Hello and welcome to the International CUA's first quarter 2025 earnings conference call. My name is Karla and I will be coordinating your call today. During the presentation, you will have the opportunity to ask questions by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two. I would now like to hand you over to the General Counsel James Small to begin.

James, please go ahead when you're ready. thank you operator good morning everyone and welcome to international seaways earnings call for the first quarter of 2025. before we begin i would like to start off by advising everyone with us on the call today of the following during this call and in the accompanying presentation management may make forward-looking statements regarding the company or the industry in which it operates which may address without limitations the following topics outlooks for the crude and product tanker markets, changes in trading patterns, forecasts of world and regional economic activity and of the demand for production of oil and petroleum products, the company's strategy and business prospects, expectations about revenues and expenses, including vessel, charter hire, and G&A expenses, estimated future bookings, TCE rates, and capital expenditures, partners, projected dry dock and off-hire days, vessel sales and purchases, new-build vessel construction, the effects of ongoing and threatened conflicts around the globe, economic, regulatory, and political developments in the United States and globally, the company's ability to achieve its financing and other objectives and its consideration of strategic alternatives anticipated financing transactions and plans to issue dividends and the company's relationships with its stakeholders 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, that could cause actual results to differ materially from those implied or expressed by the statements. Factors, risks, and uncertainties that could cause the company's actual results to differ from expectations include those described in our annual report on Form 10-K for 2024 and our quarterly report on Form 10-Q for the first quarter of 2025, as well as in other filings that we have made or in the future may make with the U.S. Securities Exchange Commission. Now let me turn the call over to Mrs. Lois DeBrocki, our President and Chief Executive Officer. Lois?

Thank you very much, Jane.

Good morning, everyone.

Thank you for joining International Seaway Earnings Call for the first quarter of 2025. On slide four of the presentation, which you can find in the Investor Relations section of our website, net income for the first quarter was $50 million or $1 per diluted share. Excluding gains on vessel sales, adjusted net income for the first quarter was $40 million, or $0.80 per diluted share, and adjusted EBITDA was $91 million, essentially in line with our previous quarter. During the quarter, we saw month-on-month increases in the rate environment that continued into the second quarter, with our weighted average rate at over $30,000 per day on 45% of our revenue days. Compared to our cash break-even of about $13,500 per day, as in the bottom left quadrant of the slide four, it looks to us like we're in for another strong quarter. We ended the first quarter with $673 million in total liquidity, which includes almost $550 million of undrawn revolver capacity. We have just over $600 million in gross debt at the end of the first quarter, which is about 15% net loan-to-value on our March vessel value. On the upper right-hand side, we already mentioned the swap in our last quarter's earnings call. We swapped two older VLCCs plus $3 million in cash for three ECO MRs. A majority of the swap was executed in the first quarter, but due to the timing of these transactions, we had net proceeds of $50 million in the first quarter and net cash outflows for deposits and one MR in the prior quarter of $53 million. We also increased our time charter exposure to lock in fixed revenue. In April, we agreed on a one-year time charter on one of our Suez Maxes to reach $295 million in fixed revenue, most of which comes over the next two years. On the lower right, for the third consecutive quarter, we have announced another dividend representing 75% of our adjusted net income. The combined dividends will be paid in June, equating to $0.60 per share. We believe in following through on our intentions to return to shareholders as part of our balanced capital allocation strategy. After returning over $300 million to shareholders in consecutive years, we continue to share in our upsides, and we remain in position to do so today with our healthy balance sheet and strong tanker environment. Referencing the last bullet on slide four, we also have a repurchase program of up to $50 million. On slide five, we've updated our standard set of bullets on tanker demand drivers with the subtle green up arrows next to the bullet represented as good for tankers, the black dash, representing a neutral impact, and a red down arrow, meaning the development is not positive for tanker demand. Without reading these bullets individually, we pull highlights. Oil production in 2025 and in 2026 is expected to increase by over a million barrels per day. Non-sanctioned OPEC Plus continues to reinforce their output increases, which is supportive of the LCC trade. As a result, non-OPEC production may continue to increase their output, and yet they are more sensitive to price fluctuations if the market becomes oversupplied and prices decline. Production from non-OPEC is important for ton-mile demand, since much of the growth is expected in the Americas region, supportive of long-haul trades. Oil demand should grow in line with its historical growth rates of 1%, or about 1 million barrels per day, for the next few years. This takes into account forecasts, which have recently dropped by as much as a couple hundred thousand barrels per day due to the ongoing geopolitical environment. With much uncertainty about establishment and enforcement of regulations that affect global trade, there may be a lack of investment that slows the global economy. On the other side of that is the increase in changes to tanker routing that is less efficient and longer haul. This is supportive to our industry. In turn, we may see a forward curve in the crude price that incentivizes storage, which is needed, as you can see in the chart at the bottom left of slide five. OECD inventories have drawn 100 million barrels since August of 2024, which has muted the tanker markets in the short term. As the price curve flattens, as is the case today, we could see some restocking, which is positive for the tanker demand. on the lower right side i don't think we had a page big enough or an update fast enough to cover the intensity of geopolitical environment canadian barrels on the west coast are shifting a bit more toward a longer haul into asia the red sea remains on edge and ships are still rerouting to avoid the area the uspr legislation on chinese vessels is still uncertain but could create more division in the tanker space it's too early to predict how these events and others not yet in the headlines can impact the tanker markets over the medium term on slide six the supply side continues to support a compelling case for tanker shipping tankers currently on order represent 14 percent of the fleet that deliver over the next four years and by the time those ships deliver 47 percent of the fleet will be over 20 years old which we identified as the age where generally those ships trade in a different environment some charters or some ports may not accept vessels of this vintage the simplest way to summarize this is that there are not enough ships to replace the current aging fleet we also saw an increase of recycling in the first quarter the highest volume of ships since the second quarter of 2022. If vessels continue to recycle, and it's hard to say at any pace since not all ship owners are alike, there may be a shortage of vessels on the water for commercial trading. We believe this should translate into a continued upcycle over the next few years, and seaways remain well positioned to continue capitalizing on these market conditions. We'll continue to execute our balanced capital allocation approach to renew our fleet and to adapt to the ever-changing industry conditions with a strong balance sheet while returning to our shareholders. Now, I'd like to turn it over to our CFO, Jeff Prebor, to provide the financial review. Jeff?

