International Seaways, Inc. [INSW] Filings

10-Q 1 insw-20230331x10q.htm 10-Q

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 March 31, 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 May 5, 2023: common stock, no par value 49,229,944 shares.

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


	March 31, 2023		December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents	$	156,220	$	243,744
Short-term investments		105,000		80,000
Restricted cash		18,329		—
Voyage receivables, net of allowance for credit losses of $123 and $261
including unbilled receivables of $238,212 and $279,567		248,029		289,775
Other receivables		11,559		12,583
Inventories		698		531
Prepaid expenses and other current assets		16,491		8,995
Current portion of derivative asset		6,274		6,987
Total Current Assets		562,600		642,615
Vessels and other property, less accumulated depreciation of $353,314 and $331,903		1,775,653		1,680,010
Vessels construction in progress		85,662		123,940
Deferred drydock expenditures, net		72,874		65,611
Operating lease right-of-use assets		7,085		8,471
Finance lease right-of-use assets		22,001		44,391
Pool working capital deposits		34,076		35,593
Long-term derivative asset		2,138		4,662
Other assets		9,441		10,041
Total Assets	$	2,571,530	$	2,615,334

LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable, accrued expenses and other current liabilities	$	53,197	$	51,069
Current portion of operating lease liabilities		430		1,596
Current portion of finance lease liabilities		18,326		41,870
Current installments of long-term debt		155,525		162,854
Total Current Liabilities		227,478		257,389
Long-term operating lease liabilities		7,738		7,740
Long-term debt		777,154		860,578
Other liabilities		1,877		1,875
Total Liabilities		1,014,247		1,127,582

Commitments and contingencies

Equity:
Capital - 100,000,000 no par value shares authorized; 49,171,314 and 49,120,648
shares issued and outstanding		1,501,516		1,502,235
Retained earnings/(accumulated deficit)		52,865		(21,447)
		1,554,381		1,480,788
Accumulated other comprehensive income		2,902		6,964
Total Equity		1,557,283		1,487,752
Total Liabilities and Equity	$	2,571,530	$	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 March 31,
		2023		2022
Shipping Revenues:
Pool revenues, including $91,707 and $23,271
from companies accounted for by the equity method	$	259,578	$	83,762
Time charter revenues		13,150		6,175
Voyage charter revenues		14,402		11,545
		287,130		101,482

Operating Expenses:
Voyage expenses		3,810		3,507
Vessel expenses		58,769		60,317
Charter hire expenses		8,800		7,309
Depreciation and amortization		29,548		27,000
General and administrative		11,246		10,166
Third-party debt modification fees		407		187
Gain on disposal of vessels and other assets, net of impairments		(10,748)		(1,376)
Total operating expenses		101,832		107,110
Income/(loss) from vessel operations		185,298		(5,628)
Equity in results of affiliated companies		—		5,597
Operating income/(loss)		185,298		(31)
Other income/(expense)		4,281		(226)
Income/(loss) before interest expense and income taxes		189,579		(257)
Interest expense		(16,947)		(12,740)
Income/(loss) before income taxes		172,632		(12,997)
Income tax benefit/(provision)		1		(4)
Net income/(loss)	$	172,633	$	(13,001)

Weighted Average Number of Common Shares Outstanding:
Basic		49,138,613		49,571,337
Diluted		49,646,331		49,571,337

Per Share Amounts:
Basic net income/(loss) per share	$	3.51	$	(0.26)
Diluted net income/(loss) per share	$	3.47	$	(0.26)

See notes to condensed consolidated financial statements

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


	Three Months Ended March 31,
		2023		2022
Net income/(loss)	$	172,633	$	(13,001)
Other comprehensive income/(loss), net of tax:
Net change in unrealized income/(losses) on cash flow hedges		(3,838)		10,762
Defined benefit pension and other postretirement benefit plans:
Net change in unrecognized prior service costs		(30)		26
Net change in unrecognized actuarial losses		(194)		171
Other comprehensive (loss)/income, net of tax		(4,062)		10,959
Comprehensive income/(loss)	$	168,571	$	(2,042)

