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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-37836-1

INTERNATIONAL SEAWAYS, INC.

(Exact name of registrant as specified in its charter)


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

600 Third Avenue, 39^th Floor, New York, New York		10016
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 212-578-1600

(Former name, former address and former fiscal year, if changed since last report)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock (no par value)	INSW	New York Stock Exchange
Rights to Purchase Common Stock	N/A	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer ☒	Accelerated filer ☐	Emerging growth company ☐

Non-accelerated filer ☐	Smaller reporting company ☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date. The number of shares outstanding of the issuer’s common stock as of May 7, 2024: common stock, no par value 49,373,073 Close shares.

INTERNATIONAL SEAWAYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
DOLLARS IN THOUSANDS
(UNAUDITED)


	March 31, 2024		December 31, 2023
ASSETS
Current Assets:
Cash and cash equivalents	$	139,501	$	126,760
Short-term investments		75,000		60,000
Voyage receivables, net of allowance for credit losses of $238 and $191
including unbilled receivables of $234,260 and $237,298		242,955		247,165
Other receivables		11,887		14,303
Inventories		593		1,329
Prepaid expenses and other current assets		15,086		10,342
Current portion of derivative asset		5,049		5,081
Total Current Assets		490,071		464,980
Vessels and other property, less accumulated depreciation of $452,717 and $427,274		1,890,796		1,914,426
Vessels construction in progress		11,905		11,670
Deferred drydock expenditures, net		72,884		70,880
Operating lease right-of-use assets		17,195		20,391
Pool working capital deposits		33,998		31,748
Long-term derivative asset		2,213		1,153
Other assets		32,360		6,571
Total Assets	$	2,551,422	$	2,521,819

LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable, accrued expenses and other current liabilities	$	42,046	$	57,904
Current portion of operating lease liabilities		10,169		10,223
Current installments of long-term debt		127,535		127,447
Total Current Liabilities		179,750		195,574
Long-term operating lease liabilities		9,270		11,631
Long-term debt		564,203		595,229
Other liabilities		3,309		2,628
Total Liabilities		756,532		805,062

Commitments and contingencies

Equity:
Capital - 100,000,000 no par value shares authorized; 48,999,765 and 48,925,562
shares issued and outstanding		1,488,531		1,490,986
Retained earnings		306,659		226,834
		1,795,190		1,717,820
Accumulated other comprehensive loss		(300)		(1,063)
Total Equity		1,794,890		1,716,757
Total Liabilities and Equity	$	2,551,422	$	2,521,819

See notes to condensed consolidated financial statements

INTERNATIONAL SEAWAYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
(UNAUDITED)


	Three Months Ended March 31,
		2024		2023
Shipping Revenues:
Pool revenues, including $83,898 and $91,707
from companies accounted for by the equity method	$	226,282	$	259,578
Time charter revenues		31,049		13,150
Voyage charter revenues		17,070		14,402
		274,401		287,130

Operating Expenses:
Voyage expenses		3,473		3,810
Vessel expenses		63,381		58,769
Charter hire expenses		6,648		8,800
Depreciation and amortization		34,153		29,548
General and administrative		12,374		11,246
Third-party debt modification fees		—		407
Gain on disposal of vessels and other assets, net		(51)		(10,748)
Total operating expenses		119,978		101,832
Income from vessel operations		154,423		185,298
Other income		2,954		4,281
Income before interest expense and income taxes		157,377		189,579
Interest expense		(12,887)		(16,947)
Income before income taxes		144,490		172,632
Income tax benefit		—		1
Net income	$	144,490	$	172,633

Weighted Average Number of Common Shares Outstanding:
Basic		48,972,842		49,138,613
Diluted		49,377,948		49,646,331

Per Share Amounts:
Basic net income per share	$	2.95	$	3.51
Diluted net income per share	$	2.92	$	3.47

See notes to condensed consolidated financial statements

INTERNATIONAL SEAWAYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
DOLLARS IN THOUSANDS
(UNAUDITED)


	Three Months Ended March 31,
		2024		2023
Net income	$	144,490	$	172,633
Other comprehensive income/(loss), net of tax:
Net change in unrealized income/(losses) on cash flow hedges		673		(3,838)
Defined benefit pension and other postretirement benefit plans:
Net change in unrecognized prior service costs		12		(30)
Net change in unrecognized actuarial losses		78		(194)
Other comprehensive income/(loss), net of tax		763		(4,062)
Comprehensive income	$	145,253	$	168,571

See notes to condensed consolidated financial statements

INTERNATIONAL SEAWAYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
DOLLARS IN THOUSANDS
(UNAUDITED)


	Three Months Ended March 31,
		2024		2023
Cash Flows from Operating Activities:
Net income	$	144,490	$	172,633
Items included in net income not affecting cash flows:
Depreciation and amortization		34,153		29,548
Amortization of debt discount and other deferred financing costs		1,038		1,556
Deferred financing costs write-off		—		166
Stock compensation		1,691		1,900
Earnings of affiliated companies		—		20
Other – net		(250)		(823)
Items included in net income related to investing and financing activities:
Gain on disposal of vessels and other assets, net		(51)		(10,748)
Payments for drydocking		(9,971)		(12,978)
Insurance claims proceeds related to vessel operations		206		950
Changes in operating assets and liabilities:
Decrease in receivables		4,210		41,746
Decrease in deferred revenue		(5,068)		(260)
Net change in inventories, prepaid expenses and other current assets, accounts
payable, accrued expenses and other current and long-term liabilities		(14,006)		(2,888)
Net cash provided by operating activities		156,442		220,822
Cash Flows from Investing Activities:
Expenditures for vessels, vessel improvements and vessels under construction, including deposits for acquisitions		(26,420)		(66,722)
Proceeds from disposal of vessels and other property, net		—		20,021
Expenditures for other property		(701)		(524)
Investments in short-term time deposits		(75,000)		(90,000)
Proceeds from maturities of short-term time deposits		60,000		65,000
Pool working capital deposits		(782)		—
Net cash used in investing activities		(42,903)		(72,225)
Cash Flows from Financing Activities:
Repayments of debt		(19,538)		(137,449)
Proceeds from sale and leaseback financing, net of issuance and deferred financing costs		—		55,722
Payments on sale and leaseback financing and finance lease		(12,146)		(34,619)
Payments of deferred financing costs		(306)		(514)
Cash dividends paid		(64,662)		(98,313)
Cash paid to tax authority upon vesting or exercise of stock-based compensation		(4,146)		(2,619)
Net cash used in financing activities		(100,798)		(217,792)
Net increase/(decrease) in cash and cash equivalents		12,741		(69,195)
Cash and cash equivalents at beginning of year		126,760		243,744
Cash and cash equivalents at end of period	$	139,501	$	174,549

See notes to condensed consolidated financial statements

INTERNATIONAL SEAWAYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
DOLLARS IN THOUSANDS
(UNAUDITED)


			Retained		Accumulated
			Earnings /		Other
			(Accumulated		Comprehensive
	Capital		Deficit)		Income/(loss)		Total
For the three months ended
Balance at January 1, 2024	$	1,490,986	$	226,834	$	(1,063)	$	1,716,757
Net income		—		144,490		—		144,490
Other comprehensive income		—		—		763		763
Dividends declared		—		(64,665)		—		(64,665)
Forfeitures of vested restricted stock awards and exercised stock options		(4,146)		—		—		(4,146)
Compensation relating to restricted stock awards		291		—		—		291
Compensation relating to restricted stock units awards		1,301		—		—		1,301
Compensation relating to stock option awards		99		—		—		99
Balance at March 31, 2024	$	1,488,531	$	306,659	$	(300)	$	1,794,890

Balance at January 1, 2023	$	1,502,235	$	(21,447)	$	6,964	$	1,487,752
Net income		—		172,633		—		172,633
Other comprehensive loss		—		—		(4,062)		(4,062)
Dividends declared		—		(98,321)		—		(98,321)
Forfeitures of vested restricted stock awards and exercised stock options		(2,619)		—		—		(2,619)
Compensation relating to restricted stock awards		268		—		—		268
Compensation relating to restricted stock units awards		1,412		—		—		1,412
Compensation relating to stock option awards		220		—		—		220
Balance at March 31, 2023	$	1,501,516	$	52,865	$	2,902	$	1,557,283

See notes to condensed consolidated financial statements

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 1 — Basis of Presentation:

The accompanying unaudited condensed consolidated financial statements include the accounts of International Seaways, Inc. (“INSW”), a Marshall Islands corporation, and its wholly owned subsidiaries. Unless the context indicates otherwise, references to “INSW”, the “Company”, “we”, “us” or “our”, refer to International Seaways, Inc. and its subsidiaries. As of March 31, 2024, the Company’s operating fleet consisted of 73 wholly-owned or lease financed and time chartered-in oceangoing vessels, engaged primarily in the transportation of crude oil and refined petroleum products in the International Flag trade through its wholly owned subsidiaries. In addition to our operating fleet, six LR1 newbuilds are scheduled for delivery to the Company between the second half of 2025 and third quarter of 2026, bringing the total operating and newbuild fleet to 79 vessels.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and notes required by generally accepted accounting principles in the United States. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results have been included. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

The condensed consolidated balance sheet as of December 31, 2023 has been derived from the audited financial statements at that date but does not include all of the information and notes required by generally accepted accounting principles in the United States for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

All intercompany balances and transactions within INSW have been eliminated. Investments in 50% or less owned affiliated companies, in which INSW exercises significant influence, are accounted for by the equity method.

Note 2 — Significant Accounting Policies:

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 as of and for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K. The following is a summary of any changes or updates to the Company’s critical accounting policies for the current period:

Concentration of Credit Risk — The allowance for credit losses is recognized as an allowance or contra-asset and reflects our best estimate of probable losses inherent in the voyage receivables balance. Activity for allowance for credit losses is summarized as follows:


(Dollars in thousands)		Allowance for Credit Losses - Voyage Receivables
Balance at December 31, 2023	$	191
Provision for expected credit losses		47
Balance at March 31, 2024	$	238

During the three months ended March 31, 2024 and 2023, the Company did not have any individual customers who accounted for 10% or more of its revenues apart from the pools in which it participates. The pools in which the Company participates accounted in aggregate for 96% and 95% of consolidated voyage receivables at March 31, 2024 and December 31, 2023, respectively.

