International Seaways, Inc. [INSW] Filings

10-Q 1 insw-20240930x10q.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 September 30, 2024

☐ 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

(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 November 4, 2024: common stock, no par value, 49,192,838 shares.

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


	September 30, 2024		December 31, 2023
ASSETS
Current Assets:
Cash and cash equivalents	$	103,309	$	126,760
Short-term investments		50,000		60,000
Voyage receivables, net of allowance for credit losses of $190 and $191
including unbilled receivables of $185,262 and $237,298		191,093		247,165
Other receivables		15,682		14,303
Inventories		378		1,329
Prepaid expenses and other current assets		9,721		10,342
Current portion of derivative asset		2,087		5,081
Total Current Assets		372,270		464,980
Vessels and other property, less accumulated depreciation of $502,936 and $427,274		2,045,331		1,914,426
Vessels construction in progress		24,401		11,670
Deferred drydock expenditures, net		82,628		70,880
Operating lease right-of-use assets		12,295		20,391
Pool working capital deposits		33,794		31,748
Long-term derivative asset		214		1,153
Other assets		16,913		6,571
Total Assets	$	2,587,846	$	2,521,819

LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable, accrued expenses and other current liabilities	$	45,796	$	57,904
Current portion of operating lease liabilities		7,673		10,223
Current installments of long-term debt		49,823		127,447
Total Current Liabilities		103,292		195,574
Long-term operating lease liabilities		6,773		11,631
Long-term debt		600,689		595,229
Other liabilities		2,462		2,628
Total Liabilities		713,216		805,062

Commitments and contingencies

Equity:
Capital - 100,000,000 no par value shares authorized; 49,192,838 and 48,925,562
shares issued and outstanding		1,501,503		1,490,986
Retained earnings		382,350		226,834
		1,883,853		1,717,820
Accumulated other comprehensive loss		(9,223)		(1,063)
Total Equity		1,874,630		1,716,757
Total Liabilities and Equity	$	2,587,846	$	2,521,819

See notes to condensed consolidated financial statements

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


	Three Months Ended September 30,				Nine Months Ended September 30,
		2024		2023		2024		2023
Shipping Revenues:
Pool revenues, including $57,062, $72,877, $211,050 and $250,909
from companies accounted for by the equity method	$	170,007	$	194,465	$	603,970	$	701,634
Time charter revenues		36,842		27,587		99,030		66,849
Voyage charter revenues		18,341		19,656		54,000		52,558
		225,190		241,708		757,000		821,041

Operating Expenses:
Voyage expenses		5,503		5,756		14,537		13,434
Vessel expenses		71,269		64,596		202,490		188,516
Charter hire expenses		7,245		11,297		20,841		30,599
Depreciation and amortization		39,304		33,363		109,974		95,356
General and administrative		13,411		12,314		37,494		35,082
Other operating expenses		985		—		2,715		—
Third-party debt modification fees		—		148		168		568
(Gain)/loss on disposal of vessels and other assets, net		(13,499)		74		(41,402)		(10,648)
Total operating expenses		124,218		127,548		346,817		352,907
Income from vessel operations		100,972		114,160		410,183		468,134
Other income		3,211		646		8,525		8,308
Income before interest expense and income taxes		104,183		114,806		418,708		476,442
Interest expense		(12,496)		(16,817)		(37,808)		(51,678)
Income before income taxes		91,687		97,989		380,900		424,764
Income tax benefit/(provision)		1		(52)		1		(432)
Net income	$	91,688	$	97,937	$	380,901	$	424,332

Weighted Average Number of Common Shares Outstanding:
Basic		49,544,412		48,861,356		49,302,367		49,008,901
Diluted		49,881,317		49,275,022		49,677,238		49,442,825

Per Share Amounts:
Basic net income per share	$	1.85	$	2.00	$	7.72	$	8.65
Diluted net income per share	$	1.84	$	1.99	$	7.66	$	8.58

See notes to condensed consolidated financial statements

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


	Three Months Ended September 30,				Nine Months Ended September 30,
		2024		2023		2024		2023
Net income	$	91,688	$	97,937	$	380,901	$	424,332
Other comprehensive loss, net of tax:
Net change in unrealized gains/(losses) on cash flow hedges		(4,277)		(968)		(4,702)		(1,725)
Defined benefit pension and other postretirement benefit plans:
Net change in unrecognized prior service costs		(467)		49		(457)		(11)
Net change in unrecognized actuarial losses		(3,063)		323		(3,001)		(69)
Other comprehensive loss, net of tax		(7,807)		(596)		(8,160)		(1,805)
Comprehensive income	$	83,881	$	97,341	$	372,741	$	422,527

