0001558370-23-014094.txt : 20230809 0001558370-23-014094.hdr.sgml : 20230809 20230809080608 ACCESSION NUMBER: 0001558370-23-014094 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 93 CONFORMED PERIOD OF REPORT: 20230630 FILED AS OF DATE: 20230809 DATE AS OF CHANGE: 20230809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: International Seaways, Inc. CENTRAL INDEX KEY: 0001679049 STANDARD INDUSTRIAL CLASSIFICATION: WATER TRANSPORTATION [4400] IRS NUMBER: 980467117 STATE OF INCORPORATION: 1T FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-37836 FILM NUMBER: 231153444 BUSINESS ADDRESS: STREET 1: 600 THIRD AVENUE STREET 2: 39TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10016 BUSINESS PHONE: 2129534100 MAIL ADDRESS: STREET 1: 600 THIRD AVENUE STREET 2: 39TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10016 FORMER COMPANY: FORMER CONFORMED NAME: OSG International, INC DATE OF NAME CHANGE: 20160707 10-Q 1 insw-20230630x10q.htm 10-Q
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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 June 30, 2023

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

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 August 7, 2023: common stock, no par value 48,889,609 shares.

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

June 30, 2023

    

December 31, 2022

ASSETS

Current Assets:

Cash and cash equivalents

$

116,023

$

243,744

Short-term investments

120,000

80,000

Voyage receivables, net of allowance for credit losses of $56 and $261

including unbilled receivables of $234,392 and $279,567

241,088

289,775

Other receivables

12,840

12,583

Inventories

629

531

Prepaid expenses and other current assets

15,079

8,995

Advance payment on debt

46,427

Current portion of derivative asset

7,595

6,987

Total Current Assets

559,681

642,615

Vessels and other property, less accumulated depreciation of $378,341 and $331,903

1,977,639

1,680,010

Vessels construction in progress

123,940

Deferred drydock expenditures, net

69,887

65,611

Operating lease right-of-use assets

6,308

8,471

Finance lease right-of-use assets

44,391

Pool working capital deposits

32,521

35,593

Long-term derivative asset

4,462

4,662

Other assets

5,158

10,041

Total Assets

$

2,655,656

$

2,615,334

LIABILITIES AND EQUITY

Current Liabilities:

Accounts payable, accrued expenses and other current liabilities

$

47,044

$

51,069

Current portion of operating lease liabilities

452

1,596

Current portion of finance lease liabilities

41,870

Current installments of long-term debt

199,785

162,854

Total Current Liabilities

247,281

257,389

Long-term operating lease liabilities

7,539

7,740

Long-term debt

778,266

860,578

Other liabilities

2,296

1,875

Total Liabilities

1,035,382

1,127,582

Commitments and contingencies

Equity:

Capital - 100,000,000 no par value shares authorized; 48,889,609 and 49,120,648

shares issued and outstanding

1,487,151

1,502,235

Retained earnings/(accumulated deficit)

127,368

(21,447)

1,614,519

1,480,788

Accumulated other comprehensive income

5,755

6,964

Total Equity

1,620,274

1,487,752

Total Liabilities and Equity

$

2,655,656

$

2,615,334

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 June 30,

Six Months Ended June 30,

2023

2022

2023

2022

Shipping Revenues:

Pool revenues, including $86,325, $31,114, $178,032 and $54,385

from companies accounted for by the equity method

$

247,591

$

164,727

$

507,169

$

248,489

Time charter revenues

26,112

8,133

39,262

14,308

Voyage charter revenues

18,500

15,337

32,902

26,882

292,203

188,197

579,333

289,679

Operating Expenses:

Voyage expenses

3,868

2,658

7,678

6,165

Vessel expenses

65,151

59,563

123,920

119,880

Charter hire expenses

10,502

7,693

19,302

15,002

Depreciation and amortization

32,445

27,256

61,993

54,256

General and administrative

11,522

10,847

22,768

21,013

Third-party debt modification fees

13

900

420

1,087

Loss/(gain) on disposal of vessels and other assets, net of impairments

26

(8,102)

(10,722)

(9,478)

Total operating expenses

123,527

100,815

225,359

207,925

Income from vessel operations

168,676

87,382

353,974

81,754

Equity in results of affiliated companies

(5,162)

435

Operating income

168,676

82,220

353,974

82,189

Other income/(expense)