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Deferred finance charges — Finance charges, excluding original issue discount, incurred in the arrangement of new debt and/or amendments resulting in the modification of existing debt are deferred and amortized to interest expense on either an effective interest method or straight-line basis over the term of the related debt. Unamortized deferred finance charges of $4.3 million and $4.5 million relating to the $750 Million Facility Revolving Loan and the $160 Million Revolving Credit Facility (See Note 10, “Debt”) as of March 31, 2024 and December 31, 2023, respectively, are included in other assets in the accompanying condensed consolidated balance sheets. Unamortized deferred financing charges of $10.5 million and $11.3 million as of March 31, 2024 and December 31, 2023, respectively, relating to the Company’s outstanding debt facilities, are included in long-term debt in the consolidated balance sheets.

Interest expense relating to the amortization of deferred financing charges amounted to $0.8 million and $1.3 million for the three months ended March 31, 2024 and 2023, respectively.

Vessels construction in progress — Interest costs are capitalized to vessels during the period that vessels are under construction. Interest capitalized totaled $0.2 million and $1.7 million during the three months ended March 31, 2024 and 2023, respectively. The construction of the Company’s three newbuild dual-fuel LNG VLCCs was completed, and the vessels were delivered to the Company between March 2023 and May 2023. The Company has six LR1 newbuilds under construction that are scheduled for delivery to the Company between the second half of 2025 and third quarter of 2026.

Recently Issued Accounting Standards — The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification is the sole source of authoritative GAAP other than United States Securities and Exchange Commission (“SEC”) issued rules and regulations that apply only to SEC registrants. The FASB issues Accounting Standards Updates (“ASU”) to communicate changes to the codification.

In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures. This guidance is expected to improve financial reporting by providing additional information about a public company’s significant segment expenses and more timely and detailed segment information reporting throughout the fiscal year. This guidance requires annual and interim period disclosure of significant segment expenses that are provided to the chief operating decision maker (“CODM”) as well as interim disclosures for all reportable segments’ profit or loss. It also requires disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources. The amendments in ASU 2023-07 are effective for all public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 and will apply retrospectively to all prior periods presented in the financial statements. We are currently evaluating the impact of the new guidance on the disclosures to our consolidated financial statements.

Note 3 — Earnings per Common Share:

Basic earnings per common share is computed by dividing earnings, after the deduction of dividends and undistributed earnings allocated to participating securities, by the weighted average number of common shares outstanding during the period.

The computation of diluted earnings per share assumes the issuance of common stock for all potentially dilutive stock options and restricted stock units not classified as participating securities. Participating securities are defined by ASC 260, Earnings Per Share, as unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents and are included in the computation of earnings per share pursuant to the two-class method.

Weighted average shares of unvested restricted common stock considered to be participating securities totaled 27,897 and 48,890 for the three months ended March 31, 2024 and 2023, respectively. Such participating securities are allocated a portion of income, but not losses under the two-class method. As of March 31, 2024, there were 470,936 shares of restricted stock units and 180,703 stock options outstanding and considered to be potentially dilutive securities.

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Reconciliations of the numerator of the basic and diluted earnings per share computations are as follows:


	Three Months Ended March 31,
(Dollars in thousands)		2024		2023
Net income allocated to:
Common Stockholders	$	144,413	$	172,466
Participating securities		77		167
	$	144,490	$	172,633

For the three months ended March 31, 2024 and 2023 earnings per share calculations, there were 405,106 and 507,718 dilutive equity awards outstanding, respectively. Awards of 633,945 and 852,546 for the three months ended March 31, 2024 and 2023, respectively, were not included in the computation of diluted earnings per share because inclusion of these awards would be anti-dilutive.

Note 4 — Business and Segment Reporting:

The Company has two reportable segments: Crude Tankers and Product Carriers. Adjusted income/(loss) from vessel operations for segment purposes is defined as income/(loss) from vessel operations before general and administrative expenses, third-party debt modification fees and gain on disposal of vessels and assets, net. The accounting policies followed by the reportable segments are the same as those followed in the preparation of the Company’s condensed consolidated financial statements.

Information about the Company’s reportable segments as of and for the three months ended March 31, 2024 and 2023 follows:


	Crude		Product
(Dollars in thousands)	Tankers		Carriers		Other		Totals
Three months ended March 31, 2024:
Shipping revenues	$	126,867	$	147,534	$	—	$	274,401
Time charter equivalent revenues		123,962		146,966		—		270,928
Depreciation and amortization		20,049		14,104		—		34,153
Gain on disposal of vessels and other assets, net		(2)		(49)		—		(51)
Adjusted income from vessel operations		69,892		96,854		—		166,746
Adjusted total assets at March 31, 2024		1,508,859		802,668		—		2,311,527
Expenditures for vessels and vessel improvements		276		26,144		—		26,420
Payments for drydocking		2,103		7,868		—		9,971

Three months ended March 31, 2023:
Shipping revenues	$	132,411	$	154,719	$	—	$	287,130
Time charter equivalent revenues		129,285		154,035		—		283,320
Depreciation and amortization		17,226		12,294		28		29,548
Gain on disposal of vessels and other assets, net		—		(10,748)		—		(10,748)
Adjusted income/(loss) from vessel operations		84,541		101,690		(28)		186,203
Adjusted total assets at March 31, 2023		1,455,356		809,251		—		2,264,607
Expenditures for vessels and vessel improvements		65,728		994		—		66,722
Payments for drydocking		2,128		10,850		—		12,978

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Reconciliations of time charter equivalent (“TCE”) revenues of the segments to shipping revenues as reported in the condensed statements of operations follow:


	Three Months Ended March 31,
(Dollars in thousands)		2024		2023
Time charter equivalent revenues	$	270,928	$	283,320
Add: Voyage expenses		3,473		3,810
Shipping revenues	$	274,401	$	287,130

Consistent with general practice in the shipping industry, the Company uses time charter equivalent revenues, which represent shipping revenues less voyage expenses, as a measure to compare revenue generated from a voyage charter to revenue generated from a time charter. Time charter equivalent revenues, a non-GAAP measure, provide additional meaningful information in conjunction with shipping revenues, the most directly comparable GAAP measure, because it assists Company management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance.

Reconciliations of total adjusted income from vessel operations of the segments to income before income taxes, as reported in the condensed consolidated statements of operations follow:


	Three Months Ended March 31,
(Dollars in thousands)		2024		2023
Total adjusted income from vessel operations of all segments	$	166,746	$	186,203
General and administrative expenses		(12,374)		(11,246)
Third-party debt modification fees		—		(407)
Gain on disposal of vessels and other assets, net		51		10,748
Consolidated income from vessel operations		154,423		185,298
Other income		2,954		4,281
Interest expense		(12,887)		(16,947)
Income before income taxes	$	144,490	$	172,632

Reconciliations of total assets of the segments to amounts included in the condensed consolidated balance sheets follow:


(Dollars in thousands)	March 31, 2024		March 31, 2023
Adjusted total assets of all segments	$	2,311,527	$	2,264,607
Corporate unrestricted cash and cash equivalents		139,501		156,220
Restricted cash		—		18,329
Short-term investments		75,000		105,000
Other unallocated amounts		25,394		27,374
Consolidated total assets	$	2,551,422	$	2,571,530

Note 5 — Vessels:

Impairment of Vessels and Other Property

During the three months ended March 31, 2024, the Company gave consideration as to whether events or changes in circumstances had occurred since December 31, 2023, that could indicate that the carrying amounts of the vessels in the Company’s fleet may not be recoverable. The Company determined that no held-for-sale or held-for-use impairment indicators existed for the Company’s vessels as of March 31, 2024.

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Vessel Acquisitions and Construction Commitments

On February 23, 2024, the Company entered into agreements to acquire two 2014-built and four 2015-built MR Product Carriers for an aggregate consideration of approximately $232 million, payable 85% in cash and 15% in shares of common stock of the Company. Each of the six vessel purchases is subject to satisfaction of closing conditions customary for vessel purchases. Three of the six vessels were delivered between April and early May 2024, and delivery of the remaining three MRs is expected to be completed by the end of the second quarter of 2024. An initial purchase price deposit totaling $23.2 million was made in February 2024 and is included in other assets in the accompanying condensed consolidated balance sheet. The cash portion of the remaining purchase commitments will be funded from available liquidity.

In March 2024 the Company declared options to build two additional dual-fuel ready LNG 73,600 dwt LR1 Product Carriers at the same shipyard from which its other four newbuild LR1s were ordered. The six LR1s are scheduled for delivery between the second half of 2025 and the third quarter of 2026 for an aggregate cost of approximately $347 million. The remaining commitments on the contracts for the construction of the LR1 newbuilds as of March 31, 2024 was $335.5 million, which will be paid for through a combination of long-term financing and available liquidity.

Disposal/Sales of Vessels

On March 18, 2024, the Company entered into a memorandum of agreement for the sale of a 2009-built MR Product Carrier for net proceeds of approximately $23 million after fees and commissions. The vessel was subsequently delivered to the buyer in April 2024 and the Company recognized a gain on the sale.

During the quarter ended March 31, 2023, the Company delivered a 2008-built MR to the buyer and recognized a gain of $10.9 million.

Note 6 — Variable Interest Entities (“VIEs”):

Unconsolidated VIEs

As of March 31, 2024, all of the seven commercial pools in which the Company participates were determined to be VIEs for which the Company is not considered a primary beneficiary.

The following table presents the carrying amounts of assets and liabilities in the condensed consolidated balance sheet related to the unconsolidated VIEs as of March 31, 2024:


(Dollars in thousands)	Condensed Consolidated Balance Sheet
Pool working capital deposits	$	33,998

In accordance with accounting guidance, the Company evaluated its maximum exposure to loss related to these unconsolidated VIEs by assuming a complete loss of the Company’s investment in these VIEs. The table below compares the Company’s liability in the condensed consolidated balance sheet to the maximum exposure to loss at March 31, 2024:


(Dollars in thousands)		Condensed Consolidated Balance Sheet	Maximum Exposure to Loss
Other Liabilities	$	–	$	33,998

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

In addition, as of March 31, 2024, the Company had approximately $232.0 million of trade receivables from the pools that were determined to be a VIE. These trade receivables, which are included in voyage receivables in the accompanying condensed consolidated balance sheet, have been excluded from the above tables and the calculation of INSW’s maximum exposure to loss. The Company does not record the maximum exposure to loss as a liability because it does not believe that such a loss is probable of occurring as of March 31, 2024.

