INSW - Earnings call transcript Q2 2018 | International Seaways, Inc.

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Operator

Good day, and welcome to the International Seaways Incorporated Second Quarter 2018 Earnings Conference Call and Webcast. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to James Small, General Counsel. Please go ahead, sir.

James Small

Thank you. welcome of Seaways XXXX. and the call everyone, quarter second morning, to earnings International for Good

in for bookings off-hire it's achieve periods capital and and XXXX; other consideration into estimated other and and quarter, developments projected other Management Management's of of and based trading economic, regulatory and and alternatives; such activity; its both Any this TCE regional of expectations dry-dock the political, Before and statements statements XXXX carrier including strategy; without start periods; rates vessel second forward-looking ability expenses, various and circumstances. world changing in everyone of half, factors objectives forecasts appropriate the tanker transactions; and today current market to factors, which petroleum the oil anticipated off for in revenues begin, forward-looking statements sales vessels; the other Company's Seaways' trends, economic about oil by scheduled of consider following: of we patterns; for and the expenditures I or which for crude advising financing Management future the historical around product made third International demand on would purchases regarding and G&A strategic assumptions believes the experience and or it days; by forecasts on the outlooks and the and estimated may take and operates, call, regarding financing developments, of markets; of world. variety perception limitation, production products; expenses; Management conference like Company to a account the make During including industry and expected to conditions, call include, could are

may in forward-looking from Factors, or to from uncertainties risks, risks, by many those that could and to actual in its quarterly report Company's expectations, beyond are or the Seaways of subject Form and of statements. Exchange and have we actual control, with expressed Forward-looking materially those second differ assumptions, the made, and future, implied those XX-Q make to annual which that quarter XX-K may cause described cause XXXX, on fillings include International uncertainties which the its in results are report Form Commission. the other U.S. statements for differ on Securities of and results XXXX,

Now I Zabrocky. Chief call turn to would like Lois and to the Officer, the Lois? President Ms. over Company's Executive

Lois Zabrocky

our Seaways results. to James, good everyone. to call much, discuss quarter very earnings joining you and second Please morning, XXXX International Thank you turn Thank for X. Slide

review our will second our We and highlights accomplishments. quarter recent XXXX

fleet, quarter, of the Seaways enhance the we taking positioned renewing our of milestone industry earnings market in recovery strength. major our leadership growing power further and as to sheet balance we During ahead a achieved International and advantage the and

cycle. of the have and profile our to age the the size attractive in point added with financed have fleet low our acquisition high to million fleet, sister enhancing tanker from Looking XXXX, at June, into of recent modern acquisition the six the our discussing VLCCs six acquire of the December to success, finalized entering bullet, first I We're and the of ships specification debt. highlighting After a agreement Sinosure of assumption our during in will an these Euronav, in by considerable transaction VLCCs. pleased we begin $XXX

manner balance to transaction, International that to financing our us have liquidity funded a Jeff as the increase the enabled that of in of our sheet second the shareholders VLCC approach based simultaneously bullet, position. purchase actions and liquidity to highlight. Continuing the with acquisition With we and Seaways maintain on available result balance and completed price without will the strength, diluting a

$XXX million representing million in of the vessels. storage part approach, our service ownership this FSO offloading Africa joint XX% $XXX floating FSO ventures, received credit and and from facility, Asia FSO we As proceeds of our

by our $XX $XXX December an increased total $XXX represents including an of cash giving undrawn million, we million, XXst. year-to-date, million million revolver. Importantly, increase liquidity us to This $XX in of position of million liquidity the $XXX since total

also of lowest value, using debt the the continue XX%, net in net in maturity quarter sector, loan-to-value maturities We XXXX. extending profiles now to ending earliest measured one maintain our the conservatively second of a with with vessel the loan-to-value while

second invested years the six one the $XXX as, to and as the X.X Moving an we Suezmax have vessels equity. bullet, XX our years, in XX%. since to nine average years reduced of in with an issuing opportunistic we the our cumulatively with age increased account into of fleet's of million spin-off quarter, two in our age with the VLCCs without third of well also VLCC acquisition during vessels, XXXX, close Taking three by by average age December sale have and of deadweight vessels XXXX,

operate the challenging to during of the market last a quarter. against Moving the second to backdrop tanker we continued bullet,

remained lean of While our from fixed-rate strategy and and our a charters model and contracted cash predictable intact. have ventures, scalable joint flows maintaining

affected the environment. Our were rate results low by QX

For of million, the time $XX first second on of $X.X charter equivalent quarter, from we the quarter million. reported an up revenues adjusted EBITDA

of $X.X of million was facility. million Company's Please the and impairments, an of charges turn of from share, million related vessels, $X.X loss amendment net credit to existing includes to or Our the gain $X.XX $XX.X Slide net which per sale X. a

