International Seaways (NYSE: INSW) reported Q3 EPS of ($0.38), $0.01 worse than the analyst estimate of ($0.37). Revenue for the quarter came in at $71.28 million versus the consensus estimate of $72.63 million.

Highlights

• Net loss for the third quarter was $11.1 million, or $0.38 per share, compared to a net loss of $47.8 million, or $1.64 per share, in the third quarter of 2018. Net loss for the quarter reflects the impact of a gain on vessel sales of $1.5 million and $0.4 million of charges related to a $10 million prepayment on the 2017 Term Loan Facility. Net loss excluding these items was $12.1 million, or $0.41 per share
• Time charter equivalent (TCE) revenues(A) for the third quarter were $65.8 million, compared to $51.3 million in the third quarter of 2018.
• Adjusted EBITDA(B) for the third quarter was $23.8 million, compared to $6.3 million in the same period of 2018.
• Cash(C) was $124.2 million as of September 30, 2019; total liquidity was $174.2 million, including $50.0 million undrawn revolver, compared to cash of $117.6 million and total liquidity of $167.6 million as of December 31, 2018.
• Sold 49.9% ownership interest in our LNG joint venture with Qatar Gas Transport Company Ltd. (Nakilat) for $123 million in cash in October.
• Made prepayments of $10 million in July and $100 million in October on the 2017 Term Loan Facility using restricted cash set aside from the proceeds of vessel sales and a portion of the proceeds from the sale of the stake in the Company’s LNG joint venture.
• Completed the program to dispose of our six 2004-built MRs with the sale of the final vessel in the series, which was delivered to the buyer in July.
• Subsequent to quarter end, agreed to sell a 2002-built Aframax, the Seaways Portland.
• Agreed to charter-in a 2006-built Panamax for a two-year period commencing in August.
• Tankers International expanded its global presence with the opening of an office within the New York offices of International Seaways to meet the needs of an increasing volume of U.S. customers.

“Towards the end of the third quarter, the tanker market reached an inflection point, as we realized initial benefits from the IMO 2020 low sulfur regulations, which together with geopolitical and broader macro factors led to significantly higher crude tanker rates on fixtures in September and October,” said Lois K. Zabrocky, International Seaways’ President and CEO. “As we progress in the fourth quarter, we expect the rate environment to remain robust, supported by factors such as seasonal demand strength, incremental IMO 2020 demand, and decreased vessel supply. With a sizeable fleet and significant operating leverage, we expect to continue capitalizing on favorable tanker prospects into 2020, as overall tanker fundamentals are anticipated to remain attractive and the impact of IMO 2020 becomes more pronounced.”

Ms. Zabrocky continued, “We have recently completed a number of initiatives that have led to INSW unlocking significant value for shareholders and strengthening our commercial prospects. Drawing on our successful and ongoing relationship with Nakilat, we monetized our interest in our LNG joint venture. This transaction marked an important accomplishment that enabled us to significantly enhance our balance sheet and furthers our disciplined and accretive capital allocation strategy. We facilitated Tankers International’s expansion of its footprint with the opening of an office in our New York headquarters, which is expected to further Tankers International’s leadership and strengthen INSW’s ability to take advantage of increasing U.S. Gulf exports.”

Jeff Pribor, the Company’s CFO, added, “We used a substantial portion of our LNG joint venture sale proceeds to prepay $100 million of the 2017 Term Loan facility, which has a current interest rate in excess of 8%, enabling us to decrease interest expense on an annual basis by approximately $8.2 million and reduce net loan to value from approximately 45% at September 30 to below 37% on a proforma basis. Going forward, we will continue to seek opportunities to optimize our balance sheet and lower our cost of capital. We remain well positioned to further implement our capital allocation strategy in a strengthening market.”

For earnings history and earnings-related data on International Seaways (INSW) click here.