International Seaways, Inc. (NYSE:INSW) Q4 2024 Earnings Call Transcript

International Seaways, Inc. (NYSE:INSW) Q4 2024 Earnings Call Transcript February 27, 2025

International Seaways, Inc. misses on earnings expectations. Reported EPS is $0.9 EPS, expectations were $1.71.

Operator: Thank you for your patience, everyone. The International Seaways, Inc. Fourth Quarter 2024 Earnings Conference Call will begin shortly. During the presentation, you may have the opportunity to ask questions. Hello, and welcome to the International Seaways, Inc. Fourth Quarter 2024 Earnings Conference Call. My name is Carla, and I will be coordinating your call today. During the presentation, you will have the opportunity to register a question by pressing star followed by one on your telephone keypad. I would now like to hand you over to James Small, General Counsel, to begin. James, please go ahead when you’re ready.

James Small: Thank you, operator. Good morning, everyone. Welcome to International Seaways earnings call for the fourth quarter of 2024. Before we begin, I would like to start off by advising everyone with us on the call today of the forward-looking statements. During this call and in the accompanying presentation, management may make forward-looking statements regarding the company or the industry in which it operates. These may address, without limitation, the following topics: outlooks for the crude and product tanker markets, changes in trading patterns, forecasts of world and regional economic activity, and the demand for and production of oil and petroleum products, the company’s strategy and business prospects, expectations about revenues and expenses, including vessel, charter hire, and G&A expenses, estimated future bookings, TCE rates, and capital expenditures, projected dry dock and off-hire days, vessel sales and purchases, newbuild vessel construction, the effects of ongoing and threatened conflicts around the globe, the changing global regulatory environment, the company’s ability to achieve its financing and other objectives, its consideration of strategic alternatives, anticipated financing transactions and plans to issue dividends, the company’s relationships with stakeholders, and other political, economic, and regulatory developments globally.

Any such forward-looking statements take into account various assumptions made by management based on a number of factors, including management’s experience and perception of historical trends, current conditions, expected and future developments, and other factors that management believes are appropriate to consider in the circumstances. Forward-looking statements are subject to risks, uncertainties, and assumptions, many of which are beyond the company’s control. These could cause actual results to differ materially from those implied by the statements. Factors, risks, and uncertainties that could cause International Seaways’ actual results to differ from expectations include those described in our annual report on Form 10-K for 2024 and in other filings we have made and may make with the US Securities Exchange Commission.

Now let me turn the call over to Lois Zabrocky, our President and Chief Executive Officer.

Lois Zabrocky: Thank you very much, James. Good morning, everyone. Thank you for joining International Seaways’ earnings call for the fourth quarter and the full year of 2024. On slide four of the presentation, which you can find in the Investor Relations section of our website, net income for the fourth quarter was $36 million or $0.72 per diluted share. Excluding a loss on vessel sales, adjusted net income for the fourth quarter was $45 million or $0.90 per diluted share, and our adjusted EBITDA was $95 million. We are proud to announce today that we continue to modernize our fleet during the fourth quarter with a vessel swap. As you can see in the upper right-hand corner of the slide, we sold two of our oldest VLCCs and paid $3 million in cash for three ECO MRs built in 2015.

The swap is less indicative of a specific preference for any one particular class of ship but more showcases our ability to opportunistically reduce our vessel ages across various ship classes, enhance our fleet efficiency, while limiting risk compared to a full cash transaction. We have optimized earnings across our tanker statements, which gives us plenty of flexibility to execute fleet optimization. The various transactions within the swap created some temporary changes to our balance sheet in the fourth quarter and the first few months of 2025. During the fourth quarter, we paid $53 million in cash for deposits and the delivery of one MR vessel. Due to this temporary timing difference, we borrowed $70 million on our revolving credit facility, which had been repaid in the first quarter following the final execution of the swap.

