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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, 2024

OR

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, 39th Floor, New York, New York

10016

(Address of principal executive offices)

(Zip Code)

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

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

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

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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth 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  

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 7, 2024: common stock, no par value 49,373,073 shares.

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

March 31, 2024

    

December 31, 2023

ASSETS

Current Assets:

Cash and cash equivalents

$

139,501

$

126,760

Short-term investments

75,000

60,000

Voyage receivables, net of allowance for credit losses of $238 and $191

including unbilled receivables of $234,260 and $237,298

242,955

247,165

Other receivables

11,887

14,303

Inventories

593

1,329

Prepaid expenses and other current assets

15,086

10,342

Current portion of derivative asset

5,049

5,081

Total Current Assets

490,071

464,980

Vessels and other property, less accumulated depreciation of $452,717 and $427,274

1,890,796

1,914,426

Vessels construction in progress

11,905

11,670

Deferred drydock expenditures, net

72,884

70,880

Operating lease right-of-use assets

17,195

20,391

Pool working capital deposits

33,998

31,748

Long-term derivative asset

2,213

1,153

Other assets

32,360

6,571

Total Assets

$

2,551,422

$

2,521,819

LIABILITIES AND EQUITY

Current Liabilities:

Accounts payable, accrued expenses and other current liabilities

$

42,046

$

57,904

Current portion of operating lease liabilities

10,169

10,223

Current installments of long-term debt

127,535

127,447

Total Current Liabilities

179,750

195,574

Long-term operating lease liabilities

9,270

11,631

Long-term debt

564,203

595,229

Other liabilities

3,309

2,628

Total Liabilities

756,532

805,062

Commitments and contingencies

Equity:

Capital - 100,000,000 no par value shares authorized; 48,999,765 and 48,925,562

shares issued and outstanding

1,488,531

1,490,986

Retained earnings

306,659

226,834

1,795,190

1,717,820

Accumulated other comprehensive loss

(300)

(1,063)

Total Equity

1,794,890

1,716,757

Total Liabilities and Equity

$

2,551,422

$

2,521,819

See notes to condensed consolidated financial statements

1

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

Three Months Ended March 31,

2024

2023

Shipping Revenues:

Pool revenues, including $83,898 and $91,707

from companies accounted for by the equity method

$

226,282

$

259,578

Time charter revenues

31,049

13,150

Voyage charter revenues

17,070

14,402

274,401

287,130

Operating Expenses:

Voyage expenses

3,473

3,810

Vessel expenses

63,381

58,769

Charter hire expenses

6,648

8,800

Depreciation and amortization

34,153

29,548

General and administrative

12,374

11,246

Third-party debt modification fees

407

Gain on disposal of vessels and other assets, net

(51)

(10,748)

Total operating expenses

119,978

101,832

Income from vessel operations

154,423

185,298

Other income

2,954

4,281

Income before interest expense and income taxes

157,377

189,579

Interest expense

(12,887)

(16,947)

Income before income taxes

144,490

172,632

Income tax benefit

1

Net income

$

144,490

$

172,633

Weighted Average Number of Common Shares Outstanding:

Basic

48,972,842

49,138,613

Diluted

49,377,948

49,646,331

Per Share Amounts:

Basic net income per share

$

2.95

$

3.51

Diluted net income per share

$

2.92

$

3.47

See notes to condensed consolidated financial statements

2

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

Three Months Ended March 31,

2024

2023

Net income

$

144,490

$

172,633

Other comprehensive income/(loss), net of tax:

Net change in unrealized income/(losses) on cash flow hedges

673

(3,838)

Defined benefit pension and other postretirement benefit plans:

Net change in unrecognized prior service costs

12

(30)

Net change in unrecognized actuarial losses

78

(194)

Other comprehensive income/(loss), net of tax

763

(4,062)

Comprehensive income

$

145,253

$

168,571

See notes to condensed consolidated financial statements

3

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

Three Months Ended March 31,

2024

2023

Cash Flows from Operating Activities:

Net income

$

144,490

$

172,633

Items included in net income not affecting cash flows:

