International Seaways Inc.
02/26/2026 | Press release | Distributed by Public on 02/26/2026 07:07
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
This MD&A, which should be read in conjunction with our accompanying consolidated financial statements as set forth in Item 8, "Financial Statements and Supplementary Data," provides a discussion and analysis of our business, current developments, financial condition, cash flows and results of operations. It is organized as follows:
| ● | General.This section provides a general description of our business and factors that impact our operations, which we believe is important in understanding the results of our operations, financial condition and potential future trends. |
| ● | Operations & Oil Tanker Markets.This section provides an overview of industry operations and dynamics that have an impact on the Company's financial position and results of operations. |
| ● | Results from Vessel Operations.This section provides an analysis of our results of operations presented on a business segment basis. In addition, a brief description of significant transactions and other items that affect the comparability of the results is provided, if applicable. |
| ● | Liquidity and Sources of Capital.This section provides an analysis of our cash flows, outstanding debt and commitments. Included in the analysis of our outstanding debt is a discussion of the amount of financial capacity available to fund our ongoing operations and future commitments as well as a discussion of the Company's planned and/or already executed capital allocation activities. |
| ● | Risk Management. This section provides a general overview of how the interest rate, currency and fuel price volatility risks are managed by the Company. |
| ● | Critical Accounting Estimates and Policies.This section identifies those accounting policies that are considered important to our results of operations and financial condition, require significant judgment and involve significant management estimates. |
A detailed discussion of the 2024 to 2023 year-over-year changes is not included herein and can be found in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024 filed on February 27, 2025.
GENERAL
We are a provider of ocean transportation services for crude oil and refined petroleum products. We operate our vessels in the International Flag market. Our business includes two reportable segments: Crude Tankers and Product Carriers. For the years ended December 31, 2025 and 2024 we derived 52% and 47%, respectively, of our TCE revenues from our Crude Tankers segment. Revenues from our Product Carriers segment constituted the balance of our TCE revenues during these periods.
As of December 31, 2025, the Company's operating fleet consisted of 70 wholly-owned or lease financed and time chartered-in vessels aggregating 8.4 million deadweight tons ("dwt"). In addition to our operating fleet of 70 vessels, four LR1 newbuilds are scheduled for delivery to the Company between the first and third quarters of 2026, bringing the total operating and newbuild fleet to 74 vessels. Our fleet includes VLCC, Suezmax and Aframax crude tankers and LR2, LR1 and MR product carriers.
The Company's revenues are impacted by (i) the patterns of supply and demand for vessels of the size and design configurations owned and operated by the Company and the trades in which those vessels operate and (ii) the Company's vessel employment strategy, which seeks to achieve an optimal mix of spot (voyage charter) and long-term (time charter) charters.
Supply and Demand for Vessels
The global fleet supply is affected by newbuilding deliveries and by the removal of existing vessels from service, principally through storage, recycling or conversions. Rates for the transportation of crude oil and refined petroleum products from which the Company earns a substantial majority of its revenues are determined by market forces such as the supply and demand for oil, the distance that
54
International Seaways, Inc.
cargoes must be transported, and the number of vessels expected to be available at the time such cargoes need to be transported. The demand for oil shipments is significantly affected by general U.S. domestic and international economic conditions and actual or expected supply chain disruptions and inflation, war and political instability in oil producing countries or regions, government regulations (both in the United States and internationally), levels of consumer demand, adverse weather and other conditions, which are beyond our control, that impact the levels of U.S. domestic and international production and OPEC+ exports.
The geopolitical and macroeconomic consequences of political instability and armed conflict including the instability in Venezuela, the Russian-Ukraine war, conflicts in the Israel-Gaza region and continued hostilities in the Middle East, including those between Israel, Iran and the United States, continue to have ongoing direct and indirect repercussions on the global trade of crude oil and refined petroleum products.
The Russian-Ukraine war has resulted in the United States, United Kingdom, and the European Union, and other countries implementing sanctions and executive orders against citizens, entities, and activities connected to Russia. Some of these sanctions and executive orders target the Russian oil sector, including a prohibition on the import of oil from Russia to the United States or the United Kingdom, and the EU's ban on Russian crude oil and petroleum products, which took effect in December 2022 and February 2023, respectively.
Russia's invasion of Ukraine also led to a disruption in supply chains for crude oil and refined petroleum products, changing volumes and trade routes, thus increasing ton-mile demand for the seaborne transportation of both crude oil and refined petroleum products, which has resulted in a prolonged spike in freight rates. Self-sanctioning by Western oil majors and many shipowners resulted in disrupted product flows, primarily diesel, from Russia to Europe, while high arbitrage spreads incentivized Middle Eastern and U.S. diesel flows to Europe, increasing ton-mile demand for vessels.
The U.S., EU nations and other countries could impose wider sanctions and take other actions. Further sanctions imposed or actions taken by the U.S., EU nations or other countries, and retaliatory measures by Russia in response, could lead to increased volatility in global oil demand, which could have a material impact on our business, results of operations and financial condition. In addition, it is possible that third parties with which we do business may be impacted by events in Russia and Ukraine, which could adversely affect us.
Military hostilities in the Middle East, including those in the Israel-Gaza region and those between Israel, Iran, the Houthis of Yemen and the United States have had both a direct and an indirect impact on the transportation of crude oil and refined petroleum products through the region. Heightened security risks because of attacks and threats of attacks on merchant vessels transiting through the region led to an increase in ton-mile demand for vessels as more vessel owners were opting to re-route their vessels around the Cape of Good Hope. Such hostilities also led to periodic increases in charter rates to compensate vessel owners for the heightened risks as well as increases in war risk insurance premiums.
The United States' naval blockade of oil exports from Venezuela on sanctioned vessels has also resulted in a shift of trade from sanctioned vessels to unsanctioned vessels as the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC") has recently expanded its issuance of licenses, which authorize various oil trading activities involving Venezuela (including transportation).
See Item 1A, Risk Factors - Terrorist attacks and international hostilities and instability can affect the tanker industry, which could adversely affect INSW's business.
Vessel Employment Strategy
The Company's revenues are also affected by its vessel employment strategy, which seeks to achieve the optimal mix of spot (voyage charter) and long-term (time or bareboat charter) charters. Because shipping revenues and voyage expenses are significantly affected by the mix between voyage charters and time charters, the Company measures the performance of its fleet of vessels based on TCE revenues. Management makes economic decisions based on anticipated TCE rates and evaluates financial performance based on TCE rates achieved.
Our revenues are derived predominantly from spot market voyage charters and our vessels are predominantly employed in the spot market via market-leading commercial pools. We derived approximately 82% and 86% of our total TCE revenues in the spot market for the years ended December 31, 2025 and 2024, respectively. The future minimum revenues, before reduction for brokerage
55
International Seaways, Inc.
commissions, expected to be received on non-cancelable time charters for three VLCCs, two Suezmaxes, one Aframax, one LR2 and six MRs as of December 31, 2025 are as follows:
|
|
|
|
|
|
(Dollars in millions) |
|
Amount(1) |
|
|
2026 |
|
$ |
95.1 |
|
2027 |
|
|
39.4 |
|
2028 |
|
|
34.0 |
|
2029 |
|
|
34.0 |
|
2030 |
|
|
7.1 |
|
Future minimum revenues |
|
$ |
209.6 |
| (1) | Future minimum contracted revenues do not include the Company's share of time charters entered into by the pools in which it participates or profit-sharing above the base rate on the time charters of its dual-fuel LNG VLCCs. In arriving at the minimum future charter revenues, an estimated time off-hire to perform periodic maintenance on each vessel has been deducted, although there is no assurance that such estimate will be reflective of the actual off-hire in the future. |
See Item 1, "Business - Fleet Operations," for further information on our vessel employment strategy.