Note 7 — Fair Value of Financial Instruments, Derivatives and Fair Value Disclosures:

The estimated fair values of the Company’s financial instruments, other than derivatives that are not measured at fair value on a recurring basis, categorized based upon the fair value hierarchy, are as follows:


(Dollars in thousands)	March 31, 2024		December 31, 2023		Fair Value Level
Cash and cash equivalents	$	139,501	$	126,760		Level 1
Short-term investments ⁽¹⁾		75,000		60,000		Level 1
$750 Million Facility Term Loan ⁽²⁾		(94,581)		(113,598)		Level 2
ING Credit Facility ⁽²⁾		(20,313)		(20,833)		Level 2
Ocean Yield Lease Financing ⁽²⁾		(304,626)		(311,907)		Level 2
BoComm Lease Financing ⁽³⁾		(200,731)		(210,186)		Level 2
Toshin Lease Financing ⁽³⁾		(12,875)		(13,566)		Level 2
Hyuga Lease Financing ⁽³⁾		(12,959)		(13,643)		Level 2
Kaiyo Lease Financing ⁽³⁾		(11,785)		(12,419)		Level 2
Kaisha Lease Financing ⁽³⁾		(11,881)		(12,519)		Level 2

(1)	Short-term investments consist of time deposits with original maturities of between 91 and 180 days.

(2)	Floating rate debt – the fair value of floating rate debt has been determined using level 2 inputs and is considered to be equal to the carrying value since it bears a variable interest rate, which is reset every three months.

(3)	Fixed rate debt – the fair value of fixed rate debt has been determined using level 2 inputs by discounting the expected cash flows of the outstanding debt.

Derivatives

At March 31, 2024, the Company was party to amortizing interest rate swap agreements with major financial institutions participating in the $750 Million Facility Term Loan that effectively converts 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 interest rate swap agreements, which contain no leverage features, are designated and qualify as cash flow hedges and have a remaining aggregate notional value of $310.5 million as of March 31, 2024, covering for accounting purposes, the $94.6 million principal balance outstanding under the $750 Million Facility Term Loan and $215.9 million outstanding under the Ocean Yield Lease Financing. Also, as of March 31, 2024, approximately $0.2 million in net gains from previously terminated interest rate swaps are expected to be amortized out of accumulated other comprehensive loss to earnings over the next 12 months.

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Derivatives are recorded on a net basis by counterparty when a legal right of offset exists. The Company had the following amounts recorded on a net basis by transaction in the accompanying unaudited condensed consolidated balance sheets related to the Company’s use of derivatives as of March 31, 2024 and December 31, 2023:


(Dollars in thousands)	Current portion of derivative asset		Long-term derivative assets		Other receivables
March 31, 2024:
Derivatives designated as hedging instruments:
Interest rate swaps	$	5,049	$	2,213	$	857
Total	$	5,049	$	2,213	$	857

December 31, 2023:
Derivatives designated as hedging instruments:
Interest rate swaps	$	5,081	$	1,153	$	961
Total	$	5,081	$	1,153	$	961

The following tables present information with respect to gains and losses on derivative positions reflected in the condensed consolidated statements of operations or in the condensed consolidated statements of comprehensive income.

The effect of cash flow hedging relationships recognized in other comprehensive income excluding amounts reclassified from accumulated other comprehensive income/(loss) for the three months ended March 31, 2024 and 2023 follows:


	Three Months Ended March 31,
(Dollars in thousands)		2024		2023
Derivatives designated as hedging instruments:
Interest rate swaps	$	3,098	$	(1,454)
Total other comprehensive income/(loss)	$	3,098	$	(1,454)

The effect of the Company’s cash flow hedging relationships on the condensed consolidated statement of operations for the three months ended March 31, 2024 and 2023 follows:


	Three Months Ended March 31,
(Dollars in thousands)		2024		2023
Derivatives designated as hedging instruments:
Interest rate swaps	$	(2,071)	$	(1,782)

Discontinued hedging instruments:
Interest rate swap		(354)		(602)
Total interest expense	$	(2,425)	$	(2,384)

See Note 11, “Accumulated Other Comprehensive Income,” for disclosures relating to the impact of derivative instruments on accumulated other comprehensive income/(loss).

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The following table presents the fair values, which are pre-tax, for assets and liabilities measured on a recurring basis:


(Dollars in thousands)	March 31, 2024		December 31, 2023		Fair Value Level
Derivative Assets (interest rate swaps)	$	8,119	$	7,195		Level 2⁽¹⁾

(1)

For the interest rate swaps, fair values are derived using valuation models that utilize the income valuation approach. These valuation models take into account contract terms such as maturity, as well as other inputs such as interest rate yield curves and creditworthiness of the counterparty and the Company.

Note 8 — Debt:

Debt consists of the following:


(Dollars in thousands)	March 31, 2024		December 31, 2023
$750 Million Facility Term Loan, due 2027, net of unamortized deferred finance costs of $2,775 and $3,124	$	91,806	$	110,474
ING Credit Facility, due 2026, net of unamortized deferred finance costs of $266 and $295		20,046		20,538
Ocean Yield Lease Financing, due 2031, net of unamortized deferred finance costs of $2,528 and $2,656		302,099		309,250
BoComm Lease Financing, due 2030, net of unamortized deferred finance costs of $3,983 and $4,166		226,349		229,583
Toshin Lease Financing, due 2031, net of unamortized deferred finance costs of $287 and $302		13,561		13,903
Hyuga Lease Financing, due 2031, net of unamortized deferred finance costs of $251 and $265		13,445		13,786
Kaiyo Lease Financing, due 2030, net of unamortized deferred finance costs of $213 and $227		12,163		12,518
Kaisha Lease Financing, due 2030, net of unamortized deferred finance costs of $224 and $238		12,269		12,624
		691,738		722,676
Less current portion		(127,535)		(127,447)
Long-term portion	$	564,203	$	595,229

Capitalized terms used hereafter have the meaning given in these condensed consolidated financial statements or in the respective transaction documents referred to below, including subsequent amendments thereto.

ING Credit Facility

On April 18, 2024, the Company prepaid the outstanding principal balance of $20.3 million and terminated the ING Credit Facility.

$750 Million Credit Facility

On April 26, 2024, the Company, International Seaways Operating Corporation (the “Borrower”) and certain of their subsidiaries entered into a second amendment that amended and extended the $750 Million Credit Facility with Nordea Bank Abp, New York Branch (“Nordea”), BNP Paribas, Crédit Agricole Corporate & Investment Bank (“CA-CIB”), DNB Markets Inc., and Skandinaviska Enskilda Banken AB (PUBL) (or their respective affiliates), as mandated lead arrangers and bookrunners; ING Bank N.V., London Branch and Danish Ship Finance A/S (or their respective affiliates), as lead arrangers and National Australia Bank Limited, as co-arranger. Nordea is acting as administrative agent, collateral agent, coordinator and security trustee under the amended agreement, and CA-CIB is acting as sustainability coordinator.

Immediately prior to the closing of the second amendment, the $750 Million Facility, had a remaining term loan balance of $94.6 million and undrawn revolver capacity of $257.4 million. The amended agreement consists of a $500 million revolving credit facility

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(the “$500 Million Revolving Credit Facility”) that matures on January 31, 2030. That maturity date is subject to acceleration upon the occurrence of certain events (as described in the credit agreement). The $500 Million Revolving Credit Facility is secured by a first lien on certain of the Company’s vessels (the “Collateral Vessels”), along with their earnings, insurances and certain other assets, as well as by liens on certain additional assets of the Borrower. Under the terms of the $500 Million Revolving Credit Facility capacity is reduced on a quarterly basis by approximately $12.8 million, based on a 20-year age-adjusted profile of the Collateral Vessels. The $500 Million Revolving Credit Facility bears an interest rate based on term SOFR plus the Applicable Margin (each as defined in the credit agreement). The Applicable Margin is 1.85% and is subject to similar sustainability-linked features as included in the $750 Million Credit Facility, which could impact the margin by five basis points, that are aimed at reducing the carbon footprint, target expenditures toward energy efficiency improvements and maintaining a safety record above the industry average. At the time of closing, $94.6 million was drawn on the $500 Million Revolving Credit Facility leaving an undrawn revolver capacity of $405.4 million on this facility.

The $500 Million Revolving Credit Facility also contains customary representations, warranties, restrictions and covenants applicable to the Company, the Borrower and the subsidiary guarantors (and in certain cases, other subsidiaries), including financial covenants that are consistent with existing financial covenants in the $750 Million Credit Facility and require the Company (i) to maintain a minimum liquidity level of the greater of $50 million and 5% of the Company’s Consolidated Indebtedness; (ii) to ensure the Company’s and its consolidated subsidiaries’ Maximum Leverage Ratio will not exceed 0.60 to 1.00 at any time; (iii) to ensure that Current Assets exceeds Current Liabilities (which is defined to exclude the current potion of Consolidated Indebtedness); and (iv) to ensure the aggregate Fair Market Value of the Collateral Vessels will not be less than 135% of the aggregate outstanding principal amount of the $500 Million Revolving Credit Facility.

Debt Covenants

The Company was in compliance with the financial and non-financial covenants under all of its financing arrangements as of March 31, 2024.

Interest Expense

Total interest expense before the impact of capitalized interest, including amortization of issuance and deferred financing costs, commitment, administrative and other fees for all of the Company’s debt facilities for the three months ended March 31, 2024 and 2023 was $12.8 million and $18.4 million, respectively. Interest paid for the Company’s debt facilities for the three months ended March 31, 2024 was $12.1 million. Interest paid for the Company’s debt facilities for the three months ended March 31, 2023 was $19.1 million including $1.3 million of the pre-delivery expenses paid for the first and second dual-fuel LNG VLCC newbuilds.

Note 9 — Taxes:

As of March 31, 2024, the Company believes it will qualify for an exemption from U.S. federal income taxes under Section 883 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) and U.S. Treasury Department regulations for the 2024 calendar year, so long as less than 50 percent of the total value of the Company’s stock is held by one or more shareholders who own 5% or more of the Company’s stock for more than half of the days of 2024.

The Company reviews its provisions for uncertain tax positions relating to freight taxes in various tax jurisdictions 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. There were no changes in such reserve recorded during the three months ended March 31, 2024 and 2023.

