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Section 1: 8-K (FORM 8-K)

 


 

United States

Securities and Exchange Commission

Washington, D.C. 20549

 

 

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 OR 15(d) of the

Securities Exchange Act of 1934

 

                      March 31, 2020 (March 31, 2020)                     

Date of Report (Date of earliest event reported)

  

International Seaways, Inc.

(Exact Name of Registrant as Specified in Charter)

  

            1-37836-1            

Commission File Number

  

Marshall Islands   98-0467117
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification Number)

   

600 Third Avenue, 39th Floor 

           New York, New York  10016           

 (Address of Principal Executive Offices) (Zip Code)

   

Registrant's telephone number, including area code (212) 578-1600

   

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 

¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company x

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Symbol   Name of each exchange on which registered
Common Stock (no par value)   INSW   New York Stock Exchange
8.5% Senior Notes due 2023   INSW - PA   New York Stock Exchange

 

 

 

 

 

Section 7 – Regulation FD

 

Item 7.01Regulation FD Disclosure.

 

International Seaways, Inc. (“INSW” or the “Company”) will present the attached presentation (the “Presentation”) to certain investors and analysts in connection with investor meetings taking place on April 1, 2020. A copy of the Presentation is attached hereto as Exhibit 99.1.

 

The information in this Form 8-K provided under Item 7.01 and Exhibit 99.1 attached hereto is being furnished and shall not be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall such information be deemed to be incorporated by reference into any registration statement of other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise stated in that filing.

 

By filing this Current Report on Form 8-K and furnishing the information contained herein, the Company makes no admission as to the materiality of any information in this report that is required to be disclosed by reason of Regulation FD.

 

FINANCIAL AND OPERATING DATA

 

INSW cautions investors and potential investors not to place undue reliance upon the information contained in the Presentation, which was not prepared for the purpose of providing the basis for an investment decision relating to any of the securities of INSW. The Presentation is limited in scope and covers a limited time period. The information in the Presentation was not audited or reviewed by independent accountants and is subject to adjustment and reconciliation. In addition, the Presentation does not necessarily contain all information required in filings pursuant to the Exchange Act, and may present the information that is provided differently from such requirements. There can be no assurance that, from the perspective of an investor or potential investor in INSW’s securities, the Presentation is complete. Any results for periods in 2020 that may be set forth in the Presentation are unaudited and preliminary, and - should not be viewed as indicative of future results.

 

The information contained in the Presentation is summary information that is intended to be considered in the context of, and read in conjunction with, the Company's Securities and Exchange Commission filings and other public announcements that the Company may make, by press release or otherwise, from time to time. The Company does not have, and expressly disclaims, any obligation to publicly update or revise the information contained in this report or any changes in our expectations or any change in events, conditions or circumstances on which any forward-looking statement is based.

 

Section 9 – Financial Statements and Exhibits

 

Item 9.01Financial Statements and Exhibits.

 

(d) Exhibits

 

Pursuant to General Instruction B.2 of Form 8-K, the following exhibit is furnished with this Form 8-K.

 

Exhibit No. Description
   
99.1 Investor Presentation.

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  INTERNATIONAL SEAWAYS, INC.
  (Registrant)
       
       
Date: March 31, 2020 By /s/ James D. Small III
    Name: James D. Small III
    Title: Chief Administrative Officer, Senior Vice President,
Secretary and General Counsel

 

 

 

 

EXHIBIT INDEX

 

Exhibit No. Description
   
99.1 Investor Presentation.

 

 

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Section 2: EX-99.1 (EXHIBIT 99.1)

 

Exhibit 99.1

 

International Seaways, Inc. 1 International Seaways, Inc. April 2020

 

 

International Seaways, Inc. Introduction to International Seaways (NYSE: INSW) 1 Represents the number of vessels in each class as a percentage of the total fleet deadweight, as of March 31, 2020. Does not in clude JV vessels. • Leading diversified tanker owner with significant presence in crude and product sectors • 40 vessel fleet with balanced mix of contracted cash flows and spot market upside • Planning to install 10 scrubbers on VLCCs representing 40% of our fuel consumption • Approximate liquidity $150m (including $17m restricted cash and $40m undrawn revolver) as of March 31, 2020 • Market cap $700m on March 31, 2020 Conventional Tanker Fleet – 38 Ships 1 Joint Venture – 2 Ships FSO JV 2 Converted ULCCs VLCC Suezmax Aframax/ LR2 Panamax / LR1 MR By Deadweight Tons 13 5 12 5 2 Lightering Operations 2

 

 

International Seaways, Inc. • Best in class safety and environmental performance • Sector leading commercial pools, many with INSW ownership • New York representation in Tankers International VLCC pool • Invested $600 million, renewing fleet at bottom of cycle without issuing equity • Sold LNG joint venture for $123 million in cash • Prepaid $110 million of long term debt, saving about $9 million annual interest • Installing 10 scrubbers on our modern VLCCs • Current Capital Allocation Priorities: • Deleverage • Return cash to shareholders – share repurchase and/or dividend Disciplined Capital Allocator Low Financial Leverage and Strong Balance Sheet Best in Class Commercial and Technical Operations Significant Operating Leverage Strong Governance and ESG Footprint • Accomplished fleet upgrade while maintaining one of the industry’s lowest leverage profiles • Refinanced $390 million of debt in January 2020, saving an additional $15 million annually • 41% Net Loan to Asset Value at December 31 • Experienced management team • Majority independent and diverse board • #1 tanker company in Wells Fargo Corporate Governance rankings two years running • National Directors Institute Public Company Board of the Year - 2018 • 38 conventional tankers offer significant operating leverage to robust tanker market • Every $5,000 improvement in the Time Charter Equivalent daily rate (TCE) provides $68 million in incremental EBITDA and $2.32 EPS per annum • Q4 rates earned and Q1 bookings demonstrate strong upside potential Why Invest in International Seaways? 3

