International Seaways, Inc. · NYSE:INSW
International Seaways — Debt Investor Presentation (May 2017)
48 slides from International Seaways's debt investor presentation, May 30, 2017
Slide 1: Lender Presentation May 2017
International Seaways, Inc. Confidential 1 Lender Presentation May 2017 Confidential
Slide 2: Disclaimer
International Seaways, Inc. Confidential Disclaimer Fo r w ar d - Loo ki n g Sta t e m e nt s Dur ing the course of th i s presentation, the Co m pany ( International Seaways, Inc . (INSW)) m ay m a k e f or w ard - loo k ing state m ents or prov ide f or w ard - loo k ing in f or m at i on . All st
Slide 3: Today's Presenters
International Seaways, Inc. Confidential 3 Today’s Presenters Jeffrey D. Pribor Chief Financial Officer Lois K. Zabrocky Chief Executive Officer
Slide 4: Agenda
International Seaways, Inc. Confidential 4 ▪ Transaction Overview ▪ Company Overview ▪ Key Credit Highlights ▪ Market Fundamentals ▪ Financial Overview ▪ Appendix Agenda
Slide 5: Transaction Overview
Transaction Overview E International Seaways. inc.
Slide 6: Transaction Summary
International Seaways, Inc. Confidential Transaction Summary 6 International Seaways, Inc . (the “Company” or “INSW”), a Marshall Islands corporation with operations dating back to 1957 , and its wholly owned subsidiaries own and operate a fleet of oceangoing vessels engaged primarily in the transpo
Slide 7: Sources, Uses & Pro Forma Capitalization
International Seaways, Inc. Confidential Sources, Uses & Pro Forma Capitalization 7 Sources and Uses ($mm) Pro Forma Capitalization ($mm) Pro Forma Credit Statistics ($mm) Source: Company information. 1 Based upon 29,207,750 million shares outstanding and $20.32 closing price. 2 Total asset value in
Slide 8: Summary Term Sheet
International Seaways, Inc. Confidential Summary Term Sheet 8 Summary of Credit Facilities Co - Borrowers International Seaways Operating Corporation (“OPCO”), OIN Delaware LLC Joint Lead Arrangers Jefferies Finance LLC and J.P. Morgan Securities LLC Facilities $50.0 million Super Priority Senior Se
Slide 9: Pro Forma Organizational Structure
International Seaways, Inc. Confidential Pro Forma Organizational Structure 9 Note: 100% ownership unless otherwise noted. International Seaways, Inc. (f/k/a OSG International, Inc.) (Marshall Islands (“MI”)) OIN Delaware LLC (Delaware) International Seaways Operating Corporation (MI) 63 Restricted
Slide 10: Timeline
International Seaways, Inc. Confidential Timeline 10 Week of Event May 29 th − Bank Meeting (5/30) June 12 th − Commitments Due from Lenders (6/13) June 19 th − Close and Fund (6/19) Bank Holiday June 2017 S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Slide 11: Company Overview
Company Overview E International Seaways. inc.
Slide 12: Company Overview
International Seaways, Inc. Confidential Company Overview Enhanced Strategic Focus, Simplified Operating Structures, Strong Financial Profiles OVERSEAS SHIPHOLDING GROUP 12 US Flag Shares Outstanding 29.21 M Price (5/23/17) $20.32 Market Cap $594 M Debt $458 M Cash $101 M Enterprise Value $940 M INS
Slide 13: Company Overview (Cont'd)
International Seaways, Inc. Confidential 13 Company Overview (Cont’d) ▪ Total operating fleet of 25 vessels ‒ LR2, LR1 and MR vessels ‒ 18 owned vessels ‒ 7 time and bareboat chartered - in vessels ▪ Primarily employed in the spot market through commercial pools ▪ 4 vessels employed on time and bare
Slide 14: Key Credit Highlights
Key Credit Highlights E International Seaways. inc.
