining outstanding term loan balance.~~.

(2)	Amounts shown include contractual interest obligations of outstanding floating rate ~~debts~~debt estimated based on the applicable margin, plus credit adjustment spread of 0.26% and plus the effective three-month SOFR rate as of June 30, 2023 of 5.10% for the ING Credit Facility.

(3)

Amounts shown include contractual interest obligations on $326.6 million of outstanding floating rate debt estimated based on the applicable margin for the Ocean Yield Lease Financing of 4.05% plus the fixed rate stated in the interest rate swaps (assigned for accounting purposes) of 2.84% on $91.0 million of notional principal amount outstanding and the effective three-month SOFR rate as of June 30, 2023 of 5.08% and 0.26% of credit adjustment spread for the remaining outstanding principal under the Ocean Yield Lease Financing.

(4)

Amounts shown include contractual interest obligations of outstanding floating rate debt estimated based on the applicable margin plus the effective three-month LIBOR rate as of ~~September~~June 30, ~~2022~~2023 of ~~3.83%~~5.56% for the ~~Macquarie Credit Facility, 3.48% for the~~ COSCO ~~Lease Financing, 2.92% for the ING Credit Facility and 2.80% for the Ocean Yield~~ Lease Financing.

~~(3)~~(5)

Amounts shown include contractual implicit interest obligations of the lease financing under the bareboat charters. In addition, BoComm Lease Financing includes 3.5% interest during the construction period and 1% commitment fee, prior to the commencement of the bareboat charter. BoComm Lease Financing amounts include both the outstanding principal amount and the undrawn amount as of September 30, 2022 of $52.8 million and $192.0 million, respectively.

~~(4)~~(6)

~~As of September 30, 2022, the Company had charter-in commitments for four vessels on leases that are accounted for as operating leases.~~ The full amounts due under ~~bareboat charter-ins,~~ office and other space leases ~~and the lease component of the amounts due under long term time charter-ins~~ are discounted and reflected on the Company’s consolidated condensed balance sheet as lease liabilities with corresponding right of use asset balances.

~~(5)~~(7)

Represents the Company’s commitments under contracts for the purchase and installation of ballast water treatment systems on 2611 vessels, and ~~the~~ installation of ~~a scrubber~~mewis duct systems on ~~one Suezmax,~~ ten vessels~~and the Company’s commitment for the construction of three dual-fuel LNG-powered VLCCs not funded by the BoComm Lease Financing.~~.

Risk Management:

The Company is exposed to market risk from changes in interest rates, which could impact its results of operations and financial condition. The Company manages this exposure to market risk through its regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. To manage its interest rate risk in a cost-effective manner, the Company, from time-to-time, enters into interest rate swap, collar or cap agreements, in which it agrees to exchange various combinations of fixed and variable interest rates based on agreed upon notional amounts or to receive payments if floating interest

INTERNATIONAL SEAWAYS, INC.

rates rise above a specified cap rate. The Company uses such derivative financial instruments as risk management tools and not for speculative or trading purposes. In addition, derivative financial instruments are entered into with a diversified group of major financial institutions in order to manage exposure to nonperformance on such instruments by the counterparties.

The Company uses interest rate swaps for the management of interest rate risk exposure associated with changes in ~~SOFR~~variable interest rate payments due on its credit facilities.

Available Information

The Company makes available free of charge through its internet website, www.intlseas.com, its Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the Securities and Exchange Commission.

The public may also read and copy any materials the Company files with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E. Washington D.C. 20549 (information on the operation of the Public Reference Room is available by calling the SEC at 1-800-SEC-0330). The SEC also maintains a web site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at https://www.sec.gov.

The Company also makes available on its website, its corporate governance guidelines, its Code of Business Conduct and Ethics, insider trading policy, anti-bribery and corruption policy and charters of the Audit Committee, the Human Resources and Compensation Committee and the Corporate Governance and Risk Assessment Committee of the Board of Directors. The Company is required to disclose any amendment to a provision of its Code of Business Conduct and Ethics. The Company intends to use its website as a method of disseminating this disclosure, as permitted by applicable SEC rules. Any such disclosure will be posted to the

~~INTERNATIONAL SEAWAYS, INC.~~

Company website within four business days following the date of any such amendment. Neither our website nor the information contained on that site, or connected to that site, is incorporated by reference into this Quarterly Report on Form 10-Q.