As a result, our line of credit capacity reduced to a still quite healthy $475 million at the end of the fourth quarter. We expect that to be around $506 million on a pro forma basis. Our balance sheet highlights are strong, shown in the bottom left of the slide, with $632 million of total liquidity composed of $157 million of cash and $475 million on the revolving credit facility. We have $695 million of debt with a net loan-to-value ratio of below 16%, and our spot breakeven rates are about $13,700 per day. On the lower right, we are proud to have shared for a second consecutive year over $300 million returned to shareholders in 2024. We paid $5.77 in dividends during 2024, representing a 12% dividend yield on our average share price over the time.

We also used proceeds from the sale of an older MR to repurchase 500,000 shares for $25 million during 2024. Today, we announced $0.70 in dividends that we will pay in March, representing a payout ratio of about 77%, marking our highest since we’ve been supplementing our regular $0.12 dividend. We believe in sharing with our shareholders during this cycle, and we expect a payout ratio similar to the last two quarters, of around 75%, to continue into the future. We believe in our balanced capital allocation approach so that we can provide competitive returns to our shareholders and still position the company for the future with the opportunity to exceed fleet renewal while maintaining a healthy balance sheet to support growth. On slide five, we’ve updated our standard set of bullets on tanker demand drivers with the subtle green up arrows next to the bullets represented as good for tankers, the black dash representing a neutral impact, and a red down arrow meaning that particular topic is not good for tanker demand.

Without reading these bullets individually, I will pull some highlights. Oil demand growth in the near term is still going to grow at its historical rate of about 1% per year. With a 100 million barrel per day of demand, this is about 1 to 1.5 million barrels of growth anticipated for 2025. Oil demand growth specifically is spread across the world in 2025 with no one large outlier as China has been for many years. Crude production growth is largely coming from the Americas, which is supportive for tanker demand as much of the incremental growth will be exported. The global economy is still settling the dots from a post-2024 election period, and there have always been headline grabbers, particularly from the United States. The geopolitical situations are not going away.

They may modify, and that could have an effect on the tanker market. But with many moving parts, the markets will adjust. We expect the United States to take a stronger position with Iran, and we see tanker movements shadowing that. Pun intended. The Israel-Hamas conflict is still very tense. Emotions are wary of their safety in the Red Sea. Russia, Ukraine, similar. And even if there is a resolution on the horizon, we believe that the unwinding could last longer for Russian crude moving to the west. We embrace these tanker markets because we can’t control them in any case, and we believe that sanctions and their enforcement can only help the legitimate commercial fleet. In the chart below on slide five, inventories in the OECD drew about 100 million barrels in the second half of the year.

This, in the short term, impacted tanker rates and will refill over time based on historical patterns. The United States SPR has grown in 2024 in small chunks. President Trump has indicated refilling the SPR is a priority to historic levels. This would mean around 300-plus million barrels, which may include imports of medium sour crude, which has historically been or medium. On slide six, the order book popped in 2024, particularly in the middle of the year. But as seen in the lower left chart, ships on order are still quite low relative to the size of the fleet in historical context. We added a weighted average tanker rate in the chart as an indicator that orders grow when the market is hot. But as we’ve shown many times, not factored into the chart on the left is the longer time horizon that many of these ships on order are expected to deliver over the next four years and the corresponding age of vessels on the water over this time.

The chart on the right reflects that 45% of the fleet is headed towards 20-plus years, the age where we identify as removed from the commercial fleet compared to 14% of the fleet that exists on order. As you can see, there are about 900 ships that are already 20 years old, and there are still another 1,500-plus vessels that are turning 20 during the delivery schedule that will need replacement. This is significant for the tanker industry as the limited tanker supply continues to be supportive of strong tanker earnings. We believe this should translate into a continued upcycle over the next few years, and Seaways remains well-positioned to capitalize on these market conditions. We will continue to execute our balanced capital allocation approach to renew our fleet and adapt to industry conditions with a strong balance sheet while returning to shareholders.

I’m now turning it over to our CFO, Jeffrey Pribor, who will provide the financial review. Jeff?

