Yahoo Finance International Seaways Inc (INSW) (Q1 2024) Earnings Call Transcript Highlights: Robust ...
Net Income: $145 million
Earnings Per Share (EPS): $2.92 per diluted share
Adjusted EBITDA: Over $190 million
Total Liquidity: $626 million, including $411 million of undrawn revolver
Free Cash Flow: Approximately $121 million for the first quarter
Dividend: Declared at $1.75 per share
Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
International Seaways Inc reported strong earnings for the eighth consecutive quarter with a net income of $145 million and $2.92 per diluted share.
Adjusted EBITDA for the first quarter of 2024 was $192 million, indicating robust operational performance.
The company has enhanced its financial flexibility by increasing total liquidity to $626 million, including $559 million in undrawn revolver capacity.
International Seaways Inc declared a combined dividend of $1.75 per share, maintaining a double-digit yield for shareholders.
The company successfully upgraded its fleet by acquiring six new Eagle MRs and declared options for additional dual-fuel ready LR1 vessels, positioning itself well for future market demands.
Negative Points
Despite strong earnings, the company faces ongoing risks and uncertainties that could affect future results, as noted in forward-looking statements.
Mandatory debt repayments have been reduced significantly, but the company still holds $700 million in gross debt as of March 31.
The tanker market's volatility and the potential impact of global economic conditions could pose challenges to sustaining current performance levels.
While the company has reduced its breakeven costs, it remains exposed to fluctuations in the tanker market, which could impact profitability.
The company's strategy involves selling older vessels, which, while profitable, could affect operational capacity if not managed carefully.
Q & A Highlights
Q: Omar Nokta from Jefferies asked about the performance of Panamax LR1s and their deployment in South America following the addition of LR1 newbuildings. A: Lois Zabrocky, CEO of International Seaways, confirmed strong performance across the midsize sector and mentioned that LR1s are trading in niche trades in the Americas. She highlighted the potential increase in Aframaxes due to the TMX pipeline, which might also benefit LR1s indirectly.
Q: Liam Burke from B. Riley Securities inquired if there has been any pushback from shipping customers regarding the chartering of older MRs as they age. A: Derek Solon, Senior VP and Chief Commercial Officer, responded that despite the age of some vessels, the strong freight market has not led to discrimination based on vessel age, with older MRs still achieving strong rates.
Q: Chris Robertson from Deutsche Bank questioned the company's strategy given its strong financial position and low cash breakeven levels. A: Jeffrey Pribor, CFO, explained that while the company is pleased with its financial health and low breakeven rates, it continues to look for opportunities to grow and renew the fleet, rather than just harvesting returns.
Q: Sherif Elmaghrabi from BTIG asked about the availability and timing of tanker newbuild slots. A: Lois Zabrocky noted that most newbuild slots are booked until 2027, with some availability for MRs in 2026. Derek Solon added that the new LR1s are built to old Panamax specifications, which gives them a competitive edge in certain trades.
Q: Liam Burke also asked about the possibility of adjusting the dividend policy due to improving cash flows and reduced cash costs. A: Jeffrey Pribor indicated that while there's no immediate plan to adjust the dividend, it's something that might be considered over time as the company continues to grow.
Q: Chris Robertson followed up on potential sales of older MR assets and the use of proceeds from vessel sales. A: Lois Zabrocky confirmed that the secondhand market is strong and that the company selectively prunes its fleet, using proceeds to high-grade and renew its fleet.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