Slide 15: Key Credit Highlights
International Seaways, Inc. Confidential Key Credit Highlights Bright Future Rich History 5 Operational Excellence and Experienced Management Team with Strong and Transparent Corporate Governance 3 Strong Upside Potential From Spot Exposure and Lightering Business 2 Contracted Revenue Provide Stable
Slide 16: Large and Diversified Fleet with Strong Collateral Value
International Seaways, Inc. Confidential Large and Diversified Fleet with Strong Collateral Value 16 1 Represents the number of vessels in each class as a percentage of the International Flag fleet, as of March 31, 2017. Does n ot include JV vessels. 2 Company Information. 3 Does not include one ves
Slide 17: Contracted Revenue Provides Stable Cash Flow Covering Fixed Costs
International Seaways, Inc. Confidential Contracted Revenue Provides Stable Cash Flow Covering Fixed Costs 17 ▪ Sufficient scale allows optimization strategies to maximize Time Charter Equivalent revenue ▪ Builds economies of scale to drive down cost ▪ Creates flexibility for INSW to scale up or dow
Slide 18: FSO Joint Venture
International Seaways, Inc. Confidential 18 Pro v ides global di v ersific at i on w ith expande d customer base ▪ $86.0M in total cash contributions to INSW since 2014 ▪ Expected cash contribution in 2017 and 2018 expected to be $35.0M and $45.0M, respectively ▪ Existing debt of the JV will be paid
Slide 19: LNG Joint Venture
International Seaways, Inc. Confidential 19 Pro v ides global di v ersific at i on w ith expande d customer base ● JV Partner is the Qatari LNG Shipping company with a strong relationship with customer Qatar Gas ● Ships have five cargo tanks with membrane - type containment system allowing transport
Slide 20: Commercial Pools
International Seaways, Inc. Confidential 20 Pools VLCC Aframax Aframax /LR2 Panamax / LR1 MR MR MR Total # of INSW Vessels 6 7 1 6 2 14 3 39 2 # of Total Vessels 36 1 45 22 30 68 24 11 236 Other Participants Rationale for Participation Largest VLCC pool and provides best access to China and Caribbea
Slide 21: Spot Earnings versus Clarksons Average
International Seaways, Inc. Confidential • Spot VLCCs out earned the Clarksons ’ Average by over $600 per day • Laden/ballast ratio of 59% of at sea days over the period • Strong relationships with Chinese oil companies $10,000 $15,000 $20,000 $25,000 $30,000 FY 2016 INSW Spot Rate TD9* Clarksons Av
Slide 22: Spot Exposure and Lightering Business
International Seaways, Inc. Confidential 22 ▪ Asset - light service business based in Houston ▪ Provides STS coverage in US Gulf, US Pacific, US Atlantic, Grand Bahama and Panama - INSW market share of the US offshore lightering market is approximately 30 - 35% ▪ Lightering unit generated EBITDA of
Slide 23: Lean and Scalable Business Model - G&A
International Seaways, Inc. Confidential $38.7 $31.6 $29.8 $25.0 $24.0 $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 $40.0 $45.0 2015 2016 LTM 3/31/17 2017 Target (with Transition Costs) 2017 Target Run Rate $M 23 ▪ Outsourced model allows for a lean organizational structure ▪ Business can scale up
Slide 24: Lean and Scalable Business Model - OPEX
International Seaways, Inc. Confidential 24 15 ▪ Outsourced to VShips - Glasgow ▪ Highly competitive OPEX numbers ▪ Assets maintained to top quality/vetting standards by INSW specific criteria ▪ INSW YTD 2017 Average Daily OPEX for owned and bareboat - in vessels is approx. $7,800 Lean and Scalable
Slide 25: Low Cash Breakeven Cost