Jeffrey Pribor: Thanks, Lois, and good morning, everyone. On slide eight, net income for the fourth quarter was $36 million or $0.72 per diluted share. This includes the loss of vessel sales as a result of the timing of the vessel swap that Lois discussed earlier. Excluding this, our net income was $45 million or $0.90 per diluted share. On the upper right chart, adjusted EBITDA for the fourth quarter of 2024 was $95 million. In the appendix, we provided a reconciliation from reported earnings to adjusted earnings. While our revenue based on market conditions is largely within expectations in the fourth quarter, our expenses were a little higher than our guidance last quarter. So expenses were higher in the fourth quarter due to the timing of stores and spares at the end of the year and additional repairs and maintenance.

G&A was higher primarily for one-off legal matters. Our lightering business continues to prosper with over $9 million of revenue in the quarter. Combining this with about $3 million in vessel expenses, $3 million in charter hire, and $1 million of G&A, the lightering business contributed nearly $3 million in EBITDA in the fourth quarter as well as an annual EBITDA contribution of nearly $20 million in 2024. Turning now to our cash bridge on slide nine. We began the quarter with total liquidity of $694 million composed of $153 million in cash and $540 million in undrawn revolving capacity. Following along the chart from left to right of the cash bridge, we first add $95 million in adjusted EBITDA for the fourth quarter. That’s $23 million in debt service, another $18 million of drydock and capital expenditures, offset by a working capital benefit of about $24 million due to the timing of deferred revenue payables or accruals.

We therefore achieved our definition of free cash flow of about $78 million in the fourth quarter. This represents an annualized cash flow yield of over 17% on today’s share price. We spent $53 million in connection with the vessel swap due to the timing of deposits and the delivery of one of the MRs in this swap. Due to the temporary timing difference, we borrowed $70 million on our lines of credit that we repaid in the first quarter of 2025. The remaining bars on the cash bridge reflect our capital allocation for the quarter. We repaid $20 million of debt early in the fourth quarter, made $12 million in installment payments for our LR1 new building, and also paid $59 million in dividends to shareholders equating to $1.20 per share. All of these components led to an ending liquidity of $603 million with $158 million in cash and short-term investments and $475 million in undrawn revolving capacity.

Now moving to slide ten, we have a strong financial position detailed by the balance sheet on the left-hand side. Cash and liquidity remain strong at $632 million. We have invested about $2.2 billion in vessels at cost, which are now on books currently at a value of $3.5 billion. With $695 million of gross debt at the end of the year, our net loan-to-value is below 16%. Our debt at December 31st was over 70% hedged or at fixed rates, pointing to an all-in weighted average interest rate of about 614 basis points, or under 200 basis points above today’s LIBOR. Following our payment in the first quarter of 2025, we expect our fixed rate hedge to be closer to 80%. We continue to enhance the balance sheet to create the financial flexibility that’s necessary to facilitate growth and returns to shareholders.

We have $475 million in undrawn revolvers at year-end. This grows to about $560 million pro forma of our debt repayment following the close of the swap transaction. Our nearest maturities in the portfolio aren’t until the next decade. We continue to lower our breakeven costs, and we share the upside with double-digit returns to shareholders. On the last slide that I’ll cover, slide eleven reflects our forward-looking guidance and book-to-date TCE aligned with our spot cash breakeven. Starting with TCE fixtures for the first quarter of 2025, and I’ll remind you that actual TCE during our next earnings call may be different. Currently, we have a blended average spot TCE of about $26,500 per day fleet-wide and 70% of our first quarter expected revenues.

On the right-hand side of the slide, our forward spot breakeven rate is about $13,700 per day, composed of a fleet-wide breakeven of about $16,200 per day, less nearly $2,500 per day in time charter revenue. Based on our spot TCE booked to date and our spot breakevens, it looks like Seaways can continue to generate significant free cash flow during the quarter and build out our track record of returning cash to shareholders. On the bottom left-hand chart, we provide some updated guidance for expenses in the first quarter and our estimates for 2025. We also included in the appendix our quarterly expected off-hire and CapEx. I won’t plan to read each item line by line, but encourage you to use them for modeling purposes. That concludes my remarks.