Slide chart made had believe the our the that disposing in the I renewing right, illustrate requiring fleet. We fleet earlier operating potential capitalizing in success our both point success older modern and to we the tonnage market on tanker recovery the our upside we've regarding at and to vessels industry our growing for product of the our crude spaces. Specifically Please X. and Seaways turn and profile solidifies leverage, International further strengthening enhancing leadership,

on Here demand. tanker an we update provide

barrels, were that note prior by significant to to X.X the first demand imports quarter, compared through June both year. Chinese IEA is demand which half demand driven strong X.X% it while million China are XXXX, the During to XXXX, particular, imports emerging In day, strong. In global be to lower oil of million X.X at markets. oil in growth and the second per forecasts the up XXXX remained into of barrels continues

the which during growth at during the chart, top six the year-over-year Looking of growth Chinese oil in prior demand next projected impact the is quarters quarters, shows right and six clear. demand increases

fully dispute recently While these buyer's We to it China, that exports maybe there certain has as intend crude imports developments the and Chinese U.S. been be the crude reported a sustained for U.S. ongoing between Asian of demand we of will markets. result monitor U.S. expect suspending other in tariff closely.

crude both regulations and refinery as demand refineries therefore, fuel the product for low upcoming increase tankers, products. likely will volume sulfur boost and crude XXXX of seaborne and transportation Additionally, looking ahead, increasing expect we margins and the distillates; petroleum more IMO middle overall produce

of downward In to quarter, indicator addition oil crude to another the demand. sustained demand, trend positive during product stocks second global continue tanker and

with on forward VLCCs growth OECD As have SPR half provide X highlight during book more in decline beginning that quarter. that fleet to XXXX, May, of with VLCC of the second to inventories negative and XX continuing first below see of the the first declines in the dipped order newbuildings an The the million inventory. the right you averages we ordered can for days excluding favorable XX barrels in IEA in in tanker based barrels, five reduction to compared quarter on further I order of days at XX book the OECD at update Beginning by stocks, inventory like Slide the the on cover began estimates chart scrapping, increased in seen XXXX. bottom year supply, compared XXXX. X. end were we'd that a Slide, highlights the an update, the of XX and

the second activity chart was at the the across top in for down of types, quarter. newbuilding declined and shown consecutive the total right As vessel orders page,

crude substantial expected Although amount we the from be in XXXX, total to continue is tanker level. deliveries to XXXX down expect

of shipyards. bulk is fleet VLCC container An ordering into compared in newbuilding expected XX in to note terms is XXXX, point at putting berths LNG are the deliveries assuming limits to In on availability that XX slippage strength VLCC and important deliveries, tanker XXXX. in dry no XXXX, total

to Turning scrapping.

chart is XX scrapping scrapping VLCC's during the to all of right. XX in environment scrap of only no due of and sold to for XX with quarter. total years been We XXXX. have the ships Suezmaxes continued increased XX bottom and nearly have in After of half stronger see scrapped XXXX, rate two second year-to-date. weak XXXX, in have already This first a and ships the considerable very activity scrapped the on in XX experienced thus also while delivered an to steel Aframaxes shown compared prices, been respectively far

growth provide following details Regarding X% minimal call Jeff net now VLCC XXXX, over I XXXX. fleet of X% in the just additional the XXXX, expect in and results. growth will our Pribor, in X% of quarter CFO, to first turn to we on growth,

Jeffrey Pribor

you, morning, and Thank Lois, good everyone.

