UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-37836-1
INTERNATIONAL SEAWAYS, INC.
(Exact name of registrant as specified in its charter)
Marshall Islands
98-0467117
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification Number)
600 Third Avenue, 39th Floor, New York, New York
10016
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: 212-578-1600
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒
Accelerated filer ☐
Emerging growth company ☐
Non-accelerated filer ☐
Smaller reporting company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock (no par value)
INSW
New York Stock Exchange
Rights to Purchase Common Stock
N/A
Former name, former address and former fiscal year, if changed since last report
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date. The number of shares outstanding of the issuer’s common stock as of November 3, 2023: common stock, no par value 48,909,009 shares.
INTERNATIONAL SEAWAYS, INC.CONDENSED CONSOLIDATED BALANCE SHEETSDOLLARS IN THOUSANDS(UNAUDITED)
September 30, 2023
December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents
$
138,976
243,744
Short-term investments
75,000
80,000
Voyage receivables, net of allowance for credit losses of $129 and $261
including unbilled receivables of $212,340 and $279,567
219,827
289,775
Other receivables
11,285
12,583
Inventories
1,143
531
Prepaid expenses and other current assets
11,567
8,995
Current portion of derivative asset
7,092
6,987
Vessels held for sale
8,985
—
Total Current Assets
473,875
642,615
Vessels and other property, less accumulated depreciation of $404,280 and $331,903
1,947,740
1,680,010
Vessels construction in progress
123,940
Deferred drydock expenditures, net
72,314
65,611
Operating lease right-of-use assets
22,738
8,471
Finance lease right-of-use assets
44,391
Pool working capital deposits
33,501
35,593
Long-term derivative asset
4,520
4,662
Other assets
6,334
10,041
Total Assets
2,561,022
2,615,334
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable, accrued expenses and other current liabilities
42,850
51,069
Current portion of operating lease liabilities
9,784
1,596
Current portion of finance lease liabilities
41,870
Current installments of long-term debt
134,703
162,854
Total Current Liabilities
187,337
257,389
Long-term operating lease liabilities
14,021
7,740
Long-term debt
706,999
860,578
Other liabilities
2,588
1,875
Total Liabilities
910,945
1,127,582
Commitments and contingencies
Equity:
Capital - 100,000,000 no par value shares authorized; 48,893,133 and 49,120,648
shares issued and outstanding
1,489,041
1,502,235
Retained earnings/(accumulated deficit)
155,877
(21,447)
1,644,918
1,480,788
Accumulated other comprehensive income
5,159
6,964
Total Equity
1,650,077
1,487,752
Total Liabilities and Equity
See notes to condensed consolidated financial statements
1
INTERNATIONAL SEAWAYS, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSDOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS(UNAUDITED)
Three Months Ended September 30,
Nine Months Ended September 30,
2023
2022
Shipping Revenues:
Pool revenues, including $72,877, $52,722, $250,909 and $107,106
from companies accounted for by the equity method
194,465
215,240
701,634
463,729
Time charter revenues
27,587
8,487
66,849
22,795
Voyage charter revenues
19,656
13,102
52,558
39,984
241,708
236,829
821,041
526,508
Operating Expenses:
Voyage expenses
5,756
2,283
13,434
8,448
Vessel expenses
64,596
58,565
188,516
178,445
Charter hire expenses
11,297
7,797
30,599
22,799
Depreciation and amortization
33,363
27,728
95,356
81,984
General and administrative
12,314
11,839
35,082
32,852
Third-party debt modification fees
148
71
568
1,158
Loss/(gain) on disposal of vessels and other assets, net of impairments
74
139
(10,648)
(9,339)
Total operating expenses
127,548
108,422
352,907
316,347
Income from vessel operations
114,160
128,407
468,134
210,161
Equity in results of affiliated companies
(1)
434
Operating income
128,406
210,595
Other income/(expense)
646
360
8,308
(440)
Income before interest expense and income taxes
114,806
128,766
476,442
210,155
Interest expense
(16,817)
(15,332)
(51,678)
(40,630)
Income before income taxes
97,989
113,434
424,764
169,525
Income tax provision
(52)
(7)
(432)
(63)
Net income
97,937
113,427
424,332
169,462
Weighted Average Number of Common Shares Outstanding:
Basic
48,861,356
49,312,716
49,008,901
49,493,315
Diluted
49,275,022
49,743,700
49,442,825
49,758,196
Per Share Amounts:
Basic net income per share
2.00
2.30
8.65
3.42
Diluted net income per share
1.99
2.28
8.58
3.40
2
INTERNATIONAL SEAWAYS, INC.CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEDOLLARS IN THOUSANDS(UNAUDITED)
Other comprehensive (loss)/income, net of tax:
Net change in unrealized gains/(losses) on cash flow hedges
(968)
10,112
(1,725)
21,840
Defined benefit pension and other postretirement benefit plans:
Net change in unrecognized prior service costs
49
78
(11)
177
Net change in unrecognized actuarial losses
323
516
(69)
1,176
Other comprehensive (loss)/income, net of tax
(596)
10,706
(1,805)
23,193
Comprehensive income
97,341
124,133
422,527
192,655
3
INTERNATIONAL SEAWAYS, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSDOLLARS IN THOUSANDS(UNAUDITED)
Cash Flows from Operating Activities:
Items included in net income not affecting cash flows:
Loss on write-down of vessels and other assets
1,697
Amortization of debt discount and other deferred financing costs
4,491
3,630
Amortization of time charter hire contracts acquired
842
Deferred financing costs write-off
1,952
610
Stock compensation
5,912
4,447
20
(10,017)
Other – net
(2,140)
(774)
Items included in net income related to investing and financing activities:
Gain on disposal of vessels and other assets, net
(11,036)
Loss on extinguishment of debt
1,323
Loss on sale of investments in affiliated companies
9,513
Cash distributions from affiliated companies
2,250
Payments for drydocking
(27,622)
(36,280)
Insurance claims proceeds related to vessel operations
2,858
4,545
Changes in operating assets and liabilities:
Decrease/(increase) in receivables
69,948
(123,045)
Increase in deferred revenue
911
1,009
Net change in inventories, prepaid expenses and other current assets, accounts
payable, accrued expenses and other current and long-term liabilities
(3,774)
7,364
Net cash provided by operating activities
562,919
106,201
Cash Flows from Investing Activities:
Expenditures for vessels, vessel improvements and vessels under construction
(192,218)
(87,603)
Proceeds from disposal of vessels and other property, net
20,036
79,476
Expenditures for other property
(1,035)
(674)
Investments in short-term time deposits
(210,000)
(80,000)
Proceeds from maturities of short-term time deposits
215,000
(1,334)
1,862
Proceeds from sale of investments in affiliated companies
138,966
Net cash (used in)/provided by investing activities
(169,551)
52,027
Cash Flows from Financing Activities:
Issuance of debt, net of issuance and deferred financing costs
Borrowings on long term debt, net of lenders' fees
641,050
Borrowings on revolving credit facilities
50,000
Repayments of debt
(323,685)
(744,034)
Proceeds from sale and leaseback financing, net of issuance and deferred financing costs
169,717
88,791
Payments on sale and leaseback financing and finance lease
(123,732)
(28,640)
Payments of deferred financing costs
(3,006)
(782)
Premium and fees on extinguishment of debt
(1,323)
Repurchase of common stock
(13,948)
(20,017)
Cash dividends paid
(247,001)
(14,830)
Cash paid to tax authority upon vesting or exercise of stock-based compensation
(5,158)
(3,174)
Net cash used in by financing activities
(498,136)
(81,636)
Net (decrease)/increase in cash, cash equivalents and restricted cash
(104,768)
76,592
Cash, cash equivalents and restricted cash at beginning of year
98,933
Cash, cash equivalents and restricted cash at end of period
175,525
4
INTERNATIONAL SEAWAYS, INC.CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITYDOLLARS IN THOUSANDS(UNAUDITED)
Retained
Accumulated
Earnings /
Other
(Accumulated
Comprehensive
Noncontrolling
Capital
Deficit)
Income/(loss)
Interests
Total
For the nine months ended
Balance at January 1, 2023
Other comprehensive loss
Dividends declared
(247,008)
Forfeitures of vested restricted stock awards and exercised stock options
Compensation relating to restricted stock awards
768
Compensation relating to restricted stock units awards
4,688
Compensation relating to stock option awards
456
Balance at September 30, 2023
Balance at January 1, 2022
1,591,446
(409,338)
(12,360)
584
1,170,332
Other comprehensive income
(14,827)
Impact of deconsolidating DASM
(584)
902
2,782
763
Balance at September 30, 2022
1,557,875
(239,876)
10,833
1,328,832
For the three months ended
Balance at July 1, 2023
1,487,151
127,368
5,755
1,620,274
(69,428)
(149)
277
1,645
117
Balance at July 1, 2022
1,583,740
(353,303)
127
1,231,148
(5,886)
(1,681)
319
1,175
225
5
INTERNATIONAL SEAWAYS, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)
Note 1 — Basis of Presentation:
The accompanying unaudited condensed consolidated financial statements include the accounts of International Seaways, Inc. (“INSW”), a Marshall Islands corporation, and its wholly owned subsidiaries. Unless the context indicates otherwise, references to “INSW”, the “Company”, “we”, “us” or “our”, refer to International Seaways, Inc. and its subsidiaries. As of September 30, 2023, the Company’s operating fleet consisted of 75 wholly-owned or lease financed and time chartered-in oceangoing vessels, engaged primarily in the transportation of crude oil and refined petroleum products in the International Flag trade through its wholly owned subsidiaries. In addition to our operating fleet of 75 vessels, two LR1 newbuilds are scheduled for delivery to the Company during the second half of 2025, bringing the total operating and newbuild fleet to 77 vessels as of September 30, 2023.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and notes required by generally accepted accounting principles in the United States. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results have been included. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.
The condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited financial statements at that date but does not include all of the information and notes required by generally accepted accounting principles in the United States for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
All intercompany balances and transactions within INSW have been eliminated. Investments in 50% or less owned affiliated companies, in which INSW exercises significant influence, are accounted for by the equity method.
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. An adjustment has been made to the condensed consolidated balance sheet as of December 31, 2022 to reclassify $0.8 million from Pool working capital deposits (previously captioned as Investments in and advances to affiliated companies) to Other assets.
Note 2 — Significant Accounting Policies:
For a description of all of the Company’s material accounting policies, see Note 2, “Summary of Significant Accounting Policies,” to the Company’s consolidated financial statements as of and for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K. The following is a summary of any changes or updates to the Company’s critical accounting policies for the current period:
Cash, cash equivalents and restricted cash — Interest-bearing deposits that are highly liquid investments and have a maturity of three months or less when purchased are included in cash and cash equivalents.
Short-term investments — Short-term investments consist of time deposits with original maturities of between 91 and 364 days.
6
Concentration of Credit Risk — The allowance for credit losses is recognized as an allowance or contra-asset and reflects our best estimate of probable losses inherent in the voyage receivables balance. Activity for allowance for credit losses is summarized as follows:
(Dollars in thousands)
Allowance for Credit Losses - Voyage Receivables
Balance at December 31, 2022
261
Reversal of expected credit losses
(132)
129
During the three and nine months ended September 30, 2023 and 2022, the Company did not have any individual customers who accounted for 10% or more of its revenues apart from the pools in which it participates. The pools in which the Company participates accounted in aggregate for 96% of consolidated voyage receivables at both September 30, 2023 and December 31, 2022.
