International Seaways (NYSE: INSW) reported Q4 EPS of ($0.20), $0.01 worse than the analyst estimate of ($0.19). Revenue for the quarter came in at $56.7 million versus the consensus estimate of $62.02 million.

Highlights

• Net loss for the twelve months ended December 31, 2020 was $5.5 million, or $0.20 per diluted share. Net loss for 2020 reflects the impact of impairments and loss on sale of vessels of $100.1 million and various expenses related to refinancing of $14.5 million, and a non-cash deferred tax provision of $16.4 million recorded as a reduction of equity in results of the FSO (Floating Storage Offloading) joint ventures, principally related to the extension of their service contracts. Net income excluding these items would have been $125.2 million, or $4.39 per diluted share.
• Net loss for the fourth quarter was $116.9 million, or $4.18 per diluted share, compared to net income of $15.9 million, or $0.54 per diluted share, in the fourth quarter of 2019. Net loss for the current quarter reflects the impact of vessel impairment charges of $85.9 million and the aforementioned non-cash $16.4 million tax provision. Net loss excluding these items would have been $14.6 million, or $0.52 per diluted share.
• Signed 10-year extensions to our service contracts for our two FSO joint ventures, which are expected to generate in excess of $322 million of contract revenues for the Company over the additional 10-year extension periods.
• Time charter equivalent (TCE) revenues(A) for the fourth quarter were $53.0 million, compared to $117.6 million for the fourth quarter of 2019.
• Adjusted EBITDA(B) for the fourth quarter was a loss of $5.0 million, compared to $72.2 million for the fourth quarter of 2019. Full year Adjusted EBITDA was $220.1 million compared to $164.7 million for fiscal 2019. The amounts for Adjusted EBITDA for the 2020 periods are without consideration of any adjustment for the $16.4 million non-cash deferred tax provision recorded by the FSO joint ventures.
• Cash(C) was $215.7 million as of December 31, 2020; total liquidity was $255.7 million, including $40.0 million of undrawn revolver.
• Paid a regular quarterly cash dividend of $0.06 per share in December 2020 and announced a quarterly cash dividend of $0.06 per share payable in March 2021.
• Sold and delivered a 2002-built VLCC, Seaways Mulan, a 2003-built VLCC, Seaways Rosalyn, and a 2001-built Aframax, Seaways Fran.
• Subsequent to the end of the quarter, announced contract to build three dual fuel LNG VLCCs at DSME shipyard in South Korea with seven-year time charters to Shell commencing at delivery in 2023.

“2020 was a challenging and volatile year for the tanker market, but also one in which we achieved solid results, generating a record $220 million of adjusted EBITDA, increasing our cash position to $216 million, and taking steps aimed at unlocking shareholder value by initiating a cash dividend and repurchasing approximately 5% of our outstanding shares,” said Lois K. Zabrocky, International Seaways’ President and CEO. “Our earnings power during the full year was driven by the performance of our sizeable fleet and our success executing four very favorable VLCC time charters early in 2020, enabling us to optimize revenue later in the year when oil inventory destocking adversely impacted tanker demand. Importantly, in addition to continuing to generate strong cash flows from two of these time charters into 2021, the extensions of our FSO joint venture contracts in the fourth quarter bolster our contracted cash flows through 2032. Over the last three years, the FSO joint ventures have returned over $54 million in cash to Seaways, excluding distributions related to refinancings.”

Ms. Zabrocky continued, “Consistent with our focus on accretive capital allocation, we are excited to have agreed to build three LNG dual-fuel VLCCs for delivery in 2023, enabling us to achieve a number of critical strategic objectives. Adding these vessels to our fleet on seven-year time charters to a market leading counterparty in Shell both allows us access to very competitive financing as we renew our fleet at attractive levels and provides strong, stable cash flows with added upside due to profit sharing above the base rate. Additionally, we expect these tankers to be well suited to adhere to future environmental regulation throughout their life. These ships meet not just today’s IMO Energy Efficiency Design Index (“EEDI”) but also beat the 2025 Phase III EEDI targets by about eight percent. Their significant environmental benefits, including substantially reducing our carbon footprint, are in keeping with Seaways’ commitment to ESG-focused corporate citizenship, and we are proud to continue to be at the forefront of sustainability initiatives in the maritime sector.”

Jeff Pribor, the Company’s CFO, added, “2020 was an important year for Seaways, as we successfully completed our sustainability-linked refinancing, which reduced our average interest rate by 3.5 percentage points and our annual interest expense by $25 million, strengthened our capital structure, and enabled us to begin returning capital to shareholders. Given our balance sheet strength, we believe we are well positioned to continue to allocate capital to create long-term shareholder value. Specifically, in addition to utilizing our strong cash flow to further prepay debt, we were able to execute on our share repurchase program and pay $0.06 per share in quarterly dividends. At the same time, we grew our total liquidity to $256 million, and our net loan to value of 32.7% remains one of the lowest among our tanker peers.”

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