OPERATIONS AND OIL TANKER MARKETS
The International Energy Agency ("IEA") estimates global oil consumption for the fourth quarter of 2025 at 105.1 million barrels per day ("b/d"), up 0.8% from the same quarter in 2024. The estimate for global oil consumption for 2026 is 105.0 million b/d, an increase of 1.0% over the 2025 estimate of 104.0 million b/d. OECD demand in 2026 is estimated to increase by 0.2% to 45.8 million b/d, while non-OECD demand is estimated to increase by 1.5% to 59.2 million b/d.
Global oil production in the fourth quarter of 2025 was 107.2 million b/d, an increase of 4.1 million b/d from the fourth quarter of 2024. OPEC crude oil production averaged 28.5 million b/d in the fourth quarter of 2025, up 0.6 million b/d from the third quarter of 2025, and an increase of 1.8 million b/d from the fourth quarter of 2024. Non-OPEC production increased by 2.1 million b/d to 73.0 million b/d in the fourth quarter of 2025 compared with the fourth quarter of 2024. Oil production in the U.S. of 13.9 million b/d in the fourth quarter of 2025 increased by 1.2% from the third quarter of 2025 and by 2.5% from the fourth quarter of 2024.
56
International Seaways, Inc.
U.S. refinery throughput decreased by 1.4 million b/d to 16.0 million b/d in the fourth quarter of 2025 compared with the third quarter of 2025.
U.S. crude oil imports in the fourth quarter of 2025 decreased by 7.1% to 5.9 million b/d compared with the fourth quarter of 2024, with imports from OPEC countries decreasing by 0.2 million b/d and imports from non-OPEC countries decreasing by 0.3 million b/d. China's crude oil imports in December 2025 were 13.2 million b/d, up 10% from November 2025 and up 17% from December 2024. China's crude oil imports increased 4.4% in 2025 compared with 2024.
OECD commercial crude inventories in the fourth quarter of 2025 increased by 3.0%, or 39 million barrels, compared with the third quarter of 2025. OECD commercial product inventories in the fourth quarter of 2025 increased by 2.7%, or 39 million barrels, compared with the third quarter of 2025.
During the fourth quarter of 2025, the tanker fleet of vessels over 10,000 dwt increased, net of vessels recycled, by 2.6 million dwt. The crude fleet increased by 1.3 million dwt, with VLCCs, Suezmaxes and Aframaxes increasing by 0.3 million dwt, 0.1 million dwt and 0.8 million dwt, respectively. The product carrier fleet increased by 1.3 million dwt, with LR1s decreasing by 0.1 million dwt and MRs increasing by 1.4 million dwt. Year-over-year, the size of the tanker fleet increased by 14.6 million dwt with the increases of 0.6 million dwt, 3.5 million dwt, 5.4 million dwt and 5.3 million dwt in the VLCCs, Suezmax, Aframax and MR fleets, respectively. The LR1 fleet decreased by 0.1 million dwt.
During the fourth quarter of 2025, the tanker orderbook increased by 17.7 million dwt. The crude tanker orderbook increased by 18.0 million dwt. The VLCC, Suezmax and Aframax orderbooks increased by 12.4 million dwt, 2.4 million dwt and 3.3 million dwt, respectively. The product carrier orderbook decreased by 0.3 million dwt, with the LR1 orderbook increasing by 0.1 million dwt and the MR orderbook decreasing by 0.4 million dwt. Year-over-year, the total tanker orderbook increased by 23.6 million dwt, with increases in VLCC and Suezmaxes of 19.0 million dwt and 6.4 million dwt, respectively. The LR1 orderbook remained flat, while the Aframax and MR orderbooks decreased by 0.4 million dwt and 1.4 million dwt, respectively.
Tanker rates were strong in the fourth quarter of 2025 compared with the third quarter of 2025. VLCCs, in particular, saw large increases in rates (to well over $100,000/day) in November and early December 2025 before decreasing towards the end of the year. So far, during the first quarter of 2026 there has been a further strengthening in VLCC rates. Other sectors remained strong throughout the fourth quarter, continuing into the start of 2026.
RESULTS FROM VESSEL OPERATIONS
During 2025, income from vessel operations decreased by $109.8 million to $345.4 million from $455.2 million in 2024. Such decrease resulted principally from (i) a year-over-year decrease in TCE revenues and (ii) increased depreciation and amortization, partially offset by (iii) larger gains on vessel sales and (iv) lower vessel expenses in the current year.
The decrease in TCE revenues in 2025 of $113.5 million, or 12%, to $819.6 million from $933.1 million in 2024 primarily reflects (i) a net aggregate rates-based decrease of $112.4 million resulting from lower average daily rates in the Product Carrier sectors, (ii) a $26.2 million days-based decline in the VLCC fleet associated with the first quarter of 2025 sales of one 2010-built VLCC and one 2011-built VLCC and (iii) a $16.7 million decrease in the Crude Tankers Lightering business. Partially offsetting the TCE revenue decreases described above were (i) a rates-based increase in the VLCC fleet of $26.4 million due to strengthening rates in the sector and (ii) a $10.2 million days-based increase in the MR fleet, which reflects the timing of the acquisition of nine modern MRs between April 2024 and January 2025 as compared to the sales of 11 older vessels in the fleet between April 2024 and December 2025.
The following tables provide a quarterly trend analysis of spot TCE rates earned between the fourth quarter of 2024 and 2025 by our Crude Tankers and Product Carriers fleet. See the "Operations and Oil Tanker Markets" discussion above for a description of the market factors that impacted the quarterly trend of spot rates during 2025.
57
International Seaways, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spot Earnings for the Quarter Ended |
|||||||||||||
|
Crude Tankers |
|
December 31, |
|
March 31, |
|
June 30, |
|
September 30, |
|
December 31, |
|||||
|
VLCC: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average rate |
|
$ |
35,572 |
|
$ |
33,531 |
|
$ |
39,303 |
|
$ |
34,809 |
|
$ |
75,566 |
|
Revenue days |
|
|
823 |
|
|
657 |
|
|
644 |
|
|
627 |
|
|
618 |
|
Suezmax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average rate |
|
$ |
29,700 |
|
$ |
30,911 |
|
$ |
36,830 |
|
$ |
33,310 |
|
$ |
52,802 |
|
Revenue days |
|
|
1,023 |
|
|
1,088 |
|
|
1,106 |
|
|
1,096 |
|
|
1,052 |
|
Aframax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average rate |
|
$ |
31,212 |
|
$ |
25,422 |
|
$ |
30,747 |
|
$ |
28,457 |
|
$ |
42,201 |
|
Revenue days |
|
|
276 |
|
|
270 |
|
|
273 |
|
|
261 |
|
|
292 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spot Earnings for the Quarter Ended |
|||||||||||||
|
Product Carriers |
|
December 31, |
|
March 31, |
|
June 30, |
|
September 30, |
|
December 31, |
|||||
|
LR1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average rate |
|
$ |
37,103 |
|
$ |
27,367 |
|
$ |
32,802 |
|
$ |
34,578 |
|
$ |
62,904 |
|
Revenue days |
|
|
715 |
|
|
719 |
|
|
702 |
|
|
450 |
|
|
381 |
|
MR |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average rate |
|
$ |
21,488 |
|
$ |
21,408 |
|
$ |
18,941 |
|
$ |
25,556 |
|
$ |
28,523 |
|
Revenue days |
|
|
2,520 |
|
|
2,664 |
|
|
2,624 |
|
|
2,529 |
|
|
2,528 |
See Note 4, "Business and Segment Reporting," to the Company's consolidated financial statements as set forth in Item 8, "Financial Statements and Supplementary Data," for additional information on the Company's segments, including reconciliations of (i) time charter equivalent revenues to shipping revenues and (ii) adjusted income from vessel operations for the segments to income before income taxes, as reported in the consolidated statements of operations.
