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What changed in International Seaways, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of International Seaways, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+402 added−410 removedSource: 10-K (2024-02-29) vs 10-K (2023-02-28)

Top changes in International Seaways, Inc.'s 2023 10-K

402 paragraphs added · 410 removed · 286 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

98 edited+34 added−37 removed143 unchanged
Biggest changeThe timing of these sales also allowed the Company to achieve significant savings, as each of the vessels had an upcoming scheduled third special survey and ballast water treatment installation. ​ ● Executed a number of liquidity enhancing, deleveraging and financing diversification initiatives, including: ​ o Sold the Company’s 50% equity interest in the FSO Joint Venture for net cash proceeds of $140 million. o Consolidated three senior secured debt facilities (the “$390 Million Facility”, “$360 Million Facility” and “$525 Million Facility”) into a single new sustainability-linked facility (the “$750 Million Facility”), which includes a $220 million revolving credit facility. o Repaid the total $25 million outstanding balance of the 8.5% senior notes due June 2023. o Refinanced three MRs through sale and leaseback arrangements with Japanese leasing companies (the “Hyuga Lease Financing”, “Kaiyo Lease Financing” and “Kaisha Lease Financing”), which resulted in net proceeds of approximately $21.7 million, after $25.4 million in repayments on previously existing debt. o Repaid the $17.8 million outstanding balance of the Macquarie Credit Facility, which had an interest rate margin of 3.825% and was scheduled to mature in 2025. ​ ● See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Liquidity and Sources of Capital,” for further details on these financing transactions. ​ ​ OUR STRATEGY ​ Our primary objectives are to (i) maintain safe and reliable vessel operations that improves energy efficiency and reduces our environmental footprint; (ii) actively manage the size, age and composition of our fleet over the course of market cycles to increase investment returns and available capital; (iii) maximize cash flows through management of vessel employment in the spot market through our participation in a number of commercial pools and selective time charters; (iv) defend and grow the market share and profits of our asset light Crude Tankers Lightering business; (v) execute a capital allocation strategy adaptive of the shipping industry cycles by maintaining a strong balance sheet in order to use cash flow generation for opportunistic fleet investment, further de-levering that reduces cash break evens and/or interest costs and return to shareholders; and (vi) enter into value-creating transactions.
Biggest changeThis ultimately resulted in the release of 30 vessels from the collateral packages of the respective credit facilities. o As a result of the principal prepayments made under the $750 Million Facility Term Loan during 2023, the scheduled quarterly principal amortization under the $750 Million Facility Term Loan decreased from $30.2 million at the beginning of the year to $19.0 million at the end of the year. o We entered into a secured $160 million revolving credit facility, which matures on March 27, 2029 and reduces on a 20-year age-adjusted profile. ​ See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Liquidity and Sources of Capital,” for further details on these financing transactions. ​ ​ OUR STRATEGY ​ Our primary objectives are to (i) maintain safe and reliable vessel operations that improves energy efficiency and reduces our environmental footprint; (ii) actively manage the size, age and composition of our fleet over the course of market cycles to increase investment returns and available capital; (iii) maximize cash flows through management of vessel employment in the spot market through our participation in a number of commercial pools and selective time charters; (iv) defend and grow the market share and profits of our asset light Crude Tankers Lightering business; (v) execute a disciplined yet flexible capital allocation strategy that is aligned with the shipping industry cycles by maintaining a strong balance sheet in order to use cash flow generation for opportunistic fleet investment, further de-levering that reduces cash break evens and/or interest costs and increases return to shareholders; and (vi) enter into value-creating transactions.
We leverage both formal and informal programs to identify, foster, and retain top seafarer and shore-based talent. On average, our seafarers have worked for us for more than 10 years and more than half of our shore-based employees have worked for us for at least 15 years.
We leverage both formal and informal programs to identify, foster, and retain top seafarer and shoreside talent. On average, our seafarers have worked for us for more than 10 years and more than half of our shore-based employees have worked for us for at least 15 years.
In addition to this GHG reduction measure, the pricing mechanism in the $750 Million Credit Facility also includes key performance indicators relating to crew safety and investment by the Company aimed at improving energy efficiency and the reduction of emissions; - Participation on the Board of Directors of the International Tanker Owners Pollution Federation, the leading not-for-profit marine ship pollution response advisors; - Participation in the Marine Anti-Corruption Network, a global business network of over 100 members whose vision is a maritime industry free of corruption that enables fair trade to the benefit of society at large; - The installation of Ballast Water Treatment Systems on vessels to comply with all applicable regulations; - Participation as a signatory to the Neptune Declaration on Seafarer Wellbeing and Crew Change, in a worldwide call to action to end the unprecedented crew change crisis caused by COVID-19; - Participation as a signatory to the Gulf of Guinea Declaration on the Suppression of Piracy, which has been signed by more than 500 organizations across the maritime industry and sets out a series of steps to help decrease and end the threat of piracy in the Gulf of Guinea; - Specifically considering overall fuel consumption when selecting vessel purchase candidates and ships in our fleet to consider for disposition, in order to reduce our fleet’s contribution to GHG emissions; and - Making a commitment to implement and practice environmentally and socially responsible ship recycling.
In addition to this GHG reduction measure, the pricing mechanism in the $750 Million Credit Facility also includes key performance indicators relating to crew safety and investment by the Company aimed at improving energy efficiency and the reduction of emissions; - Participation on the Board of Directors of the International Tanker Owners Pollution Federation, the leading not-for-profit marine ship pollution response advisors; - Participation in the Marine Anti-Corruption Network, a global business network of over 100 members whose vision is a maritime industry free of corruption that enables fair trade to the benefit of society at large; - The installation of Ballast Water Treatment Systems on vessels to comply with all applicable regulations; - Participation as a signatory to the Neptune Declaration on Seafarer Wellbeing and Crew Change, in a worldwide call to action to end the unprecedented crew change crisis caused by COVID-19; - Participation as a signatory to the Gulf of Guinea Declaration on the Suppression of Piracy, which has been signed by more than 500 organizations across the maritime industry and sets out a series of steps to help decrease and end the threat of piracy in the Gulf of Guinea; - Specific consideration of overall fuel consumption when selecting vessel purchase candidates and ships in our fleet to consider for disposition, in order to reduce our fleet’s contribution to GHG emissions; and - Our continued commitment to practice environmentally and socially responsible ship recycling.
In full-service STS lightering, we provide the lightering vessel, usually an Aframax tanker, in addition to the personnel and equipment to facilitate the transferring of cargo. Demand for lightering services is significantly affected by the level of crude oil imports by the United States and, in recent years, by the volumes of crude oil exports by the United States.
In full-service STS lightering, we provide the lightering vessel, usually an Aframax tanker, in addition to the personnel and equipment to facilitate the transferring of cargo. Demand for lightering services is significantly affected by the level of crude oil imports into the United States and, in recent years, by the volumes of crude oil exports from the United States.
As of December 31, 2022, the Company was a member of four P&I Associations. Each of the Company’s vessels is insured by one of these four Associations with deductibles ranging from $0.025 million to $0.1 million per vessel per incident.
As of December 31, 2023, the Company was a member of four P&I Associations. Each of the Company’s vessels is insured by one of these four Associations with deductibles ranging from $0.025 million to $0.1 million per vessel per incident.
Table of Contents Other EU Legislation and Regulations ​ The EU has adopted legislation that: (1) bans manifestly sub-standard vessels (defined as those over 15 years old that have been detained by port authorities at least twice in the course of the preceding 24 months) from European waters, creates an obligation for port states to inspect at least 25% of vessels using their ports annually and provides for increased surveillance of vessels posing a high risk to maritime safety or the marine environment, and (2) provides the EU with greater authority and control over Classification Societies, including the ability to seek to suspend or revoke the authority of negligent societies.
Environmental and Safety Regulations and Standards.” ​ Other EU Legislation and Regulations ​ The EU has adopted legislation that: (1) bans manifestly sub-standard vessels (defined as those over 15 years old that have been detained by port authorities at least twice in the course of the preceding 24 months) from European waters, creates an obligation for port states to inspect at least 25% of vessels using their ports annually and provides for increased surveillance of vessels posing a high risk to maritime safety or the marine environment, and (2) provides the EU with greater authority and control over Classification Societies, including the ability to seek to suspend or revoke the authority of negligent societies.
For 2023 and future years, INSW will need to evaluate its qualification for exemption under Section 883 and there can be no assurance that INSW will continue to qualify for the exemption.
For 2024 and future years, INSW will need to evaluate its qualification for exemption under Section 883 and there can be no assurance that INSW will continue to qualify for the exemption.
In the interim, effective January 1, 2022 the California State Lands Commission incorporated the federal ballast water discharge standards and implementation schedule into California law and established operational monitoring and recordkeeping requirements. ​ New York State has imposed a more stringent bilge water discharge requirement for vessels in its waters than what is required by the VGP or IMO.
In the interim, the California State Lands Commission incorporated the federal ballast water discharge standards and implementation schedule into California law and established operational monitoring and recordkeeping requirements. New York State has imposed a more stringent bilge water discharge requirement for vessels in its waters than what is required by the VGP or IMO.
NOx emission Tier III standards came into force on January 1, 2016 in ECAs. ​ Additional air emission requirements under Annex VI became effective on July 1, 2010 mandating the development of Volatile Organic Compound (“VOC”) Management Plans for tank vessels and certain gas ships. ​ The Company believes that its vessels are compliant with the current requirements of Annex VI and that those of its vessels that operate in the EU, Turkey, China, Norway and elsewhere are also compliant with the regional mandates applicable there.
NOx emission Tier III standards came into force on January 1, 2016 in ECAs. ​ Additional air emission requirements under Annex VI mandate the development of Volatile Organic Compound (“VOC”) Management Plans for tank vessels and certain gas ships. ​ The Company believes that its vessels are compliant with the current requirements of Annex VI and that those of its vessels that operate in the EU, Turkey, China, Norway and elsewhere are also compliant with the regional mandates applicable there.
Clean Water Act (“CWA”) prohibits the discharge of oil or hazardous substances in U.S. navigable waters and imposes strict liability in the form of penalties for unauthorized discharges.
Table of Contents In addition, the U.S. Clean Water Act (“CWA”) prohibits the discharge of oil or hazardous substances in U.S. navigable waters and imposes strict liability in the form of penalties for unauthorized discharges.
During 2022, we maintained what we believe to be reasonable financial leverage for the current point in the tanker cycle.
During 2023, we maintained what we believe to be reasonable financial leverage for the current point in the tanker cycle.
See Item 1A, “Risk Factors— Risks Related to Our Company — Risks relating to legal and regulatory matters, compliance with complex laws, regulations and, in particular, environmental laws or regulations, including those relating to the emission of greenhouse gases, may adversely affect INSW’s business .” ​ 9 International Seaways, Inc. Table of Contents International and U.S.
See Item 1A, “Risk Factors— Risks Related to Our Company — Risks relating to legal and regulatory matters, compliance with complex laws, regulations and, in particular, environmental laws or regulations, including those relating to the emission of greenhouse gases, may adversely affect INSW’s business .” ​ International and U.S.
The current VGP, which was issued in 2013, identifies twenty-six vessel discharge streams and establishes numeric ballast water discharge limits that generally align with the treatment technologies to be implemented under USCG’s 2012 final rule, requirements to ensure that the ballast water treatment systems are functioning correctly, and more stringent effluent limits for oil to sea interfaces and exhaust gas scrubber wastewater.
The current VGP identifies twenty-six vessel discharge streams and establishes numeric ballast water discharge limits that generally align with the treatment technologies to be implemented under USCG’s final rule, requirements to ensure that the ballast water treatment systems are functioning correctly, and more stringent effluent limits for oil to sea interfaces and exhaust gas scrubber wastewater.
Both instruments apply to all seagoing vessels carrying oil in bulk as cargo. These instruments also limit the liability of the shipowner under certain circumstances. As these instruments calculate liability in terms of a basket of currencies, the figures in this section are converted into U.S. dollars based on currency exchange rates on December 31, 2022 and are approximate.
Both instruments apply to all seagoing vessels carrying oil in bulk as cargo. These instruments also limit the liability of the shipowner under certain circumstances. As these instruments calculate liability in terms of a basket of currencies, the figures in this section are converted into U.S. dollars based on currency exchange rates on January 2, 2024 and are approximate.
In fact, most U.S. states that border a navigable waterway have enacted environmental pollution laws that impose strict liability on a person for removal costs and damages resulting from a discharge of oil or a release of a hazardous substance. These laws are in some cases more stringent than U.S. federal law. ​ In addition, the U.S.
In fact, most U.S. states that border a navigable waterway have enacted environmental pollution laws that impose strict liability on a person for removal costs and damages resulting from a discharge of oil or a release of a hazardous substance. These laws are in some cases more stringent than U.S. federal law. ​ 15 International Seaways, Inc.
Our continued participation in pools allows us to benefit from economies of scale and higher vessel utilization rates. ​ We plan to continue to complement our spot chartering strategy by selectively employing a portion of our vessels on time charters that provide consistent cash flows.
Our continued participation in pools allows us to benefit from economies of scale and higher vessel utilization rates. 2 International Seaways, Inc. Table of Contents ​ We plan to continue to complement our spot chartering strategy by selectively employing a portion of our vessels on time charters that provide consistent cash flows.
The convention applies to damage caused to the territory, including the territorial sea, and exclusive economic zones, of states that are party to it. Vessels operating 11 International Seaways, Inc. Table of Contents internationally are subject to it if sailing within the territories of those countries that have implemented its provisions (which does not include the United States).
The convention applies to damage caused to the territory, including the territorial sea, and exclusive economic zones, of states that are party to it. Vessels operating internationally are subject to it if sailing within the territories of those countries that have implemented its provisions (which does not include the United States).
At December 31, 2022, we owned or operated an International Flag fleet of 74 vessels (totaling an aggregate of 8.1 million dwt), consisting of VLCC, Suezmax and Aframax crude tankers, as well as LR2, LR1 and MR product carriers.
At December 31, 2023, we owned or operated an International Flag fleet of 73 vessels (totaling an aggregate of 8.8 million dwt), consisting of VLCC, Suezmax and Aframax crude tankers, as well as LR2, LR1 and MR product carriers.
INSW expects that its vessels discharging ballast in U.S. waters will have Type Approved treatment systems by their extended compliance dates. ​ The discharge of ballast water and other substances incidental to the normal operation of vessels in U.S. ports also is subject to CWA permitting requirements.
INSW’s vessels discharging ballast in U.S. waters currently have, or INSW expects such vessels will have, Type Approved treatment systems by their extended compliance dates. The discharge of ballast water and other substances incidental to the normal operation of vessels in U.S. ports also is subject to CWA permitting requirements.
More stringent long-term standards for newly built engines that applied beginning in 2016 and required the use of high efficiency emission control 16 International Seaways, Inc. Table of Contents technology such as selective catalytic reduction to achieve NOx reductions 80 percent below the pre-2016 levels.
More stringent long-term standards for newly built engines that applied beginning in 2016 and required the use of high efficiency emission control technology such as selective catalytic reduction to achieve NOx reductions 80 percent below the pre-2016 levels.
Compliance with the ballast water requirements effective under the BWM Convention and other regulations may have material impacts on INSW’s operations and financial results, as discussed below under “U.S. Environmental and Safety Regulations and Standards-Other U.S. Environmental and Safety Regulations and Standards.” ​ 12 International Seaways, Inc.
Compliance with the ballast water requirements effective under the BWM Convention and other regulations may have material impacts on INSW’s operations and financial results, as discussed below under “U.S. Environmental and Safety Regulations and Standards-Other U.S.
Environmental and Safety Regulations and Standards - Liability Standards and Limits” below. ​ Under the 1969 Convention, except where the pollution damage resulted from the actual fault or privity of the owner, its liability is limited to $186 per ton of the vessel’s tonnage, with a maximum liability of $19.6 million.
Environmental and Safety Regulations and Standards - Liability Standards and Limits” below. ​ Under the 1969 Convention, except where the pollution damage resulted from the actual fault or privity of the owner, its liability is limited to $179 per ton of the vessel’s tonnage, with a maximum liability of $18.7 million.
The Company’s management team, led by the Chief Executive Officer, has the day-to-day responsibility to execute the action plans as approved by the Board of Directors. ​ 3 International Seaways, Inc. Table of Contents Strategy – We are committed to Environmental, Social and Governance practices as a part of our core culture.
The Company’s management team, led by the Chief Executive Officer, has the day-to-day responsibility to execute the action plans as approved by the Board of Directors. ​ Strategy – We are committed to Environmental, Social and Governance practices as a part of our core culture.
The ISM Code requires a Document of Compliance (“DoC”) to be obtained for the company responsible for operating the vessel and a Safety Management Certificate (“SMC”) to be obtained for each vessel that such company operates. Once issued, these certificates are valid for a maximum of five years.
The ISM Code requires a Document of Compliance (“DoC”) to be obtained for the company responsible for operating the vessel and a Safety Management 12 International Seaways, Inc. Table of Contents Certificate (“SMC”) to be obtained for each vessel that such company operates. Once issued, these certificates are valid for a maximum of five years.
OPA 90 affects all owners and operators whose vessels trade with the United States or its territories or possessions, or whose vessels operate in the waters of the United States, which include the U.S. territorial sea and the 200 nautical mile Exclusive Economic Zone around the United States.
OPA 90 affects all owners and operators whose vessels trade with the United States or its territories or possessions, or whose vessels operate in the waters of the United States, which include the U.S. 14 International Seaways, Inc. Table of Contents territorial sea and the 200 nautical mile Exclusive Economic Zone around the United States.
For vessels operating in SOx Emission Control Areas (“SECAs”), sulfur content of fuel oil is limited to 0.1% as of January 1, 2015. For vessels operating outside SECAs, sulfur content of fuel oil is limited to 0.5% as of January 1, 2020.
For vessels operating in SOx Emission Control Areas (“SECAs”), sulfur content of fuel oil is limited to 0.1%. For vessels operating outside SECAs, sulfur content of fuel oil is limited to 0.5%.
To trade internationally, a vessel must attain an International Ship Security Certificate (“ISSC”) from a recognized security organization approved by the vessel’s flag state. ​ The USCG regulations, intended to align with international maritime security standards, exempt from MTSA vessel security measures for non-U.S. vessels that have on board a valid ISSC attesting to the vessel’s compliance with SOLAS security requirements and the ISPS Code. ​ All of INSW’s vessels have developed and implemented vessel security plans that have been approved by the appropriate regulatory authorities, have obtained ISSCs and comply with applicable security requirements. ​ 17 International Seaways, Inc.
To trade internationally, a vessel must attain an International Ship Security Certificate (“ISSC”) from a recognized security organization approved by the vessel’s flag state. ​ The USCG regulations, intended to align with international maritime security standards, exempt from MTSA vessel security measures for non-U.S. vessels that have on board a valid ISSC attesting to the vessel’s compliance with SOLAS security requirements and the ISPS Code. ​ All of INSW’s vessels have developed and implemented vessel security plans that have been approved by the appropriate regulatory authorities, have obtained ISSCs and comply with applicable security requirements. ​ The Company monitors the waters in which its vessels operate for pirate activity.
To achieve our goals, we have taken actions which include: ​ - The establishment of a Performance and Sustainability team, and creation of the new role of Sustainability Engineer, who are tasked with both educating the organization as well as putting in place programs and initiatives to expand our decarbonization efforts; - The continuing implementation of a third-party data collection and analysis platform which allows data to be gathered from our vessels for use in advanced analytics with the aim of reducing our fuel consumption and CO2 and GHG emissions; - The inclusion of a sustainability-linked pricing mechanism in the $750 Million Credit Facility.
To achieve our goals, we have taken actions which include: ​ - The establishment of a Performance and Sustainability team, and creation of the new role of Sustainability Engineer, who are tasked with both educating the organization as well as putting in place programs and initiatives to expand our decarbonization efforts; - The continuing implementation of a third-party data collection and analysis platform which allows data to be gathered from our vessels for use in advanced analytics with the aim of reducing our fuel consumption and CO2 and GHG emissions; 3 International Seaways, Inc.
The Company’s governance, strategy, risk management and performance monitoring efforts in this area are evolving and will continue to do so over time: ​ Governance – Our 10-member Board of Directors, which includes eight independent members and experts in shipping and compliance, engages in regular discussions relating to environmental matters and the Company’s response to climate change-related risks and opportunities.
The Company’s governance, strategy, risk management and performance monitoring efforts in this area are evolving and will continue to do so over time: ​ Governance – Our Board of Directors (10 members as of December 31, 2023, including eight independent members), has experts in shipping and compliance and engages in regular discussions relating to environmental matters and the Company’s response to climate change-related risks and opportunities.
In July 2021, the EU issued draft legislation that from 2023 to 2026 would phase in GHG 10 International Seaways, Inc. Table of Contents emissions from shipping into its established Emissions Trading Scheme (“ETS”) and require the purchase of allowances reflecting the emissions.
In July 2021, the EU issued draft legislation that from 2023 to 2026 would phase in GHG emissions from shipping into its established Emissions Trading Scheme (“ETS”) and require the purchase of allowances reflecting the emissions.
Under the 1992 Protocol, the liability of the owner is limited to $4.2 million for a ship not exceeding 5,000 units of tonnage (a unit of measurement for the total enclosed spaces within a vessel) and $588 per gross ton thereafter, with a maximum liability of $83.6 million.
Under the 1992 Protocol, the liability of the owner is limited to $4.0 million for a ship not exceeding 5,000 units of tonnage (a unit of measurement for the total enclosed spaces within a vessel) and $603 per gross ton thereafter, with a maximum liability of $80.0 million.
INSW has provided the requisite guarantees and has received certificates of financial responsibility from the USCG for each of its vessels required to have one. ​ 14 International Seaways, Inc. Table of Contents INSW has insurance for each of its vessels with pollution liability insurance in the amount of $1 billion.
INSW has provided the requisite guarantees and has received certificates of financial responsibility from the USCG for each of its vessels required to have one. ​ INSW has insurance for each of its vessels with pollution liability insurance in the amount of $1 billion.
Under the 2000 amendments to the 1992 Protocol, which became effective on November 1, 2003, liability is limited to $6.3 million plus $884 for each additional gross ton over 5,000 for vessels of 5,000 to 140,000 gross tons, and $125.8 million for vessels over 140,000 gross tons, subject to the exceptions discussed above for the 1992 Protocol. ​ Vessels trading to states that are parties to these instruments must provide evidence of insurance covering the liability of the owner.
Under the 2000 amendments to the 1992 Protocol, which became effective on November 1, 2003, liability is limited to $6.0 million plus $845 for each additional gross ton over 5,000 for vessels of 5,000 to 140,000 gross tons, with a maximum liability of $120.1 million subject to the exceptions discussed above for the 1992 Protocol. ​ Vessels trading to states that are parties to these instruments must provide evidence of insurance covering the liability of the owner.
As of December 31, 2022, we had total liquidity on a consolidated basis of $541.1 million, comprised of $323.7 million of cash and short-term investments and $217.4 million of remaining undrawn revolver capacity, as well as a Consolidated Net Debt to Assets Value and Consolidated Net Debt to Book Capital ratios of 23.9% and 33.3%, respectively. ​ Environmental, Social and Governance Initiatives ​ We are committed to fulfilling our mission of transporting energy safely and efficiently to customers around the world using well-maintained assets operated by dedicated crews in a diligent and environmentally sustainable manner.
As of December 31, 2023, we had total liquidity on a consolidated basis of $601.2 million, comprised of $186.8 million of cash and short-term investments and $414.4 million of remaining undrawn revolver capacity, as well as a Consolidated Net Debt to Assets Value and Consolidated Net Debt to Book Capital ratios of 17% and 23.8%, respectively. ​ Environmental, Social and Governance Initiatives ​ We are committed to fulfilling our mission of transporting energy safely and efficiently to customers around the world using well-maintained assets operated by dedicated crews in a diligent and environmentally sustainable manner.
As of December 31, 2022, we participated in six commercial pools as our principal means of participation in the spot market— Tankers International (“TI”), Dakota Tankers (“DAKOTA”), Penfield Tankers (“PENFIELD”), Panamax International (“PI”), Clean Products Tankers Alliance (“CPTA”), and Norden Tanker Pool (“NTP”) — each selected for specific expertise in its respective market.
As of December 31, 2023, we participated in seven commercial pools as our principal means of participation in the spot market— Tankers International (“TI”), Penfield Tankers (“PENFIELD”), Panamax International (“PI”), Clean Products Tankers Alliance (“CPTA”), Norden Tanker Pool (“NTP”), Hafnia Tanker Pool (“HTP”) and Aframax International Pool (“AI”) — each selected for specific expertise in its respective market.
The EPA has determined that it will not issue extensions under the VGP, but in December 2013 it issued an Enforcement Response Policy 15 International Seaways, Inc. Table of Contents (“ERP”) to address this industry-wide issue.
The EPA has determined that it will not issue extensions under the VGP, but in December 2013 it issued an Enforcement Response Policy (“ERP”) to address this industry-wide issue.
The new measures will require ships to calculate their Energy Efficiency Existing Ship Index (EEXI) and to establish their annual operational carbon intensity indicator (CII) that links the GHG emissions to the amount of cargo carried over distance traveled. Ships with low ratings will be required to submit corrective action plans.
