International Seaways, Inc. (INSW)

International Seaways, Inc. operates in the international ocean transportation of crude oil and petroleum products, a highly cyclical and fragmented industry. The company's vessel operations are organized into two segments: Crude Tankers and Product Carriers. At December 31, 2025, the company owned or operated an International Flag fleet of 70 vessels totaling an aggregate of 8.4 million dwt, consisting of VLCC, Suezmax and Aframax crude tankers, as well as LR2, LR1 and MR product carriers. In addition to the operating fleet of 70 vessels, four dual-fuel ready LR1 newbuilds are contracted for delivery between the first and third quarters of 2026, bringing the total operating and newbuild fleet to 74 vessels. The Marshall Islands is the principal flag of registry of the vessels. The ultimate customers include major independent and state-owned oil companies, oil traders, refinery operators and international government entities.

The shipping industry is highly competitive and fragmented. The company competes with other owners of International Flag tankers, including other independent shipowners, integrated oil companies, state-owned entities with their own fleets, and oil traders with logistical operations. In the spot market, competition is based primarily on price, cargo quantity and cargo type, although charterers are selective with respect to the quality of the vessels they hire considering other key factors such as the reliability, age and quality and efficiency of operations and experience of crews. In the time charter market, factors such as the age and quality of the vessel and the efficiency of its operation and reputation of its owner and operator tend to be even more significant when competing for business. The lightering business competes against a small number of other market participants, both in the United States and in other jurisdictions in which the company operates.

The company generates revenue by chartering its vessels to customers either for specific voyages at spot rates through the services of commercial pools in which it participates, or for specific periods of time at fixed daily rates through time charters or bareboat charters. Spot market rates are highly volatile, while time charter and bareboat charter rates provide more predictable streams of TCE revenues because they are fixed for specific periods of time. Voyage charters, including vessels operating in commercial pools that predominantly operate in the spot market, constituted 82% of the company's aggregate TCE revenues in 2025 compared to 86% in 2024. Time charters constituted 18% and 14% of the company's TCE revenues in 2025 and 2024, respectively.

The Crude Tankers reportable business segment is made up of a fleet of VLCCs, Suezmaxes, and Aframaxes engaged in the worldwide transportation of crude oil. This segment also includes the Crude Tankers Lightering business which provides ship-to-ship lightering support services and full-service STS lightering to customers in the U.S. Gulf, U.S. Pacific, Grand Bahama and Panama regions. The Product Carriers reportable business segment consists of a fleet of MRs, LR1 product carriers, and an LR2 product carrier engaged in the worldwide transportation of refined petroleum products. The company's MR product carriers are IMO III compliant, allowing those vessels to carry edible oils, such as palm and vegetable oil, increasing flexibility when switching between cargo grades. In order to take advantage of market conditions and optimize economic performance, the company employs its LR1 Product Carriers, which currently participate in the PI pool, in the transportation of crude oil cargoes.

During 2025, the company sold 12 vessels — one 2010-built VLCC, one 2011-built VLCC, three 2008-built MRs, five 2007-built MRs and two 2006-built LR1s, resulting in net proceeds of approximately $246.3 million ¹ after fees and commissions, and recognized total net gains of approximately $42.5 million ² on these sales. The company took delivery of the first two of the six dual-fuel ready LNG 73,600 dwt LR1 Product Carriers under construction in Korea at K Shipbuilding Co., Ltd.'s shipyard. The company took delivery of one 2020-built, scrubber-fitted VLCC in November 2025 for a purchase price of $119.0 million ³. The company opportunistically locked in $34.9 million ⁴ of minimum revenues (before reduction for brokerage commissions) on non-cancelable time charters for two Suezmaxes and two MRs with charter expiry dates ranging from October 2025 to November 2026. At December 31, 2025, the remaining future minimum revenues under these charters (approximately $14.6 million ⁵), when aggregated with the remaining future minimum revenues (excluding any applicable profit share) under time charters entered into in previous years, totaled approximately $208.7 million ⁶. Between December 2025 and February 2026, the company entered into agreements to sell one 2007-built MR, four 2008-built MRs, one 2010-built VLCC and one 2012-built VLCC for aggregate proceeds of approximately $216.4 million ⁷, net of commissions and fees. The company paid out $144.6 million ⁸ in dividends to shareholders during 2025. The company issued $250 million ⁹ aggregate principal amount of non-amortizing, 7.125% senior unsecured bonds maturing on September 23, 2030 at an issue price of 100%. The company exercised its purchase options on six VLCCs that secured the Ocean Yield Lease Financing arrangement; the $257.8 million ¹⁰ aggregate purchase price was paid on November 10, 2025 using the proceeds from the senior unsecured bond issuance. The company entered into an ECA Credit Facility, consisting of a 12-year term loan facility of up to $239.7 million ¹¹ and a commercial credit facility of up to $91.9 million ¹², collectively for use in respect of the LR1 newbuilding program at K Shipbuilding Co., Ltd. The 12-year facility combines for a 20-year amortization profile and a blended interest rate of SOFR plus 125 basis points across two tranches.