Additionally, a number of countries, including some in which certain of the Company’s subsidiaries are domiciled, have drafted or are actively considering drafting legislation to implement the Organization for Economic Cooperation and Development's (“OECD”) international tax framework, including the Pillar Two Model Rules. These model rules call for a minimum global tax of 15% on large

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

multinational enterprises with possible application from January 1, 2024 or later, depending on implementation by the individual countries in which the Company is domiciled. As currently enacted, the Pillar Two Model Rules have no impact on the Company’s consolidated financial statements in 2024, however, the Company is monitoring these developments and evaluating the necessary steps it can take to minimize the impact, if any, to the Company’s consolidated financial statements and operations going forward.

Note 10 — Capital Stock and Stock Compensation:

The Company accounts for stock-based compensation expense in accordance with the fair value method required by ASC 718, Compensation – Stock Compensation. Such fair value method requires share-based payment transactions to be measured according to the fair value of the equity instruments issued.

Director Compensation – Restricted Common Stock

On February 19, 2024, Mr. Nadim Qureshi resigned from the Board of Directors of the Company. Mr. Qureshi’s resignation was not the result of any disagreement with the Company or the Board on any matter relating to the Company’s operations, policies or practices. In connection with his resignation, the Board approved the accelerated vesting of the 2,635 restricted shares of INSW common stock previously granted to Mr. Qureshi in June 2023 (valued at approximately $0.1 million) and the Company did not seek reimbursement of any cash director fees paid to Mr. Qureshi in advance for the first quarter of 2024. In consideration of this action, Mr. Qureshi entered into a one-year agreement not to compete with the Company’s crude and product tanker operations.

Management Compensation

Stock Options

There were no stock options granted during the three months ended March 31, 2024 and 2023. A total of 58,893 and 12,940 stock options were exercised during the three months ended March 31, 2024 and 2023, respectively, by certain senior officers of the Company at an average exercise price of $21.76 and $22.54 per share, respectively.

Restricted Stock Units

During the three months ended March 31, 2024, the Company granted 48,078 time-based restricted stock units (“RSUs”) to certain of its senior officers. The weighted average grant date fair value of these awards was $52.57 per RSU. Each RSU represents a contingent right to receive one share of INSW common stock upon vesting. All of the RSUs awarded will vest in equal installments on each of the first three anniversaries of the grant date.

During the three months ended March 31, 2024, the Company also granted 48,080 performance-based RSUs to certain of its senior officers. Each performance stock unit represents a contingent right to receive RSUs based upon the covered employees being continuously employed through the end of the period over which the performance goals are measured and shall vest as follows: (i) one-half of the target RSUs shall vest on December 31, 2026, subject to INSW’s return on invested capital (“ROIC”) performance in the three-year ROIC performance period relative to a target rate (the “ROIC Target”) set forth in the award agreements; and (ii) one-half of the target RSUs shall vest on December 31, 2026, subject to INSW’s three-year total shareholder return (“TSR”) performance relative to that of a performance peer group over a three-year performance period (“TSR Target”). Vesting is subject in each case to the Human Resources and Compensation Committee of the Company’s Board of Directors’ certification of achievement of the performance measures and targets no later than March 15, 2027. The weighted average grant date fair value of the awards with performance conditions was determined to be $52.57 per RSU. The weighted average grant date fair value of the TSR based performance awards which have a market condition was estimated using a Monte Carlo probability model and determined to be $41.08 per RSU.

Dividends

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

On May 7, 2024, 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 $1.63 per share of common stock. Both dividends will be paid on June 26, 2024 to stockholders of record as of June 12, 2024.

Share Repurchases

No shares were acquired under the Company’s stock repurchase program during the three months ended March 31, 2024 and 2023.

In connection with the settlement of vested restricted stock units and the exercise of stock options, the Company repurchased 102,523 and 59,292 shares of common stock during the three months ended March 31, 2024 and 2023, respectively, at an average cost of $52.94 and $55.16, respectively, per share (based on the market prices on the dates of vesting or exercise) from employees and certain members of management to cover withholding taxes.

Note 11 — Accumulated Other Comprehensive Income:

The components of accumulated other comprehensive loss, net of related taxes, in the condensed consolidated balance sheets follow:


(Dollars in thousands)	March 31, 2024		December 31, 2023
Unrealized gains on derivative instruments	$	10,022	$	9,349
Items not yet recognized as a component of net periodic benefit cost (pension plans)		(10,322)		(10,412)
	$	(300)	$	(1,063)

The changes in the balances of each component of accumulated other comprehensive income/(loss), net of related taxes, during the three months ended March 31, 2024 and 2023 follow:


(Dollars in thousands)	Unrealized gains on cash flow hedges		Items not yet recognized as a component of net periodic benefit cost		Total
Balance as of December 31, 2023	$	9,349	$	(10,412)	$	(1,063)
Current period change, excluding amounts reclassified
from accumulated other comprehensive loss		3,098		90		3,188
Amounts reclassified from accumulated other comprehensive loss		(2,425)		—		(2,425)
Balance as of March 31, 2024	$	10,022	$	(10,322)	$	(300)

Balance as of December 31, 2022	$	16,912		(9,948)		6,964
Current period change, excluding amounts reclassified
from accumulated other comprehensive income		(1,454)		(224)		(1,678)
Amounts reclassified from accumulated other comprehensive income		(2,384)		—		(2,384)
Balance as of March 31, 2023	$	13,074	$	(10,172)	$	2,902

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Amounts reclassified out of each component of accumulated other comprehensive income/(loss) follow:


	Three Months Ended March 31,
(Dollars in thousands)		2024		2023	Statement of Operations Line Item
Reclassifications of gains on cash flow hedges:
Interest rate swaps entered into by the Company's subsidiaries		(2,071)		(1,782)	Interest expense

Reclassifications of losses on discontinued hedging instruments
Interest rate swap entered into by the Company's subsidiaries		(354)		(602)	Interest expense
Total before and net of tax	$	(2,425)	$	(2,384)

At March 31, 2024, the Company expects that it will reclassify $5.3 million (gross and net of tax) of net gain on derivative instruments from accumulated other comprehensive income to earnings during the next twelve months attributable to interest rate swaps held by the Company.

See Note 7, “Fair Value of Financial Instruments, Derivatives and Fair Value Disclosures,” for additional disclosures relating to derivative instruments.

Note 12 — Revenue:

Revenue Recognition

The majority of the Company’s contracts for pool revenues, time charter revenues, and voyage charter revenues are accounted for as lease revenue under ASC 842. The Company’s contracts with pools are short term which are cancellable with up to 90 days’ notice. As of March 31, 2024, the Company is a party to time charter out contracts with customers on three VLCCs, two Suezmaxes, one Aframax, and six MRs, with expiry dates ranging from August 2024 to April 2030. The Company’s contracts with customers for voyage charters are short term and vary in length based upon the duration of each voyage. Lease revenue for non-variable lease payments is recognized over the lease term on a straight-line basis and lease revenue for variable lease payments (e.g., demurrage) is recognized in the period in which the changes in facts and circumstances on which the variable lease payments are based occur.

Lightering services provided by the Company’s Crude Tanker Lightering Business, and voyage charter contracts that do not meet the definition of a lease are accounted for as service revenues under ASC 606. In accordance with ASC 606, revenue is recognized when a customer obtains control of or consumes promised services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services.

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The following tables present the Company’s revenues from leases accounted for under ASC 842 and revenues from services accounted for under ASC 606 for the three months ended March 31, 2024 and 2023:


	Crude		Product
(Dollars in thousands)	Tankers		Carriers		Totals
Three months ended March 31, 2024:
Revenues from leases
Pool revenues	$	90,046	$	136,236	$	226,282
Time charter revenues		20,804		10,245		31,049
Voyage charter revenues from non-variable lease payments		948		1,053		2,001
Revenues from services
Voyage charter revenues from lightering services		15,069		—		15,069
Total shipping revenues	$	126,867	$	147,534	$	274,401

Three months ended March 31, 2023:
Revenues from leases
Pool revenues	$	108,799	$	150,779	$	259,578
Time charter revenues		9,686		3,464		13,150
Voyage charter revenues from non-variable lease payments		2,238		326		2,564
Voyage charter revenues from variable lease payments		–		150		150
Revenues from services
Voyage charter revenues from lightering services		11,688		—		11,688
Total shipping revenues	$	132,411	$	154,719	$	287,130

Contract Balances

The following table provides information about receivables, contract assets and contract liabilities from contracts with customers, and significant changes in contract assets and liabilities balances, associated with revenue from services accounted for under ASC 606. Balances related to revenues from leases accounted for under ASC 842 are excluded from the table below.


(Dollars in thousands)	Voyage receivables - Billed receivables		Contract assets (Unbilled voyage receivables)		Contract liabilities (Deferred revenues and off hires)
Opening balance as of January 1, 2024	$	6,512	$	1,029	$	—
Closing balance as of March 31, 2024		6,583		690		—

We receive payments from customers based on the schedule established in our contracts. Contract assets relate to our conditional right to consideration for our completed performance obligations under contracts and decrease when the right to consideration becomes unconditional or payments are received. Contract liabilities include payments received in advance of performance under contracts and are recognized when performance under the respective contract has been completed. Deferred revenues allocated to unsatisfied performance obligations will be recognized over time as the services are performed.

Performance Obligations

All of the Company’s performance obligations are generally transferred to customers over time. The expected duration of services is less than one year. There were no material adjustments in revenues from performance obligations satisfied in previous periods recognized during the three months ended March 31, 2024 and 2023.

Costs to Obtain or Fulfill a Contract

As of March 31, 2024, there were no unamortized deferred costs of obtaining or fulfilling a contract.

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

European Union’s Emissions Trading System

Commencing January 1, 2024, the European Union’s Emissions Trading System (“EU ETS”) was extended to cover Carbon dioxide (“CO₂”) emissions from ships over 5,000 gross tons entering EU ports. The EU ETS covers (a) 50% of emissions from voyages either starting in or ending in an EU port, and (b) 100% of emissions from voyages between two EU ports or emissions generated while a ship is within an EU port.