The new measures will require ships to calculate their Energy Efficiency Existing Ship Index (EEXI) and to establish their annual operational carbon intensity indicator (CII) that links the GHG emissions to the amount of cargo carried over distance traveled.
In the time charter market, factors such as the age and quality of the vessel and the efficiency of its operation and reputation of its owner and operator tend to be even more significant when competing for business. ​ Our lightering business competes against a small number of other market participants, both in the United States and in other jurisdictions in which we operate.
In the time charter market, factors such as the age and quality of the vessel and the efficiency of its operation and reputation of its owner and operator tend to be even more significant when competing for business. ​ Our lightering business competes against a small number of other market participants, both in the United States and in other jurisdictions in which we operate. ​ ENVIRONMENTAL AND SECURITY MATTERS RELATING TO BULK SHIPPING ​ Government regulation significantly affects the operation of the Company’s vessels.
The VGP contains a compliance date schedule for these requirements. The VGP standards and requirements were due for modification and renewal in December 2018, but this renewal has been postponed by the EPA with no fixed date for completion.
The VGP contains a compliance date schedule for these requirements. The VGP standards and requirements were due for modification and renewal in December 2018, but this renewal has been postponed by the EPA with no fixed date for completion. Until a new VGP program is implemented, the current standards remain in effect.
Under the ERP, the EPA states that vessels that have received an extension from the USCG, are in compliance with all of the VGP’s requirements other than the numeric discharge limits and meet certain other requirements will be entitled to a “low enforcement priority.” While INSW believes that any vessel that is or may become subject to the VGP’s numeric discharge limits during the pendency of a USCG extension will be entitled to such low priority treatment under the ERP no assurance can be given that they will do so. ​ The VGP system also permits individual states and territories to impose more stringent requirements for discharges into the navigable waters of such state or territory.
Under the ERP, the EPA states that vessels that have received an extension from the USCG, are in compliance with all of the VGP’s requirements other than the numeric discharge limits and meet certain other requirements will be entitled to a “low enforcement priority.” While INSW believes that any vessel that is or may become subject to the VGP’s numeric discharge limits during the pendency of a USCG extension will be entitled to such low priority treatment under the ERP no assurance can be given that they will do so.
Integral to meeting standards mandated by worldwide regulators and customers is a ship manager’s use of robust Safety Management Systems (“SMS”). The SMS is a framework of processes and procedures that addresses a spectrum of operational risks associated with quality, environment, health and safety.
We are also committed to providing safe, reliable and environmentally sound transportation to our customers. Integral to meeting standards mandated by worldwide regulators and customers is a ship manager’s use of robust Safety Management Systems (“SMS”). The SMS is a framework of processes and procedures that addresses a spectrum of operational risks associated with quality, environment, health and safety.
No assurance can be given that changes in or interpretation of existing laws will not occur or will not be retroactive or that anticipated future circumstances will in fact occur. ​ All of the Company’s vessels are owned or operated by foreign corporations that are subsidiaries of INSW. ​ Taxation of INSW on its Shipping Income ​ INSW derives substantially all of its gross income from the use and operation of vessels in international commerce.
No assurance can be given that changes in or interpretation of existing laws will not occur or will not be retroactive or that anticipated future circumstances will in fact occur. ​ INSW derives substantially all of its gross income from the use and operation of vessels in international commerce.
For a more detailed discussion on factors influencing spot and time charter markets, see “— Fleet Operations — Commercial Management” below. ​ 2022 IN REVIEW ​ The year ended December 31, 2022 was our best year since becoming an independent public company in 2016.
For a more detailed discussion on factors influencing spot and time charter markets, see “— Fleet Operations — Commercial Management” below. ​ 2023 IN REVIEW ​ For the second consecutive year, we had our best financial results since becoming an independent public company in 2016.
Until a new VGP program is implemented, the current standards remain in effect. ​ Certain of the Company’s vessels are subject to more stringent numeric discharge limits under the EPA’s VGP, even though those vessels have obtained a valid extension from the USCG for implementation of treatment technology under its 2012 final rule.
Certain of the Company’s vessels are subject to more stringent numeric discharge limits under the EPA’s VGP, even though those vessels have obtained a valid extension from the USCG for implementation of treatment technology under the final rule.
P&I insurance is provided by mutual protection and indemnity associations (“P&I Associations”). The P&I Associations that comprise the International Group insure approximately 90% of the world’s commercial tonnage and have entered into a pooling agreement to reinsure each association’s 18 International Seaways, Inc. Table of Contents liabilities.
P&I insurance is provided by mutual protection and indemnity associations (“P&I Associations”). The P&I Associations that comprise the International Group insure approximately 90% of the world’s commercial tonnage and have entered into a pooling agreement to reinsure each association’s liabilities. Each P&I Association has capped its exposure to each of its members at approximately $8.9 billion.
Loss of hire insurance covers up to 60 days lost charter income per vessel per incident in excess of the first 60 days lost for each covered incident, which is borne by the Company. ​ INCOME TAXATION OF THE COMPANY ​ INSW is incorporated in the Republic of the Marshall Islands and pursuant to the laws of the Marshall Islands, the Company is not subject to income tax in the Marshall Islands. ​ The following summary of the principal U.S. income tax laws applicable to the Company, as well as the conclusions regarding certain issues of income tax law, are based on the provisions of the U.S.
Loss of hire insurance covers up to 60 days lost charter income per vessel per incident in excess of the first 60 days lost for each covered incident, which is borne by the Company. ​ INCOME TAXATION OF THE COMPANY ​ INSW is incorporated in the Republic of the Marshall Islands and pursuant to the laws of the Marshall Islands, the Company is not subject to income tax in the Marshall Islands.
In 2020, IMO issued its Fourth GHG Study, which further refined IMO’s understanding of maritime greenhouse gas emissions and reported updated projections that in 2050 GHG emissions will increase from 0 to 50% over 2018 levels, which is equal to 90-130% of 2008 levels. ​ In keeping with IMO’s initial strategy, IMO has committed to having in place by 2023 short-term measures and by 2030 mid-term measures intended to meet the stated goals of reducing carbon dioxide emissions from international shipping by 40% by 2030 and 70% by 2050, and GHG emissions from international shipping by 50% by 2050.
In 2020, IMO issued its Fourth GHG Study, which further refined IMO’s understanding of maritime greenhouse gas emissions and reported updated projections that in 2050 GHG emissions will increase from 0 to 50% over 2018 levels, which is equal to 90-130% of 2008 levels. ​ At the MEPC 76 in June 2021, the IMO, taking into account the findings of the Fourth GHG Study, adopted short-term measures that became effective in 2023 to implement its stated goals of reducing carbon dioxide emissions from international shipping by 40% by 2030 and 70% by 2050, and GHG emissions from international shipping by 50% by 2050.
All new and secondhand vessels that we acquire must be certified as being “in class” prior to their delivery under our standard purchase contracts and memorandum of agreement.
All our vessels are currently, and we expect will continue to be, certified as being “in class” by a Classification Society that is a member of IACS. All new and secondhand vessels that we acquire must be certified as being “in class” prior to their delivery under our standard purchase contracts and memorandum of agreement.
EU directives enacted in 2005 and amended in 2009 require EU member states to introduce criminal sanctions for illicit ship-source discharges of polluting substances (e.g., from tank cleaning operations) which result in deterioration in the quality of water and has been committed with intent, recklessness or serious negligence.
INSW believes that none of its vessels meet the definitions of a "sub-standard" vessel contained in the EU legislation. EU directives require EU member states to introduce criminal sanctions for illicit ship-source discharges of polluting substances (e.g., from tank cleaning operations) which result in deterioration in the quality of water and has been committed with intent, recklessness or serious negligence.
In addition to our operating fleet of 74 vessels, three dual-fuel LNG VLCC newbuilds are scheduled for delivery to the Company in the first half of 2023, bringing the total operating and newbuild fleet to 77 vessels. The Marshall Islands is the principal flag of registry of our vessels.
In addition to our operating fleet of 73 vessels, four dual-fuel ready LR1 newbuilds are scheduled for delivery to the Company between the second half of 2025 and first quarter of 2026, bringing the total operating and newbuild fleet to 77 vessels. The Marshall Islands is the principal flag of registry of our vessels.
Upon a shipowner’s request, the surveys required for class renewal may be split according to an agreed schedule to extend over the entire period of class survey period. This process is referred to as continuous class renewal. Vessels are required to dry dock for inspection of the underwater hull at each intermediate survey and at each class renewal survey.
Upon a shipowner’s request, the surveys required for class renewal may be split according to an agreed schedule to extend over the entire period of class survey period. This process is referred to as continuous class renewal. 18 International Seaways, Inc.
Under these regulations, vessels subject to the engine and fuel standards of Annex VI must comply with the applicable Annex VI provisions when they enter U.S. ports or operate in most internal U.S. waters. The Company’s vessels are currently Annex VI compliant.
Air Emissions Standards ​ Pursuant to MARPOL Annex VI, EPA adopted regulations implementing the provisions of Annex VI, which regulations require subject vessels to comply with the applicable Annex VI provisions when they enter U.S. ports or operate in most internal U.S. waters. The Company’s vessels are currently Annex VI compliant.
The Company’s MR product carriers are IMO III compliant, allowing those vessels to carry edible oils, such as palm and vegetable oil, increasing flexibility when switching between cargo grades. ​ In order to take advantage of market conditions and optimize economic performance, we employ our LR1 Product Carriers, which currently participate in the PI pool, in the transportation of crude oil cargoes. ​ Commercial Management ​ Spot Market ​ Voyage charters, including vessels operating in commercial pools that predominantly operate in the spot market, constituted 96% of the Company’s aggregate TCE revenues in 2022 compared to 81% in 2021 as a result of higher average daily spot market rates realized across all of INSW’s fleet sectors.
The Company’s MR product carriers are IMO III compliant, allowing those vessels to carry edible oils, such as palm and vegetable oil, increasing flexibility when switching between cargo grades. ​ In order to take advantage of market conditions and optimize economic performance, we employ our LR1 Product Carriers, which currently participate in the PI pool, in the transportation of crude oil cargoes. ​ Commercial and Technical Management of Fleet – Hybrid Operating Model ​ We employ a hybrid operating model in the commercial and technical management of our fleet.
Inclusion and Diversity is at the core of all we do and drives us to build and reinforce an inclusive culture. Our commitment to Inclusion and Diversity starts at the top with a diverse Board of Directors and executive management team, who represent a broad spectrum of backgrounds and perspectives.
We recognize the importance of diverse teams, an equitable workplace and an inclusive culture in driving innovation and competitiveness. ​ Our commitment to Diversity and Inclusion starts at the top with a diverse Board of Directors and executive management team, who represent a broad spectrum of backgrounds and perspectives.
The mechanism has been certified by an independent, leading firm in ESG and corporate governance research as meeting sustainability-linked loan principles.
Table of Contents - The inclusion of a sustainability-linked pricing mechanism in both the $750 Million Credit Facility and the $160 Million Revolving Credit Facility . The mechanism has been certified by an independent, leading firm in ESG and corporate governance research as meeting sustainability-linked loan principles.
However, the current administration has stated that GHG emissions from shipping are a priority and that the United States will be participating more actively in international efforts including the IMO’s. ​ Future passage of climate control legislation or other regulatory initiatives by the IMO, EU, United States or other countries where INSW operates that restrict emissions of GHGs could require significant additional capital and/or operating expenditures and could have operational impacts on INSW’s business.
Table of Contents Future passage of climate control legislation or other regulatory initiatives by the IMO, EU, United States or other countries where INSW operates that restrict emissions of GHGs could require significant additional capital and/or operating expenditures and could have operational impacts on INSW’s business.
New York State also requires that vessels entering its waters from outside the Exclusive Economic Zone must perform ballast water exchange in addition to treating it with a ballast water treatment system. ​ On December 4, 2018, the USCG Authorization Act of 2018 was enacted, which included the Vessel Incidental Discharge Act (“VIDA”).
New York State also requires that vessels entering its waters from outside the Exclusive Economic Zone must perform ballast water exchange in addition to treating it with a ballast water treatment system. ​ Under the USCG Authorization Act of 2018, which includes the Vessel Incidental Discharge Act (“VIDA”), the EPA is the designated government agency responsible for establishing standards for U.S. ballast water regulations and the USCG was assigned the responsibility for monitoring and enforcing those standards.
Table of Contents ​ ​ SOLAS ​ From January 1, 2014, various amendments to the SOLAS conventions came into force, including an amendment to Chapter VI of SOLAS, which prohibits the blending of bulk liquid cargoes during sea passage and the production process on board ships.
Although INSW cannot predict such expenditures and impacts with certainty at this time, they may be material to INSW’s financial statements. ​ ​ SOLAS ​ From January 1, 2014, various amendments to the SOLAS conventions came into force, including an amendment to Chapter VI of SOLAS, which prohibits the blending of bulk liquid cargoes during sea passage and the production process on board ships.
Vessel recycling is affected by the level of freight rates, recycling prices, vetting standards established by charterers and terminals and by international and U.S. governmental regulations that establish maintenance standards and regulatory compliance standards. 6 International Seaways, Inc. Table of Contents ​ Time Charter Market ​ Our operating fleet currently includes a number of vessels that operate on time charters.
Vessel recycling is affected by the level of freight rates, recycling prices, vetting standards established by charterers and terminals and by international and U.S. governmental regulations that establish maintenance standards and regulatory compliance standards. ​ ​ 7 International Seaways, Inc.
Shipping revenues and TCE Revenues achieved in 2022 were $864.7 million and $853.7 million, respectively, of which approximately 62% were generated from our Product Carriers segment and 38% from our Crude Tankers segment.
Shipping revenues and TCE Revenues achieved in 2023 were $1.1 billion and $1.1 billion, respectively, of which approximately 51% were generated from our Product Carriers segment and 49% from our Crude Tankers segment.
Table of Contents We currently deploy the majority of our fleet on a spot rate basis to benefit from market volatility and what we believe are the traditionally higher returns the spot market offers compared with time charters.
We will continue to pursue an overall chartering strategy, with a substantial spot rate exposure that provides us with higher returns when the more volatile spot market is stronger. ​ We currently deploy the majority of our fleet on a spot rate basis to benefit from market volatility and what we believe are the traditionally higher returns the spot market offers compared with time charters.
What we believe to be the most significant of such risks are described in the “Item 1A – Risk Factors” section below. ​ Metrics and Targets – As a part of the actions described in the “Strategy” section above, we are working to meet the carbon efficiency targets included in our sustainability-linked loan and to establish other appropriate metrics by which to measure our performance and drive improvement. 4 International Seaways, Inc.
What we believe to be the most significant of such risks are described in the “Item 1A – Risk Factors” section below. ​ Metrics and Targets – As a part of the actions described in the “Strategy” section above, we are working to meet the carbon efficiency targets included in our sustainability-linked loan and to establish other appropriate metrics by which to measure our performance and drive improvement. ​ FLEET OPERATIONS ​ Fleet Summary ​ As of December 31, 2023, our operating fleet consisted of 73 vessels, 59 of which were owned and 14 of which were chartered in (including 13 vessels under bareboat charters pursuant to sale and leaseback arrangements which are deemed to be financing arrangements).
For example, California has adopted extensive requirements for more stringent effluent limits and discharge monitoring and testing requirements with respect to discharges in its waters. ​ Following an assessment by the California State Lands Commission of the current technology for meeting ballast water management standards, effective January 1, 2020, California extended the deadline for compliance with stringent interim standards to 2030 and the deadline for final “zero detect” standards to 2040.
Following an assessment by the California State Lands Commission of the current technology for meeting ballast water management standards, California extended the deadline for compliance with stringent interim standards to 2030 and the deadline for final “zero detect” standards to 2040.
This transition process is expected to be completed by the second quarter of 2023. ​ In addition to regular maintenance and repair, crews onboard each vessel and shore-side personnel must ensure that the vessels in the Company’s fleet meet or exceed regulatory standards established by organizations such as the IMO and the U.S.
We continue to hire the crew, with the managers acting as agents on our behalf. ​ In addition to regular maintenance and repair, crews onboard each vessel and shore-side personnel must ensure that the vessels in the Company’s fleet meet or exceed regulatory standards established by organizations such as the IMO and the U.S.
Subsequently, at the MEPC 77 meeting in November 2021, IMO announced plans to adopt a revised GHG strategy in 2023. ​ In 2011, the European Commission established a working group on shipping to provide input to the European Commission in its work to develop and assess options for the inclusion of international maritime transport in the GHG reduction commitment of the European Union (“EU”).
Ships with low ratings are required to submit corrective action plans. ​ In 2011, the European Commission established a working group on shipping to provide input to the European Commission in its work to develop and assess options for the inclusion of international maritime transport in the GHG reduction commitment of the European Union (“EU”).
Refined petroleum product cargoes are transported from refineries to consuming markets characterized by both long and short-haul routes. The market for these product cargoes is driven by global refinery capacity, changes in consumer demand and product specifications and cargo arbitrage opportunities.
The market for these product cargoes is driven by global refinery capacity, changes in consumer demand and product specifications and cargo arbitrage opportunities.
The impact of these changes is not known at this time. ​ Security Regulations and Practices ​ Security at sea has been a concern to governments, shipping lines, port authorities and importers and exporters for years. Since the terrorist attacks of September 11, 2001, there have been a variety of initiatives intended to enhance vessel security. In 2002, the U.S.
The impact of these changes is not known at this time. ​ Security Regulations and Practices ​ 17 International Seaways, Inc. Table of Contents Security at sea has been a concern to governments, shipping lines, port authorities and importers and exporters for years.
Our qualification for the exemption under Section 883 is described in more detail under “Risk Factors — Risks Related to Legal and Regulatory Matters — We may be subject to U.S. federal income tax on U.S. source shipping income, which would reduce our net income and cash flows .” To the extent INSW is unable to qualify for exemption from tax under Section 883, 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 United States will be considered to be 50% derived from sources within the United States.
Our qualification for the exemption under Section 883 is described in more detail under “Risk Factors — Risks Related to Legal and Regulatory Matters — We may be subject to U.S. federal income tax on U.S. source shipping income, which would reduce our net income and cash flows .” To the extent INSW is unable to qualify for exemption from tax under Section 883, 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. ​ Global Minimum Tax ​ In December 2021, the Organization for Economic Co-operation and Development (“OECD”) issued Model Rules for implementation of a 15% minimum tax for multinational enterprises as part of its initiative intended to address the tax challenges arising from globalization.
Our customers include oil companies and trading companies that are importing or exporting crude oil in the USG to or from larger Suezmax and VLCC vessels, which are prevented from using certain ports due to their size and draft. ​ Product Carriers ​ Our Product Carriers reportable business segment consists of a fleet of MRs, LR1 product carriers, and an LR2 product carrier engaged in the worldwide transportation of refined petroleum products.
Our customers include oil companies and trading companies that are importing or exporting crude oil in the USG to or from larger Suezmax and VLCC vessels, which are prevented from using certain ports due to their size and draft. ​ 5 International Seaways, Inc.
One is administered by the USCG under the National Aquatic Nuisance and Control Act and National Invasive Species Act, and the other is administered by the EPA under the CWA. ​ In March 2012, the USCG promulgated its final rule on ballast water management for the control of nonindigenous species in U.S. waters.
One is administered by the USCG under the National Aquatic Nuisance and Control Act and National Invasive Species Act, and the other is administered by the EPA under the CWA. ​ Under the USCG’s final rule on ballast water management for the control of nonindigenous species in U.S. waters, which generally is in line with the requirements set out in the BWM Convention, the treatment systems for domestic and foreign vessels operating in U.S. waters must be Type Approved by the USCG.
The Company’s fleet list excludes vessels chartered-in where the duration of the charter was one year or less at inception. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total at December 31, 2022 Vessel Fleet and Type ​ Vessels Owned ​ Vessels Chartered-in (1) ​ Number ​ Total Dwt Operating Fleet ​ ​ ​ ​ ​ ​ ​ ​ Crude Tankers ​ ​ ​ ​ ​ ​ ​ ​ VLCC ​ 4 ​ 6 ​ 10 ​ 3,012,171 Suezmax ​ 13 ​ — ​ 13 ​ 2,061,754 Aframax ​ 1 ​ 3 ​ 4 ​ 452,375 Total ​ 18 ​ 9 ​ 27 ​ 5,526,300 Product Carriers ​ ​ ​ ​ ​ ​ ​ ​ LR2 ​ — ​ 1 ​ 1 ​ 112,691 LR1 ​ 6 ​ 2 ​ 8 ​ 595,134 MR ​ 34 ​ 4 ​ 38 ​ 1,905,176 Total ​ 40 ​ 7 ​ 47 ​ 2,613,001 Total Owned and Operated Fleet ​ 58 ​ 16 ​ 74 ​ 8,139,301 Newbuild Fleet ​ ​ ​ ​ ​ ​ ​ ​ VLCC ​ 3 ​ — ​ 3 ​ 900,000 Total Newbuild Fleet ​ 3 ​ — ​ 3 ​ 900,000 ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Operating and Newbuild Fleet ​ 61 ​ 16 ​ 77 ​ 9,039,301 (1) Includes both bareboat charters and time charters, but excludes vessels chartered in where the duration of the charter was one year or less at commencement of the charter. ​ Business Segments ​ The bulk shipping of crude oil and refined petroleum products has many distinct market segments based largely on the size and design configuration of vessels required and, in some cases, on the flag of registry.
The Company’s fleet list excludes vessels chartered-in where the duration of the charter was one year or less at inception, as well as any workboats chartered-in by our Crude Tankers Lightering business. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total at December 31, 2023 Vessel Fleet and Type ​ Vessels Owned ​ Vessels Chartered-in ​ Number ​ Total Dwt Operating Fleet ​ ​ ​ ​ ​ ​ ​ ​ Crude Tankers ​ ​ ​ ​ ​ ​ ​ ​ VLCC ​ 4 ​ 9 ​ 13 ​ 3,910,572 Suezmax ​ 13 ​ — ​ 13 ​ 2,061,754 Aframax ​ 4 ​ — ​ 4 ​ 452,375 Total ​ 21 ​ 9 ​ 30 ​ 6,424,701 Product Carriers ​ ​ ​ ​ ​ ​ ​ ​ LR2 ​ 1 ​ — ​ 1 ​ 112,691 LR1 ​ 6 ​ 1 ​ 7 ​ 522,698 MR ​ 31 ​ 4 ​ 35 ​ 1,750,854 Total ​ 38 ​ 5 ​ 43 ​ 2,386,243 Total Owned and Operated Fleet ​ 59 ​ 14 ​ 73 ​ 8,810,944 Newbuild Fleet ​ ​ ​ ​ ​ ​ ​ ​ LR1 ​ 4 ​ — ​ 4 ​ 294,400 Total Newbuild Fleet ​ 4 ​ — ​ 4 ​ 294,400 ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Operating and Newbuild Fleet ​ 63 ​ 14 ​ 77 ​ 9,105,344 ​ ​ Business Segments ​ The bulk shipping of crude oil and refined petroleum products has many distinct market segments based largely on the size and design configuration of vessels required and, in some cases, on the flag of registry.
Table of Contents ​ ​ ​ Crude Tankers (including Crude Tankers Lightering) ​ Our Crude Tankers reportable business segment is made up of a fleet of VLCCs, Suezmaxes, and Aframaxes engaged in the worldwide transportation of crude oil. ​ This segment also includes our Crude Tankers Lightering business through which we provide ship-to-ship (or “STS”) lightering support services and full-service STS lightering to customers in the U.S.
The Company has established two reportable business segments: Crude Tankers and Product Carriers. ​ For additional information regarding the Company’s two reportable segments for the three years ended December 31, 2023, see Note 5, “Business and Segment Reporting,” to the Company’s consolidated financial statements set forth in Item 8, “Financial Statements and Supplementary Data.” ​ Crude Tankers (including Crude Tankers Lightering) ​ Our Crude Tankers reportable business segment is made up of a fleet of VLCCs, Suezmaxes, and Aframaxes engaged in the worldwide transportation of crude oil. ​ This segment also includes our Crude Tankers Lightering business through which we provide ship-to-ship (or “STS”) lightering support services and full-service STS lightering to customers in the U.S.
By operating a large number of vessels as an integrated transportation system, commercial pools offer customers greater flexibility and a higher level of service while achieving scheduling efficiencies. Pools are commercially managed by experienced commercial operators that, among other things, arrange charters for the vessels participating in the pool in exchange for an administrative fee.
Commercial Pools and other Commercial Management Arrangements ​ We currently utilize third-party managed pools as the principal commercial strategy for our vessels participating in the spot voyage charter markets. By operating a large number of vessels as an integrated transportation system, commercial pools offer customers greater flexibility and a higher level of service while achieving scheduling efficiencies.
We compete with other owners of International Flag tankers, including other independent shipowners, integrated oil companies, state-owned entities with their own fleets, and oil traders with logistical operations. Our vessels compete with all other vessels of a size and type required by the customer that can be available at the date and location specified.
Our vessels compete with all other vessels of a size and type required by the customer that can be available at the date and location specified.
Acting on that commitment, we oversaw the recycling of two of our Panamaxes at certified facilities. Our efforts on these projects including stopping work until identified unsafe working conditions were rectified and procedures for materials handling were improved. Additionally, during 2022, we continued the construction of our three dual-fuel LNG VLCCs at Daewoo Shipbuilding and Marine Engineering’s shipyard.
