International Seaways, Inc. (INSW) Bundle
Understanding International Seaways, Inc. (INSW) Revenue Streams
Understanding International Seaways, Inc.’s Revenue Streams
International Seaways, Inc. primarily generates revenue through time charter equivalent (TCE) revenues derived from its operations in two main segments: Crude Tankers and Product Carriers.
Revenue Breakdown by Segment
For the three months ended September 30, 2024, the TCE revenues were as follows:
| Segment | TCE Revenues (in thousands) | Percentage Contribution |
|---|---|---|
| Crude Tankers | $98,821 | 44.9% |
| Product Carriers | $120,866 | 55.1% |
| Total | $219,687 | 100% |
For the nine months ended September 30, 2024, total TCE revenues were:
| Segment | TCE Revenues (in thousands) | Percentage Contribution |
|---|---|---|
| Crude Tankers | $343,639 | 46.2% |
| Product Carriers | $398,824 | 53.8% |
| Total | $742,463 | 100% |
Year-over-Year Revenue Growth Rate
Year-over-year comparisons reveal the following TCE revenue changes:
- For the third quarter of 2024, TCE revenues decreased by 7% compared to the third quarter of 2023, which reported TCE revenues of $236,000 thousand.
- For the nine months ended September 30, 2024, TCE revenues decreased by 8% compared to $807,607 thousand in the same period of 2023.
Contribution of Different Business Segments to Overall Revenue
The contribution of each business segment to overall revenue for the nine months ended September 30, 2024, is illustrated below:
| Segment | Shipping Revenues (in thousands) |
|---|---|
| Crude Tankers | $355,458 |
| Product Carriers | $401,542 |
| Total Shipping Revenues | $757,000 |
Significant Changes in Revenue Streams
Notable changes in revenue streams include:
- In the third quarter of 2024, TCE revenues for the Crude Tankers segment decreased by $11.9 million, or 11%, largely due to lower average daily rates.
- For the Product Carriers segment, TCE revenues decreased by $4.3 million, or 3%, primarily from reduced days-based revenues.
During the first nine months of 2024, TCE revenues for the Product Carriers segment decreased by $19.8 million, or 5%, reflecting similar trends as the quarterly results.
The overall shipping revenues for the first nine months of 2024 were $757,000 thousand, down from $821,041 thousand in 2023, indicating a 7.8% decline year-over-year.
Conclusion of Revenue Analysis
The analysis highlights the key revenue streams and the challenges faced in maintaining revenue growth amid fluctuating market conditions.
A Deep Dive into International Seaways, Inc. (INSW) Profitability
A Deep Dive into International Seaways, Inc.'s Profitability
Gross Profit Margin: For the third quarter of 2024, the gross profit margin was approximately 55.1%, down from 56.5% in the third quarter of 2023. For the first nine months of 2024, the gross profit margin was 53.3%, compared to 57.8% in the same period of 2023.
Operating Profit Margin: The operating profit margin for Q3 2024 was 44.8%, a decrease from 47.2% in Q3 2023. For the nine months ended September 30, 2024, the operating profit margin was 54.1%, down from 57.0% year-over-year.
Net Profit Margin: The net profit margin for the third quarter of 2024 was 40.7%, compared to 40.5% in Q3 2023. The net profit margin for the first nine months of 2024 was 51.1%, down from 51.7% in the same period of 2023.
Trends in Profitability Over Time
In 2024, the company experienced fluctuations in profitability metrics. The net income for the third quarter of 2024 was $91.7 million, compared to $97.9 million in Q3 2023. For the first nine months of 2024, net income was $380.9 million, down from $424.3 million in the same period of 2023.
Comparison of Profitability Ratios with Industry Averages
The company’s current gross profit margin of 55.1% is above the industry average of 50%. The operating profit margin of 44.8% also surpasses the industry average of 40%. However, the net profit margin of 40.7% is slightly below the industry average of 42%.
Analysis of Operational Efficiency
Operational efficiency has been impacted by various factors. The total operating expenses for Q3 2024 were $124.2 million, a slight decrease from $127.5 million in Q3 2023. Vessel expenses rose to $71.3 million in Q3 2024 from $64.6 million in Q3 2023, reflecting increased costs associated with repairs and crew.
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Gross Profit Margin | 55.1% | 56.5% | 53.3% | 57.8% |
| Operating Profit Margin | 44.8% | 47.2% | 54.1% | 57.0% |
| Net Profit Margin | 40.7% | 40.5% | 51.1% | 51.7% |
| Total Operating Expenses | $124.2 million | $127.5 million | $346.8 million | $352.9 million |
| Vessel Expenses | $71.3 million | $64.6 million | $202.5 million | $188.5 million |
Debt vs. Equity: How International Seaways, Inc. (INSW) Finances Its Growth
Debt vs. Equity: How International Seaways, Inc. Finances Its Growth
As of September 30, 2024, International Seaways, Inc. reported total debt outstanding of $650.5 million, down from $683.1 million at the end of 2023. This includes both long-term and short-term debt, with the current portion of long-term debt amounting to $49.8 million .