Deferred finance charges — Finance charges, excluding original issue discount, incurred in the arrangement of new debt and/or amendments resulting in the modification of existing debt are deferred and amortized to interest expense on either an effective interest method or straight-line basis over the term of the related debt. Unamortized deferred finance charges of $4.8 million relating to the $750 Million Facility Revolving Loan and the $160 Million Revolving Credit Facility (See Note 10, “Debt”) as of September 30, 2023 and $6.9 million relating to the $750 Million Facility Revolving Loan and the BoComm Lease Financing as of December 31, 2022, are included in other assets in the accompanying condensed consolidated balance sheets. Unamortized deferred financing charges of $12.8 million and $13.4 million as of September 30, 2023 and December 31, 2022, respectively, relating to the Company’s outstanding debt facilities, are included in long-term debt in the consolidated balance sheets.
Interest expense relating to the amortization of deferred financing charges amounted to $1.2 million and $3.8 million for the three and nine months ended September 30, 2023, respectively, and $1.7 million and $3.3 million for the three and nine months ended September 30, 2022, respectively.
Vessels construction in progress — Interest costs are capitalized to vessels during the period that vessels are under construction. Interest capitalized during the three and nine months ended September 30, 2023 totaled nil and $2.3 million, respectively, and $1.2 million and $2.7 million during the three and nine months ended September 30, 2022, respectively. The construction of the Company’s three newbuild dual-fuel LNG VLCCs was completed and the vessels were delivered to the Company between March 2023 and May 2023. Construction on the two LR1 newbuilds is expected to commence during the second half of 2024 with expected delivery to the Company during the second half of 2025.
Recently Issued Accounting Standards — The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification is the sole source of authoritative GAAP other than United States Securities and Exchange Commission (“SEC”) issued rules and regulations that apply only to SEC registrants. The FASB issues Accounting Standards Updates (“ASU”) to communicate changes to the codification. The Company considered the applicability and impact of all ASUs issued during the quarter ended September 30, 2023 and determined that they were either not applicable or not expected to have a material impact on the Company’s consolidated financial statements.
Note 3 — Earnings per Common Share:
Basic earnings per common share is computed by dividing earnings, after the deduction of dividends and undistributed earnings allocated to participating securities, by the weighted average number of common shares outstanding during the period.
The computation of diluted earnings per share assumes the issuance of common stock for all potentially dilutive stock options and restricted stock units not classified as participating securities. Participating securities are defined by ASC 260, Earnings Per Share, as unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents and are included in the computation of earnings per share pursuant to the two-class method.
7
Weighted average shares of unvested restricted common stock considered to be participating securities totaled 29,519 and 38,288 for the three and nine months ended September 30, 2023, respectively, and 49,778 and 68,945 for the three and nine months ended September 30, 2022, respectively. Such participating securities are allocated a portion of income, but not losses under the two-class method. As of September 30, 2023, there were 499,607 shares of restricted stock units and 244,313 stock options outstanding and considered to be potentially dilutive securities.
Reconciliations of the numerator of the basic and diluted earnings per share computations are as follows:
Net income allocated to:
Common Stockholders
97,878
113,313
424,011
169,229
Participating securities
59
114
321
233
For the three and nine months ended September 30, 2023 earnings per share calculations, there were 413,666 and 433,924 dilutive equity awards outstanding, respectively. For the three and nine months ended September 30, 2022 earnings per share calculations, there were 430,984 and 264,881 dilutive equity awards outstanding, respectively. Awards of 774,957 and 804,199 for the three and nine months ended September 30, 2023, respectively, and 1,298,016 and 1,236,334 for the three and nine months ended September 30, 2022, respectively, were not included in the computation of dilutive earnings per share because inclusion of these awards would be anti-dilutive.
Note 4 — Business and Segment Reporting:
The Company has two reportable segments: Crude Tankers and Product Carriers. Adjusted income/(loss) from vessel operations for segment purposes is defined as income/(loss) from vessel operations before general and administrative expenses, third-party debt modification fees and loss/(gain) on disposal of vessels and assets, net of impairments. The accounting policies followed by the reportable segments are the same as those followed in the preparation of the Company’s condensed consolidated financial statements.
8
Information about the Company’s reportable segments as of and for the three and nine months ended September 30, 2023 and 2022 follows:
Crude
Product
Tankers
Carriers
Totals
Three months ended September 30, 2023:
Shipping revenues
114,250
127,458
Time charter equivalent revenues
110,766
125,186
235,952
20,039
13,298
26
Loss on disposal of vessels and other assets
13
61
Adjusted income/(loss) from vessel operations
58,926
67,796
(26)
126,696
Adjusted total assets at September 30, 2023
1,520,485
795,568
2,316,053
Three months ended September 30, 2022:
77,071
159,758
75,192
159,355
234,546
15,771
11,931
Loss on disposal of vessels and other assets, net of impairments
77
62
30,993
109,490
(27)
140,456
Investments in and advances to affiliated companies at September 30, 2022
16,301
21,808
38,109
Adjusted total assets at September 30, 2022
1,356,386
819,768
2,176,154
9
Nine months ended September 30, 2023:
398,829
422,212
388,963
418,644
807,607
56,583
38,694
79
Loss/(gain) on disposal of vessels and other assets
38
(10,686)
239,985
253,230
(79)
493,136
Expenditures for vessels and vessel improvements
184,515
7,703
192,218
4,364
23,258
27,622
Nine months ended September 30, 2022:
178,788
347,720
171,124
346,936
518,060
46,109
35,816
1,048
(10,387)
40,717
194,173
(58)
234,832
59,101
28,502
87,603
22,086
14,194
36,280
Reconciliations of time charter equivalent (“TCE”) revenues of the segments to shipping revenues as reported in the condensed statements of operations follow:
Add: Voyage expenses
Consistent with general practice in the shipping industry, the Company uses time charter equivalent revenues, which represent shipping revenues less voyage expenses, as a measure to compare revenue generated from a voyage charter to revenue generated from a time charter. Time charter equivalent revenues, a non-GAAP measure, provide additional meaningful information in conjunction with shipping revenues, the most directly comparable GAAP measure, because it assists Company management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance.
10
Reconciliations of total adjusted income from vessel operations of the segments to income before income taxes, as reported in the condensed consolidated statements of operations follow:
Total adjusted income from vessel operations of all segments
General and administrative expenses
(12,314)
(11,839)
(35,082)
(32,852)
(148)
(71)
(568)
(1,158)
(Loss)/gain on disposal of vessels and other assets, net of impairments
(74)
(139)
10,648
9,339
Consolidated income from vessel operations
Reconciliations of total assets of the segments to amounts included in the condensed consolidated balance sheets follow:
September 30, 2022
Adjusted total assets of all segments
Corporate unrestricted cash and cash equivalents
174,465
Restricted cash
1,060
Other unallocated amounts
28,224
Consolidated total assets
2,459,903
Note 5 — Vessels:
Impairment of Vessels and Other Property
During the nine months ended September 30, 2023, the Company gave consideration as to whether events or changes in circumstances had occurred since December 31, 2022, that could indicate that the carrying amounts of the vessels in the Company’s fleet may not be recoverable. The Company determined that no held-for-use or held-for-sale impairment indicators existed for the Company’s vessels during the nine months ended September 30, 2023.
The Company recognized a loss of approximately $0.2 million during the first nine months ended September 30, 2023, related to the cost to terminate the purchase and installation contract for a ballast water treatment system on a vessel that was sold.
Vessel Acquisitions and Construction Commitments
In December 2022 the Company tendered notice of its intention to exercise its options to purchase two 2009-built Aframaxes that it had been bareboat chartering-in. The aggregate purchase price for the two vessels was $43.0 million. On March 30, 2023 and April 4, 2023, the Company completed the purchase of the two Aframaxes.
The Company’s three newbuild dual-fuel LNG VLCCs were delivered to the Company on March 7, 2023, April 11, 2023 and May 24, 2023, respectively. All three vessels commenced employment under seven-year time charter contracts with an oil major shortly after delivery.
On August 8, 2023, the Company entered into agreements to construct two dual-fuel ready LNG 73,600 dwt LR1 Product Carriers at K Shipbuilding Co., Ltd.’s shipyard, subject to certain conditions customary to similar transactions. The two vessels are scheduled for
11
delivery during the second half of 2025. The total construction cost for the vessels will be approximately $115 million, which will be paid for through a combination of long-term financing and available liquidity. The Company also entered into an option agreement, which was exercised in October 2023, to construct two additional dual-fuel ready LNG 73,600 dwt LR1 Product Carriers at the same shipyard for delivery during the first quarter of 2026 at an additional cost of approximately $115 million.
Disposal/Sales of Vessels
On March 14, 2023, the Company delivered a 2008-built MR to its buyer and recognized a gain of $10.9 million.
On September 8, 2023, the Company entered into a memorandum of agreement for the sale of another one of its 2008-built MR product carriers. The vessel, which is classified as held-for-sale in the accompanying condensed consolidated balance sheet as of September 30, 2023, was subsequently delivered to the buyer on October 6, 2023 and the Company expects to recognize a gain on sale in the fourth quarter of 2023.
Note 6 — Variable Interest Entities (“VIEs”):
Unconsolidated VIEs
As of September 30, 2023, all of the seven commercial pools in which the Company participates were determined to be VIEs for which the Company is not considered a primary beneficiary.
The following table presents the carrying amounts of assets and liabilities in the condensed consolidated balance sheet related to the unconsolidated VIEs as of September 30, 2023:
Condensed Consolidated Balance Sheet
In accordance with accounting guidance, the Company evaluated its maximum exposure to loss related to these unconsolidated VIEs by assuming a complete loss of the Company’s investment in these VIEs. The table below compares the Company’s liability in the condensed consolidated balance sheet to the maximum exposure to loss at September 30, 2023:
Maximum Exposure toLoss
Other Liabilities
–
In addition, as of September 30, 2023, the Company had approximately $208.4 million of trade receivables from the pools that were determined to be a VIE. These trade receivables, which are included in voyage receivables in the accompanying condensed consolidated balance sheet, have been excluded from the above tables and the calculation of INSW’s maximum exposure to loss. The Company does not record the maximum exposure to loss as a liability because it does not believe that such a loss is probable of occurring as of September 30, 2023.
12
Note 7 — Fair Value of Financial Instruments, Derivatives and Fair Value Disclosures:
The estimated fair values of the Company’s financial instruments, other than derivatives that are not measured at fair value on a recurring basis, categorized based upon the fair value hierarchy, are as follows:
Fair Value Level
Level 1
Short-term investments (1)
$750 Million Facility Term Loan (2)
(171,442)
(493,565)
Level 2
$160 Million Revolving Credit Facility (3)
(50,000)
ING Credit Facility (2)
(21,354)
(22,917)
Ocean Yield Lease Financing (2)
(319,266)
(341,106)
BoComm Lease Financing (4)
(207,359)
(63,598)
Toshin Lease Financing (4)
(13,600)
(14,744)
Hyuga Lease Financing (4)
(13,694)
(14,853)
COSCO Lease Financing (2)
(47,732)
Kaiyo Lease Financing (4)
(12,536)
(13,797)
Kaisha Lease Financing (4)
(12,630)
(13,704)
Derivatives
In May 2022, in connection with the refinancing of its $390 Million Facility Term Loan and $525 Million Facility Term Loan, the Company terminated all of its existing in-the-money LIBOR based interest swaps with an aggregate notional amount of approximately $358.6 million and received net cash proceeds of approximately $9.6 million. As of September 30, 2023, approximately $3.0 million of the gain is expected to amortize out of accumulated other comprehensive income to earnings over the next 12 months.
