International Seaways, Inc. · NYSE:INSW
International Seaways — Microcap Conference Spring Investor Summit (March 2020)
37 slides from International Seaways's conference presentation, Mar 25, 2020
Slide 1: International Seaways, Inc.
1 International Seaways, Inc. March 2020 International Seaways, Inc.
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: INSW Overview
INSW Overview International Seaways, Inc. Ce
Slide 4: 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 5: 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 6: 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 7: Low Financial Leverage
Low Financial Leverage • We acquired $600m of vessels to renew our fleet without issuing equity Long Term Debt / Total Assets 65% • INSW still has one of the lowest leverage profiles in the publicly traded tanker 60% space 55% • We repaid our more expensive Term 50% Loan B debt ($331m) and BlackRock
Slide 8: 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) 5 110,000 DWT PRODUCTS 500,000 barrels Panamax/LR1 (230 meters) 13 70,000 DWT 350,000 barrels MR (1
Slide 9: 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 10: 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 11: Market Update – Oil Supply
Market Update – Oil Supply US Domestic Crude Production by Month of Forecast Oil Supply Update • In its February meeting OPEC agreed to further restruct production by 1.7 million b/d • HOWEVER, Russia refused to go along with this plan. As a consequence Saudi Arabia decided to actually increase prod
Slide 12: Market Update – Oil Demand
Market Update – Oil Demand World Oil Demand Impacted by Coronavirus Demand Update • The Coronavirus (COVID-19) has negatively impacted global oil demand as the world fights with containment. • One impact of the lower demand has been reduced oil prices, which, in combination with the increased Saudi
Slide 13: Market Update – Ship Supply
Market Update – Ship Supply Orderbook Update Historically Low Orderbook • Orderbook remains historically low: 20 60% • VLCC 7.7% 50% 15 Million DWT • Suezmax 10.8% 40% • Aframax/LR2 8.2% 10 30% • Panamax/LR1 4.3% 20% 5 • MR 7.4% 10% • 31 VLCCs ordered in 2019; YTD 2020 only one thus far 0 0% Q2-2001
Slide 14: 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 15: 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 • 41% Net Loan to Asset Value at December 31 Balance Sheet • $200 million in liquidity at Dec 31 ($150 million cash, $50 million undrawn
Slide 16: 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 $50 million accordion • LIBOR + 550, maturity June 2022 2017 • Proceeds used to acquire 2 modern Suezmaxes fo
Slide 17: Refinancing Details – Lowers Cost of Capital
Refinancing Details – Lowers Cost of Capital Pre-Refinancing Facilities Pro Forma Pro-Refinancing Principal Annual Principal Annual ($m) Maturity Rate Amortization ($m) Maturity Rate Amortization Term Loan B $331.5 2022 L + 600 $18.4 Core Facility Term Loan $300.0 2025 L + 260 $37.7 ABN Term Loan $2
Slide 18: Refinancing Details – Debt Amortization and Maturities
Refinancing Details – Debt Amortization and Maturities 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 24.4 23.6 - 2020 2020 2021 2021 2022 2022 2023 2023 2024 2024 Pre-R
Slide 19: Lean and Scalable Model – Cash Breakevens
Lean and Scalable Model – Cash Breakevens –Last 12 Months TCE breakeven levels allow INSW to navigate low points in the tanker cycle while providing significant operating leverage in rising markets Last Twelve Months Q4 2019 Actuals Breakeven Rates by Sector • INSW Daily OPEX excludes DDK deviation
Slide 20: 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. 20
Slide 21: Financial Summary – Q4 & Q1
Financial Summary – Q4 & Q1 Earnings Update 4th Quarter 2019 1st Quarter 2020 1 Spot Overall Spot % Fixed Overall % Fixed VLCC $54,100 $54,100 $75,000 74% $75,000 74% Suezmax $50,900 $50,900 $57,700 71% $57,700 71% Aframax/LR2 $29,400 $29,400 $32,800 66% $32,800 66% Panamax/LR1 2 $28,700 $21,300 $40
Slide 22: Operating Leverage
Operating Leverage Our Fleet Provides Tremendous Upside Exposure (Mid-Cycle) (Recent Peak) 15-Year Average 2015 Average VLCC 42,800 72,200 Suezmax 33,200 50,400 Aframax/LR2 24,600 39,300 Panamax/LR1 20,000 26,500 MR 15,500 21,400 Adjusted EBITDA ($m) $243 $441 Annual EPS $4.10 $10.88 Every $5,000/da
Slide 23: INSW Trading Liquidity
INSW Trading Liquidity Average Daily Volume, $ million1 $12 $10 $8 $6 $4 $2 $0 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 1 2020 Q1 is through March 20, 2020 International Seaways, Inc. 23
Slide 24: Strong, Transparent Corporate Governance
Strong, Transparent Corporate Governance 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
Slide 25: 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 26: 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 27: 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 28: 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 • Sustainability-linked pricing featu
Slide 29: 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 30: 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 31: Thank You
Thank You Disciplined Capital Allocator Low Financial Leverage and Strong Balance Sheet Significant Operating Leverage Best in Class Commercial and Technical Operations Strong Governance and ESG Footprint International Seaways, Inc. 31
Slide 32: Appendix
Appendix International Seaways, Inc. Ce
Slide 33: 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 34: 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 35: 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 36: 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 37: INSW Fleet as of March 20, 2020
INSW Fleet as of March 20, 2020 Ship Type Built DWT Ownership Ship Type Built DWT Ownership Gener8 Miltiades VLCC 2016 301,038 Owned Seaways Leyte LR1 2011 73,944 Owned Gener8 Andriotis VLCC 2016 301,014 Owned Seaways Samar LR1 2011 73,925 Owned Gener8 Chiotis VLCC 2016 300,973 Owned Seaways Guayaqu
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