3,381

(574)

7,662

(800)

Income before interest expense and income taxes

172,057

81,646

361,636

81,389

Interest expense

(17,914)

(12,558)

(34,861)

(25,298)

Income before income taxes

154,143

69,088

326,775

56,091

Income tax provision

(381)

(52)

(380)

(56)

Net income

$

153,762

$

69,036

$

326,395

$

56,035

Weighted Average Number of Common Shares Outstanding:

Basic

49,029,784

49,602,181

49,083,897

49,586,847

Diluted

49,404,837

49,878,645

49,525,282

49,754,876

Per Share Amounts:

Basic net income per share

$

3.13

$

1.39

$

6.64

$

1.13

Diluted net income per share

$

3.11

$

1.38

$

6.59

$

1.12

See notes to condensed consolidated financial statements

2

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

Three Months Ended June 30,

Six Months Ended June 30,

2023

2022

2023

2022

Net income

$

153,762

$

69,036

$

326,395

$

56,035

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

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

3,081

966

(757)

11,728

Defined benefit pension and other postretirement benefit plans:

Net change in unrecognized prior service costs

(30)

73

(60)

99

Net change in unrecognized actuarial losses

(198)

489

(392)

660

Other comprehensive income/(loss), net of tax

2,853

1,528

(1,209)

12,487

Comprehensive income

$

156,615

$

70,564

$

325,186

$

68,522

See notes to condensed consolidated financial statements

3

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

Six Months Ended June 30,

2023

2022

Cash Flows from Operating Activities:

Net income

$

326,395

$

56,035

Items included in net income not affecting cash flows:

Depreciation and amortization

61,993

54,256

Loss on write-down of vessels and other assets

1,697

Amortization of debt discount and other deferred financing costs

3,128

1,955

Amortization of time charter hire contracts acquired

684

Deferred financing costs write-off

721

261

Stock compensation

3,873

2,728

Equity in results of affiliated companies

20

(10,017)

Other – net

(1,560)

(327)

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

Gain on disposal of vessels and other assets, net

(10,722)

(11,175)

Loss on sale of investments in affiliated companies

9,512

Cash distributions from affiliated companies

2,250

Payments for drydocking

(18,992)

(25,789)

Insurance claims proceeds related to vessel operations

2,698

2,035

Changes in operating assets and liabilities:

Decrease/(increase) in receivables

48,687

(74,809)

Decrease in deferred revenue

(142)

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

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

(1,643)

5,549

Net cash provided by operating activities

414,456

14,845

Cash Flows from Investing Activities:

Expenditures for vessels, vessel improvements and vessels under construction

(188,068)

(53,801)

Proceeds from disposal of vessels and other property, net

20,070

79,614

Expenditures for other property

(586)

(509)

Investments in short-term time deposits

(175,000)

Proceeds from maturities of short-term time deposits

135,000

Pool working capital deposits

(838)

Proceeds from sale of investments in affiliated companies

140,069

Net cash (used in)/provided by investing activities

(208,584)

164,535

Cash Flows from Financing Activities:

Issuance of debt, net of issuance and deferred financing costs

Borrowings on long term debt, net of lenders' fees

641,050

Repayments of debt

(192,856)

(717,913)

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

169,717

60,076

Payments and advance payment on sale and leaseback financing and finance lease

(112,786)

(18,816)

Payments of deferred financing costs

(1,146)

(556)

Repurchase of common stock

(13,948)

Cash dividends paid

(177,565)

(8,941)

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

(5,009)

(1,493)

Net cash used in by financing activities

(333,593)

(46,593)

Net (decrease)/increase in cash, cash equivalents and restricted cash

(127,721)

132,787

Cash, cash equivalents and restricted cash at beginning of year

243,744

98,933

Cash, cash equivalents and restricted cash at end of period

$

116,023

$

231,720

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

Noncontrolling

Capital

Deficit)

Income/(loss)

Interests

Total

For the six months ended

Balance at January 1, 2023

$

1,502,235

$

(21,447)

$

6,964

$

$

1,487,752

Net income

326,395

326,395

Other comprehensive loss

(1,209)

(1,209)

Dividends declared

(177,580)

(177,580)

Forfeitures of vested restricted stock awards and exercised stock options

(5,009)

(5,009)