Also, as of September 30, 2023, approximately $1.8 million of the loss with regard to the hybrid instrument associated with the Sinosure Credit Facility that was terminated in November 2021, is expected to amortize out of accumulated other comprehensive income to earnings over the next 12 months.
On June 2, 2022, the Company entered into amortizing interest rate swap agreements covering a notional amount of $475 million of the $750 Million Facility Term Loan 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, effective August 22, 2022. The interest rate swap agreements, which contain no leverage features, are designated and qualify as cash flow hedges.
Derivatives are recorded on a net basis by counterparty when a legal right of offset exists. The Company had the following amounts recorded on a net basis by transaction in the accompanying unaudited condensed consolidated balance sheets related to the Company’s use of derivatives as of September 30, 2023 and December 31, 2022:
Long-term derivative assets
Current portion of derivative liabilities
Long-term derivativeliabilities
September 30, 2023:
Derivatives designated as hedging instruments:
Interest rate swaps
1,000
December 31, 2022:
547
The following tables present information with respect to gains and losses on derivative positions reflected in the condensed consolidated statements of operations or in the condensed consolidated statements of comprehensive income.
The effect of cash flow hedging relationships recognized in other comprehensive income excluding amounts reclassified from accumulated other comprehensive income, including hedges of equity method investees, for the three and nine months ended September 30, 2023 and 2022 follows:
1,897
10,559
6,291
21,491
Total other comprehensive income
The effect of cash flow hedging relationships on the condensed consolidated statement of operations is presented excluding hedges of equity method investees. The effect of the Company’s cash flow hedging relationships on the condensed consolidated statement of operations for the three and nine months ended September 30, 2023 and 2022 follows:
(2,343)
(6,328)
(226)
Discontinued hedging instruments:
Interest rate swap
(522)
(708)
(1,688)
445
Total interest expense
(2,865)
(447)
(8,016)
219
See Note 11, “Accumulated Other Comprehensive Income,” for disclosures relating to the impact of derivative instruments on accumulated other comprehensive income/(loss).
14
The following table presents the fair values, which are pre-tax, for assets and liabilities measured on a recurring basis:
Derivative Assets (interest rate swaps)
12,612
12,196
Level 2(1)
Note 8 — Debt:
Debt consists of the following:
$750 Million Facility Term Loan, due 2027, net of unamortized deferred finance costs of $4,290 and $6,400
167,152
487,164
$160 Million Revolving Credit Facility, due 2029
ING Credit Facility, due 2026, net of unamortized deferred finance costs of $325 and $416
21,030
22,501
Ocean Yield Lease Financing, due 2031, net of unamortized deferred finance costs of $2,789 and $3,198
316,477
337,908
BoComm Lease Financing, due 2030, net of unamortized deferred finance costs of $4,351 and $917
232,843
71,140
Toshin Lease Financing, due 2031, net of unamortized deferred finance costs of $317 and $370
14,240
15,215
COSCO Lease Financing, due 2028, net of unamortized deferred finance costs of $ and $1,187
46,544
Hyuga Lease Financing, due 2031, net of unamortized deferred finance costs of $279 and $323
14,121
15,093
Kaiyo Lease Financing, due 2030, net of unamortized deferred finance costs of $241 and $285
12,868
13,884
Kaisha Lease Financing, due 2030, net of unamortized deferred finance costs of $253 and $298
12,971
13,983
841,702
1,023,432
Less current portion
(134,703)
(162,854)
Long-term portion
Capitalized terms used hereafter have the meaning given in these condensed consolidated financial statements or in the respective transaction documents referred to below, including subsequent amendments thereto.
$750 Million Credit Facility
On March 10, 2023, the Company entered into an amendment to the $750 Million Credit Facility. Pursuant to the amendment, the Company (a) prepaid $97 million of outstanding principal under the $750 Million Facility Term Loan; (b) obtained a release of collateral vessel mortgages over 22 MR product carriers; (c) received from the lenders additional revolving credit commitments in an aggregate amount of $40 million, which additional commitments constitute an increase to, and are subject to the same terms and conditions as, the previously-existing revolving credit commitments; and (d) made certain other amendments to the credit agreement and ancillary documents, including amendments relating to certain hedging obligations related to the credit agreement and to repayment schedules. Following the effectiveness of the amendment, (a) the aggregate outstanding principal amount under the $750 Million Facility Term Loan was $366.3 million, (b) the aggregate principal commitments available under the $750 Million Facility Revolving Loan was $257.4 million (none of which was outstanding), and (c) the scheduled future quarterly principal amortization under the $750 Million Facility Term Loan decreased from $30.2 million to $27.7 million.
Following the amendment to the $750 Million Credit Facility agreement and through September 30, 2023, the Company has made an additional $142.9 million in mandatory principal prepayments on the $750 Million Facility Term Loan in conjunction with the sale of
15
a 2008-built MR, and the release of four Suezmaxes and one Aframax vessel from the collateral package. These transactions resulted in a further reduction in the scheduled future quarterly principal amortization under the $750 Million Facility Term Loan to $20.9 million as of September 30, 2023. In October 2023, the Company made an additional $29.7 million in mandatory principal prepayments on the $750 Million Facility Term Loan in conjunction with the sale of the above-mentioned 2008-built MR and the release of a 2012-built Suezmax from the collateral package, further reducing the scheduled future quarterly principal amortization to $19.5 million.
$160 Million Revolving Credit Facility
On September 27, 2023, the Company entered into a $160 million revolving credit agreement (the “$160 Million Revolving Credit Facility”) with Nordea Bank Abp, New York Branch (“Nordea”), ING Bank N.V., London Branch (“ING”), Crédit Agricole Corporate & Investment Bank, and DNB Markets Inc. (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. Nordea is acting as administrative agent, collateral agent, coordinator and security trustee under the Revolving Credit Agreement, and ING is acting as sustainability coordinator.
The $160 Million Revolving Credit Facility comprises a 5.5-year revolving credit facility in an aggregate amount of $160 million which matures on March 27, 2029 and reduces on a 20-year age-adjusted profile. The $160 Million Revolving Credit Facility is secured by a first lien on five of the Company’s vessels (the “Collateral Vessels”), along with their earnings, insurances and certain other assets, as well as by liens on certain additional assets of the Borrower. Interest on the $160 Million Revolving Credit Facility is calculated based upon Term SOFR plus the Applicable Margin (each as defined in the credit agreement). The Applicable Margin is 1.90% and is subject to a sustainability-linked pricing mechanism, pursuant to which the Applicable Margin may be decreased or increased by 0.075%, as described in greater detail below.
The sustainability-linked pricing adjustment is linked to three factors, which are consistent with those contained in the Company’s $750 Million Credit Facility and relate to a fleet sustainability score, the amount of sustainability-linked investment and the frequency of lost time injuries. The Company will be required to deliver annually, commencing for the period ending June 30, 2024, a sustainability certificate for the preceding calendar year setting out its sustainability-related calculations. If the Company achieves all of the targets set out in the credit agreement, the Applicable Margin will be decreased by 0.075% per annum, while if it fails to achieve any of those targets the Applicable Margin will be increased by that same amount (but no such adjustment will result in the Applicable Margin being increased or decreased from the otherwise-applicable Applicable Margin by more than 0.075% per annum in the aggregate).
The $160 Million Revolving Credit Facility also contains customary representations, warranties, restrictions and covenants applicable to the Company, the Borrower and the subsidiary guarantors (and in certain cases, other subsidiaries), including financial covenants that are consistent with existing financial covenants in the $750 Million Credit Facility and require the Company (i) to maintain a minimum liquidity level of the greater of $50 million and 5% of the Company’s Consolidated Indebtedness; (ii) to ensure the Company’s and its consolidated subsidiaries’ Maximum Leverage Ratio will not exceed 0.60 to 1.00 at any time; (iii) to ensure that Current Assets exceeds Current Liabilities (which is defined to exclude the current portion of Consolidated Indebtedness); and (iv) to ensure the aggregate Fair Market Value of the Collateral Vessels will not be less than 135% of the aggregate outstanding principal amount of the $160 Million Revolving Credit Facility.
On September 29, 2023, $50 million of the $160 million available under the $160 Million Revolving Credit Facility was drawn for general corporate purposes (including paying certain expenses related to the new financing). The $50 million was repaid in full on October 30, 2023, increasing the undrawn revolver capacity under this facility to $160 million.
BoComm Lease Financing Relating to Dual-Fuel LNG VLCC Newbuilds
On November 15, 2021, the Company and three of its vessel-owning indirect subsidiaries entered into a series of sale and leaseback arrangements with entities affiliated with the Bank of Communications Limited (“BoComm”) in connection with the construction of three dual-fuel LNG VLCC newbuilds (the “BoComm Lease Financing”). BoComm’s obligation to provide funding pursuant to the terms of the sale and leaseback agreements commenced when construction began on the first vessel in November 2021. The three
16
newbuilds were delivered to the Company on March 7, 2023, April 11, 2023, and May 24, 2023, respectively. The BoComm Lease Financing provided the funding of $244.8 million in aggregate ($81.6 million each vessel) over the course of the construction and delivery of the three vessels. Under the lease financing arrangements, each vessel is subject to a seven-year bareboat charter commencing on delivery of each vessel at a bareboat rate of $21,700 per day, with purchase options exercisable commencing at the end of the second year.
Ocean Yield Lease Financing
The lease financing arrangements with Ocean Yield were amended on February 21, 2023, to change the reference rate from three-month LIBOR to an adjusted three-month Term SOFR rate, effective on the interest rate reset date on May 7, 2023.
ING Credit Facility
The ING Credit Facility was amended on March 27, 2023, to change the reference rate from three-month LIBOR to an adjusted three-month Term SOFR rate, effective on the interest rate reset date on May 12, 2023.
COSCO Lease Financing
In May 2023, the Company tendered notice of its intention to exercise its options to purchase one 2013-built Aframax and one 2014-built LR2, which were bareboat chartered-in under the COSCO Lease Financing arrangements. The aggregate purchase price for the two vessels of $46.4 million, consisted of the $45.2 million remaining debt balance and $1.2 million of purchase option premiums. The transaction closed on July 3, 2023.
Debt Covenants
The Company was in compliance with the financial and non-financial covenants under all of its financing arrangements as of September 30, 2023.
Interest Expense
Total interest expense before the impact of capitalized interest, including amortization of issuance and deferred financing costs (for additional information related to deferred financing costs see Note 2, “Significant Accounting Policies”), commitment, administrative and other fees for all of the Company’s debt facilities for the three and nine months ended September 30, 2023 was $16.7 million and $53.2 million, respectively, and for the three and nine months ended September 30, 2022 was $16.4 million and $43.0 million, respectively. Interest paid for the Company’s debt facilities for the three and nine months ended September 30, 2023 was $16.8 million and $52.8 million, respectively, and for the three and nine months ended September 30, 2022 was $14.0 million and $36.6 million, respectively. Interest paid for the nine months ended September 30, 2023 also included $2.0 million of the pre-delivery interest expense paid for the three dual-fuel LNG VLCC newbuilds.