Crude Tankers
|
|
|
|
|
|
|
|
|
(Dollars in thousands, except daily rate amounts) |
|
2025 |
|
2024 |
||
|
TCE revenues |
|
$ |
423,267 |
|
$ |
437,095 |
|
Vessel expenses |
|
|
(119,290) |
|
|
(130,107) |
|
Charter hire expenses |
|
|
(14,419) |
|
|
(14,322) |
|
Depreciation and amortization |
|
|
(76,347) |
|
|
(80,988) |
|
Adjusted income from vessel operations (a) |
|
$ |
213,211 |
|
$ |
211,678 |
|
Average daily TCE rate |
|
$ |
42,510 |
|
$ |
41,345 |
|
Average number of owned vessels (b) |
|
|
20.1 |
|
|
21.0 |
|
Average number of vessels chartered-in under leases |
|
|
8.2 |
|
|
9.1 |
|
Number of revenue days (c) |
|
|
9,957 |
|
|
10,572 |
|
Number of ship-operating days (d) |
|
|
|
|
|
|
|
Owned vessels |
|
|
7,349 |
|
|
7,686 |
|
Vessels bareboat chartered-in under leases (e) |
|
|
2,979 |
|
|
3,294 |
|
Vessels spot chartered-in under leases (f) |
|
|
21 |
|
|
49 |
| (a) | Adjusted income from vessel operations by segment is before general and administrative expenses, other operating expenses, third-party debt modification fees and gain on disposal of vessels and other property, net of impairments. |
| (b) | The average is calculated to reflect the addition and disposal of vessels during the period. |
| (c) | Revenue days represent ship-operating days less days that vessels were not available for employment due to repairs, drydock or lay-up. Revenue days are weighted to reflect the Company's interest in chartered-in vessels. |
| (d) | Ship-operating days represent calendar days. |
| (e) | Represents nine VLCCs that secured lease financing arrangements during the periods presented. In November 2025 the Company purchased six of the VLCCs that it had been bareboat chartering-in. See Note 8, "Debt," to the accompanying consolidated |
58
International Seaways, Inc.
| financial statements as set forth in Item 8, "Financial Statements and Supplemental Data," for additional information on these transactions. |
| (f) | Represents vessels spot chartered-in by the Company's Crude Tankers Lightering business for full service lightering jobs. |
The following table provides a breakdown of TCE rates achieved for the years ended December 31, 2025 and 2024 between spot and fixed earnings and the related revenue days. The information is based, in part, on information provided by the commercial pools in which the segment's vessels participate and excludes commercial pool fees/commissions averaging approximately $1,126 and $982 per day in 2025 and 2024, respectively, as well as activity in the Crude Tankers Lightering business and revenue and revenue days for which recoveries were recorded by the Company under its loss of hire insurance policies. The fixed earnings rates in the table are net of broker/address commissions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025 |
|
2024 |
||||||||
|
|
|
Spot Earnings |
|
Fixed Earnings |
|
Spot Earnings |
|
Fixed Earnings |
||||
|
VLCC (1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average rate |
|
$ |
44,397 |
|
$ |
47,121 |
|
$ |
39,011 |
|
$ |
35,758 |
|
Revenue days |
|
|
2,455 |
|
|
1,095 |
|
|
3,395 |
|
|
1,098 |
|
Suezmax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average rate |
|
$ |
38,329 |
|
$ |
33,726 |
|
$ |
39,303 |
|
$ |
30,971 |
|
Revenue days |
|
|
4,342 |
|
|
355 |
|
|
4,036 |
|
|
702 |
|
Aframax (2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average rate |
|
$ |
31,941 |
|
$ |
38,496 |
|
$ |
32,433 |
|
$ |
38,518 |
|
Revenue days |
|
|
1,096 |
|
|
353 |
|
|
873 |
|
|
365 |
| (1) | The average spot rate reported in the table above for VLCCs in 2025 represents VLCCs less than 15 years of age. The average spot TCE rates earned by the Company's VLCCs on an overall basis during such period was $44,817. |
| (2) | During 2024, one of the Company's Aframaxes was employed on a transitional voyage in the spot market outside of its ordinary course operations in the Aframax International Pool. Such transitional voyage is excluded from the table above. |
During 2025, TCE revenues for the Crude Tankers segment decreased by $13.8 million, or 3%, to $423.3 million from $437.1 million in 2024. Such decrease principally resulted from (i) a $26.2 million days-based decline in the VLCC sector, which reflected the sales of one 2010-built VLCC and one 2011-built VLCC during the first quarter of 2025, and 67 more off-hire days during the current year which included 47 drydocking days for a 2020-built VLCC acquired by the Company in November 2025 and (ii) a $16.7 million decrease in the Crude Tankers Lightering business. Partially offsetting the TCE revenue decreases described above were (i) a rates-based increase in the VLCC fleet of $26.4 million due to strengthening rates in the sector and (ii) a days-based increase of $5.2 million in the Aframax fleet reflecting 162 fewer off-hire days in the current year.
Vessel expenses decreased by $10.8 million to $119.3 million in 2025 from $130.1 million in 2024. Such decrease was driven principally by the sales of the two VLCCs noted above. Depreciation and amortization decreased by $4.6 million to $76.3 million in 2025 from $81.1 million in 2024 principally as a result of the sales of the two VLCCs noted above.
Excluding depreciation and amortization and general and administrative expenses, operating income for the Crude Tankers Lightering business was $7.8 million for 2025 compared to $23.3 million for 2024. The decrease reflects decreased activity levels year-over-year, with 329 service support only lighterings and four full-service lighterings being performed during 2025 compared to the 459 service support only lighterings and six full-service lightering that were performed during 2024. The decreased lightering activity levels during 2025 reflects the impact of geopolitical dynamics and volatile market conditions that disrupted supply chains and resulted in a shift from the use of large crude carriers for the fulfillment of oil cargo demand to the use of smaller crude carriers, which did not require transshipment.
59
International Seaways, Inc.
