good morning everyone and welcome to the international seaways inc second quarter 2025 earnings conference call my name is carla and i will be coordinating your call today during the presentation you can register 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 your host james small general counsel to begin please go ahead when

you're ready thank you operator good morning everyone and welcome to international seaways during this call for the second 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 limitation the following topics outlooks for the crude and product tanker markets changes in trading patterns forecasts of world and and regional economic activity, forecasts of the demand for and production of oil and petroleum products, the company's strategy and business prospects, expectations about revenues and expenses, including vessel, charter hire, and GNA expenses, estimated future bookings, TCE rates, and capital expenditures, projected dry dock and off hire days, new build vessel construction, vessel purchases and sales, anticipated financing transactions and plans to issue dividends the effects of ongoing and threatened conflicts around the globe 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 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 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 reports on Form 10-Q for the first and second quarters of 2025, as well as 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, Lois LeBright. Lois.

Thank you, James. Good morning, everyone. Thank you all for joining International Seaway's earnings call for the second quarter of 2025 on slide four of the presentation found in the investor relations section of our website net income for the second quarter was 62 million or one dollar and 25 cents per diluted share excluding gains on vessel sales adjusted net income for the second quarter was 50 million dollars or one dollar and two cents per diluted share and adjusted EBITDA was 102 million dollars today we also announced a combined dividend of 77 cents per share to be paid in september as you can see in the lower left section of the slide this is our fourth consecutive quarter of a payout ratio of at least 75 percent we continue to believe in building on our track record of returning to shareholders as part of our consistent and balanced capital allocation strategies since we started supplementing a regular 12 cents per share dividend in the fourth quarter of 2022 we have paid combined dividends of 15.25 per share which equates to a dividend yield of about 14 per year on our average market cap share repurchases remain an option for seaways and this would be additive to our payout ratio on the upper right hand side we have sold or agreed to sell six of our oldest vessels with an average age of 17 and a half years two were sold within the second quarter for proceeds of 28 million dollars with the other four delivering during the third quarter for proceeds of around 57 million dollars we have also taken steps to utilize those proceeds with our agreement to purchase a 2020-built scrubber fitted VLCC delivering in the fourth quarter. The impact of these sales and purchase reduced our age by half a year. Fleet renewal is always part of our strategy, and we expect to execute sales and purchases throughout the tamper cycle. We continue to work through our time charter book as well. We still have over $260 million dollars in future contracted revenues on 12 vessels with an average duration of around two years. The first of our six LR1 new billings is set to be delivered in September. We are very pleased to share our expected financing for up to 240 million dollars of the 300 million in outstanding payments. We have received secured commitments for export agency financing with KSHUR and DMV across two tranches. On a blended basis, the agreement carries a 20-year amortization profile bearing interest of SOFR plus 125 basis points over the 12-year maturity. Funds will be drawn upon delivery of each vessel starting in the third quarter through September of 2026. All of this is subject to final documentation and closing expected later this month with the remaining funding for these vessels to be sourced through cash on hand. We ended Q2 with over 700 million dollars in total liquidity with 149 million dollars in cash and 560 million in undrawn revolver capacity. Our gross debt was 553 million dollars on over $3 billion in fleet value. Our net loan to value is comfortably under 15%. We are proud of the strength of our balance sheet. With ample liquidity, debts below our recycled values, and low cash break-evens, we are able to grow the company and create further enhancements like our most recent financing. With break-even levels where our spot ships only need to make thirteen thousand dollars per day we expect to continue executing our balanced strategy turning to slide five we've updated our standard set of bullets on tanker demand drivers with the green up arrows next to the bullets representing good for tankers the blank dash representing neutral impact and a red down arrow meaning the topic is not positive for tanker demand. Without reading these bullets individually, we do believe demand fundamentals are solid and continue to support a constructive outlook for seaborne transportation. Recent upward revisions to forecasted GDP may increase oil demand forecasts. The OECD has maintained crude storage at historically low levels that are slowly rising in 2025, as you can see in the chart on the lower left-hand side. Product inventories are also at historically low levels. Specifically, we are short on middle distillate, whose growing demand worldwide has increased the refinery margins and is currently pushing up refinery utilization. We've noted in the bottom right chart that over the next five years, refining capacity is growing east of Suez and largely for export purposes. while we have seen more capacity shutting down in the west. This is very supportive of the refined product ton miles demand. The release of these barrels may impact non-OPEC production, as these areas may be more sensitive to price fluctuations if prices decline significantly. The geopolitical environment remains fluid, making sustained trends and new trade routes more difficult to identify. This quarter alone saw an escalation within the strength of hormones that grabbed headlines and was short-lived in the escalation of the LCC rates. Many vessels on subjects in late June were failed within the week. There are scenarios for an uptick in rates if there is sustained escalation of tensions. And there are scenarios for full de-escalation and peace, which could also rationalize the aging tanker fleet. This brings us to the supply side of slide six in the presentation. It remains one of the most compelling cases for tanker shipping. Tankers are currently on order representing 15 percent of the existing fleet with this 15 percent delivering over the next four to five years. Over a 25 year life of a vessel we would expect as much with a four percent increase per year of removal candidates multiplied by the four years it takes to deliver the new vessels. In practicality, based on actual ship deliveries, there is a significant number of removal candidates that were built in the golden age 204 to 210. In the graph on the lower left of the page, we note the relationship of older vessels to the order book. Since 2021, the fleet over 20 years which our removal candidate exceeds the ships on order by the time the order book delivers in 2029 nearly 50 of this fleet will be over 20 years old and likely excluded from the commercial trade there is simply not enough ships on order to replace the current aging fleet we show this in the graph in the lower right 800 plus ships shall deliver over the next four years representing only one-third of the likely tonnage to face trading challenges during the same period. Not to mention ever-tightening regulations and either further environmental pressures. We believe this should translate into a combined upcycle over the next few years and Seaways is capitalizing on these market conditions. We will continue to execute our balanced capital allocation approach to renew our fleet and to adapt to industry conditions with a strong balance sheet while returning shareholders. Now I'm going to turn it over to our CFO Jeff Preboer to share the financial review. Jeff? Thanks Lovis and good morning everyone.