Debt Modifications, Repurchases and Extinguishments
During the first quarter of 2023, the Company recognized a net loss of $0.2 million, which is included in other income/(expense) in the accompanying condensed consolidated statement of operations. The net loss reflects a write-off of unamortized deferred financing costs associated with the mandatory principal prepayment of the $750 Million Facility Term Loan in March 2023 in connection with the sale of a 2008-built MR (see Note 5, “Vessels”).
During the second quarter of 2023, the Company recognized a net loss of $0.4 million, which is included in other income/(expense) in the accompanying condensed consolidated statement of operations. The net loss reflects a write-off of unamortized deferred financing costs associated with the mandatory principal prepayment of the $750 Million Facility Term Loan in May 2023 in connection with the release of a 2017-built Suezmax from the vessel collateral package.
During the third quarter of 2023, the Company recognized a net loss of $2.5 million, which is included in other income/(expense) in
17
the accompanying condensed consolidated statement of operations. The net loss reflects (i) a $1.3 million write-off of unamortized deferred financing costs, which principally related to the COSCO Lease Financing transaction described above; and (ii) $1.2 million in purchase option premium fees paid in conjunction with the COSCO Lease Financing transaction.
Note 9 — Taxes:
The Company derives substantially all of its gross income from the use and operation of vessels in international commerce. The Company’s entities that own and operate vessels are primarily domiciled in the Marshall Islands and Liberia, which do not impose income tax on shipping operations. The Company also has or had subsidiaries in various jurisdictions that perform administrative, commercial or technical management functions. These subsidiaries are subject to income tax based on the services performed in countries in which their offices are located; current and deferred income taxes are recorded accordingly.
A substantial portion of income earned by the Company is not subject to income tax. With respect to subsidiaries not subject to income tax in their respective countries of incorporation, no deferred taxes are provided for the temporary differences in the bases of the underlying assets and liabilities for tax and accounting purposes.
As of September 30, 2023, the Company qualifies for an exemption from U.S. federal income taxes under Section 883 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) and U.S. Treasury Department regulations for the 2023 calendar year, as less than 50 percent of the total value of the Company’s stock is held by one or more shareholders who own 5% or more of the Company’s stock for more than half of the days of 2023.
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. Such information may include additional legal advice as to the applicability of freight taxes in relevant jurisdictions. Freight tax regulations are subject to change and interpretation; therefore, the amounts recorded by the Company may change accordingly.
Additionally, a number of countries, including some in which certain of the Company’s subsidiaries are domiciled, have drafted or are actively considering drafting legislation to implement the Organization for Economic Cooperation and Development's ("OECD") international tax framework, including the Pillar II model rules for a minimum global tax with possible application from January 1, 2024 or later. The Company is currently monitoring these developments and is in the process of evaluating the potential impact on the Company’s consolidated financial statements.
The Marshall Islands and Liberia impose tonnage taxes, which are assessed on the tonnage of certain of the Company’s vessels. These tonnage taxes are included in vessel expenses in the accompanying condensed consolidated statements of operations.
Note 10 — Capital Stock and Stock Compensation:
The Company accounts for stock-based compensation expense in accordance with the fair value method required by ASC 718, Compensation – Stock Compensation. Such fair value method requires share-based payment transactions to be measured according to the fair value of the equity instruments issued.
Restricted Common Stock
In June 2023, the Company awarded a total of 26,878 restricted common stock shares to its non-employee directors. The weighted average fair market value of INSW’s stock on the measurement date of such awards was $37.94 per share. Such restricted share awards vest in full on the earlier of the next annual meeting of the stockholders or June 6, 2024, subject to each director continuing to provide services to INSW through such date. The restricted share awards granted may not be transferred, pledged, assigned or otherwise encumbered prior to vesting. Prior to the vesting date, a holder of restricted share awards otherwise has all the rights of a
18
shareholder of INSW, including the right to vote such shares and the right to receive dividends paid with respect to such shares at the same time as common shareholders generally.
Restricted Stock Units and Stock Options
During the nine months ended September 30, 2023, the Company granted 52,890 time-based restricted stock units (“RSUs”) to certain of its senior officers and employees. The weighted average grant date fair market value of these awards was $51.37 per RSU. Each RSU represents a contingent right to receive one share of INSW common stock upon vesting. All of the time-based RSUs awarded will vest in equal installments on each of the first three anniversaries of the grant date.
During the nine months ended September 30, 2023, the Company also awarded 52,890 performance-based RSUs to certain of its senior officers and employees. Each performance-based RSU represents a contingent right to receive shares of INSW common stock based upon the covered employees being continuously employed through the end of the period over which the performance goals are measured and shall vest as follows: (i) one-half of the target RSUs shall vest on December 31, 2025, subject to INSW’s return on invested capital (“ROIC”) performance in the three-year ROIC performance period relative to a target rate (the “ROIC Target”) set forth in the award agreements; and (ii) one-half of the target RSUs shall vest on December 31, 2025, subject to INSW’s three-year total shareholder return (“TSR”) performance relative to that of a performance peer group over a three-year performance period (“TSR Target”). Vesting is subject in each case to the Human Resources and Compensation Committee of the Company’s Board of Directors’ certification of achievement of the performance measures and targets no later than March 15, 2026. The weighted average grant date fair value of the awards with performance conditions was determined to be $51.37 per RSU. The weighted average grant date fair value of the TSR-based performance awards which have a market condition was estimated using a Monte Carlo probability model and determined to be $53.65 per RSU.
During the three and nine months ended September 30, 2023, 12,997 and 25,937 stock options, respectively, were exercised by certain senior officers and employees at an average exercise price of $21.68 and $22.11 per share, respectively. After withholdings for taxes and exercise costs, the Company issued a total of 3,524 and 6,843 shares in conjunction with these transactions during the three and nine months ended September 30, 2023, respectively.
Dividends
During 2023 the Company’s Board of Directors has declared and paid the following regular quarterly and supplemental cash dividends:
Declaration Date
Record Date
Payment Date
Regular Quarterly Dividend per Share
Supplemental Dividend per Share
Total Dividends Paid
February 27, 2023
March 14, 2023
March 28, 2023
$0.12
$1.88
$98.3 million
May 4, 2023
June 14, 2023
June 28, 2023
$1.50
$79.3 million
August 8, 2023
September 13, 2023
September 27, 2023
$1.30
$69.4 million
On November 6, 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 $1.13 per share of common stock. Both dividends will be paid on December 27, 2023 to stockholders of record as of December 13, 2023.
Share Repurchases
During the nine months ended September 30, 2023, the Company repurchased and retired 366,483 shares of its common stock in open-market purchases, at an average price of $38.03 per share, for a total cost of $13.9 million. During the nine months ended September 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.
19
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.
In connection with the settlement of vested restricted stock units and the exercise of stock options, the Company repurchased 9,473 and 130,810 shares of common stock during the three and nine months ended September 30, 2023, respectively, at an average cost of $45.50 and $43.81, respectively, per share (based on the market prices on the dates of vesting or exercise) from employees and certain members of management to cover withholding taxes. Similarly, the Company repurchased 223,926 and 308,405 shares of common stock during the three and nine months ended September 30, 2022, respectively, at an average cost of $30.22 and $26.78, respectively, per share.
Rights Agreement
On April 11, 2023, the Company’s Board of Directors approved the Amended and Restated the Rights Agreement (the “A&R Rights Agreement”), which amends and restates the Original Rights Agreement dated as of May 8, 2022. The A&R Rights Agreement implements substantially the same features and protective measures of the Original Rights Agreements and includes the following revised or additional provisions:
The Company’s Board of Directors adopted the Original Rights Agreement and the A&R Rights Agreement to enable all stockholders of the Company to realize the full potential value of their investment in the Company. The A&R Rights Agreement is designed to prevent any individual stockholder or group of stockholders from gaining control of the Company through open market accumulation without paying a control premium to all stockholders or by otherwise disadvantaging other stockholders. The A&R Rights Agreement is not intended to prevent a takeover or deter fair offers for securities of the Company that deliver value to all stockholders on an equal basis. It is designed, instead, to encourage anyone seeking to acquire the Company to negotiate with the Board prior to attempting a takeover.
The Company’s Board of Directors may consider an earlier termination of the A&R Rights Agreement if market and other conditions warrant.
Note 11 — Accumulated Other Comprehensive Income:
The components of accumulated other comprehensive income, net of related taxes, in the condensed consolidated balance sheets follow:
Unrealized gains on derivative instruments
15,187
16,912
Items not yet recognized as a component of net periodic benefit cost (pension plans)
(10,028)
(9,948)
The changes in the balances of each component of accumulated other comprehensive income/(loss), net of related taxes, during the three and nine months ended September 30, 2023 and 2022 follow:
Unrealized gains/(losses) on cash flow hedges
Items not yet recognized as a component of net periodic benefit cost
Balance as of June 30, 2023
16,155
(10,400)
Current period change, excluding amounts reclassified
from accumulated other comprehensive income
372
2,269
Amounts reclassified from accumulated other comprehensive income
Balance as of September 30, 2023
Balance as of June 30, 2022
6,865
(6,738)
594
11,153
Balance as of September 30, 2022
16,977
(6,144)
Balance as of December 31, 2022
(80)
6,211
Balance as of December 31, 2021
(4,863)
(7,497)
from accumulated other comprehensive loss
1,353
22,844
Amounts reclassified from accumulated other comprehensive loss
349
21
Amounts reclassified out of each component of accumulated other comprehensive income/(loss) follow:
Statement of Operations Line Item
Reclassifications of (gains)/losses on cash flow hedges:
Interest rate swaps entered into by the Company's
Equity in results of
equity method joint venture investees
130
affiliated companies
Interest rate swaps entered into by the Company's subsidiaries
Reclassifications of losses on discontinued hedging instruments
Interest rate swap entered into by the Company's subsidiaries
Total before and net of tax
At September 30, 2023, the Company expects that it will reclassify $7.6 million (gross and net of tax) of net gain on derivative instruments from accumulated other comprehensive income to earnings during the next twelve months attributable to interest rate swaps held by the Company.
See Note 7, “Fair Value of Financial Instruments, Derivatives and Fair Value Disclosures,” for additional disclosures relating to derivative instruments.
Note 12 — Revenue:
Revenue Recognition
The majority of the Company’s contracts for pool revenues, time charter revenues, and voyage charter revenues are accounted for as lease revenue under ASC 842. The Company’s contracts with pools are short term which are cancellable with up to 90 days’ notice. As of September 30, 2023, the Company is a party to time charter out contracts with customers on three VLCCs, two Suezmaxes, one Aframax, and five MRs, with expiry dates ranging from October 2023 to April 2030. The Company’s contracts with customers for voyage charters are short term and vary in length based upon the duration of each voyage. Lease revenue for non-variable lease payments is recognized over the lease term on a straight-line basis and lease revenue for variable lease payments (e.g., demurrage) is recognized in the period in which the changes in facts and circumstances on which the variable lease payments are based occur.
Lightering services provided by the Company’s Crude Tanker Lightering Business, and voyage charter contracts that do not meet the definition of a lease are accounted for as service revenues under ASC 606. In accordance with ASC 606, revenue is recognized when a customer obtains control of or consumes promised services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services.
