International Seaways, Inc.

Hello, everyone, and welcome to the International Seaways Third Quarter 2023 Results Conference call. All lines have been placed on mute during the presentation portion of the call with an opportunity for question and answer at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. I would now like to turn the conference over to our host, James Small, General Counsel and Chief Administrative Officer. Please go ahead.

Thank you, Candice. Good morning, everyone, and welcome to the International CYS Earnings Call for the third quarter of 2023. Before we start, I'd like to begin by advising everyone with us on the call to say 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 of the crude and product tanker markets, 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 ongoing conflicts around the globe, 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 the fourth quarter of 2023, during 2024, or in any other period, projected scheduled dry dock and off-fire 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 perception of historical trends, current conditions, expected and future developments, and other factors that management believes are appropriate to consider in a certain sense. 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 include those described in our annual report on Form 10-K for 2022, our quarterly reports on Form 10-Q for the first three 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 LeBrock. Lois?

Thank you very much, James. Good morning, everyone. Thank you for joining International Seaway's earnings call for the third quarter of 2023. Following slide four of the presentation, which you can find on the investor relations section of our website, International Seaway's net income for the third quarter was almost $100 million, roughly $2 per diluted share. bringing our cumulative earnings over the last 12 months to over $640 million. Adjusted EBITDA was $151 million for the quarter and over $800 million in the last 12 months. Based on our strong results in the third quarter and the spot pictures well above our break-even level thus far in the fourth quarter, we declare a combined dividend of $1.25 per share. Following this dividend payment in December, actual last 12 months returns to shareholders will include a cumulative $6.29 per share in combined dividends as well as $14 million in buybacks equating to over $320 million, a 16 plus percent yield on our average market cap during this period. We continue to enhance our balance sheet with our balanced capital allocation approach. Total liquidity at the end of the quarter was over $580 million, comprised of $215 million in cash and an undrawn revolver capacity of over $365 million. We added $160 million of revolver capacity after executing this new credit facility during the quarter. This facility features a 20-year amortization profile a margin of 190 basis points over SOPR, and a five and a half year term, all of which are critical key outcomes for Seaway. We drew about $50 million on the revolver during the quarter, which has been repaid. The final results on our major senior credit facility allowed us to repay $100 million. We now have a total undrawn revolving capacity of over $400 million and 30 unencumbered ships. Our fortress balance sheet highlights the success of our balanced capital allocation strategy over time We have acquired assets. These assets are on the books for $2 billion, where the value of the fleet today is nearly $3.3 billion. Our net loan to value is 19%. Our cash break even for the next 12 months is under $15,000 per day. This is an exceptionally low level. and a key differentiator for international fee rates. This includes about $3,700 per day of our fixed contracted revenue that in aggregate amounts to over $344 million through to Charter X3. It excludes any profit-sharing element on applicable time charters. This low break-even level paves the way for enhanced free cash flow during 2024. We have exercised two optional LR1 new building contracts. We now have four LR1 new buildings with delivery scheduled beginning in the second half of 2025 through to the first quarter of 2026. These four ships are designed to be scrubber fitted, and they are certified as dual fuel ready. The aggregate price is $231 million for the four vessels. Upon delivery, these ships will trade in our niche Panamax International Joint Venture, which has earned over $64,000 per day on average in the last 12 months. Turning to slide five, we've updated our standard set of bullets on tanker demand drivers with the subtle green up arrow next to the bullet represented as positive for tankers and the black dash representing neutral impact and a red down arrow meaning the factor is not positive for tanker demand. Pulling some highlights, oil demand increased in 2023 on average about 2 million barrels per day over 2022 and is projected to increase another million and a half barrels per day in 2024. Scheduled growth in oil supply is about a million and a half barrels per day over the next two years, each of the two years. mostly coming from the West, in the United States, Guyana, and Brazil. A relevant question for the tanker space is when will OPEC decide to turn some of the pumps back on and increase production? We believe this will bring positive sentiment and lift average time charter equivalents. On the flip side, During the duration with OPEC keeping production at bay, we are drawing inventories in the fourth quarter based upon present demand levels, which we believe benefits a longer-term horizon on tankers. As the chart on the lower right shows, current levels of commercial inventories are well below their 15-year highs. Previously, Key events caused big builds and draws such as COVID in 2020 and 2021. It took us time to draw these inventories down. We looked at the five-year average all the way from 2010 since it predates events and have included the average of 2019 and 2022 separately. as these two periods match better with oil demand. The bottom line is that inventories are historically low, especially when combining commercial and strategic reserves. Before moving on from this slide, there are a number of outstanding geopolitical events that are sadly affecting our current tanker environment. Over the last few years, over the last few months, the price cap imposed on the Russian oil had been effectively priced out due to rising crude oil costs from OPEC plus production cuts. We have seen an impact on the tanker market as many ships in the Great Fleet migrate into the commercial fleet. An upside over time is that we see the loosening of sanctions on 800,000 barrels per day of Venezuelan crude oil. Moving to slide six, the supply side continues to be compelling. This component is very strong for tanker fundamentals. On the lower left-hand chart, we break down the order book by each vessel class relative to the total fleet. More specifically, potential candidates in the next few years that will be at the very least removed from intensive commercial trading, which we categorize as becoming somewhat marginalized around 20 years of age or older. In aligning the dark bars on the graph, vessels on order do not meet the need to replace these distinct leads. On the lower right-hand chart, The limited replacement of the fleet over the next few years is expected to increase the average fleet age to levels that we have not seen in 30 years. 15% of the tanker fleet today is over 18 years. And by 2027, we anticipate that figure to double to 30%. And the average age of the fleet, if this were the case, would be about 15 years old. We believe that in order to meet growing demand in the next few years, that ship over 15 years old will need to stay in service beyond the next few years as we transition to a multi-fuel future. The candidate pool for recycling will then be very high. Overall, we expect a great run for tankers over the next few years, Regional imbalances of oil should continue to increase the need for tankers as the growth in oil production is coming from the West and largely the growth in oil demand is driven by emerging markets in the East. At KeyWay, we will continue to capture the strength of the tanker market today and tomorrow. With our balanced capital allocation approach, we continue to utilize all possible levers that builds upon our track record of returning to shareholders, maintaining a healthy balance sheet, and growing the company. I'm now going to turn it over to our CFO, Jeff Pribor, to provide our financial review. Jeff?