Depreciation and amortization

34,153

29,548

Amortization of debt discount and other deferred financing costs

1,038

1,556

Deferred financing costs write-off

166

Stock compensation

1,691

1,900

Earnings of affiliated companies

20

Other – net

(250)

(823)

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

Gain on disposal of vessels and other assets, net

(51)

(10,748)

Payments for drydocking

(9,971)

(12,978)

Insurance claims proceeds related to vessel operations

206

950

Changes in operating assets and liabilities:

Decrease in receivables

4,210

41,746

Decrease in deferred revenue

(5,068)

(260)

Net change in inventories, prepaid expenses and other current assets, accounts

payable, accrued expenses and other current and long-term liabilities

(14,006)

(2,888)

Net cash provided by operating activities

156,442

220,822

Cash Flows from Investing Activities:

Expenditures for vessels, vessel improvements and vessels under construction, including deposits for acquisitions

(26,420)

(66,722)

Proceeds from disposal of vessels and other property, net

20,021

Expenditures for other property

(701)

(524)

Investments in short-term time deposits

(75,000)

(90,000)

Proceeds from maturities of short-term time deposits

60,000

65,000

Pool working capital deposits

(782)

Net cash used in investing activities

(42,903)

(72,225)

Cash Flows from Financing Activities:

Repayments of debt

(19,538)

(137,449)

Proceeds from sale and leaseback financing, net of issuance and deferred financing costs

55,722

Payments on sale and leaseback financing and finance lease

(12,146)

(34,619)

Payments of deferred financing costs

(306)

(514)

Cash dividends paid

(64,662)

(98,313)

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

(4,146)

(2,619)

Net cash used in financing activities

(100,798)

(217,792)

Net increase/(decrease) in cash and cash equivalents

12,741

(69,195)

Cash and cash equivalents at beginning of year

126,760

243,744

Cash and cash equivalents at end of period

$

139,501

$

174,549

See notes to condensed consolidated financial statements

4

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

Retained

Accumulated

Earnings /

Other

(Accumulated

Comprehensive

Capital

Deficit)

Income/(loss)

Total

For the three months ended

Balance at January 1, 2024

$

1,490,986

$

226,834

$

(1,063)

$

1,716,757

Net income

144,490

144,490

Other comprehensive income

763

763

Dividends declared

(64,665)

(64,665)

Forfeitures of vested restricted stock awards and exercised stock options

(4,146)

(4,146)

Compensation relating to restricted stock awards

291

291

Compensation relating to restricted stock units awards

1,301

1,301

Compensation relating to stock option awards

99

99

Balance at March 31, 2024

$

1,488,531

$

306,659

$

(300)

$

1,794,890

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

See notes to condensed consolidated financial statements

5

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, 2024, the Company’s operating fleet consisted of 73 wholly-owned or lease financed 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 our operating fleet, six LR1 newbuilds are scheduled for delivery to the Company between the second half of 2025 and third quarter of 2026, bringing the total operating and newbuild fleet to 79 vessels.

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, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

The condensed consolidated balance sheet as of December 31, 2023 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, 2023.

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 — 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, 2023 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:

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, 2023

$

191

Provision for expected credit losses

47

Balance at March 31, 2024

$

238

During the three months ended March 31, 2024 and 2023, 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 95% of consolidated voyage receivables at March 31, 2024 and December 31, 2023, respectively.

6

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

Deferred finance charges Finance charges, excluding original issue discount, incurred in the arrangement of new debt and/or amendments resulting in the modification of existing 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 $4.3 million and $4.5 million relating to the $750 Million Facility Revolving Loan and the $160 Million Revolving Credit Facility (See Note 10, “Debt”) as of March 31, 2024 and December 31, 2023, respectively, are included in other assets in the accompanying condensed consolidated balance sheets. Unamortized deferred financing charges of $10.5 million and $11.3 million as of March 31, 2024 and December 31, 2023, 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 $0.8 million and $1.3 million for the three months ended March 31, 2024 and 2023, respectively.

Vessels construction in progress — Interest costs are capitalized to vessels during the period that vessels are under construction. Interest capitalized totaled $0.2 million and $1.7 million during the three months ended March 31, 2024 and 2023, respectively. The construction of the Company’s three newbuild dual-fuel LNG VLCCs was completed, and the vessels were delivered to the Company between March 2023 and May 2023. The Company has six LR1 newbuilds under construction that are scheduled for delivery to the Company between the second half of 2025 and third quarter of 2026.