International Seaways, Inc. Confidential 25 Note: INSW Daily OPEX excludes DDK deviation bunkers, insurance claims and one - off expenses. Note: Only includes owned vessels. Three bareboat - in vessels have charter hire and OPEX expenses of approx. $13,400 per day. Note: Breakevens basis Revenue Day
Slide 26: Low Cash Breakeven Cost (Cont'd)
International Seaways, Inc. Confidential 26 Lean and Scalable Business Model – Low Cash Breakeven Cost (Cont’d) 4 Low TCE breakeven mitigates cyclicality and seasonality while preserving upside potential $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000 2001 2003 20
Slide 27: Operational Excellence
International Seaways, Inc. Confidential 27 Pro v ides global di v ersific at i on w ith expande d customer base ▪ Technical management is outsourced to V. Ships ▪ Our customers through Oil Companies International Marine Forum (OCIMF) independently inspect and measure all tankers ▪ In 2016, our ship
Slide 28: Operations KPI Benchmark
International Seaways, Inc. Confidential Confidential 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Chapter 12 Intertanko Industry Average INSW Certification and Documentation Crew Management Navigation Safet
Slide 29: Management Team
International Seaways, Inc. Confidential Lois K. Zabrocky President & CEO ▪ Most recently served as President for OSG’S International Flag strategic business unit, International Seaways’ predecessor company ▪ Joined OSG in 1992, previously held positions as Head of International Product Carrier & Ga
Slide 30: Board of Directors
International Seaways, Inc. Confidential Douglas D. Wheat Chairman of the Board ▪ Managing Partner of Wheat Investments Timothy J. Bernlohr Director ▪ Founder and Managing Member of TJB Management Consulting, LLC Ian T. Blackley Director ▪ Former President, CEO and Director of OSG Randee Day Directo
Slide 31: Tanker Market Fundamentals - Excellent Timing for Renewal and Growth
International Seaways, Inc. Confidential 0 20 40 60 80 100 120 140 160 180 Source: Clarksons, US BLS. 31 Inflation Adjusted Clarksons ' 5 Year Old VLCC Adjusted prices at levels seen only twice before in 30 years Tanker cycle low point provides opportunities Tanker Market Fundamentals – Excellent Ti
Slide 32: Financial Position - Strong Balance Sheet with Low Leverage
International Seaways, Inc. Confidential 32 Strong balance sheet and low breakevens protect INSW during low portions of tanker cycle and provide opportunity for growth and returning cash ▪ PF Term Loan B: $550M ▪ Liquidity: $178M cash & $50M undrawn revolving credit facility ▪ Maturity: 5 years ▪ Am
Slide 33: Market Fundamentals
Market Fundamentals Bynes seme.
Slide 34: Market Fundamentals - Demand Drives the Business
International Seaways, Inc. Confidential 76 80 84 88 92 96 100 104 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Market Fundamentals – Demand Drives the Business 34 Source: Lloyds Maritime Intelligence, EIA May 2017 Short Term Energy Outlook Strong Chinese Seaborne Petroleum Imports Encouraging
Slide 35: Favorable Demand Dynamics in Product Sector
International Seaways, Inc. Confidential Export - oriented Teapot Refineries: Permits granted in the start of 2015 both increased crude oil imports and increased product available for export But location of refineries does little to satiate growing demand for gasoline in China so imports continue to
Slide 36: Market Fundamentals - Supply
International Seaways, Inc. Confidential (15) (10) (5) 0 5 10 15 20 25 30 35 40 45 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 DWT, millions VLCC Aframax Panamax MR Market Fundamentals - Supply 36 0 10 20 30 40 50 60 70 80 90 100 Fewest orders in 20 years 0 20 40 60 80 100 HHI U
Slide 37: Financial Overview
Financial Overview E International Seaways. inc.