4744

INTERNATIONAL SEAWAYS, INC.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s current disclosure controls and procedures were effective as of ~~September~~June 30, ~~2022~~2023 to ensure that information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There was no change in the Company’s internal control over financial reporting during the ~~three~~ first six months ~~ending September~~ended June 30, ~~2022~~2023 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. On July 16, 2021, the Company completed the Merger with Diamond S and in our 2021 Annual Report on Form 10-K, we excluded Diamond S from our internal control over financial reporting. This exclusion was in accordance with the U.S. Securities and Exchange Commission’s general guidance that a recently acquired business may be omitted from the assessment scope for up to one year from the date of acquisition. The Company has extended its oversight and monitoring processes that support our internal control over financial reporting, as well as our disclosure controls and procedures, to the acquired operations of Diamond S and we will incorporate Diamond S into our annual assessment of internal control over financial reporting for our fiscal year ending December 31, 2022.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

See Note ~~16,~~14, “Contingencies,” to the accompanying condensed consolidated financial statements for a description of the current legal proceedings, which is incorporated by reference in this Part II, Item 1.

Item 1A. Risk Factors

You should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our ~~2021~~2022 Form 10-K and in Part II, Item 1A, “Risk Factors” in our Quarterly Report on Form 10-Q for the ~~quarters~~quarter ended March 31, ~~2022 and June 30, 2022.~~2023. The risks described in those documents are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended ~~September~~June 30, ~~2022,~~2023, the Company repurchased and retired ~~687,740~~366,483 shares of its common stock in open-market purchases, at an average price of ~~$29.08~~$38.03 per share, for a total cost of ~~$20.0~~$13.9 million. As of ~~September~~June 30, ~~2022,~~2023, the maximum number of shares that may still be purchased under the program is ~~1,138,138~~681,553 shares, which was determined by dividing the remaining buyback authorization ($~~40.0~~26.0 million) by the ~~September~~June 30, ~~2022~~2023 closing price of the Company’s common stock. Future buybacks under the stock repurchase program will be at the discretion of our Board of Directors and subject to limitations under the Company’s debt facilities.

See Note ~~12,~~10, “Capital Stock and Stock Compensation,” to the accompanying condensed consolidated financial statements for additional information about the stock repurchase plan and a description of shares withheld to cover the cost of stock options exercised

~~INTERNATIONAL SEAWAYS, INC.~~

by certain members of management and tax withholding liabilities relating to the vesting of previously-granted equity awards to certain members of management, which is incorporated by reference in this Part II, Item 2.

Item 4. Mine Safety Disclosures

Not applicable.

INTERNATIONAL SEAWAYS, INC.

Item 5. Other Information

~~Not applicable.~~Insider Trading Arrangements and Policies

On June 6, 2023, Mr. Jeffrey Pribor, the Company’s Chief Financial Officer, Senior Vice President and Treasurer, entered into a trading plan designed to satisfy the affirmative defense of Rule 10b5-1(c) under the Securities Exchange act of 1934, as amended (the “Plan”). The Plan provides for sale of up to 12,000 shares of our Common Stock beginning on October 2, 2023 until December 31, 2024 or when all of the shares have been sold. The Plan was adopted in accordance with our insider trading policy. Actual sale transactions will be disclosed publicly in filings with the SEC in accordance with applicable securities laws, rules and regulations.

During the second quarter of 2023, none of our other directors or executive officers adopted Rule 10b5-1 trading plans and none of our directors or executive officers terminated a Rule 10b5-1 trading plan or adopted or terminated a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).

Item 6. Exhibits




**31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a), as amended.

**31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a), as amended.

**32		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

EX-101.INS		Inline XBRL Instance Document

EX-101.SCH		Inline XBRL Taxonomy Extension Schema

EX-101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase

EX-101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase

EX-101.LAB		Inline XBRL Taxonomy Extension Label Linkbase

EX-101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase

EX-104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

(1)The Exhibits which have not previously been filed or listed are marked with an asterisk (**).

4946

INTERNATIONAL SEAWAYS, INC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	INTERNATIONAL SEAWAYS, INC.
	(Registrant)

Date: ~~November 8, 2022~~August 9, 2023	/s/ Lois K. Zabrocky
	Lois K. Zabrocky
	Chief Executive Officer

Date: ~~November 8, 2022~~August 9, 2023	/s/ Jeffrey D. Pribor
	Jeffrey D. Pribor
	Chief Financial Officer

5047


(Dollars in thousands)		Allowance for Credit Losses - Voyage Receivables
Balance at December 31, 2021	$	31
Provision for expected credit losses		130
Balance at September 30, 2022	$	161


(Dollars in thousands)		Fair Value		Level 2		Total Impairment Charges
Crude Tankers - Vessels held for sale ⁽¹⁾⁽²⁾	$	7,561	$	7,561	$	(1,019)
Product Carriers - Vessels held for sale^{(1) (2)}		9,850		9,850		(207)
Product Carriers - Vessels held for use ^{(1) (2)}		9,575		9,575		(471)


(Dollars in thousands)	Amount		Operating Days
2022	$	1,582	184
2023		4,532	556
Total lease payments		6,114	740
less imputed interest		(225)
Total operating lease liabilities	$	5,889