International Seaways Reports Robust Q3 Cash Flow with $28K Daily TCE and $13K Breakeven

Strong Performance and Strategic Moves in Q2 2025

International Seaways, Inc. (INSW) delivered a strong second quarter of 2025, showcasing consistent financial performance and strategic initiatives that reinforce its position in the maritime industry. The company reported net income of $62 million, or $1.25 per diluted share, with adjusted net income reaching $50 million, or $1.02 per diluted share. Adjusted EBITDA for the quarter was $102 million, reflecting robust operational efficiency.

CEO Lois K. Zabrocky emphasized the company’s commitment to returning value to shareholders, noting that this marks the fourth consecutive quarter with a payout ratio of at least 75%. This reflects the company’s balanced capital allocation strategy, which prioritizes both growth and shareholder returns. Additionally, Zabrocky highlighted the sale of six older vessels, with two sold during the quarter for $28 million and four more expected to be delivered in the third quarter for approximately $57 million. These sales contribute to the company’s liquidity and fleet modernization efforts.

The company also announced the upcoming delivery of the first of six LR1 newbuildings in September, along with securing commitments for up to $240 million in export agency financing. At the end of Q2, International Seaways had over $700 million in total liquidity, including $149 million in cash and $560 million in undrawn revolver capacity. The company’s gross debt stood at $553 million, with a net loan-to-value ratio comfortably under 15%, indicating a strong balance sheet and financial flexibility.

CFO Jeffrey D. Pribor provided further insights into the company’s financials, stating that net income for the quarter was $62 million, or $1.25 per diluted share. Excluding gains on vessel sales, net income was $50 million, or $1.02 per diluted share. He noted that revenue and expenses were largely within expectations, with cost management being a key focus. The lightering business contributed approximately $2 million in EBITDA for the quarter, and the company achieved free cash flow of about $71 million.

Outlook and Forward-Looking Guidance

Looking ahead, Pribor provided forward-looking guidance, stating that as of the current date, the company has a blended average spot TCE of about $28,000 per day fleet-wide, with 40% of third-quarter revenue expected to come from spot rates. The forward spot breakeven rate is approximately $13,000 per day. Zabrocky reiterated the company’s expectation of continued significant free cash flows and its commitment to returning cash to shareholders. There were no explicit changes in guidance language compared to the previous quarter.

In terms of financial results, the company reported adjusted EBITDA of $102 million and free cash flow of $71 million for the second quarter. Liquidity at the end of the quarter exceeded $700 million, with $149 million in cash and $560 million in undrawn revolver capacity. Gross debt remained at $553 million, and the net loan-to-value ratio stayed under 15%. Two vessels were sold for $28 million, with an additional four expected to be delivered for $57 million in the third quarter. The lightering business generated over $9 million in revenue and $2 million in EBITDA.

Key Questions and Discussions

During the earnings call, analysts raised several questions regarding the company’s operations and strategies. Christopher Warren Robertson of Deutsche Bank asked about the $57 million proceeds from four vessel sales in Q3 and their net status. Pribor responded that these proceeds should be considered net because they are part of the unencumbered fleet.

Robertson also inquired about the impact of recent sanctions and potential U.S. sanctions on India. Zabrocky noted that India is already taking compliant tonnage for exports and is highly tactical in its trading. She added that the situation would likely become clearer over the next 30 days.

Sherif Ehab Elmaghrabi of BTIG questioned the impact of OPEC+ unwinding production cuts. Chief Commercial Officer Derek G. Solon explained that much of this would affect VLCCs, which could benefit the B market. He also mentioned that the company brought in nine more modern MRs throughout 2024, strengthening its fleet profile in the product tanker segment.

Omar Mostafa Nokta of Jefferies asked about ongoing portfolio optimization between crude and product segments. Zabrocky stated that the company is deliberate in its moves and sees upside on VLCCs. She also noted that there are opportunities emerging in the VLCC space. Regarding financing for six VLCCs coming off leases, Pribor indicated that numerous options are being evaluated, and the company feels fortunate about the available opportunities.

Analyst Sentiment and Management Tone

Analysts maintained a neutral to slightly positive tone, focusing on asset sales, sanctions, OPEC+ supply, fleet renewal, and financing strategies. Questions probed for clarity on proceeds, strategic intent, and potential market impacts. Management’s tone was confident and constructive, emphasizing balance sheet strength and capital allocation. Phrases such as “we are able to grow the company and create further enhancements like our most recent financing” (Zabrocky) and “we continue to enhance our balance sheet to maintain the financial flexibility necessary to facilitate growth” (Pribor) underscored the company’s confidence.

Compared to the previous quarter, management’s tone remained consistently confident, with a continued emphasis on returning cash to shareholders and proactive fleet management. Analyst sentiment was similarly focused on clarity and strategy, with little change in skepticism or optimism.

Quarter-over-Quarter Comparison

Net income, adjusted net income, and EBITDA all increased compared to the previous quarter. Q2 net income was $62 million, up from $50 million in Q1, while adjusted EBITDA rose to $102 million from $91 million. The payout ratio of at least 75% continued for the fourth straight quarter.

Liquidity improved, with $700 million reported in Q2 versus $673 million in Q1. Gross debt declined from over $600 million in Q1 to $553 million in Q2, and the number of unencumbered vessels slightly decreased from 34 to 32.

Management maintained its balanced capital allocation strategy but increased the pace of fleet renewal activities, with six vessel sales and a major VLCC acquisition announced in Q2.

Risks and Concerns

Management highlighted geopolitical volatility, especially in the Strait of Hormuz, as a factor making "sustained trends in new trade routes more difficult to identify." There was acknowledgment that further escalation or de-escalation could impact rates and the structure of the aging fleet.

Supply-side risks remain, with tankers on order representing only 15% of the existing fleet, while nearly 50% of the fleet is expected to be over 20 years old by 2029. Regulatory and environmental pressures were also cited as additional concerns.

Analysts raised concerns about the impact of sanctions, OPEC+ supply changes, and the potential effects on trade patterns and asset values.

Final Takeaway

International Seaways delivered a strong second quarter, marked by robust free cash flow, proactive fleet renewal, and substantial liquidity. Management emphasized its ability to continue returning capital to shareholders while maintaining financial flexibility amid market volatility and regulatory change. With a spot TCE of $28,000 per day and a low breakeven rate, the company positions itself to capitalize on ongoing market opportunities and sustain shareholder returns through disciplined capital allocation and strategic fleet management.