On slide eight net income for the second quarter was 62 million dollars over one dollar and 25 per diluted share, excluding gains on vessel sales, our net income was $50 million or $1.02 per year. On the upper right chart, adjusted EBITDA for the second quarter was $102 million. In the appendix, we provided a reconciliation from reported earnings to adjusted earnings. Our revenue and expenses were largely within expectations in the second quarter, and we are pleased with our policy. Our BLCC rates were impacted by a long-haul strategy that didn't allow us to fully capture short spikes during the quarter. MRs were more heavily weighted to the weaker western market and positioning for a significant number of dry dockings for shifts in the CPTA pool. We're seeing the benefits of those already at our third quarter bookings, which I'll talk about later. Our line reading business had over $9 million in revenue in the quarter. Combined with less than $3 million in vessel expenses, just under $4 million in charter hire, and $1 million in G&A, provider in business contributed about $2 million in EBITDA in the second quarter. Turning to our cash bridge on slide nine, we began the quarter with total liquidity of $673 million, composed of $133 million in cash, and $540 million in undrawn revolving capacity. Following along the chart that left the write-up, we had $102 million in adjusted EBITDA, $22 million in debt service, and another $29 million in dry dock and cap $20 million due to the timing of payables and receipts. We therefore achieved our definition of free cash flows of just about $71 million per second. This represents an annualized cash flow yield of nearly 15%. We received $28 million in proceeds from the two vessel sales at the end of the quarter. We paid about $16 million in LR-1 new building installments. As previously announced on the last call, we repaid $36 million down on our revolver for $16 million on the remaining $30 million per share dividend. A few bars on the charitable allocation approach. Leveraging $71 million in free cash flow plus $28 million in vessel sales, $82 million in capital allocation gives us a net positive $15 million dollars and an increase in undrawn RCM. This equates to ending cash of 149 million dollars with 560 million in undrawn revolvers, a total liquidity of over 700 million dollars. Moving to slide 10, we have a strong financial position detailed by the balance sheet on left-hand liquidity remaining strong at 709 million dollars. We have invested about 2 million dollars and vessels at cost, which are currently valued at about $553 million in gross net load of value with the intention to repay the ocean yield. Under the accounting guidelines, we are required to classify the outstanding debt of $268 million as current debt, which impacts our current ratio. I want to be clear that this does not affect our financial covenants or our ability. While we continue to evaluate numerous financing alternatives for this refinancing. We can simply draw on the right-hand table. We have detailed our debt portfolio as of June 30th. Since then, we've repaid the remaining $27 million outstanding. By the time of our next earnings call, we'll expect to have completed documentation and gone down on a new export agency back. We'd like to thank our partners at K-Shure and B&B for their after $240 million on our debt that effectively achieves a 20-year amortization profiles in a margin of 125. We've been excited about our dual-fuel ready LR1 new building and today we're very proud to be in the finals. We continue to enhance our balance sheet to maintain the financial flexibility necessary to facilitate growth. Our nearest maturity in the portfolio is until the next decade. We have 32 uncovered vessels and we have ample undrawn revolving credit facility capacity. We continue to explore ways to lower our breakeven costs even more and share the upside with continued double digits. The last slide that I'll cover, slide 11, reflects our forward-looking guidance and book-to-date TCE aligned with our spot. Starting with TCE pictures for the third quarter of 2005, I'll remind you, as I always do, that actual TCE during our next journey's call may be different. But as of today, we currently have a blended average of $28,000 per day complete wide and 40% of our third. On the right-hand side, Our forward spot breakeven rate is about $13,000 per day, composed of a three-wide breakeven of about $15,700 to $2,600 per day. Based on our spot TCE booked today and our spot breakeven, it looks like Seaways can continue to generate significant free cash flows during the third quarter and build on our track record of returning cash. On the bottom left-hand chart, we provide some updated guidance for our expenses in the third quarter. we also include in the appendix our quarterly expected don't plan to read each item line by line but it concludes my remarks and i'd like to now turn the call back to lois thank you so much