See notes to condensed consolidated financial statements

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


	Nine Months Ended September 30,
		2024		2023
Cash Flows from Operating Activities:
Net income	$	380,901	$	424,332
Items included in net income not affecting cash flows:
Depreciation and amortization		109,974		95,356
Amortization of debt discount and other deferred financing costs		3,093		4,491
Deferred financing costs write-off		—		1,952
Stock compensation		5,736		5,912
Equity in results of affiliated companies		(42)		20
Other – net		(519)		(2,140)
Items included in net income related to investing and financing activities:
Gain on disposal of vessels and other assets, net		(41,402)		(10,648)
Loss on extinguishment of debt		—		1,323
Payments for drydocking		(43,855)		(27,622)
Insurance claims proceeds related to vessel operations		1,004		2,858
Changes in operating assets and liabilities:
Decrease in receivables		56,072		69,948
(Decrease)/increase in deferred revenue		(5,273)		911
Purchase of insurance contract in connection with settlement of pension plan obligations		(3,649)		—
Net change in inventories, prepaid expenses and other current assets, accounts
payable, accrued expenses and other current and long-term liabilities		(8,524)		(3,774)
Net cash provided by operating activities		453,516		562,919
Cash Flows from Investing Activities:
Expenditures for vessels, vessel improvements and vessels under construction		(216,589)		(192,218)
Proceeds from disposal of vessels and other property, net		71,915		20,036
Expenditures for other property		(880)		(1,035)
Investments in short-term time deposits		(125,000)		(210,000)
Proceeds from maturities of short-term time deposits		135,000		215,000
Pool working capital deposits		(1,532)		(1,334)
Net cash used in investing activities		(137,086)		(169,551)
Cash Flows from Financing Activities:
Borrowings on revolving credit facilities		50,000		50,000
Repayments on revolving credit facilities		(50,000)		—
Repayments of debt		(39,851)		(323,685)
Proceeds from sale and leaseback financing, net of issuance and deferred financing costs		—		169,717
Payments on sale and leaseback financing and finance lease		(36,831)		(123,732)
Payments of deferred financing costs		(5,759)		(3,006)
Premium and fees on extinguishment of debt		—		(1,323)
Repurchase of common stock		(25,000)		(13,948)
Cash dividends paid		(225,385)		(247,001)
Cash paid to tax authority upon vesting or exercise of stock-based compensation		(7,055)		(5,158)
Net cash used in financing activities		(339,881)		(498,136)
Net decrease in cash and cash equivalents		(23,451)		(104,768)
Cash and cash equivalents at beginning of year		126,760		243,744
Cash and cash equivalents at end of period	$	103,309	$	138,976

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
	Capital		Deficit)		Income/(loss)		Total
For the nine months ended
Balance at January 1, 2024	$	1,490,986	$	226,834	$	(1,063)	$	1,716,757
Net income		—		380,901		—		380,901
Other comprehensive loss		—		—		(8,160)		(8,160)
Dividends declared		—		(225,385)		—		(225,385)
Forfeitures of vested restricted stock awards and exercised stock options		(7,055)		—		—		(7,055)
Compensation relating to restricted stock awards		811		—		—		811
Compensation relating to restricted stock units awards		4,826		—		—		4,826
Compensation relating to stock option awards		99		—		—		99
Equity consideration issued for purchase of vessels		36,836		—		—		36,836
Repurchase of common stock		(25,000)		—		—		(25,000)
Balance at September 30, 2024	$	1,501,503	$	382,350	$	(9,223)	$	1,874,630

Balance at January 1, 2023	$	1,502,235	$	(21,447)	$	6,964	$	1,487,752
Net income		—		424,332		—		424,332
Other comprehensive loss		—		—		(1,805)		(1,805)
Dividends declared		—		(247,008)		—		(247,008)
Forfeitures of vested restricted stock awards and exercised stock options		(5,158)		—		—		(5,158)
Compensation relating to restricted stock awards		768		—		—		768
Compensation relating to restricted stock units awards		4,688		—		—		4,688
Compensation relating to stock option awards		456		—		—		456
Repurchase of common stock		(13,948)		—		—		(13,948)
Balance at September 30, 2023	$	1,489,041	$	155,877	$	5,159	$	1,650,077

For the three months ended
Balance at July 1, 2024	$	1,524,400	$	364,452	$	(1,416)	$	1,887,436
Net income		—		91,688		—		91,688
Other comprehensive loss		—		—		(7,807)		(7,807)
Dividends declared		—		(73,790)		—		(73,790)
Compensation relating to restricted stock awards		291		—		—		291
Compensation relating to restricted stock units awards		1,812		—		—		1,812
Repurchase of common stock		(25,000)		—		—		(25,000)
Balance at September 30, 2024	$	1,501,503	$	382,350	$	(9,223)	$	1,874,630