Product Carriers
|
|
|
|
|
|
|
|
|
(Dollars in thousands, except daily rate amounts) |
|
2025 |
|
2024 |
||
|
TCE revenues |
|
$ |
396,347 |
|
$ |
496,008 |
|
Vessel expenses |
|
|
(146,853) |
|
|
(145,554) |
|
Charter hire expenses |
|
|
(18,842) |
|
|
(15,517) |
|
Depreciation and amortization |
|
|
(87,239) |
|
|
(68,452) |
|
Adjusted income from vessel operations |
|
$ |
143,413 |
|
$ |
266,485 |
|
Average daily TCE rate |
|
$ |
24,787 |
|
$ |
31,846 |
|
Average number of owned vessels |
|
|
41.2 |
|
|
40.2 |
|
Average number of vessels chartered-in under leases |
|
|
5.4 |
|
|
5.2 |
|
Number of revenue days |
|
|
15,990 |
|
|
15,575 |
|
Number of ship-operating days |
|
|
|
|
|
|
|
Owned vessels |
|
|
15,040 |
|
|
14,714 |
|
Vessels bareboat chartered-in under leases (a) |
|
|
1,460 |
|
|
1,464 |
|
Vessels time chartered-in under leases |
|
|
529 |
|
|
457 |
| (a) | Represents MRs that secured lease financing arrangements during the periods presented. |
The following table provides a breakdown of TCE rates achieved for the years ended December 31, 2025 and 2024 between spot and fixed earnings and the related revenue days. The information is based, in part, on information provided by the commercial pools in which the segment's vessels participate and excludes commercial pool fees/commissions averaging approximately $793 and $850 per day in 2025 and 2024, respectively, as well as revenue and revenue days for which recoveries were recorded by the Company under its loss of hire insurance policies. The fixed earnings rates in the table are net of broker/address commissions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025 |
|
2024 |
||||||||
|
|
|
Spot Earnings |
|
Fixed Earnings |
|
Spot Earnings |
|
Fixed Earnings |
||||
|
LR2: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average rate |
|
$ |
- |
|
$ |
39,485 |
|
$ |
53,159 |
|
$ |
39,500 |
|
Revenue days |
|
|
- |
|
|
364 |
|
|
149 |
|
|
161 |
|
LR1 (1)(2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average rate |
|
$ |
36,516 |
|
$ |
- |
|
$ |
49,915 |
|
$ |
- |
|
Revenue days |
|
|
2,251 |
|
|
- |
|
|
2,386 |
|
|
- |
|
MR (1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average rate |
|
$ |
23,535 |
|
$ |
21,638 |
|
$ |
30,887 |
|
$ |
21,809 |
|
Revenue days |
|
|
10,345 |
|
|
2,737 |
|
|
10,348 |
|
|
2,391 |
| (1) | During 2025 and 2024, certain of the Company's LR1s and MRs were employed on transitional voyages in the spot market outside of their ordinary course operations in the commercial pools in which they are deployed. Such transitional voyages are excluded from the table above. |
| (2) | In order to take advantage of market conditions and optimize economic performance, management employs all of the Company's LR1 product carriers, which operate in the Panamax International pool, exclusively in the transportation of crude oil cargoes. |
During 2025, TCE revenues for the Product Carriers segment decreased by $99.7 million, or 20%, to $396.3 million from $496.0 million in 2024. The reduction in TCE revenues was primarily as a result of an aggregate $112.4 million rates-based decrease in the LR2, LR1 and MR sectors due to lower average daily blended rates earned in the current year. Partially offsetting the rates-based decrease were (i) a $10.2 million days-based increase in the MR sector, which reflects the net impact of the Company's acquisition of nine MRs between April 2024 and January 2025 and sale of 11 MRs between April 2024 and December 2025 and (ii) a $2.5 million days-based increase in the LR2 sector, which reflects 56 fewer off-hire days in the current year.
Vessel expenses during 2025 increased by $1.3 million to $146.9 million from $145.6 million in 2024.Such increase was principally attributable to the timing of the net changes in our MR fleet referenced above, partially offset by the decrease in owned LR1 days in 2025. Charter hire expenses increased by $3.3 million to $18.8 million in 2025 from $15.5 million in 2024 primarily as a result of a year-over-year increase in time chartered-in LR1 days. Depreciation and amortization increased by $18.8 million to $87.2 million in
60
International Seaways, Inc.
the current year from $68.5 million in the prior year. Such increase resulted from increased drydock amortization and the MR purchases and sales referenced above, as the acquired vessels have higher cost bases than the older vessels that were sold.
General and Administrative Expenses
During 2025, general and administrative expenses decreased by $2.4 million to $50.2 million from $52.6 million in 2024. The primary drivers for the decrease were (i) lower legal fees of $1.4 million, principally incurred in connection with a commercial dispute, and (ii) a $0.7 million decrease in compensation, benefits and hiring and relocation costs, of which $0.3 million relates to a decrease in non-cash stock compensation.
Other Operating Expenses
See Note 16, "Other Operating Expenses," to the accompanying consolidated financial statements as set forth in Item 8, "Financial Statements and Supplementary Data," for additional information on these expenses.
Other Income
Other income was $6.2 million for the year ended December 31, 2025 compared with $10.1 million for the year ended December 31, 2024. The current year income includes $7.6 million of interest income compared to interest income of $9.9 million earned during 2024. The year-over-year decrease reflects the impact of a lower average balance of invested cash during 2025, attributable to the significant deleveraging initiatives completed during 2024, as well as a decrease in interest rates in 2025. Interest income in 2025 was partially offset by a $0.3 million loss on extinguishment of debt and a $1.8 million write-off of unamortized deferred financing costs in connection with the prepayment of the Ocean Yield Lease Financing in November 2025. The 2025 and 2024 periods also reflect net actuarial gains or losses and currency gains or losses associated with the Company's retirement benefit obligation in the United Kingdom. See Note 8, "Debt," and Note 17, "Other Income," to the accompanying consolidated financial statements as set forth in Item 8, "Financial Statements and Supplementary Data,"for further information.
Interest Expense
The components of interest expense are as follows:
|
|
|
|
|
|
|
|
|
(Dollars in thousands) |
|
2025 |
|
2024 |
||
|
Interest before items shown below |
|
$ |
49,290 |
|
$ |
57,962 |
|
Interest cost on defined benefit pension obligation and other interest costs |
|
|
821 |
|
|
787 |
|
Impact of interest rate hedge derivatives |
|
|
(3,188) |
|
|
(7,705) |
|
Capitalized interest |
|
|
(4,219) |
|
|
(1,341) |
|
Interest expense |
|
$ |
42,704 |
|
$ |
49,703 |
Interest expense decreased in 2025 compared to 2024 as a result of (i) a reduction in the average outstanding principal balance under the Company's revolving credit facilities, due to voluntary repayment of certain of such facilities since April 2024, (ii) the repayment in full of the ING Credit Facility in April 2024, and (iii) the decline of SOFR rates in 2025 compared to the prior year. Those year-over-year decreases were partially offset by $6.3 million of interest expense incurred on the ECA Credit Facility and the 2030 Bonds, which were issued during 2025. See Note 8, "Debt," to the accompanying consolidated financial statements as set forth in Item 8, "Financial Statements and Supplementary Data,"for further information on the Company's debt facilities.
Income Tax Benefit
We qualified for an exemption pursuant to Section 883, or the "Section 883 exemption," of the U.S. Internal Revenue Code of 1986, as amended, or the "Code," for the tax year ended December 31, 2025. We will qualify for the Section 883 exemption for 2026 and forward if, among other things, (i) our common shares are treated as primarily and regularly traded on an established securities market in the United States or another qualified country ("publicly traded test"), or (ii) we satisfy one of two other ownership tests. Under applicable U.S. Treasury Regulations, the publicly traded test will not be satisfied in any taxable year in which persons who directly, indirectly or constructively own five percent or more of our common shares (sometimes referred to as "5% shareholders") own in the
61
International Seaways, Inc.
aggregate 50% or more of the vote and value of our common shares for more than half the days in such year, unless an exception applies. We can provide no assurance that ownership of our common shares by 5% shareholders will allow us to qualify for the Section 883 exemption in future taxable years. If we do not qualify for the Section 883 exemption, our gross shipping income derived from U.S. sources, i.e., 50% of our gross shipping income attributable to transportation beginning or ending in the United States (but not both beginning and ending in the United States), generally would be subject to a U.S. federal income tax of four percent without allowance for deductions.
The Company reviews its freight tax obligations on a regular basis and may update its assessment of its tax positions based on available information at that time. Such information may include additional legal advice as to the applicability of freight taxes in relevant jurisdictions. Freight tax regulations are subject to change and interpretation; therefore, the amounts recorded by the Company may change accordingly. During 2025 the Company decreased its reserve for uncertain tax liabilities for various jurisdictions by $0.4 million compared to a $1.1 million decrease in such reserves during 2024.