Stoppage of work until identified unsafe working conditions are rectified and improvements in procedures for materials handling were some of the positive takeaways noted from our most recent recycling projects. Additionally, during 2023, we completed the construction of our three dual-fuel LNG VLCCs at Daewoo Shipbuilding and Marine Engineering’s shipyard.
We believe that the diversity of our current Board of Directors (including three women and one Asian American) and the diversity of our executive leadership (two of the Company’s six executive officers belong to underrepresented minorities and are diverse by ethnic background, non-U.S. place of birth, or gender) is a testament to our ongoing commitment to hiring, developing, and retaining diverse talent. ​ To support the advancement of our employees, we offer training and development programs encouraging advancement from within.
We believe that the diversity of our Board of Directors as of December 31, 2023 (including three women and one Asian American) and the diversity of our executive leadership (two of the Company’s six executive officers belong to underrepresented minorities and are diverse by ethnic background, non-U.S. place of birth, or gender) is a testament to our ongoing commitment to hiring, developing, and retaining diverse talent. ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2023 ​ ​ Female ​ Male Shoreside Employees ​ 22 ​ 43 Seafarers ​ 4 ​ 2,629 Total Employees ​ 26 ​ 2,672 ​ ​ ​ ​ ​ ​ ​ As of December 31, 2023 ​ ​ Female ​ Male Board of Directors (a) ​ 3 ​ 7 Non-Director Senior Management ​ — ​ 5 Non-Director Senior Management Direct Reports ​ 21 ​ 38 (a) Includes our CEO who is also a member of the Board of Directors ​ We recognize the need to address gender representation in our industry.
See Note 16, “Leases,” to the Company’s consolidated financial statements set forth in Item 8, “Financial Statements and Supplementary Data,” for additional information relating to the Company’s chartered-in vessels.
Vessels chartered-in include one time charter. The Company is subject to purchase obligations for 10 of the vessels under sale and leaseback financing arrangements at the end of each bareboat charter. See Note 16, “Leases,” to the Company’s consolidated financial statements set forth in Item 8, “Financial Statements and Supplementary Data,” for additional information 4 International Seaways, Inc.
Ultimately, under VIDA, the discharge of ballast water in the navigable waters of the United States will no longer subject to the VGP or the CWA. In October 2020, EPA issued its proposed national standards of performance for 20 separate discharges incidental to normal vessel operations including ballast tanks and exhaust gas emission control systems.
In October 2020, EPA issued its proposed national standards of performance for 20 separate discharges incidental to normal vessel operations including ballast tanks and exhaust gas emission control 16 International Seaways, Inc. Table of Contents systems. EPA has not yet issued a final rule.
Shipping income attributable to transportation exclusively between non-U.S. ports will be considered to be 100% derived from sources outside the United States and will generally not be subject to any U.S. federal income tax. INSW’s vessels operate in various parts of the world, including to or from U.S. ports. ​ ​ ​ 19 International Seaways, Inc. Table of Contents ​
Shipping income attributable to transportation exclusively between non-U.S. ports will be considered to be 100% derived from sources outside the United States and will generally not be subject to any U.S. federal income tax. ​ In 2023 and prior years, INSW was exempt from taxation on its U.S. source shipping income under Section 883 of the Code and the corresponding Treasury regulations.
This income principally consists of hire from time and voyage charters for the transportation of cargoes and the performance of services directly related thereto, which is referred to herein as “shipping income.” ​ In 2022 and prior years, INSW was exempt from taxation on its U.S. source shipping income under Section 883 of the Code and Treasury regulations.
This income principally consists of hire from time and voyage charters for the transportation of cargoes and the performance of services directly related thereto, which is referred to herein as “shipping income.” 19 International Seaways, Inc. Table of Contents ​ INSW’s vessels operate in various parts of the world, including to or from U.S. ports.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeTable of Contents ● Termination of, or a change in the nature of, INSW’s relationship with any of the commercial pools in which it participates could adversely affect its business. ● INSW may not realize the benefits it expects from past acquisitions or acquisitions or other strategic transactions it may make in the future. ● The smuggling or alleged smuggling of drugs or other contraband onto the Company’s vessels may lead to governmental claims against the Company. ● Operational costs and capital expenses will increase as the Company’s vessels age and may also increase due to unanticipated events related to secondhand vessels and the consolidation of suppliers. ● The Company is subject to credit risks with respect to its counterparties on contracts, and any failure by those counterparties to meet their obligations could cause the Company to suffer losses on such contracts, decreasing revenues and earnings. ● The Company may face unexpected drydock costs for its vessels. ● Technological innovation could reduce the Company’s charter income and the value of the Company’s vessels. ● The Company stores, processes, maintains, and transmits confidential information through information technology (“IT”) systems.
Biggest changeRisks Related to Our Company ​ ● INSW has incurred significant indebtedness which could affect its ability to finance its operations, pursue desirable business opportunities and successfully run its business in the future, all of which could affect INSW’s ability to fulfill its obligations under that indebtedness. ● The Company may not be able to generate sufficient cash to service all of its indebtedness and could in the future breach covenants in its credit facilities, term loans and certain vessel charters. ● INSW is a holding company and depends on the ability of its subsidiaries to distribute funds to it in order to satisfy its financial obligations or pay dividends. ● The Company will be required to make additional capital expenditures to expand the number of vessels in its fleet and to maintain its vessels, which depend on additional financing. ● The Company depends on third-party service providers for technical and commercial management of its fleet. ● INSW’s business depends on voyage charters, and any future decrease in spot charter rates could adversely affect its earnings. ● INSW may not be able to renew Time Charters when they expire or enter into new Time Charters. ● Termination of, or a change in the nature of, INSW’s relationship with any of the commercial pools in which it participates could adversely affect its business. ● INSW may not realize the benefits it expects from past acquisitions or acquisitions or other strategic transactions it may make in the future. ● The smuggling or alleged smuggling of drugs or other contraband onto the Company’s vessels may lead to governmental claims against the Company. ● Operational costs and capital expenses will increase as the Company’s vessels age and may also increase due to unanticipated events related to secondhand vessels and the consolidation of suppliers. ● The Company is subject to credit risks with respect to its counterparties on contracts, and any failure by those counterparties to meet their obligations could cause the Company to suffer losses on such contracts, decreasing revenues and earnings. ● The Company may face unexpected drydock costs for its vessels. ● Technological innovation could reduce the Company’s charter income and the value of the Company’s vessels. ● The Company stores, processes, maintains, and transmits confidential information through information technology (“IT”) systems.
Key regulatory initiatives that are anticipated to require substantial additional capital and/or operating expenditures in the next several years include more stringent limits on the sulfur content of fuel oil for vessels operating in certain areas and more stringent requirements for management and treatment of ballast water. ​ Certain of the Company’s vessels are subject to more stringent numeric discharge limits of ballast water under the EPA’s VGP, with additional vessels becoming subject in future years, even though those vessels have obtained a valid extension from the USCG for implementation of treatment technology under the USCG’s final rules.
Key regulatory initiatives that are anticipated to require substantial additional capital and/or operating expenditures in the next several years include more stringent limits on the sulfur content of fuel oil for vessels operating in certain areas and more stringent requirements for management and treatment of ballast water. ​ Ballast Water ​ Certain of the Company’s vessels are subject to more stringent numeric discharge limits of ballast water under the EPA’s VGP, with additional vessels becoming subject in future years, even though those vessels have obtained a valid extension from the USCG for implementation of treatment technology under the USCG’s final rules.
Furthermore, there is substantial doubt that the courts of the Republic of the Marshall Islands or of the non-U.S. jurisdictions in which our offices are located would enter judgments in original actions brought in those courts predicated on U.S. federal or state securities laws. ​ The market price of the Company’s securities may fluctuate significantly. ​ The Company’s common stock is listed on New York Stock Exchange.
Furthermore, there is substantial doubt that the courts of the Republic of the Marshall Islands or of the non-U.S. jurisdictions in which our offices are located would enter judgments in original actions brought in those courts predicated on U.S. federal or state securities laws. ​ The market price of the Company’s securities may fluctuate significantly. ​ The Company’s common stock is listed on the New York Stock Exchange.
These risks include those described or referred to in this “Risk Factors” section and under “Forward -Looking Statements,” as well as, among other things: fluctuations in the Company’s operating results; activities of and results of operations of the Company’s competitors; changes in the Company’s relationships with the 40 International Seaways, Inc.
These risks include those described or referred to in this “Risk Factors” section and under “Forward -Looking Statements,” as well as, among other things: fluctuations in the Company’s operating results; activities of and results of operations of the Company’s competitors; changes in the Company’s relationships with 40 International Seaways, Inc.
Table of Contents Company’s customers or the Company’s vendors; changes in business or regulatory conditions; changes in the Company’s capital structure; any announcements by the Company or its competitors of significant acquisitions, strategic alliances or joint ventures; additions or departures of key personnel; investors’ general perception of the Company; failure to meet market expectations; future sales of the Company’s securities by it, directors, executives and significant stockholders; changes in domestic and international economic and political conditions; and other events or factors, including those resulting from natural disasters, war, acts of terrorism or responses to these events.
Table of Contents the Company’s customers or the Company’s vendors; changes in business or regulatory conditions; changes in the Company’s capital structure; any announcements by the Company or its competitors of significant acquisitions, strategic alliances or joint ventures; additions or departures of key personnel; investors’ general perception of the Company; failure to meet market expectations; future sales of the Company’s securities by it, directors, executives and significant stockholders; changes in domestic and international economic and political conditions; and other events or factors, including those resulting from natural disasters, war, acts of terrorism or responses to these events.
If the Company breaches such covenants and is unable to remedy the relevant breach or obtain a waiver, the Company’s lenders could accelerate its debt and lenders could foreclose on the Company’s owned vessels and the owners of certain vessels that the Company charters in could terminate such charters. ​ A range of economic, competitive,29inanceial, business, industry and other factors will affect future financial performance, and, accordingly, the Company’s ability to generate cash flow from operations and to pay debt and to meet the financial covenants under the Company’s debt facilities.
If the Company breaches such covenants and is unable to remedy the relevant breach or obtain a waiver, the Company’s lenders could accelerate its debt and lenders could foreclose on the Company’s owned vessels and the owners of certain vessels that the Company charters in could terminate such charters. ​ A range of economic, competitive, financial, business, industry and other factors will affect future financial performance, and, accordingly, the Company’s ability to generate cash flow from operations and to pay debt and to meet the financial covenants under the Company’s debt facilities.
Violations of or liabilities under environmental requirements also can result in substantial penalties, fines and other sanctions, including in certain instances, seizure or detention of the Company’s vessels. ​ INSW could incur significant costs, including cleanup costs, fines, penalties, third-party claims and natural resource damages, as the result of an oil spill or liabilities under environmental laws.
Violations of or liabilities under environmental requirements also can result in substantial penalties, fines and other sanctions, including in certain instances, seizure or detention of the Company’s vessels. ​ Oil Pollution ​ INSW could incur significant costs, including cleanup costs, fines, penalties, third-party claims and natural resource damages, as the result of an oil spill or liabilities under environmental laws.
If the third-party technical manager exercises that right, the Company will be required either to enter into substitute agreements with other third parties or to assume those management duties.
If a third-party technical manager exercises that right, the Company will be required either to enter into substitute agreements with other third parties or to assume those management duties.
We will qualify for the Section 883 exemption for 2023 and forward if, among other things, (i) our common shares are treated as primarily and regularly traded on an established securities market in the United States or another qualified country (“publicly traded test”), or (ii) we satisfy one of two other ownership tests. Under applicable U.S.
We will qualify for the Section 883 exemption for 2024 and forward if, among other things, (i) our common shares are treated as primarily and regularly traded on an established securities market in the United States or another qualified country (“publicly traded test”), or (ii) we satisfy one of two other ownership tests. Under applicable U.S.
As of December 31, 2022, the weighted average age of the Company’s total owned and operated fleet was 10.2 years. In addition, older vessels are typically less fuel-efficient than more recently constructed vessels due to improvements in engine technology.
As of December 31, 2023, the weighted average age of the Company’s total owned and operated fleet was 10.2 years. In addition, older vessels are typically less fuel-efficient than more recently constructed vessels due to improvements in engine technology.
Any securities class action litigation could result in substantial cost and the diversion of management’s attention and resources. ​ In addition, the stock market has recently experienced volatility that, in some cases, has been unrelated or disproportionate to the operating performance of particular companies.
Any securities class action litigation could result in substantial costs and the diversion of management’s attention and resources. ​ In addition, the stock market has recently experienced volatility that, in some cases, has been unrelated or disproportionate to the operating performance of particular companies.
Should the Company not be able to successfully clear the oil majors’ risk assessment processes on an ongoing basis, the future employment of the Company’s vessels could also be adversely affected. since it might lead to the oil majors’ terminating existing charters. ​ The Company’s vessels may be directed to call on ports located in countries that are subject to restrictions imposed by the U.S. government, the U.N. the United Kingdom (“U.K.”) or the EU, which could negatively affect the trading price of the Company’s common shares. ​ From time to time, certain of the Company’s vessels, on the instructions of the charterers or pool manager responsible for the commercial management of such vessels, have called and may again call on ports located in countries or territories, and/or operated by persons, subject to sanctions and embargoes imposed by the U.S. government, the U.N., the U.K. or the EU and countries identified by the U.S. government, the U.N., the U.K. or the EU as state sponsors of terrorism.
Should the Company not be able to successfully clear the oil majors’ risk assessment processes on an ongoing basis, the future employment of the Company’s vessels could also be adversely affected. since it might lead to the oil majors’ terminating existing charters. ​ The Company’s vessels may be directed to call on ports located in countries that are subject to restrictions imposed by the U.S., the U.N., the U.K. or the EU, which could negatively affect the trading price of the Company’s common shares. ​ From time to time, certain of the Company’s vessels, on the instructions of the charterers or pool manager responsible for the commercial management of such vessels, have called and may again call on ports located in countries or territories, and/or operated by persons, subject to sanctions and embargoes imposed by the U.S., the U.N., the U.K. or the EU and countries identified by the U.S., the U.N., the U.K. or the EU as state sponsors of terrorism.
The Company has also transferred commercial management of much of its fleet to certain other third-party service providers, principally commercial pools. ​ In such outsourcing arrangements, the Company has transferred direct control over technical and commercial management of the relevant vessels, while maintaining significant oversight and audit rights, and must rely on third-party service providers to, among other things: ● comply with contractual commitments to the Company, including with respect to safety, quality and environmental compliance of the operations of the Company’s vessels; ● comply with requirements imposed by the U.S. government, the United Nations (“U.N.”) and the EU (i) restricting calls on ports located in countries that are subject to sanctions and embargoes and (ii) prohibiting bribery and other corrupt practices; ● respond to changes in customer demands for the Company’s vessels; ● obtain supplies and materials necessary for the operation and maintenance of the Company’s vessels; and ● mitigate the impact of labor shortages and/or disruptions relating to crews on the Company’s vessels. ​ The failure of third-party service providers to meet such commitments could lead to legal liability or other damages to the Company.
The Company has also transferred commercial management of much of its fleet to certain other third-party service providers, principally commercial pools. ​ In such outsourcing arrangements, the Company has transferred direct control over technical and commercial management of the relevant vessels, while maintaining significant oversight and audit rights, and must rely on third-party service providers to, among other things: ● comply with contractual commitments to the Company, including with respect to safety, quality and environmental compliance of the operations of the Company’s vessels; ● comply with requirements imposed by the U.S., the U.N., the U.K. and the EU (i) restricting calls on ports located in countries that are subject to sanctions and embargoes and (ii) prohibiting bribery and other corrupt practices; ● respond to changes in customer demands for the Company’s vessels; ● obtain supplies and materials necessary for the operation and maintenance of the Company’s vessels; and ● mitigate the impact of labor shortages and/or disruptions relating to crews on the Company’s vessels. ​ The failure of third-party service providers to meet such commitments could lead to legal liability or other damages to the Company.
Although vessel recycling levels over any particular period will depend on various factors, including charter rates and recycling prices, the newbuilding order book (i.e., vessels in various stages of planning or construction that will be delivered in the future) represented 4% and 7% of the existing world tanker fleet as of each of December 31, 2022 and 2021.
Although vessel recycling levels over any particular period will depend on various factors, including charter rates and recycling prices, the newbuilding order book (i.e., vessels in various stages of planning or construction that will be delivered in the future) represented approximately 7% and 4% of the existing world tanker fleet as of each of December 31, 2023 and 2022.
We can provide no assurance that ownership of our common shares by 5% shareholders will allow us to qualify for the Section 883 exemption in 2023 and any other future taxable years.
We can provide no assurance that ownership of our common shares by 5% shareholders will allow us to qualify for the Section 883 exemption in 2024 and any other future taxable years.
See Item 1, “Business —Environmental and Security Matters Relating to Bulk Shipping. ​ Other government regulation of vessels, particularly in the areas of safety and environmental requirements, can be expected to become stricter in the future and require the Company to incur significant capital expenditures on its vessels to keep them in compliance, or even to recycle or sell certain vessels altogether.
See Item 1, “Business — Environmental and Security Matters Relating to Bulk Shipping”. ​ Other Impacts ​ Other government regulation of vessels, particularly in the areas of safety and environmental requirements, can be expected to become stricter in the future and require the Company to incur significant capital expenditures on its vessels to keep them in compliance, or even to recycle or sell certain vessels altogether.
The Rights Plan reduces the likelihood that any person or group gains control of the Company through open market accumulation, or other tactics potentially disadvantaging the interests of all stockholders, without paying all stockholders an appropriate control premium or providing the Company’s Board of Directors sufficient time to make informed decisions in the best interests of all stockholders.
The Amended and Restated Rights Plan reduces the likelihood that any person or group gains control of the Company through open market accumulation, or other tactics potentially disadvantaging the interests of all stockholders, without paying all stockholders an appropriate control premium or providing the Company’s Board of Directors sufficient time to make informed decisions in the best interests of all stockholders.
In addition, at any time after a person or group acquires 17.5% or more of the Company’s common stock (unless such person or group acquires 50% or more), the Company’s Board of Directors may exchange one share of the Company’s common stock for each outstanding Right (other than Rights owned by such person or group, which would have become null and void).
In addition, at any time after a person or group acquires 20% or more of the Company’s common stock (unless such person or group acquires 50% or more), the Company’s Board of Directors may exchange one share of the Company’s common stock for each outstanding Right (other than Rights owned by such person or group, which would have become null and void).
In order to mitigate the financial impact of any losses arising from security breaches or computer malwares, the Company has purchased insurance in an amount of $10 million that covers losses arising from such breaches or malwares, including data recovery, extortion, ransomware and business interruption. ​ INSW’s revenues are subject to seasonal variations. ​ INSW operates its tankers in markets that have historically exhibited seasonal variations in demand for tanker capacity, and therefore, charter rates.
In order to mitigate the financial impact of any losses arising from security breaches or computer malwares, the Company has purchased insurance that covers losses arising from such breaches or malwares, including data recovery, extortion, ransomware and business interruption. ​ INSW’s revenues are subject to seasonal variations. ​ INSW operates its tankers in markets that have historically exhibited seasonal variations in demand for tanker capacity, and therefore, charter rates.
The Rights Plan will expire on May 7, 2023, subject to earlier termination by the Company’s Board of Directors if the Board determines that market and other conditions warrant. ​ Notwithstanding the foregoing advantages provided by the Rights Plan to the interests of all stockholders, the Rights Plan may depress the market price of the Company’s common stock by acting to discourage, delay or prevent a change of control of the Company or changes in the management of the Company that the stockholders of the Company may deem advantageous. ​ ​ Future offerings of debt or equity securities by the Company may materially adversely affect the share price, and future capitalization measures could lead to substantial dilution of existing stockholders’ interests in the Company. ​ The Company may seek to raise additional equity through the issuance of new shares or convertible or exchangeable bonds to finance future organic growth or acquisitions.
The Amended and Restated Rights Plan will expire on April 10, 2026, subject to earlier termination by the Company’s Board of Directors if the Board determines that market and other conditions warrant. ​ Notwithstanding the foregoing advantages provided by the Amended and Restated Rights Plan to the interests of all stockholders, the Amended and Restated Rights Plan may depress the market price of the Company’s common stock by acting to discourage, delay or prevent a change of control of the Company or changes in the management of the Company that the stockholders of the Company may deem advantageous. ​ Future offerings of debt or equity securities by the Company may materially adversely affect the share price, and future capitalization measures could lead to substantial dilution of existing stockholders’ interests in the Company. ​ The Company may seek to raise additional equity through the issuance of new shares or convertible or exchangeable bonds to finance future organic growth or acquisitions.
Such attacks may also impact the Company’s customers, which could impair their ability to make payments to the Company under their charters. ​ 26 International Seaways, Inc.
Such attacks may also impact the Company’s customers, which could impair their ability to make payments to the Company under their charters. ​ 27 International Seaways, Inc.
Internal Revenue Code of 1986, as amended, or the “Code,” then we will be subject to U.S. federal income tax on our shipping income that is derived from U.S. sources. If we are subject to such tax, our results of operations and cash flows would be reduced by the amount of such tax.
Internal Revenue Code of 1986, as amended (the “Code”) then we will be subject to U.S. federal income tax on our shipping income that is derived from U.S. sources. If we are subject to such tax, our results of operations and cash flows would be reduced by the amount of such tax.
The success of any such acquisitions will depend upon a number of factors, some of which may not be within its control.
The success of any such acquisition will depend upon a number of factors, some of which may not be within its control.
The Rights Plan is not intended to interfere with any transaction that the Board of Directors determines is in the best interests of stockholders, nor does the Rights Plan prevent the Board of Directors from considering any proposal.
The Amended and Restated Rights Plan is not intended to interfere with any transaction that the Board of Directors determines is in the best interests of stockholders, nor does the Amended and Restated Rights Plan prevent the Board of Directors from considering any proposal.
In the years ended December 31, 2022, 2021 and 2020, INSW derived approximately 96%, 81% and 79%, respectively, of its TCE revenues in the spot market. The tanker industry is both cyclical and volatile in terms of charter rates and profitability.
In the years ended December 31, 2023, 2022 and 2021, INSW derived approximately 91%, 96% and 81%, respectively, of its TCE revenues in the spot market. The tanker industry is both cyclical and volatile in terms of charter rates and profitability.
Table of Contents order book of all classes of tankers (representing vessels in various stages of planning or construction that will be delivered in the future) equaled 4%, 7% and 8% as of each of December 31, 2022, 2021 and 2020. ​ The market value of vessels fluctuates significantly, which could adversely affect INSW’s liquidity or otherwise adversely affect its financial condition. ​ The market value of vessels has fluctuated over time.
The newbuilding order book of all classes of tankers (representing vessels in various stages of planning or construction that will be delivered in the future) equaled approximately 7%, 4% and 7% as of each of December 31, 2023, 2022 and 2021. ​ The market value of vessels fluctuates significantly, which could adversely affect INSW’s liquidity or otherwise adversely affect its financial condition. ​ The market value of vessels has fluctuated over time.
Changes in the management of, and the terms of, these pools (including as a result of changes adopted in conjunction with the IMO 2020 regulations), decreases in the number of vessels participating in these pools, or the termination of these pools, could result in increased costs and reduced efficiency and profitability for the Company. ​ In addition, in recent years the EU has published guidelines on the application of the EU antitrust rules to traditional agreements for maritime services such as commercial pools.
Changes in the management of, and the terms of, these pools (including as a result of changes adopted in conjunction with the implementation of the EU Emission Trading System), decreases in the number of vessels participating in these pools, or the termination of these pools, could result in increased costs and reduced efficiency and profitability for the Company. ​ In addition, in recent years the EU has published guidelines on the application of the EU antitrust rules to traditional agreements for maritime services such as commercial pools.
See also Item 1, “Business — Fleet Operations — Commercial Management.” ​ ​ INSW may not be able to renew Time Charters when they expire or enter into new Time Charters. ​ INSW’s ability to renew expiring contracts or obtain new charters will depend on the prevailing market conditions at the time of renewal.
See also Item 1, “Business — Fleet Operations — Commercial Management.” ​ 30 International Seaways, Inc. Table of Contents INSW may not be able to renew Time Charters when they expire or enter into new Time Charters. ​ INSW’s ability to renew expiring contracts or obtain new charters will depend on the prevailing market conditions at the time of renewal.
Similarly, if analysts publish inaccurate or unfavorable research about the Company’s business, the price and/or trading volume of shares of the Company’s common stock could decline. ​ Our limited duration stockholders rights plan dated as of May 8, 2022 (the “Rights Plan”), also known as a “poison pill”, may discourage, delay or prevent a change of control of the Company or changes in our management and, therefore, depress the market price of the Company’s common stock . ​ The Rights Plan is intended to enable all Company stockholders to realize the long-term value of their investment in the Company.
Similarly, if analysts publish inaccurate or unfavorable research about the Company’s business, the price and/or trading volume of shares of the Company’s common stock could decline. ​ Our limited duration Amended and Restated Stockholders Rights plan dated as of April 11, 2023 (the “Amended and Restated Rights Plan”), also known as a “poison pill”, may discourage, delay or prevent a change of control of the Company or changes in our management and, therefore, depress the market price of the Company’s common stock . ​ The Amended and Restated Rights Plan is intended to enable all Company stockholders to realize the long-term value of their investment in the Company.
As of December 31, 2022, INSW employed four of its vessels on time charters, with expiration dates ranging between March 2023 and August 2024. The Company’s existing time charters may not be renewed at comparable rates or if renewed or entered into, those new contracts may be at less favorable rates.
