Sign in
IS

International Seaways, Inc. (INSW)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered solid profitability amid softer product tanker spot rates: net income $62M ($1.25 diluted EPS) and adjusted EPS $1.02; adjusted EBITDA $101.5M, supported by disciplined cost control and balance sheet strength .
  • Results beat S&P Global consensus on adjusted EPS and revenue; adjusted EPS $1.02 vs 0.90 estimate and revenue $195.6M vs $191.5M estimate; EBITDA modestly above consensus, reflecting resilient VLCC/Suezmax/Aframax performance despite weaker MR rates .
  • Guidance cadence improved: forward spot breakeven lowered to ~$13,000/day and Q3 2025 booked TCE at ~$28,000/day on ~40% of revenue days, pointing to strong free cash flow continuation; Board declared combined $0.77 dividend (4th consecutive ≥75% payout) .
  • Capital allocation catalysts: sale of six older vessels ($28M in Q2, ~$57M in Q3) and agreement to purchase a 2020-built VLCC for $119M; secured $240M export-agency financing for LR1 newbuilds (SOFR+125 bps, 20-year amortization) .
  • Balance sheet and financing optionality expanded with total liquidity ~$709M, undrawn RCF $560M, and net LTV ~14%; subsequent press releases indicate fixed-income investor meetings and successful $250M unsecured bond at 7.125% coupon (Sept 2025), supporting Ocean Yield refinancing .

What Went Well and What Went Wrong

  • What Went Well

    • Adjusted EPS and revenue beat consensus; adjusted EBITDA held up despite product softness, aided by crude segments and cost discipline .
    • Balance sheet strength and financing wins: $240M K-SURE/DNB LR1 financing commitments (SOFR+125 bps, 20-year amortization; 12-year maturity), liquidity ~$709M, net LTV ~14%; “We ended Q2 with over $700,000,000 in total liquidity... Our net loan to value is comfortably under 15%” .
    • Shareholder returns: declared $0.77 (regular $0.12 + supplemental $0.65), with management reiterating minimum 75% payout ratio consistency .

  • What Went Wrong

    • Spot MR and LR1 rates were significantly lower YoY; MR spot ~$18,941/day vs $35,007/day and LR1 ~$32,802/day vs $53,066/day in Q2 2024, compressing product TCE revenues .
    • VLCC strategy missed short rate spikes due to long-haul positioning; “Our VLCC rates were impacted by a long haul strategy that didn't allow us to fully capture short spikes” .
    • Segment revenue declines YoY: Crude shipping revenues $104M vs $125M, Product $92M vs $132M, reflecting broader rate normalization .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Shipping Revenues ($USD Millions)$194.613 $183.394 $195.641
TCE Revenues ($USD Millions)$190.640 $178.342 $188.822
GAAP Diluted EPS ($USD)$0.72 $1.00 $1.25
Adjusted EPS ($USD)$0.90 $0.80 $1.02
Adjusted EBITDA ($USD Millions)$94.846 $90.701 $101.527
EBITDA Margin %27.39%*48.45%*50.85%*
EBIT Margin %27.35%*26.80%*29.72%*

*Values retrieved from S&P Global.

Segment breakdown

SegmentQ4 2024 Shipping Rev ($M)Q4 2024 TCE Rev ($M)Q1 2025 Shipping Rev ($M)Q1 2025 TCE Rev ($M)Q2 2025 Shipping Rev ($M)Q2 2025 TCE Rev ($M)
Crude Tankers$96 $93 $88 $85 $104 $99
Product Carriers$99 $97 $95 $94 $92 $90

KPIs

KPIQ4 2024Q1 2025Q2 2025
VLCC Avg Spot TCE ($/day)$35,572 $33,531 $39,303
Suezmax Avg Spot TCE ($/day)$29,700 $30,911 $36,830
Aframax Avg Spot TCE ($/day)$31,212 $25,422 $30,747
LR1 Avg Spot TCE ($/day)$37,103 $27,367 $32,802
MR Avg Spot TCE ($/day)$21,488 $21,408 $18,941
Total Revenue Days6,697 6,635 6,570
Total Liquidity ($M)$632 $673 $709
Cash ($M)$157 $133 $149
Undrawn Revolver ($M)$475 $540 $560
Net Loan-to-Value (%)~15.5% ~15% ~14%
Dividend Declared ($/share)$0.70 $0.60 $0.77

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Payout RatioOngoingMinimum ~75% payout ratio (Q4 commentary) Minimum ~75% reiterated; $0.77 combined dividend declared Maintained
Spot Breakeven RateNext 12 months~$13,700/day (Q4 call) ~$13,000/day (fleet breakeven ~$15,700/day less ~$2,600/day TC profit) Lowered
Booked Spot TCEQ1 2025 vs Q3 2025Q1 2025: ~$26,500/day booked on ~70% revenue days Q3 2025: ~$28,000/day booked on ~40% revenue days Raised
LR1 Newbuild Financing3Q25–3Q26 delivery scheduleWorking towards financing (implicit) Secured commitments: $240M, SOFR+125 bps, 20-year amortization; draw at delivery Secured
Dividend ($/share)Q1 vs Q2 2025Q1 2025: $0.60 Q2 2025: $0.77 Raised
Ocean Yield Refinancing2025Intention to repay ~$258M in Nov 2025; RCF can fund Fixed income investor meetings (Sep 2) and successful $250M 7.125% unsecured bond (Sep 9) Executed in Sept (post-Q2)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Geopolitics/sanctionsIran/Red Sea risks; sanctions enforcement supports compliant fleet; inventories adjusted; SPR discussion India/Russia sanctions tightening; Strait of Hormuz escalation briefly spiked VLCC rates; OPEC+ unwind Volatility supportive of ton-miles
Supply-side/orderbook/agingOrderbook popped but low vs fleet; ~45% heading >20 years; recycling elevated Orders ~15% of fleet over 4–5 yrs; not enough ships to replace aging fleet Tightening supply
Dividend policyMoved to ~75% payout; $0.70 declared for Mar 2025 4th consecutive ≥75% payout; $0.77 declared Consistent returns
Fleet renewalVLCC→MR swap to lower age; added modern MRs Sold older MRs/LR1; buying 2020 VLCC; first LR1 newbuild delivering Sep Ongoing renewal
Financing/balance sheetRCF extension; net LTV ~15.5%; liquidity $632M K-SURE/DNB $240M commitments; liquidity $709M; net LTV ~14% Improved flexibility
Rates/TCEQ1 booked ~$26.5k/day on 70% Q3 booked ~$28k/day on 40%; breakeven ~$13k/day Strengthening spreads