move the quarter to in results more directly detail. Let's second reviewing

in Slide reflects associated offset or quarter interest per expense a of $X.XX million depreciation as $XX.X in share, which million, and of compared Before million. well and per of diluted affiliated in degree to decreases with net and second a XXXX, aggregated with was $X.X negative $X.XX changes TCE a on diluted debt of by and with for vessel X, second negative companies income $XX.X quarter amortization revenues $XX.X were summarize to of in large our Company's the expenses expenses compared Net This $X.X gain second decline during $X.X of vessel $X.X higher million, let the just reduction loss net of as million. facilities XXXX. quarter $X.X million, equity of the loss the consolidated me a million, factors results. turning and million a quickly a period or share, decreases to share in the disposals These

to ask turn could I if you to Now, X. Slide

to in principally this average for earned decrease QX second sectors top left, quarter XXXX consolidated reflected daily million, of last of This rates driven quarter the lower Seaways $XX fleet across on As by year. of the compared compared were to the in was XXXX. International revenues $XX.X million second the majority quarter TCE the chart

of the were of sector, our of January was to quarter, Let the XXXX. revenue which in Tanker April XXXX, VLCC, was delivered note sectors sale million increased fleet and as all of which first Tankers compared second XXXX. in $XX.X the compared being dry segments offset average revenues results although end Also of entirety as XXXX, the from the the particularly the accounted quarter. beginning in decrease ULCC the of me a year, through Crude sequentially the VLCCs Suezmax, primarily at the only last the day for XXX June I increased that the quarter June to segment. in quarter two XXXX period as its decrease and year. impact its well revenue revenue half last million lightering with This dock lower represents idle fleet, million of to by and the Crude business This Company increased the days to $X million in VLCC second days five blended the contributed $X the rates period. sale to Panamax was business and contributed in the now $XX.X our to XXXX built overall delivered for lightering discuss Crude EBITDA to the decreased of compared year would the due in by XXXX the XXXX same one reduction $XX.X TCEs segment of XXXX, for the for completion An held the to decline, being of built built sale built additional of decrease. for ahead of from of the Also the contributing end by prior built days million that partially VLCC the as the the XXXX Company

decrease to quarter of Turning increase in million second MR December rates sale Product result XXXX, blended average Decline of five a in decrease revenues Carriers, of XXXX also earned at year. revenue for to to to and between contributed to of were This time due MRs an daily was in the fleet charters. as days expiry owners in the segment their decrease. between the offset April daily of due arising LRX their was last primarily bareboat partially from XXXX, the the June rates LRX resulting August TCE in and the in Carriers $XX.X Product respective compared a XXXX the redelivery This and for earned fleets. quarter, the MRs and $XX.X million MR three revenue to increased of

period the at million year, was quarter, reflects $X.X This of for last in now page, of quarter, second mentioned. to chart second lower Looking EBITDA the in XXXX. to right adjusted the the million the same previously as rates daily at the compared top the mainly as $XX other well the decrease quarter of factors compared

of the ending $XXX of to in Slide, XX EBITDA compared the second at for bottom trailing for to period, terms months $XXX months, can XX comparable year was months the In the million for you prior was $XXX XXXX. TCE ending $XX period. Adjusted of same see compared XX revenue the latest XXXX June the million the period quarter the latest million million,

We XX. XXXX Slide to turning Now QX, update. provide earnings

in to the VLCCs old, broken for and booked VLCCs we've This over out quarter spot spot first the for rates VLCCs the overall. spot are rates that in years out our fleet, for breaking modern rates XX for addition our time,

on previous regarding cycles for as VLCCs tanker period, As at call in spot points rates low are rates. of the mentioned the I modern the current such VLCCs higher

the As VLCC the this persists, improved oversold. rates made X the recovers, however, to as XX group. progress VLCCs Seaways described implementing short-term, by gap growth our as renewal in In fleet well should based have those which closely are the on a we of the which for VLCCs from of even of significant only strategy, rates out result Lois, overall modern our positioned gap VLCCs, and for we've is significantly should if modern benefit and narrow more reflect the market