As of December 31, 2023, INSW employed twelve of its vessels on time charters, with expiration dates ranging between August 2024 and April 2030. The Company’s existing time charters may not be renewed at comparable rates or if renewed or entered into, those new contracts may be at less favorable rates.
Furthermore, damage to any such third party’s reputation, relationships or business may reflect on the Company directly or indirectly, and could have a material adverse effect on the Company’s reputation and business. ​ The third-party technical manager has the right to terminate the Ship Management Agreements at any time with 90 days’ notice.
Furthermore, damage to any such third party service provider’s reputation, relationships or business may reflect on the Company directly or indirectly, and could have a material adverse effect on the Company’s reputation and business. ​ The third-party technical managers have the right to terminate the Ship Management Agreements at any time with 90 days’ notice.
In addition, as a vessel must be drydocked within five years of its delivery from a shipyard, with survey cycles of no more than 60 months for the first three surveys, and 30 months thereafter, not including any unexpected repairs, the Company will incur significant maintenance costs for its existing and any newly-acquired vessels.
In addition, as a vessel must be drydocked within five years of its delivery from a shipyard, with survey cycles of no more than 60 months for the first three surveys, and 30 months thereafter, not including any unexpected repairs, the Company will incur significant maintenance costs 29 International Seaways, Inc.
While the Rights Agreement was effective immediately, the Rights become exercisable only if a person or group acquires beneficial ownership, as defined in the Rights Agreement, of 17.5% or more of the Company’s common stock in a transaction not approved by the Company's Board of Directors.
While the Amended and Restated Rights Agreement was effective immediately, the Rights become exercisable only if a person or group acquires beneficial ownership, as defined in the Rights Agreement, of 20% or more of the Company’s common stock in a transaction not approved by the Company's Board of Directors.
The U.S., U.N., the U.K. and EU sanctions and embargo laws and regulations vary in their application, as they do not all apply to the same covered persons or proscribe the same activities, and such sanctions and embargo laws and regulations may be amended or expanded over time.
The U.S., U.N., the U.K. and EU sanctions and embargo laws and regulations vary in their application, as they do not all apply to the same covered persons or proscribe the same activities, and such sanctions and embargo laws and regulations may be amended or expanded over time. Some sanctions may also apply to transportation 37 International Seaways, Inc.
In addition, the time when a vessel is out of service for maintenance is determined by a number of factors including regulatory deadlines, market conditions, shipyard availability and customer requirements, and accordingly the length of time that a vessel may be off-hire may be longer than anticipated, which could adversely affect the Company’s business, financial condition, results of operations and cash flows. ​ Technological innovation could reduce the Company’s charter income and the value of the Company’s vessels. ​ The charter rates and the value and operational life of a vessel are determined by a number of factors including the vessel’s efficiency, operational flexibility and physical life.
In addition, the time when a vessel is out of service for maintenance is determined by a number of factors including regulatory deadlines, market conditions, shipyard availability and customer requirements, and accordingly the length of time that a vessel may be off-hire may be longer than anticipated, which could adversely affect the Company’s business, financial condition, results of operations and cash flows. ​ Technological innovation could reduce the Company’s charter income and the value of the Company’s vessels. ​ 33 International Seaways, Inc.
Table of Contents Shipping is a business with inherent risks, and INSW’s insurance may not be adequate to cover its losses. ​ INSW’s vessels and their cargoes are at risk of being damaged or lost and its vessel crews and shoreside employees are at risk of injury or death because of events including, but not limited to: ● marine disasters; ● bad weather; ● mechanical failures; ● human error; ● war, terrorism and piracy; ● grounding, fire, explosions and collisions; and ● other unforeseen circumstances or events. ​ These hazards may result in death or injury to persons; loss of revenues or property; demand for the payment of ransoms; environmental damage; higher insurance rates; damage to INSW’s customer relationships; and market disruptions, delay or rerouting, any or all of which may also subject INSW to litigation.
Any of these factors may cause both spot charter rates and the value of the INSW’s vessels to fluctuate, and may have a material adverse effect on our revenues, profitability, cash flows and financial condition. ​ Shipping is a business with inherent risks, and INSW’s insurance may not be adequate to cover its losses. ​ INSW’s vessels and their cargoes are at risk of being damaged or lost and its vessel crews and shoreside employees are at risk of injury or death because of events including, but not limited to: ● marine disasters; ● bad weather; ● mechanical failures; ● human error; ● war, terrorism and piracy; ● grounding, fire, explosions and collisions; and ● other unforeseen circumstances or events. ​ These hazards may result in death or injury to persons; loss of revenues or property; demand for the payment of ransoms; environmental damage; higher insurance rates; damage to INSW’s customer relationships; and market disruptions, delay or rerouting, any or all of which may also subject INSW to litigation.
If the number of new ships of a particular class delivered exceeds the number of vessels of that class being recycled, available capacity in that class will increase. The newbuilding 22 International Seaways, Inc.
If the number of new ships of a particular class delivered exceeds the number of vessels of that class being recycled, available capacity in that class will increase.
Cybersecurity issues, such as security breaches and computer viruses, affecting INSW’s IT systems and those of its third-party vendors, suppliers or counterparties, could disrupt INSW’s business, result in unintended disclosure or misuse of confidential or proprietary information, damage its reputation, increase its costs, and cause losses. ● INSW’s revenues are subject to seasonal variations. ● Effective internal controls are necessary for the Company to provide reliable financial reports and effectively prevent fraud. ● Future discontinuation of LIBOR may adversely affect the interest rate on certain of our debt facilities which reference LIBOR.
Cybersecurity issues, such as security breaches and computer viruses, affecting INSW’s IT systems and those of its third-party vendors, suppliers or counterparties, could disrupt INSW’s business, result in unintended disclosure or misuse of confidential or proprietary information, damage its reputation, increase its costs, and cause losses. ● INSW’s revenues are subject to seasonal variations. ● Effective internal controls are necessary for the Company to provide reliable financial reports and effectively prevent fraud.
The Company recorded vessel impairment charges totaling $1.7 million during 2022. ​ Changes in the worldwide supply of vessels or an expansion of the capacity of newly-built tankers, without a commensurate shift in demand for such vessels, may cause spot charter rates to increase or decline, affecting INSW’s revenues, profitability and cash flows, and the value of its vessels.
The Company did not record any vessel impairment charges during 2023. ​ Changes in the worldwide supply of vessels or an expansion of the capacity of newly-built tankers, without a commensurate shift in demand for such vessels, may cause spot charter rates to increase or decline, affecting INSW’s revenues, profitability and cash flows, and the value of its vessels.
Some sanctions may also apply to transportation of goods (including crude oil) originating in sanctioned countries (particularly Iran, Venezuela and Russia), even if the vessel does not travel to those countries, or is otherwise acting on behalf of sanctioned persons.
Table of Contents of goods (including crude oil) originating in sanctioned countries (particularly Iran, Venezuela and Russia), even if the vessel does not travel to those countries, or is otherwise acting on behalf of sanctioned persons.
If, upon expiration of the existing time charters, INSW is unable to obtain time charters or voyage charters at desirable rates, the Company’s business, financial condition, results of operations and cash flows may be adversely affected. ​ Termination of, or a change in the nature of, INSW’s relationship with any of the commercial pools in which it participates could adversely affect its business. ​ As of December 31, 2022, nine of the Company’s 10 VLCCs participate in the TI pool; 12 of its 13 Suezmaxes participate in the PENFIELD pool; all of the Company’s four Aframaxes participate in the DAKOTA pool; all eight of its LR1s participate in the PI pool; and 37 of the 38 MRs participate in the CPTA pool or NTP pool.
If, upon expiration of the existing time charters, INSW is unable to obtain time charters or voyage charters at desirable rates, the Company’s business, financial condition, results of operations and cash flows may be adversely affected. ​ Termination of, or a change in the nature of, INSW’s relationship with any of the commercial pools in which it participates could adversely affect its business. ​ As of December 31, 2023, 10 of the Company’s 13 VLCCs participate in the TI pool; 11 of its 13 Suezmaxes participate in the PENFIELD pool; two of the Company’s four Aframaxes participate in the Aframax International pool and its one LR2 participates in the HAFNIA pool; all seven of its LR1s participate in the PI pool; and 29 of the 35 MRs participate in the CPTA pool or NTP pool.
Any inability to prevent security breaches (including the inability of INSW’s third party vendors, suppliers or counterparties to prevent security breaches) could also cause existing clients to lose confidence in the Company’s IT systems and could adversely affect INSW’s reputation, cause losses to INSW 34 International Seaways, Inc.
Any inability to prevent security breaches (including the inability of INSW’s third-party vendors, suppliers or counterparties to prevent security breaches) could also cause existing clients to lose confidence in the Company’s IT systems and could adversely affect INSW’s reputation, cause losses to INSW or our customers, damage our brand, and increase our costs.
Furthermore, any such incident could seriously damage INSW’s reputation and cause INSW either to lose business or to be less likely to be able to enter into new business (either because of customer concerns or changes in customer vetting processes).
Table of Contents other cause, due to the high flammability of the oil transported in tankers. Furthermore, any such incident could seriously damage INSW’s reputation and cause INSW either to lose business or to be less likely to be able to enter into new business (either because of customer concerns or changes in customer vetting processes).
Furthermore, investors’ perceptions that the Company’s internal controls are inadequate or that the Company is unable to produce accurate financial statements on a timely basis may harm its stock price. ​ Work stoppages or other labor disruptions may adversely affect INSW’s operations. ​ INSW could be adversely affected by actions taken by employees of other companies in related industries (including third parties providing services to INSW) against efforts by management to control labor costs, restrain wage or benefit increases or modify work practices or the failure of other companies in its industry to successfully negotiate collective bargaining agreements. ​ Future discontinuation of LIBOR may adversely affect the interest rate on certain of our debt facilities which reference LIBOR. ​ Certain of our debt facilities bear interest at a rate which references LIBOR.
Furthermore, investors’ perceptions that the Company’s internal controls are inadequate or that the Company is unable to produce accurate financial statements on a timely basis may harm its stock price. ​ Work stoppages or other labor disruptions may adversely affect INSW’s operations. ​ INSW could be adversely affected by actions taken by employees of other companies in related industries (including third parties providing services to INSW) against efforts by management to control labor costs, restrain wage or benefit increases or modify work practices or the failure of other companies in its industry to successfully negotiate collective bargaining agreements. ​ ​ ​ Risks Related to Legal and Regulatory Matters ​ Climate change and greenhouse gas restrictions may adversely affect our operating results .
Table of Contents Environmental laws and regulations also can affect the resale value or significantly reduce the useful lives of the Company’s vessels, require a reduction in carrying capacity, ship modifications or operational changes or restrictions (and related increased operating costs) or retirement of service, lead to decreased availability or higher cost of insurance coverage for environmental matters or result in the denial of access to, or detention in, certain jurisdictional waters or ports.
These requirements impose significant capital and operating costs on INSW, including, without limitation, ones related to engine adjustments and ballast water treatment. ​ Environmental laws and regulations also can affect the resale value or significantly reduce the useful lives of the Company’s vessels, require a reduction in carrying capacity, ship modifications or operational changes or restrictions (and related increased operating costs) or retirement of service, lead to decreased availability or higher cost of insurance coverage for environmental matters or result in the denial of access to, or detention in, certain jurisdictional waters or ports.
The occurrence of any of the foregoing could have a material adverse effect on our business, financial condition and results of operations. ​ ​ Compliance with complex laws, regulations, and, in particular, environmental laws or regulations, including those relating to the emission of greenhouse gases, may adversely affect INSW’s business. ​ The Company’s operations are affected by extensive and changing international, national and local environmental protection laws, regulations, treaties, conventions and standards in force in international waters, the jurisdictional waters of the countries in which INSW’s vessels operate, as well as the countries of its vessels’ registration.
Table of Contents ​ Compliance with complex laws, regulations, and, in particular, environmental laws or regulations, including those relating to the emission of greenhouse gases, may adversely affect INSW’s business. ​ General ​ The Company’s operations are affected by extensive and changing international, national and local environmental protection laws, regulations, treaties, conventions and standards in force in international waters, the jurisdictional waters of the countries in which INSW’s vessels operate, as well as the countries of its vessels’ registration.
While the Company successfully refinanced in 2022 approximately $575 million of then existing indebtedness, if additional financing is not available when current facilities mature, or is available only on unfavorable terms, the Company may be unable to meet its obligations as they come due or the Company may be unable to execute its business strategy, complete additional vessel acquisitions, or otherwise take advantage of potential business opportunities as they arise. ​ INSW conducts its operations internationally, which subjects it to changing economic, political and governmental conditions that may adversely affect its business. ​ The Company conducts its operations internationally, and its business, financial condition, results of operations and cash flows may be adversely affected by changing economic, political and government conditions in the countries and regions where its vessels are employed, including: ● regional or local economic downturns; ● changes in governmental policy or regulation; ● restrictions on the transfer of funds into or out of countries in which INSW or its customers operate; ● difficulty in staffing and managing (including ensuring compliance with internal policies and controls) geographically widespread operations; ● trade relations with foreign countries in which INSW’s customers and suppliers have operations, including protectionist measures such as tariffs and import or export licensing requirements; ● general economic and political conditions, which may interfere with, among other things, the Company’s supply chain, its customers and all of INSW’s activities in a particular location; ● difficulty in enforcing contractual obligations in non-U.S. jurisdictions and the collection of accounts receivable from foreign accounts; ● different regulatory regimes in the various countries in which INSW operates; ● inadequate intellectual property protection in foreign countries; ● the difficulties and increased expenses in complying with multiple and potentially conflicting U.S. and foreign laws, regulations, security rules, product approvals and trade standards, anti-bribery laws, government sanctions and restrictions on doing business with certain nations or specially designated nationals; ● import and export duties and quotas; ● demands for improper payments from port officials or other government officials; ● U.S. and foreign customs, tariffs and taxes; ● currency exchange controls, restrictions and fluctuations, which could result in reduced revenue and increased operating expense; ● international incidents; ● transportation delays or interruptions; ● local conflicts, acts of war, terrorist attacks or military conflicts; ● changes in oil prices or disruptions in oil supplies that could substantially affect global trade, the Company’s customers’ operations and the Company’s business; 25 International Seaways, Inc.
Table of Contents ​ INSW conducts its operations internationally, which subjects it to changing economic, political and governmental conditions that may adversely affect its business. ​ The Company conducts its operations internationally, and its business, financial condition, results of operations and cash flows may be adversely affected by changing economic, political and government conditions in the countries and regions where its vessels are employed, including: ● regional or local economic downturns; ● changes in governmental policy or regulation; ● restrictions on the transfer of funds into or out of countries in which INSW or its customers operate; ● difficulty in staffing and managing (including ensuring compliance with internal policies and controls) geographically widespread operations; ● trade relations with foreign countries in which INSW’s customers and suppliers have operations, including protectionist measures such as tariffs and import or export licensing requirements; ● general economic and political conditions, which may interfere with, among other things, the Company’s supply chain, its customers and all of INSW’s activities in a particular location; ● difficulty in enforcing contractual obligations in non-U.S. jurisdictions and the collection of accounts receivable from foreign accounts; ● different regulatory regimes in the various countries in which INSW operates; ● inadequate intellectual property protection in foreign countries; ● the difficulties and increased expenses in complying with multiple and potentially conflicting U.S. and foreign laws, regulations, security rules, product approvals and trade standards, anti-bribery laws, government sanctions and restrictions on doing business with certain nations or specially designated nationals; ● import and export duties and quotas; ● demands for improper payments from port officials or other government officials; ● U.S. and foreign customs, tariffs and taxes; ● currency exchange controls, restrictions and fluctuations, which could result in reduced revenue and increased operating expense; ● international incidents; ● transportation delays or interruptions; ● local conflicts, acts of war, terrorist attacks or military conflicts; ● changes in oil prices or disruptions in oil supplies that could substantially affect global trade, the Company’s customers’ operations and the Company’s business; ● the imposition of taxes by flag states, port states and jurisdictions in which INSW or its subsidiaries are incorporated or where its vessels operate; and ● expropriation of INSW’s vessels. ​ The occurrence of any such event could have a material adverse effect on the Company’s business. ​ Additionally, protectionist developments, or the perception they may occur, may have a material adverse effect on global economic conditions, and may significantly reduce global trade.
Although there can be no certainty that any of these discussions will result in definitive agreements or the completion of any transactions, the announcement of any such transaction may lead to increased volatility in the trading price of INSW’s securities. ​ Acquisitions and other transactions can also involve a number of special risks and challenges, including: ● diversion of management time and attention from the Company’s existing business and other business opportunities; ● delays in closing or the inability to close an acquisition for any reason, including third-party consents or approvals; ● any unanticipated negative impact on the Company of disclosed or undisclosed matters relating to any vessels or operations acquired; and ● assumption of debt or other liabilities of the acquired business, including litigation related to the acquired business. ​ The success of acquisitions or strategic investments depends on the effective integration of newly acquired businesses or assets into INSW’s current operations.
Table of Contents Acquisitions and other transactions can also involve a number of special risks and challenges, including: ● diversion of management time and attention from the Company’s existing business and other business opportunities; ● delays in closing or the inability to close an acquisition for any reason, including third-party consents or approvals; ● any unanticipated negative impact on the Company of disclosed or undisclosed matters relating to any vessels or operations acquired; and ● assumption of debt or other liabilities of the acquired business, including litigation related to the acquired business. ​ The success of acquisitions or strategic investments depends on the effective integration of newly acquired businesses or assets into INSW’s current operations.
Table of Contents ​ The Company will be required to make additional capital expenditures to expand the number of vessels in its fleet and to maintain all of its vessels, which depend on additional financing. ​ The Company’s business strategy is based in part upon the expansion of its fleet through the purchase of additional vessels at attractive points in the tanker cycle.
In addition, the terms of certain of the Company’s financing agreements restrict the ability of certain of those subsidiaries to distribute funds to International Seaways, Inc. ​ The Company will be required to make additional capital expenditures to expand the number of vessels in its fleet and to maintain all of its vessels, which depend on additional financing. ​ The Company’s business strategy is based in part upon the expansion of its fleet through the purchase of additional vessels at attractive points in the tanker cycle.
Table of Contents ​ ​ The Company may not be able to generate sufficient cash to service all of its indebtedness and could in the future breach covenants in its credit facilities, term loans, and certain vessel charters. ​ The Company’s earnings, cash flow and the market value of its vessels vary significantly over time due to the cyclical nature of the tanker industry, as well as general economic and market conditions affecting the industry.
The Company’s inability to obtain additional financing at an acceptable cost, or at all, could materially affect the Company’s results of operation and its ability to implement its business strategy. ​ The Company may not be able to generate sufficient cash to service all of its indebtedness and could in the future breach covenants in its credit facilities, term loans, and certain vessel charters. ​ The Company’s earnings, cash flow and the market value of its vessels vary significantly over time due to the cyclical nature of the tanker industry, as well as general economic and market conditions affecting the industry.
Increasing the number of issued shares would dilute the ownership interests of existing stockholders. Stockholders’ ownership interests could also be diluted if other companies or equity interests in companies are acquired in exchange for new shares of the Company’s common stock to be issued and if the Company’s Board of 41 International Seaways, Inc.
Increasing the number of issued shares would dilute the ownership interests of existing stockholders. Stockholders’ ownership interests could also be diluted if other companies or equity interests in 41 International Seaways, Inc.
See also “— Risks Related to Our Company — The Company is subject to credit risks with respect to its counterparties on contracts and any failure by those counterparties to meet their obligations could cause the Company to suffer losses on such contracts, decreasing revenues and earnings ” and “— Risks Related to Our Company — INSW has incurred significant indebtedness which could affect its ability to finance its operations, pursue desirable business opportunities and successfully run its business in the future, all of which could affect INSW’s ability to fulfill its obligations under that indebtedness .” ​ 24 International Seaways, Inc.
See also “— Risks Related to Our Company — The Company is subject to credit risks with respect to its counterparties on contracts, and any failure by those counterparties to meet their obligations could cause the Company to suffer losses on such contracts, decreasing revenues and earnings ” and “— Risks Related to Our Company — INSW has incurred significant indebtedness which could affect its ability to finance its operations, pursue desirable business opportunities and successfully run its business in the future, all of which could affect INSW’s ability to fulfill its obligations under that indebtedness .” ​ The state of the global financial markets may adversely impact the Company’s ability to obtain additional financing on acceptable terms and otherwise negatively impact the Company’s business. ​ Global financial markets have been, and continue to be, volatile.
The Company currently has newbuilding construction contracts for the purchase of three dual fuel VLCCs which provide for installment payments of the purchase price to be made by the Company as the vessels are being built.
The Company currently has newbuilding construction contracts for the purchase of four dual fuel LNG ready LR1s and an option for two additional dual fuel LNG ready LR1s which provide for installment payments of the purchase price to be made by the Company as the vessels are being built.
Efficiency includes speed, fuel economy and the ability to load and discharge cargo quickly. Flexibility includes the ability to enter harbors, utilize related docking facilities and pass through canals and straits. The length of a vessel’s physical life is related to its original design and construction, its maintenance, the impact of the stress of operations and new regulations.
Flexibility includes the ability to enter harbors, utilize related docking facilities and pass through canals and straits. The length of a vessel’s physical life is related to its original design and construction, its maintenance, the impact of the stress of operations and new regulations (including in particular regulations relating to GHG emissions).
The Classification Society certifies that a tanker is safe and seaworthy in accordance with the applicable rule and regulations of the country of registry of the tanker and the international conventions of which that country is a member.
Every commercial tanker must pass inspection by a Classification Society authorized by the vessel’s country of registry. The Classification Society certifies that a tanker is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the tanker and the international conventions of which that country is a member.
The fluctuation in market value of vessels over time is based upon various factors, including: ● age of the vessel; ● general economic and market conditions affecting the tanker industry, including the availability of vessel financing; ● number of vessels in the world fleet; ● types and sizes of vessels available; ● changes in trading patterns affecting demand for particular sizes and types of vessels; ● cost of newbuildings; ● prevailing level of charter rates; ● environmental and maritime regulations; ● competition from other shipping companies and from other modes of transportation; ● technological advances in vessel design and propulsion and overall vessel efficiency; and ● ability to utilize less expensive fuels. ​ During 2022, tanker values increased, primarily because of higher TCE rates, greater residual values of tankers because of higher steel prices, and limited shipyard capacity to construct tankers because of orders for other categories of vessels such as bulk carriers and container ships.
The fluctuation in market value of vessels over time is based upon various factors, including: ● age of the vessel; ● general economic and market conditions affecting the tanker industry, including the availability of vessel financing; ● number of vessels in the world fleet; ● types and sizes of vessels available; ● changes in trading patterns affecting demand for particular sizes and types of vessels; ● cost of newbuildings; ● prevailing level of charter rates; ● environmental and maritime regulations; ● competition from other shipping companies and from other modes of transportation; ● technological advances in vessel design and propulsion and overall vessel efficiency; and ● ability to utilize less expensive fuels. 23 International Seaways, Inc.
Political instability has also resulted in attacks on vessels, mining of waterways and other efforts to disrupt international shipping, particularly in the Arabian Gulf region and most recently in the Black Sea in connection with the war between Russia and the Ukraine.
Political instability has also resulted in attacks on vessels, mining of waterways and other efforts to disrupt international shipping, particularly in the Arabian Gulf region and most recently in the Black Sea in connection with the war between Russia and Ukraine and in the Red Sea and the Gulf of Aden in connection with the Israel/Gaza conflict resulting from attacks by Iran-backed Houthi militants based in Yemen, respectively.
Risks Related to the Common Stock ● We are incorporated in the Marshall Islands, which may have fewer rights and protections for shareholders than under a typical jurisdiction in the United States. ● It may be difficult to serve process on or enforce a United States judgment against us, our officers and our directors because we are a foreign corporation. ● The market price of the Company’s securities may fluctuate significantly. ● Our Rights Plan may discourage, delay or prevent a change of control of the Company or changes to our management and, therefore, depress the market price of our Common Stock. ● Future offerings of debt or equity securities by the Company may materially adversely affect the share price, and future capitalization measures could lead to substantial dilution of existing shareholders’ interests in the Company. 21 International Seaways, Inc.
Risks Related to the Common Stock ● We are incorporated in the Marshall Islands, which may have fewer rights and protections for shareholders than under a typical jurisdiction in the United States. ● It may be difficult to serve process on or enforce a United States judgment against us, our officers and our directors because we are a foreign corporation. ● The market price of the Company’s securities may fluctuate significantly. ● Our Amended and Restated Rights Plan may discourage, delay or prevent a change of control of the Company or changes to our management and, therefore, depress the market price of our Common Stock. ● Future offerings of debt or equity securities by the Company may materially adversely affect the share price, and future capitalization measures could lead to substantial dilution of existing shareholders’ interests in the Company. ● INSW may not continue to pay cash dividends on its Common Stock. ​ Risks Related to Our Industry ​ The highly cyclical nature of the industry may lead to volatile changes in charter rates and vessel values, which could adversely affect the Company’s earnings and available cash. ​ INSW depends on short duration, or “spot,” charters, for a significant portion of its revenues, which exposes INSW to fluctuations in market conditions.