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.

In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures. This guidance is expected to improve financial reporting by providing additional information about a public company’s significant segment expenses and more timely and detailed segment information reporting throughout the fiscal year. This guidance requires annual and interim period disclosure of significant segment expenses that are provided to the chief operating decision maker (“CODM”) as well as interim disclosures for all reportable segments’ profit or loss. It also requires disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources. The amendments in ASU 2023-07 are effective for all public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 and will apply retrospectively to all prior periods presented in the financial statements. We are currently evaluating the impact of the new guidance on the disclosures to our 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 27,897 and 48,890 for the three months ended March 31, 2024 and 2023, respectively. Such participating securities are allocated a portion of income, but not losses under the two-class method. As of March 31, 2024, there were 470,936 shares of restricted stock units and 180,703 stock options outstanding and considered to be potentially dilutive securities.

7

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)

2024

2023

Net income allocated to:

Common Stockholders

$

144,413

$

172,466

Participating securities

77

167

$

144,490

$

172,633

For the three months ended March 31, 2024 and 2023 earnings per share calculations, there were 405,106 and 507,718 dilutive equity awards outstanding, respectively. Awards of 633,945 and 852,546 for the three months ended March 31, 2024 and 2023, 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 gain on disposal of vessels and assets, net. 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, 2024 and 2023 follows:

Crude

Product

(Dollars in thousands)

Tankers

Carriers

Other

Totals

Three months ended March 31, 2024:

Shipping revenues

$

126,867

$

147,534

$

$

274,401

Time charter equivalent revenues

123,962

146,966

270,928

Depreciation and amortization

20,049

14,104

34,153

Gain on disposal of vessels and other assets, net

(2)

(49)

(51)

Adjusted income from vessel operations

69,892

96,854

166,746

Adjusted total assets at March 31, 2024

1,508,859

802,668

2,311,527

Expenditures for vessels and vessel improvements

276

26,144

26,420

Payments for drydocking

2,103

7,868

9,971

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, net

(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

8

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)

2024

2023

Time charter equivalent revenues

$

270,928

$

283,320

Add: Voyage expenses

3,473

3,810

Shipping revenues

$

274,401

$

287,130

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:

Three Months Ended March 31,

(Dollars in thousands)

2024

2023

Total adjusted income from vessel operations of all segments

$

166,746

$

186,203

General and administrative expenses

(12,374)

(11,246)

Third-party debt modification fees

(407)

Gain on disposal of vessels and other assets, net

51

10,748

Consolidated income from vessel operations

154,423

185,298

Other income

2,954

4,281

Interest expense

(12,887)

(16,947)

Income before income taxes

$

144,490

$

172,632

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

(Dollars in thousands)

March 31, 2024

March 31, 2023

Adjusted total assets of all segments

$

2,311,527

$

2,264,607

Corporate unrestricted cash and cash equivalents

139,501

156,220

Restricted cash

18,329

Short-term investments

75,000

105,000

Other unallocated amounts

25,394

27,374

Consolidated total assets

$

2,551,422

$

2,571,530

Note 5 — Vessels:

Impairment of Vessels and Other Property

During the three months ended March 31, 2024, the Company gave consideration as to whether events or changes in circumstances had occurred since December 31, 2023, that could indicate that the carrying amounts of the vessels in the Company’s fleet may not be recoverable. The Company determined that no held-for-sale or held-for-use impairment indicators existed for the Company’s vessels as of March 31, 2024.

9

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

Vessel Acquisitions and Construction Commitments

On February 23, 2024, the Company entered into agreements to acquire two 2014-built and four 2015-built MR Product Carriers for an aggregate consideration of approximately $232 million, payable 85% in cash and 15% in shares of common stock of the Company. Each of the six vessel purchases is subject to satisfaction of closing conditions customary for vessel purchases. Three of the six vessels were delivered between April and early May 2024, and delivery of the remaining three MRs is expected to be completed by the end of the second quarter of 2024. An initial purchase price deposit totaling $23.2 million was made in February 2024 and is included in other assets in the accompanying condensed consolidated balance sheet. The cash portion of the remaining purchase commitments will be funded from available liquidity.