See notes to condensed consolidated financial statements

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


	Three Months Ended March 31,
		2023		2022
Cash Flows from Operating Activities:
Net income/(loss)	$	172,633	$	(13,001)
Items included in net income/(loss) not affecting cash flows:
Depreciation and amortization		29,548		27,000
Loss on write-down of vessels and other assets		—		1,697
Amortization of debt discount and other deferred financing costs		1,556		855
Amortization of time charter hire contracts acquired		—		340
Deferred financing costs write-off		166		133
Stock compensation		1,900		1,108
Equity in results of affiliated companies		20		(5,597)
Other – net		(823)		580
Items included in net income/(loss) related to investing and financing activities:
Gain on disposal of vessels and other assets, net		(10,748)		(3,073)
Cash distributions from affiliated companies		—		2,250
Payments for drydocking		(12,978)		(17,570)
Insurance claims proceeds related to vessel operations		950		954
Changes in operating assets and liabilities:
Decrease/(increase) in receivables		41,746		(13,369)
Decrease in deferred revenue		(260)		—
Net change in inventories, prepaid expenses and other current assets, accounts
payable, accrued expenses and other current and long-term liabilities		(2,888)		(2,088)
Net cash provided by/(used in) operating activities		220,822		(19,781)
Cash Flows from Investing Activities:
Expenditures for vessels, vessel improvements and vessels under construction		(66,722)		(37,989)
Proceeds from disposal of vessels and other property, net		20,021		24,257
Expenditures for other property		(524)		(390)
Investments in short-term time deposits		(90,000)		—
Proceeds from maturities of short-term time deposits		65,000		—
Pool working capital deposits		—		(527)
Net cash used in investing activities		(72,225)		(14,649)
Cash Flows from Financing Activities:
Repayments of debt		(137,449)		(46,265)
Proceeds from sale and leaseback financing, net of issuance and deferred financing costs		55,722		20,401
Payments on sale and leaseback financing and finance lease		(34,619)		(9,085)
Payments of deferred financing costs		(514)		—
Borrowings on revolving credit facilities		—		50,000
Cash dividends paid		(98,313)		(2,980)
Cash paid to tax authority upon vesting or exercise of stock-based compensation		(2,619)		(970)
Net cash (used in)/provided by financing activities		(217,792)		11,101
Net decrease in cash, cash equivalents and restricted cash		(69,195)		(23,329)
Cash, cash equivalents and restricted cash at beginning of year		243,744		98,933
Cash, cash equivalents and restricted cash at end of period	$	174,549	$	75,604

See notes to condensed consolidated financial statements

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


			Retained		Accumulated
			Earnings /		Other
			(Accumulated		Comprehensive		Noncontrolling
	Capital		Deficit)		Income/(loss)		Interests		Total
For the three months ended
Balance at January 1, 2023	$	1,502,235	$	(21,447)	$	6,964	$	—	$	1,487,752
Net income		—		172,633		—		—		172,633
Other comprehensive loss		—		—		(4,062)		—		(4,062)
Dividends declared		—		(98,321)		—		—		(98,321)
Forfeitures of vested restricted stock awards and exercised stock options		(2,619)		—		—		—		(2,619)
Compensation relating to restricted stock awards		268		—		—		—		268
Compensation relating to restricted stock units awards		1,412		—		—		—		1,412
Compensation relating to stock option awards		220		—		—		—		220
Balance at March 31, 2023	$	1,501,516	$	52,865	$	2,902	$	—	$	1,557,283