Government requisition of one or more of the Company’s vessels may negatively impact the Company’s business, financial condition, results of operations and available cash. ​ We may be subject to U.S. federal income tax on U.S. source shipping income, which would reduce our net income and cash flows. ​ If we do not qualify for an exemption pursuant to Section 883, or the “Section 883 exemption,” of the U.S.
Table of Contents ​ We may be subject to U.S. federal income tax on U.S. source shipping income, which would reduce our net income and cash flows. ​ If we do not qualify for an exemption pursuant to Section 883, or the “Section 883 exemption,” of the U.S.
Commencing in May 2019, several vessels in the Arabian Gulf have been attacked, which attacks the United States has attributed to Iranian forces, and at least one vessel has been seized by Iran. Further the war between Russia and the Ukraine has resulted in attacks on commercial vessels in the Black Sea.
Commencing in May 2019, several vessels in the Arabian Gulf have been attacked, which attacks the United States has attributed to Iranian forces, and at least two vessels have been seized by Iran.
If we do not qualify for the Section 883 exemption, our gross shipping income derived from U.S. sources, i.e., 50% of our gross shipping income attributable to transportation beginning or ending in the United States (but not both beginning and ending in the United States), generally would be subject to a four percent tax without allowance for deductions. ​ U.S. tax authorities could treat us as a “passive foreign investment company,” which could have adverse U.S. federal income tax consequences to U.S. shareholders. ​ A non-U.S. corporation generally will be treated as a “passive foreign investment company,” or a “PFIC,” for U.S. federal income tax purposes if, after applying certain look through rules, either (i) at least 75% of its gross income for any taxable year consists of 39 International Seaways, Inc.
If we do not qualify for the Section 883 exemption, our gross shipping income derived from U.S. sources, i.e., 50% of our gross shipping income attributable to transportation beginning or ending in the United States (but not both beginning and ending in the United States), generally would be subject to a four percent tax without allowance for deductions. ​ U.S. tax authorities could treat us as a “passive foreign investment company,” which could have adverse U.S. federal income tax consequences to U.S. shareholders. ​ A non-U.S. corporation generally will be treated as a “passive foreign investment company,” or a “PFIC,” for U.S. federal income tax purposes if, after applying certain look through rules, either (i) at least 75% of its gross income for any taxable year consists of “passive income” or (ii) at least 50% of the average value of assets (determined on a quarterly basis) held for the production of “passive income.” We refer to assets which produce or are held for production of “passive income” as “passive assets.” For purposes of these tests, “passive income” generally includes dividends, interest, gains from the sale or exchange of investment property and rental income and royalties other than rental income and royalties which are received from unrelated parties in connection with the active conduct of a trade or business, as defined in applicable U.S.
The process of designing and implementing effective internal controls is a continuous effort that requires the Company to anticipate and react to changes in its business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy its reporting obligations as a public company. ​ Any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met.
The process of designing and implementing effective internal controls is a continuous effort that requires the Company to anticipate and react to changes in its business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy its reporting obligations as a public company. 34 International Seaways, Inc.
Risks Related to Legal and Regulatory Matters ● Climate change and greenhouse emissions may adversely affect our operating results. ● Increasing scrutiny and changing expectations from investors, lenders and other market participants with respect to our Environmental, Social and Governance policies may impose additional costs on us or expose us to additional risks. ● Compliance with complex laws, regulations, and, in particular, environmental laws or regulations, including those relating to the emission of greenhouse gases (“GHGs”), may adversely affect INSW’s business. ● The employment of the Company’s vessels could be adversely affected by an inability to clear the oil majors’ risk assessment process. ● The Company’s vessels may be directed to call on ports located in countries that are subject to restrictions imposed by the U.S. government, the U.N., the United Kingdom, or the EU, which could negatively affect the trading price of the Company’s common shares. ● The Company may be subject to litigation and government inquiries or investigations that, if not resolved in the Company’s favor and not sufficiently covered by insurance, could have a material adverse effect on it. ● Maritime claimants could arrest INSW’s vessels, which could interrupt cash flows. ● Governments could requisition the Company’s vessels during a period of war or emergency, which may negatively impact the Company’s business, financial condition, results of operation and available cash. ● We may be subject to U.S. federal income tax on U.S. source shipping income, which could reduce our net income and cash flows. ● U.S. tax authorities could treat us as a “passive foreign investment company”, which could have adverse U.S. federal income tax consequences to U.S. shareholders.
Table of Contents ● The employment of the Company’s vessels could be adversely affected by an inability to clear the oil majors’ risk assessment process. ● The Company’s vessels may be directed to call on ports located in countries that are subject to restrictions imposed by the United States (“U.S.”), the UN, the United Kingdom, or the EU, which could negatively affect the trading price of the Company’s common shares. ● The Company may be subject to litigation and government inquiries or investigations that, if not resolved in the Company’s favor and not sufficiently covered by insurance, could have a material adverse effect on it. ● Maritime claimants could arrest INSW’s vessels, which could interrupt cash flows. ● Governments could requisition the Company’s vessels during a period of war or emergency, which may negatively impact the Company’s business, financial condition, results of operation and available cash. ● We may be subject to U.S. federal income tax on U.S. source shipping income, which could reduce our net income and cash flows. ● U.S. tax authorities could treat us as a “passive foreign investment company”, which could have adverse U.S. federal income tax consequences to U.S. shareholders. ● Pending and future tax law changes may result in significant additional taxes to us.
Violations of these laws and regulations could result in fines and penalties, criminal sanctions, restrictions on the Company’s business operations and on the Company’s ability to transport cargo to one or more countries, and could also materially affect the Company’s brand, ability to attract and retain employees, international operations, business and operating results.
Table of Contents Company’s ability to transport cargo to one or more countries, and could also materially affect the Company’s brand, ability to attract and retain employees, international operations, business and operating results.
Table of Contents ​ Although the Company intends to defend these matters vigorously, it cannot predict with certainty the outcome or effect of any such matter, and the ultimate outcome of these matters or the potential costs to resolve them could involve or result in significant expenditures or losses by the Company, or result in significant changes to INSW’s insurance costs, rules and practices in dealing with its customers, all of which could have a material adverse effect on the Company’s future operating results, including profitability, cash flows, and financial condition.
These matters may include, among other things, regulatory proceedings and litigation arising out of or relating to contract disputes, personal injury claims, environmental claims or proceedings, asbestos and other toxic tort claims, employment matters, governmental claims for taxes or duties, sanctions and other regulatory compliance, and other disputes that arise in the ordinary course of the Company’s business. ​ Although the Company intends to defend these matters vigorously, it cannot predict with certainty the outcome or effect of any such matter, and the ultimate outcome of these matters or the potential costs to resolve them could involve or result in significant expenditures or losses by the Company, or result in significant changes to INSW’s insurance costs, rules and practices in dealing with its customers, all of which could have a material adverse effect on the Company’s future operating results, including profitability, cash flows, and financial condition.
Table of Contents ​ ​ INSW’s business depends on voyage charters, and any future decrease in spot charter rates could adversely affect its earnings. ​ Voyage charters, including vessels operating in commercial pools that predominantly operate in the spot market, constituted 96% of INSW’s aggregate TCE revenues in the year ended December 31, 2022, 81% in 2021 and 79% in 2020.
Any such changes could result in a temporary loss of customer approvals, could disrupt the Company’s business and have a material adverse effect on the Company’s business, results of operations and financial condition. ​ INSW’s business depends on voyage charters, and any future decrease in spot charter rates could adversely affect its earnings. ​ Voyage charters, including vessels operating in commercial pools that predominantly operate in the spot market, constituted 91% of INSW’s aggregate TCE revenues in the year ended December 31, 2023, 96% in 2022 and 81% in 2021.
Any insufficiency could negatively impact INSW’s business. ​ Additionally, the $750 Million Credit Facility contains certain restrictions relating to new borrowings as set forth in the loan agreement.
Any insufficiency could negatively impact INSW’s business. ​ 28 International Seaways, Inc. Table of Contents Additionally, INSW’s $750 Million Credit Facility and $160 Million Revolving Credit Facility contain certain restrictions relating to new borrowings as set forth in the relevant loan agreements.
Additional discussion of the risks summarized in this risk factor summary, and other risks we face, can be found below in this risk factor section and should be carefully considered, together with other information in this annual report on Form 10-K and other filings with the SEC, before making an investment decision regarding our common stock. ​ Risks Related to Our Industry ​ ● The highly cyclical nature of the industry may lead to volatile changes in charter rates and vessel values, which could adversely affect the Company’s earnings and available cash. ● The market value of vessels fluctuates significantly, which could adversely affect INSW’s liquidity or otherwise adversely affect its financial condition. ● Declines in charter rates and other market deterioration could cause INSW to incur impairment charges. ● Changes in the worldwide supply of vessels or an expansion of the capacity of newly-built vessels, without a commensurate shift in demand for such vessels, may cause spot chart rates to increase or decline, affecting INSW’s revenues, profitability and cash flows, and the value of its vessels. ● Shipping is a business with inherent risks, and INSW’s insurance may not be adequate to cover its losses. ● Counterparty credit risk and constraints on capital availability may adversely affect INSW’s business. ● The state of the global financial markets may adversely impact the Company’s ability to obtain additional financing on acceptable terms and otherwise negatively impact the Company’s business. ● INSW conducts its operations internationally, which subjects it to changing economic, political and governmental conditions that may adversely affect its business. ● Acts of piracy on ocean-going vessels, terrorist attacks and international hostilities and instability could adversely affect the Company’s business. ● The war between Russia and Ukraine could adversely affect INSW’s business. ● Public health threats could adversely affect INSW’s business. ● The ongoing pandemic involving the novel coronavirus (COVID-19) has adversely affected the Company’s business, operations and financial results, and will likely continue to do so.
Additional discussion of the risks summarized in this risk factor summary, and other risks we face, can be found below in this risk factor section and should be carefully considered, together with other information in this annual report on Form 10-K and other filings with the SEC, before making an investment decision regarding our common stock. ​ Risks Related to Our Industry ​ ● The highly cyclical nature of the industry may lead to volatile changes in charter rates and vessel values, which could adversely affect the Company’s earnings and available cash. ● The market value of vessels fluctuates significantly, which could adversely affect INSW’s liquidity or otherwise adversely affect its financial condition. ● Declines in charter rates and other market deterioration could cause INSW to incur impairment charges. ● Changes in the worldwide supply of vessels or an expansion of the capacity of newly-built vessels, without a commensurate shift in demand for such vessels, may cause spot chart rates to increase or decline, affecting INSW’s revenues, profitability and cash flows, and the value of its vessels. 20 International Seaways, Inc.
Accordingly, it is likely that the operating costs of INSW’s currently operated vessels will rise as the age of the Company’s fleet increases. In addition, changes in governmental regulations and compliance with Classification Society standards 32 International Seaways, Inc.
Accordingly, it is likely that the operating costs of INSW’s currently operated vessels will rise as the age of the Company’s fleet increases. In addition, changes in governmental regulations and compliance with Classification Society standards may restrict the type of activities in which the vessels may engage and/or may require INSW to make additional expenditures for new equipment.
Table of Contents ​ The Company relies on the skills of its senior management team, and if the Company were required to replace them, it could negatively impact the effectiveness of management and the Company’s results of operations could be negatively impacted.
If the counterparties fail to meet their obligations, the Company could suffer losses on such contracts which would decrease revenues, cash flows and earnings. ​ The Company relies on the skills of its senior management team, and if the Company were required to replace them, it could negatively impact the effectiveness of management and the Company’s results of operations could be negatively impacted.
Table of Contents government regulation of tankers, particularly in the areas of safety and environmental impact may change in the future and require the Company to incur significant capital expenditures with respect to its ships to keep them in compliance. ​ Due to concern over the risk of climate change, a number of countries, including the United States, and international organizations, including the EU, the IMO and the U.N., have adopted, or are considering the adoption of, regulatory frameworks to reduce greenhouse gas emissions.
Table of Contents ​ Due to concern over the risk of climate change, a number of countries, including the United States, and international organizations, including the EU, the IMO and the U.N., have adopted, or are considering the adoption of, regulatory frameworks to reduce greenhouse gas emissions.
See “—The Company may not be able to generate sufficient cash to service all of its indebtedness and could in the future breach covenants in its credit facilities, notes and term loans.” ​ Factors influencing the demand for tanker capacity include: ● supply and demand for, and availability of, energy resources such as oil, oil products and natural gas, which affect customers’ need for vessel capacity; ● global and regional economic and political conditions, including armed conflicts, terrorist activities and strikes, that among other things could impact the supply of oil, as well as trading patterns and the demand for various vessel types; ● regional availability of refining capacity and inventories; ● changes in the production levels of crude oil (including in particular production by OPEC, the United States and other key producers); ● developments in international trade generally; ● changes in seaborne and other transportation patterns, including changes in the distances that cargoes are transported, changes in the price of crude oil and changes to the West Texas Intermediate and Brent Crude Oil pricing benchmarks; ● environmental and other legal and regulatory developments and concerns; ● government subsidies of shipbuilding; ● construction or expansion of new or existing pipelines or railways; ● weather and natural disasters; ● competition from alternative sources of energy; and ● international sanctions, embargoes, import and export restrictions or nationalizations and wars. ​ Factors influencing the supply of vessel capacity include: ● the number of newbuilding deliveries; ● the recycling rate of older vessels; ● environmental and maritime regulations; ● the number of vessels being used for storage or as FSO service vessels; ● the number of vessels that are removed from service; ● availability and pricing of other energy sources for which tankers can be used or to which construction capacity may be dedicated; and ● port or canal congestion and weather delays. ​ Many of the factors that influence the demand for tanker capacity will also, in the longer term, effectively influence the supply of tanker capacity, since decisions to build new capacity, invest in capital repairs, or to retain in service older obsolescent capacity are influenced by the general state of the marine transportation industry from time to time.
Table of Contents ● regional availability of refining capacity and inventories; ● changes in the production levels of crude oil (including in particular production by OPEC, the United States and other key producers); ● 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 in crossing the canal or extending their voyages by going around Cape Horn; ● international sanctions, embargoes, import and export restrictions or nationalizations and wars, including the current Russia – Ukraine war and attacks by Iran – backed Houthi militants based in Yemen; ● developments in international trade generally; ● changes in seaborne and other transportation patterns, including changes in the distances that cargoes are transported, changes in the price of crude oil and changes to the West Texas Intermediate and Brent Crude Oil pricing benchmarks; ● environmental and other legal and regulatory developments and concerns; ● government subsidies of shipbuilding; ● construction or expansion of new or existing pipelines or railways; and ● competition from alternative sources of energy. ​ Factors influencing the supply of vessel capacity include: ● the number of newbuilding deliveries; ● the recycling rate of older vessels; ● environmental and maritime regulations; ● the number of vessels being used for storage or as FSO service vessels; ● the number of vessels that are removed from service; ● changes in the number of vessels ceasing to comply with sanctions imposed by the U.S., the UK and the EU, which changes either decrease or increase the number of vessels that participate in sanctions compliant trading; ● availability and pricing of other energy sources for which tankers can be used or to which construction capacity may be dedicated; and ● port or canal congestion and weather delays. ​ Many of the factors that influence the demand for tanker capacity will also, in the longer term, effectively influence the supply of tanker capacity, since decisions to build new capacity, invest in capital repairs, or to retain in service older obsolescent capacity are influenced by the general state of the marine transportation industry from time to time.
These cost increases or delays could result in downtime, and delays in the repair and maintenance of the Company’s vessels and have a material adverse effect on INSW’s business, financial condition, results of operations and cash flows. ​ ​ The Company’s lightering business faces significant competition and market volatility, and revenues and profitability for these operations may vary significantly from period to period. ​ The Company provides STS transfer services, primarily in the crude oil and refined petroleum products industries.
Table of Contents ​ ​ The Company’s lightering business faces significant competition and market volatility, and revenues and profitability for these operations may vary significantly from period to period. ​ The Company provides STS transfer services, primarily in the crude oil and refined petroleum products industries.
These adverse tax consequences to shareholders could negatively impact our ability to issue additional equity in order to raise the capital necessary for our business operations. ​ Risks Related to the Common Stock ​ We are incorporated in the Marshall Islands, which does not have a well-developed body of corporate case law or bankruptcy law and, as a result, shareholders may have fewer rights and protections under Marshall Islands law than under a typical jurisdiction in the United States. ​ Our corporate affairs are governed by our articles of incorporation and bylaws and by the Marshall Islands Business Corporations Act (the "BCA").
The Company believes that any income tax liability that may arise in all such countries would not be material to the Company, but no assurance can be made as to the amount of any such liability, if any. ​ ​ Risks Related to the Common Stock ​ We are incorporated in the Marshall Islands, which does not have a well-developed body of corporate case law or bankruptcy law, and, as a result, shareholders may have fewer rights and protections under Marshall Islands law than under a typical jurisdiction in the United States. ​ Our corporate affairs are governed by our articles of incorporation and bylaws and by the Marshall Islands Business Corporations Act (the "BCA").
Any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase the Company’s operating costs and harm its business.
Table of Contents ​ Any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. Any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase the Company’s operating costs and harm its business.
Table of Contents INSW may not realize the benefits it expects from past acquisitions or acquisitions or other strategic transactions it may make in the future. ​ From time to time, INSW considers, and may make, acquisitions of individual vessels, groups of vessels, or shipping businesses.
The Company believes that because ownership of the world tanker fleet is highly fragmented, no single vessel owner is able to influence charter rates. ​ INSW may not realize the benefits it expects from past acquisitions or acquisitions or other strategic transactions it may make in the future. ​ From time to time, INSW considers, and may make, acquisitions of individual vessels, groups of vessels, or shipping businesses.
Table of Contents Directors makes grants of equity awards to the Company’s directors, officers and employees pursuant to any equity incentive or compensation plan, any such grants would also cause dilution. ​ INSW may not continue to pay cash dividends on its Common Stock. ​ INSW paid a cash dividend of six cents per share on its Common Stock during the first quarter of 2022 and a cash dividend of twelve cents per share on its Common Stock during each of the second, third and fourth quarters of 2022 and a supplemental cash dividend of $1.00 per share in December 2022, totaling $69.8 million for 2022.
Table of Contents companies are acquired in exchange for new shares of the Company’s common stock to be issued and if the Company’s Board of Directors makes grants of equity awards to the Company’s directors, officers and employees pursuant to any equity incentive or compensation plan, any such grants would also cause dilution. ​ INSW may not continue to pay cash dividends on its Common Stock. ​ During 2023, 2022 and 2021 INSW paid regular quarterly and supplemental cash dividends totaling $308.2 million or $6.29 per share, $69.8 million or $1.42 per share and $9.4 million or $0.24 per share, respectively.
To date, these attacks and vessel seizures, while increasing the costs of the Company conducting its business to a limited extent, have not had a material adverse effect on INSW’s business, financial condition, results of operations and cash flow but no assurance can be given that continued vessel attacks or seizures will not do so. ​ Public health threats could have an adverse effect on the Company’s operations and financial results. ​ Public health threats and other highly communicable diseases, outbreaks of which have already occurred in various parts of the world near where INSW operates, could adversely impact the Company’s operations, the operations of the Company’s customers and the global economy, including the worldwide demand for crude oil and the level of demand for INSW’s services.
Table of Contents Public health threats could have an adverse effect on the Company’s operations and financial results. ​ Public health threats and other highly communicable diseases, outbreaks of which have already occurred in various parts of the world near where INSW operates, could adversely impact the Company’s operations, the operations of the Company’s customers and the global economy, including the worldwide demand for crude oil and the level of demand for INSW’s services.
Compared to other types of vessels, tankers are also exposed to a higher risk of damage and loss by fire, whether ignited by a terrorist attack, collision, or other cause, due to the high flammability of the oil transported in tankers.
An oil spill may cause significant environmental damage and the associated costs could exceed the insurance coverage available to the Company. Compared to other types of vessels, tankers are also exposed to a higher risk of damage and loss by fire, whether ignited by a terrorist attack, collision, or 24 International Seaways, Inc.
The price and supply of fuel is unpredictable and fluctuates based on events outside the Company’s control, including geopolitical developments; supply and demand for oil and gas; actions by OPEC, and other oil and gas producers; war and unrest in oil producing countries and regions; regional production patterns; and environmental concerns and regulations, including requirements to use certain fuels that are more costly. ​ Acts of piracy on ocean-going vessels could adversely affect the Company’s business. ​ The threat of pirate attacks on seagoing vessels remains, particularly off the west coast of Africa and in the South China Sea.
The price and supply of fuel is unpredictable and fluctuates based on events outside the Company’s control, including geopolitical developments; supply and demand for oil and gas; actions by OPEC, and other oil and gas producers; war and unrest in oil producing countries and regions; regional production patterns; and environmental concerns and regulations, including requirements to use certain fuels that are more costly. ​ Terrorist attacks and international hostilities and instability can affect the tanker industry, which could adversely affect INSW’s business. ​ Terrorist attacks, the outbreak of war, or the existence of international hostilities could damage the world economy, adversely affect the availability of and demand for crude oil and petroleum products and adversely affect both the Company’s ability to charter its vessels and the charter rates payable under any such charters.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES ​ We lease approximately 13,100 square feet of office space for the Company’s New York headquarters. We do not own or lease any production facilities, plants, mines or similar real properties. ​ At December 31, 2022, the Company owned or operated an aggregate of 74 vessels, which included 16 chartered-in vessels.
Biggest changeITEM 2. PROPERTIES ​ We lease approximately 13,100 square feet of office space for the Company’s New York headquarters. We do not own or lease any production facilities, plants, mines or similar real properties. ​ At December 31, 2023, the Company owned or operated an aggregate of 73 vessels, which included 14 chartered-in vessels.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS See Note 19, “Contingencies” to the Company’s consolidated financial statements set forth in Item 8, “Financial Statements and Supplementary Data” of this Form 10-K for information regarding legal proceedings in which we are involved. ​ ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ​ 42 International Seaways, Inc. Table of Contents ​ ​ PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS See Note 19, “Contingencies” to the Company’s consolidated financial statements set forth in Item 8, “Financial Statements and Supplementary Data” of this Form 10-K for information regarding legal proceedings in which we are involved. ​ ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ​ 45 International Seaways, Inc. Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe range of high and low closing sales prices of the Company’s common stock as reported on the NYSE for each of the quarters during the last two years are set forth below: ​ ​ ​ ​ ​ ​ ​ ​ Common stock (INSW) (In dollars) ​ High ​ Low 2022 ​ ​ ​ ​ First Quarter ​ $ 18.61 ​ $ 13.74 Second Quarter ​ $ 24.90 ​ $ 18.72 Third Quarter ​ $ 36.00 ​ $ 18.22 Fourth Quarter ​ $ 46.23 ​ $ 33.12 ​ ​ ​ ​ ​ 2021 ​ ​ ​ ​ First Quarter ​ $ 21.58 ​ $ 15.79 Second Quarter ​ $ 21.09 ​ $ 17.07 Third Quarter ​ $ 19.86 ​ $ 14.69 Fourth Quarter ​ $ 19.03 ​ $ 13.86 ​ ​ As of February 23, 2023, there were 61 stockholders of record of the Company’s common stock. ​ During the first quarter of 2022, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.06 per share.
Biggest changeThe range of high and low closing sales prices of the Company’s common stock as reported on the NYSE for each of the quarters during the last two years are set forth below: ​ ​ ​ ​ ​ ​ ​ ​ Common stock (INSW) (In dollars) ​ High ​ Low 2023 ​ ​ ​ ​ First Quarter ​ $ 52.88 ​ $ 33.29 Second Quarter ​ $ 42.47 ​ $ 35.30 Third Quarter ​ $ 46.72 ​ $ 35.91 Fourth Quarter ​ $ 49.67 ​ $ 40.97 ​ ​ ​ ​ ​ 2022 ​ ​ ​ ​ First Quarter ​ $ 18.61 ​ $ 13.74 Second Quarter ​ $ 24.90 ​ $ 18.72 Third Quarter ​ $ 36.00 ​ $ 18.22 Fourth Quarter ​ $ 46.23 ​ $ 33.12 ​ As of February 23, 2024, there were 59 stockholders of record of the Company’s common stock. ​ During 2023, the Company’s Board of Directors declared and paid regular quarterly and supplemental cash dividends totaling $308.2 million or $6.29 per share as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Declaration Date Record Date Payment Date ​ ​ Regular Quarterly Dividend per Share ​ ​ Supplemental Dividend per Share ​ ​ Total Dividends Paid (Dollars in Millions) February 27, 2023 March 14, 2023 March 28, 2023 ​ $ 0.12 ​ $ 1.88 ​ $ 98.3 May 4, 2023 June 14, 2023 June 28, 2023 ​ $ 0.12 ​ $ 1.50 ​ $ 79.3 August 8, 2023 September 13, 2023 September 27, 2023 ​ $ 0.12 ​ $ 1.30 ​ $ 69.4 November 6, 2023 December 13, 2023 December 27, 2023 ​ $ 0.12 ​ $ 1.13 ​ $ 61.2 ​ 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 dividend of $1.20 per share of common stock, both payable on March 28, 2024 to shareholders of record at the close of business on March 14, 2024.