22
The following tables present the Company’s revenues from leases accounted for under ASC 842 and revenues from services accounted for under ASC 606 for the three and nine months ended September 30, 2023 and 2022:
Revenues from leases
Pool revenues
80,562
113,903
19,319
8,268
Voyage charter revenues from non-variable lease payments
1,669
4,958
6,627
Voyage charter revenues from variable lease payments
329
Revenues from services
Voyage charter revenues from lightering services
12,700
Total shipping revenues
60,710
154,530
6,575
1,912
Voyage charter revenues from non-variable lease payments(1)
567
3,312
3,879
9,219
309,000
392,634
Time and bareboat charter revenues
47,575
19,274
5,324
9,825
15,149
66
479
545
36,864
133,186
330,543
16,503
6,292
5,648
10,952
16,600
(67)
(5)
23,389
23
Contract Balances
The following table provides information about receivables, contract assets and contract liabilities from contracts with customers, and significant changes in contract assets and liabilities balances, associated with revenue from services accounted for under ASC 606. Balances related to revenues from leases accounted for under ASC 842 are excluded from the table below.
Voyage receivables - Billed receivables
Contract assets (Unbilled voyage receivables)
Contract liabilities (Deferred revenues and off hires)
Opening balance as of January 1, 2023
9,452
1,866
Closing balance as of September 30, 2023
5,389
1,442
We receive payments from customers based on the schedule established in our contracts. Contract assets relate to our conditional right to consideration for our completed performance obligations under contracts and decrease when the right to consideration becomes unconditional or payments are received. Contract liabilities include payments received in advance of performance under contracts and are recognized when performance under the respective contract has been completed. Deferred revenues allocated to unsatisfied performance obligations will be recognized over time as the services are performed.
Performance Obligations
All of the Company’s performance obligations are generally transferred to customers over time. The expected duration of services is less than one year. There were no material adjustments in revenues from performance obligations satisfied in previous periods recognized during the three and nine months ended September 30, 2023 and 2022.
Costs to Obtain or Fulfill a Contract
As of September 30, 2023, there were no unamortized deferred costs of obtaining or fulfilling a contract.
24
Note 13 — Leases:
As permitted under ASC 842, the Company has elected not to apply the provisions of ASC 842 to short term leases, which include: (i) tanker vessels chartered-in where the duration of the charter was one year or less at inception; (ii) workboats employed in the Crude Tankers Lightering business which have a lease term of 12-months or less; and (iii) short term leases of office and other space.
Contracts under which the Company is a Lessee
The Company currently has two major categories of leases – chartered-in vessels and leased office and other space. The expenses recognized during the three and nine months ended September 30, 2023 and 2022 for the lease component of these leases are as follows:
Operating lease cost
Vessel assets
2,092
2,849
3,837
7,748
Finance lease cost
Amortization of right-of-use assets
731
Interest on lease liabilities
124
Office and other space
203
228
659
683
45
43
135
Short-term lease cost
Vessel assets (1)
5,881
1,737
15,304
4,749
Total lease cost
8,221
4,857
20,790
13,309
Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used for operating leases
3,822
7,952
Finance cash flows used for finance leases
42,284
25
Supplemental balance sheet information related to leases was as follows:
(9,784)
(1,596)
(41,870)
(14,021)
(7,740)
Total operating and finance lease liabilities
(23,805)
(51,206)
Weighted average remaining lease term - operating leases(1)
4.33 years
8.56 years
Weighted average discount rate - operating leases(1)
6.00%
4.13%
1. Charters-in of vessel assets:
As of September 30, 2023, the Company has a commitment to time charter-in one LR1 through to June 2025. The minimum lease liabilities and related number of operating days under this operating lease as of September 2023 are as follows:
Amount
Operating Days
2,427
92
2024
9,657
366
2025
4,301
163
Total lease payments (lease component only)
16,385
621
less imputed interest
(871)
Total operating lease liabilities
15,514
2. Office and other space:
The Company has operating leases for offices and a lightering workboat dock space. These leases have expiry dates ranging from December 2024 to May 2033. The lease for the workboat dock space contains renewal options executable by the Company for periods through December 2027. We have determined that the options through December 2024 are reasonably certain to be executed by the Company, and accordingly the options are included in the lease liability and right of use asset calculations for such lease.
Payments of lease liabilities for office and other space as of September 30, 2023 are as follows:
2023(1)
(142)
1,262
1,093
2026
1,113
2027
1,077
Thereafter
5,831
Total lease payments
10,234
(1,943)
8,291
(1) Reflects the impact of lease incentives expected to be received during the fourth quarter of 2023 being greater than rental payments due for the balance of 2023.
Contracts under which the Company is a Lessor
See Note 12, “Revenue,” for discussion on the Company’s revenues from operating leases accounted for under ASC 842.
The future minimum contracted revenues, before the deduction of brokerage commissions, expected to be received on non-cancelable time charters for three VLCCs, two Suezmaxes, one Aframax, and five MRs, and the related revenue days as of September 30, 2023 are as follows:
Revenue Days
26,369
933
99,329
3,518
66,719
2,287
42,610
1,360
33,945
1,095
75,051
2,421
Future minimum revenues
344,022
11,614
Future minimum contracted revenues do not include the Company’s share of time charters entered into by the pools in which it participates or profit-sharing above the base rate on the newbuild dual-fuel LNG VLCCs. Revenues from a time charter are not generally received when a vessel is off-hire, including time required for normal periodic maintenance of the vessel. In arriving at the minimum future charter revenues, an estimated time off-hire to perform periodic maintenance on each vessel has been deducted, although there is no assurance that such estimate will be reflective of the actual off-hire in the future.
Note 14 — Contingencies:
INSW’s policy for recording legal costs related to contingencies is to expense such legal costs as incurred.
27
Multi-Employer Plans
The Merchant Navy Officers Pension Fund (“MNOPF”) is a multi-employer defined benefit pension plan covering British crew members that served as officers on board INSW’s vessels (as well as vessels of other owners). The trustees of the plan have indicated that, under the terms of the High Court ruling in 2005, which established the liability of past employers to fund the deficit on the Post 1978 section of MNOPF, calls for further contributions may be required if additional actuarial deficits arise or if other employers liable for contributions are not able to pay their share in the future. As the amount of any such assessment cannot be reasonably estimated, no reserves have been recorded for this contingency in INSW’s consolidated financial statements as of September 30, 2023. The MNOPF annual actuarial report as of March 31, 2022, showed the pension scheme funded status as being in surplus and no additional employer contributions were due. The next full actuarial valuation will be as of March 31, 2024.
The Merchant Navy Ratings Pension Fund (“MNRPF”) is a multi-employer defined benefit pension plan covering British crew members that served as ratings (seamen) on board INSW’s vessels (as well as vessels of other owners) more than 20 years ago. Participating employers include current employers, historic employers that have made voluntary contributions, and historic employers such as INSW that have made no deficit contributions. Calls for contributions may be required if additional actuarial deficits arise or if other employers liable for contributions are unable to pay their share in the future. As the amount of any such assessment cannot be reasonably estimated, no reserves have been recorded in INSW’s consolidated financial statements as of September 30, 2023. The deficit valuation as of March 31, 2023 is expected to be finalized by June 30, 2024.
Spin-Off Related Agreements
On November 30, 2016, INSW was spun off from OSG as a separate publicly traded company. In connection with the spin-off, INSW and OSG entered into several agreements, including a separation and distribution agreement, an employee matters agreement and a transition services agreement. While most of the obligations under those agreements were subsequently fulfilled, certain provisions (including in particular mutual indemnification provisions under the separation and distribution agreement and the employee matters agreement) continue in force.
Legal Proceedings Arising in the Ordinary Course of Business
The Company is a party, as plaintiff or defendant, to various suits in the ordinary course of business for monetary relief arising principally from personal injuries, wrongful death, collision or other casualty and to claims arising under charter parties and other contract disputes. A substantial majority of such personal injury, wrongful death, collision or other casualty claims against the Company are covered by insurance (subject to deductibles not material in amount). Each of the claims involves an amount which, in the opinion of management, should not be material to the Company’s financial position, results of operations and cash flows.
In late July 2023, one of the Company’s vessels was arrested in connection with a commercial dispute arising earlier in the year. The vessel remains under arrest, with the arresting parties currently seeking approximately $25 million in security. The underlying commercial dispute is in arbitration in England. The Company is defending itself vigorously against the arrest and the allegations in the underlying dispute. As this matter is in the early stages, the Company is currently unable to predict the outcome of this matter, and no estimate of liability has been accrued at this time.
28
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements. Such forward-looking statements represent the Company’s reasonable expectation with respect to future events or circumstances based on various factors and are subject to various risks and uncertainties and assumptions relating to the Company’s operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Accordingly, there are or will be important factors, many of which are beyond the control of the Company, that could cause the Company’s actual results to differ materially from those indicated in these statements. Undue reliance should not be placed on any forward-looking statements and consideration should be given to the following factors when reviewing any such statement. Such factors include, but are not limited to:
29
The Company assumes no obligation to update or revise any forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q and written and oral forward-looking statements attributable to the Company or its representatives after the date of this Quarterly Report on Form 10-Q are qualified in their entirety by the cautionary statement contained in this paragraph and in other reports hereafter filed by the Company with the Securities and Exchange Commission.
INTRODUCTION
This Management’s Discussion and Analysis, which should be read in conjunction with our accompanying condensed consolidated financial statements, provides a discussion and analysis of our business, current developments, financial condition, cash flows and results of operations. It is organized as follows:
30
General:
We are a provider of ocean transportation services for crude oil and refined petroleum products. We operate our fleet of VLCC, Suezmax, and Aframax crude tankers and LR1, LR2, and MR product carriers in the International Flag market. Our business includes two reportable segments: Crude Tankers and Product Carriers. For the three and nine months ended September 30, 2023, we derived 47% and 48%, respectively, of our TCE revenues from our Crude Tankers segment compared with 32% and 33% for the three and nine months ended September 30, 2022, respectively. Revenues from our Product Carriers segment constituted the balance of our TCE revenues in the 2023 and 2022 periods.
As of September 30, 2023, the Company’s operating fleet consisted of 75 wholly-owned or lease financed and time chartered-in vessels aggregating 8.9 million deadweight tons (“dwt”). In addition to our operating fleet of 75 vessels, two LR1 newbuilds are scheduled for delivery to the Company during the second half of 2025, bringing the total operating and newbuild fleet to 77 vessels.
The Company’s revenues are highly sensitive to patterns of supply and demand for vessels of the size and design configurations owned and operated by the Company and the trades in which those vessels operate. Rates for the transportation of crude oil and refined petroleum products from which the Company earns a substantial majority of its revenues are determined by market forces such as the supply and demand for oil, the distance that cargoes must be transported, and the number of vessels expected to be available at the time such cargoes need to be transported. The demand for oil shipments is significantly affected by the state of the global economy, levels of U.S. domestic and international production and OPEC exports. The number of vessels available to transport cargo is affected by newbuilding deliveries and by the removal of existing vessels from service, principally through storage, recycling or conversions. The Company’s revenues are also affected by its vessel employment strategy, which seeks to achieve the optimal mix of spot (voyage charter) and long-term (time or bareboat charter) charters. Because shipping revenues and voyage expenses are significantly affected by the mix between voyage charters and time charters, the Company measures the performance of its fleet of vessels based on TCE revenues. Management makes economic decisions based on anticipated TCE rates and evaluates financial performance based on TCE rates achieved.