 

 

International Seaways, Inc. 4 Record Oil Production and Covid - 19 Related Demand Decrease… Saudi Crude Production (million b/d) Projected Demand Impact from Covid - 19 (thousand b/d) Source: S&P Global Platts Source: ZeroHedge

 

 

International Seaways, Inc. 5 …Leading to Huge Increase in Ship Earnings $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 Week # 2019 VLCC Earnings 2020 VLCC Earnings Source: Clarksons Weekly Average VLCC TCE

 

 

International Seaways, Inc. 6 Contango Leading to Increased Storage… “Crude is likely to stay in floating storage for between six and nine months and tie up to twice the vessels that it did during the 2014 - 2016 period” – Braemar ACM, March 27, 2020

 

 

International Seaways, Inc. 7 VLCC 1 Year TC Rates 10,000 20,000 30,000 40,000 50,000 60,000 70,000 VLCC 1 Year TC (non - ECO) VLCC 1 Year TC (non-ECO) Source: Clarksons Weekly VLCC 1 Year Timecharter Rate

 

 

International Seaways, Inc. • Refinanced Term Loan B and other instruments with traditional bank debt, completes balance sheet evolution from acquisition to long term capital allocation • Lower margins and $110m debt prepayment yield savings of appr $25 million/ yr • Support of top tier shipping bank group • Structured to provide capital allocation flexibility Refinancing Brings Strong and Flexible Balance Sheet Low Cash Breakeven • Fleetwide cash breakeven $20,400/day in 2019 • Effectively $18,900/day when factoring in JV contributions • Expected $20m drydock and $37m BWTS and Scrubber costs for 2020 Significant Operating Leverage • 38 conventional tankers • Every $5,000 improvement in the Time Charter Equivalent daily rate (TCE) provides $68 million in incremental EBITDA and $2.32 EPS annually INSW Financial Highlights Low Financial Leverage and Strong Balance Sheet • Accomplished fleet upgrade while maintaining one of the lowest leverage profiles in the tanker space • 41% Net Loan to Asset Value at December 31 • Approximately $150 million in liquidity (including $17 million restricted cash and $40 million undrawn revolver) • Invested $600 million, renewing fleet at bottom of cycle without issuing equity • Sold LNG joint venture for $123 million in cash • Prepaid $110 million of long term debt • Current Capital Allocation Priorities: • Deleverage • Return cash to shareholders – share repurchase and/or dividend Disciplined Capital Allocator 8

 

 

International Seaways, Inc. Financial Summary – Q4 & Q1 Earnings Update 9 Spot Overall Spot % Fixed Overall % Fixed VLCC $54,100 $54,100 $63,000 99% $63,000 99% Suezmax $50,900 $50,900 $53,000 99% $53,000 99% Aframax/LR2 $29,400 $29,400 $29,000 92% $29,000 92% Panamax/LR1 2 $28,700 $21,300 $36,000 94% $26,000 97% MR $14,000 $14,000 $18,000 95% $18,000 95% 4th Quarter 2019 Preliminary 1st Quarter 2020 1 1 As of March 31, 2020. Subject to change. 2 Overall 2019 Q4 TCE includes 549 time charter days at $14,350/day. Overall 2020 Q1 TCE includes 543 time charter days booked at approximately $15,900/day Rates exclude average pool fees of approximately $491/day

 

 

International Seaways, Inc. Refinancing Details – Lowers Cost of Capital Net LTV 41% Net LTV 41% Principal ($m) Maturity Rate Annual Amortization Principal ($m) Maturity Rate Annual 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 $23.2 2023 L + 325 $3.6 Transition Facility $50.0 2023 L + 350 $20.0 Sinosure Credit Facility $269.7 2027-2028 L + 200 $23.6 Sinosure Credit Facility $269.7 2027-2028 L + 200 $23.6 8.5% Senior Notes $25.0 2023 8.50% $0.0 8.5% Senior Notes $25.0 2023 8.50% $0.0 10.75% Subordinated Notes $27.9 2023 10.75% $0.0 Revolving Facility $20.0 2025 L + 260 $0.0 TOTAL $677.4 6.48% $45.6 TOTAL $664.7 4.48% $81.3 Pre-Refinancing Facilities Pro Forma Post-Refinancing 10 Note: as of December 31, 2019

 

 

International Seaways, Inc. 11 Refinancing Details – Debt Amortization 0 50 100 150 200 250 300 2020 2021 2022 2023 2024 Amortization Balloon $ millions

 

 

International Seaways, Inc. Lean and Scalable Model – Cash Breakevens – Last 12 Months 12 • INSW Daily OPEX excludes DDK deviation bunkers, insurance claims and one - off expenses • G&A for the Lightering segment is excluded • Vessels that have been sold are excluded • Only includes owned vessels. Two bareboat - in Aframaxes vessels have charter hire and OPEX expenses of approx. $17,700 per day • Breakevens are basis Revenue Days TCE breakeven levels allow INSW to navigate low points in the tanker cycle while providing significant operating leverage in rising markets Breakeven Rates by Sector Last Twelve Months Q4 2019 Actuals

 

 

International Seaways, Inc. (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 Note: 15 Year Average and 2015 Average are Clarksons Average rates for each ship class. EBITDA and annual EPS for each scen ari o are estimated Operating Leverage Our Fleet Provides Tremendous Upside Exposure Every $5,000/day increase in fleetwide TCE corresponds to an increase in EPS of $2.32 and EBITDA of $68M 13

 

 

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