Management Commentary

  • “Net income for the second quarter was $62,000,000 or $1.25 per diluted share… adjusted net income… $50,000,000 or $1.02 per diluted share, and adjusted EBITDA was $102,000,000” .
  • “We ended Q2 with over $700,000,000 in total liquidity… Our net loan to value is comfortably under 15%” .
  • “We have sold or agreed to sell six of our oldest vessels… proceeds of $28,000,000 [Q2] … ~$57,000,000 [Q3]; agreed to purchase a 2020-built scrubber-fitted VLCC delivering in the fourth quarter” .
  • CFO: “VLCC rates were impacted by a long haul strategy that didn't allow us to fully capture short spikes during the quarter… lightering business contributed about $2,000,000 in EBITDA in the second quarter” .
  • CFO on forward outlook: “Blended average spot TCE of about $28,000 per day… forward spot breakeven rate is about $13,000 per day” .

Q&A Highlights

  • Sanctions and trade flows: India’s intake of Russian crude increasingly requires compliant tonnage; rising US Gulf exports to India noted; management expects negotiations over ~30 days .
  • OPEC+ unwind: VLCCs’ increased engagement in Arabian Gulf lifts crude tanker complex; reduced cannibalization into Suezmax/Aframax routes benefits smaller segments .
  • Fleet mix: Management balancing crude vs product exposure; modern MR additions in 2024, first LR1 newbuild in September; opportunistic VLCC purchase to position for crude cycle .
  • Financing strategy: $240M LR1 ECA-backed facility appropriate for newbuilds; multiple options for VLCC refinancing post Ocean Yield repayment; aim to lower breakevens (term, margin, amortization profile) .
  • Dividend clarity: Minimum ~75% payout ratio emphasized for consistency; share repurchases remain in the mix with $50M authorization .

Estimates Context

MetricQ4 2024 EstimateQ4 2024 ActualQ1 2025 EstimateQ1 2025 ActualQ2 2025 EstimateQ2 2025 Actual
Adjusted/Primary EPS ($)0.904*0.90 0.643*0.80 0.902*1.02
Revenue ($USD)184.582M*194.613M 176.500M*183.394M 191.484M*195.641M
EBITDA ($USD)94.349M*94.846M 81.706M*90.701M 95.249M*101.527M

Bolded beats/misses:

  • Q2 2025: Adjusted EPS beat; Revenue beat; EBITDA beat.
  • Q1 2025: Adjusted EPS beat; Revenue beat; EBITDA beat.
  • Q4 2024: Revenue beat; Adjusted EPS essentially in line; EBITDA in line-to-slight beat.

*Values retrieved from S&P Global.

Where estimates may need to adjust:

  • Product tanker rates softened in Q2 but Q3 booked TCE and improved crude rates suggest upward revisions to near-term EBITDA and EPS if spot strength persists; lower breakevens add operating leverage .
  • Fleet optimization (older vessel sales and modern VLCC purchase) likely lifts average earnings power and margins into Q4/Q1, supporting medium-term consensus upgrades .

Key Takeaways for Investors

  • Q2 print was resilient with beats on adjusted EPS, revenue, and EBITDA; the setup into Q3 looks stronger on booked TCE versus lower breakevens—constructive for near-term FCF and dividend capacity .
  • Capital returns remain a core pillar: $0.77 declared for Q3 payment and minimum ~75% payout ratio reiterated; buybacks remain optionality with $50M authorization .
  • Balance sheet strength and financing optionality (ECA-backed $240M facility; later $250M unsecured bond at 7.125%) underpin Ocean Yield repayment and fleet growth while lowering breakevens over time .
  • Fleet renewal is ongoing: monetizing older MRs/LR1 and adding modern VLCC improves cycle capture; first LR1 newbuild delivers in September, with six LR1s through 3Q26 contributing to product exposure in a niche pool .
  • Tactical positioning matters: VLCC long-haul strategy missed some short spikes in Q2; however, OPEC+ unwind and Arabian Gulf activity are tailwinds for crude segments into Q3/Q4 .
  • Watch geopolitical vectors (India sanctions, Hormuz/Red Sea) and inventory normalization; management views compliant fleet positioning and ton-mile dynamics as supportive to earnings .
  • Trading implications: near term, strength in spot bookings vs lower breakevens argues for positive revisions and dividend visibility; medium term, tightening supply and fleet age dynamics could support multi-quarter earnings momentum .