International Seaways, Inc. · NYSE:INSW
International Seaways — Investor Day (January 2020)
43 slides from International Seaways's investor day presentation, Jan 15, 2020
Slide 1: Investor and Analyst Day
1 International Seaways, Inc. Investor and Analyst Day International Seaways, Inc. January 15, 2020
Slide 2: Disclaimer
Disclaimer Forward-Looking Statements During the course of this presentation, the Company (International Seaways, Inc. (INSW)) may make forward-looking statements or provide forward-looking information. All statements other than statements of historical facts should be considered forward-looking sta
Slide 3: Presenters and Panelists
Presenters and Panelists Lois K. Zabrocky William Nugent President & CEO Head of International Fleet Operations Jeffrey D. Pribor David Siever Chief Financial Officer Chartering and Investor Relations Erik Broekhuizen Derek Solon Global Manager, Tanker Chief Commercial Officer Research and Consultin
Slide 4: Agenda
Agenda Welcome David Siever Safety Briefing William Nugent Introduction to International Seaways Lois Zabrocky Commercial Update Derek Solon Financial Overview Jeff Pribor Environmental, Social, Governance (ESG) Update James Small Outside Market Review Erik Broekhuizen Key Takeaways
Slide 5: Introduction to International Seaways – Lois Zabrocky
Introduction to International Seaways – Lois Zabrocky
Slide 6: Introduction to International Seaways (NYSE: INSW)
Introduction to International Seaways (NYSE: INSW) • Leading diversified tanker owner with significant presence in crude and product sectors • 42 vessel fleet with balanced mix of contracted cash flows and spot market upside • Installing 10 scrubbers on VLCCs representing 40% of our fuel consumption
Slide 7: Why Invest in International Seaways?
Why Invest in International Seaways? • Invested $600 million, renewing fleet at bottom of cycle without issuing equity • Sold LNG joint venture for $123 million in cash Disciplined Capital • Prepaid $110 million of long term debt, saving about $9 million annual interest Allocator • Installing 10 scr
Slide 8: Disciplined Capital Allocation: Fleet Renewal
Disciplined Capital Allocation: Fleet Renewal ▪ International Seaways Invested $600 million at the bottom of the cycle o Two Suezmax newbuilding resales purchased for $58 million each o 2010-built VLCC purchased for $53 million o Six VLCCs built 2016 and 2015 purchased for $434 million total o Asset
Slide 9: Low Financial Leverage
Low Financial Leverage • We acquired $600m of vessels to renew our fleet without issuing equity Long Term Debt / Total Assets 65% • And, INSW still has one of the lowest leverage profiles in the publicly traded 60% tanker space 55% • With bank commitments announced last 50% week for $380m, we are pl
Slide 10: Significant Operating Leverage
Significant Operating Leverage Capacity Our Fleet 2 million barrels VLCC (330 meters) 13 300,000 DWT 1 million barrels Suezmax (275 meters) 2 160,000 DWT CRUDE 750,000 barrels Aframax/LR2 (250 meters) 6 110,000 DWT PRODUCTS 500,000 barrels Panamax/LR1 (230 meters) 12 70,000 DWT 350,000 barrels MR (1
Slide 11: Best in Class Commercial and Technical Operations
Best in Class Commercial and Technical Operations • Founding member and co-owner • London based with NY office within INSW HQ • 60 VLCCs in fleet • Founding member • Strong representation in Americas • Consistently outperforms all others • 36 Panamaxes and LR1s in fleet • Leading technical manager •
Slide 12: Strong Governance and ESG Footprint
Strong Governance and ESG Footprint • Highly Experienced Management Team • Independent, Diverse Board of Directors • Committed to ESG best practices and advocacy • Ranked #1 Tanker Company by Wells Fargo / Webber Research • National Directors Institute Public Company Board of the Year - 2018 Interna
Slide 13: Commercial Update – Derek Solon
Commercial Update – Derek Solon
Slide 14: Tanker Markets are Strengthening
Tanker Markets are Strengthening Tanker Rates Since October Have Recovered from Multi-Year Lows Weekly TCE per day $120,000 Oil demand remains strong $100,000 • Chinese demand expected to exceed 14 $80,000 million b/d in 2020 $60,000 • Increased refining capacity online in China $40,000 Oil prod
Slide 15: Market Fundamentals Indicate Recovery Underway
Market Fundamentals Indicate Recovery Underway Oil demand in second half of 2019 increased by 1.6 million b/d • VLCC fixtures out of AG climbed again to over 140 liftings per month during latter part of the year Atlantic Basin exports continue to grow • Fixtures for VLCCs from the Atlantic Basin to