Thanks, Lois, and good morning, everyone. On slide eight, net income for the first quarter was 50 million dollars or one dollar per diluted share. Excluding gains on vessel sales, our net income was 40 million dollars or 80 cents per diluted share. On the upper right chart, adjusted EBITDA from the first quarter of 2025 was 91 million dollars. In the appendix, we've provided a reconciliation from reported earnings to adjusted earnings. Our revenue and expenses were largely within expectations in the first quarter. We're pleased that our vessel expenses improved from last quarter and much of 2024 with reductions to repairs and maintenance our lightering business had over eight million dollars in revenue in the quarter combining that with a bit under three million dollars in vessel expenses less than three million in charter hire and about one million dollars in gna the lightering business contributed about two million dollars in evita in the first quarter turning to our cash bridge on slide nine we We began the quarter with total liquidity of $632 million, composed of $157 million in cash and $475 million in undrawn revolving credit capacity. Following along the chart from left to right on the cash bridge, we first had $91 million in adjusted EBITDA for the quarter, plus $23 million in debt service, and another $19 million in dry dock and capital expenditures, offset by working capital benefit of about $7 million due to the timing of payables and receivables. We therefore achieved our definition of free cash flow of about $56 million for the first quarter. This represents an annualized cash flow yield of over 12% on today's share price. We received $48 million in connection with the now fully executed vessel swap, which began in the fourth quarter of 2024. Also in connection with that swap we repaid 70 million dollars on the revolving credit facility that we drew on in the fourth quarter which is included in the delever column this column also includes a net 12 million dollar payment where we utilize and repaid amounts on the rcf for general cash management purposes so the total for the quarter is 82 million to the right of this column you will find our remaining capital allocation for the quarter which was 10 million dollars in new building installments and $34 million in dividends, representing $0.70 per share. The remaining $3 million on the waterfall represents cash taxes paid for vesting or share exercises. Altogether, these components led to ending liquidity of $673 million, comprised of $133 million in cash and $540 million in undrawn revolving capacity. Moving to slide 10, we have a strong financial position detailed by the balance sheet on the left-hand side of the page. Cash and liquidity remain strong at 673 million dollars. We have invested about 2 million dollars in vessels that cost, which are currently valued at about 3 million dollars. And with 600 million dollars of gross debt at the end of the first quarter, our net loan to value is below 15 percent. Our debt at March 31st was nearly 80 percent hedge toward fixed rates, equating to an all-in weighted average interest rate of about 617 basis points, or just about 180 basis points above today's SOFR rate. On the lower right-hand table, we have detailed our debt portfolio as of March 31. Since that time, I would note that we've repaid $36 million on the RCF, for which about $16 million represents a reduction in RCF capacity that occurs at the end of every quarter. We like this practice of moderate payments to maintain our RCF capacity in order to support growth. And with $540 million undrawn, we have ample liquidity for growth. Also, as we noted in our 10Q that we filed this morning, our intention is to repay the ocean yield debt that carries interest at SOFR plus 405 basis points. The outstanding principal amount of the loan is approximately $250 million as of the fourth quarter when payment will be made. and we were reviewing our opportunities to maintain our maturity profile and reduce our interest we continue to enhance our balance sheet to maintain the financial flexibility necessary to facilitate growth that returns to shareholders our nearest maturity in the portfolio isn't until the next decade we have 34 unencumbered vessels and we have ample undrawn rcf capacity we continue to explore ways to lower our break-even costs even more and share in the upside with with double-digit returns and shareholder. On the last slide that I'll cover, slide 11 reflects our forward-looking guidance and book-to-date TCE aligned with our spot cash break-even rate. Starting with TCE's pictures for the second quarter of 2025, I'll remind you, as I always do, that actual TCE reported during our next surveys call may be different. As of today, we currently have a blended average spot TCE of about $31,200 per day fleet-wide on 45% of our second quarter expected revenue. On the right-hand side of the slide, our forward spot breakeven rate is about $13,500 per day, composed of a fleet-wide breakeven of about $16,000 per day, less nearly $2,600 per day on the time charter revenue. Based on our spot TCE booked to date and our spot breakeven, It looks like Seaways can continue to generate significant free cash flows during the second quarter and build on our track record of returning cash to sharehold. On the bottom left-hand chart, we provide some updated guidance for our expenses in the second quarter and our estimates for 2025. We also include in the appendix a quarterly expected off-hire and CapEx. I don't plan to read each item line by line, but I encourage you to use these for modeling purposes. That concludes my remarks. I'd now like to turn the call back to Lois for a closing comment.

