International Seaways, Inc.

Good morning and thank you all for standing by. I would like to welcome you all to International Seaway's first quarter 2023 earnings conference call. All lines have been placed on mute without any background noise and after the speaker's remarks we will conduct a question and answer session. Please press star followed by 1 on your telephone keypad to ask a question. Please press star 2 if you do change your mind and would like to remove your request to speak. And for operator assistance at any point, it's the star zero key. Thank you. I'll now turn the conference over to your host, James Small, General Counsel. So, please go ahead, James.

Thank you, Brika. Good morning, everyone, and welcome to International Seaway's earnings call for the first quarter of 2023. 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 topics. The outlooks for the crude and product tanker markets and changes in trading patterns. Forecasts of world and regional economic activity and 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 during 2023 or in 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 and 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 management's experience and perceptions of historical trends, current conditions expected in 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 Seaway's actual results to differ from expectations include those described in our annual report on Form 10-K, our quarterly reports on Form 10-Q, and in other filings 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 Labrocki. Lois?

Thanks very much, James. Good morning, everyone. Thank you for joining International Seawaste Earnings Call for the first quarter of 2023. Following slide four of the presentation found on our investor relations section of our website, net income for the first quarter was $173 million. or $3.47 per diluted share, bringing our cumulative earnings over the last three quarters to over $500 million. Adjusted EBITDA, which removes the gain on the sale of an MR, was $209 million. Based on our strong results in the first quarter and strong spot fixtures thus far in the second quarter, we have declared a combined dividend of $1.62 per share. Following the dividend payment in June, Seaway's year-to-date dividends are nearly as high as the previous three years combined, as found in the chart on the upper right-hand corner of the slide, and surpasses $360 million in cumulative returns to shareholders since the start of 2020. and finally represents over $5 per share returned to shareholders over trailing 12 months. Our success today is clearly demonstrated in our balanced capital allocation approach. Two of the three dual-fuel VLCCs have been delivered, with the third new billing and final delivery expected later in the second quarter. We ordered these ships in 2021, at a contract price of $96 million per ship. And today's vessels value has these ships worth nearly $150 million each. These ships will be on time charter for the next seven years to an oil major with a fixed rate component plus a profit share. They are financed at a 64% loan to current value at a fixed interest rate of 425 basis points. We also exercised the purchase options on two vessels under sale-leaseback arrangements for a net price of $41 million combined, representing a discount to current values of about 45%. One vessel delivered in March and the other in April. Additionally, we sold an MR during the quarter, and that resulted in a $10 million gain on sale, evidencing our successful investments at low points in the cycle. The balance sheet remains strong with total liquidity ending the quarter at $519 million. This is after our $98 million in dividends and $97 million of repayment toward our term loan. With the repayment on the term loan, we amended the facility. to increase our revolving credit to nearly $260 million and released 22 vessels from the collateral package. Today, we have 27 unencumbered vessels representing 35% of our total fleet. Lastly, we fixed four shifts on two to three year time charters during the quarter, increasing our contracted revenue to about $337 million excluding any profit share component on the new Bill D. These additional time charters increase our fixed coverage to over 10% of the fleet and reduce our cash break-even levels. On slide five, Russian oil exports remain in focus. Trade flows to Europe are displaced due to the ongoing sanctions and creating higher ton-mile demand while soaking up tonnage. On the left-hand side of the slide, it's clear that Russian crude is primarily heading to Asia, particularly India and China. The chart shows that crude seaborne exports have remained relatively stable and constant at 4.5 to 5 million barrels per day, while the composition of the destination on the right axis has narrowed significantly to essentially Turkey and Europe and increased significantly to Asia. Product exports from Russia in a similar graph on the right-hand side of the page are not as clear in terms of displacement since the sanctions began only in February. Turkish imports in the Mediterranean are all that remain for Europe, while volumes to Asia and Africa have increased. While this story continues to develop, including the concept of double handling via STS transfers, International Seaways and its commercial managers remain constant on our self-sanctioning of lifting Russian oil. Turning to slide six, we have updated our standard set of bullets on tanker demand drivers with the subtle green up arrows next to the bullet representing good for tankers, the black dash represents neutral impact on tankers, and a red arrow meaning the topic is not presently positive for tanker demand. I won't read each of these bullets individually, but we'll pull some highlights for you. While the consensus of oil demand growth for 2023 is around 2 million barrels per day, most believe that the growth in oil demand is weighted to the second half of the year. In the chart on the lower left of the slide, the average of the EIA, the IEA, and OPEC forecast for oil supply and demand reflects a slight oversupply in the first half of 2023 that is then more than offset in the second half of the year. We saw inventories grow in the first quarter, some of which is seasonal, but we remain cautious on near-term views of global recession. With these considerations, it seems logical that OPEC Plus announced cuts to their production targets. However, we're a bit skeptical on compliance as these targets, as evidenced in the lower right-hand chart, are very close to actual recent OPEC Plus production levels in the past few months. We believe sentiment has been impacted particularly on the VLCC earnings, and we continue to monitor oil supply and oil demand as the year progresses. On slide seven, the tanker supply side remains a compelling story to our fundamentals. The supply side remains constrained with an aging fleet and barriers to ordering new ships. Yards are still quite busy over the next two years with other shipping sectors. This is keeping new building prices high and limiting economic decisions on ordering. We expect new environmental regulations to continue to evolve and to further pause a wave of new building orders. In the chart on the lower left of the page, contracting has been somewhat limited this year, and there is a significant downward trend over the last few years for tanker vessels that are taking longer to build with 2026 a reasonable estimate for the early delivery on certain new building contracts today. The oil tanker fleet age is now above 12 years old, with more than one-third of the fleet above 15. As you can see in the lower right-hand chart, expected new tonnage over the next few years is well under the candidates that could be removed from the commercial trading, and we may see negative fleet growth in the near future. The supply outlook for tankers in the near term is incredibly positive. Combined with higher oil demand and disrupted trade flows, the overall outlook for tankers remains strong, particularly in the medium term. There may be near-term recession, which could affect tanker rates or we may return to our regular seasonality in the summer months. In either case, we remain positive on tankers, and we believe that Seaways is very well positioned to capture strong markets with our low operating leverage and our diversified fleet of 76 tankers in both crude and product sectors. With our healthy balance sheet and our liquidity, we expect to continue building upon our track record and on our balanced capital allocation strategy, investing in the fleet opportunistically, reducing debt, and returning cash to shareholders. I'm going to now turn it over to Jeff, our CFO, to provide our financial review. Jeff?