Balance at January 1, 2022	$	1,591,446	$	(409,338)	$	(12,360)	$	584	$	1,170,332
Net loss		—		(13,001)		—		—		(13,001)
Other comprehensive income		—		—		10,959		—		10,959
Dividends declared		(2,978)		—		—		—		(2,978)
Forfeitures of vested restricted stock awards		(970)		—		—		—		(970)
Compensation relating to restricted stock awards		296		—		—		—		296
Compensation relating to restricted stock units awards		501		—		—		—		501
Compensation relating to stock option awards		311		—		—		—		311
Balance at March 31, 2022	$	1,588,606	$	(422,339)	$	(1,401)	$	584	$	1,165,450

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 March 31, 2023, the Company’s operating fleet consisted of 74 wholly-owned, finance leased or bareboat chartered-in and time-chartered-in 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 of 74 vessels, two dual-fuel LNG VLCC newbuilds are scheduled for delivery to the Company during the second quarter of 2023, bringing the total operating and newbuild fleet to 76 vessels as of March 31, 2023.

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 months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

The condensed consolidated balance sheet as of December 31, 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, 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.

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. An adjustment has been made to the condensed consolidated balance sheet for the fiscal year ended December 31, 2022 to reclassify $0.8 million from Pool working capital deposits (previously captioned as Investments in and advances to affiliated companies) to Other assets.

Note 2 — 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, 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. Current restricted cash of $18.3 million as of March 31, 2023 represents cash held in escrow related to the Company’s exercise of its option to purchase a bareboat chartered-in 2009-built Aframax, which closed in early April 2023.

Short-term investments - Short-term investments consist of time deposits with original maturities of between 91 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:

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		(138)
Balance at March 31, 2023	$	123

During the three months ended March 31, 2023 and 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% of consolidated voyage receivables at both March 31, 2023 and December 31, 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 $6.3 million and $6.9 million relating to the $750 Million Facility Revolving Loan and BoComm Lease Financing (See Note 10, “Debt”) as of March 31, 2023 and December 31, 2022, respectively, are included in other assets in the accompanying condensed consolidated balance sheets. Unamortized deferred financing charges of $13.7 million and $13.4 million as of March 31, 2023 and December 31, 2022, respectively, relating to the Company’s outstanding debt facilities, are included in long-term debt in the consolidated balance sheets.

Interest expense relating to the amortization of deferred financing charges amounted to $1.3 million and $0.6 million for the three months ended March 31, 2023 and 2022, respectively.

Vessels construction in progress — Interest costs are capitalized to vessels during the period that vessels are under construction. Interest capitalized totaled $1.7 million and $0.7 million during the three months ended March 31, 2023 and 2022, respectively.

Recently Issued Accounting Standards — 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 issues Accounting Standards Updates ("ASU") to communicate changes to the codification. The Company considered the applicability and impact of all ASUs issued during the quarter ended March 31, 2023 and determined that they were either not applicable or not expected to have a material impact on the Company’s consolidated financial statements.

Note 3 — 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 48,890 and 87,117 for the three months ended March 31, 2023 and 2022, respectively. Such participating securities are allocated a portion of income, but not losses under the two-class method. As of March 31, 2023, there were 637,223 shares of restricted stock units and 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 March 31,
(Dollars in thousands)		2023		2022
Net income/(loss) allocated to:
Common Stockholders	$	172,466	$	(13,006)
Participating securities		167		5
	$	172,633	$	(13,001)

For the three months ended March 31, 2023 earnings per share calculations, there was 507,718 dilutive equity awards outstanding. For the three months ended March 31, 2022 earnings per share calculations, there was no dilutive equity awards outstanding. Awards of 852,546 and 1,026,418 for the three months ended March 31, 2023 and 2022, respectively, were not included in the computation of diluted earnings per share because inclusion of these awards would be anti-dilutive.