So I’d now like to turn the call back to Lois for her closing comments.

Lois Zabrocky: Thank you so much, Jeff. On slide twelve, we have provided you with Seaways investment highlights which we encourage you to read in its entirety. I will summarize briefly. Over the last eight years, International Seaways has built a track record of returning cash to shareholders, maintaining and improving our healthy balance sheet, and growing the company. Our total shareholder return represents around a 20% compounded annual return. For the second consecutive year, we’ve returned over $300 million to shareholders, which is about a 25% combined return over the last two years. We continue to renew our fleet so that our average age is about ten years old, in what we see as the sweet spot for tanker investments and returns.

We’ve invested in a range of asset classes to cast a wider net of growth opportunity and to supplement our scale in each class by operating in larger pools. We aim to keep our balance sheet fortified for any down cycle. We have over $500 million in undrawn credit capacity to support our growth. Our net debt is under 16% of the fleet’s current value, and we have 36 vessels that are unencumbered. Lastly, we only need our spot ships to collectively earn $14,000 per day to break even in the next twelve months. At this point in the cycle, we expect to continue generating cash, and we will put it to work to create value for the company and for our shareholders. Thank you very much. And with that said, operator, we’d like to open the lines for questions.

Operator: We will now begin the question and answer session. When preparing to ask your question, please ensure your device is unmuted locally. We will make a quick pause for the questions to be registered. Our first question comes from Ben Nolan with Stifel.

Q&A Session

Ben Nolan: I appreciate it. Hey. Hey. Good morning, Jeff, Lois, and team. So I’ve got a couple. The first relates to sort of maybe your charter-out strategy at the moment, and I think this is particularly true for some of the crude tankers. The charter market is pretty elevated relative to certainly where you’ve built some of your spot vessels. And, generally, I think spot is, you know, obviously, that’s pointing to an inflection up in the spot market. But I’m curious if you think about, you know, just given that dislocation, maybe taking a little risk off the table and locking in some capacity just because there is a gap between the two at the moment.

Lois Zabrocky: Okay. Good morning. How are you? So I would start to answer that question. Sorry. Sorry, Ben. I didn’t wait for your remaining questions. Let me answer that one, and then we’ll take your second one. How’s that?

Ben Nolan: Sounds good.

Lois Zabrocky: We have fourteen time charters in our fleet right now, out of our seventy-eight vessels that are on the water, and then we have our six new buildings that will be arriving. So we have nearly twenty percent of our time charter present, and then I would just have Derek jump in there.

Derek Solon: Sure, Lois. Thanks. Good morning, Ben.

Ben Nolan: Yeah.

Derek Solon: Further to your question, we would continue to look at time charters like we always do with the right partners, the right term, and the right rate, Ben. It’s something that we’re always evaluating.

Ben Nolan: Okay. But there’s nothing about the market at the moment that makes you more or less compelled to move in that direction, I suppose, is the answer.

Lois Zabrocky: Okay. So that we…

Ben Nolan: Oh, sorry. Go ahead.

Derek Solon: Go ahead.

Ben Nolan: I was gonna ask my next question, but if you were gonna add any more to it, that’s fine. But well, my next question just to have it out there is, in the quarter, the MR, you guys thus far in the first quarter, your MR rates were pretty decent thus far for what you already have booked. Just curious if maybe you can give a little color or like, is there a specific geographic focus? Is this, you know, how should we think about the remainder of the quarter? Is it just, you know, hey, things are going pretty well there at the moment.

Derek Solon: Ben, it’s Derek again if I can take that one. You know, thank you. Yes. The Q1 bookings we’re pleased with so far. We’re doing well when we look at our peer group. I think we’re starting to see a little bit of dislocation in the MR rates. Whereas we’ve been kind of carried by the Atlantic basin over the last couple of quarters, we’re seeing US Gulf start to come down a little bit. We do have a good deal of exposure. But we’re seeing Asia come up, and not likely with an MR for either of our size and our full employment, we have good exposure to the East market as well. So we should be covered to capture some of that eastern upside.