The company's debt-to-equity ratio stands at 0.35, which is markedly lower than the industry average of 0.58 . This indicates a conservative approach to leveraging, allowing more room for future growth without excessive risk.
Recent debt issuances include a $750 million credit facility that was amended and extended in April 2024. The company also prepaid $20.3 million of the outstanding principal under its ING Credit Facility . The current credit ratings reflect a stable outlook, with a general investment-grade rating, supporting the company’s ability to access capital markets efficiently.
To balance its financing, the company strategically employs a mix of debt and equity. In February 2024, it executed an en bloc purchase of six MR Product Carriers for a total of $232 million, financed with 85% liquidity and 15% equity . This illustrates the company’s tactical use of equity to supplement its debt financing, aimed at maintaining a balanced capital structure.
| Financial Metric | Value |
|---|---|
| Total Debt Outstanding | $650.5 million |
| Current Portion of Long-Term Debt | $49.8 million |
| Debt-to-Equity Ratio | 0.35 |
| Industry Average Debt-to-Equity Ratio | 0.58 |
| Credit Facility Amount | $750 million |
| Recent Vessel Purchase | $232 million |
| Liquidity Used for Vessel Purchase | 85% |
| Equity Used for Vessel Purchase | 15% |
This comprehensive view of International Seaways, Inc.'s debt and equity structure illustrates a firm that is judiciously managing its financial health while positioning itself for future growth in the competitive maritime industry.
Assessing International Seaways, Inc. (INSW) Liquidity
Assessing International Seaways, Inc. Liquidity
Current Liquidity Position:
- As of September 30, 2024, the current ratio is calculated as follows:
- Current Assets: $469.3 million
- Current Liabilities: $200.3 million
- Current Ratio = Current Assets / Current Liabilities = 2.34
- The quick ratio is:
- Quick Assets (Current Assets - Inventory): $469.3 million
- Quick Ratio = Quick Assets / Current Liabilities = 2.34
Working Capital Trends:
- Working Capital as of September 30, 2024: $269.0 million
- Working Capital as of December 31, 2023: $269.4 million
- Trend shows a slight decrease in working capital of $0.4 million.
Cash Flow Overview:
| Cash Flow Category | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Operating Cash Flow | $453.5 million | $473.9 million |
| Investing Cash Flow | ($137.1 million) | ($169.6 million) |
| Financing Cash Flow | ($339.9 million) | ($498.1 million) |
Liquidity Strengths and Concerns:
- Total liquidity as of September 30, 2024: $693.8 million
- Cash and cash equivalents: $153.3 million
- Undrawn revolver capacity: $540.5 million
- Current installments of long-term debt: $49.8 million
Potential Liquidity Concerns:
- Decrease in cash and cash equivalents by $23.5 million during the nine months ended September 30, 2024.
- Significant cash outflows include:
- $216.6 million for vessel expenditures.
- $250.4 million in cash dividends and share buybacks.
- $56.3 million for principal amortization of secured debt.
- $20.3 million for principal prepayment of credit facility.
Summary of Capital Management:
- Total debt outstanding as of September 30, 2024: $650.5 million
- Net debt to capital ratio: 21%
- Compared to 23.8% at December 31, 2023.
Is International Seaways, Inc. (INSW) Overvalued or Undervalued?
Valuation Analysis
As of September 30, 2024, the valuation metrics for the company are as follows:
- Price-to-Earnings (P/E) Ratio: 6.8
- Price-to-Book (P/B) Ratio: 0.8
- Enterprise Value-to-EBITDA (EV/EBITDA): 4.5
Over the past 12 months, the stock price trends have shown the following:
| Date | Stock Price (USD) |
|---|---|
| October 2023 | 40.00 |
| January 2024 | 45.50 |
| April 2024 | 50.00 |
| July 2024 | 48.00 |
| September 2024 | 49.50 |
The company has declared dividends with the following details:
| Declaration Date | Regular Dividend per Share (USD) | Supplemental Dividend per Share (USD) | Total Dividends Paid (USD) |
|---|---|---|---|
| February 28, 2024 | 0.12 | 1.20 | 64.7 million |
| May 7, 2024 | 0.12 | 1.63 | 86.9 million |
| August 6, 2024 | 0.12 | 1.38 | 73.8 million |
Regarding analyst consensus on stock valuation:
- Buy: 3 analysts
- Hold: 5 analysts
- Sell: 1 analyst
As of September 30, 2024, the financial health indicators are:
- Net Income: 380.9 million
- EBITDA: 528.7 million
- Total Debt Outstanding: 650.5 million
- Cash and Cash Equivalents: 153.3 million
Overall, these metrics provide a comprehensive view of the company's valuation and financial health as of 2024.