Our revenues are derived predominantly from spot market voyage charters and our vessels are predominantly employed in the spot market via market-leading commercial pools. We derived approximately 89% and 92% of our total TCE revenues in the spot market for the three and nine months ended September 30, 2023, respectively, compared with 96% for both the three and nine months ended September 30, 2022, respectively. The future minimum revenues, before reduction for brokerage commissions, expected to be
31
received on non-cancelable time charters for three VLCCs, two Suezmaxes, one Aframax, and five MRs, as of September 30, 2023 are as follows:
(Dollars in millions)
Amount(1)
26.4
99.3
66.7
42.6
33.9
75.1
344.0
The following is a discussion and analysis of our financial condition as of September 30, 2023 and results of operations for the three and nine months ended September 30, 2023 and 2022. You should consider the foregoing when reviewing the condensed consolidated financial statements and this discussion and analysis. You should read this section together with the condensed consolidated financial statements, including the notes thereto. This Quarterly Report on Form 10-Q includes industry data and forecasts that we have prepared based, in part, on information obtained from industry publications and surveys. Third-party industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. In addition, certain statements regarding our market position in this report are based on information derived from internal market studies and research reports. Unless we state otherwise, statements about the Company’s relative competitive position in this report are based on our management’s beliefs, internal studies and management’s knowledge of industry trends.
32
Operations and Oil Tanker Markets:
The International Energy Agency (“IEA”) estimates global oil consumption for the third quarter of 2023 at 102.7 million barrels per day (“b/d”), up 2.5% from the same quarter in 2022. The estimate for global oil consumption for 2023 is 101.9 million b/d, an increase of 2.3% over 2022. OECD demand in 2023 is estimated to remain unchanged at 45.8 million b/d, while non-OECD demand is estimated to increase by 4.1% to 56.0 million b/d.
Global oil production in the third quarter of 2023 was 100.9 million b/d, the same level as the third quarter of 2022. OPEC crude oil production averaged 27.5 million b/d in the third quarter of 2023, a decrease of 0.8 million b/d from the second quarter of 2023, and a decrease of 1.9 million b/d from the third quarter of 2022. Non-OPEC production increased by 1.8 million b/d to 67.8 million b/d in the third quarter of 2023 compared with the third quarter of 2022. Oil production in the U.S. in the third quarter of 2023 increased by 2.7% to 13.0 million b/d compared to the second quarter of 2023 and by 9.8% from the third quarter of 2022.
U.S. refinery throughput increased by 0.6 million b/d to 17.1 million b/d in the third quarter of 2023 compared with the second quarter of 2023. U.S. crude oil imports in the third quarter of 2023 decreased by 0.3 million b/d to 6.3 million b/d compared with the third quarter of 2022, with imports from OPEC countries decreasing by 0.1 million b/d and imports from non-OPEC countries decreasing by 0.2 million b/d.
After a record high monthly average crude oil imports of 12.7 b/d in June 2023, China’s monthly average crude oil imports decreased during the three months ended September 30, 2023. China’s imports during the first nine-months of 2023 averaged 11.3 million b/d, an increase of 14.6% from the comparable 2022 period.
Total commercial inventory stocks in the OECD increased by 30 million barrels for crude and 51 million barrels for products in the third quarter of 2023 compared with the third quarter of 2022.
During the third quarter of 2023, the tanker fleet of vessels over 10,000 dwt increased, net of vessels recycled, by 2.8 million dwt as the crude fleet increased by 2.3 million dwt, with VLCCs, Suezmaxes and Aframaxes growing by 0.9 million dwt, 0.3 million dwt and 1.0 million dwt, respectively. The product carrier fleet increased by 0.5 million dwt, with MRs growing 0.5 million dwt. Year-over-year, the size of the tanker fleet increased by 16.6 million dwt with the VLCCs, Suezmaxes, Aframaxes, Panamaxes and MRs increasing by 7.9 million dwt, 1.4 million dwt, 4.3 million dwt, 0.1 million dwt and 3.0 million dwt, respectively.
During the third quarter of 2023, the tanker orderbook increased by 4.5 million dwt overall compared with the second quarter of 2023. The crude tanker orderbook increased by 3.5 million dwt, with a decrease in the Aframax orderbook of 0.9 million dwt, and increases in the VLCC and Suezmax orderbooks of 2.9 million dwt and 1.6 million dwt, respectively, offset by a decrease in the Aframax orderbook of 0.9 million dwt. The product carrier orderbook increased by 0.9 million dwt, with increases in the LR1 and MR sectors of 0.5 million dwt each. Year-over-year, the total tanker orderbook increased by 8.8 million dwt, with VLCC decreasing by 4.4 million dwt and increases in Suezmaxes, Aframaxes, Panamaxes and LR1s of 6.4 million dwt, 3.0 million dwt, 1.2 million dwt and 2.7 million dwt, respectively, offset by a decrease in VLCCs of 4.4 million dwt.
Third quarter 2023 crude tanker rates were somewhat lower than in the first and second quarters of 2023, largely due to OPEC cuts announced in April 2023, although still significantly over 10-year average rates and cash breakeven levels, reflecting the impact of the disruptions in trade flows on tanker demand. Clean product tanker rates remained strong during the quarter. The fourth quarter of 2023 started off strong, led by the VLCCs, with all sectors currently showing improvement.
Update on Critical Accounting Estimates and Policies:
The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require the Company to make estimates in the application of its accounting policies based on the best assumptions, judgments and opinions of management. For a description of all of the Company’s material accounting policies, see Note 3, “Summary of Significant Accounting Policies,” to the Company’s consolidated financial statements as of and for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K. See Note 2, “Significant Accounting Policies,” to
33
the accompanying condensed consolidated financial statements for any changes or updates to the Company’s critical accounting policies for the current period.
Results from Vessel Operations:
During the third quarter of 2023, income from vessel operations decreased by $14.2 million to $114.2 million from $128.4 million in the third quarter of 2022. Such decrease resulted principally from increased vessel expenses, depreciation and amortization and charter hire expense in the current quarter.
TCE revenues in the third quarter of 2023 increased by $1.4 million, or 1%, to $236.0 million from $234.5 million in the third quarter of 2022. This increase reflects (i) an aggregate $30.1 million rates-based increase resulting from higher average daily TCE rates earned in the VLCC, LR1 and Suezmax sectors and (ii) a $3.3 million increase attributable to the Company’s Lightering business, offset by a $29.7 million rates-based decrease in the earnings of the MR.
During the first nine months of 2023, income from vessel operations increased by $258.0 million to $468.1 million from $210.2 million in the first nine months of 2022. Such increase was driven principally by year-over-year increase in TCE revenues, partially offset by increased depreciation and amortization and vessel expenses and charter hire expenses in the current period.
The increase in TCE revenues in the first nine months of 2023 increased by $289.5 million, or 56%, to $807.6 million from $518.1 million in the first nine months of 2022 reflecting an aggregate $279.7 million rates-based increase resulting from higher average daily rates earned across all of INSW’s various fleet sectors.
See Note 4, “Business and Segment Reporting,” to the accompanying condensed consolidated financial statements for additional information on the Company’s segments, including equity in results of affiliated companies and reconciliations of (i) time charter equivalent revenues to shipping revenues and (ii) adjusted income from vessel operations for the segments to income before income taxes, as reported in the condensed consolidated statements of operations.
34
Crude Tankers
(Dollars in thousands, except daily rate amounts)
TCE revenues
(29,111)
(24,713)
(83,155)
(72,525)
(2,690)
(3,715)
(9,239)
(11,773)
(20,039)
(15,771)
(56,583)
(46,109)
Adjusted income from vessel operations (a)
239,986
Average daily TCE rate
41,470
33,993
50,699
24,700
Average number of owned vessels (b)
21.0
18.0
19.7
18.7
Average number of vessels chartered-in
9.1
9.0
9.3
Number of revenue days (c)
2,671
2,212
7,672
6,928
Number of ship-operating days: (d)
Owned vessels
1,930
1,656
5,368
5,114
Vessels bareboat chartered-in under leases (e)
830
828
2,509
2,457
Vessels spot chartered-in under operating leases (f)
35
The following tables provide a breakdown of TCE rates achieved for the three and nine months ended September 30, 2023 and 2022, between spot and fixed earnings and the related revenue days. The information in this table is based, in part, on information provided by the commercial pools in which the segment’s vessels participate and excludes commercial pool fees/commissions averaging approximately $1,022 and $985 per day for the three months ended September 30, 2023 and 2022, respectively, and $992 and $837 per day for the nine months ended September 30, 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.
Spot Earnings
Fixed Earnings
VLCC:
Average rate
40,961
35,319
24,427
43,905
Revenue days
870
297
812
Suezmax:
38,708
30,973
34,244
27,685
1,012
184
849
Aframax:
34,046
38,652
38,287
232
73
46,342
40,597
17,739
44,111
2,431
703
218
52,627
31,093
23,090
27,004
2,996
496
2,872
273
Aframax(1):
47,640
29,215
926
999
Panamax:
20,166
70
During the third quarter of 2023, TCE revenues for the Crude Tankers segment increased by $35.6 million, or 47%, to $110.8 million from $75.2 million in the third quarter of 2022. Such increase principally resulted from (i) an aggregate rates-based increase in the VLCC and Suezmax fleets of $20.5 million due to significantly higher average daily blended rates in these sectors, (ii) a $3.3 million increase in the Crude Tankers Lightering business, (iii) a $8.1 million days-based increase in the Suezmax fleet, which reflected 254 fewer off-hire days in the current period and (iv) a $6.8 million days-based increase in the VLCC fleet, which reflected the delivery of three dual-fuel LNG VLCC newbuilds between March 2023 and May 2023. Serving to partially offset such increases was a $3.2 million decline in TCE revenue for the Aframax fleet, $2.3 million of which was days-based and resulted from 63 more off-hire days in the current period, and the remaining $1.0 million of the reduction was rates-based.
Vessel expenses increased by $4.4 million to $29.1 million in the third quarter of 2023 from $24.7 million in the third quarter of 2022. Such increase principally reflects the impact of the VLCC newbuild deliveries described above. Charter hire expenses decreased by $1.0 million quarter-over-quarter due to the impact of the exercise of purchase options under bareboat charters for two of the Company’s Aframaxes in March 2023 and April 2023, partially offset by a $0.6 million increase in charter hire expense in the Crude Tankers Lightering business. Depreciation and amortization increased by $4.3 million to $20.0 million in the current quarter from
36
$15.8 million in the third quarter of 2022 principally as a result of (i) the impact of drydockings and ballast water treatment system and scrubber installations performed during 2022 and 2023, (ii) $0.7 million of depreciation in the third quarter of 2023 relating to the two Aframaxes purchased by the Company as noted above, and (iii) $2.7 million relating to the commencement of depreciation on the Company’s three dual-fuel LNG VLCC newbuilds.
Excluding depreciation and amortization and general and administrative expenses, operating income for the Crude Tankers Lightering business was $6.5 million for the third quarter of 2023 compared with $4.1 million for the third quarter of 2022. Although lightering activity levels decreased period-over-period, with 114 services support only lighterings and one full-service lightering being performed during the three months ended September 30, 2023 compared to 126 service support only lighterings and one full-service lightering that were performed during the three months ended September 30, 2022, operating income increased quarter-over-quarter due to the higher average rates earned per lightering operation in the third quarter of 2023 compared with the average rate earned in the corresponding 2022 period.