Beginning in September 2025, in an effort to maximize future operational and strategic flexibility while maintaining compliance with evolving global tax regulations that are focused on the alignment of the jurisdictions in which an entity's commercial or strategic management are performed with where its profits are realized, the Company commenced the process of changing the domicile of its international shipping income generating vessel-owning subsidiaries and various intermediate parent holding companies under International Seaways, Inc. from the Marshall Islands and Liberia to Bermuda. The redomiciliation process was completed in December 2025.The Company itself remains organized under the laws of the Republic of the Marshall Islands.
In general, income arising from international shipping is exempted from the scope of corporate income tax chargeable to a Bermuda Constituent Entity Group (as defined in the Bermuda CIT Act) to the extent that the applicable substance-based requirements relating to strategic or commercial management in Bermuda are satisfied. Accordingly, in compliance with the Bermuda CIT Act and the Bermuda economic substance requirements, the strategic management of the Company's international shipping income generating subsidiaries and their intermediate parent holding companies was carried out from Bermuda, following their redomiciliation between September and December 2025. See Note 10, "Taxes," to the Company's consolidated financial statements set forth in Item 8, "Financial Statements and Supplementary Data," for further details on the income tax benefit line and the tax implications of redomiciling the Company's international shipping income generating vessel-owning subsidiaries and their intermediate holding companies to Bermuda.
EBITDA and Adjusted EBITDA
EBITDA represents net income before interest expense, income taxes and depreciation and amortization expense. Adjusted EBITDA consists of EBITDA adjusted for the impact of certain items that we do not consider indicative of our ongoing operating performance. EBITDA and Adjusted EBITDA are presented to provide investors with meaningful additional information that management uses to monitor ongoing operating results and evaluate trends over comparative periods. EBITDA and Adjusted EBITDA do not represent, and should not be considered a substitute for, net income or cash flows from operations determined in accordance with GAAP. EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of our results reported under GAAP. Some of the limitations are:
| ● | EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; |
| ● | EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; and |
| ● | EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt. |
While EBITDA and Adjusted EBITDA are frequently used by companies as a measure of operating results and performance, neither of those items as prepared by the Company is necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation.
62
International Seaways, Inc.
The following table reconciles net income, as reflected in the consolidated statements of operations set forth in Item 8, "Financial Statements and Supplementary Data," to EBITDA and Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
(Dollars in thousands) |
|
2025 |
|
2024 |
||
|
Net income |
|
$ |
309,261 |
|
$ |
416,724 |
|
Income tax benefit |
|
|
(411) |
|
|
(1,084) |
|
Interest expense |
|
|
42,704 |
|
|
49,703 |
|
Depreciation and amortization |
|
|
163,586 |
|
|
149,440 |
|
EBITDA |
|
|
515,140 |
|
|
614,783 |
|
Third-party debt modification fees |
|
|
- |
|
|
168 |
|
Gain on disposal of vessels and assets, net of impairments |
|
|
(42,537) |
|
|
(32,657) |
|
Provision for settlement of multi-employer pension plan obligations |
|
|
- |
|
|
1,019 |
|
Write-off of deferred financing costs |
|
|
1,761 |
|
|
- |
|
Loss on extinguishment of debt |
|
|
315 |
|
|
- |
|
Adjusted EBITDA |
|
$ |
474,679 |
|
$ |
583,313 |
63
International Seaways, Inc.
LIQUIDITY AND SOURCES OF CAPITAL
Our business is capital intensive. Our ability to successfully implement our strategy is dependent on the continued availability of capital on attractive terms. In addition, our ability to successfully operate our business to meet near-term and long-term debt repayment obligations is dependent on maintaining sufficient liquidity.
Liquidity
As of December 31, 2025, we had total liquidity on a consolidated basis of $723.6 million comprised of $166.9 million of cash and $556.7 million of undrawn revolver capacity.
Working capital at December 31, 2025 and 2024 was $268.2 million and $245.4 million, respectively. Current assets are highly liquid, consisting principally of cash, interest-bearing deposits, short-term investments, which are time deposits with original maturities of between 91 and 180 days, and receivables. Current liabilities include current installments of long-term debt of $25.8 million and $50.1 million at December 31, 2025 and 2024, respectively.
The Company's total cash decreased by $40.6 million during the year ended December 31, 2025. This decrease principally reflects the net impact of (i) $319.8 million in proceeds from the issuance of debt, net of deferred financing costs; (ii) $144.6 million of net loan repayments under the $500 Million Revolving Credit Facility; (iii) $144.6 million of cash dividends paid to shareholders; (iv) $46.0 million in regularly scheduled principal amortization of the Company's lease financing arrangements; (v) $257.5 million of prepayment in full on the Ocean Yield Lease Financing; (vi) $380.1 million of cash provided by operating activities; (vii) $56.9 million in returned security deposits and net proceeds from the sale of two VLCCs, two LR1s, and eight MRs, net of the purchase of two MRs and one VLCC; (viii) $146.9 million in other expenditures for vessels, vessel improvements and other property, of which $142.9 million was construction in progress payments; and (ix) $50.0 million in investments in short-term time deposits.
Our cash and cash equivalents balances generally exceed Federal Deposit Insurance Corporation insured limits. We place our cash and cash equivalents in what we believe to be credit-worthy financial institutions. In addition, certain of our money market accounts invest in U.S. Treasury securities or other obligations issued or guaranteed by the U.S. government or its agencies, floating rate and variable demand notes of U.S. and foreign corporations, commercial paper rated in the highest category by Moody's Investor Services and Standard & Poor's, certificates of deposit and time deposits, asset-backed securities, and repurchase agreements.
As of December 31, 2025, we had total debt outstanding (net of deferred financing costs of $11.1 million) of $567.1 million and a net debt to total capitalization of 16.5%, which compares with 22.2% at December 31, 2024.
Sources, Uses and Management of Capital
During 2025, we have (i) used incremental liquidity generated from operations and the proceeds from disposal of older tonnage at strong prices to invest in renewing and growing the fleet, (ii) enhanced our balance sheet and liquidity position, and (iii) continued to make substantial returns to shareholders.
In addition to future operating cash flows, our other future sources of funds are proceeds from issuances of equity securities, additional borrowings as permitted under our loan agreements and proceeds from the opportunistic sales of our vessels. Our current uses of funds are to fund working capital requirements, maintain the quality of our vessels, purchase vessels, pay newbuilding construction costs, comply with international shipping standards and environmental laws and regulations, repay or repurchase our outstanding loan facilities, pay a regular quarterly cash dividend, and from time-to-time, repurchase shares of our common stock and pay supplemental cash dividends.
The following is a summary of the significant capital allocation initiatives we executed during 2025 and the sources of capital we have at our disposal for future use as well as our current commitments for future uses of capital:
Returns to Shareholders
During 2025, the Company's Board of Directors declared and paid regular quarterly and supplemental cash dividends totaling $144.6 million or $2.93 per share as follows:
64
International Seaways, Inc.
|
|
|
|
|
|
|
|
Declaration Date |
Record Date |
Payment Date |
Regular Quarterly Dividend per Share |
Supplemental Dividend per Share |
Total Dividends Paid |
|
February 26, 2025 |
March 14, 2025 |
March 28, 2025 |
$0.12 |
$0.58 |
$34.5 million |
|
May 7, 2025 |
June 12, 2025 |
June 26, 2025 |
$0.12 |
$0.48 |
$29.6 million |
|
August 5, 2025 |
September 10, 2025 |
September 24, 2025 |
$0.12 |
$0.65 |
$38.0 million |
|
November 5, 2025 |
December 9, 2025 |
December 23, 2025 |
$0.12 |
$0.74 |
$42.5 million |
Also on February 25, 2026, the Company's Board of Directors declared a regular quarterly cash dividend of $0.12 per share of common stock and a supplemental dividend of $2.03 per share of common stock. Both dividends will be paid on March 30, 2026 to stockholders of record as of March 20, 2026.