In 2025, shipping revenues and TCE Revenues were $843.3 million ¹³ and $819.6 million ¹⁴, respectively. Approximately 52% of TCE Revenues were generated from the Crude Tankers segment and 48% from the Product Carriers segment. Income from vessel operations decreased by $109.8 million ¹⁵ to $345.4 million ¹⁶ in 2025, from $455.2 million ¹⁷ in 2024, primarily driven by lower average daily rates across the Product Carrier sectors. The company achieved an Adjusted EBITDA of $474.7 million ¹⁸ in 2025 compared to $583.3 million ¹⁹ in 2024. Net income was $309.3 million ²⁰ for 2025 compared to $416.7 million ²¹ for 2024. Diluted net income per share was $6.23 ²² for 2025 compared to $8.38 ²³ for 2024.

The company's strategy includes actively managing the size, age and composition of the fleet over the course of market cycles to increase investment returns and available capital. The company will continue to actively manage the size and composition of its fleet through opportunistic accretive acquisitions and dispositions as part of its effort to achieve above-market returns on capital for its vessel assets and renew its fleet. The company intends to continue to engage in opportunistic dispositions where it can achieve attractive values for its vessels relative to their anticipated future earnings from operations as it assesses the market cycle. The company has a six vessel dual-fuel ready LR1 newbuild program, with two of the vessels delivered in 2025, and four dual-fuel ready LR1 newbuilds contracted for delivery between the first and third quarters of 2026. The aggregate contract price for the six scrubber-fitted, dual-fuel ready LR1 vessels is approximately $359 million ²⁴. As of December 31, 2025, the company has approximately $188.5 million ²⁵ in remaining construction costs, of which approximately $158 million ²⁶ is expected to be drawn from the ECA Credit Facility in accordance with the delivery schedule.

The company plans to continue to pursue an overall chartering strategy, with a substantial spot rate exposure that provides higher returns when the more volatile spot market is stronger. The company currently deploys the majority of its fleet on a spot rate basis to benefit from market volatility and what it believes are the traditionally higher returns the spot market offers compared with time charters. The company plans to continue to complement its spot chartering strategy by selectively employing a portion of its vessels on time charters that provide consistent cash flows. As of December 31, 2025, the company had three VLCCs, two Suezmaxes, one Aframax, one LR2 and six MRs on time charters expiring between 2026 and 2030.

The company is committed to sustainability and governance practices as a part of its core culture. To achieve sustainable growth, including reducing fuel cost and enhancing workforce safety, as well as long-term financial goals, the company has taken actions which include the establishment of a Performance and Sustainability team, the continuing implementation of a third-party data collection and analysis platform, and the inclusion of a sustainability-linked pricing mechanism in both the $500 Million Revolving Credit Facility and the $160 Million Revolving Credit Facility. The company is developing a plan to meet the IMO's 2050 and interim GHG emissions targets. The pathway to achieve these targets includes short-term, mid-term and long-term components, such as a significant Fleet Decarbonization Project, the completion of three dual-fuel LNG VLCCs at Daewoo Shipbuilding and Marine Engineering's shipyard during 2023, and the installation of energy savings devices such as wake improvement ducts, propellor boss cap fins, and advanced hull coatings.

The company seeks to maintain a strong balance sheet and prudent financial leverage with sufficient liquidity that positions it to take advantage of attractive strategic opportunities throughout the dynamic tanker cycles of the shipping sector. As of December 31, 2025, the company had total liquidity on a consolidated basis of $723.6 million ²⁷, comprised of $166.9 million ²⁸ of cash and short-term investments and $556.7 million ²⁹ of remaining undrawn revolver capacity, as well as a Consolidated Net Debt to Assets Value and Consolidated Net Debt to Book Capital ratios of 12.9% ³⁰ and 16.5% ³¹, respectively. The company ended the year with 44% (i.e., 31 vessels) of its fleet unencumbered, a net loan to value ratio of 12.9% ³², and a net debt-to-capital ratio of 16.5% ³³. The company made approximately $426.1 million ³⁴ in capital investments for vessel and other property purchases, vessel improvements, vessel construction and drydocking.

During 2025, the company's Board of Directors declared and paid regular quarterly and supplemental cash dividends totaling $144.6 million ³⁵ or $2.93 per share ³⁶. On February 25, 2026, the company's Board of Directors declared a regular quarterly cash dividend of $0.12 ³⁷ per share of common stock and a supplemental dividend of $2.03 ³⁸ per share of common stock, both payable on March 30, 2026 to shareholders of record at the close of business on March 20, 2026. In October 2025, the company's Board of Directors authorized the extension of the expiry date of its $50.0 million ³⁹ share repurchase program from December 31, 2025 to December 31, 2026.

