Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- International Seaways Inc (INSW, Financial) reported its eighth consecutive quarter of adjusted net income over $100 million, with a net income of $145 million for Q2 2024.
- The company declared a combined dividend of $1.50 per share, representing 64% of adjusted net income, maintaining a strong dividend yield of 12% over the last 12 months.
- INSW successfully executed fleet renewals by acquiring six eco MR vessels and selling three older vessels, reducing the average age of its MR fleet.
- The company has a strong liquidity position with $682 million in total liquidity, including $506 million of undrawn revolver capacity.
- INSW has a low spot breakeven rate of under $13,400 per day, enhancing its free cash flow generation and financial flexibility.
Negative Points
- The company experienced 559 days of off-hire time in Q2 2024, which was higher than the previously guided 359 days, impacting operational efficiency.
- There is uncertainty regarding the impact of geopolitical events and potential changes in global oil demand and supply, which could affect tanker demand.
- The tanker market is experiencing seasonality, with softer rates in the summer months, which could impact earnings in the short term.
- The aging global tanker fleet poses a challenge, as older vessels have lower efficiency and utilization, potentially affecting market dynamics.
- INSW faces inflationary pressures in operational expenses, particularly in transportation and crew costs, which could impact future cash breakeven levels.
Q & A Highlights
Q: Can you explain the increase in dry-docking days and whether this will affect future schedules?
A: Jeffrey Pribor, CFO, explained that the increase in dry-docking days was due to advancing some dockings into the second quarter for strategic positioning, particularly for Aframax vessels. This was partly to prepare for the West Coast trade. The overall annual guidance has been adjusted to reflect these changes, but some timing differences between quarters remain.
Q: How do you view the potential for share repurchases given the current market conditions?
A: Jeffrey Pribor, CFO, stated that while the company has a $50 million share repurchase program in place, they prioritize transparency and consistency with their dividend policy, which is set at a minimum of 50% of net income. However, they will consider share repurchases opportunistically, given their low leverage and strong liquidity position.
Q: What are your expectations for tanker market rates in the coming months?
A: Lois Zabrocky, CEO, noted that while there is seasonality affecting current rates, the fundamentals remain strong with expected oil demand growth. Derek Solon, Chief Commercial Officer, added that increased OPEC+ exports should support crude markets, and the MR segment remains strong with historically high rates.
Q: How does the Dangote refinery in Nigeria impact crude and product flows?
A: Lois Zabrocky, CEO, mentioned that the Dangote refinery is expected to have a significant capacity, but currently, it is impacting diesel exports and has affected global diesel margins. The refinery is still in early stages, and its full impact on crude and product flows will evolve over time.
Q: Are you considering any strategic shifts or new investments given your strong liquidity position?
A: Lois Zabrocky, CEO, indicated that the company is not planning any major strategic shifts at the moment. They are focused on maintaining a strong balance sheet and are open to opportunities in both crude and product segments, but there is no immediate plan to enter new markets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