Note 4 — Business and Segment Reporting:

The Company has two reportable segments: Crude Tankers and Product Carriers. 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 and loss/(gain) on disposal of vessels and 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 months ended March 31, 2023 and 2022 follows:


	Crude		Product
(Dollars in thousands)	Tankers		Carriers		Other		Totals
Three months ended March 31, 2023:
Shipping revenues	$	132,411	$	154,719	$	—	$	287,130
Time charter equivalent revenues		129,285		154,035		—		283,320
Depreciation and amortization		17,226		12,294		28		29,548
Gain on disposal of vessels and other assets		—		(10,748)		—		(10,748)
Adjusted income/(loss) from vessel operations		84,541		101,690		(28)		186,203
Adjusted total assets at March 31, 2023		1,455,356		809,251		—		2,264,607
Expenditures for vessels and vessel improvements		65,728		994		—		66,722
Payments for drydocking		2,128		10,850		—		12,978

Three months ended March 31, 2022:
Shipping revenues	$	39,610	$	61,872	$	—	$	101,482
Time charter equivalent revenues		36,475		61,500		—		97,975
Depreciation and amortization		15,152		11,841		7		27,000
Loss/(gain) on disposal of vessels and other assets, net of impairments		1,843		(3,219)		—		(1,376)
Adjusted (loss)/income from vessel operations		(5,842)		9,198		(7)		3,349
Equity in results of affiliated companies		5,597		—		—		5,597
Investments in and advances to affiliated companies at March 31, 2022		160,298		23,063		—		183,361
Adjusted total assets at March 31, 2022		1,465,035		803,077		—		2,268,112
Expenditures for vessels and vessel improvements		14,608		23,381		—		37,989
Payments for drydocking		7,660		9,910		—		17,570

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

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 March 31,
(Dollars in thousands)		2023		2022
Time charter equivalent revenues	$	283,320	$	97,975
Add: Voyage expenses		3,810		3,507
Shipping revenues	$	287,130	$	101,482

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/(loss) before income taxes, as reported in the condensed consolidated statements of operations follow:


	Three Months Ended March 31,
(Dollars in thousands)		2023		2022
Total adjusted income from vessel operations of all segments	$	186,203	$	3,349
General and administrative expenses		(11,246)		(10,166)
Third-party debt modification fees		(407)		(187)
Gain on disposal of vessels and other assets, net of impairments		10,748		1,376
Consolidated income/(loss) from vessel operations		185,298		(5,628)
Equity in results of affiliated companies		—		5,597
Other income/(expense)		4,281		(226)
Interest expense		(16,947)		(12,740)
Income/(loss) before income taxes	$	172,632	$	(12,997)

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


(Dollars in thousands)	March 31, 2023		March 31, 2022
Adjusted total assets of all segments	$	2,264,607	$	2,268,112
Corporate unrestricted cash and cash equivalents		156,220		74,553
Restricted cash		18,329		1,051
Short-term investments		105,000		—
Other unallocated amounts		27,374		22,877
Consolidated total assets	$	2,571,530	$	2,366,593

Note 5 — Vessels:

Impairment of Vessels and Other Property

During the three months ended March 31, 2023, the Company gave consideration as to whether events or changes in circumstances had occurred since December 31, 2022, that could indicate that the carrying amounts of the vessels in the Company’s fleet may not be recoverable. The Company determined that none of the vessels in the Company’s fleet met held-for-sale criteria as of March 31, 2023 and no held-for-use impairment indicators existed for the Company’s vessels as of March 31, 2023.

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

The Company recognized a loss of approximately $0.2 million during the quarter ended March 31, 2023, related to the cost to terminate the purchase and installation contract for a ballast water treatment system on a vessel that was sold.

Vessel Acquisitions and Construction Commitments

On March 7, 2023, the first of Company’s three newbuild dual-fuel LNG VLCCs was delivered by the shipyard and shortly thereafter commenced its employment under a seven-year time charter contract with an oil major. The remaining commitments on the contracts for the construction of other two VLCCs as of March 31, 2023 was $115.2 million, which will be primarily funded by the BoComm Lease Financing (See Note 8, “Debt”).