of old, Looking a forward, approximately a over $X,XXX higher XX% XX% of QX. available day; generally compared for We average we are approximately booked, available rates QX, of to for our modern days spot of have or years generally at an approximately overall at experienced approximately day; vessels QX in or available Panamax LRX which an $XX,XXX VLCC XX% or example, XX experienced XX% at QX for of of days and and spot $XX,XXX spot average per XX% days day; LRX Aframax VLCC per an approximately day. at are $XX,XXX days, booked average approximately day; $XX,XXX available days an spot per therefore of per available are of of day. XX% Suezmax, In average spot days of $XX,XXX Vs

a On a and of we to Once Crude market modernization increase positioned A XX% flow. and result again, potential in example, in $XX the both $XX $XXX for add about on enhance approximately our increase of at our quarter an in the average $X,XXX Product of MR out, million to $X,XXX per in third million day, A an strategy for quarter. like million the upside in rates in and side, point booked respectively. spot increases growth class, every vessel capitalizing flow would International sectors. recovery Tanker has and and increase will cash in $XX,XXX cash $X,XXX slight days increase second days fleet I'd Seaways our revenue our

overall expense. a for into well VLCC day, operating JVs dropped breakevens highlighting day debt $XX,XXX into strong our XX. the for market as Turning XX Of Seaways per breakeven period, expense, flows XXX overall costs, to during the as XX, $XX,XXX to June XX the in owned that fleet per XXXX, distributions Aframaxes, the ended optimizing costs, $XX,XXX rates to for vessels June International in quarter. for environment. consideration ended were all-in not day the are does they $XX,XXX the our day per VLCCs, second earn The Of for per challenging note the acquired a These Company for per XXXX. was G&A for cash daily cover position breakeven recently note, rate fleet XX VLCCs, take for $XX, - rate Slide which as principal our cash MRs. CapEx, months $XX,XXX service $XX,XXX cost our scheduled Panamaxes, must rates amortization, day taking wide account for dock, the means breakeven and owned in for the XX, and interest days Suezmaxes, vessels the six for only were day from TCE months dry

do MRs Additionally, completed was FSO on view our of going $X,XXX; $X,XXX little operating amounts the for MRs, the were class The per more and as per Panamax, day. revenue targeted the a months as and OpEx, detail follows: $X,XXX; per on financing, classes VLCCs, columns quarter. a this reflect effect the Aframax, $X,XXX; VLCCs, day; and $X,XXX Panamax, to $X,XXX; Providing $X,XXX; breakevens $X,XXX; last which vessel Aframax, day XX day. day by Suezmax, for XXXX are per follows; the any targeted dark $X,XXX not corresponds various forward, the $X,XXX; which Slide for in blue Suezmax, chart, at, per

on months $X,XXX for day. G&A $XX.X the cash to corresponds the per which this yellow per was or last XX Our page bar million vessel

vessel for for XXXX $X,XXX million - months, $XX.X day. $XX.X target in Our or the or XX is per per vessel $X,XXX million last Debt is was service, white, which day. per per

Now if XX, Slide cash I turn could ask bridge. for to you our to

began left to million. of second with we from the Moving quarter total right, cash $XX

During FSO of non-cash income $XXX $X million in therefore amount The million we cash proceeds JVs deducted from from which adjusted figure. $X EBITDA, the million, of the order in a to the item, equity which generated JVs $XXX quarter were reach financing. cash and this was is distributions from million includes

expended term quarter. the million sale a $XX quarter, $XX debt of million million equity which new during and on the expended of to amortization. CapEx. we six was expect purchase dry $XX the contributed contributed debt was we issuance which $XXX in on spending the docking the drive portion VLCCs, while The addition, while million, interest $X was of of service vessels In and paid $X also power $XX maintenance in We million Debt of earning $XX million million future prepayment million.

some changes a The of yielding items is with that quarter $X million net and million. in and Finally, impact result million negative total a of of cash noncash revolver, more we working will more the can the for $XXX of payable million bridge other the you as including further significant the the capital There all XXXX. approximately third end we than $XX were ended quarter, undrawn amounts the this VLCC still $XX first events than there and liquidity that $XXX balance that cash million million purchase. of affecting the during $XXX had $XX the of of quarter million, quarter are the expect and transaction a see, occur six in year-end