Slide 38: Historical Summary Financials
International Seaways, Inc. Confidential $347 $476 $385 $344 2014 2015 2016 LTM 3/31/17 $137 $299 $222 $183 2014 2015 2016 LTM 3/31/17 $104 $277 $210 $166 2014 2015 2016 LTM 3/31/17 Historical Summary Financials ($ millions) Adjusted EBITDA Free Cash Flow 1 Average Daily TCE Rates ($ actual) TCE Rev
Slide 39: Strong Credit Profile
International Seaways, Inc. Confidential $228 $359 $142 $151 2014 2015 2016 LTM 3/31/17 $447 $310 $368 $357 2014 2015 2016 LTM 3/31/17 $44 $60 $73 $70 2014 2015 2016 LTM 3/31/17 Strong Credit Profile ($ millions) Net Debt 2 EBITDA From Fixed Rate Contracts Collateral Value of Loan Liquidity 1 39 1 L
Slide 40: Financial Summary - Q1 Update
International Seaways, Inc. Confidential 37 28 87 56 1Q16 1Q17 Product Tankers Crude Tankers Financial Summary – Q1 Update ($ millions) 1 See Appendix for TCE Revenue and Adjusted EBITDA reconciliation. $125 $84 $38,794 $16,002 $14,888 $12,586 $32,000 $13,000 $12,000 $12,000 $28,125 $15,625 $13,250
Slide 41: Financial Summary - Change in Cash Balance
International Seaways, Inc. Confidential Financial Summary – Change in Cash Balance ($ millions) 41 $46 ($13) ($1) ($7) ($9) ($7) $92 $101 $0 $20 $40 $60 $80 $100 $120 $140 $160 12/31/16 Cash Balance Adjusted EBITDA Less Undistributed JV Earnings Separation & Transition Costs Drydock & CAPEX Debt Se
Slide 42: Chartered-In Hire Details
International Seaways, Inc. Confidential Chartered - In Fleet 42 • Time Charter - Ins: ‒ 4 MR vessels that redeliver in Q2 - Q3 2018 with an option to extend an additional year ‒ Charter Hire expense for balance of 2017: $17.7M • Bareboat - Ins: ‒ 3 MR vessels that redeliver in Q1 2018 ‒ Charter Hir
Slide 43: Appendix
Appendix E International Seaways. inc.
Slide 44: INSW Owned Fleet List
International Seaways, Inc. Confidential INSW Owned Fleet List 1 44 Vessel Type Dwt Year Built Value ($M) 2 Vessel Type Dwt Year Built Value ($M) 2 Seaways Laura Lynn ULCC 441,585 2003 $29.2 Seaways Jademar Panamax 69,697 2002 $11.0 Seaways Raphael VLCC 309,614 2000 $21.6 Overseas Pearlmar Panamax 6
Slide 45: TCE Revenue Reconciliation
International Seaways, Inc. Confidential INSW TCE Revenue in thousands of dollars Last Twelve Months ended March 31, 2017 Year ended December 31, 2016 Year ended December 31, 2015 Year ended December 31, 2014 Quarter ended March 31, 2017 Quarter ended March 31, 2016 Time charter equivalent revenues
Slide 46: Adjusted EBITDA Reconciliation
International Seaways, Inc. Confidential Adjusted EBITDA Reconciliation 46 in thousands of dollars Last Twelve Months ended March 31, 2017 Year ended December 31, 2016 Year ended December 31, 2015 Year ended December 31, 2014 Quarter ended March 31, 2017 Quarter ended March 31, 2016 Net (loss)/incom
Slide 47: Glossary of Commonly Used Shipping Terms
International Seaways, Inc. Confidential Handysize Product Carrier:29,000 - 39,999 MR: 40,000 – 54,999 Panamax / LR1: 55,000 - 79,999 Aframax / LR2: 80,000 - 119,999 Suezmax : 120,000 – 199,999 VLCC: 200,000 – 319,999 ULCC: 320,000 + Glossary of Commonly Used Shipping Terms 47 Source: Tankers Intern
Slide 48: Ballast Water Treatment Requirements
International Seaways, Inc. Confidential • IMO requirements enter into force Sept 7, 2017 • At the first IOPP certificate renewal after this date, ships must be fitted with a ballast water treatment system. IOPP renewals generally coincide with five year Special Surveys • Ballast treatment systems r
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