Shipping companies will have to surrender EU ETS emissions allowances (“EUA”) for each ton of reported CO₂ emissions in the scope of the EU ETS. There is a phase-in period for the regulations, as allowances will have to be submitted for 40% of 2024 emissions, 70% of 2025 emissions and 100% of emissions for 2026 and subsequent years. Beginning in 2026, the scope of the EU ETS will also be expanded to include Methane (“CH₄”) and Nitrus oxide (“N₂O”).

EUAs are valued based upon a market approach utilizing prices published on an EUA market index. The value of the EUAs to be provided to the Company pursuant to the terms of its agreements with the charterers of its vessels and the commercial pools in which it participates is included in shipping revenues in the condensed consolidated statements of operations. The value of the EUA obligations incurred by the Company under the EU ETS while its vessels are on-hire is included in voyage expenses, or in vessel expenses while its vessels are off-hire, in the condensed consolidated statements of operations.

EUAs held by the Company are intended to be used to settle its EUA obligations and are accounted for as intangible assets. The Company did not hold any EUAs as of March 31, 2024. EUAs relating to 2024 emissions are required to be surrendered to the EU authorities in September 2025.

The following table presents the components of the non-cash revenues and expenses recognized for EUAs earned and incurred during the three months ended March 31, 2024:


(Dollars in thousands)
Pool revenues	$	388
Time charter revenues		131
Total shipping revenues	$	519

Voyage expenses	$	519

The value of EUAs due to the Company from its charterers or commercial pools in which it participates, and the value of the EUAs the Company is obligated to surrender to the EU authorities is $0.5 million as of March 31, 2024 and is included in other receivables and other liabilities, respectively, in the condensed consolidated balance sheet.

Note 13 — Leases:

As permitted under ASC 842, the Company has elected not to apply the provisions of ASC 842 to short term leases, which include: (i) tanker vessels chartered-in where the duration of the charter was one year or less at inception; (ii) workboats employed in the Crude Tankers Lightering business which have a lease term of 12-months or less; and (iii) short term leases of office and other space.

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Contracts under which the Company is a Lessee

The Company currently has two major categories of leases – chartered-in vessel and leased office and other space. The expenses recognized during the three months ended March 31, 2024 and 2023 for the lease component of these leases are as follows:


	Three Months Ended March 31,
(Dollars in thousands)		2024		2023
Operating lease cost
Vessel assets
Charter hire expenses	$	2,367	$	1,067

Finance lease cost
Vessel assets
Amortization of right-of-use assets		—		715
Interest on lease liabilities		—		121

Office and other space
General and administrative		226		228
Voyage expenses		45		45

Short-term lease cost
Vessel assets⁽¹⁾
Charter hire expenses		1,365		4,269
Total lease cost	$	4,003	$	6,445

(1)

Excludes vessels spot chartered-in under operating leases and employed in the Crude Tankers Lightering business for periods of less than one month each, totaling $0.7 million and $0.1 million for the three months ended March 31, 2024 and 2023, respectively, including both lease and non-lease components.

Supplemental cash flow information related to leases was as follows:


	Three Months Ended March 31,
(Dollars in thousands)		2024		2023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used for operating leases	$	264	$	937
Finance cash flows used for finance leases		—		23,955

Supplemental balance sheet information related to leases was as follows:


(Dollars in thousands)	March 31, 2024		December 31, 2023
Operating lease right-of-use assets	$	17,195	$	20,391

Current portion of operating lease liabilities	$	(10,169)	$	(10,223)
Long-term operating lease liabilities		(9,270)		(11,631)
Total operating and finance lease liabilities	$	(19,439)	$	(21,854)

Weighted average remaining lease term - operating leases		4.47 years		4.42 years
Weighted average discount rate - operating leases		5.81%		5.90%

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. Charters-in of vessel assets:

As of March 31, 2024, the Company has a commitment to time charter-in one LR1 through to June 2025. The minimum lease liabilities and related number of operating days under this operating lease as of March 31, 2024 are as follows:


(Dollars in thousands)	Amount		Operating Days
2024	$	7,256	275
2025		4,301	163
Total lease payments (lease component only)		11,557	438
less imputed interest		(431)
Total operating lease liabilities	$	11,126

2. Office and other space:

The Company has operating leases for offices and a lightering workboat dock space. These leases have expiry dates ranging from December 2024 to May 2033. The lease for the workboat dock space contains renewal options executable by the Company for periods through December 2027. We have determined that the options through December 2024 are reasonably certain to be executed by the Company, and accordingly the options are included in the lease liability and right of use asset calculations for such lease.

Payments of lease liabilities for office and other space as of March 31, 2024 are as follows:


(Dollars in thousands)		Amount
2024	$	952
2025		1,093
2026		1,113
2027		1,077
2028		1,077
Thereafter		4,754
Total lease payments		10,066
less imputed interest		(1,753)
Total operating lease liabilities	$	8,313

Contracts under which the Company is a Lessor

See Note 12, “Revenue,” for discussion on the Company’s revenues from operating leases accounted for under ASC 842.

The future minimum contracted revenues, before the deduction of brokerage commissions, expected to be received on non-cancelable time charters for three VLCCs, two Suezmaxes, one Aframax, and six MRs, and the related revenue days as of March 31, 2204 are as follows:


(Dollars in thousands)	Amount		Revenue Days
2024	$	85,310	3,158
2025		82,414	3,017
2026		47,856	1,604
2027		33,945	1,095
2028		34,038	1,098
Thereafter		41,013	1,323
Future minimum revenues	$	324,576	11,295

INTERNATIONAL SEAWAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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 newbuild dual-fuel LNG VLCCs. Revenues from a time charter are not generally received when a vessel is off-hire, including time required for normal periodic maintenance of the vessel. 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.

In April 2024, the Company entered into non-cancelable time charter agreements with durations ranging from 32 to 34 months for two 2009-built MRs and one 2014-built LR2. The future minimum contracted revenues, before the deduction of brokerage commissions, expected to be received under these agreements is approximately $86.0 million. All three vessels are expected to be delivered to their charterers before the end of the third quarter of 2024, after the completion of their scheduled drydocks.

Note 14 — Contingencies:

INSW’s policy for recording legal costs related to contingencies is to expense such legal costs as incurred.

Multi-Employer Plans

The Merchant Navy Officers Pension Fund (“MNOPF”) is a multi-employer defined benefit pension plan covering British crew members that served as officers on board INSW’s vessels (as well as vessels of other owners). The trustees of the plan have indicated that, under the terms of the High Court ruling in 2005, which established the liability of past employers to fund the deficit on the Post 1978 section of MNOPF, calls for further contributions may be required if additional actuarial deficits arise or if other employers liable for contributions are not able to pay their share in the future. As the amount of any such assessment cannot be reasonably estimated, no reserves have been recorded for this contingency in INSW’s consolidated financial statements as of March 31, 2024. The MNOPF annual actuarial funding report as of March 31, 2023, showed its funded status as being in deficit by approximately £11 million, but at March 31, 2024, no additional employer contributions have been sought or assessed. The next full actuarial valuation will be as of March 31, 2024.

The Merchant Navy Ratings Pension Fund (“MNRPF”) is a multi-employer defined benefit pension plan covering British crew members that served as ratings (seamen) on board INSW’s vessels (as well as vessels of other owners) more than 20 years ago. Based on a High Court ruling in 2015, the Trustees of the MNRPF levied assessments to recover the significant deficit in the plan from participating employers. Participating employers include current employers, historic employers that have made voluntary contributions, and historic employers such as INSW that have made no deficit contributions. Calls for contributions may be required if additional actuarial deficits arise or if other employers liable for contributions are unable to pay their share in the future. A reserve of $0.3 million has been recorded in INSW’s consolidated financial statements as of March 31, 2024, based on the Trustees of the MNRPF’s estimated calculation of INSW’s share of the March 31, 2023 deficit valuation, which is expected to be finalized by June 30, 2024.

Spin-Off Related Agreements

On November 30, 2016, INSW was spun off from OSG as a separate publicly traded company. In connection with the spin-off, INSW and OSG entered into several agreements, including a separation and distribution agreement, an employee matters agreement and a transition services agreement. While most of the obligations under those agreements were subsequently fulfilled, certain provisions (including in particular mutual indemnification provisions under the separation and distribution agreement and the employee matters agreement) continue in force.

Legal Proceedings Arising in the Ordinary Course of Business

The Company is a party, as plaintiff or defendant, to various suits in the ordinary course of business for monetary relief arising principally from personal injuries, wrongful death, collision or other casualty and to claims arising under charter parties and other

INTERNATIONAL SEAWAYS, INC.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. Such forward-looking statements represent the Company’s reasonable expectation with respect to future events or circumstances based on various factors and are subject to various risks and uncertainties and assumptions relating to the Company’s operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Accordingly, there are or will be important factors, many of which are beyond the control of the Company, that could cause the Company’s actual results to differ materially from those indicated in these statements. Undue reliance should not be placed on any forward-looking statements and consideration should be given to the following factors when reviewing any such statement. Such factors include, but are not limited to:

●

the highly cyclical nature of INSW’s industry;

●

fluctuations in the market value of vessels;

●

declines in charter rates, including spot charter rates or other market deterioration;

●

an increase in the supply of vessels without a commensurate increase in demand;

●

the impact of adverse weather and natural disasters, including the continuing drought in Panama, reducing water levels in the Panama Canal and thereby decreasing the daily number of vessels permitted to transit the canal, resulting in delays crossing the canal or extending their voyages by going around Cape Horn;

●

the adequacy of INSW’s insurance to cover its losses, including in connection with maritime accidents or spill events;

●

constraints on capital availability;

●

changing economic, political and governmental conditions in the United States and/or abroad and general conditions in the oil and natural gas industry;

●

the impact of changes in fuel prices;

●

acts of piracy on ocean-going vessels;

●

terrorist attacks and international hostilities and instability, including attacks against merchant vessels in the Red Sea and the Gulf of Aden by Iran-backed Houthi militants based in Yemen;

●

the war between Russia and Ukraine could adversely affect INSW’s business;

●

the impact of public health threats and outbreaks of other highly communicable diseases, including COVID-19;

●

the effect of the Company’s indebtedness on its ability to finance operations, pursue desirable business opportunities and successfully run its business in the future;

●

an event occurs that causes the rights issued under the A&R Rights Agreement adopted by the Company on April 11, 2023 to become exercisable;

●

the Company’s ability to generate sufficient cash to service its indebtedness and to comply with debt covenants;

●

the Company’s ability to make capital expenditures to expand the number of vessels in its fleet, and to maintain all of its vessels and to comply with existing and new regulatory standards;

●

the availability and cost of third-party service providers for technical and commercial management of the Company’s fleet;

●

the Company’s ability to renew its time charters when they expire or to enter into new time charters;

●

termination or change in the nature of the Company’s relationship with any of the commercial pools in which it participates and the ability of such commercial pools to pursue a profitable chartering strategy;

●

competition within the Company’s industry and INSW’s ability to compete effectively for charters with companies with greater resources;

●

the loss of a large customer or significant business relationship;

●

the Company’s ability to realize benefits from its past acquisitions or acquisitions or other strategic transactions it may make in the future;

●

increasing operating costs and capital expenses as the Company’s vessels age, including increases due to limited shipbuilder warranties or the consolidation of suppliers;

●

the Company’s ability to replace its operating leases on favorable terms, or at all;

●

changes in credit risk with respect to the Company’s counterparties on contracts;

INTERNATIONAL SEAWAYS, INC.

