International Seaways' Q2 2025: Navigating Contradictions in Fleet Strategy, Sanctions Impact, and Dividend Outlook

Fleet profile and strategy, impact of sanctions on trade patterns, dividend payout ratio strategy, fleet optimization strategy, and crude and product tanker market dynamics are the key contradictions discussed in International Seaways' latest 2025Q2 earnings call.



Dividend Payout and Capital Allocation:
- International Seaways announced a combined dividend of $0.77 per share for September 2025, maintaining a payout ratio of at least 75%, marking the fourth consecutive quarter.
- This strategy is part of the company's consistent and balanced capital allocation, which includes fleet renewal, deleveraging, and returns to shareholders, as evidenced by the payment of $15.25 per share since 2022.

Fleet Renewal and Financing:
- The company plans to reduce its average fleet age by half a year, with the sale and purchase of 6 older vessels and the agreement to acquire a 2020-built scrubber-fitted VLCC.
- Financing for up to $240 million of the $300 million in outstanding payments on LR1 newbuildings was secured, with a blended 20-year amortization profile and interest of SOFR plus 125 basis points over the 12-year maturity.

Tanker Demand and Supply Dynamics:
- Demand fundamentals for seaborne transportation are considered solid, supported by low crude and product inventories, increasing oil demand forecasts, and geopolitical uncertainties.
- The supply side is characterized by a current order book that represents 15% of the existing fleet, with a significant number of removal candidates expected to retire in the coming years, indicating a potential up cycle.

Financial Strength and Liquidity:
- International Seaways ended Q2 with over $700 million in total liquidity, with $149 million in cash and $560 million in undrawn revolver capacity.
- The company's net loan-to-value ratio is comfortably under 15%, with a strong balance sheet and low cash breakeven levels allowing for growth and strategic enhancements.

Spot Market Performance and Guidance:
- The company reported a blended average spot TCE of $28,000 per day fleet-wide for the third quarter, with a spot breakeven rate of $13,000 per day.
- International Seaways expects to continue generating significant free cash flows during the third quarter, supporting its strategy of returning cash to shareholders.