The aforementioned 0.55375 exchange ratio set forth in the Merger Agreement resulted in the issuance of 22,536,647 shares of INSW Common Stock, with the pre-Merger INSW shareholders and the former Diamond S shareholders owning approximately 55.75% and 44.25%, respectively, of the 50,674,393 issued and outstanding common stock of the Company immediately following the Effective Time. ​ As provided for under the terms of the Merger Agreement, on July 15, 2021, prior to the Effective Time, INSW paid a special dividend to its shareholders of record as of July 14, 2021 in an aggregate amount equal to $31.5 million ($1.12 per share). ​ Stockholder Return Performance Presentation ​ Set forth below is a line graph for the period between January 1, 2018 and December 31, 2022 comparing the percentage change in the cumulative total stockholder return on the Company’s common stock against the cumulative return of (i) the published Standard and Poor’s 500 index and (ii) a peer group index consisting of Frontline Ltd.
The aforementioned 0.55375 exchange ratio set forth in the Merger Agreement resulted in the issuance of 22,536,647 shares of INSW Common Stock, with the pre-Merger INSW shareholders and the former Diamond S shareholders owning approximately 55.75% and 44.25%, respectively, of the 50,674,393 issued and outstanding common stock of the Company immediately following the Effective Time. ​ As provided for under the terms of the Merger Agreement, on July 15, 2021, prior to the Effective Time, INSW paid a special dividend to its shareholders of record as of July 14, 2021 in an aggregate amount equal to $31.5 million ($1.12 per share). ​ Stockholder Return Performance Presentation ​ Set forth below is a line graph for the period between January 1, 2019 and December 31, 2023 comparing the percentage change in the cumulative total stockholder return on the Company’s common stock against the cumulative return of (i) the published Standard and Poor’s 500 index and (ii) a peer group index consisting of Frontline Ltd.
(FRO), Tsakos Energy Navigation Limited (TNP), Teekay Tankers Ltd. Class A (TNK), DHT Holdings, Inc. (DHT), Ardmore Shipping Corporation (ASC), Scorpio Tankers, Inc. (STNG), Euronav NV (EURN), and the Company, referred to as the peer group index. 44 International Seaways, Inc.
(FRO), Tsakos Energy Navigation Limited (TNP), Teekay Tankers Ltd. Class A (TNK), DHT Holdings, Inc. (DHT), Ardmore Shipping Corporation (ASC), Scorpio Tankers, Inc. (STNG), Euronav NV (EURN), and the Company, referred to as the peer group index. 48 International Seaways, Inc.
Table of Contents STOCK PERFORMANCE GRAPH COMPARISON OF CUMULATIVE TOTAL RETURN* THE COMPANY, S&P 500 INDEX, PEER GROUP INDEX *Assumes that the value of the investment in the Company’s common stock and each index was $100 on January 1, 2018 and that all dividends were reinvested. ​ Equity Compensation Plan Information ​ See Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,” for further information on the number of shares of the Company’s common stock that may be issued under the 2020 Management Incentive Compensation Plan and the 2020 Non-Employee Director Incentive Compensation Plan. ​ ​ ​ ​ ​ ​ ​ 45 International Seaways, Inc.
Table of Contents STOCK PERFORMANCE GRAPH COMPARISON OF CUMULATIVE TOTAL RETURN* THE COMPANY, S&P 500 INDEX, PEER GROUP INDEX ​ *Assumes that the value of the investment in the Company’s common stock and each index was $100 on January 1, 2019 and that all dividends were reinvested. ​ Equity Compensation Plan Information ​ See Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,” for further information on the number of shares of the Company’s common stock that may be issued under the 2020 Management Incentive Compensation Plan and the 2020 Non-Employee Director Incentive Compensation Plan. ​ ​ ​ ​ ​ ​ ​ 49 International Seaways, Inc.
As of December 31, 2022, the remaining buyback authorization under the Company’s $60.0 million stock repurchase program expiring in December 2023 was $40.0 million.
As of December 31, 2023, the remaining buyback authorization under the Company’s stock repurchase program was $50.0 million.
The declaration and timing of future cash dividends, if any, will be at the discretion of the Board of Directors and will depend upon, among other things, our future operations and earnings, capital requirements, general financial condition, contractual restrictions, restrictions imposed by applicable law or the SEC and such other factors as our Board of Directors may deem relevant. ​ Purchase and Sale of Equity Securities ​ On August 4, 2020, the Company’s Board of Directors authorized the renewal of the Company’s $30.0 million stock repurchase program for another 24-month period ending August 4, 2022.
The declaration and timing of future cash dividends, if any, will be at the discretion of the Board of Directors and will depend upon, among other things, our future operations and earnings, capital requirements, general financial condition, contractual restrictions, restrictions imposed by applicable law or the SEC and such other factors as our Board of Directors may deem relevant. ​ ​ 46 International Seaways, Inc.
In August 2022, the Company’s Board of Directors authorized an increase in the share repurchase program to $60.0 million from $33.3 million and extended the expiration of the program to December 31, 2023. 43 International Seaways, Inc.
Shares owned by employees, directors and other affiliates of the Company were not eligible for repurchase under this program without further authorization from the Board. In August 2022, the Company’s Board of Directors authorized an increase in the share repurchase program to $60.0 million from $33.3 million and extended the expiration of the program to December 31, 2023.
Future buybacks under the stock repurchase program will be at the discretion of our Board of Directors and subject to limitations under the Company’s debt facilities. ​ See Note 13, “Capital Stock and Stock Compensation,” to the Company’s consolidated financial statements set forth in Item 8, “Financial Statements and Supplementary Data” of this Form 10-K for a description of shares withheld to cover tax withholding liabilities relating to the vesting of outstanding restricted stock units held by certain members of management, which is incorporated by reference in this Item 5. ​ Completion of Merger Transaction ​ On July 16, 2021 (the “Effective Time”), pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) dated as of March 30, 2021, by and among INSW, Diamond S Shipping Inc., a Republic of the Marshall Islands corporation (“Diamond S”), and Dispatch Transaction Sub, Inc., a Republic of the Marshall Islands corporation and wholly-owned subsidiary of INSW (“Merger Sub”), Merger Sub merged with and into Diamond S (the “Merger”), with Diamond S surviving such merger as a wholly owned subsidiary of INSW.
Future buybacks under the stock repurchase program will be at the discretion of our Board of Directors and subject to limitations under the Company’s debt facilities. ​ See Note 13, “Capital Stock and Stock Compensation,” to the Company’s consolidated financial statements set forth in Item 8, “Financial Statements and Supplementary Data” of this Form 10-K for a description of shares withheld to cover tax withholding liabilities relating to the vesting of outstanding restricted stock units held by certain members of management, which is incorporated by reference in this Item 5. ​ On December 20, 2023, the Company adopted an “at the market” offering program in connection with general corporate housekeeping and entered into an Equity Distribution Agreement (the “Distribution Agreement”) with Evercore Group L.L.C. and Jefferies LLC, as our sales agents, relating to the common shares of International Seaways, Inc.
Table of Contents During the year ended December 31, 2022, the Company repurchased and retired 687,740 shares of its common stock in open-market purchases, at an average price of $29.08 per share, for a total cost of $20.0 million.
Table of Contents Purchase and Sale of Equity Securities ​ The following is a summary of the purchases made under the Company’s stock repurchase program during the three years ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year-ended December 31, Total shares repurchased ​ ​ Average Price per share ​ ​ Total Cost (Dollars in Millions) 2023 366,483 ​ $ 38.03 ​ $ 13.9 2022 687,740 ​ $ 29.08 ​ $ 20.0 2021 1,077,070 ​ $ 15.44 ​ $ 16.7 ​ On August 4, 2020, the Company’s Board of Directors authorized the renewal of the Company’s $30.0 million stock repurchase program for another 24-month period ending August 4, 2022.
Removed
The regular quarterly dividend was subsequently doubled to $0.12 per share for the second, third and fourth quarters of 2022. On November 7, 2022, in addition to declaring the fourth quarterly dividend for the year, the Board of Directors also declared a supplemental dividend of $1 per share of common stock.
Added
In August 2023, the Company’s Board of Directors authorized an increase in the share repurchase program to $50.0 million from $26.1 million. In November 2023, the Company’s Board of Directors authorized the extension of the expiry date of the stock repurchase program from December 31, 2023 to December 31, 2025.
Removed
Pursuant to such dividend declarations, the Company made dividend payments totaling $69.8 million during the year ended December 31, 2022. ​ On February 27, 2023, 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 $1.88 per share of common stock, both payable on March 28, 2023 to shareholders of record at the close of business on March 14, 2023.
Added
In accordance with the terms of the Distribution Agreement, we may offer and sell common shares having an aggregate offering price of up to $100.0 million from time to time through the sales agents.
Removed
Shares owned by employees, directors and other affiliates of the Company were not eligible for repurchase under this program without further authorization from the Board. During the last quarter of 2021, the Company repurchased and retired 1,077,070 shares of its common stock in open-market purchases, at an average price of $15.44 per share, for a total cost of $16.7 million.
Added
Sales of shares of our common stock, if any, may be made in privately negotiated transactions, which may include block trades, or transactions that are deemed to be "at the market" offerings as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), including sales made directly on the NYSE or sales made to or through a market maker other than on an exchange or as otherwise agreed upon by the sales agents and us.
Added
We also may sell some or all of the shares in this offering to a sales agent as principal for its own account at a price per share agreed upon at the time of sale. ​ We will designate the minimum price per share at which the common shares may be sold and the maximum amount of common shares to be sold through the sales agents during any selling period or otherwise determine such maximum amount together with the sales agents.
Added
Each sales agent will receive from us a commission of up to 3.0% of the gross sales price of all common shares sold through it as sales agent under the Distribution Agreement.
Added
In connection with the sale of common stock, each of the sales agents may be deemed an "underwriter" within the meaning of the Securities Act, and the compensation paid to the sales agents may be deemed to be underwriting commission. ​ The sales agents are not required to sell any specific number or dollar amount of our common shares but will use their commercially reasonable efforts, as our agents and subject to the terms of the Distribution Agreement, to sell the common shares offered, as requested by us. ​ We intend to use the net proceeds of any offering, after deducting the sales agents’ commissions and our offering expenses, for general corporate purposes.
Added
This may include, among other things, additions to working capital, repayment or refinancing of existing indebtedness or other corporate obligations, financing of capital expenditures (including the purchase of marine exhaust gas cleaning 47 International Seaways, Inc.
Added
Table of Contents systems that reduce sulfur emissions to comply with upcoming implementation of new IMO standards) and acquisitions and investment in existing and future projects. As of the date hereof, the Company has neither sold or undertaken to sell any shares pursuant to the Distribution Agreement.
Added
The Company has no obligation to sell any shares and may at any time suspend offers under the Distribution Agreement or terminate the Distribution Agreement. ​ Completion of Merger Transaction ​ On July 16, 2021 (the “Effective Time”), pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) dated as of March 30, 2021, by and among INSW, Diamond S Shipping Inc., a Republic of the Marshall Islands corporation (“Diamond S”), and Dispatch Transaction Sub, Inc., a Republic of the Marshall Islands corporation and wholly-owned subsidiary of INSW (“Merger Sub”), Merger Sub merged with and into Diamond S (the “Merger”), with Diamond S surviving such merger as a wholly owned subsidiary of INSW.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeSee the “Operations and Oil Tanker Markets” discussion above and segment discussion below for a description of the market factors that impacted the quarterly trend of spot rates during 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Spot Earnings for the Quarter Ended Crude Tankers ​ December 31, 2021 ​ March 31, 2022 ​ June 30, 2022 ​ September 30, 2022 ​ December 31, 2022 VLCC: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ 14,326 ​ $ 12,269 ​ $ 16,441 ​ $ 24,427 ​ $ 64,596 Revenue days ​ ​ 778 ​ ​ 801 ​ ​ 808 ​ ​ 812 ​ ​ 799 Suezmax: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ 13,069 ​ $ 13,610 ​ $ 23,684 ​ $ 34,244 ​ $ 59,064 Revenue days ​ ​ 1,084 ​ ​ 1,060 ​ ​ 963 ​ ​ 849 ​ ​ 1,029 Aframax: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ 11,537 ​ $ 13,216 ​ $ 34,116 ​ $ 38,287 ​ $ 62,030 Revenue days ​ ​ 275 ​ ​ 307 ​ ​ 326 ​ ​ 366 ​ ​ 284 Panamax: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ 15,037 ​ $ 20,551 ​ $ — ​ $ — ​ $ — Revenue days ​ ​ 105 ​ ​ 70 ​ ​ — ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Spot Earnings for the Quarter Ended Product Carriers ​ December 31, 2021 ​ March 31, 2022 ​ June 30, 2022 ​ September 30, 2022 ​ December 31, 2022 LR1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ 17,422 ​ $ 20,300 ​ $ 25,910 ​ $ 40,973 ​ $ 63,950 Revenue days ​ ​ 614 ​ ​ 678 ​ ​ 787 ​ ​ 830 ​ ​ 818 MR ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ 11,311 ​ $ 14,030 ​ $ 30,436 ​ $ 35,986 ​ $ 39,678 Revenue days ​ ​ 3,040 ​ ​ 3,115 ​ ​ 3,386 ​ ​ 3,411 ​ ​ 3,350 Handy ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ 11,300 ​ $ 12,251 ​ $ 19,521 ​ $ — ​ $ — Revenue days ​ ​ 316 ​ ​ 343 ​ ​ 126 ​ ​ — ​ ​ — ​ See Note 5, “Business and Segment Reporting,” to the Company’s consolidated financial statements as set forth in Item 8, “Financial Statements and Supplementary Data,” for additional information on the Company’s segments, including equity in income of affiliated companies and reconciliations of (i) time charter equivalent revenues to shipping revenues and (ii) adjusted income/(loss) from vessel operations for the segments to income/(loss) before income taxes, as reported in the consolidated statements of operations. ​ 49 International Seaways, Inc.
Biggest changeTable of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Spot Earnings for the Quarter Ended Product Carriers ​ December 31, 2022 ​ March 31, 2023 ​ June 30, 2023 ​ September 30, 2023 ​ December 31, 2023 LR2 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ — ​ $ — ​ $ 25,594 ​ $ 32,603 ​ $ 43,666 Revenue days ​ ​ — ​ ​ — ​ ​ 41 ​ ​ 92 ​ ​ 92 LR1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ 63,950 ​ $ 70,838 ​ $ 63,608 ​ $ 56,295 ​ $ 46,199 Revenue days ​ ​ 818 ​ ​ 800 ​ ​ 780 ​ ​ 685 ​ ​ 561 MR ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ 39,678 ​ $ 31,468 ​ $ 28,331 ​ $ 26,563 ​ $ 31,493 Revenue days ​ ​ 3,350 ​ ​ 3,087 ​ ​ 2,954 ​ ​ 2,836 ​ ​ 2,738 ​ See Note 5, “Business and Segment Reporting,” to the Company’s consolidated financial statements as set forth in Item 8, “Financial Statements and Supplementary Data,” for additional information on the Company’s segments, including equity in income of affiliated companies and reconciliations of (i) time charter equivalent revenues to shipping revenues and (ii) adjusted income/(loss) from vessel operations for the segments to income/(loss) before income taxes, as reported in the consolidated statements of operations.
For contracts which qualify as cash flow hedges for accounting purposes, hedge effectiveness would be assessed based on changes in foreign exchange spot rates with the change in fair value of the effective portions being recorded in accumulated other comprehensive income/(loss). ​ Fuel price volatility risk ​ The Company has installed scrubbers on its ten VLCCs and two of its Suezmaxes.
For contracts which qualify as cash flow hedges for accounting purposes, hedge effectiveness would be assessed based on changes in foreign exchange spot rates with the change in fair value of the effective portions being recorded in accumulated other comprehensive income/(loss). ​ Fuel price volatility risk ​ The Company has installed scrubbers on ten VLCCs and two of its Suezmaxes.
The full amounts due under bareboat charter-ins, office and other space leases and the lease component of the amounts due under long term time charter-ins are discounted and reflected on the Company’s consolidated balance sheet as lease liabilities with corresponding right of use asset balances.
The full amounts due under office and other space leases and the lease component of the amounts due under long term time charter-ins are discounted and reflected on the Company’s consolidated balance sheet as lease liabilities with corresponding right of use asset balances.
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. ​ ​ 54 International Seaways, Inc.
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. 58 International Seaways, Inc.
Self-sanctioning by Western oil majors and many ship owners resulted in lower product flows, primarily diesel, from Russia to Europe, while high arbitrage spreads incentivized Middle Eastern and U.S. diesel flows to Europe, increasing ton-mile demand for vessels. ​ The U.S., EU nations and other countries could impose wider sanctions and take other actions.
Self-sanctioning by Western oil majors and many ship owners resulted in disrupted product flows, primarily diesel, from Russia to Europe, while high arbitrage spreads incentivized Middle Eastern and U.S. diesel flows to Europe, increasing ton-mile demand for vessels. ​ The U.S., EU nations and other countries could impose wider sanctions and take other actions.
The Company’s assumptions used in the determination of estimated salvage value take into account current steel recycling prices, the historic pattern of annual average steel recycling rates over the five years ended December 31, 2022, which ranged from $270 to $670 per lightweight ton, estimated changes in future market demand for recycled steel and estimated future demand for vessels.
The Company’s assumptions used in the determination of estimated salvage value take into account current steel recycling prices, the historic pattern of annual average steel recycling rates over the five years ended December 31, 2023, which ranged from $270 to $670 per lightweight ton, estimated changes in future market demand for recycled steel and estimated future demand for vessels.
See Note 17, “Pension and other postretirement benefit plans,” to the Company’s consolidated financial statements set forth in Item 8, “Financial Statements and Supplementary Data,” for additional information. ​ ​ Risk Management ​ Interest rate risk ​ The Company is exposed to market risk from changes in interest rates, which could impact its results of operations and financial condition.
See Note 17, “Pension and other postretirement benefit plans,” to the accompanying consolidated financial statements as set forth in Item 8, “Financial Statements and Supplementary Data,” for additional information. ​ ​ RISK MANAGEMENT ​ Interest rate risk ​ The Company is exposed to market risk from changes in interest rates, which could impact its results of operations and financial condition.
Current assets are highly liquid, consisting principally of cash, interest-bearing deposits, short-term investments consisting of time deposits with original maturities of between 90 and 180 days, and receivables.
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.
This section identifies those accounting policies that are considered important to our results of operations and financial condition, require significant judgment and involve significant management estimates. ​ A detailed discussion of the 2021 to 2020 year-over-year changes is not included herein and can be found in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021 filed on March 2, 2022. ​ GENERAL ​ We are a provider of ocean transportation services for crude oil and refined petroleum products.
This section identifies those accounting policies that are considered important to our results of operations and financial condition, require significant judgment and involve significant management estimates. ​ ​ A detailed discussion of the 2022 to 2021 year-over-year changes is not included herein and can be found in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022 filed on February 28, 2023. ​ GENERAL ​ We are a provider of ocean transportation services for crude oil and refined petroleum products.
The following table presents information with respect to the carrying amount of the Company’s vessels by type. Instances in which the fair market values of the Company’s vessels, which are estimated by a third-party vessel appraisal, are below their carrying values as of December 31, 2022, are indicated in the footnote(s) to the table.
The following table presents information with respect to the carrying amount of the Company’s vessels by type. Instances in which the fair market values of the Company’s vessels, which are estimated by a third-party vessel appraiser, are below their carrying values as of December 31, 2023, are indicated in the footnote(s) to the table.
We operate our vessels in the International Flag market. Our business includes two reportable segments: Crude Tankers and Product Carriers. For the years ended December 31, 2022 and 2021 we derived 62% and 44%, respectively, of our TCE revenues from our Product Carriers segment.
We operate our vessels in the International Flag market. Our business includes two reportable segments: Crude Tankers and Product Carriers. For the years ended December 31, 2023 and 2022 we derived 51% and 62%, respectively, of our TCE revenues from our Product Carriers segment.
Market conditions that could influence the volume and pricing of vessel recycling activity in 2023 and beyond include the combined impact of scheduled newbuild deliveries and charter rate expectations for vessels potentially facing age restrictions imposed by oil majors as well as the impact of ballast water treatment systems regulatory requirements or proposals, costs and timing of pending special surveys, which are likely to be expensive for vessels over 15 years of age and IMO requirements for the use of low-sulfur fuels and other carbon reduction initiatives.
Market conditions that could influence the volume and pricing of vessel recycling activity in 2024 and beyond include (i) the combined impact of scheduled newbuild deliveries and charter rate expectations for vessels potentially facing age restrictions imposed by oil majors, (ii) the impact of ballast water treatment systems regulatory requirements or proposals, (iii) costs and timing of pending special surveys, which are likely to be expensive for vessels over 15 years of age, and (iv) IMO requirements for the use of low-sulfur fuels and other carbon reduction initiatives.
To manage its interest rate risk 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.
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.
During 2022, the Company increased its reserve for uncertain tax liabilities for this jurisdiction by $0.2 million. ​ See Note 12, “Taxes,” to the Company’s consolidated financial statements set forth in Item 8, “Financial Statements and Supplementary Data,” for further details on the income tax provision line. ​ EBITDA and Adjusted EBITDA ​ EBITDA represents net income/(loss) before interest expense, income taxes and depreciation and amortization expense.
During 2023 and 2022, the Company increased its reserve for uncertain tax liabilities for various jurisdictions by $3.6 million and $0.2 million, respectively. ​ See Note 12, “Taxes,” to the Company’s consolidated financial statements set forth in Item 8, “Financial Statements and Supplementary Data,” for further details on the income tax provision line. ​ EBITDA and Adjusted EBITDA ​ EBITDA represents net income/(loss) before interest expense, income taxes and depreciation and amortization expense.
If foreign exchange risk becomes material in the future, the Company may seek to reduce its exposure to fluctuations in foreign exchange rates 61 International Seaways, Inc. Table of Contents through the use of short-term currency forward contracts and through the purchase of bulk quantities of currencies at rates that management considers favorable.
If foreign exchange risk becomes material in the future, the Company may seek to reduce its exposure to fluctuations in foreign exchange rates through the use of short-term currency forward contracts and through the purchase of bulk quantities of currencies at rates that management considers favorable.
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. ​ ● Critical Accounting Estimates and Policies.
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 .
The contributions are subject to change after an actuarial estimate of the Scheme's funding level is produced. ​ Carrying Value of Vessels ​ At December 31, 2022, 67 of the Company’s 70 owned and chartered-in vessels were pledged as collateral under certain of the Company’s debt and lease financing facilities.
The contributions are subject to change after an actuarial estimate of the Scheme's funding level is produced. ​ Carrying Value of Vessels ​ At December 31, 2023, 42 of the Company’s 72 owned and bareboat chartered-in vessels were pledged as collateral under certain of the Company’s debt and lease financing facilities.
The current period other income includes $3.7 million of interest income from invested cash, resulting from a significant increase in the average balance of invested cash and the rate earned on such investments during 2022 compared to 2021.
The current period other income includes $13.9 million of interest income resulting from a significant increase in the average balance of invested cash and the interest rates earned on such investments during 2023 compared to interest income of only $3.7 million earned during 2022.
Table of Contents Company utilizes weighted probabilities assigned to the possible outcomes for such vessels being sold or recycled before the end of their respective useful lives. ​ The determination of fair value is highly judgmental.
Finally, for vessels that are being considered for disposal before the end of their respective useful lives, the Company utilizes weighted probabilities assigned to the possible outcomes for such vessels being sold or recycled before the end of their respective useful lives. ​ The determination of fair value is highly judgmental.
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.
The Company manages this exposure to market risk through its regular operating and financing activities and, when 64 International Seaways, Inc. Table of Contents deemed appropriate, through the use of derivative financial instruments.
See Note 10, “Debt,” to the accompanying consolidated financial statements as set forth in Item 8, “Financial Statements and Supplementary Data,” for further information on the Company’s debt facilities . Income Tax Provision ​ If we do not qualify for an exemption pursuant to Section 883, or the “Section 883 exemption,” of the U.S.
See Note 10, “Debt,” to the accompanying consolidated financial statements as set forth in Item 8, “Financial Statements and Supplementary Data,” for further information on the Company’s debt facilities . 57 International Seaways, Inc. Table of Contents Income Tax Provision ​ We qualified for an exemption pursuant to Section 883, or the “Section 883 exemption,” of the U.S.
We will qualify for the Section 883 exemption for 2023 and forward if, among other things, (i) our common shares are treated as primarily and regularly traded on an established securities market in the United States or another qualified country (“publicly traded test”), or (ii) we satisfy one of two other 53 International Seaways, Inc. Table of Contents ownership tests.
We will qualify for the Section 883 exemption for 2024 and forward if, among other things, (i) our common shares are treated as primarily and regularly traded on an established securities market in the United States or another qualified country (“publicly traded test”), or (ii) we satisfy one of two other ownership tests. Under applicable U.S.
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.
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 50 International Seaways, Inc.
(f) The Company’s Crude Tankers Lightering business spot chartered-in one vessel under an operating lease during the year ended December 31, 2022 for one full service lightering job. ​ The following table provides a breakdown of TCE rates achieved for the years ended December 31, 2022 and 2021 between spot and fixed earnings and the related revenue days.
(f) The Company’s Crude Tankers Lightering business spot chartered-in vessels under operating leases during 2023 and 2022 for full service lightering jobs. ​ The following table provides a breakdown of TCE rates achieved for the years ended December 31, 2023 and 2022 between spot and fixed earnings and the related revenue days.
These assumptions are based on historical trends as well as future expectations. Specifically, in estimating future charter rates, management takes into consideration rates currently in effect for existing time charters and estimated daily time charter equivalent rates for each vessel class for the unfixed days over the estimated remaining lives of each of the vessels.