●

Critical Accounting Estimates and Policies. This section identifies any updates to those accounting policies that are considered important to our results of operations and financial condition, require significant judgment and involve significant management estimates.

●

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.

This Quarterly Report on Form 10-Q includes industry data and forecasts that we have prepared based, in part, on information obtained from industry publications and surveys. Third-party industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. In addition, certain statements regarding our market position in this report are based on information derived from internal market studies and research reports. Unless we state otherwise, statements about the Company’s relative competitive position in this report are based on our management’s beliefs, internal studies and management’s knowledge of industry trends.

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 both the three months ended March 31, 2024 and 2023, we derived 54% of our TCE revenues from our Product Carriers segment. Revenues from our Crude Tankers segment constituted the balance of our TCE revenues in the 2024 and 2023 periods.

As of March 31, 2024, the Company’s operating fleet consisted of 73 wholly-owned or lease financed and time chartered-in vessels aggregating 8.8 million deadweight tons (“dwt”). In addition to our operating fleet of 73 vessels, six LR1 newbuilds are scheduled for delivery to the Company between the second half of 2025 and third quarter of 2026, bringing the total operating and newbuild fleet to 79 vessels. Our fleet includes VLCC, Suezmax and Aframax crude tankers and LR2, LR1 and MR product carriers.

The Company’s revenues are highly sensitive to 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. 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 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 the state of the global economy, levels of U.S. domestic and international production and OPEC exports. The number of vessels available to transport cargo is affected by newbuilding deliveries and by the removal of existing vessels from service, principally through storage, recycling or conversions. 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. In order to take advantage of market conditions and optimize economic performance, management employs all of the Company’s LR1 product carriers, which currently participate in the Panamax International Pool, in the transportation of crude oil cargoes.

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 89% of our total TCE revenues in the spot market for the

INTERNATIONAL SEAWAYS, INC.

Operations and Oil Tanker Markets:

The International Energy Agency (“IEA”) estimates global oil consumption for the first quarter of 2024 at 102.0 million barrels per day (“b/d”), up 1.6% from the same quarter in 2023. The estimate for global oil consumption for 2024 is 103.2 million b/d, an increase of 1.2% over the 2023 estimate of 102.0 million b/d. OECD demand in 2024 is estimated to decrease 0.2% to 45.7 million b/d, while non-OECD demand is estimated to increase by 2.3% to 57.5 million b/d.

Global oil production in the first quarter of 2024 was 101.3 million b/d, a decrease of 1.0 million b/d from the first quarter of 2023. OPEC crude oil production averaged 26.5 million b/d in the first quarter of 2024, a decrease of 0.2 million b/d from the fourth quarter of 2023, and a decrease of 2.3 million b/d from the first quarter of 2023. Non-OPEC production increased by 1.2 million b/d to 69.3 million b/d in the first quarter of 2024 compared with the first quarter of 2023. Oil production in the U.S. in the first quarter of 2024 decreased by 5.2% to 12.5 million b/d compared to the fourth quarter of 2023 and by 0.3% from the first quarter of 2023.

U.S. refinery throughput increased by 0.1 million b/d to 15.9 million b/d in the first quarter of 2024 compared with the fourth quarter of 2023. U.S. crude oil imports in the first quarter of 2024 increased by 0.4 million b/d to 6.6 million b/d compared with the first quarter of 2023, with imports from OPEC countries decreasing by 0.1 million b/d and imports from non-OPEC countries increasing by 0.5 million b/d.

China’s crude oil imports increased 0.7% in the first quarter of 2024 from the first quarter of 2023, although imports in March 2024, at 11.55 million b/d, were down 6.2% from the previous March 2023 levels.

Total OECD commercial inventories ended the first quarter of 2024 down 41 million barrels of crude and 39 million barrels of products (3.0% and 2.7%, respectively), compared with the first quarter of 2023.

During the first quarter of 2024, the tanker fleet of vessels over 10,000 dwt increased, net of vessels recycled, by 1.9 million dwt as the crude fleet increased by 1.2 million dwt, all in the Aframax fleet. The product carrier fleet increased by 0.6 million dwt, with MRs growing 0.4 million dwt. Year-over-year, the size of the tanker fleet increased by 9.3 million dwt with the VLCCs, Suezmaxes, Aframaxes, and MRs increasing by 3.3 million dwt, 0.5 million dwt, 3.4 million dwt, and 2.1 million dwt, respectively. The LR1/Panamax fleet remained unchanged.

During the first quarter of 2024, the tanker orderbook increased by 11.9 million dwt overall compared with the fourth quarter of 2023. The crude tanker orderbook increased by 10.5 million dwt. The VLCC orderbook increased by 7.1 million dwt, while the Suezmax and Aframax orderbooks increased by 3.1 million dwt and 0.2 million dwt respectively. The product carrier orderbook increased by 1.4 million dwt, with increases in the LR1 and MR sectors of 0.2 million dwt and 1.3 million dwt respectively. Year-over-year, the total tanker orderbook increased by 33.2 million dwt, with increases in VLCC, Suezmaxes, Aframaxes, Panamaxes and LR1s of 8.8 million dwt, 10.5 million dwt, 6.3 million dwt, 2.2 million dwt and 5.3 million dwt, respectively.

Crude tanker rates remained strong, albeit at similar levels as in the fourth quarter of 2023, remaining significantly over 10-year average rates and cash breakeven levels, reflecting the continuing impact of the disruptions in trade flows on tanker demand. Clean product tanker rates strengthened during the quarter. Subsequent to the end of the first quarter of 2024, rates have softened somewhat due to reduced Chinese imports of crude oil and reduced exports of clean products from the U.S. Gulf.

Update on 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. For a description of all of the Company’s material accounting policies, see Note 3, “Summary of Significant Accounting Policies,” to the Company’s consolidated financial statements as of and for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K. See Note 2, “Significant Accounting Policies,” to the accompanying condensed consolidated financial statements for any changes or updates to the Company’s critical accounting policies for the current period.

INTERNATIONAL SEAWAYS, INC.

Crude Tankers


	Three Months Ended March 31,
(Dollars in thousands, except daily rate amounts)		2024		2023
TCE revenues	$	123,962	$	129,285
Vessel expenses		(30,513)		(25,028)
Charter hire expenses		(3,508)		(2,490)
Depreciation and amortization		(20,049)		(17,226)
Adjusted income from vessel operations ^(a)	$	69,892	$	84,541
Average daily TCE rate	$	46,991	$	54,390
Average number of owned vessels ^(b)		21.0		18.0
Average number of vessels chartered-in		9.1		9.3
Number of revenue days ^(c)		2,638		2,377
Number of ship-operating days: ^(d)
Owned vessels		1,911		1,621
Vessels bareboat chartered-in under leases ^(e)		819		833
Vessels spot chartered-in under leases ^(f)		7		—

(a)	Adjusted income from vessel operations by segment is before general and administrative expenses, third-party debt modification fees and gain on disposal of vessels and other property, net.

(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 VLCCs and Aframaxes that secured lease financing arrangements during the periods presented. Between March and July 2023 the Company purchased the three remaining Aframaxes that it had been bareboat chartering-in under the purchase options contained in such charters, and accordingly, such vessels are not included in this category for the three months ended March 31, 2024.

(f)	The Company’s Crude Tankers Lightering business spot chartered-in one vessel under a lease during the three months ended March 31, 2024 for a full service lightering job.

INTERNATIONAL SEAWAYS, INC.

The following table provides a breakdown of TCE rates achieved for the three months ended March 31, 2024 and 2023, between spot and fixed earnings and the related revenue days. The information in this table 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 $1,232 and $1,266 per day for the three months ended March 31, 2024 and 2023, 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.


	2024				2023
	Spot Earnings		Fixed Earnings		Spot Earnings		Fixed Earnings
Three Months Ended March 31,
VLCC:
Average rate	$	44,736	$	40,917	$	46,371	$	48,118
Revenue days		863		273		780		112
Suezmax:
Average rate	$	44,666	$	30,987	$	58,191	$	31,402
Revenue days		998		183		996		131
Aframax⁽¹⁾:
Average rate	$	40,913	$	38,500	$	50,756	$	—
Revenue days		222		91		330		—

(1)	During the three months ended March 31, 2023, one of the Company’s Aframaxes was employed on a transitional voyage in the spot market outside of its ordinary course operations in the Dakota Tankers’ Aframax Pool. Such transitional voyage is excluded from the table above.

During the first quarter of 2024, TCE revenues for the Crude Tankers segment decreased by $5.3 million, or 4%, to $124.0 million from $129.3 million in the first quarter of 2023. Such decrease principally resulted from an aggregate rates-based decrease in the Suezmax, VLCC and Aframax fleets of $20.5 million due to lower average daily blended rates in these sectors. This decrease was offset by (i) a $11.2 million days-based increase in the VLCC fleet, which reflected the delivery of three dual-fuel LNG VLCC newbuilds between March 2023 and May 2023, and (ii) a $3.4 million increase in the Crude Tankers Lightering business.

Vessel expenses increased by $5.5 million to $30.5 million in the first quarter of 2024 from $25.0 million in the first quarter of 2023. Such increase principally reflects the impact of the VLCC newbuild deliveries described above. Charter hire expenses increased by $1.0 million quarter-over-quarter due to increased charter hire expense in the Crude Tankers Lightering business, which primarily reflects charter hire incurred in conjunction with a full-service lightering job during the current quarter and an increased daily rate on one of the workboats being chartered-in by the Company. Depreciation and amortization increased by $2.8 million to $20.0 million in the current quarter from $17.2 million in the first quarter of 2023 principally as a result of the commencement of depreciation on the Company’s three dual-fuel LNG VLCC newbuilds.

