International Seaways (NYSE: INSW) reported Q4 EPS of $1.32, $0.13 worse than the analyst estimate of $1.45. Revenue for the quarter came in at $124.02 million versus the consensus estimate of $126.82 million.

• Net income for the fourth quarter was $15.9 million, or $0.54 per share, compared to a net income of $7.0 million, or $0.24 per share, in the fourth quarter of 2018. Net income for the quarter reflects the impact of a $3.0 million cash gain on sale of the LNG joint venture with Qatar Gas Transport Company Ltd. (Nakilat), offset by the release of the Company’s share of the unrealized losses associated with the interest rate swaps held by the LNG JV of $21.6 million into earnings from accumulated other comprehensive loss, a $0.3 million loss on sale of vessels, a $3.2 million write-off of deferred financing costs, and a $1.0 million loss from the extinguishment of debt. Net income excluding these items was $39.0 million, or $1.32 per share.
• Time charter equivalent (TCE) revenues(A) for the fourth quarter were $117.6 million, compared to $93.0 million in the fourth quarter of 2018.
• Adjusted EBITDA(B) for the fourth quarter was $72.2 million, compared to $46.2 million in the same period of 2018.
• Cash(C) was $150.2 million as of December 30, 2019; total liquidity was $200.2 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 its 49.9% ownership interest in the LNG joint venture for $123 million in cash in October.
• Made a prepayment of $100 million in October on the 2017 Term Loan Facility.
• Agreed to purchase a 2009-built LR1, the Seaways Guayaquil, which delivered in February.
• Sold a 2002-built Aframax, the Seaways Portland, and agreed to sell a 2001-built Aframax, Seaways Fran.
• Subsequent to the end of the quarter, closed on new senior secured credit facilities aggregating $390 million, with proceeds used to refinance $383 million existing high-cost secured and unsecured debt of the Company and its subsidiaries.
• Instituted a program of returning cash to shareholders, including a fixed, quarterly dividend of $0.06 per share to complement our existing $30 million share repurchase program.

“During 2019, we unlocked significant value for shareholders by monetizing our non-core investment in the LNG joint venture and allocating capital to further reduce our leverage and significantly lower our cost of capital,” said Lois K. Zabrocky, International Seaways’ President and CEO. “This success, together with our recently completed refinancing, transformed our capital structure and enabled us to maintain one of the lowest leverage profiles in the public company shipping sector, with our net loan to asset value of our conventional tanker fleet at 41%. The new credit facilities will reduce annual interest expense by approximately $15 million, by lowering our average interest rates on the refinanced portion of our debt by 350 basis points (or 3.5%), and our overall average interest rates by 200 basis points (or 2.0%). Our significant operating leverage and earnings power were also evident in 2019, as we capitalized on the strong market in the fourth quarter, returning to profitability and ending the year with over $200 million in total liquidity. While rates in the first quarter have come off of recent highs, primarily due to concerns around the impact of the coronavirus (COVID-19), we expect overall tanker fundamentals to remain positive and supportive of a strengthening market once the virus is contained.”

Ms. Zabrocky continued, “We have successfully completed our refinancing, delevered by paying down $110 million of our debt, and renewed our fleet without issuing equity during the lower portion of the cycle over the last three years. As a result of these steps, and taking into consideration our strong liquidity position and compelling long-term prospects, we are pleased to establish a program to begin to return capital to shareholders as part of our broader capital allocation strategy. This will initially consist of a fixed, quarterly dividend of $0.06 per share which provides us flexibility to allocate capital to best serve shareholders during a time when we have the ability to act on our $30 million share repurchase program.”

Jeff Pribor, the Company’s CFO, added, “Proceeds from our new senior secured credit facilities, which closed in January 2020, allowed us to refinance high-cost debt, improving our capital structure for the future. In addition to eliminating restrictions that limited our ability to return capital to shareholders, the refinancing is expected to reduce our annual interest expense by approximately $15 million and enable us to maintain low cash break evens. We are proud to have collaborated with our leading banking group and Sustainalytics, a leading firm in ESG and corporate governance research, to become the first NYSE-listed ship owner and operator to include a sustainability-linked pricing mechanism in our new credit facilities. This groundbreaking sustainability feature is consistent with INSW’s commitment to environmental initiatives and improving our ESG footprint.”

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