International Seaways Boosts Q3 Cash Flow with $28k Daily TCE and $13k Breakeven

Strong Financial Performance and Strategic Moves

International Seaways, Inc. (INSW) delivered a strong second quarter in 2025, showcasing consistent financial performance and strategic fleet management. The company reported net income of $62 million or $1.25 per diluted share, with adjusted net income at $50 million or $1.02 per diluted share. Adjusted EBITDA reached $102 million, reflecting solid operational efficiency.

CEO Lois K. Zabrocky emphasized the company's commitment to returning value to shareholders, noting that this was the fourth consecutive quarter with a payout ratio of at least 75%. She highlighted the sale of six older vessels, with two sold for $28 million during the quarter and four more expected to be delivered in the third quarter for approximately $57 million. Additionally, the company announced the purchase of a 2020-built scrubber-fitted VLCC, set for delivery in the fourth quarter.

Zabrocky also mentioned the upcoming delivery of the first of six LR1 newbuildings in September and secured commitments for up to $240 million in export agency financing. The company ended Q2 with over $700 million in total liquidity, including $149 million in cash and $560 million in undrawn revolver capacity. Gross debt stood at $553 million, with a net loan-to-value ratio comfortably under 15%.

Operational Highlights and Financial Results

CFO Jeffrey D. Pribor provided additional insights into the company’s financials. He noted that net income for the quarter was $62 million or $1.25 per diluted share, with adjusted net income of $50 million or $1.02 per diluted share. Revenue and expenses were largely within expectations, and the company achieved free cash flow of approximately $71 million in Q2.

The lightering business contributed about $2 million in EBITDA for the quarter, while the company received $28 million in proceeds from the sale of two vessels at the end of the quarter. These funds were used to pay approximately $16 million in LR1 newbuilding installments.

Outlook and Forward-Looking Guidance

Pribor provided forward-looking guidance, stating that the company currently has a blended average spot TCE of about $28,000 per day fleet-wide at 40% of its third-quarter expected revenue. The forward spot breakeven rate is approximately $13,000 per day. Zabrocky reiterated the company’s expectation to continue generating significant free cash flows and maintaining its track record of returning cash to shareholders.

There were no explicit changes in guidance language compared to the previous quarter, indicating stability in the company’s outlook.

Fleet Composition and Market Dynamics

During the Q&A session, analysts raised several questions about the company’s fleet composition and market dynamics. Christopher Warren Robertson of Deutsche Bank asked about the $57 million proceeds from four vessel sales in Q3, which Pribor clarified should be considered net proceeds as 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 activities, suggesting that the situation may evolve 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, potentially benefiting the B market as these vessels become more engaged in moving crude out of the Arabian Gulf.

Elmaghrabi also asked about the company’s fleet composition given resurgent product tanker rates. Zabrocky explained that the company brought in nine more modern MRs throughout 2024, strengthening its fleet profile in the MR space.

Portfolio Optimization and Financing Strategies

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, anticipating opportunities on the horizon. Nokta also inquired about financing for six VLCCs coming off leases, to which Pribor responded that there are numerous options being evaluated, with confidence in future 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, particularly regarding 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) reflected this 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 remained 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 over the previous quarter, with Q2 net income at $62 million versus Q1 at $50 million, and adjusted EBITDA at $102 million versus $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 identified 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.