The second of the Company’s three newbuild dual-fuel LNG VLCC was delivered to the Company on April 11, 2023 and the third VLCC is expected to deliver before the end of the second quarter of 2023.

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, the Company completed the purchase of one of the two Aframaxes. The purchase of the second of the two vessels closed in early April 2023.

Disposal/Sales of Vessels

During the quarter ended March 31, 2023, the Company delivered a 2008-built MR to the buyer and recognized a gain of $10.9 million.

Note 6 — Variable Interest Entities (“VIEs”):

Unconsolidated VIEs

As of March 31, 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 March 31, 2023:


(Dollars in thousands)	Condensed Consolidated Balance Sheet
Pool working capital deposits	$	34,076

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 March 31, 2023:


(Dollars in thousands)		Condensed Consolidated Balance Sheet	Maximum Exposure to Loss
Other Liabilities	$	–	$	34,076

In addition, as of March 31, 2023, the Company had approximately $236.6 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 March 31, 2023.

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

Note 7 — 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)	March 31, 2023		December 31, 2022		Fair Value Level
Cash and cash equivalents ⁽¹⁾	$	174,549	$	243,744		Level 1
Short-term investments ⁽²⁾		105,000		80,000		Level 1
$750 Million Facility Term Loan ⁽³⁾		(356,637)		(493,565)		Level 2
ING Credit Facility ⁽³⁾		(22,396)		(22,917)		Level 2
Ocean Yield Lease Financing ⁽³⁾		(333,906)		(341,106)		Level 2
BoComm Lease Financing ⁽⁴⁾		(113,783)		(63,598)		Level 2
Toshin Lease Financing ⁽⁴⁾		(14,586)		(14,744)		Level 2
Hyuga Lease Financing ⁽⁴⁾		(14,585)		(14,853)		Level 2
COSCO Lease Financing ⁽³⁾		(46,479)		(47,732)		Level 2
Kaiyo Lease Financing ⁽⁴⁾		(13,414)		(13,797)		Level 2
Kaisha Lease Financing ⁽⁴⁾		(13,508)		(13,704)		Level 2

(1)	Includes current restricted cash of $18.3 million at March 31, 2023.

(2)	Short-term investments consist of time deposits with original maturities of between 91 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. As of March 31, 2023, approximately $3.8 million of the gain is expected to amortize out of accumulated other comprehensive income to earnings over the next 12 months.

Also, as of March 31, 2023, approximately $1.9 million of the loss with regards to the hybrid instrument associated with the Sinosure Credit Facility that was terminated in November 2021, is expected to amortize out of accumulated other comprehensive income to earnings 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.

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 net basis by transaction in the accompanying unaudited condensed consolidated balance sheets related to the Company’s use of derivatives as of March 31, 2023 and December 31, 2022:


(Dollars in thousands)	Current portion of derivative asset		Long-term derivative assets		Current portion of derivative liabilities		Long-term derivative liabilities		Other receivables
March 31, 2023:
Derivatives designated as hedging instruments:
Interest rate swaps	$	6,274	$	2,138	$	—	$	—	$	768
Total	$	6,274	$	2,138	$	—	$	—	$	768

December 31, 2022:
Derivatives designated as hedging instruments:
Interest rate swaps	$	6,987	$	4,662	$	—	$	—	$	547
Total	$	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/(loss) excluding amounts reclassified from accumulated other comprehensive income/(loss), including hedges of equity method investees, for the three months ended March 31, 2023 and 2022 follows:


	Three Months Ended March 31,
(Dollars in thousands)		2023		2022
Derivatives designated as hedging instruments:
Interest rate swaps	$	(1,454)	$	9,058
Total other comprehensive (loss)/income	$	(1,454)	$	9,058

The effect of cash flow hedging relationships on the condensed consolidated statement of operatio