In October 2025, the Company's Board of Directors authorized the extension of the expiry date of the Company's $50.0 million share repurchase program from December 31, 2025 to December 31, 2026.
Fleet Optimization Program
In continuation of our strategic fleet optimization program during 2025, we:
| ● | Completed the last of five vessel sale and purchase transactions involving the sale of one 2010-built VLCC and one 2011-built VLCC for an aggregate sales price of $116.6 million and the purchase of three 2015-built MRs (the first of which was delivered in December 2024) for an aggregate purchase price of $119.5 million resulting in a net cash outflow of $2.9 million between December 2024 and February 2025. |
| ● | Completed the sales of two 2006-built LR1s, five 2007-built MRs, and three 2008-built MRs for net proceeds of $131.0 million. |
| ● | Purchased a 2020-built, scrubber fitted VLCC in November 2025 for $119.0 million. |
| ● | Took delivery between September and October 2025 of the first two of six LR1 newbuildings under construction in Korea with K Shipbuilding Co., Ltd. The aggregate contract price for the six scrubber-fitted, dual-fuel ready LR1 vessels is approximately $359 million. As of December 31, 2025, the Company has approximately $188.5 million in remaining construction costs, of which approximately $158 million is expected to be drawn from the ECA Credit Facility in accordance with the delivery schedule. The remaining four LR1s are expected to be delivered by third quarter of 2026. |
| ● | Entered into memoranda of agreements between December 2025 and February 2026, for the sale of one 2007-built MR Product Carrier, four 2008-built MR Product Carriers, one 2010-built VLCC and one 2012-built VLCC for net proceeds of approximately $216.4 million after fees and commissions. All seven vessels are expected to be delivered to their buyers in the first quarter of 2026. |
Balance Sheet Enhancements
Further building on our liquidity enhancing, deleveraging and financing initiatives, we executed the following transactions during 2025:
| ● | In August 2025, we entered into a credit agreement (the "ECA Credit Facility"), which consists of (1) a 12-year term loan facility of up to $239.7 million and (2) a commercial credit facility of up to $91.9 million, collectively for use in respect of partly financing the acquisition of six LR1 newbuildings under construction at K Shipbuilding Co., Ltd in Korea. Between September and October 2025, the Company borrowed $81.5 million under the ECA Credit Facility upon the delivery of the first two LR1 newbuildings. The facilities combine for an effective 20-year amortization profile and a blended margin of 1.25% over a 12-year stated maturity. |
65
International Seaways, Inc.
| ● | In September 2025, we issued $250 million aggregate principal amount of 7.125% senior unsecured bonds (the "2030 Bonds") maturing on September 23, 2030 (unless earlier redeemed or repurchased), at an issue price of 100%. Interest will be paid semi-annually in arrears on March 23 and September 23 each year, commencing March 23, 2026 (and subject to business day conventions). The 2030 Bonds have a denomination of $0.125 million, and application will be made to list the 2030 Bonds on the Oslo Stock Exchange during the first half of 2026. We used the net proceeds from the 2030 Bonds to retire higher-cost debt outstanding under the Ocean Yield Lease Financing. |
| ● | In November 2025, we exercised purchase options on six VLCCs, which were bareboat chartered-in under the Ocean Yield Lease Financing arrangements. The aggregate purchase price for the six vessels of $257.8 million, consisted of the $257.5 million remaining debt balance and $0.3 million of other costs. We used net proceeds from the 2030 Bonds and available liquidity to pay the purchase price. |
| ● | During 2025, we drew $80 million under our $500 Million Revolving Credit Facility and repaid an aggregate of $224.6 million of the principal balance outstanding under this facility, leaving the facility fully undrawn as of December 31, 2025. |
See Note 8, "Debt," to the Company's consolidated financial statements set forth in Item 8, "Financial Statements and Supplementary Data" of this Form 10-K for further information on the ECA Credit Facility and the 2030 Bonds. The Company's debt service commitments and aggregate purchase commitments for vessel construction and betterments as of December 31, 2025, are presented in the Aggregate Contractual Obligations Table below.
Outlook
Our strong balance sheet, as evidenced by a substantial level of liquidity, 31 unencumbered vessels (excluding the four LR1s under construction) as of December 31, 2025, and diversified financing sources with debt maturities spread out between 2030 and 2037, positions us to support our operations over the next twelve months as we continue to advance our vessel employment strategy, which seeks to achieve an optimal mix of spot (voyage charter) and long-term (time charter) charters. Our balance sheet strength and balanced fleet position us to continue pursuing our disciplined capital allocation strategy of fleet renewal, incremental debt reduction and returns to shareholders and pursue potential strategic opportunities that may arise within the diverse sectors in which we operate.
Aggregate Contractual Obligations
A summary of the Company's long-term contractual obligations as of December 31, 2025 follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beyond |
|
|
|
|
(Dollars in thousands) |
|
|
2026 |
|
|
2027 |
|
|
2028 |
|
|
2029 |
|
|
2030 |
|
|
2030 |
|
|
Total |
|
$500 Million Revolving Credit Facility(1) |
|
$ |
2,663 |
|
|
2,332 |
|
|
2,000 |
|
|
1,655 |
|
|
128 |
|
|
- |
|
$ |
8,778 |
|
$160 Million Revolving Credit Facility(1) |
|
|
898 |
|
|
811 |
|
|
730 |
|
|
161 |
|
|
- |
|
|
- |
|
|
2,600 |
|
ECA Credit Facility - floating rate(2) |
|
|
7,473 |
|
|
7,802 |
|
|
7,642 |
|
|
7,430 |
|
|
7,228 |
|
|
77,360 |
|
|
114,935 |
|
2030 Bonds - fixed rate |
|
|
17,812 |
|
|
17,812 |
|
|
17,813 |
|
|
17,813 |
|
|
267,813 |
|
|
- |
|
|
339,063 |
|
BoComm Lease Financing - fixed rate(3) |
|
|
23,762 |
|
|
23,762 |
|
|
23,827 |
|
|
23,762 |
|
|
142,272 |
|
|
- |
|
|
237,385 |
|
Toshin Lease Financing - fixed rate(3) |
|
|
2,160 |
|
|
2,151 |
|
|
2,223 |
|
|
2,052 |
|
|
2,052 |
|
|
2,829 |
|
|
13,467 |
|
Hyuga Lease Financing - fixed rate(3) |
|
|
2,232 |
|
|
2,232 |
|
|
2,160 |
|
|
2,160 |
|
|
2,256 |
|
|
2,000 |
|
|
13,040 |
|
Kaiyo Lease Financing - fixed rate(3) |
|
|
2,410 |
|
|
2,214 |
|
|
2,214 |
|
|
2,214 |
|
|
2,127 |
|
|
- |
|
|
11,179 |
|
Kaisha Lease Financing - fixed rate(3) |
|
|
2,225 |
|
|
2,214 |
|
|
2,214 |
|
|
2,214 |
|
|
2,287 |
|
|
- |
|
|
11,154 |
|
Operating lease obligations(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time Charter-ins |
|
|
2,563 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
2,563 |
|
Office space |
|
|
1,297 |
|
|
1,250 |
|
|
1,077 |
|
|
1,077 |
|
|
1,077 |
|
|
2,602 |
|
|
8,380 |
|
Vessel and vessel betterment commitments(5) |
|
|
189,256 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
189,256 |
|
Total |
|
$ |
254,751 |
|
$ |
62,580 |
|
$ |
61,900 |
|
$ |
60,538 |
|
$ |
427,240 |
|
$ |
84,791 |
|
$ |
951,800 |
| (1) | Amounts shown include unused revolver capacity commitment fees. |
66
International Seaways, Inc.