Excluding depreciation and amortization and general and administrative expenses, operating income for the Crude Tankers Lightering business was $7.8 million for the first quarter of 2024 compared with $6.0 million for the first quarter of 2023. The increase reflects (i) higher average rates earned per lightering operation in the first quarter of 2024 compared with the first quarter of 2023 and (ii) increased activity levels period-over-period, with 128 service support only lighterings and one full-service lightering job (which was completed in April 2024) being performed during the three months ended March 31, 2024 compared to the 122 service support only lighterings that were performed during the three months ended March 31, 2023.

INTERNATIONAL SEAWAYS, INC.

Product Carriers


	Three Months Ended March 31,
(Dollars in thousands, except daily rate amounts)		2024		2023
TCE revenues	$	146,966	$	154,035
Vessel expenses		(32,868)		(33,741)
Charter hire expenses		(3,140)		(6,310)
Depreciation and amortization		(14,104)		(12,294)
Adjusted income from vessel operations	$	96,854	$	101,690
Average daily TCE rate	$	39,807	$	37,726
Average number of owned vessels		38.0		39.8
Average number of vessels chartered-in		5.0		7.9
Number of revenue days		3,692		4,083
Number of ship-operating days:
Owned vessels		3,458		3,582
Vessels bareboat chartered-in under leases ^(a)		364		450
Vessels time chartered-in under leases		91		264

(a)	Represents MRs that secured lease financing arrangements during the three months ended March 31, 2024 and an LR2 and MRs that secured lease financing arrangements during the three months ended March 31, 2023.

The following table provides a breakdown of TCE rates achieved for the three months ended March 31, 2024 and 2023, between spot and fixed earnings and the related revenue days. The information in this table 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 $898 and $787 per day for the three months ended March 31, 2024 and 2023, 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.


	2024				2023
	Spot Earnings		Fixed Earnings		Spot Earnings		Fixed Earnings
Three Months Ended March 31,
LR2:
Average rate	$	51,027	$	—	$	—	$	19,108
Revenue days		91		—		—		90
LR1⁽¹⁾:
Average rate	$	66,310	$	—	$	70,838	$	—
Revenue days		571		—		800		—
MR⁽²⁾:
Average rate	$	37,969	$	21,696	$	31,468	$	18,434
Revenue days		2,546		465		3,087		90

(1)

In order to take advantage of market conditions and optimize economic performance, during the 2024 and 2023 periods, management employed all of the Company’s LR1 product carriers, which operate in the Panamax International pool, exclusively in the transportation of crude oil cargoes. During the three months ended March 31, 2024, one LR1 was employed on a transitional voyage in the spot market outside of its ordinary course operations in the Panamax International pool. Such transitional voyage is excluded from the table above.

(2)	During the three months ended March 31, 2023 one MR was employed on a transitional voyage in the spot market outside of its ordinary course operations in Norden’s MR Pool due to a change in technical management. Such transitional voyage is excluded from the table above.

INTERNATIONAL SEAWAYS, INC.

During the first quarter of 2024, TCE revenues for the Product Carriers segment decreased by $7.0 million, or 5%, to $147.0 million from $154.0 million in the first quarter of 2023. The reduction in TCE revenues was primarily as a result of (i) a $14.7 million days-based decrease in the LR1 fleet sector which reflects a 173-day net decrease in time-chartered in days, (ii) a $5.5 million days-based decline in the MR sector, which reflects the sales of three MRs between March 2023 and December 2023 and (iii) a $3.4 million rates-based decrease in the LR1 sector due to lower average daily rates earned in the current quarter. Partially offsetting such decreases was (iv) a $16.6 million aggregate rates-based increase in the MR and LR2 sectors due to higher average daily blended rates earned in the first quarter of 2024.

Vessel expenses decreased by $0.9 million to $32.9 million in the first quarter of 2024 from $33.7 million in the first quarter of 2023. Such decrease reflects the MR sales referenced above. Charter hire expenses decreased by $3.2 million to $3.1 million in the current quarter from $6.3 million in the first quarter of 2023, primarily as a result of the quarter-over-quarter decrease in time chartered-in LR1 days described above. Depreciation and amortization increased by $1.8 million to $14.1 million in the current quarter from $12.3 million in the prior year’s quarter. Such increase resulted primarily from increased drydock amortization, offset by the impact of the sales of the MR vessels referenced above.

General and Administrative Expenses

During the first quarter of 2024, general and administrative expenses increased by $1.1 million to $12.4 million from $11.2 million in the first quarter of 2023. The primary driver for such increase was higher legal fees of $0.7 million, principally incurred in connection with a commercial dispute. See Note 14, “Contingencies,” to the accompanying condensed consolidated financial statements for additional information.

Other Income

Other income was $3.0 million for the three months ended March 31, 2024 compared with $4.3 million for the three months ended March 31, 2023. Other income in the current period includes $3.0 million of interest income earned on invested cash compared to $4.1 million of interest income earned during the first quarter of 2023. The quarter-over-quarter decrease reflects the impact of a lower average balance of invested cash during the three months ended March 31, 2024, attributable to the significant deleveraging initiatives completed during 2023. Both periods also reflect net actuarial gains and currency losses associated with the retirement benefit obligation in the United Kingdom.

Interest Expense

The components of interest expense are as follows:


	Three Months Ended March 31,
(Dollars in thousands)		2024		2023
Interest before items shown below	$	15,326	$	20,741
Interest cost on defined benefit pension obligation		205		330
Impact of interest rate hedge derivatives		(2,425)		(2,384)
Capitalized interest		(219)		(1,740)
Interest expense	$	12,887	$	16,947

Interest expense decreased during the first quarter of 2024 compared to the first quarter of 2023 as a result of (i) a reduction in the average outstanding principal balance under the $750 Million Term Loan Facility and (ii) the repayment in full of the COSCO Lease financing in July 2023, partially offset by post-delivery interest expense related to the BoComm Lease Financing. See Note 8, “Debt,” in the accompanying condensed consolidated financial statements for further information on the Company’s debt facilities.

INTERNATIONAL SEAWAYS, INC.

Taxes

The Company believes it will qualify for an exemption from U.S. federal income taxes under Section 883 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) and U.S. Treasury Department regulations for the 2024 calendar year, so long as less than 50 percent of the total value of the Company’s stock is held by one or more shareholders who own 5% or more of the Company’s stock for more than half of the days of 2024. There can be no assurance at this time that INSW will continue to qualify for the Section 883 exemption beyond calendar year 2024. Should the Company not qualify for the exemption in the future, INSW will be subject to U.S. federal income taxation of 4% of its U.S. source shipping income on a gross basis without the benefit of deductions. Shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the U.S. will be considered to be 50% derived from sources within the United States. Shipping income attributable to transportation that both begins and ends in the U.S. would be considered to be 100% derived from sources within the United States, but INSW does not and cannot engage in transportation that gives rise to such income.

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.

The following table reconciles net income, as reflected in the condensed consolidated statements of operations, to EBITDA and Adjusted EBITDA:


	Three Months Ended March 31,
(Dollars in thousands)		2024		2023
Net income	$	144,490	$	172,633
Income tax benefit		—		(1)
Interest expense		12,887		16,947
Depreciation and amortization		34,153		29,548
EBITDA		191,530		219,127
Third-party debt modification fees		—		407
Gain on disposal of vessels and other assets, net		(51)		(10,748)
Write-off of deferred financing costs		—		166
Adjusted EBITDA	$	191,479	$	208,952

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 March 31, 2024, we had total liquidity on a consolidated basis of $625.9 million comprised of $139.5 million of cash, $75.0 million of short-term investments, and $411.4 million of undrawn revolver capacity.

Working capital at March 31, 2024 and December 31, 2023 was $310.0 million and $269.4 million, respectively. Current assets are highly liquid, consisting principally of cash, interest-bearing deposits, short-term investments consisting of time deposits with original maturities of between 91 and 180 days and receivables. Current liabilities include current installments of long-term debt of $127.5 million and $127.4 million at March 31, 2024 and December 31, 2023, respectively.

The Company’s cash and cash equivalents increased by $12.7 million during the three months ended March 31, 2024. This increase principally reflects $156.4 million of cash provided by operating activities. Such cash inflows were principally offset by:

●

$64.7 million of cash dividends paid to shareholders;

●

$31.7 million in regularly scheduled principal amortization of the Company’s secured debt facilities and lease financing arrangements;

●

$26.4 million in expenditures for vessels and other property including $23.2 million deposits for vessel acquisitions.

●

$15.0 million net increase in cash invested in short-term investments.

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 March 31, 2024, we had total debt outstanding (net of original issue discount and deferred financing costs) of $691.7 million and net debt to total capitalization of 21.0%, compared with 23.8% at December 31, 2023.

Sources, Uses and Management of Capital

With strong market conditions continuing in 2024 to date, 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 and strategic fleet optimization activities the Company executed so far during 2024 and sources of capital the Company has at its disposal for future use as well as the Company’s current commitments for future uses of capital:

INTERNATIONAL SEAWAYS, INC.

On February 28, 2024, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.12 per share of common stock and a supplemental cash dividend of $1.20 per share of common stock. Both dividends totaling $64.7 million were paid on March 28, 2024 to stockholders of record as of March 14, 2024. On May 7, 2024, 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 $1.63 per share of common stock. Both dividends will be paid on June 26, 2024 to stockholders of record as of June 12, 2024.

In continuation of our strategic fleet optimization program, in February 2024, we entered into agreements for the en bloc purchase of four 2015-built and two 2014-built MR Product Carriers for an aggregate purchase price of $232 million. Eighty-five percent of the purchase price consideration will be funded from available liquidity and the balance of 15% with the issuance of common stock. Three of the six vessels were delivered between April and early May 2024, and delivery of the remaining three MRs is expected to be completed by the end of the second quarter of 2024. A registration statement on Form S-3 was filed with the SEC on April 29, 2024 to register the shares that will be issued in conjunction with these vessel acquisitions and facilitate sellers’ ability to offer and sell or otherwise dispose of the shares of common stock issued to them under this transaction.