Slide 16: US Gulf Exports Strengthen Freight Market
US Gulf Exports Strengthen Freight Market US Crude Exports Continue to Climb • US crude exports up 950K b/d in 4th quarter 2019 compared to 4th quarter 2018 • EIA reports exports exceeded 4 million b/d in last week of December • IEA expects US crude oil production to increase by 1 million b/d in 202
Slide 17: INSW’s Americas Presence - Tankers International USA
INSW’s Americas Presence - Tankers International USA Owner and founder of largest independent VLCC tanker pool • With 60 ships, Tankers International provides flexible service for the world’s largest VLCC charterers • Large fleet leads to highly efficient utilization and economies of scale to member
Slide 18: INSW’s Americas Presence - Lightering LLC
INSW’s Americas Presence - Lightering LLC Lightering LLC provides positive cash flow from an asset-light, expertise-heavy, customer oriented service business • Conducts both full-service and service-only lighterings in the US Gulf • Very active in USG crude export market, responsible for transshippi
Slide 19: INSW Americas Presence - Panamax International
INSW Americas Presence- Panamax International INSW and its partners contribute 36 ships to the pool Large Chilean shipowner with over 300 Ecuadorian Public (State) shipowner ships across gas, tankers, drybulk and and operator coastal trades Strong Americas-based trading… Which consistently outperfor
Slide 20: Sanctions and Regulations Cause Vessel Supply Disruption
Sanctions and Regulations Cause Vessel Supply Disruption US Sanctions on Chinese Ship Owners • Created confusion amongst industry participants leading to firming rate environment • Reluctance amongst customers to charter Chinese- controlled tonnage US Sanctions on Iran • Reduces trading VLCC fleet •
Slide 21: Orderbook is Low and Tempered by Regulatory Environment
Orderbook is Low and Tempered by Regulatory Environment Orderbook at Historically Low Levels Tanker Orderbook is the Lowest since 19971 50% • Earliest deliveries for new orders of large ships 2021 45% 40% • VLCC 7.8% 35% • Suezmax 9.9% 30% 25% • Aframax/LR2 8.0% 20% • Panamax/LR1 5.0% 15% 10% • MR 6
Slide 22: IMO 2020 – Addressing Low-Sulfur Emissions Regulations
IMO 2020 – Addressing Low-Sulfur Emissions Regulations ▪ Global 0.5% Sulfur Cap in effect from January 1, 2020 o Seaways installing scrubbers on its 10 modern VLCCs o 40% of our total fleet fuel consumption o Remainder of fleet will use 0.5% Fuel o Balanced portfolio approach ▪ Scrubber Installation
Slide 23: Stable Cash Flow and Value from JV
Stable Cash Flow and Value from JV 50% owner of a Joint Venture which owns two Floating Storage and Offloading (FSO) units with multi year contracts to process oil for export for Qatar Petroleum • Customer is North Oil Company, JV between Qatar Petroleum and Total • Field produces 270,000 – 300,000
Slide 24: Finely Balanced Market Means Recovery Underway
Finely Balanced Market Means Recovery Underway • Continued strong demand for oil and refined products • Non-OPEC production continues to grow • $300,000 Located further away from Asia, with high demand • Smaller effective trading fleet coupled with low orderbook paints positive supply-side picture $
Slide 25: Financial Overview – Jeff Pribor
Financial Overview – Jeff Pribor
Slide 26: INSW Financial Highlights
INSW Financial Highlights • Accomplished fleet upgrade while maintaining one of the lowest leverage profiles in the Low Financial tanker space Leverage and Strong • 36% Net Loan to Asset Value at Sept 30 proforma for LNG sale and $100 million debt Balance Sheet repayment • Commitments in place for r
Slide 27: INSW Financial and Capital Allocation Milestones
INSW Financial and Capital Allocation Milestones • Public spin-off with $440m Term Loan B debt 2016 • LIBOR + 475, maturity August 2019 • EOY Net LTV 40% • Term Loan B refinanced, $500m with $50 million accordion • LIBOR + 550, maturity June 2022 2017 • Proceeds used to acquire 2 modern Suezmaxes fo
Slide 28: Refinancing Details – Lowers Cost of Capital
Refinancing Details – Lowers Cost of Capital Existing Facilities Anticipated Pro Forma Refinancing Principal Annual Principal Annual ($m) Maturity Rate Amortization ($m) Maturity Rate Amortization Term Loan B $336.1 2022 L + 600 $18.4 Core Facility Term Loan $300.0 2025 L + 260 $37.7 ABN Term Loan $
Slide 29: Refinancing Details – Debt Amortization and Maturities