Thank you very much, Jeff. On slide 12, we have provided you with Seaway's investment highlights. Summarizing them briefly, over the last eight years, International Seaway has built a track record of returning cash to shareholders, maintaining a healthy balance sheet, and growing the company. Our total shareholder return represents around 20% compounded annual return. We continue to renew our fleet so that our average age is about 10 years old in what we see as the sweet spot for tanker investments and returns. We've invested in a range of asset classes to cast a wider net for growth opportunities and to supplement our scale in each class by operating in larger pools. We aim to keep our balance sheet fortified for any down cycle. We have over $500 million in undrawn credit capacity to support our growth. Our net debt is under 15% of the fleet's current value. And as Jeff mentioned, we have 34 vessels that are unencumbered. Lastly, we only need our spot ships to collectively earn less than $13,500 per day to break even in the next 12 months.

At this point in the cycle, we expect to continue generating cash that we will put to work to create value for the company and for our shareholders we'd like to thank you very much and operator we'd like to open up the lines for questions thank you lois we will now begin the question and answer session if you'd like to ask a question please press star followed by one on your telephone keypad if you change your mind please press star followed by two when preparing to ask your question please ensure your device is unmuted locally we will make a quick pause here for the questions to be registered and our first question comes from omar nokta with jeffrey

hi lois and jeff good morning i um have just a couple of maybe finance questions uh so maybe to you jeff uh on the on the six lr ones you've got a little over you know 300 million in payments to make on those you've also got the 540 of a million of undrawn capacity um do you expect to use that for financing these remaining installments or do you intend to secure a separate financing package for those installments?

Good morning, Omar. We're still evaluating. We'll let Jeff answer that.

Yeah, sorry. Yeah, good morning. Yeah, lots of options, still evaluating. a great thing about the revolver is you always know you have that. So we kind of have the optionality to evaluate other financing possibilities, and we're doing that. So not too much more I can say right now, but lots of attractive, well-priced, and good terms. I look forward to telling you about it when we get caught.

Okay. All right. So it sounds like perhaps maybe you're still evaluating, but something may be in the works is what I'm inferring from that. Then, I guess, definitely, Jeff, you mentioned the lease financing. Again, you mentioned a facility that you're looking to refinance an amount of $250 million. Just thinking about the bar chart you show on slide 11, where your combined breakeven is $16,100. With that refinancing, what do you think that comes down to? So is that a magnitude of $300 or $400, or am I doing back-of-the-envelope math too wrong?

Thank you, Omar. Yeah, indeed. Yeah, go ahead, Jeff.

All right, following up. Yeah, back to the first question for a second. Yes, I think you would expect us to evaluate lots of options that we're fortunate to have on the financing side. So we will do that, knowing we always have to evolve. Back to the question you asked, yeah, I mentioned in my remarks that this facility now is at SOPR plus very attractive when it was done because it was virtually 100% financing. But now that the outstanding amount that I mentioned as of the payment date to approximately $250 is in the 50% of value, special value area, we can expect to be refinancing that at a savings of at least a couple hundred basis points on interest. If you look at our recent trend on financings with revolvers, there's likely to be significantly less amortization. So, I would go with your estimate of several hundred dollars a day reduction in break-evens is the opportunity that we see in doing that refinancing. So, spot on.