In March 2024 the Company declared options to build two additional dual-fuel ready LNG 73,600 dwt LR1 Product Carriers at the same shipyard from which its other four newbuild LR1s were ordered. The six LR1s are scheduled for delivery between the second half of 2025 and the third quarter of 2026 for an aggregate cost of approximately $347 million. The remaining commitments on the contracts for the construction of the LR1 newbuilds as of March 31, 2024 was $335.5 million, which will be paid for through a combination of long-term financing and available liquidity.

Disposal/Sales of Vessels

On March 18, 2024, the Company entered into a memorandum of agreement for the sale of a 2009-built MR Product Carrier for net proceeds of approximately $23 million after fees and commissions. The vessel was subsequently delivered to the buyer in April 2024 and the Company recognized a gain on the sale.

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, 2024, all of the seven 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, 2024:

(Dollars in thousands)

Condensed
Consolidated Balance Sheet

Pool working capital deposits

$

33,998

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, 2024:

(Dollars in thousands)

Condensed
Consolidated Balance Sheet

Maximum Exposure to
Loss

Other Liabilities

$

$

33,998

10

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

In addition, as of March 31, 2024, the Company had approximately $232.0 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, 2024.

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, 2024

December 31, 2023

Fair Value Level

Cash and cash equivalents

$

139,501

$

126,760

Level 1

Short-term investments (1)

75,000

60,000

Level 1

$750 Million Facility Term Loan (2)

(94,581)

(113,598)

Level 2

ING Credit Facility (2)

(20,313)

(20,833)

Level 2

Ocean Yield Lease Financing (2)

(304,626)

(311,907)

Level 2

BoComm Lease Financing (3)

(200,731)

(210,186)

Level 2

Toshin Lease Financing (3)

(12,875)

(13,566)

Level 2

Hyuga Lease Financing (3)

(12,959)

(13,643)

Level 2

Kaiyo Lease Financing (3)

(11,785)

(12,419)

Level 2

Kaisha Lease Financing (3)

(11,881)

(12,519)

Level 2

(1)Short-term investments consist of time deposits with original maturities of between 91 and 180 days.
(2)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.
(3)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

At March 31, 2024, the Company was party to amortizing interest rate swap agreements with major financial institutions participating in the $750 Million Facility Term Loan 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. The interest rate swap agreements, which contain no leverage features, are designated and qualify as cash flow hedges and have a remaining aggregate notional value of $310.5 million as of March 31, 2024, covering for accounting purposes, the $94.6 million principal balance outstanding under the $750 Million Facility Term Loan and $215.9 million outstanding under the Ocean Yield Lease Financing. Also, as of March 31, 2024, approximately $0.2 million in net gains from previously terminated interest rate swaps are expected to be amortized out of accumulated other comprehensive loss to earnings over the next 12 months.

11

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, 2024 and December 31, 2023:

(Dollars in thousands)

Current portion of derivative asset

Long-term derivative
assets

Other
receivables

March 31, 2024:

Derivatives designated as hedging instruments:

Interest rate swaps

$

5,049

$

2,213

$

857

Total

$

5,049

$

2,213

$

857

December 31, 2023:

Derivatives designated as hedging instruments:

Interest rate swaps

$

5,081

$

1,153

$

961

Total

$

5,081

$

1,153

$

961

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) for the three months ended March 31, 2024 and 2023 follows:

Three Months Ended March 31,

(Dollars in thousands)

2024

2023

Derivatives designated as hedging instruments:

Interest rate swaps

$

3,098

$

(1,454)

Total other comprehensive income/(loss)

$

3,098

$

(1,454)

The effect of the Company’s cash flow hedging relationships on the condensed consolidated statement of operations for the three months ended March 31, 2024 and 2023 follows:

Three Months Ended March 31,

(Dollars in thousands)

2024

2023

Derivatives designated as hedging instruments:

Interest rate swaps

$

(2,071)

$

(1,782)

Discontinued hedging instruments:

Interest rate swap

(354)

(602)

Total interest expense

$

(2,425)

$

(2,384)

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

12

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

The following table presents the fair values, which are pre-tax, for assets and liabilities measured on a recurring basis:

(Dollars in thousands)

March 31, 2024

December 31, 2023

Fair Value Level

Derivative Assets (interest rate swaps)

$

8,119

$

7,195

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.