Refinancing Details – Debt Amortization and Maturities Anticipated new debt repayment profile based on signed commitments. Expected 2020 debt service $105m ($33m interest, $72m amortization) 350.0 300.0 250.0 USD Millions 200.0 285.4 150.0 100.0 25.0 50.0 64.9 71.9 81.3 71.3 45.5 45.5 61.3 61.3 36.3
Slide 30: Lean and Scalable Model – Cash Breakevens
Lean and Scalable Model – Cash Breakevens TCE breakeven levels allow INSW to navigate low points in the tanker cycle while providing significant operating leverage in rising markets Last Twelve Months Q3 2019 Actuals Breakeven Rates by Sector • INSW Daily OPEX excludes DDK deviation bunkers, insuran
Slide 31: Accretive and Flexible Capital Allocation Strategy
Accretive and Flexible Capital Allocation Strategy Peak Potentially sell vessels and/or return more cash Deleverage and return cash to shareholders Focus on fleet renewal until leverage targets met Trough International Seaways, Inc. 31
Slide 32: Financial Summary – Preliminary Q4 & Q1
Financial Summary – Preliminary Q4 & Q1 Earnings Update 4th Quarter 2019 1st Quarter 2020 1 Spot Spot & TC Spot % Fixed Spot & TC % Fixed Modern VLCC $57,000 $57,000 $94,000 37% $94,000 37% VLCC 15+ $46,000 $46,000 $90,000 54% $90,000 54% Suezmax $46,000 $46,000 $64,000 28% $64,000 28% Aframax/LR2 $
Slide 33: Operating Leverage
Operating Leverage Our Fleet Provides Tremendous Upside Exposure (Mid-Cycle) (Analyst Consensus) (Recent Peak) (Historic Peak) 15-Year Average 2020 2015 Average 2008 Average VLCC 43,500 72,200 97,500 Suezmax 33,700 50,400 74,200 Aframax/LR2 24,900 39,300 50,300 Panamax/LR1 20,700 26,500 38,500 MR 15
Slide 34: INSW Trading Liquidity and Stock Price Performance
INSW Trading Liquidity and Stock Price Performance Average Daily Volume, $ million1 Stock Price Performance (1/1/17 = 100) $14 250 $12 200 $10 150 $8 100 $6 $4 50 $2 0 01/03/17 03/03/17 05/03/17 07/03/17 09/03/17 11/03/17 01/03/18 03/03/18 05/03/18 07/03/18 09/03/18 11/03/18 01/03/19 03/03/19 05/03/
Slide 35: Environmental, Social & Governance Update
Environmental, Social & Governance Update
Slide 36: Strong Governance and ESG Footprint
Strong Governance and ESG Footprint • Highly Experienced Management Team • Independent, Diverse Board of Directors • Committed to ESG best practices and advocacy • Ranked #1 Tanker Company by Wells Fargo / Webber Research • National Directors Institute Public Company Board of the Year - 2018 Interna
Slide 37: Management Team
Management Team • Most recently served as President for OSG’S International Flag strategic business unit, International Seaways’ predecessor company Lois K. Zabrocky • Joined OSG in 1992, previously held positions as Head of International Product Carrier & President & CEO Gas Strategic Business Unit
Slide 38: Board of Directors
Board of Directors Committees Industry Majority Led by Strong Investor Leading Rigorous Independent Independent Participation Governance Board Policies Board Directors Track Record Highly professional management team and board of directors guided by rigorous capital allocation principles Board of Di
Slide 39: Strong Environmental Social & Governance Culture
Strong Environmental Social & Governance Culture • INSW is committed to implementing and advocating industry leading Environmental, Social and Governance practices Environmental • Commitment to minimizing risk of all forms of pollution and managing waste streams • Active and enhanced compliance prog
Slide 40: Strong Environmental Social & Governance Culture
Strong Environmental Social & Governance Culture Governance • Six members of Board of Directors fully independent • Split non-Executive Chairman and CEO • Commitment to diversity exemplified by two female Directors, one of whom is CEO • Shareholder representation on Board • Board includes former CEO
Slide 41: Get to Green
Environmental Initiatives • INSW is committed to responsible ship recycling • Approved Inventories of Hazardous Materials • All ships in compliance with EU requirements one year early • Campaign to reduce single use plastics onboard ships • Emissions Reduction through Performance Optimization • Deep
Slide 42: Key Takeaways – Lois Zabrocky
Key Takeaways – Lois Zabrocky
Slide 43: Why Invest in International Seaways?
Why Invest in International Seaways? • Invested $600 million, renewing fleet at bottom of cycle without issuing equity • Sold LNG joint venture for $123 million in cash Disciplined Capital • Prepaid $110 million of long term debt, saving about $9 million annual interest Allocator • Installing 10 scr