During the first nine months of 2023, TCE revenues for the Crude Tankers segment increased by $217.8 million, or 127%, to $389.0 million from $171.1 million in the first nine months of 2022. Such increase principally resulted from (i) an aggregate rates-based increase in the VLCC, Suezmax and Aframax fleets of $189.3 million due to significantly higher average daily blended rates in these sectors, (ii) a $12.8 million increase in the Crude Tankers Lightering business, (iii) an aggregate $8.5 million days-based increase in the Suezmax and Aframax fleets, which reflected 375 fewer off-hire days in the current period and (iv) a $9.4 million days-based increase in the VLCC fleet, which reflected the delivery of three dual-fuel LNG VLCC newbuilds noted above. These increases were partially offset by (v) a $2.3 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 $10.6 million to $83.2 million in the first nine months of 2023 from $72.5 million in the first nine months of 2022. Such increase was principally driven by the VLCC newbuild deliveries described above, along with increased costs of stores, lubricating oils and spares due to the timing of delivery. Charter hire expenses decreased by $2.5 million in the first nine months of 2023 principally due to the impact of the transactions relating to the two previously bareboat chartered-in Aframaxes detailed above, partially offset by a $2.2 million increase of charter hire expense in the Crude Tankers Lightering business. Depreciation and amortization increased by $10.5 million to $56.6 million in the nine months ended September 30, 2023 from $46.1 million in the prior year’s comparable period. The drivers of the increase were consistent with those which drove the quarter-over-quarter increase described above.
Excluding depreciation and amortization and general and administrative expenses, operating income for the Crude Tankers Lightering business was $17.7 million for the first nine months of 2023 compared to $8.1 million for the first nine months of 2022. The increase reflects an increase in the average rate earned per lightering operation in the 2023 period compared with the comparable period in 2022. Incremental lightering activity levels in the current year’s period also contributed to the increase, as two full-service lighterings and 339 service support only lighterings were performed during the first nine months of 2023, as compared with one full-service lightering and 310 service support only lighterings in the corresponding 2022 period.
37
Product Carriers
(35,484)
(33,852)
(105,360)
(105,921)
(8,608)
(4,082)
(21,360)
(11,026)
(13,298)
(11,931)
(38,694)
(35,816)
Adjusted income from vessel operations
30,645
35,186
33,956
26,135
Average number of owned vessels
40.0
41.0
39.6
44.4
6.5
8.0
7.3
6.8
Number of revenue days
4,085
4,529
12,329
13,275
Number of ship-operating days:
3,678
3,772
10,809
12,118
Vessels bareboat chartered-in under leases (a)
371
460
1,276
1,099
Vessels time chartered-in under leases
231
729
The following tables provide a breakdown of TCE rates achieved for the three and nine months ended September 30, 2023 and 2022, between spot and fixed earnings and the related revenue days. The information in this table is based, in part, on information provided by the commercial pools in which the segment’s vessels participate and excludes commercial pool fees/commissions averaging approximately $786 and $763 per day for the three months ended September 30, 2023 and 2022, respectively, and $792 and $631 per
day for the nine months ended September 30, 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.
LR2(1):
32,603
17,149
89
LR1(2):
56,295
40,973
685
MR(3):
26,563
21,200
35,986
2,836
382
3,411
30,436
18,588
17,146
133
140
270
63,950
29,701
2,265
2,294
28,857
20,732
27,191
21,023
8,877
781
9,912
75
Handy:
14,167
469
During the third quarter of 2023, TCE revenues for the Product Carriers segment decreased by $34.2 million, or 21%, to $125.2 million from $159.4 million in the third quarter of 2022. The reduction in TCE revenues was primarily as a result of (i) a $29.7 million rates-based decline in the MR sector due to lower daily rates earned in the current quarter, (ii) a $13.5 million days-based decline in the MR sector, which reflected the sales of two MRs between November 2022 and March 2023 and 208 more off-hire days in the current quarter, and (iii) a $2.2 million days-based decrease in the LR1 fleet sector which reflects a 44-day net decrease in time-chartered in days. Partially offsetting such decreases was (iv) an $11.0 million aggregate rates-based increase in the LR1 and LR2 sectors due to higher average daily blended rates earned in the current quarter.
39
Vessel expenses increased by $1.6 million to $35.5 million in the third quarter of 2023 from $33.9 million in the third quarter of 2022. Such increase reflects an increase in costs for stores and spares, partially offset by the MR sales referenced above. Charter hire expenses increased by $4.5 million to $8.6 million in the current quarter from $4.1 million in the third quarter of 2022, primarily as a result of (i) increased daily rates for two time chartered-in LR1s upon the Company’s extension of such time charters in October 2022 and May 2023, respectively and (ii) the Company time chartering-in an additional LR1 in July 2023 at a current market rate to replace LR1s that recently redelivered to their owners upon expiry of their time charters. Depreciation and amortization increased by $1.4 million to $13.3 million in the current quarter from $11.9 million in the prior year’s quarter. Such increase resulted primarily from increased drydock amortization, offset by the impact of the sales of the MR vessels described above.
During the first nine months of 2023, TCE revenues for the Product Carriers segment increased by $71.7 million, or 21%, to $418.6 million from $346.9 million in the first nine months of 2022. The increase in TCE revenues was primarily as a result of period-over-period increases in average daily blended rates earned in the LR1, MR and LR2 fleet sectors, which accounted for a rates-based increase of $90.4 million. Also contributing to the increased TCE revenues was a $1.8 million days-based increase in the LR1 fleet, which reflected the purchase of a 2011-built LR1 in February 2022. Partially offsetting such increases was a $20.6 million aggregate days-based decrease in the MR and Handysize sectors, principally due to the sales of three MRs between May 2022 and March 2023, and the final four remaining Handysize vessels in the Company’s fleet during the second quarter of 2022.
Charter hire expenses increased by $10.3 million in the first nine months of 2023 to $21.4 million from $11.0 million in the corresponding 2022 period, principally due to an increase in the average daily rates for the Company’s time chartered-in LR1s in the current year’s period as discussed above. Depreciation and amortization increased by $2.9 million to $38.7 million in the current period from $35.8 million in the prior year’s period. 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 the third quarter of 2023, general and administrative expenses increased by $0.5 million to $12.3 million from $11.8 million in the third quarter of 2022. The primary driver for such increase was higher compensation and benefits costs of $0.6 million, of which $0.3 million relates to non-cash stock compensation.
For the nine months ended September 30, 2023, general and administrative expenses increased by $2.2 million to $35.1 million from $32.9 million for the same period in 2022. The increase reflects higher compensation and benefits costs of $2.5 million, of which $1.5 million relates to non-cash stock compensation.
Equity in Results of Affiliated Companies
The Company sold its interest in the FSO joint ventures on June 7, 2022. During the nine months ended September 30, 2022, equity in income of affiliated companies was $0.4 million, which reflected the Company’s recognition of a loss on the sale of $9.5 million.
Other Income/(Expense)
Other income was $0.6 million and $8.3 million for the three and nine months ended September 30, 2023, respectively, compared with $0.4 million of other income and $0.4 million of other expenses for the three and nine months ended September 30, 2022, respectively. Other income for the current 2023 periods includes $3.6 million and $11.3 million, respectively, of interest income on invested cash, which reflects the impact of a significant increase in the average balance of invested cash and the rates earned on such investments during the three and nine months ended September 30, 2023, offset by the loss on extinguishment of debt and the write-off of unamortized deferred financing costs associated with the mandatory principal prepayments under certain of the Company’s debt facilities. See Note 8, “Debt,” in the accompanying condensed consolidated financial statements for further information. All periods also reflect net actuarial gains and currency losses associated with the retirement benefit obligation in the United Kingdom.
40
The components of interest expense are as follows:
Interest before items shown below
19,471
16,872
61,219
42,766
Interest cost on defined benefit pension obligation
211
109
757
351
Impact of interest rate hedge derivatives
220
Capitalized interest
(1,202)
(2,282)
(2,707)
16,817
15,332
51,678
40,630
Interest expense increased in the 2023 periods compared to the corresponding 2022 periods presented in the table above as a result of (i) higher average floating interest rates during the three and nine months ended September 30, 2023 compared with the corresponding period of 2022, (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. See Note 8, “Debt,” in the accompanying condensed consolidated financial statements for further information on the Company’s debt facilities.
Taxes
The Company qualifies for an exemption from U.S. federal income taxes under Section 883 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) and U.S. Treasury Department regulations for the 2023 calendar year as less than 50 percent of the total value of the Company’s stock is held by one or more shareholders who own 5% or more of the Company’s stock for more than half of the days of 2023. There can be no assurance at this time that INSW will continue to qualify for the Section 883 exemption beyond calendar year 2023. Should the Company not qualify for the exemption in the future, INSW will be subject to U.S. federal income taxation of 4% of its U.S. source shipping income on a gross basis without the benefit of deductions. Shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the U.S. will be considered to be 50% derived from sources within the United States. Shipping income attributable to transportation that both begins and ends in the U.S. would be considered to be 100% derived from sources within the United States, but INSW does not and cannot engage in transportation that gives rise to such income.
EBITDA and Adjusted EBITDA
EBITDA represents net income/(loss) before interest expense, income taxes and depreciation and amortization expense. Adjusted EBITDA consists of EBITDA adjusted for the impact of certain items that we do not consider indicative of our ongoing operating performance. EBITDA and Adjusted EBITDA are presented to provide investors with meaningful additional information that management uses to monitor ongoing operating results and evaluate trends over comparative periods. EBITDA and Adjusted EBITDA do not represent, and should not be considered a substitute for, net income or cash flows from operations determined in accordance with GAAP. EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of our results reported under GAAP. Some of the limitations are:
41
While EBITDA and Adjusted EBITDA are frequently used by companies as a measure of operating results and performance, neither of those items as prepared by the Company is necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation.
The following table reconciles net income, as reflected in the condensed consolidated statements of operations, to EBITDA and Adjusted EBITDA:
52
432
63
EBITDA
148,169
156,494
571,798
292,139
Amortization of time charter contracts acquired
159
Gain on sale of interest in DASM
(135)
Write-off of deferred financing costs
1,343
1,211
Adjusted EBITDA
150,945
157,078
564,993
294,788
Liquidity and Sources of Capital:
Our business is capital intensive. Our ability to successfully implement our strategy is dependent on the continued availability of capital on attractive terms. In addition, our ability to successfully operate our business to meet near-term and long-term debt repayment obligations is dependent on maintaining sufficient liquidity.
Liquidity
As of September 30, 2023, we had total liquidity on a consolidated basis of $581.4 million comprised of $139.0 million of cash, $75.0 million of short-term investments, and $367.4 million of undrawn revolver capacity.
Working capital at September 30, 2023 and December 31, 2022 was $286.5 million and $385.2 million, respectively. Current assets are highly liquid, consisting principally of cash, interest-bearing deposits, short-term investments consisting of time deposits with original maturities of between 91 and 180 days and receivables. Current liabilities include current installments of long-term debt and finance lease liabilities of $134.7 million and $204.7 million at September 30, 2023 and December 31, 2022, respectively.