Note 8 — Debt:

Debt consists of the following:

(Dollars in thousands)

March 31, 2024

    

December 31, 2023

$750 Million Facility Term Loan, due 2027, net of unamortized deferred finance costs of $2,775 and $3,124

$

91,806

$

110,474

ING Credit Facility, due 2026, net of unamortized deferred finance costs of $266 and $295

20,046

20,538

Ocean Yield Lease Financing, due 2031, net of unamortized deferred finance costs of $2,528 and $2,656

302,099

309,250

BoComm Lease Financing, due 2030, net of unamortized deferred finance costs of $3,983 and $4,166

226,349

229,583

Toshin Lease Financing, due 2031, net of unamortized deferred finance costs of $287 and $302

13,561

13,903

Hyuga Lease Financing, due 2031, net of unamortized deferred finance costs of $251 and $265

13,445

13,786

Kaiyo Lease Financing, due 2030, net of unamortized deferred finance costs of $213 and $227

12,163

12,518

Kaisha Lease Financing, due 2030, net of unamortized deferred finance costs of $224 and $238

12,269

12,624

691,738

722,676

Less current portion

(127,535)

(127,447)

Long-term portion

$

564,203

$

595,229

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.

ING Credit Facility

On April 18, 2024, the Company prepaid the outstanding principal balance of $20.3 million and terminated the ING Credit Facility.

$750 Million Credit Facility

On April 26, 2024, the Company, International Seaways Operating Corporation (the “Borrower”) and certain of their subsidiaries entered into a second amendment that amended and extended the $750 Million Credit Facility with Nordea Bank Abp, New York Branch (“Nordea”), BNP Paribas, Crédit Agricole Corporate & Investment Bank (“CA-CIB”), DNB Markets Inc., and Skandinaviska Enskilda Banken AB (PUBL) (or their respective affiliates), as mandated lead arrangers and bookrunners; ING Bank N.V., London Branch and Danish Ship Finance A/S (or their respective affiliates), as lead arrangers and National Australia Bank Limited, as co-arranger. Nordea is acting as administrative agent, collateral agent, coordinator and security trustee under the amended agreement, and CA-CIB is acting as sustainability coordinator.

Immediately prior to the closing of the second amendment, the $750 Million Facility, had a remaining term loan balance of $94.6 million and undrawn revolver capacity of $257.4 million. The amended agreement consists of a $500 million revolving credit facility

13

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

(the “$500 Million Revolving Credit Facility”) that matures on January 31, 2030. That maturity date is subject to acceleration upon the occurrence of certain events (as described in the credit agreement). The $500 Million Revolving Credit Facility is secured by a first lien on certain of the Company’s vessels (the “Collateral Vessels”), along with their earnings, insurances and certain other assets, as well as by liens on certain additional assets of the Borrower. Under the terms of the $500 Million Revolving Credit Facility capacity is reduced on a quarterly basis by approximately $12.8 million, based on a 20-year age-adjusted profile of the Collateral Vessels. The $500 Million Revolving Credit Facility bears an interest rate based on term SOFR plus the Applicable Margin (each as defined in the credit agreement). The Applicable Margin is 1.85% and is subject to similar sustainability-linked features as included in the $750 Million Credit Facility, which could impact the margin by five basis points, that are aimed at reducing the carbon footprint, target expenditures toward energy efficiency improvements and maintaining a safety record above the industry average. At the time of closing, $94.6 million was drawn on the $500 Million Revolving Credit Facility leaving an undrawn revolver capacity of $405.4 million on this facility.

The $500 Million Revolving Credit Facility also contains 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 are consistent with existing financial covenants in the $750 Million Credit Facility and 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 $500 Million Revolving Credit Facility.

Debt Covenants

The Company was in compliance with the financial and non-financial covenants under all of its financing arrangements as of March 31, 2024.