International Seaways, one of the largest tanker companies worldwide providing energy transportation services for crude oil and petroleum products, reported results for the first quarter of 2022.
HIGHLIGHTS & RECENT DEVELOPMENTS
“Following a year of significant growth, we continued to advance strategic objectives in the first quarter, further solidifying our balance sheet and optimizing our fleet by selling older tonnage in a rising price environment,” said Lois K. Zabrocky, International Seaways’ President and CEO. “With both near-term catalysts driving tanker rates higher and longer-term positive market fundamentals fully intact based on historically low inventories, growing oil demand that is anticipated to return to pre-pandemic levels, and expectations of increased oil production in the second half of the year, we remain optimistic that our expanded scale, capabilities, and substantial operating leverage will serve us well as the rate environment improves.”
Ms. Zabrocky added, “We have further strengthened Seaways’ industry position ahead of a market rebound and believe we are ideally positioned with our sizable, diversified fleet of crude and product tankers. Our financial strength has been bolstered by the success of our ongoing fleet optimization program and financing activities that have unlocked value for shareholders.”
Jeff Pribor, the Company’s CFO stated, “We continue to advance initiatives that support a diversified capital structure and financial flexibility for the benefit of shareholders. Returning capital is a top priority, as evidenced by the nearly $100 million we have returned since the start of 2020, including our regular quarterly dividend in the first quarter. Going forward, we expect to pursue additional opportunities to strengthen our financial position and further implement our disciplined and accretive capital allocation strategy.”
FIRST QUARTER 2022 RESULTS
Net loss for the first quarter of 2022 was $13.0 million, or $0.26 per diluted share, compared to a net loss of $13.4 million, or $0.48 per diluted share, for the first quarter of 2021. The results in the first quarter of 2022 reflected a significant increase in revenue days as a result of the merger that were mostly offset by higher operating expenses (vessel expenses, depreciation and amortization, general and administrative expenses) and interest expense, reflecting the debt assumed in the merger that closed in the third quarter of 2021.
Consolidated TCE revenues(C) for the first quarter were $98.0 million, compared to $45.2 million for the first quarter of 2021. This increase in TCE revenue reflects an increase of approximately 3,800 revenue days of the significantly larger post-merger fleet. Shipping revenues for the first quarter were $101.5 million, compared to $46.8 million for the first quarter of 2021.
Adjusted EBITDA(A) for the first quarter was $26.0 million, compared to $10.7 million for the first quarter of 2021.
Crude Tankers
TCE revenues for the Crude Tankers segment were $36.5 million for the first quarter, compared to $35.9 million for the first quarter of 2021. This increase was primarily attributable to an increase of approximately 400 revenue days as a result of changes fleet composition from the merger and our fleet optimization program. Shipping revenues for the Crude Tankers segment were $39.6 million for the first quarter of 2022, compared to $37.5 million for the first quarter of 2021.
Product Carriers
TCE revenues for the Product Carriers segment were $61.5 million for the first quarter, compared to $9.2 million for the first quarter of 2021. This increase is attributable to an increase of over 3,400 revenue days as a result of the merger and higher average rates earned by the LR1 and MR fleets, with average spot rates increasing to approximately $20,300 and $14,000 per day, respectively. Shipping revenues for the Product Carriers segment were $61.9 million for the first quarter, compared to $9.2 million for the first quarter of 2021.
BALANCE SHEET ENHANCEMENTS
The Company executed a number of liquidity enhancing and financial diversification initiatives during the first four months of 2022:
VESSEL SALES & RECYCLING
During the first quarter of 2022, the Company sold a 2010-built MR and purchased a 2011-built LR1 with the same counterparty. The transaction resulted in a net cost to the Company of approximately $3.0 million. The LR1 replaced the MR as collateral in the $525 million debt facility.
During 2022, the Company agreed to sell two Panamaxes, built between 2002 and 2004, delivered to the buyers in April 2022 for recycling compliant with the Hong Kong Convention. Proceeds of approximately $8.1 million on one of these vessels were received prior to the end of the first quarter.
In April 2022, the Company sold a 2006-built Handysize product carrier, which resulted in proceeds, net of debt repayment of $6.1 million. The remaining three 2006-built Handysize product carriers were agreed to be sold in the second quarter for net proceeds of approximately $17.8 million.
The Company also agreed to sell a 2008-built MR in the second quarter, which is expected to generate proceeds, net of debt repayment, of approximately $10.3 million.