Okay. All right. Great. Jeff, thank you. Lois, thank you. I'll pass it back.

The next question comes from Sheriff Elmagrawi with BTIG.

Hey, good morning. Thanks for taking my question. Lois, you highlighted the 400,000 barrels a day OPEC cost bump this month and next. Is that showing up in conversations with charters or is it benefit to tankers on a bit of a lag given some Middle Eastern overproduction there?

Yeah, good morning and thank you for the question. It seems that it's a little bit of a lag at the moment from what we're sitting and seeing for the forward fixing markets. I mean, for sure, the VLCCs have picked up in recent weeks, but they're a little bit sideways in the spot market at the moment. So, we're anticipating increased lifting as we head into the next course.

And then I've got one for Jeff. You guys completed some pretty substantial deleveraging over the last four months. So I guess on the other side of Omar's question, is there a leverage target you keep in mind, or are we just being opportunistic, bearing in mind you've got some new bill payments to make?

Go ahead, Jeff, and share your views on that.

Sure. Thanks, Marie. As we've said before, We, like the leverage level we're at now, broadly sub-20%, we have to be sub-15% net loan-to-value. That's low leverage, not zero leverage. At this point in the cycle, that gives us the optionality to put some more leverage on when it's the right time to do it. So, I don't think that, you know, refinancing the lease that we mentioned, that doesn't increase leverage. The LR1 will require a little leverage and definitely put some on one way or another. But that's not going to be a substantial increase in leverage. So, you know, we can easily absorb that and still have room for additional leverage when the time comes for more investment in assets. Is that what you were asking, or can I go in more?

No, I think you've addressed it. Thanks very much for taking my question.

Sure.

Just as a reminder, if you'd like to ask a question, please press star followed by one on your telephone keypad. The next question comes from Chris Robertson with Deutsche Bank.

Hey, good morning, Louis and Jeff. Thanks for taking my questions.

Good morning.

Just a market question for me. since you operate in both the product and crude segments, you'll be in an advantaged position to answer this. Some of your product tanker peers have talked about the LR2 order book and their expectation around a pretty big percentage of those trading dirty. I guess, can you speak to your views on the LR2 market and where those new builds might trade?

Absolutely. We have one LR2. We do have it out at a lucrative time chart around $40,000 a day at the moment, but we always think of APRAs and LR2s as one combined fleet of, you know, coming on 1,300 vessels with an aging profile on the APRA side, and folks that are ordering LR2s, you know, looks like, you know, it's kind of the size of vessel at this time where you just elect to coat due to the cost of the coating fee, you know, in relative to your overall asset investment to give yourself that optionality. You know, we tend to see the vessels dirty up when they become older. The more modern vessels tend to trade clean. And so when you look at that whole sector as a whole, even though there's a lot of LR2 zone order, that entire fleet is aging fairly rapidly, and you have had strong growth in your 10 miles on both the APRIS and the LR2.

Got it. Yeah, that makes sense. That's really it for me. I'll turn it over.

Thank you. And our next question comes from Liam Burke with B-Rally Securities.

Thank you. Good morning, Lois. Good morning, Jeff.

Good morning, Liam.

Hi. Lois, the step up in OPEC-plus production has boosted VLCC rates, but we've also got additional production coming out of non-OPEC-plus countries as well. Where do you see, does that benefit significantly your Suez Maxx vessels, even though we're seeing a nice lift in VLCC rates?

Yeah, thank you, Liam. Yeah, absolutely. I mean, now you've seen the VLCC take sort of their leadership position for the first time in probably three years, and the Suez Maxis have always had a strong correlation, something, you know, around 85 percent in tandem with the Vs, and you've seen them step up as well. I think another factor, you know, that's playing very well for, I'm going to say, the legitimate trading fleet in the world is these low oil prices are creating a situation where the Russian barrels are going on legitimate tonnage, and that's creating more business for owners that have followed the right line all the way.

Great. Thank you. And you've been pretty adept at lowering the age of your fleet in a very shareholder-friendly manner. Are you seeing more opportunities to do that?

You know, we're always out there looking, Liam, and, you know, so we can never be idle, right? You know, and indeed, we have our eyes open and are looking for those opportunities, you know, as you speak.

Fair enough. Thank you, Lois.

Thank you. Just as a final reminder, if you'd like to ask a question, please press star followed by one on your telephone keypad. And as we currently have no further questions in the queue, I will hand back over to Lois Zabracki for any final comments.

We just want to thank everybody for tuning in with International Seaways, and we look forward to speaking with you in the coming months. Thank you very much.

Thank you, everyone. This concludes today's call. You may not disconnect. Have a great rest of your day.