| (2) | Amounts shown include unused commitment fees and contractual interest obligations on $81.5 million of outstanding floating rate debt estimated based on the applicable margin for the ECA Credit Facility of 1.1% and the fixed rate stated in the interest rate swaps (assigned for hedge accounting purposes) of 2.84% through the swap maturity date of February 22, 2027. The effective three-month SOFR rate of 3.79% as of December 31, 2025 was used for the remaining outstanding principal under the ECA Credit Facility. |
| (3) | Amounts shown include contractual implicit interest obligations of the lease financing under the bareboat charters. |
| (4) | As of December 31, 2025, the Company had a charter-in commitment for one vessel on a lease that is accounted for as an operating lease. The full amounts due under office space leases and the lease component of the amounts due under long term time charter-ins are discounted and reflected on the Company's consolidated balance sheet as lease liabilities with corresponding right of use asset balances. |
| (5) | Represents the Company's commitments for the purchase of one ballast water treatment system and one Mewis duct system, and the purchase and installation of various performance efficiency devices for the fleet, and the remaining commitments for the construction of four dual-fuel ready LR1s. |
Carrying Value of Vessels
At December 31, 2025, 38 of the Company's 69 owned and bareboat chartered-in vessels were pledged as collateral under certain of the Company's debt and lease financing facilities. The following table presents information with respect to the carrying amount of the Company's vessels by type. Instances in which the fair market values of the Company's vessels, which are estimated by third-party vessel appraisers, are below their carrying values as of December 31, 2025, are indicated in the footnote(s) to the table. The carrying value of each of the Company's vessels does not necessarily represent its fair market value or the amount that could be obtained if the vessel were sold. The Company's estimates of market values for its vessels assume that the vessels are all in good and seaworthy condition without need for repair and, if inspected, would be certified as being in class without notations. In addition, because vessel values are highly volatile, these estimates may not be indicative of either the current or future prices that the Company could achieve if it were to sell any of the vessels. The Company would not record a loss for any of the vessels for which the fair market value is below its carrying value unless and until the Company either determines to sell the vessel for a loss or determines that the vessel is impaired as discussed below in "Critical Accounting Policies - Vessel Impairment." The Company believes that the future undiscounted cash flows expected to be earned over the estimated remaining useful lives for those vessels that have experienced declines in market values below their carrying values would exceed such vessels' carrying values.
Footnotes to the following table exclude those vessels with an estimated market value in excess of their carrying value.
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands) |
|
|
Average Vessel Age (weighted by dwt) |
|
|
Number of Vessels |
|
|
Carrying Value |
|
Crude Tankers |
|
|
|
|
|
|
|
|
|
|
VLCC |
|
|
8.5 |
|
|
12 |
|
$ |
830,810 |
|
Suezmax |
|
|
11.8 |
|
|
13 |
|
|
353,655 |
|
Aframax |
|
|
13.8 |
|
|
4 |
|
|
85,446 |
|
Total Crude Tankers(1) |
|
|
10.0 |
|
|
29 |
|
$ |
1,269,911 |
|
|
|
|
|
|
|
|
|
|
|
|
Product Carriers |
|
|
|
|
|
|
|
|
|
|
LR2 |
|
|
11.4 |
|
|
1 |
|
$ |
44,081 |
|
LR1 |
|
|
10.2 |
|
|
6 |
|
|
179,471 |
|
MR |
|
|
14.3 |
|
|
33 |
|
|
579,681 |
|
Total Product Carriers(2) |
|
|
13.3 |
|
|
40 |
|
$ |
803,233 |
|
|
|
|
|
|
|
|
|
|
|
|
Fleet total |
|
|
10.9 |
|
|
69 |
|
$ |
2,073,144 |
| (1) | As of December 31, 2025, the Crude Tankers segment includes one VLCC with carrying value of $118.4 million, which the Company believes exceeds its market value of approximately $116.7 million by $1.7 million. |
| (2) | As of December 31, 2025, the Product Carriers segment includes nine MRs with aggregate carrying value of $327.2 million, which the Company believes exceeds their aggregate market values of approximately $283.9 million by $43.3 million. |
67
International Seaways, Inc.
RISK MANAGEMENT
Interest rate risk
The Company is exposed to market risk from changes in interest rates, which could impact its results of operations and financial condition. The Company manages this exposure to market risk through its regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. To manage its interest rate risk exposure associated with changes in variable interest rate payments due on its credit facilitiesin a cost-effective manner, the Company, from time-to-time, enters into interest rate swap, collar or cap agreements, in which it agrees to exchange various combinations of fixed and variable interest rates based on agreed upon notional amounts or to receive payments if floating interest rates rise above a specified cap rate. The Company uses such derivative financial instruments as risk management tools and not for speculative or trading purposes. In addition, derivative financial instruments are entered into with a diversified group of major financial institutions in order to manage exposure to nonperformance on such instruments by the counterparties.
See "Interest Rate Sensitivity" section below andNote 7, "Fair Value of Financial Instruments, Derivative and Fair Value Disclosures," to the Company's consolidated financial statements set forth in Item 8, "Financial Statements and Supplementary Data," for additional information on the Company various interest rate derivatives.
Currency and exchange rate risk
The shipping industry's functional currency is the U.S. dollar. All of the Company's revenues and most of its operating costs are in U.S. dollars. The Company incurs certain operating expenses, such as some vessel and general and administrative expenses, in currencies other than the U.S. Dollar, and the foreign exchange risk associated with these operating expenses is immaterial. If foreign exchange risk becomes material in the future, the Company may seek to reduce its exposure to fluctuations in foreign exchange rates through the use of short-term currency forward contracts and through the purchase of bulk quantities of currencies at rates that management considers favorable. For contracts which qualify as cash flow hedges for accounting purposes, hedge effectiveness would be assessed based on changes in foreign exchange spot rates with the change in fair value of the effective portions being recorded in accumulated other comprehensive income/(loss).
Fuel price volatility risk
The Company has nine scrubber-fitted VLCCs and two scrubber-fitted Suezmaxes. During 2025, the average price differential between very low sulfur fuel and high sulfur fuel in Singapore and Fujairah, the most common bunkering locations for VLCCs, was approximately $83 per ton. Assuming a VLCC bunker consumption rate of 50 metric tons per day, this translated to approximately $4,150 per day per vessel in lower bunker consumption costs on our VLCCs during 2025. In addition to installing scrubbers on certain of the larger vessels in the Company's fleet, significant consideration continues to be given to other ways of managing the risk of volatility in the price spread between high-sulfur fuel and low-sulfur fuel as well as the risk of limited supply of compliant fuel or HFO along the routes that the Company's vessels typically travel.
Interest Rate Sensitivity
As of December 31, 2025, the Company had the ECA Credit Facility and revolving credit facilities under which borrowings bear interest at a rate based on SOFR, plus the applicable margin, as stated in the respective financing arrangements. The Company has entered into interest rate swaps agreements with major financial institutionscovering for accounting purposes 100% of the ECA Credit Facility outstanding balance of $81.5 million as of December 31, 2025. The Swapseffectively convert the Company's interest rate exposure from a three-month SOFR floating rate to a fixed rate of 2.84% through the maturity date of February 22, 2027.
