International Seaways, Inc.

Hello everyone and welcome to International Seawaste second quarter 2023 results call and thank you for standing by. My name is Daisy and I'll be coordinating your call today. If you would like to register a question, please press star followed by one on your telephone keypad. I would now like to hand the call over to your host, James Small, General Counsel to begin. So James, please go ahead.

Thank you, Daisy. Good morning everyone and welcome to International Seawaste earnings call for the second 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. 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, 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, 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 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 statement. Faster risks and uncertainties that could cause international COS actual results to differ from expectations include those described in our annual report on Form 10-K for 2022, our quarterly reports on Form 10-Q for the first and second quarters of 2023, 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 Zabrocki. Lois?

Thank you very much, James. Good morning, everyone. Thank you very much for joining International Seawaste Earnings Call. for the second quarter of 2023. Going to slide four of the presentation found on the investor relations section of our website. Net income for the second quarter was $154 million, $3.11 per diluted share, bringing our cumulative earnings over the last 12 months to over $650 million. Adjusted EBITDA was $205 million. Based on our strong results in the second quarter and strong spot rates thus far in the third quarter, we have declared a combined dividend of $1.42 per share. Following the dividend payment in September, returns to shareholders over the last 12 months include a cumulative $6.16 in combined dividends, as well as $14 million in buybacks. This equates to approximately $360 million, which represents a 17% yield on our average market cap over the period. We have returned to shareholders an average of about half of our net income. We have enhanced our capital structure. We have liquidity of nearly $500 million, comprised of $236 million in cash and an undrawn revolver of nearly $260 million. Our strong liquidity is net of our returns to shareholders and of our deleveraging initiative. In the second quarter, we prepaid $75 million of our debt portfolio, two loans on sale leaseback financing, $46 million that had an interest margin of 390 basis points above bank borrowing rates and $29 million under our largest senior secured facility. This unencumbered a modern Suez Max. Overall, in the last 12 months, we have prepaid nearly $390 million in debt and unencumbered 30 vessels, 40% of our fleet. Our net loan to value is about 22% today and our cash break even for the next 12 months is under $16,000 per day. This includes about $3,500 per day from our fixed contracted revenue that in aggregate amounts to over $350 million through charter expiry. It excludes profit sharing on applicable charters. As we continue pull all the levers with our capital allocation approach. Our third and final dual-fuel VLCC delivered in May. The three VLCCs are on time charters for the next seven years with a fixed base rate of earnings plus a profit share over the index rate on the route from the Middle East to China, TDTree. In the second quarter, the TCEs on these shifts with the profit share was about $43,000 per day, providing a nice premium on the 96 million per vessel invested. We just signed two new building commitments with two options for LR1 with K ship building for delivery in the second half of 2025. These ships will be scrubber fitted and class certified for LNG conversion. The aggregate price of $115 million for the two vessels includes strengthened decks, oversized generators, and equipment consideration. Upon delivery, these ships will deliver into our niche, Panamax International Joint Venture, which has consistently earned a premium to the LR1 broader market. The average age of the LR1 in our fleet is about 14 years old, and the overall LR1 Panamax sector has a very aged fleet profile. Even our vessels at this age, they have earned $67,000 per day year to date. We are supporting our presence in this critical strategic joint venture. On slide five, we pull highlights. Oil demand is expected to surpass 102 million barrels per day on average for the second half of the year, increasing by 2 million barrels per day year-over-year. Growth in oil supply mostly comes from the West, in North America, Guyana, and Brazil. In the chart on the lower left of the slide, the average of the EIA, the IEA, and OPEC forecasts for oil supply and demand align projecting a supply deficit in the second half of 2023. On the lower right chart, oil inventories, we are showing commercial stocks in the OECD have increased in the first half of the year as expected. We now expect that these inventories will rapidly draw early in the second half of the year as OPEC Plus cuts are felt. Sentiment from these expected cuts have largely been priced into the spot tanker rate. It will be interesting to watch now in the tanker market as the impact due to the tightening of Ural's crude to Brent pricing, which may impact the price cap part of the fleet that has been trading in accordance with sanctions rules. These shifts may come back into the commercial fleet and affect daily earnings. It is still very early to tell how this will unfold and we remain observant. On slide six, the tanker supply side. Despite some new ordering activity, this remains a compelling component to the story of our fundamentals. As you can see on the lower left-hand chart, vessels on order make up less than 15% of the fleet that is over 15 years old that should be replaced over the next few years. It represents less than 5% of the overall fleet. These orders are also spread over the next three to four years. Owners cannot easily rush to start replacing tonnage today because lead times are longer as yards continue to build in other shipping sectors, as you can see in the lower right-hand chart. Environmental regulations continue evolving. creating uncertainty toward building new vessels and selecting engine types. Flipping the presentation to slide seven. Since the IEA recently updated their oil outlook through 2028, we reiterate our stance that near-term fundamentals in this map of the world, we wanted to simply show that oil supply growth is coming largely from the Americas, As you see on the blue bars, wet oil demand growth shown in the green bars is mostly driven by Asia. These dynamics create an incredible investment case for seaborne transportation in the near term. Layer on top of this, geographical changes, a constrained supply side that is aging, compounded with trade flow inefficiencies as a result of the Russian invasion and subsequent sanctions. It sets the stage for a solid tanker environment. At Seaway, we continue capturing the strength of the tanker markets today, and we are building our future as a leading tanker owner listed on the New York Stock Exchange. With our comprehensive capital allocation approach, we are utilizing all the possible levers that build upon our track record of returning shareholders, cash to shareholders, maintaining healthy balance sheets, and growing the company. Now, I'll turn it over to our CFO, Jeff Pribor, for the financial review. Jeff?