International Seaways, Inc.

Ladies and gentlemen, welcome to the International C-Waze Fourth Quarter 2022 Earnings Conference Call. My name is Glenn, and I will be the moderator for today's call. If you would like to ask a question during the presentation, you may do so by pressing star 1 on a telephone keypad. I will now hand you over to your host, James Moore, General Counsel. James, please go ahead.

Thank you, Glenn. Good morning, everyone, and welcome to International C-Waze Earnings Call for the fourth quarter of and full year 2022. Before we begin, I would like to start off by advising everyone with us on the call today of the following. During this call, management may make forward-looking statements regarding the company or the industry in which it operates. Those statements may address, without limitation, the following. The outlooks for the crude and product tanker markets and changes in trading patterns, forecasts of world and regional economic activity and of the demand for and production of oil and other petroleum products, the effects of the ongoing conflict between Russia and Ukraine, the company's strategy, the effects of the ongoing coronavirus pandemic, our business prospects, expectations regarding revenues and expenses, including vessel, charter hire, and G&A expenses, estimated bookings, TCE rates, and or capital expenditures in 2023 or any other period, projected scheduled dry dock and off-hire days, purchases and sales of vessels, construction of new-build vessels and other investments, the company's consideration of strategic alternatives, Anticipated at recent financing transactions and any plans to issue dividends, the company's relationships with its stakeholders, the company's ability to achieve its financing and other objectives, and other economic, political, and regulatory developments globally. Any such forward-looking statements take into account various assumptions made by management based on a number of factors, including experienced perception of historical trends, current conditions, expected and future developments, and other factors that management believes are appropriate to consider in the circumstances. Forward-looking statements are subject to risks, uncertainties, and assumptions, many of which are beyond the company's control, which could cause actual results to differ materially from those implied or expressed by the statements. Factors, risks, and uncertainties that could cause international COAs' actual results to differ from expectations include, in particular, those described in our annual report on Form 10-K for 2022, and in other findings that we have made or in the future may make with the U.S. Securities and Exchange Commission. Now, let me turn the call over to our President and Chief Executive Officer, Ms. Lois LeBrock. Lois?

Thank you very much, James. Good morning, everyone. Thank you for joining International Seawaste Earnings Call for the fourth quarter and full year of 2022. We're going to start out on page four. Today, International Seawaste has reported our highest earnings in our history. Net income for the fourth quarter was $218 million, $4.40 per share and $388 million or close to $8 per share for the full year of 2022. As a result and building upon our solid track record of returning cash to shareholders, we have declared a combined dividend of $2 per share We are continuing our disciplined capital allocation strategy. We have a demonstrated history of investing at low points in the cycle. Vessel assets on our books are at less than $2 billion that are today worth over $3 billion. With $1 billion in debt and cash of nearly $325 million, our net loan-to-value is currently under 24%. In March, we will take delivery of our first dual-fuel VLCC, the Seaway's Endeavor, which, along with her two sister ships, expected to deliver in the first half of 2023, will commence long-term time charters to shell. These ships are fully funded, creating another $172 million of debt in aggregate. We sold a 2008 built MR in the fourth quarter, and we're delivering another to reliable buyers in the first quarter. This saves us about $4 million each from their 2023 dry docking and ballast water treatment installation. We will allocate the estimated $28 million in combined net proceeds from these two vessel sales toward the $41 million net cash cost for two AfriMaxes, where we have exercised below market purchase options. These aftermaths will not be further in comfort. We announced today unanimous commitment from the syndicate of our largest senior secured facility to amend terms to repay $100 million of the outstanding term loan and increase the revolver capacity to over $250 million. The amendment will also release 22 vessels from the collateral package. These 22 ships combined with the two aforementioned APRMAXs and three LRs released as a result of repaying our Macquarie Loan Facility in the fourth quarter positions Seaway with one third of our fleet unencumbered. Highlights and recent developments. Slide five. The hottest topic in tankers today is what's happening with Russian oil exports. The chart on the left shows that while crude oil exports from Russia have been fairly consistent within a range over the last few years, Russian oil that was going to Europe is now traveling longer distances to Asia, primarily India and China, and absorbing crude tonnage for longer periods of time. On the right-hand chart, our data reflected here through January 2023 shows that self-sanctioning has been limited on oil products, as much of Russian oil was still heading into the EU in the months leading up to the sanctions that were implemented on February 5th. We expect that the product sanctions will create displacement. It's early days, and we have a limited data set However, the changes in trade flows are anticipated to be a positive for the busy product tanker market. Journey to slide six. We updated our standard set of bullets on tanker demand drivers with the subtle green up arrow next to the bullets represented as good for tankers, the black dash representing unusual impact, and the red down arrows meaning the factor is not positive for tanker demand. Pulling some highlights, in total, oil demand is expected to grow about 2% in 2023, a good portion of which is attributable to Chinese demand reopening after relaxing the zero COVID policies that had been in place. We saw increased travel at the beginning of the year for the New Year's holiday, and this has continued with higher congestion in major Chinese cities. If you look at the chart in the lower left-hand corner, Chinese demand should increase nearly 5% or almost 700,000 barrels per day in 2023. This is especially important for the crude tanker market where Chinese imports about 10 million barrels per day. It's also very helpful for the product carrier market as China has increased its product export quota. Crude oil production is expected to increase primarily from the Americas by around 1 million barrels per day. While OPEC announced their production cuts in 2022 using a reference point at peak production levels, there have been some noticeable cuts from Saudi, Iraq, and the UAE that have been offset by some of the countries that do not have limits, such as Libya, where production has now resumed a more consistent level. The last key point that I'd like to bring up on this page is the inventory level. On the bottom right-hand chart, slide six, you can see that we have separated the OECD crude and product inventories, which have grown recently, to above their averages from 10 years ago. We expect that some of the build has been ahead of the sanctions on Russian oil and natural ebbs and flows around the regional oil demand, refinery turnaround schedules, and other geopolitical factors. These charts are commercial inventories only, and they do exclude the OECD strategic reserves, which as we know are at historic lows. On slide seven, we updated our tanker supply statistics as we see them developing. Tanker supply remains constrained due to a lack of orders and a rapidly aging fleet. Yards are busy with other shipping sectors, keeping new build prices high and limiting economic decisions on ordering. The industry is expected to face more environmental regulations ahead, further limiting conventionally fueled new buildings for tankers. Alternative fuels for propulsion are still in the first generation in the tanker space, and we're likely to see more opportunistic partnering with sponsors along the supply chain. The worldwide oil tanker fleet's age is now above 12 years old, with more than one third of the fleet above 15 years old. As we show in the charts below for the crude and product sectors, vessels over 20 years old are not going to be replaced in the coming years based on the order book we have today. The charts reflect the millions of deadweight tons that are either 20 years old today or will be in the given years aligned with the millions of deadweight tons that are scheduled during those years for delivery. On the crude side, there is a more complete mismatch and dearth of orders, while on the product side, we have seen some MR and LR2s ordered in recent months. The supply outlook for tankers in the near term is incredibly positive. Combined with higher oil demand, low inventories, and disrupted trade flows, the overall outlook for tankers remains strong, barring global economic slowdown. At International Seaways, we are well positioned to capture the strong rate environment with our operational leverage from our diversified fleet of 77 tankers in both crude and product. With our healthy balance sheet and our liquidity, we expect to continue our balanced capital allocation strategy, investing in the fleet opportunistically. reducing our debt, and very importantly, returning cash to shareholders. I will now turn it over to our CFO, Jeff Preborg, to provide the financial review. Jeff?