The following table presents information about the Company's financial instruments that are sensitive to changes in interest rates. For debt obligations, the table presents the principal cash flows and related weighted average interest rates by expected maturity dates of the Company's debt obligations.
68
International Seaways, Inc.
Principal (Notional) Amount (dollars in millions) by Expected Maturity and Average Interest (Swap) Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beyond |
|
|
|
Fair Value at |
||||||||
|
(Dollars in millions) |
|
2026 |
|
2027 |
|
2028 |
|
2029 |
|
2030 |
|
2030 |
|
Total |
|
December. 31, 2025 |
||||||||
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate debt |
|
$ |
21.9 |
|
$ |
22.8 |
|
$ |
23.9 |
|
$ |
24.9 |
|
$ |
398.5 |
|
$ |
4.7 |
|
$ |
496.7 |
|
$ |
463.2 |
|
Average interest rate |
|
|
5.90% |
|
|
5.96% |
|
|
6.02% |
|
|
6.10% |
|
|
5.87% |
|
|
4.28% |
|
|
|
|
|
|
|
Variable rate debt (1) |
|
$ |
4.1 |
|
$ |
4.1 |
|
$ |
4.1 |
|
$ |
4.1 |
|
$ |
4.1 |
|
$ |
61.1 |
|
$ |
81.5 |
|
$ |
81.5 |
|
Average interest rate (1) |
|
|
4.22% |
|
|
4.88% |
|
|
4.89% |
|
|
4.89% |
|
|
4.89% |
|
|
4.89% |
|
|
|
|
|
|
| (1) | Rates are discussed in the aggregate contractual obligations section above. |
CRITICAL ACCOUNTING ESTIMATES AND POLICIES
The Company's consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require the Company to make estimates in the application of its accounting policies based on the best assumptions, judgments, and opinions of management. Following is a discussion of the accounting policies that involve a higher degree of judgment and the methods of their application. For a description of all of the Company's material accounting policies, see Note 2, "Summary of Significant Accounting Policies," to the Company's consolidated financial statements set forth in Item 8, "Financial Statements and Supplementary Data."
Vessel Lives and Salvage Values
The carrying value of each of the Company's vessels represents its original cost at the time it was delivered or purchased less depreciation calculated using an estimated useful life of 25 years from the date such vessel was originally delivered from the shipyard. A vessel's carrying value is reduced to its new cost basis (i.e., its current fair value) if a vessel impairment charge is recorded.
If the estimated useful lives assigned to the Company's vessels prove to be shorter than previously estimated because of new regulations, an extended period of weak markets, the broad imposition of age restrictions by the Company's customers, or other future events, it could result in higher depreciation expense and impairment losses in future periods related to a reduction in the useful lives of any affected vessels.
Company management estimates the steel recycle value of all of its vessels to be $300 per lightweight ton consistent with its commitment to implement and practice environmentally and socially responsible ship recycling. The Company's assumptions used in the determination of estimated salvage value take into account current steel recycling prices, the historic pattern of annual average steel recycling rates in the Indian ship recycling market over the five years ended December 31, 2025, which ranged from $380 to $670 per lightweight ton, estimated changes in future market demand for recycled steel and estimated future demand for vessels. Steel recycling prices also fluctuate depending upon type of ship, bunkers on board, spares on board and delivery range. Market conditions that could influence the volume and pricing of vessel recycling activity in 2026 and beyond include (i) geopolitical pressure that drives a shift in the global transportation of oil from sanctioned vessels to unsanctioned vessels and makes recycling the most economical option for owners of underutilized sanctioned vessels, (ii) the combined impact of scheduled newbuild deliveries and charter rate expectations for vessels potentially facing age restrictions imposed by oil majors, (iii) costs and timing of pending special surveys, which are likely to be expensive for vessels over 15 years of age, and (iv) IMO requirements for the use of low-sulfur fuels and other carbon reduction initiatives. These factors will influence owners' decisions to accelerate the disposal of older vessels, especially those with upcoming special surveys.
Although management believes that the assumptions used to determine the steel recycling value for its vessels are reasonable and appropriate, such assumptions are highly subjective, in part, because of the cyclicality of the nature of future demand for recycled steel.
69
International Seaways, Inc.
Vessel Impairment
The carrying values of the Company's vessels may not represent their fair market value or the amount that could be obtained by selling the vessel at any point in time since the market prices of second-hand vessels tend to fluctuate with changes in charter rates and the cost of newbuildings. Historically, both charter rates and vessel values tend to be cyclical. Management evaluates the carrying amounts of vessels held and used by the Company for impairment only when it determines that it will sell a vessel or when events or changes in circumstances occur that cause management to believe that future cash flows for any individual vessel will be less than its carrying value. In such instances, an impairment charge would be recognized if the estimate of the undiscounted future cash flows expected to result from the use of the vessel and its eventual disposition is less than the vessel's carrying amount. This assessment is made at the individual vessel level as separately identifiable cash flow information for each vessel is available.
In developing estimates of future cash flows, the Company must make assumptions about future performance, with significant assumptions being related to charter rates, operating expenses, utilization, drydocking and capital expenditure requirements, residual value and the estimated remaining useful lives of the vessels. These assumptions are based on historical trends as well as future expectations. Specifically, in estimating future charter rates, management takes into consideration rates currently in effect for existing time charters and estimated daily time charter equivalent rates for each vessel class for the unfixed days over the estimated remaining lives of each of the vessels. The estimated daily time charter equivalent rates used for unfixed days are based on a combination of (i) rates as forecasted by third-party analysts, and (ii) trailing historical average rates, based on monthly average rates published by a third-party maritime research service. Management determines the historical periods to utilize in its estimations based on its judgment of current, past, and ongoing shipping cycles. Recognizing that the transportation of crude oil and petroleum products is cyclical and subject to significant volatility based on factors beyond the Company's control, management believes the use of estimates based on the combination of rates forecasted by third-party analysts and historical average rates calculated as of the reporting date to be reasonable.
Estimated outflows for operating expenses and capital expenditures and drydocking requirements are based on historical and budgeted costs and are adjusted for assumed inflation. Utilization is based on historical levels achieved and estimates of residual value for recycling are based upon the pattern of steel recycling rates used in management's evaluation of salvage value for purposes of recording depreciation. Finally, for vessels that are being considered for disposal before the end of their respective useful lives, the Company utilizes weighted probabilities assigned to the possible outcomes for such vessels being sold or recycled before the end of their respective useful lives.
The determination of fair value is highly judgmental. In estimating the fair value of INSW's vessels for purposes of Step 2 of the impairment tests, the Company considers the market and income approaches by using a combination of third-party appraisals and discounted cash flow models prepared by the Company. In preparing the discounted cash flow models, the Company uses a methodology consistent with the methodology discussed above in relation to the undiscounted cash flow models prepared by the Company and discounts the cash flows using its current estimate of INSW's weighted average cost of capital.
The more significant factors that could impact management's assumptions regarding time charter equivalent rates include (i) loss or reduction in business from significant customers, (ii) unanticipated changes in demand for transportation of crude oil and petroleum products, (iii) changes in production of or demand for oil and petroleum products, generally or in particular regions, (iv) greater than anticipated levels of tanker newbuilding orders or lower than anticipated levels of tanker recycling, and (v) changes in rules and regulations applicable to the tanker industry, including legislation adopted by international organizations such as IMO and the EU or by individual countries. Although management believes that the assumptions used to evaluate potential impairment are reasonable and appropriate at the time they were made, such assumptions are highly subjective and likely to change, possibly materially, in the future.
International Seaways Inc. published this content on February 26, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 26, 2026 at 13:07 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]