Ben Nolan: Okay. I appreciate it. Thank you, guys.

Derek Solon: Thank you.

Operator: Our next question comes from Omar Nokta with Jefferies.

Omar Nokta: Thank you. Hey, guys. Good morning. Good update. Just wanted to ask a couple questions. Clearly, over the past two years, you’ve done a lot in terms of, you know, strengthening the balance sheet. You know, debt is now, as you say, below sixteen percent. You have plenty of liquidity. Fleet renewals, and consistent capital returns, whether buyback, dividends. Just in terms of the dividend at the moment, you know, the Q4 payout, seventy-seven percent of earnings. That’s up from seventy-five percent previously. And that fifty to sixty percent you were doing kind of going back to the beginning and say in 2022? How should we think about this ratio going forward? I know it’s moving it’s been moving upwards, but just in general, seventy-seven percent what we should be expecting going forward?

And then how do we think about what that payout looks like as earnings kind of move up and down? As in if rates strengthened materially, kind of go back to where they were in 2023, should we expect kind of a more normal payout kind of coming down closer to that fifty percent threshold again? Any kind of color you can give on what you’re thinking of the payout ratio, especially in terms of earnings swinging.

Lois Zabrocky: No. Good morning. And, you know, excellent tee up for us, Omar. We do want to highlight that and, you know, as you know, we have steadily increased the percentage of adjusted net income that we have been returning to shareholders, and we have to have Jeff has his thunder here on what you should expect going forward.

Jeffrey Pribor: Yeah. Hi, Omar. Recapped it well. We raised the payout ratio gradually from 2022 until the end of last year as we were allocating free cash flow capital to delever. Having reached a level of leverage which is sufficiently low, fifty percent. Yes. Loan to value forty percent. Gross. We were able to move up the payout ratio to seventy-five percent or a little more last quarter and again, this quarter as you noticed, so it’s seventy-seven percent. I think what I hear from shareholders, what we hear from shareholders most often, is for clarity and consistency around this return of capital to shareholders program. And I think we can say clearly that shareholders should expect seventy-five percent or a minimum of seventy-five percent payout ratio.

Meaning, it’s helpful to have a round number like seventy. So, you know, cents per share but I think that’s the clear message. And to your second part of your question, I think if rates were to moderate or go up, you know, net income will go up and the payout ratios that still works. You know, that payout will go up or down. Does that how the year develops. So I think it’s fair to say that we ourselves in a position to have a payout ratio of a minimum of seventy-five percent at that’s the message.

Omar Nokta: Okay. So that that’s clear. Appreciate that. And oh, that that’s really helpful. And maybe just second question. You know, the VLCC MR swap certainly been innovative, and we’ve been hearing about that for a while, at least in the shipping circle that something that was in the hopper. Just in general, as we think about that transaction, how should we think about it in terms of what your plan has been? Is it deemphasizing the VLCCs in favor of products or is it really deemphasizing older tankers and then that’s one sort of part one. And then part two, I guess, would be as you think about further transactions, from here, what part of the fleet profile do you look to try to increase the ratio up. Thank you.

Lois Zabrocky: Yeah, Omar. It would be the latter of your, you know, what you were opining. You know, essentially, we really want to drive down the age of the fleet going forward and because we’re in each of these sectors and we have a very broad network, we were able to come up with what I think was a pretty creative deal from the team and execute that pretty flawlessly here. And, you know, our overall age on the fleet is right around ten years. And, you know, selling ships that are, you know, two ten and then bringing in two fifteen, you know, you just you’re buying yourself that longer horizon. With it to capture that upside. I think that would kind of do the summation and then when you we’re not deemphasizing crude at all. It simply happened to be an opportunity for us to shed some older inefficient.