Balance at July 1, 2023	$	1,487,151	$	127,368	$	5,755	$	1,620,274
Net income		—		97,937		—		97,937
Other comprehensive loss		—		—		(596)		(596)
Dividends declared				(69,428)		—		(69,428)
Forfeitures of vested restricted stock awards and exercised stock options		(149)		—		—		(149)
Compensation relating to restricted stock awards		277		—		—		277
Compensation relating to restricted stock units awards		1,645		—		—		1,645
Compensation relating to stock option awards		117		—		—		117
Balance at September 30, 2023	$	1,489,041	$	155,877	$	5,159	$	1,650,077

See notes to condensed consolidated financial statements

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

Note 1 — Basis of Presentation:

The accompanying unaudited condensed consolidated financial statements include the accounts of International Seaways, Inc. (“INSW”), a Marshall Islands corporation, and its wholly owned subsidiaries. Unless the context indicates otherwise, references to “INSW”, the “Company”, “we”, “us” or “our”, refer to International Seaways, Inc. and its subsidiaries. As of September 30, 2024, the Company’s operating fleet consisted of 76 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 82 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 and nine months ended September 30, 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
Reversal of expected credit losses		(1)
Balance at September 30, 2024	$	190

During the three and nine months ended September 30, 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 97% and 95% of consolidated voyage receivables at September 30, 2024 and December 31, 2023, respectively.

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

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

method or straight-line basis over the term of the related debt. Unamortized deferred finance charges of $11.8 million and $4.5 million relating to the $500 Million Revolving Credit Facility and the $160 Million Revolving Credit Facility (See Note 8, “Debt”) as of September 30, 2024 and December 31, 2023, respectively, are included in other assets in the accompanying condensed consolidated balance sheets. Unamortized deferred financing charges of $6.8 million and $11.3 million as of September 30, 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 $2.5 million for the three and nine months ended September 30, 2024, respectively, and $1.2 million and $3.8 million for the three and nine months ended September 30, 2023, respectively.

Vessels construction in progress — Interest costs are capitalized to vessels during the period that vessels are under construction.

Interest capitalized during the three and nine months ended September 30, 2024 totaled $0.3 million and $0.7 million, respectively, and nil and $2.3 million during the three and nine months ended September 30, 2023, respectively. Construction of the Company’s three 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. As the guidance requires only additional disclosure, there will be no effects of this standard on our financial position, results of operations or cash flows.

In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses. This guidance will require additional disclosures and disaggregation of certain costs and expenses presented on the face of the income statement. The amendments are effective for annual reporting periods beginning after December 15, 2026 and interim reporting period beginning after December 15, 2027 with early adoption permitted. We are currently evaluating the impact of this 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

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

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 20,198 and 23,302 for the three and nine months ended September 30, 2024, respectively, and 29,519 and 38,288 for the three and nine months ended September 30, 2023, respectively. Such participating securities are allocated a portion of income, but not losses under the two-class method. As of September 30, 2024, there were 419,215 shares of restricted stock units and 174,417 stock options outstanding and considered to be potentially dilutive securities.

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)		2024		2023		2024		2023
Net income allocated to:
Common Stockholders	$	91,650	$	97,878	$	380,730	$	424,011
Participating securities		38		59		171		321
	$	91,688	$	97,937	$	380,901	$	424,332

For the three and nine months ended September 30, 2024 earnings per share calculations, there were 336,905 and 374,871 dilutive equity awards outstanding, respectively. For the three and nine months ended September 30, 2023 earnings per share calculations, there were 413,666 and 433,924 dilutive equity awards outstanding, respectively. Awards of 593,632 and 579,779 for the three and nine months ended September 30, 2024, respectively, and 774,957 and 804,199 for the three and nine months ended September 30, 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, other operating 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 and nine months ended September 30, 2024 and 2023 follows:

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


	Crude		Product
(Dollars in thousands)	Tankers		Carriers		Other		Totals
Three months ended September 30, 2024:
Shipping revenues	$	103,212	$	121,978	$	—	$	225,190
Time charter equivalent revenues		98,821		120,866		—		219,687
Depreciation and amortization		20,536		18,768		—		39,304
Gain on disposal of vessels and other assets, net		(18)		(13,481)		—		(13,499)
Adjusted income from vessel operations		39,656		62,213		—		101,869
Adjusted total assets at September 30, 2024		1,453,559		953,451		—		2,407,010

Three months ended September 30, 2023:
Shipping revenues	$	114,250	$	127,458	$	—	$	241,708