Compensation relating to restricted stock awards

491

491

Compensation relating to restricted stock units awards

3,043

3,043

Compensation relating to stock option awards

339

339

Repurchase of common stock

(13,948)

(13,948)

Balance at June 30, 2023

$

1,487,151

$

127,368

$

5,755

$

$

1,620,274

Balance at January 1, 2022

$

1,591,446

$

(409,338)

$

(12,360)

$

584

$

1,170,332

Net income

56,035

56,035

Other comprehensive income

12,487

12,487

Dividends declared

(8,941)

(8,941)

Forfeitures of vested restricted stock awards

(1,493)

(1,493)

Compensation relating to restricted stock awards

583

583

Compensation relating to restricted stock units awards

1,607

1,607

Compensation relating to stock option awards

538

538

Balance at June 30, 2022

$

1,583,740

$

(353,303)

$

127

$

584

$

1,231,148

For the three months ended

Balance at April 1, 2023

$

1,501,516

$

52,865

$

2,902

$

$

1,557,283

Net income

153,762

153,762

Other comprehensive income

2,853

2,853

Dividends declared

(79,259)

(79,259)

Forfeitures of vested restricted stock awards

(2,390)

(2,390)

Compensation relating to restricted stock awards

223

223

Compensation relating to restricted stock units awards

1,631

1,631

Compensation relating to stock option awards

119

119

Repurchase of common stock

(13,948)

(13,948)

Balance at June 30, 2023

$

1,487,151

$

127,368

$

5,755

$

$

1,620,274

Balance at April 1, 2022

$

1,588,606

$

(422,339)

$

(1,401)

$

584

$

1,165,450

Net income

69,036

69,036

Other comprehensive income

1,528

1,528

Dividends declared

(5,963)

(5,963)

Forfeitures of vested restricted stock awards

(523)

(523)

Compensation relating to restricted stock awards

287

287

Compensation relating to restricted stock units awards

1,106

1,106

Compensation relating to stock option awards

227

227

Balance at June 30, 2022

$

1,583,740

$

(353,303)

$

127

$

584

$

1,231,148

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 June 30, 2023, the Company’s operating fleet consisted of 74 wholly-owned or lease financed oceangoing vessels, engaged primarily in the transportation of crude oil and refined petroleum products in the International Flag trade through its wholly owned subsidiaries.

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 six months ended June 30, 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. Restricted cash is nil as of June 30, 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:

6

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

(205)

Balance at June 30, 2023

$

56

During the three and six months ended June 30, 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% and 96% of consolidated voyage receivables at June 30, 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 $3.3 million relating to the $750 Million Facility Revolving Loan (See Note 10, “Debt”) as of June 30, 2023 and $6.9 million relating to the $750 Million Facility Revolving Loan and BoComm Lease Financing as of December 31, 2022, are included in other assets in the accompanying condensed consolidated balance sheets. Unamortized deferred financing charges of $14.7 million and $13.4 million as of June 30, 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 $2.6 million for the three and six months ended June 30, 2023, respectively, and $1.1 million and $1.7 million for the three and six months ended June 30, 2022, 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 six months ended June 30, 2023 totaled $0.5 million and $2.3 million, respectively, and $0.8 million and $1.5 million during the three and six months ended June 30, 2022, 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.

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 June 30, 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 36,668 and 42,745 for the three and six months ended June 30, 2023, respectively, and 70,350 and 78,687 for the three and six months ended June 30, 2022, respectively. Such participating securities are allocated a portion of income, but not losses under the two-class method. As of June 30, 2023, there were 516,252 shares of restricted stock units and 257,310 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 June 30,

Six Months Ended June 30,

(Dollars in thousands)

2023

2022

2023

2022

Net income allocated to:

Common Stockholders

$

153,659

$

68,939

$

326,124

$

55,947

Participating securities

103

97

271

88

$

153,762

$

69,036

$

326,395

$

56,035

For the three and six months ended June 30, 2023 earnings per share calculations, there were 375,053 and 441,385 dilutive equity awards outstanding, respectively. For the three and six months ended June 30, 2022 earnings per share calculations, there were 276,464 and 168,029 dilutive equity awards outstanding, respectively. Awards of 780,471 and 816,387 for the three and six months ended June 30, 2023, respectively, and 1,245,340 and 1,155,756 for the three and six months ended June 30, 2022, respectively, were not included in the computation of dilutive 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.