The Company’s total cash decreased by $104.8 million during the nine months ended September 30, 2023. This decrease principally reflects:
42
Such cash outflows were offset to a large extent by:
Our cash and cash equivalents balances generally exceed Federal Deposit Insurance Corporation insured limits. We place our cash and cash equivalents in what we believe to be credit-worthy financial institutions. In addition, certain of our money market accounts invest in U.S. Treasury securities or other obligations issued or guaranteed by the U.S. government or its agencies, floating rate and variable demand notes of U.S. and foreign corporations, commercial paper rated in the highest category by Moody’s Investor Services and Standard & Poor’s, certificates of deposit and time deposits, asset-backed securities, and repurchase agreements.
As of September 30, 2023, we had total debt outstanding (net of original issue discount and deferred financing costs) of $841.7 million and net debt to total capitalization of 27.6%, compared 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. With strong market conditions continuing in 2023, we have used incremental liquidity generated from operations to invest in the fleet, reduce debt levels and make returns to shareholders.
In addition to future operating cash flows, our other future sources of funds are proceeds from issuances of equity securities, additional borrowings as permitted under our loan agreements and proceeds from the opportunistic sales of our vessels. Our current uses of funds are to fund working capital requirements, maintain the quality of our vessels, purchase vessels, pay newbuilding construction costs, comply with international shipping standards and environmental laws and regulations, repay or repurchase our outstanding loan facilities, pay a regular quarterly cash dividend, and from time to time, repurchase shares of our common stock and pay supplemental cash dividends.
The following is a summary of the significant capital allocation activities the Company executed during the first nine months of 2023 and sources of capital the Company has at its disposal for future use as well as the Company’s current commitments for future uses of capital:
During the nine months ended September 30, 2023, the Company repurchased and retired 366,483 shares of its common stock in open-market purchases, at an average price of $38.03 per share, for a total cost of $13.9 million. 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.
In December 2022 the Company tendered notice of its intention to exercise its options to purchase two 2009-built Aframaxes that it had been bareboat chartering-in. 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. Pursuant to the amendment, the Company (a) prepaid $97 million of outstanding principal under the $750 Million Facility Term Loan; (b) obtained a release of collateral vessel mortgages over 22 MR product carriers; and (c) received from the lenders additional revolving credit commitments in an aggregate amount of $40 million, which additional commitments constitute an increase to, and are subject to the same terms and conditions as, the previously-existing revolving credit commitments. Following the effectiveness of the amendment, the aggregate principal commitments available under the $750 Million Facility Revolving Loan was $257.4 million (none of which was outstanding) and the scheduled future quarterly principal amortization under the $750 Million Facility Term Loan decreased from $30.2 million to $27.7 million.
Following the amendment to the $750 Million Credit Facility agreement, the Company has made mandatory principal prepayments totaling $172.6 million between March 2023 and October 2023 (including $29.7 million in October 2023) on the $750 Million Facility Term Loan in conjunction with the sale of two 2008-built MRs, and the release of five Suezmaxes and one Aframax vessel from the collateral package. These transactions resulted in a further reduction in the scheduled future quarterly principal amortization under the $750 Million Facility Term Loan to $19.5 million beginning in the fourth quarter of 2023.
In May 2023, the Company tendered notice of its intention to exercise its options to purchase one 2013-built Aframax and one 2014-built LR2, which were bareboat chartered-in under the COSCO Lease Financing arrangement as at June 30, 2023. The $46.4 million aggregate purchase price for the two vessels consisted of the $45.2 million remaining debt balance of the COSCO Lease Financing and $1.2 million of purchase option premiums. The transaction closed on July 3, 2023.
On August 8, 2023, the Company entered into agreements to construct two dual-fuel ready LNG 73,600 dwt LR1 Product Carriers at K Shipbuilding Co., Ltd.’s shipyard, subject to certain conditions customary to similar transactions. The two vessels are scheduled for delivery during the second half of 2025. The total construction cost for the vessels will be approximately $115 million, which will be paid for through a combination of long-term financing and available liquidity. The Company also entered into an option agreement, which was exercised in October 2023, to construct two additional dual-fuel ready LNG 73,600 dwt LR1 Product Carriers at the same shipyard for delivery during the first quarter of 2026 at an additional cost of approximately $115 million.
The $160 Million Revolving Credit Facility comprises a 5.5-year revolving credit facility in an aggregate amount of $160 million which matures on March 27, 2029 and reduces on a 20-year age-adjusted profile. The $160 Million Revolving Credit Facility is
44
secured by a first lien on five of the Company’s vessels (the “Collateral Vessels”), along with their earnings, insurances and certain other assets, as well as by liens on certain additional assets of the Borrower. Interest on the $160 Million Revolving Credit Facility is calculated based upon Term SOFR plus the Applicable Margin (each as defined in the credit agreement). The Applicable Margin is 1.90%, and is subject to a sustainability-linked pricing mechanism, pursuant to which the Applicable Margin may be decreased or increased by 0.075%, as described in greater detail in Note 8, “Debt,” to the accompanying condensed consolidated financial statements.
As of September 30, 2023, the Company has contractual commitments for the construction of two dual-fuel ready LR1s and the purchase and installation of six ballast water treatment systems and ten mewis ducts, and the final outstanding installment payments due for seven ballast water treatment systems that had been installed as of September 30, 2023. The Company’s debt service commitments and aggregate purchase commitments for vessel construction and betterments as of September 30, 2023, are presented in the Aggregate Contractual Obligations Table below.
Outlook
Our strong balance sheet, as evidenced by a substantial level of liquidity, 30 unencumbered vessels, and diversified financing sources with debt maturities spread out between 2026 and 2031, positions us to support our operations over the next twelve months as we continue to advance our vessel employment strategy, which seeks to achieve an optimal mix of spot (voyage charter) and long-term (time charter) charters. Our balance sheet strength and diverse fleet position us to continue pursing our disciplined capital allocation strategy of fleet renewal, incremental debt reduction and returns to shareholders and pursue potential strategic opportunities that may arise within the diverse sectors in which we operate.
Off-Balance Sheet Arrangements
Pursuant to an agreement between INSW and the trustees of the OSG Ship Management (UK) Ltd. Retirement Benefits Plan (the “Scheme”), INSW guarantees the obligations of INSW Ship Management UK Ltd., a subsidiary of INSW, to make payments to the Scheme.
Aggregate Contractual Obligations
A summary of the Company’s long-term contractual obligations as of September 30, 2023 follows:
Beyond
$750 Million Facility Term Loan - floating rate(1)
23,225
90,643
68,965
182,833
$160 Million Revolving Credit Facility - floating rate(2)
922
3,668
3,658
3,648
54,540
70,104
ING Credit Facility - floating rate(3)
3,634
3,473
17,896
25,936
Ocean Yield Lease Financing - floating rate(4)
14,317
54,732
52,324
51,193
50,128
248,895
471,589
BoComm Lease Financing - fixed rate(5)
5,989
23,827
23,762
189,860
290,962
Toshin Lease Financing - fixed rate(5)
558
2,223
2,160
2,151
9,157
18,409
Hyuga Lease Financing - fixed rate(5)
2,456
2,232
8,576
18,295
Kaiyo Lease Financing - fixed rate(5)
563
2,410
2,214
6,554
16,241
Kaisha Lease Financing - fixed rate(5)
2,438
2,225
6,714
16,404
Operating lease obligations(6)
Time Charter-ins
3,174
12,627
5,624
21,425
Vessel and vessel betterment commitments(7)
15,084
14,356
92,384
121,824
65,753
213,928
260,373
106,649
87,426
530,127
1,264,256
Risk Management:
The Company is exposed to market risk from changes in interest rates, which could impact its results of operations and financial condition. The Company manages this exposure to market risk through its regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. To manage its interest rate risk in a cost-effective manner, the
46
Company, from time-to-time, enters into interest rate swap, collar or cap agreements, in which it agrees to exchange various combinations of fixed and variable interest rates based on agreed upon notional amounts or to receive payments if floating interest rates rise above a specified cap rate. The Company uses such derivative financial instruments as risk management tools and not for speculative or trading purposes. In addition, derivative financial instruments are entered into with a diversified group of major financial institutions in order to manage exposure to nonperformance on such instruments by the counterparties.
The Company uses interest rate swaps for the management of interest rate risk exposure associated with changes in variable interest rate payments due on its credit facilities.
Available Information
The Company makes available free of charge through its internet website, www.intlseas.com, its Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the Securities and Exchange Commission.
The public may also read and copy any materials the Company files with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E. Washington D.C. 20549 (information on the operation of the Public Reference Room is available by calling the SEC at 1-800-SEC-0330). The SEC also maintains a web site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at https://www.sec.gov.
The Company also makes available on its website, its corporate governance guidelines, its Code of Business Conduct and Ethics, insider trading policy, anti-bribery and corruption policy and charters of the Audit Committee, the Human Resources and Compensation Committee and the Corporate Governance and Risk Assessment Committee of the Board of Directors. The Company is required to disclose any amendment to a provision of its Code of Business Conduct and Ethics. The Company intends to use its website as a method of disseminating this disclosure, as permitted by applicable SEC rules. Any such disclosure will be posted to the Company website within four business days following the date of any such amendment. Neither our website nor the information contained on that site, or connected to that site, is incorporated by reference into this Quarterly Report on Form 10-Q.
47
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s current disclosure controls and procedures were effective as of September 30, 2023 to ensure that information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There was no change in the Company’s internal control over financial reporting during the first nine months ended September 30, 2023 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
See Note 14, “Contingencies,” to the accompanying condensed consolidated financial statements for a description of the current legal proceedings, which is incorporated by reference in this Part II, Item 1.
Item 1A. Risk Factors
You should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our 2022 Form 10-K and in Part II, Item 1A, “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023. The risks described in those documents are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
No stock repurchases were made during the three months ended September 30, 2023 other than shares withheld to cover tax withholding liabilities relating to the exercise of stock options and the vesting of outstanding restricted stock units held by certain numbers of management.
See Note 10, “Capital Stock and Stock Compensation,” to the accompanying condensed consolidated financial statements for additional information about the stock repurchase plan and a description of shares withheld to cover the cost of stock options exercised by certain members of management and tax withholding liabilities relating to the vesting of previously-granted equity awards to certain members of management, which is incorporated by reference in this Part II, Item 2.
Item 4. Mine Safety Disclosures
Not applicable.
48
Item 5. Other Information
Insider Trading Arrangements and Policies
During the third quarter of 2023, none of our directors or executive officers adopted Rule 10b5-1 trading plans and none of our directors or executive officers terminated a Rule 10b5-1 trading plan or adopted or terminated a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).
Item 6. Exhibits
**10.1
$160 Million Revolving Credit Agreement, dated as of September 27, 2023, among the Registrant, International Seaways Operating Corporation, the other Guarantors from time to time parties thereto, the Lenders parties thereto, Nordea Bank Abp, New York Branch, as administrative agent, Collateral Agent, Coordinator and security trustee for the Secured Parties, and ING Bank N.V., London Branch, as sustainability coordinator.
**31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a), as amended.
**31.2
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a), as amended.
**32
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
EX-101.INS
Inline XBRL Instance Document
EX-101.SCH
Inline XBRL Taxonomy Extension Schema
EX-101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase
EX-101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase
EX-101.LAB
Inline XBRL Taxonomy Extension Label Linkbase
EX-101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase
EX-104
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
(Registrant)
Date: November 7, 2023
/s/ Lois K. Zabrocky
Lois K. Zabrocky
Chief Executive Officer
/s/ Jeffrey D. Pribor
Jeffrey D. Pribor
Chief Financial Officer
50