jeff on slide 12 we have provided you with detailed seaways investment highlights i will summarize briefly over the last eight years international seaways 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 close to 10 years old in what we see as a sweet spot for tanker investments and returns we have invested in a range of asset classes casting a wider net for growth opportunities, and supplementing our scale in each class by operating in larger pools. We aim to keep our balance sheet fortified for any down cycle. We have nearly $600 million in undrawn credit capacity to support our growth. Our net debt is under 15% of the fleet's current value, and we have 32 vessels that are unencumbered. Lastly, our spot shifts only need to earn $13,000 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. Thank you very much. And with that said, Operator, we'd like to open up the lines for questions.

of course we will now begin the question and answer session if you would 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'll make a quick pause here for the questions to be registered and our first question comes from the line of chris robertson with socia bank hi good morning thank you for

taking my questions i have uh just one simple modeling type question and then a market question um the first is jeff could you clarify on the four vessels expected to be delivered in the third quarter here on for 57 million is that 57 million of net proceeds or is that prior

to uh debbie payment um chris i think those that should be considered to be debt proceeds

Because they're part of our uncovered suite. Got it.

Yeah, thank you for that. Second question then, on the recent sanctions package, and then kind of some of the more recent threats by President Trump with regards to India taking Russian crude volumes, I guess could you provide some color on your thoughts around what impact the sanctions package will And then if there are an increase in sanctions, U.S. sanctions against India or certain refiners there, something like that, what do you expect to happen in the market with regards to trade patterns?

Hey, Chris, it's Lois. It's definitely, you know, definitely never a dull day. And we're already seeing India only take compliant tonnage for export. They certainly have enjoyed a massive discount on copious volumes of Russian imports. So I think this is in the midst of negotiations likely behind the scene. You have seen India take more U.S. Gulf crude in the last six months than what we had seen previously. So, you know, this administration, they seem to be highly tactical in their trading. So we're going to see how this is all going to cook over this, probably the next 30 days.

Yeah, I agreed with that. All right. Thank you for the color.

Thank you. So the next question comes from Sheriff Almagravi with BTIG.

Hey, good morning. Thanks for taking my question. So OPEC Plus announced they're going to finish unwinding those voluntary production cuts roughly a year ahead of schedule. That's a lot of crude, and a lot will probably flow on bees, but can you speak to where we may see a benefit for smaller tankers? Yeah, absolutely. I'm going to turn that

over to Derek Salone, our Chief Commercial Officer. Thanks, Lois. Sharif, thanks for the question.