In March 2024, we entered into an agreement for the sale of one 2009-built MR for net proceeds of approximately $23 million after fees and commissions. The vessel was delivered to the buyer in April 2024 and the Company recognized a gain on the sale.

In March 2024 we also declared options to build two additional dual-fuel ready LNG 73,600 dwt LR1 Product Carriers at the same shipyard where our other four newbuild LR1s are currently under construction. The six LR1s are scheduled for delivery between the second half of 2025 and the third quarter of 2026 for an aggregate cost of approximately $347 million, which will be paid for through a combination of long-term financing and available liquidity.

In April 2024, we opportunistically locked in $86 million of minimum future charter revenues (before reduction for brokerage commissions) on non-cancelable time charters with durations ranging from 32 to 34 months for two 2009-built MRs and one 2014-built LR2. All three vessels are expected to be delivered to their charterers before the end of the third quarter of 2024, after the completion of their scheduled drydocks.

Further building on our liquidity enhancing, deleveraging and financing diversification initiatives, we have executed the following transactions:

●

On April 18, 2024, we prepaid the $20.3 million outstanding principal balance under the ING Credit Facility.

●

On April 26, 2024, we entered into an agreement to amend and extend our existing $750 Million Credit Facility, under which the Company had a remaining term loan balance of $94.6 million and undrawn revolver capacity of $257.4 million at March 31, 2024. The new agreement consists of a $500 million revolving credit facility (the “$500 Million Revolving Credit Facility”) that matures in January 2030. Under the terms of the $500 Million Revolving Credit Facility, capacity is reduced on a quarterly basis by approximately $12.8 million each quarter, based on a 20-year age-adjusted profile of the collateral vessels. The $500 Million Revolving Credit Facility bears an interest rate based on term SOFR plus the Applicable Margin (each as defined in the credit agreement). The Applicable Margin is 1.85% and is subject to similar sustainability-linked features as included in the $750 Million Credit Facility, which could impact the margin by five basis points, that are aimed at reducing the carbon footprint, target expenditures toward energy efficiency improvements and maintaining a safety record above the industry average. At the time of closing, after $94.6 million was drawn on the new revolver, our overall undrawn revolver capacity increased by $148 million to $559.4 million.

By entering into the $500 Million Revolving Credit Facility we have (i) eliminated $19.5 million in mandatory quarterly debt repayments since the balance drawn on closing is not required to be repaid until Maturity, (ii) reduced cash break evens by over $3,000 per day, (iii) extended the maturity profile of the facility from 2027 to 2030, and (iv) reduced future interest expense through a margin reduction of over 85 basis points.

As of March 31, 2024, the Company has contractual commitments for the construction of six dual-fuel ready LR1s, the acquisition of six MRs, and the purchase and installation of three ballast water treatment systems and 11 mewis ducts, and the final outstanding installment payments due for five ballast water treatment systems that had been installed as of March 31, 2024. The Company’s debt

INTERNATIONAL SEAWAYS, INC.

service commitments and aggregate purchase commitments for vessel construction and betterments as of March 31, 2024, are presented in the Aggregate Contractual Obligations Table below.

Outlook

Our strong balance sheet, as evidenced by a substantial level of liquidity, 30 unencumbered vessels as of March 31, 2024, and diversified financing sources with debt maturities spread out between 2030 and 2031, 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 diverse 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.

Off-Balance Sheet Arrangements

Pursuant to an agreement between INSW and the trustees of the OSG Ship Management (UK) Ltd. Retirement Benefits Plan (the “Scheme”), INSW guarantees the obligations of INSW Ship Management UK Ltd., a subsidiary of INSW, to make payments to the Scheme.

Aggregate Contractual Obligations

A summary of the Company’s long-term contractual obligations as of March 31, 2024 follows:


												Beyond
(Dollars in thousands)		2024		2025		2026		2027		2028		2028		Total
$750 Million Facility Term Loan - floating rate⁽¹⁾	$	60,213	$	38,308	$	—	$	—	$	—	$	—	$	98,521
ING Credit Facility - floating rate⁽²⁾		2,702	$	3,461		17,884		—		—		—		24,047
Ocean Yield Lease Financing - floating rate⁽³⁾		39,788	$	51,185		50,793		49,868		47,208		201,166		440,008
BoComm Lease Financing - fixed rate⁽⁴⁾		17,902	$	23,761		23,761		23,762		23,827		166,034		279,047
Toshin Lease Financing - fixed rate⁽⁴⁾		1,665	$	2,160		2,160		2,151		2,223		6,934		17,293
Hyuga Lease Financing - fixed rate⁽⁴⁾		1,889	$	2,232		2,232		2,232		2,160		6,416		17,161
Kaiyo Lease Financing - fixed rate⁽⁴⁾		1,688	$	2,250		2,410		2,214		2,214		4,341		15,117
Kaisha Lease Financing - fixed rate⁽⁴⁾		1,688	$	2,437		2,225		2,214		2,214		4,501		15,279
Operating lease obligations⁽⁵⁾
Time Charter-ins		9,488		5,624		—		—		—		—		15,112
Office and other space		952		1,093		1,113		1,077		1,077		4,754		10,066
Vessel and vessel betterment commitments⁽⁶⁾		246,864		139,517		162,088		—		—		—		548,469
Total	$	384,839	$	272,028	$	264,666	$	83,518	$	80,923	$	394,146	$	1,480,120

(1)	Amounts shown include contractual interest obligations of floating rate debt estimated based on the applicable margin for the $750 Million Facility Term Loan of 2.45%, plus the fixed rate stated in the related interest rate swaps of 2.84%.

(2)	Amounts shown include contractual interest obligations of outstanding floating rate debt estimated based on the applicable margin, plus credit adjustment spread of 0.26% and plus the effective three-month SOFR rate as of March 31, 2024 of 5.30% for the ING Credit Facility.

(3)

Amounts shown include contractual interest obligations on $304.6 million of outstanding floating rate debt estimated based on the applicable margin for the Ocean Yield Lease Financing of 4.05% plus 0.26% of credit adjustment spread and the fixed rate stated in the interest rate swaps (assigned for accounting purposes) of 2.84% on $215.9 million of notional principal amount outstanding and the effective three-month SOFR rate as of March 31, 2024 of 5.27% for the remaining outstanding principal under the Ocean Yield Lease Financing.

(4)	Amounts shown include contractual implicit interest obligations of the lease financing under the bareboat charters.

INTERNATIONAL SEAWAYS, INC.

(5)

As of March 31, 2024, the Company had charter-in commitments for one vessel on a lease that is accounted for as an operating lease. The full amounts due under office and other space leases are discounted and reflected on the Company’s consolidated condensed balance sheet as lease liabilities with corresponding right of use asset balances.

(6)	Represents the Company’s commitments for the purchase and installation of three ballast water treatment systems and 11 mewis duct systems, the remaining commitment for the construction of six dual-fuel ready LR1s, and the remaining cash commitment for the purchase of six MRs.

Risk Management:

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 facilities in 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.

Available Information

The Company makes available free of charge through its internet website, www.intlseas.com, its Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the Securities and Exchange Commission.

The public may also read and copy any materials the Company files with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E. Washington D.C. 20549 (information on the operation of the Public Reference Room is available by calling the SEC at 1-800-SEC-0330). The SEC also maintains a web site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at https://www.sec.gov.

The Company also makes available on its website, its corporate governance guidelines, its Code of Business Conduct and Ethics, insider trading policy, anti-bribery and corruption policy, incentive compensation recoupment policy, and charters of the Audit Committee, the Human Resources and Compensation Committee and the Corporate Governance and Risk Assessment Committee of the Board of Directors. The Company is required to disclose any amendment to a provision of its Code of Business Conduct and Ethics. The Company intends to use its website as a method of disseminating this disclosure, as permitted by applicable SEC rules. Any such disclosure will be posted to the Company website within four business days following the date of any such amendment. Neither our website nor the information contained on that site, or connected to that site, is incorporated by reference into this Quarterly Report on Form 10-Q.



**10.1		Second Amendment dated as of April 26, 2024 to the $750 Million Facility (henceforth the “$500 Million Revolving Credit Facility”) among the Registrant, International Seaways Operating Corporation, the other Guarantors from time to time party thereto, the Lenders from time to time party thereto, Nordea Bank Abp, New York Branch, as administrative agent for the lenders and as collateral agent and security trustee for the Secured Parties, and Credit Agricole Corporate and Investment Bank, as sustainability coordinator.

*10.2		Form of Amendment No. 9 to Lois K. Zabrocky’s Employment Agreement filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated March 14, 2024 and incorporated herein by reference.

*10.3		Form of Amendment No. 6 to Jeffrey D. Pribor’s Employment Agreement filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated March 14, 2024 and incorporated herein by reference.

*10.4		Form of Amendment No. 7 to James D. Small III’s Employment Agreement filed as Exhibit 10.3 to the Registrant’s Current Report on Form 8-K dated March 14, 2024 and incorporated herein by reference.

*10.5		Form of Amendment No. 8 to Adewale O. Oshodi’s Employment Agreement filed as Exhibit 10.4 to the Registrant’s Current Report on Form 8-K dated March 14, 2024 and incorporated herein by reference.

**31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a), as amended.

**31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a), as amended.

**32		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*99.2		Irrevocable Conditional Letter of Resignation of Kristian K. Johansen dated April 17, 2024 filed as Exhibit 99.2 to the Registrant’s Current Report on Form 8-K dated April 19, 2024 and incorporated herein by reference.

EX-101.INS		Inline XBRL Instance Document

EX-101.SCH		Inline XBRL Taxonomy Extension Schema

EX-101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase

EX-101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase

EX-101.LAB		Inline XBRL Taxonomy Extension Label Linkbase

EX-101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase

EX-104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)



	INTERNATIONAL SEAWAYS, INC.
	(Registrant)

Date: May 8, 2024	/s/ Lois K. Zabrocky
	Lois K. Zabrocky
	Chief Executive Officer

Date: May 8, 2024	/s/ Jeffrey D. Pribor
	Jeffrey D. Pribor
	Chief Financial Officer


(Dollars in millions)	Amount⁽¹⁾
2024	$	85.3
2025		82.4
2026		47.9
2027		34.0
2028		34.0
Thereafter		41.0
Future minimum revenues	$	324.6