Now to Slide balance the talk about if turn sheet. to you I'm XX. could going

As of XX, assets debt. million of had $X.X we of XXXX, conventional long-term June billion $XXX against

a $XX credit this undrawn facility had at we time. addition, In remains million that revolving

can value As debt right-hand XX% as column you vessels of balance the in significant Overall, QX provide the capital spot to at sheet with moderate in ended the at net Slide, see the our turns. upside our while where total environment, loan protects challenging leverage our strong opportunity XX%. market stood to us

book the noted side values. we for our believe right of the ventures, are of values fair Slide, their On we have two which representative relative joint

$XXX LNGS respectively. quarter, As of $XXX million FSO the values book of second end the JVs million of have the and and

available the program. in which the of Lois balance this and mentioned, the $XXX In of program. At purchase Slide, terms outline VLCCs, we of the as recent by of during our renewal sale million was of fleet the entered the our generated attractive we of into funded liquidity, from part quarter part growth Sinosure-insured we vessels fleet of bottom with assumed debt second the and renewal debt facilities older financing price as acquisition

or low my amortization Importantly, comments. facilities concludes mature and these all in That XXXX of relatively later. have

closing So, to call her I'd to remarks. now the turn Lois, back like for

Lois Zabrocky

Please Jeff. Slide to on summary turn you, XX. page Thank the

we The from our increased end our the as second position. of up was million power important our quarter position million, $XX to financial for significantly liquidity strong while at earnings International Seaways, XXXX. increased $XXX maintaining Notably,

now our remained In XXth, addition, to at And XX% in the very of with debt maturities maturity earliest extended in loan June as XXXX. our point we net the this value a cycle. reasonable

low Our the fleet Based rate on position our fleet our we cycle. has by during charters, by points deadweight age considerable our moderate enabled cash increased level the contracted flows growing of modernizing of strong decrease our success remain ventures Seaways and and capacity and years, fixed joint to from to of XX%. our a three average close in predictable International operate to the

point recovery. our issuing liquidity, our equity. focus significantly fleet upside success stakeholders have December now traded our profile, upside also With a in size our which and Company enhanced the intense age That and our over comments, Since formal cash Tanker our fleet leverage predictable $XXX our will on independent a implementing we becoming potential low has all the strength This has further market invested of XXXX, and market. leaner the in strategy. an in our Crude and Product enhanced of capital of questions. we profile, level spot our operating up with million the been allocation recovery in call enhanced significant the to create exposure, publicly strength in open to at on for has Operator? scalable cycle and our fleet financial focus concludes disciplined combined We flows, and and in without ability value model, to an our

Operator

from Instructions] go Noah We a ahead. JPMorgan. Parquette have from Please [Operator question

Noah Parquette

you want I just little are your you've where at a the some and if to bit scrubbers to up mind, looking your to strategy their if install regarding some still that talk I on guys want ask announced know about competitors decisions have XXXX. decision, for ships. your you're of problem, made of

Lois Zabrocky

will think and deep our process with look We This at potentially impact fitting in we're on the vessels. do of of looking XXXX, scrubbers the market we some to is Lois. come continue at that

Noah Parquette

trade anything also be as result course U.S. you seen nice. I of have seen have China, right, changes in - to wanted but and you well specific just a And ask, seen of in would you've of terms

Derek Solon

Solon. Derek is This

something very With of wars closely Chinese tariffs of watch U.S. trade potential and but so oil, displaced is trade what imports it's going of that goes terms course, crude India. in from seen far talk we’ve on, for East, the we Far by with impact other of out to parts to seen going be China, also we've cargos potential any it can Korea of and oil U.S. the and

that a will if tense find with things with get crude home U.S. confident even trading China. we're So,

Operator

next Our from Magnus go question from is Fyhr Please ahead. Seaport Global.

Magnus Fyhr

Just two questions.

First that on seen the the market third developments in spot the we've during quarter.