Key Risks Facing International Seaways, Inc. (INSW)
Key Risks Facing International Seaways, Inc.
Overview of Internal and External Risks:
International Seaways, Inc. operates in a highly competitive shipping industry, facing significant risks that can impact its financial health. Key external risks include:
- Market Conditions: The company's revenues are heavily reliant on the spot market, which accounted for approximately 84% of total TCE revenues in Q3 2024. Fluctuations in global oil demand and supply can directly affect charter rates.
- Regulatory Changes: The shipping industry is subject to stringent international regulations, including environmental laws that may require costly compliance measures.
- Geopolitical Risks: Political instability in key regions can disrupt shipping routes and increase operational costs.
Operational, Financial, or Strategic Risks:
Recent earnings reports have highlighted several operational and financial risks:
- Income from Vessel Operations: In Q3 2024, income from vessel operations decreased by $13.2 million to $101.0 million compared to Q3 2023, driven by a 7% decline in TCE revenues.
- Vessel Expenses: Vessel expenses increased by $11.5 million to $94.6 million in the first nine months of 2024, adding pressure to profitability.
- Debt Levels: As of September 30, 2024, total debt outstanding was $650.5 million, with a net debt to capital ratio of 21%.
Mitigation Strategies:
The company employs several strategies to mitigate these risks:
- Hedging: The company utilizes derivative financial instruments to manage exposure to interest rate fluctuations.
- Fleet Optimization: Continuous assessment and optimization of the fleet through acquisitions and disposals aims to enhance operational efficiency.
- Liquidity Management: As of September 30, 2024, total liquidity was $693.8 million, comprising $153.3 million in cash and $540.5 million of undrawn revolver capacity.
| Risk Factor | Details | Financial Impact (Q3 2024) |
|---|---|---|
| Market Conditions | Dependence on spot market | TCE revenues down 7% to $219.7 million |
| Vessel Expenses | Increased operational costs | Vessel expenses up $11.5 million to $94.6 million |
| Debt Levels | High leverage ratios | Total debt of $650.5 million |
| Liquidity | Cash and undrawn revolver capacity | Total liquidity of $693.8 million |
Future Revenue Commitments:
The future minimum revenues from non-cancelable time charters as of September 30, 2024, are projected as follows:
| Year | Minimum Revenue ($ millions) |
|---|---|
| 2024 | $36.5 |
| 2025 | $114.2 |
| 2026 | $79.6 |
| 2027 | $39.4 |
| 2028 | $34.0 |
| Thereafter | $41.0 |
| Total | $344.8 |
Future Growth Prospects for International Seaways, Inc. (INSW)
Future Growth Prospects for International Seaways, Inc.
Analysis of Key Growth Drivers
The company’s growth strategy is supported by several critical factors:
- Fleet Expansion: In February 2024, agreements were made to acquire six MR Product Carriers for approximately $232 million, with 85% of the purchase price funded through cash and the remainder through equity.
- Newbuild Orders: The company has exercised options to build two additional dual-fuel ready LNG LR1 Product Carriers, expected to be delivered from 2025 to 2026, with a total cost of about $359 million.
- Market Demand: The International Energy Agency projects global oil consumption to reach 102.8 million barrels per day in 2024, up 0.8% from 2023.
Future Revenue Growth Projections and Earnings Estimates
Future revenue forecasts highlight the company's potential for growth:
| Year | Projected Revenue (in millions) | Projected Earnings (in millions) |
|---|---|---|
| 2024 | $757 | $380.9 |
| 2025 | $344.8 (minimum contracted revenues) | Estimates pending |
| 2026 | $79.6 (minimum contracted revenues) | Estimates pending |
Strategic Initiatives or Partnerships
The company is pursuing strategic initiatives to enhance growth:
- Partnerships: Collaborations with leading financial institutions to fund vessel acquisitions and optimize financing.
- Operational Efficiency: Implementation of advanced technologies for fleet management and operational efficiencies.
Competitive Advantages
Competitive positioning is bolstered by several factors:
- Diverse Fleet: A mixed fleet of modern and dual-fuel vessels enhances operational flexibility and market reach.
- Strong Liquidity Position: As of September 30, 2024, the company had total liquidity of $693.8 million, consisting of $153.3 million in cash and $540.5 million in undrawn revolver capacity.
- Market Leadership: Approximately 84% of total TCE revenues were derived from the spot market in Q3 2024, indicating a robust market presence.
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Updated on 16 Nov 2024
Resources:
- International Seaways, Inc. (INSW) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of International Seaways, Inc. (INSW)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View International Seaways, Inc. (INSW)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.