Specifically, in estimating future charter rates, management takes into consideration rates currently in effect for existing time charters and estimated daily time charter equivalent rates for each vessel class for the unfixed days over the estimated remaining lives of each of the vessels.
The estimate for global oil consumption for 2023 is 101.7 million b/d, an increase of 1.8% over 2022.
The estimate for global oil consumption for 2024 is 103.0 million b/d, an increase of 1.3% over the 2023 estimate of 101.7 million b/d.
Some of these sanctions and executive orders target the Russian oil sector, including a prohibition on the import of oil from Russia to the United States or the United Kingdom, and the European Union's recent ban on Russian crude oil and petroleum products which took effect in December 2022 and February 2023, respectively. ​ Russia’s invasion of Ukraine also led to a disruption in supply chains for crude oil and refined petroleum products, changing volumes and trade routes, thus increasing ton-mile demand for the seaborne transportation of refined petroleum products, which resulted in a prolonged spike in freight rates.
Table of Contents United Kingdom, and the European Union's ban on Russian crude oil and petroleum products which took effect in December 2022 and February 2023, respectively. ​ Russia’s invasion of Ukraine also led to a disruption in supply chains for crude oil and refined petroleum products, changing volumes and trade routes, thus increasing ton-mile demand for the seaborne transportation of both crude oil and refined petroleum products, which resulted in a prolonged spike in freight rates.
Oil production in the U.S. in the fourth quarter of 2022 increased by 4.5% to 12.4 million b/d compared to the third quarter of 2022 and by 7.0% from the fourth quarter of 2021. ​ U.S. refinery throughput decreased by 0.6 million b/d to 16.3 million b/d in the fourth quarter of 2022 compared with the third quarter of 2022.
Oil production in the U.S. in the fourth quarter of 2023 increased by 2.5% to 13.3 million b/d compared to the third quarter of 2023 and by 7.0% from the fourth quarter of 2022. ​ U.S. refinery throughput decreased by 1.3 million b/d to 15.8 million b/d in the fourth quarter of 2023 compared with the third quarter of 2023.
For debt obligations, the table presents the principal cash flows and related weighted average interest rates by expected maturity dates of the Company’s debt obligations. ​ Principal (Notional) Amount (dollars in millions) by Expected Maturity and Average Interest (Swap) Rate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beyond ​ ​ ​ Fair Value at (Dollars in millions) ​ 2023 ​ 2024 ​ 2025 ​ 2026 ​ 2027 ​ 2027 ​ Total ​ Dec. 31, 2022 Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Debt ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed rate debt ​ $ 17.0 ​ $ 20.3 ​ $ 21.2 ​ $ 21.7 ​ $ 22.9 ​ $ 201.1 ​ $ 304.1 ​ $ 120.7 Average interest rate ​ ​ 4.01% ​ ​ 4.58% ​ ​ 4.56% ​ ​ 4.54% ​ ​ 4.51% ​ ​ 5.22% ​ ​ ​ ​ ​ ​ Variable rate debt (1) ​ $ 157.3 ​ $ 157.3 ​ $ 157.3 ​ $ 171.9 ​ $ 43.9 ​ $ 217.7 ​ $ 905.3 ​ $ 905.3 Average interest rate (1) ​ ​ 7.01% ​ ​ 7.23% ​ ​ 7.61% ​ ​ 8.52% ​ ​ 8.64% ​ ​ 8.63% ​ ​ ​ ​ ​ ​ (1) Rates are discussed in the aggregate contractual obligations section above . ​ As of December 31, 2022, the Company had secured term loans or lease financings, and revolving credit facilities under which borrowings bear interest at a rate based on LIBOR or SOFR, plus the applicable margin, as stated in the respective financing arrangements.
For debt obligations, the table presents the principal cash flows and related weighted average interest rates by expected maturity dates of the Company’s debt obligations. ​ Principal (Notional) Amount (dollars in millions) by Expected Maturity and Average Interest (Swap) Rate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beyond ​ ​ ​ Fair Value at (Dollars in millions) ​ 2024 ​ 2025 ​ 2026 ​ 2027 ​ 2028 ​ 2028 ​ Total ​ Dec. 31, 2023 Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Debt ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed rate debt ​ $ 20.0 ​ $ 20.9 ​ $ 21.9 ​ $ 22.8 ​ $ 23.9 ​ $ 178.2 ​ $ 287.6 ​ $ 262.3 Average interest rate ​ ​ 4.59% ​ ​ 4.57% ​ ​ 4.54% ​ ​ 4.51% ​ ​ 4.47% ​ ​ 5.33% ​ ​ ​ ​ ​ ​ Variable rate debt (1) ​ $ 107.4 ​ $ 68.8 ​ $ 45.9 ​ $ 29.2 ​ $ 29.3 ​ $ 165.8 ​ $ 446.3 ​ $ 446.3 Average interest rate (1) ​ ​ 7.54% ​ ​ 7.78% ​ ​ 7.79% ​ ​ 9.55% ​ ​ 9.70% ​ ​ 9.70% ​ ​ ​ ​ ​ ​ (1) Rates are discussed in the aggregate contractual obligations section above . ​ As of December 31, 2023, the Company had variable rate secured term loans or lease financings, and revolving credit facilities under which borrowings bear interest at a rate based on SOFR, plus the applicable margin, as stated in the respective financing arrangements.
Current liabilities include current installments of long-term debt and finance lease liabilities of $204.7 million and $178.7 million at December 31, 2022 and 2021, respectively. ​ The Company’s total cash increased by $144.8 million during the year ended December 31, 2022.
Current liabilities include current installments of long-term debt and finance lease liabilities of $127.4 million and $204.7 million at December 31, 2023 and 2022, respectively. ​ The Company’s total cash decreased by $116.9 million during the year ended December 31, 2023.
In addition, our ability to successfully operate our business to meet near-term and long-term debt repayment obligations is dependent on maintaining sufficient liquidity. ​ Liquidity ​ As of December 31, 2022, we had total liquidity on a consolidated basis of $541.1 million comprised of $243.7 million of cash, $80.0 million of short-term investments and $217.4 million of undrawn revolver capacity. ​ Working capital at December 31, 2022 was $385.2 million compared with a negative $10.0 million at December 31, 2021.
In addition, our ability to successfully operate our business to meet near-term and long-term debt repayment obligations is dependent on maintaining sufficient liquidity. ​ Liquidity ​ As of December 31, 2023, we had total liquidity on a consolidated basis of $601.2 million comprised of $126.8 million of cash, $60.0 million of short-term investments and $414.4 million of undrawn revolver capacity. ​ Working capital at December 31, 2023 and 2022 was $269.5 million and $385.2 million, respectively.
The Company has entered into interest rate swaps agreements covering a notional amount of $447.6 million of the $750 Million Facility Term Loan that was outstanding as of December 31, 2022, with major financial institutions participating in such facility 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. ​ ​ 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.
Table of Contents purposes 100% of the $750 Million Facility Term Loan outstanding principal balance of $113.6 million as of December 31, 2023, and $224.3 million of the notional principal amount outstanding under the Ocean Yield Lease Financing 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. ​ ​ 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.
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. 46 International Seaways, Inc. Table of Contents Management makes economic decisions based on anticipated TCE rates and evaluates financial performance based on TCE rates achieved.
Table of Contents between voyage charters and time charters, the Company measures the performance of its fleet of vessels based on TCE revenues. Management makes economic decisions based on anticipated TCE rates and evaluates financial performance based on TCE rates achieved.
Our ability to successfully implement our strategy is dependent on the continued availability of capital on attractive terms.
Table of Contents 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.
See Note 9, “Fair Value of Financial Instruments, Derivative and Fair Value Disclosures,” to the Company’s consolidated financial statements set forth in Item 8, “Financial Statements and Supplementary Data,” for additional information on the Company various interest rate derivatives. ​ Currency and exchange rate risk ​ The shipping industry’s functional currency is the U.S. dollar.
In addition, derivative financial instruments are entered into with a diversified group of major financial institutions in order to manage exposure to nonperformance on such instruments by the counterparties. ​ See “Interest Rate Sensitivity” section below and Note 9, “Fair Value of Financial Instruments, Derivative and Fair Value Disclosures,” to the Company’s consolidated financial statements set forth in Item 8, “Financial Statements and Supplementary Data,” for additional information on the Company various interest rate derivatives. ​ Currency and exchange rate risk ​ The shipping industry’s functional currency is the U.S. dollar.
Table of Contents Crude Tankers ​ ​ ​ ​ ​ ​ ​ ​ (Dollars in thousands, except daily rate amounts) ​ 2022 ​ 2021 TCE revenues ​ $ 321,857 ​ $ 144,286 Vessel expenses ​ ​ (98,844) ​ ​ (95,805) Charter hire expenses ​ ​ (15,380) ​ ​ (16,282) Depreciation and amortization ​ ​ (62,596) ​ ​ (57,870) Adjusted income/(loss) from vessel operations (a) ​ $ 145,037 ​ $ (25,671) Average daily TCE rate ​ $ 34,724 ​ $ 15,986 Average number of owned vessels (b) ​ ​ 18.5 ​ ​ 24.8 Average number of vessels chartered-in under leases ​ ​ 9.0 ​ ​ 2.9 Number of revenue days (c) ​ ​ 9,269 ​ ​ 9,026 Number of ship-operating days (d) ​ ​ ​ ​ ​ ​ Owned vessels ​ ​ 6,770 ​ ​ 9,061 Vessels bareboat chartered-in under leases (e) ​ ​ 3,285 ​ ​ 1,062 Vessels spot chartered-in under leases (f) ​ ​ 14 ​ ​ — (a) Adjusted income/(loss) from vessel operations by segment is before general and administrative expenses, third-party debt modification fees, merger and integration related costs and (gain)/loss on disposal of vessels and other property, including impairments.
Crude Tankers ​ ​ ​ ​ ​ ​ ​ ​ (Dollars in thousands, except daily rate amounts) ​ 2023 ​ 2022 TCE revenues ​ $ 512,220 ​ $ 321,857 Vessel expenses ​ ​ (115,710) ​ ​ (98,844) Charter hire expenses ​ ​ (11,870) ​ ​ (15,380) Depreciation and amortization ​ ​ (76,877) ​ ​ (62,596) Adjusted income from vessel operations (a) ​ $ 307,764 ​ $ 145,037 Average daily TCE rate ​ $ 49,619 ​ $ 34,724 Average number of owned vessels (b) ​ ​ 20.0 ​ ​ 18.5 Average number of vessels chartered-in under leases ​ ​ 9.2 ​ ​ 9.0 Number of revenue days (c) ​ ​ 10,323 ​ ​ 9,269 Number of ship-operating days (d) ​ ​ ​ ​ ​ ​ Owned vessels ​ ​ 7,300 ​ ​ 6,770 Vessels bareboat chartered-in under leases (e) ​ ​ 3,337 ​ ​ 3,285 Vessels spot chartered-in under leases (f) ​ ​ 19 ​ ​ 14 (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 of impairments.
Utilization is based on historical levels achieved and estimates of residual value for recycling are based upon the pattern of steel recycling rates used in management’s evaluation of salvage value for purposes of recording depreciation. Finally, for vessels that are being considered for disposal before the end of their respective useful lives, the 63 International Seaways, Inc.
Utilization is based on historical levels achieved and estimates of residual value for recycling are based upon the pattern of steel recycling rates used in management’s evaluation of salvage value for purposes of recording depreciation.
Treasury securities or other obligations issued or guaranteed by the U.S. government or its agencies, floating rate and variable demand notes of U.S. and foreign corporations, commercial paper rated in the highest category by Moody’s Investor Services and Standard & Poor’s, certificates of deposit and time deposits, asset-backed securities, and repurchase agreements. ​ As of December 31, 2022, we had total debt and finance lease obligations outstanding (net of original issue discount and deferred financing costs) of $1,065.3 million and a net debt (including finance lease obligations) to total capitalization ratio of 33.3%, which compares with 46.2% at December 31, 2021. 55 International Seaways, Inc.
Treasury securities or other obligations issued or guaranteed by the U.S. government or its agencies, floating rate and variable demand notes of U.S. and foreign corporations, commercial paper rated in the highest category by Moody’s Investor Services and Standard & Poor’s, certificates of deposit and time deposits, asset-backed securities, and repurchase agreements. ​ As of December 31, 2023, we had total debt outstanding (net of original issue discount and deferred financing costs) of $722.7 million and a net debt to total capitalization of 23.8%, which compares with 33.3% at December 31, 2022. ​ Sources, Uses and Management of Capital ​ During 2022, as the tanker cycle recovered from the historical lows of 2021, we increased our overall liquidity with vessel sales, a refinancing that increased the capacity of our revolving credit and cash from operations.
The product carrier fleet increased by 1.2 million dwt, with MRs growing 1.1 million dwt. Year-over-year, the size of the tanker fleet increased by 22.3 million dwt with the VLCCs, Suezmaxes, Aframaxes and MRs increasing by 11.3 million dwt, 5.2 million dwt, 2.7 million dwt and 3.0 million dwt, respectively.
The product carrier fleet increased by 0.4 million dwt, with MRs growing 0.4 million dwt. Year-over-year, the size of the tanker fleet increased by 13.1 million dwt with the VLCCs, Suezmaxes, Aframaxes, and MRs 52 International Seaways, Inc. Table of Contents increasing by 6.1 million dwt, 0.9 million dwt, 4.0 million dwt, and 2.2 million dwt, respectively.
Table of Contents The following table reconciles net income/(loss), as reflected in the consolidated statements of operations set forth in Item 8, “Financial Statements and Supplementary Data,” to EBITDA and Adjusted EBITDA: ​ ​ ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ 2022 ​ 2021 Net income/(loss) ​ $ 387,891 ​ $ (134,660) Income tax provision ​ ​ 88 ​ ​ 1,618 Interest expense ​ ​ 57,721 ​ ​ 36,796 Depreciation and amortization ​ ​ 110,388 ​ ​ 86,674 Noncontrolling interest ​ ​ — ​ ​ (174) EBITDA ​ ​ 556,088 ​ ​ (9,746) Amortization of time charter contracts acquired ​ ​ 842 ​ ​ 2,428 Third-party debt modification fees ​ ​ 1,158 ​ ​ 110 Loss on sale of investments in affiliated companies ​ ​ 9,513 ​ ​ — Merger and integration related costs ​ ​ — ​ ​ 50,740 Gain on disposal of vessels and assets, net of impairments ​ ​ (19,647) ​ ​ (9,753) Gain on sale of interest in DASM ​ ​ (135) ​ ​ — Write-off of deferred financing costs ​ ​ 1,266 ​ ​ 2,113 Loss on extinguishment of debt ​ ​ — ​ ​ 4,465 Adjusted EBITDA ​ $ 549,085 ​ $ 40,357 ​ LIQUIDITY AND SOURCES OF CAPITAL ​ Our business is capital intensive.
Table of Contents ​ The following table reconciles net income/(loss), as reflected in the consolidated statements of operations set forth in Item 8, “Financial Statements and Supplementary Data,” to EBITDA and Adjusted EBITDA: ​ ​ ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ 2023 ​ 2022 Net income ​ $ 556,446 ​ $ 387,891 Income tax provision ​ ​ 3,878 ​ ​ 88 Interest expense ​ ​ 65,759 ​ ​ 57,721 Depreciation and amortization ​ ​ 129,038 ​ ​ 110,388 EBITDA ​ ​ 755,121 ​ ​ 556,088 Amortization of time charter contracts acquired ​ ​ — ​ ​ 842 Third-party debt modification fees ​ ​ 568 ​ ​ 1,158 Loss on sale of investments in affiliated companies ​ ​ — ​ ​ 9,513 Gain on disposal of vessels and assets, net of impairments ​ ​ (35,934) ​ ​ (19,647) Gain on sale of interest in DASM ​ ​ — ​ ​ (135) Write-off of deferred financing costs ​ ​ 2,686 ​ ​ 1,266 Loss on extinguishment of debt ​ ​ 1,323 ​ ​ — Adjusted EBITDA ​ $ 723,764 ​ $ 549,085 ​ ​ 59 International Seaways, Inc.
Our balance sheet and diverse fleet, positions us to support our operations over the next twelve months as we continue to advance our disciplined capital allocation strategy of fleet renewal, incremental debt reduction and tanker-cycle appropriate returns to shareholders and provides us with flexibility to continue pursuing potential strategic opportunities that may arise within the diverse sectors in which we operate. ​ ​ ​ 58 International Seaways, Inc.
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. ​ ​ Aggregate Contractual Obligations 62 International Seaways, Inc.
OECD demand in 2023 is estimated to increase by 0.9% to 46.4 million b/d, while non-OECD demand is estimated to increase by 2.6% to 55.3 million b/d. ​ Global oil production in the fourth quarter of 2022 was 101.2 million b/d, an increase of 3.3% from the fourth quarter of 2021.
OECD demand in 2024 is estimated to decrease by 0.2% to 45.6 million b/d, while non-OECD demand is estimated to increase by 2.5% to 57.4 million b/d. ​ Global oil production in the fourth quarter of 2023 was 102.2 million b/d, the same level as the fourth quarter of 2022.
During 2022, we continued to lower our financial leverage to what we believed to be appropriate for the current strong point in the tanker cycle. ​ 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.
Table of Contents 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.
This assessment is made at the individual vessel level as separately identifiable cash flow information for each vessel is available. ​ In developing estimates of future cash flows, the Company must make assumptions about future performance, with significant assumptions being related to charter rates, operating expenses, utilization, drydocking and capital expenditure requirements, residual value and the estimated remaining useful lives of the vessels.
Table of Contents In developing estimates of future cash flows, the Company must make assumptions about future performance, with significant assumptions being related to charter rates, operating expenses, utilization, drydocking and capital expenditure requirements, residual value and the estimated remaining useful lives of the vessels. These assumptions are based on historical trends as well as future expectations.
In addition to our operating fleet of 74 vessels, three dual-fuel LNG VLCC newbuilds are scheduled for delivery to the Company in the first half of 2023, bringing the total operating and newbuild fleet to 77 vessels.
In addition to our operating fleet of 73 vessels, four LR1 newbuilds are scheduled for delivery to the Company between the second half of 2025 and first quarter of 2026, bringing the total operating and newbuild fleet to 77 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. ​ The following is a summary of the significant capital allocation initiatives we executed during 2022 and the sources of capital we have at our disposal for future use as well as our current commitments for future uses of capital : ​ During the first quarter of 2022, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.06 per share.
Our current uses of funds are to fund working capital requirements, maintain the quality of our vessels, purchase vessels, pay newbuilding construction costs, comply with international shipping standards and environmental laws and regulations, repay or repurchase our outstanding loan facilities, pay a regular quarterly cash dividend, and from time-to-time, repurchase shares of our common stock and pay supplemental cash dividends. ​ The following is a summary of the significant capital allocation initiatives we executed during 2023 and the sources of capital we have at our disposal for future use as well as our current commitments for future uses of capital : ​ During 2023, the Company’s Board of Directors declared and paid regular quarterly and supplemental cash dividends totaling $308.2 million or $6.29 per share as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Declaration Date Record Date Payment Date ​ ​ Regular Quarterly Dividend per Share ​ ​ Supplemental Dividend per Share ​ ​ Total Dividends Paid (Dollars in Millions) February 27, 2023 March 14, 2023 March 28, 2023 ​ $ 0.12 ​ $ 1.88 ​ $ 98.3 May 4, 2023 June 14, 2023 June 28, 2023 ​ $ 0.12 ​ $ 1.50 ​ $ 79.3 August 8, 2023 September 13, 2023 September 27, 2023 ​ $ 0.12 ​ $ 1.30 ​ $ 69.4 November 6, 2023 December 13, 2023 December 27, 2023 ​ $ 0.12 ​ $ 1.13 ​ $ 61.2 ​ Also 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 dividend of $1.20 per share of common stock.
U.S. crude oil imports in the fourth quarter of 2022 increased by 0.3 million b/d to 6.2 million b/d compared with the fourth quarter of 2021, with imports from OPEC countries increasing by 0.1 million b/d and imports from non-OPEC countries increasing by 0.2 million b/d. ​ China’s average crude oil imports declined to 10.2 million b/d in 2022, a decrease of 0.9% when compared with 2021.
U.S. crude oil imports in the fourth quarter of 2023 decreased by 0.1 million b/d to 6.1 million b/d compared with the fourth quarter of 2022, with imports from OPEC countries remaining flat and imports from non-OPEC countries decreasing by 0.1 million b/d. ​ China’s crude oil imports in 2023 set a new record of 11.3 million b/d; the previous record year was 2020 with 10.8 million b/d.
OPEC crude oil production averaged 29.1 million b/d in the fourth quarter of 2022, a decrease of 0.3 million b/d from the third quarter of 2022, and an increase of 1.4 million b/d from the fourth quarter of 2021. Non-OPEC production increased by 1.7 million b/d to 66.8 47 International Seaways, Inc.
OPEC crude oil production averaged 26.7 million b/d in the fourth quarter of 2023, a decrease of 0.3 million b/d from the third quarter of 2023, and a decrease of 2.4 million b/d from the fourth quarter of 2022.
(2) Amounts shown include contractual interest obligations of floating rate debts estimated based on the applicable margin plus the effective three-month LIBOR rate as of December 31, 2022 of 4.74% for the COSCO Lease Financing, 4.63% for the ING Credit Facility and 4.46% for the Ocean Yield Lease Financing .
(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 December 31, 2023 of 5.37% for the ING Credit Facility.
If we do not qualify for the Section 883 exemption, our gross shipping income derived from U.S. sources, i.e., 50% of our gross shipping income attributable to transportation beginning or ending in the United States (but not both beginning and ending in the United States), generally would be subject to a four percent tax without allowance for deductions. ​ In 2021, we obtained advice regarding freight taxes in a certain jurisdiction related to the uncertainty surrounding the application of a law given the limited transparency into the actions of the tax authorities in this jurisdiction.
If we do not qualify for the Section 883 exemption, our gross shipping income derived from U.S. sources, i.e., 50% of our gross shipping income attributable to transportation beginning or ending in the United States (but not both beginning and ending in the United States), generally would be subject to a U.S. federal income tax of four percent without allowance for deductions. ​ The Company reviews its freight tax obligations on a regular basis and may update its assessment of its tax positions based on available information at that time.
These transitional voyages are excluded from the Table above. (2) The 2022 spot earnings primarily relate to the results of a positioning voyage of one of the Company’s 2004-built Panamaxes in the Panamax International Pool during the first quarter of 2022, prior to its sale for recycling in April 2022. ​ ​ 50 International Seaways, Inc.
(2) The 2022 spot earnings primarily relate to the results of a positioning voyage of one of the Company’s 2004-built Panamaxes in the Panamax International Pool during the first quarter of 2022, prior to its sale for recycling in April 2022. ​ ​ During 2023, TCE revenues for the Crude Tankers segment increased by $190.4 million, or 59%, to $512.2 million from $321.9 million in 2022.
The product carrier orderbook decreased by 0.5 million dwt, with declines in the LR1 and MR sectors of 0.1 million dwt and 0.4 million dwt, respectively.
The VLCC orderbook remained flat, while the Suezmax and Aframax orderbooks increased by 1.4 million dwt and 1.2 million dwt respectively. The product carrier orderbook increased by 0.8 million dwt, with increases in the LR1 and MR sectors of 0.6 million dwt and 0.2 million dwt respectively.
The information is based, in part, on information provided by the commercial pools in which the segment’s vessels participate and excludes commercial pool fees/commissions averaging approximately $665 and $624 per day in 2022 and 2021, respectively, as well as revenue and revenue days for which recoveries were recorded by the Company under its loss of hire insurance policies. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ 2021 ​ ​ Spot Earnings ​ Fixed Earnings ​ Spot Earnings ​ Fixed Earnings LR2: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ — ​ $ 17,613 ​ $ — ​ $ 17,637 Revenue days ​ ​ — ​ ​ 362 ​ ​ — ​ ​ 364 LR1 (1) : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ 38,706 ​ $ — ​ $ 14,768 ​ $ — Revenue days ​ ​ 3,113 ​ ​ — ​ ​ 2,052 ​ ​ — MR (2) : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ 30,345 ​ $ 20,927 ​ $ 10,506 ​ $ 16,044 Revenue days ​ ​ 13,262 ​ ​ 140 ​ ​ 6,492 ​ ​ 176 Handy: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ 13,861 ​ $ — ​ $ 8,790 ​ $ — Revenue days ​ ​ 469 ​ ​ — ​ ​ 635 ​ ​ — (1) During 2022 and 2021, each of the Company’s LR1s participated in the Panamax International Pool and transported crude oil cargoes exclusively .
The information is based, in part, on information provided by the commercial pools in which the segment’s vessels participate and excludes commercial pool fees/commissions averaging approximately $797 and $665 per day in 2023 and 2022, respectively, as well as revenue and revenue days for which recoveries were recorded by the Company under its loss of hire insurance policies. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 ​ ​ Spot Earnings ​ Fixed Earnings ​ Spot Earnings ​ Fixed Earnings LR2 (1) : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ 35,842 ​ $ 18,588 ​ $ — ​ $ 17,613 Revenue days ​ ​ 225 ​ ​ 140 ​ ​ — ​ ​ 362 LR1 (2) : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ 60,428 ​ $ — ​ $ 38,706 ​ $ — Revenue days ​ ​ 2,826 ​ ​ — ​ ​ 3,113 ​ ​ — MR (3) : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ 29,479 ​ $ 21,040 ​ $ 30,345 ​ $ 20,927 Revenue days ​ ​ 11,615 ​ ​ 1,210 ​ ​ 13,262 ​ ​ 140 Handy: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ — ​ $ — ​ $ 13,861 ​ $ — Revenue days ​ ​ — ​ ​ — ​ ​ 469 ​ ​ — (1) During 2023, the Company’s LR2 was employed on a transitional voyage in the spot market subsequent to the May 2023 expiry of its time charter and prior to joining the Hafnia LR2 Pool in July 2023.