The company's business is subject to the highly cyclical nature of the industry, which may lead to volatile changes in charter rates and vessel values. The company depends on short duration, or spot, charters for a significant portion of its revenues, which exposes it to fluctuations in market conditions. In the years ended December 31, 2025, 2024 and 2023, the company derived approximately 82%, 86% and 91%, respectively, of its TCE revenues in the spot market. Recent geopolitical instability and weather conditions have significantly benefitted the company's financial results by increasing tanker demand in 2023 and 2024, and this increased demand remained at an elevated level in 2025. There can be no certainty as to when such geopolitical instability and weather conditions will normalize, and any such normalization could cause tanker rates to decline significantly. The newbuilding order book of all classes of tankers equaled approximately 17%, 14% and 7% as of each of December 31, 2025, 2024 and 2023.

Management's message emphasizes a focus on maintaining safe and reliable vessel operations, actively managing the fleet over market cycles, maximizing cash flows through a blend of spot and period market exposure, defending and growing the asset light Crude Tankers Lightering business, executing a disciplined capital allocation strategy, and entering into value-creating transactions. The company achieved an Adjusted EBITDA of $474.7 million ⁴³ in 2025 compared to $583.3 million ⁴⁴ in 2024. The company continued to enhance its strong balance sheet by increasing total liquidity to $723.6 million ⁴⁵ from $632.2 million ⁴⁶ at the end of 2024, and ended the year with 44% (i.e., 31 vessels) of its fleet unencumbered, a net loan to value ratio of 12.9% ⁴⁷, and a net debt-to-capital ratio of 16.5% ⁴⁸. The company returned capital to shareholders through cash dividends totaling $144.6 million ⁴⁹. Key strategic priorities emphasized for the period ahead include fleet optimization through opportunistic acquisitions and dispositions, disciplined capital allocation aligned with shipping industry cycles, and executing transactions that would ultimately unlock the value of shares to investors.

For the year ended December 31, 2025, total shipping revenues were $843.3 million ⁵⁰ compared to $951.6 million ⁵¹ in 2024. Net income was $309.3 million ⁵² in 2025 versus $416.7 million ⁵³ in 2024. Diluted net income per share was $6.23 ⁵⁴ in 2025 compared to $8.38 ⁵⁵ in 2024. Income from vessel operations was $345.4 million ⁵⁶ in 2025, down from $455.2 million ⁵⁷ in 2024. Depreciation and amortization expense was $163.6 million ⁵⁸ in 2025 versus $149.4 million ⁵⁹ in 2024. Interest expense decreased to $42.7 million ⁶⁰ in 2025 from $49.7 million ⁶¹ in 2024. The company recorded a gain on disposal of vessels and other assets, net of impairments, of $42.5 million ⁶² in 2025 compared to $32.7 million ⁶³ in 2024. Adjusted EBITDA was $474.7 million ⁶⁴ in 2025 versus $583.3 million ⁶⁵ in 2024. The company had total liquidity of $723.6 million ⁶⁶ as of December 31, 2025, comprised of $166.9 million ⁶⁷ of cash and short-term investments and $556.7 million ⁶⁸ of undrawn revolver capacity. Total debt outstanding, net of deferred financing costs of $11.1 million ⁶⁹, was $567.1 million ⁷⁰ as of December 31, 2025. The company recorded a write-off of deferred financing costs of $1.8 million ⁷¹ and a loss on extinguishment of debt of $0.3 million ⁷² in 2025. For the Crude Tankers segment, TCE revenues were $423.3 million ⁷³ in 2025 compared to $437.1 million ⁷⁴ in 2024. For the Product Carriers segment, TCE revenues were $396.3 million ⁷⁵ in 2025 compared to $496.0 million ⁷⁶ in 2024.

The highly cyclical nature of the tanker industry may lead to volatile changes in charter rates and vessel values, which could adversely affect earnings and available cash. The company derived approximately 82% of its TCE revenues in the spot market in 2025, exposing it to significant fluctuations in market conditions. A decline in charter rates or other market deterioration could cause the company to incur impairment charges, though no vessel impairment charges were recorded during 2025. The company has incurred significant indebtedness, with approximately $567 million ⁴⁰ of outstanding indebtedness (including finance lease obligations), net of deferred finance costs, as of December 31, 2025, which could limit its ability to finance operations and pursue business opportunities. The company may not be able to generate sufficient cash to service all of its indebtedness and could breach covenants in its credit facilities, which require, among other things, a minimum liquidity level of the greater of $50 million ⁴¹ and 5% of the company's Consolidated Indebtedness, and a Maximum Leverage Ratio not to exceed 0.60 to 1.00 ⁴² at any time. Compliance with complex environmental laws and regulations, including those relating to the emission of greenhouse gases, may require substantial additional capital and/or operating expenditures. The company may be subject to U.S. federal income tax on U.S. source shipping income if it does not qualify for the Section 883 exemption, which would subject its gross shipping income derived from U.S. sources to a four percent tax without allowance for deductions.