I mean, I think you hit the nail on the head. The easy answer is a lot of that will move on vlccs so that should be beneficial to the v market we're seeing already an uptick in activity out of the arabian gulf over the last day or so uh on the back of this news and then to your question specifically the vlcc is being much more engaged in moving crude out of the arabian gulf will be beneficial to the smaller segments because there's less cannibalization of the vlccs in the suez max routes and the Afromax routes so all in should be very beneficial for uh for crude tankers as a whole

thanks and and sticking with that um vessel mix thematic I guess um you guys are buying that modern v at the end of the year opportunities like that don't come around often um but how are you thinking about the balance of crude versus product in your own fleet particularly given product anchor rates being resurgent thus far in Q3?

So, Chris, you know, we brought in nine more modern MRs throughout 2024, and those vessels, you know, as you see with our days booked in the third quarter of $23,800 per day, even though we're selling, and it pains me to sell those older MRs because they're earning incredibly, You know, we have shored up with more modern fleet profile across our MR space, and as you know, you know, we will be taking in September our first LR1 of our six new building delivery built in Korea in a sector where there's been five recycles, which for this year is a lot, and there's been no delivery for three and a half years. So if you look at, you know, the smaller part of our fleet and the product carriers as we bubble up, it's time.

Okay. Thanks for taking my question.

Just as a reminder, you start one on your telephone keypad to ask a question. The next question comes from Omar Nocta with Jeffries.

Good morning. Hi, Lois. Hi, Jeff. Just a couple questions and maybe just a little bit of a follow-up to start with Sharif's last question. you know clearly you know you earlier in the year you rolled those older VLTCs into modern MRs and then recently you did the reverse by kind of rolling the older MRs into a new modern V. Do you see yourselves doing more of this type of action within those specific segments or are there any other segments you need or have a desire to tweak in a similar fashion? No thank you Omar you know

definitely you know the prices we received on those you know 15 year old vlcs were really you know strongly above uh mid cycle levels you know so we look very opportunistically at constantly improving our fleet profile we're very deliberate um with the moves that we're making and you know we do see uh upside on um the vlccs it's you know people have been waiting for that and kind of maybe move prematurely where we have a more balanced fleet we think that uh the

opportunity is coming on the horizon there okay thanks lois and then maybe jeff for you um just sort of on the on the financing uh that you've just announced you secured the new 260 million but for the lr ones that gives you it looks like about two-thirds of the order cost and the facility is repaid over 12 years um can you talk a little bit about how you think the the six VLCCs would be refinanced that are coming off those leases later in the year. I figure they may not be able to get the same type of package given they're not new buildings, but do you have an idea of what that type of financing package could look like?

Hi, Omar. Well, first of all, we're pleased about this case short financing for the LR1 who goes I think marrying up new buildings in Korea with financing that's backed by a good way to do things and a good do for those ships in particular. Regarding the six ships that will be freed up or unencumbered by paying off ocean yield, there's numerous. We really are in the middle of evaluating all that. But first of all, we have enough revolver to simply stroke a check, right? But we'll use this as an opportunity to see whether or not we can get a further tweak in our balance sheet to lower our break even. So we're evaluating sort of everything. So I really can't tell you much more than that. But we feel very fortunate that there will be a lot of good opportunities for the –

And maybe just a quick follow-up to that. you know the we've generally seen whenever a refinancing takes place of you know vessels on the water tends to be maybe a five-year term and we're seeing these new buildings get 12 years it's five years still the more kind of that is that what can be expected or do you see that

extending look i think that there's usually trade-offs involved like you can certainly possibly get six or seven years uh but depending upon the age you may securing it may not make a trade-off for that if you look at the age of the vessels that are that are coming off you know it's certainly not going to be a 12-year term on those vessels that are relatively moderate but close to 10 years old but uh uh you know i i think that is to be one of the factors i think the other things that go into it are obviously margin everyone looks at margin that's important uh and they've been coming down but it's also profile like we have a 20-year profile on this uh eca financing And that's a lot of our other financing, reducing the amortization, therefore lowering your daily cash break even. So we as a company kind of look at all of these factors. So any one of them is relevant, but you kind of look at the best choice. So I hope that kind of answers your question, Omar.

It does. It's helpful. I appreciate your comments, Jeff. Thank you. And thanks, Lois.

Thank you. all right we want to thank everyone for joining us for our earnings call today and as as we sit here uh in the middle of august we're starting to see a synchronized uptick in the stock market on both crude and products so we look forward to uh having you join us on the next quarter

thank you so very much thank you everyone this concludes today's call you may not ask