This decrease was attributable to the sale of the Company’s interest in the FSO joint ventures on June 7, 2022. The Company recognized a $9.5 million loss on such sale. ​ Other Income/(Expense) ​ Other income was $2.3 million for the year ended December 31, 2022 compared with $5.9 million of other expense for the year ended December 31, 2021.
During 2022, equity in income of affiliated companies was $0.7 million, which reflected the Company’s recognition of a loss on the sale of $9.5 million. ​ Other Income/(Expense) ​ Other income was $10.7 million for the year ended December 31, 2023 compared with $2.3 million for the year ended December 31, 2022.
We derived approximately 96% and 81% of our total TCE revenues in the spot market for the years ended December 31, 2022 and 2021, respectively, primarily driven by the higher average daily spot market rates earned across all of INSW’s fleet sectors in 2022 compared with 2021.
We derived approximately 91% and 96% of our total TCE revenues in the spot market for the years ended December 31, 2023 and 2022, respectively.
Table of Contents The carrying value of each of the Company’s vessels represents its original cost at the time it was delivered or purchased less depreciation calculated using an estimated useful life of 25 years from the date such vessel was originally delivered from the shipyard.
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 set forth in Item 8, “Financial Statements and Supplementary Data.” ​ Vessel Lives and Salvage Values ​ The carrying value of each of the Company’s vessels represents its original cost at the time it was delivered or purchased less depreciation calculated using an estimated useful life of 25 years from the date such vessel was originally delivered from the shipyard.
Retirement Benefits Plan (the “Scheme”), pursuant to the Scheme's secondary funding objective. The Scheme is currently fully funded for financial reporting purposes. The Company and the trustees of the Scheme have agreed to target achieving a funding level that would permit the securing of the Scheme’s obligations with an insurance company by 2030.
The Company and the trustees of the Scheme have agreed to target achieving a funding level that would permit the 63 International Seaways, Inc. Table of Contents securing of the Scheme’s obligations with an insurance company by 2025.
During 2022, the average price differential between very low sulfur fuel and high sulfur fuel in Singapore and Fujairah, the most common bunkering locations for VLCCs, was approximately $277 per ton. Assuming a VLCC bunker consumption rate of 50 metric tons per day, this translated to approximately $13,800 per day in lower bunker consumption costs on our VLCCs during 2022.
During 2023, the average price differential between very low sulfur fuel and high sulfur fuel in Singapore and Fujairah, the most common bunkering locations for VLCCs, was approximately $158 per ton.
Such increase principally resulted from (i) an aggregate rates-based increase in the Suezmax, VLCC and Aframax fleets of $162.8 million due to higher average daily blended rates in these sectors, (ii) a $19.3 million days-based increase in the Suezmax fleet which reflected the Company’s acquisition of 13 Suezmaxes as a part of the Merger, two of which have been subsequently disposed of by the Company, (iii) a $10.2 million increase relating to activity growth in the Crude Tankers Lightering business, and (iv) a $2.8 million days-based increase in the VLCC fleet, which primarily reflected 360 fewer off-hire days in 2022.
Such increase principally resulted from (i) an aggregate rates-based increase in the Suezmax, VLCC and Aframax fleets of $146.1 million due to significantly higher average daily blended rates in these sectors, (ii) a $21.5 million days-based increase in the VLCC fleet, which primarily reflected the delivery of three dual-fuel LNG VLCC newbuilds between March 2023 and May 2023, (iii) an aggregate $14.6 million days-based increase in the Suezmax and Aframax fleets, which reflected 462 fewer primarily drydock related off-hire days in 2023 and (iv) a $10.5 million increase in the Crude Tankers Lightering business.
The information is based, in part, on information provided by the commercial pools in which the segment’s vessels participate and excludes commercial pool fees/commissions averaging approximately $787 and $592 per day in 2022 and 2021, 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ 2021 ​ ​ Spot Earnings ​ Fixed Earnings ​ Spot Earnings ​ Fixed Earnings VLCC: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ 29,361 ​ $ 44,043 ​ $ 13,604 ​ $ 45,280 Revenue days ​ ​ 3,220 ​ ​ 310 ​ ​ 2,948 ​ ​ 412 Suezmax (1) : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ 32,579 ​ $ 28,287 ​ $ 12,624 ​ $ 26,953 Revenue days ​ ​ 3,901 ​ ​ 365 ​ ​ 2,193 ​ ​ 168 Aframax: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ 36,488 ​ $ — ​ $ 10,803 ​ $ 25,740 Revenue days ​ ​ 1,283 ​ ​ — ​ ​ 1,087 ​ ​ 144 Panamax (2) : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ 19,851 ​ $ — ​ $ 13,346 ​ $ 11,007 Revenue days ​ ​ 70 ​ ​ — ​ ​ 437 ​ ​ 1,370 (1) During 2021, certain of the Company’s Suezmaxes were employed on transitional voyages in the spot market outside of their ordinary course operations in Penfield Maritime’s Suezmax Pool.
Table of Contents day in 2023 and 2022, 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 ​ ​ Spot Earnings ​ Fixed Earnings ​ Spot Earnings ​ Fixed Earnings VLCC: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ 45,483 ​ $ 40,098 ​ $ 29,361 ​ $ 44,043 Revenue days ​ ​ 3,269 ​ ​ 979 ​ ​ 3,220 ​ ​ 310 Suezmax: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ 51,293 ​ $ 31,065 ​ $ 32,579 ​ $ 28,287 Revenue days ​ ​ 4,002 ​ ​ 680 ​ ​ 3,901 ​ ​ 365 Aframax (1) : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ 46,841 ​ $ 38,566 ​ $ 36,488 ​ $ — Revenue days ​ ​ 1,182 ​ ​ 164 ​ ​ 1,283 ​ ​ — Panamax (2) : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average rate ​ $ — ​ $ — ​ $ 19,851 ​ $ — Revenue days ​ ​ — ​ ​ — ​ ​ 70 ​ ​ — (1) During the first quarter of 2023, one of the Company’s Aframaxes was employed on a transitional voyage in the spot market outside of its ordinary course operations in a commercial pool.
These increases were partially offset by (v) a $19.2 million days-based decrease in the Panamax fleet driven by the sale of four 2002-built Panamaxes and one 2003-built Panamax between August and December 2021 and the Company taking advantage of the strong demand for steel to recycle its two remaining Panamaxes in April 2022. ​ Vessel expenses increased by $3.0 million to $98.8 million in 2022 from $95.8 million in 2021.
These increases were partially offset by (v) a $2.2 million days-based decrease in the Panamax fleet due to the Company’s recycling of its two remaining Panamaxes in April 2022. ​ Vessel expenses increased by $16.9 million to $115.7 million in 2023 from $98.8 million in 2022.
The decrease reflects a $0.5 million reduction in charter hire expense in the Crude Tankers Lightering business as well as the impact of the bareboat charters for two of the Company’s Aframaxes being classified as finance leases subsequent to the Company providing notice in December 2022 that it intends to exercise its purchase options under the bareboat charters.
Approximately $5.8 million of the decrease reflects the impact of the exercise of purchase options under bareboat charters for two of the Company’s Aframaxes in 2023, partially offset by a $2.3 million increase in charter hire expense in the Crude Tankers Lightering business.
(2) During 2022 and 2021, certain MRs acquired by the Company through the Merger were employed on transitional voyages prior to delivering to commercial pools. These transitional voyages are excluded from the tables above. ​ During 2022, TCE revenues for the Product Carriers segment increased by $420.3 million, or 377%, to $531.9 million from $111.6 million in 2021.
Such transitional voyages are excluded from the table above. ​ During 2023, TCE revenues for the Product Carriers segment increased by $11.4 million, or 2%, to $543.3 million from $531.9 million in 2022.
(6) Represents the Company’s commitments for the purchase and installation of ballast water treatment systems on 16 vessels, installation of mewis duct systems on ten vessels, and the Company’s remaining commitment for the construction of three dual-fuel LNG VLCCs not funded by the BoComm Lease Financing. ​ In addition to the above long-term contractual commitments, we have certain obligations for our shore-based employees as of December 31, 2022, related to a defined benefit pension plan in the U.K. as follows: ​ 59 International Seaways, Inc.
(6) Represents the Company’s commitments for the purchase and installation of nine ballast water treatment systems and two mewis duct systems, and the Company’s remaining commitment for the construction of four dual-fuel ready LR1s. ​ In addition to the above long-term contractual commitments, we have certain obligations for our shore-based employees as of December 31, 2023, related to a defined benefit pension plan in the U.K. as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beyond ​ ​ ​ (Dollars in thousands) ​ ​ 2024 ​ ​ 2025 ​ ​ 2026 ​ ​ 2027 ​ ​ 2028 ​ ​ 2028 ​ ​ Total Defined benefit pension plan contributions (1) ​ $ 1,455 ​ $ 760 ​ $ 783 ​ $ 807 ​ $ 831 ​ $ 3,580 ​ $ 8,216 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ $ 1,455 ​ $ 760 ​ $ 783 ​ $ 807 ​ $ 831 ​ $ 3,580 ​ $ 8,216 ​ (1) Represents estimated employer contributions under the OSG Ship Management (UK) Ltd.
The Company’s debt service commitments and aggregate purchase commitments for vessel construction and betterments as of December 31, 2022, are presented in the Aggregate Contractual Obligations Table below. ​ During the first quarter of 2023, we have continued to execute on our capital allocation strategy, balance sheet enhancement efforts and fleet optimization program through the following actions: ​ In December 2022 the Company tendered notice of its intention to exercise its options to purchase two 2009-built Aframaxes that are currently bareboat chartered-in.
The Company’s debt service commitments and aggregate purchase commitments for vessel construction and betterments as of December 31, 2023, are presented in the Aggregate Contractual Obligations Table below. ​ During the first quarter of 2024, we continued to execute on our fleet optimization program by entering 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.
Additionally, during 2022 one full-service lightering was performed, while no full-service lighterings were performed in 2021. ​ Product Carriers ​ ​ ​ ​ ​ ​ ​ ​ (Dollars in thousands, except daily rate amounts) ​ 2022 ​ 2021 TCE revenues ​ $ 531,853 ​ $ 111,574 Vessel expenses ​ ​ (141,830) ​ ​ (87,251) Charter hire expenses ​ ​ (16,752) ​ ​ (7,653) Depreciation and amortization ​ ​ (47,706) ​ ​ (28,739) Adjusted income/(loss) from vessel operations ​ $ 325,565 ​ $ (12,069) Average daily TCE rate ​ $ 30,221 ​ $ 10,842 Average number of owned vessels ​ ​ 43.7 ​ ​ 30.0 Average number of vessels chartered-in under leases ​ ​ 6.9 ​ ​ 1.6 Number of revenue days ​ ​ 17,599 ​ ​ 10,291 Number of ship-operating days ​ ​ ​ ​ ​ ​ Owned vessels ​ ​ 15,951 ​ ​ 10,938 Vessels bareboat chartered-in under leases (a) ​ ​ 1,467 ​ ​ 32 Vessels time chartered-in under leases ​ ​ 1,035 ​ ​ 569 ​ (a) Includes one LR2 and four MRs that secure lease financing arrangements. ​ ​ ​ 51 International Seaways, Inc.
Table of Contents Product Carriers ​ ​ ​ ​ ​ ​ ​ ​ (Dollars in thousands, except daily rate amounts) ​ 2023 ​ 2022 TCE revenues ​ $ 543,299 ​ $ 531,853 Vessel expenses ​ ​ (143,831) ​ ​ (141,830) Charter hire expenses ​ ​ (27,533) ​ ​ (16,752) Depreciation and amortization ​ ​ (52,160) ​ ​ (47,706) Adjusted income from vessel operations ​ $ 319,775 ​ $ 325,565 Average daily TCE rate ​ $ 33,518 ​ $ 30,221 Average number of owned vessels ​ ​ 39.4 ​ ​ 43.7 Average number of vessels chartered-in under leases ​ ​ 6.9 ​ ​ 6.9 Number of revenue days ​ ​ 16,209 ​ ​ 17,599 Number of ship-operating days ​ ​ ​ ​ ​ ​ Owned vessels ​ ​ 14,384 ​ ​ 15,951 Vessels bareboat chartered-in under leases (a) ​ ​ 1,644 ​ ​ 1,467 Vessels time chartered-in under leases ​ ​ 876 ​ ​ 1,035 ​ (a) Represents an LR2 and MRs that secured lease financing arrangements during the periods presented. ​ The following table provides a breakdown of TCE rates achieved for the years ended December 31, 2023 and 2022 between spot and fixed earnings and the related revenue days.
In addition, it is possible that third parties with which we do business may be impacted by events in Russia and Ukraine, which could adversely affect us. ​ ​ OPERATIONS AND OIL TANKER MARKETS ​ The International Energy Agency (“IEA”) estimates global oil consumption for the fourth quarter of 2022 at 100.5 million barrels per day (“b/d”), down 0.4% from the same quarter in 2021.
See Item 1A, Risk Factors – Terrorist attacks and international hostilities and instability can affect the tanker industry, which could adversely affect INSW’s business . ​ ​ OPERATIONS AND OIL TANKER MARKETS ​ The International Energy Agency (“IEA”) estimates global oil consumption for the fourth quarter of 2023 at 102.0 million barrels per day (“b/d”), up 1.8% from the same quarter in 2022.
Table of Contents Footnotes to the following table exclude those vessels with an estimated market value in excess of their carrying value. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ ​ Average Vessel Age (weighted by dwt) ​ ​ Number of Owned Vessels ​ ​ Carrying Value Crude Tankers ​ ​ ​ ​ ​ ​ ​ ​ ​ VLCC ​ ​ 8.8 ​ ​ 10 ​ $ 631,522 Suezmax ​ ​ 8.8 ​ ​ 13 ​ ​ 407,204 Aframax ​ ​ 7.7 ​ ​ 2 ​ ​ 57,173 Total Crude Tankers (1) ​ ​ 8.8 ​ ​ 25 ​ $ 1,095,899 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product Carriers ​ ​ ​ ​ ​ ​ ​ ​ ​ LR2 ​ ​ 8.4 ​ ​ 1 ​ $ 52,002 LR1 ​ ​ 13.6 ​ ​ 6 ​ ​ 96,234 MR ​ ​ 13.4 ​ ​ 38 ​ ​ 432,964 Total Product Carriers ​ ​ 13.2 ​ ​ 45 ​ $ 581,200 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fleet total ​ ​ 10.2 ​ ​ 70 ​ $ 1,677,099 (1) As of December 31, 2022, the Crude Tankers segment includes a vessel with a carrying value of $70.5 million, which the Company believes exceeds its aggregate market value of approximately $60.4 million by $10.1 million. ​ Off-Balance Sheet Arrangements ​ Pursuant to an agreement between INSW and the trustees of the OSG Ship Management (UK) Ltd.
The Company would not record a loss for any of the vessels for which the fair market value is below its carrying value unless and until the Company either determines to sell the vessel for a loss or determines that the vessel is impaired as discussed below in “Critical Accounting Policies — Vessel Impairment.” The Company believes that the future undiscounted cash flows expected to be earned over the estimated remaining useful lives for those vessels that have experienced declines in market values below their carrying values would exceed such vessels’ carrying values. ​ Footnotes to the following table exclude those vessels with an estimated market value in excess of their carrying value. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ ​ Average Vessel Age (weighted by dwt) ​ ​ Number of Vessels ​ ​ Carrying Value Crude Tankers ​ ​ ​ ​ ​ ​ ​ ​ ​ VLCC ​ ​ 7.8 ​ ​ 13 ​ $ 895,979 Suezmax ​ ​ 9.8 ​ ​ 13 ​ ​ 390,075 Aframax ​ ​ 11.8 ​ ​ 4 ​ ​ 96,099 Total Crude Tankers (1) ​ ​ 8.7 ​ ​ 30 ​ $ 1,382,153 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product Carriers ​ ​ ​ ​ ​ ​ ​ ​ ​ LR2 ​ ​ 9.4 ​ ​ 1 ​ $ 49,431 LR1 ​ ​ 14.6 ​ ​ 6 ​ ​ 89,944 MR ​ ​ 14.3 ​ ​ 35 ​ ​ 389,262 Total Product Carriers ​ ​ 14.1 ​ ​ 42 ​ $ 528,637 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fleet total ​ ​ 10.1 ​ ​ 72 ​ $ 1,910,790 (1) As of December 31, 2023, the Crude Tankers segment includes a vessel with a carrying value of $65.7 million, which the Company believes exceeds its aggregate market value of approximately $62.9 million by $2.8 million. ​ Off-Balance Sheet Arrangements ​ Pursuant to an agreement between INSW and the trustees of the OSG Ship Management (UK) Ltd.
Days of forward cover for OECD commercial stocks stood at 59.5 days in November 2022, 3.5 days below the five-year average. ​ During the fourth quarter of 2022, the tanker fleet of vessels over 10,000 dwt increased, net of vessels recycled, by 4.4 million dwt as the crude fleet increased by 3.3 million dwt, with VLCCs, Suezmaxes and Aframaxes growing by 2.4 million dwt, 0.3 million dwt and 0.6 million dwt, respectively.
Crude imports in December averaged 11.4 million b/d, up from November’s imports of 10.3 million b/d. ​ Total commercial inventories ended the fourth quarter of 2023 essentially flat compared with the fourth quarter of 2022; however stocks during the fourth quarter of 2023 declined by approximately 64.0 million barrels from the end of the prior quarter while stocks during the fourth quarter of 2022 increased by approximately 21.0 million barrels. ​ During the fourth quarter of 2023, the tanker fleet of vessels over 10,000 dwt increased, net of vessels recycled, by 1.2 million dwt as the crude fleet increased by 0.8million dwt, with VLCCs and Aframaxes growing by 0.6 million dwt and 0.4 million dwt, respectively, and Suezmaxes decreasing by 0.2 million dwt.
The Company also has contractual commitments for the purchase and installation of 16 ballast water treatment systems and ten Mewis ducts, and the final outstanding installment payments due for four ballast water treatment systems that had been installed as of December 31 , 2022 .
See Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities,” for further details on the offering program. ​ As of December 31, 2023, the Company has vessel construction commitments for four dual-fuel ready LR1s and the purchase and installation of three ballast water treatment systems and two mewis ducts, and the final outstanding installment payments due for six ballast water treatment systems that had been installed as of December 31 , 2023 .
Such increase was driven by the Suezmaxes and Aframax acquired in the Merger, offset substantially by the impact of the sales in the Panamax fleet described above. Charter hire expenses decreased by $0.9 million to $15.4 million in 2022 from $16.3 million in 2021.
Such increase was principally driven by the VLCC newbuild deliveries described above, along with increased costs of spares, stores and lubricating oils. Charter hire expenses decreased by $3.5 million to $11.9 million in 2023 from $15.4 million in 2022.
The growth in TCE revenues was primarily as a result of substantial period-over-period increases in average daily blended rates earned by the MR and LR1 fleet sectors, which accounted for a rates-based increase of approximately $341.4 million. Also contributing to the increased TCE revenues were days-based increases. In conjunction with the Merger, the Company acquired 44 MRs.
The increase in TCE revenues was primarily as a result of (i) a $64.2 million aggregate rates-based increase in the LR1 and LR2 sectors due to substantial year-over-year increases in average daily blended rates earned in the current year.
Such charges in 2021 were partially offset by interest income on cash deposits, net actuarial gains and currency gains associated with the retirement benefit obligation in the United Kingdom. ​ Interest Expense ​ The components of interest expense are as follows: ​ ​ ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ 2022 ​ 2021 Interest before items shown below ​ $ 62,847 ​ $ 26,954 Interest cost on defined benefit pension obligation ​ ​ 497 ​ ​ 81 Impact of interest rate hedge derivatives ​ ​ (1,259) ​ ​ 10,376 Capitalized interest ​ ​ (4,364) ​ ​ (615) Interest expense ​ $ 57,721 ​ $ 36,796 ​ Interest expense was $57.7 million in 2022, compared with $36.8 million in 2021.
The 2023 and 2022 periods also reflect net actuarial gains and currency gains or losses associated with the Company’s retirement benefit obligation in the United Kingdom. ​ Interest Expense ​ The components of interest expense are as follows: ​ ​ ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ 2023 ​ 2022 Interest before items shown below ​ $ 77,912 ​ $ 62,847 Interest cost on defined benefit pension obligation ​ ​ 982 ​ ​ 497 Impact of interest rate hedge derivatives ​ ​ (10,750) ​ ​ (1,259) Capitalized interest ​ ​ (2,385) ​ ​ (4,364) Interest expense ​ $ 65,759 ​ $ 57,721 ​ Interest expense increased in 2023 compared to 2022 as a result of (i) higher average floating interest rates during 2023, (ii) the impact of two lease financings entered into during the second quarter of 2022, and (iii) the post-delivery interest expense related to BoComm Lease Financing.
Such increase resulted primarily from the net vessel additions noted above. ​ General and Administrative Expenses ​ During 2022, general and administrative expenses increased by $13.2 million to $46.4 million from $33.2 million in 2021.
Such increase resulted from increased drydock amortization, and the purchase of the LR1 described above, partially offset by the MR and Handysize sales described above. ​ General and Administrative Expenses ​ During 2023, general and administrative expenses increased by $1.1 million to $47.5 million from $46.4 million in 2022.
Table of Contents million b/d in the fourth quarter of 2022 compared with the fourth quarter of 2021.
Non-OPEC production increased by 2.3 million b/d to 70.0 million b/d in the fourth quarter of 2023 compared with the fourth quarter of 2022.
Such items were partially offset by increased vessel expenses and depreciation and amortization, which are reflective of the Company’s larger post-Merger fleet. ​ The increase in TCE revenues in 2022 of $597.9 million, or 234%, to $853.7 million from $255.9 million in 2021 primarily reflects a net aggregate $504.9 million rates-based increase resulting from higher average daily rates earned across all of INSW’s fleet sectors.
Such increase resulted principally from a year-over-year increase in TCE revenues and larger gains on the sale of vessels recognized in the current year, partially offset by increased depreciation and amortization, vessel expenses, and charter hire expenses in the current year. ​ The increase in TCE revenues in 2023 of $201.8 million, or 24%, to $1,055.5 million from $853.7 million in 2022 primarily reflects (i) a net aggregate $191.9 million rates-based increase resulting from higher average daily rates earned across all of INSW’s fleet sectors, with the exception of the MRs, and (ii) a $10.5 million increase attributable to the Company’s Lightering business. ​ The following tables provide a quarterly trend analysis of spot TCE rates earned between the fourth quarter of 2022 and 2023 by our Crude Tankers and Product Carriers fleet.
Table of Contents Branch (“Nordea”), Crédit Agricole Corporate & Investment Bank (“CA-CIB”), BNP Paribas, DNB Markets Inc. and Skandinaviska Enskilda Banken AB (PUBL) (or their respective affiliates), as mandated lead arrangers and bookrunners; Danish Ship Finance A/S and ING Bank N.V., London Branch (or their respective affiliates), as mandated lead arrangers; and National Australia Bank Limited, as co-arranger.
(or their respective affiliates), as mandated lead arrangers and bookrunners; and Danish Ship Finance A/S and Skandinaviska Enskilda Banken AB (PUBL) (or their respective affiliates), as lead arrangers.
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 set forth in Item 8, “Financial Statements and Supplementary Data.” ​ Vessel Lives and Salvage Values ​ 62 International Seaways, Inc.
See Note 10, “Debt,” to the accompanying consolidated financial statements as set forth in Item 8, “Financial Statements and Supplementary Data,” for further information .
The LR1/Panamax fleet remained flat. ​ During the fourth quarter of 2022, the tanker orderbook declined by 2.1 million dwt overall compared with the third quarter of 2022. The crude tanker orderbook decreased by 1.6 million dwt, with a decrease in the VLCC orderbook of 2.7 million dwt, and an increase in the Suezmax orderbook of 1.1 million dwt.
The LR1/Panamax fleet remained unchanged. ​ The tanker orderbook remains at historic lows across all tanker sectors and the average age of the global fleet is approximately 13 years. During the fourth quarter of 2023, the tanker orderbook increased by 3.4 million dwt overall compared with the third quarter of 2023. The crude tanker orderbook increased by 2.6 million dwt.
Under the terms of the options, the Company expects to purchase the two vessels in March 2023 for an aggregate purchase price of $43.0 million, representing an over 45% discount to the current market values of for these vessels. ​ In January 2023 we executed a memorandum of agreement to sell a 2008-built MR for approximately $20.5 million.
The aggregate purchase price for the two vessels was $43.0 million, representing an approximately 45% discount to the market price of the vessels. The first of the two vessels was purchased in March 2023, and the second in early April 2023. ​ On March 10, 2023 the Company entered into an amendment to the $750 Million Credit Facility agreement.

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