- You than that operating XX% dates, But but the have booked more also last strength I'm of this in is seen, some or a strength some higher you we this sure accelerating production. the the recent we've I book related level your so? increase have of of at to its seen in for and the seasonal the OPEC to should week rates quarter? expect remainder mean,

Lois Zabrocky

in say coming been some had went this XX little increased. shows bit they around sort four and The to been they've it's that was now. not have Magnus, and holding for last up day that - like maybe it stronger, has there but TDX weeks would seen on on I of the we rates a sustained, of indeed OPEC basically a a somewhere been

Jeffrey Pribor

But say seasonal. so seasonal more it's much bit counter would little also I not

Lois Zabrocky

correct. That's

Jeffrey Pribor

see rise in QX So, rates a we'd normally in versus to expect QX.

the ultimately fact we encouraging. at is to seen fact like we've but that levels that have Magnus in So the that QX improve see that seen we'd still

Lois Zabrocky

That's for sure is the third quarter quarter. generally weakest

is strengthening the positive. which seen Jeff's to point, very So we've

Magnus Fyhr

I - to that but your more have of more, the just noticed any portion on And old not EBITDA big I gone it's question lightering appendix. mean the one business

that how should on So anything you'd U.S. you be export facilities that read be be coming business line? emphasizing impacted think and that into with that'll increasing

Lois Zabrocky

few Magus, steadily doing us. stronger, anything for not the positive has last So, very which been lightering fact you that month-on-month, is read should in into in months,

that XX are for We a another They look be including room and following that the even everything the all online down export of of for of take the it coming healthy are in you Christi every portion the I Corpus amount method dredging XX you at at coming for if but XXXX, to growth tremendous is U.S. into think completed you're crude, lot to seems the out and of at looking context projects Gulf, wouldn't months, the Gulf, export of projects. planned least lightering. in there

Magnus Fyhr

a primary seen reason on last for we've you're month-to-month on basis, the saying picking lightering here I that up What's the or year downtrend it's in the the but… so? mean, business here

Lois Zabrocky

team more they're the does stronger continuing the market and results that full-service post, that increase lightering Yes, the our to they that share.

Jeffrey Pribor

It's a Magnus, and but at chasing market, point. prices - down the this competitive pleased want sequentially be with won't making very we you're progress we're

Operator

Espen go [Operator our And next Landmark is from from question Please Instructions] Fearnley. ahead.

Espen Landmark

that you on fair value business? the on I from the up I picking to terms given that Just thinking Thank on so, in of and comps this last I'll isn’t is the for lot you. this earnings note of your lightering business, mean, have mean, now, there variations, curious be what's hear

Jeffrey Pribor

million. trailing have we a months about now XX Well, EBITDA, $X.X

an don't side. you you So, who this at to I and looking not to But others or business. follow it or would are heavy asset speculate we you, leave think to it's

earnings and start at there kind had you that earnings, at to trailing make. and look So I'd of look

Lois Zabrocky

improve. that And like we'd to

Jeffrey Pribor

Which choosing start your on but do the earnings. to those I'd and there expect we improve, multiple probably of for

Espen Landmark

And I then VLCCs, maybe illustrative on on think mean, splitting on. I it's earnings quite going what's the side, the appreciate of scrubber up I guys the you

thoughts your throughout kind mind them? of would hear benefit and have to for financing from curious be the in potentially the I'd what vintages So, alternatives you various

Lois Zabrocky

from actually choice moderns but highly XXXX, you purchased built, vessels Generate. be are right, bigger than the efficient vessels not first are are know consumers - just clearly Well ships that your from long that it, we analyzing that XXXX XXXX, future, would that our have a

then want of on any So, from that side, in know an I comment you financing there. don't to perspective, kind if Jeff you take and go order can

Jeffrey Pribor

time financing increasing creative profits for internally timesharing, for and cost. health good and we had also being we debt charter our are at source leverage as profit-sharing Well, look and a financing of also really others, but proposals numerous insurance and have financing, that generated funds

So that's consideration. all part of the

- stay this conference a be time but call of just our it's So I we come description more this, fulfilling where can tuned. think at doesn’t

Operator

this ma'am. gentlemen, will Zabrocky. session. go conclude would our ahead, I and the back turn ladies And conference Please over question-and-answer to to Lois like

Lois Zabrocky

you much. the just forward Thank conference look want today. everyone our call joining We much. And you next very Thank us very to for thank to we quarter. in

Operator

has for conference presentation. Thank The concluded. now attending today's you

You your lines. now disconnect may

International Seaways (INSW) 12 Aug 182018 Q2 Earnings call transcript