Poor TCE Rates Push International Seaways to 2Q Loss

Image Courtesy: International Seaways

Mainly driven by lower TCE revenues, US-based tanker shipping company International Seaways suffered a net loss of USD 11.6 million in the second quarter of 2017, compared to a net income of USD 30.5 million posted in the same period a year earlier.

As explained, apart from the decline in revenues, the net loss also reflects costs associated with the company’s debt refinancing.

In 2Q 2017, TCE revenues decreased to USD 69.3 million from USD 101 million recorded in the same quarter last year.

TCE revenues for the crude tankers segment were USD 45.7 million for the quarter, against USD 66.5 million in the second quarter of 2016. This decrease resulted primarily from the impact of significantly lower average blended rates in the VLCC, Aframax and Panamax sectors, and fewer revenue days in the Panamax sector, resulting from an increase in drydock days.

TCE revenues for the product carriers segment were USD 23.5 million for the quarter, compared to USD 34.4 million in the second quarter of 2016. This drop was primarily due to a decline in average daily blended rates earned by the MR, LR1 and LR2 fleets, according to the company.

Adjusted EBITDA was USD 31.8 million for the quarter, compared to USD 62.3 million in the second quarter of 2016, affected by lower daily rates.

“During the second quarter, we executed on our fleet growth and renewal strategy, enhanced our financial flexibility and strengthened the company’s position to optimize revenue through the current tanker cycle,” Lois K. Zabrocky, International Seaways’ president and CEO, said.

In 2Q 2017, International Seaways acquired two 2017-built Suezmax newbuildings, Seaways Hatteras and Seaways Montauk. Constructed at Hyundai Samho Heavy Industries shipyard, the ships were delivered to the Company in July 2017.

The company also inked an agreement to sell a 2001-built MR, which is expected to be finalized in the third quarter.

“We also completed a USD 550 million refinancing in the quarter, which was recently upsized to USD 600 million… In addition to extending the company’s debt maturities, this successful refinancing … enhances our ability to take advantage of compelling opportunities for shareholders,” Zabrocky added.

Furthermore, International Seaways managed to increase its contracted cash flows in 2Q 2017 by signing two five-year contracts for its FSO joint ventures which are expected to generate in excess of USD 180 million of EBITDA for the company over the contract period.

“We are driven by a disciplined and balanced capital allocation strategy and enter the second half of 2017 with significant liquidity to continue to opportunistically grow and modernize our fleet. We also continue to maintain sizeable contracted cash flows, as well as upside to a market recovery in both the crude and product tanker sectors. We remain positive on crude tanker fundamentals in 2018 and continue to be encouraged by near-term prospects for a strengthening product tanker market,” Zabrocky concluded.

International Seaways owns and operates a fleet of 57 vessels. Through joint ventures, the company has ownership interests in four liquefied natural gas carriers and two floating storage and offloading service vessels.

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