Omar Nokta: Okay. Thanks, Lois. And just quickly on in terms of is it is it in in thinking about expansion or adding vessels or fine-tuning further, is there any part of the fleet that you want to bolster, or is it just kind of it’ll depend on what the opportunity set is at the time.

Lois Zabrocky: It certainly will depend upon the opportunity set at the time. And, you know, over time, you should look for us to add to the big crude side. You know, which is, you know, where we’ve had a little bit of attrition now. Right? So that’ll be a focus as and when that suits.

Omar Nokta: Very good. Alright. Thanks, Lois. And thanks, Jeff. I’ll pass it back.

Jeffrey Pribor: Thanks, everyone.

Operator: Our next question comes from Chris Robertson with Deutsche Bank.

Chris Robertson: Hey. Good morning, Lois and Jeff. Thank you for taking my questions. Jeff, this might be a question for you. Just turning to the breakeven. Just broadly speaking, looking at what makes that up, you look forward, and there’s maybe a bit of a deemphasis here on further delevering. So maybe, you know, there’s not more savings with regards to breakeven there. But as you look at OpEx and other components to it, where do you see kind of the floor that you could theoretically get to?

Jeffrey Pribor: Hi, Chris. That’s a good how are you? Good. Thank you. That’s a good question. You know, I think that, you know, we’re always working on keeping costs in line and from going up too much. I don’t think you’d expect us to be driving down OpEx. It’ll be good to hold as low as we can. G&A, we’re always working on that to make sure it’s on a per ship basis. You know, that that’s a good number. And then if we were if we find ourselves growing as we have done in the past, the right time, that does bring you a little lower per day. Cost than G&A in terms of, you know, interest, I think we’re interested. The debt cost, I think there’s a little bit that you can look forward to in the future without and start deleveraging further.

Just as, you know, we have a little bit of debt that’s the tire price that will roll off. We have the ability to think about more revolvers as opposed to more amortizing debt. You know, as we look out towards the end of this year and into next year. So it’s kind of incremental. I think we feel good about our break evens right now. Right? So I think when you look at a suite, it has everything from VLCCs down to MR to have a breakeven rate that’s fifteen thousand before taking into account time charters, and under fourteen thousand when taking account time charters. Feel good about that. We’ll always like to find the incremental ways to save to lower even more.

Chris Robertson: Okay. Okay. Great. Yeah. That’s what I like to hear on that. Turning to the LR1 segment, I know this is a segment that you guys have outperformed historically speaking. So I was wondering if you could just talk about that particular segment for a moment with the current market dynamics, there are and you still have a kind of a competitive advantage there? I you know, I’ll leave that at Floet and then I’ll turn to Derek. You know, I think you can see, when you stack up the LR1 Panamax sector against the competition in the fourth quarter. We continue to out earn our competition and that market, continues to use strong niche.

Derek Solon: Sure. Thanks, Rob. Yeah. But as you said, we continue to be strong niche and, Chris, you know, I think you’re probably raising the question because the rates from sort of the start of the year to the end of the year have come down a good deal. But you know, like you said, like you said, like you said, like, it’s still a good niche for us. A lot of the decrease in rates has to do with just overall market but also a little bit from Ecuador. And we’re seeing a little bit of Ecuador sending more of their barrels out to China, so that’ll ship bigger ships. When that dynamic shifts to come back to sort of the West Coast of the Americas, we expect that market pick up even more again. Hope that answers your question, Chris.

Chris Robertson: Yes. Thank you very much. I’ll turn it over.

Operator: Just as a reminder, it should like our next question comes from Liam Burke with B. Riley.

Liam Burke: Thank you. Good morning, Lois. Good morning, Jeff.

Lois Zabrocky: Good morning. Hi.

Liam Burke: Lois, there’s lots of puts and takes out there in terms of sanctions, redistribution of production. And most of the discussion has been in effect on VLCCs. Specifically, how are you looking at the outlook for the SUEZ MAXs?

Lois Zabrocky: So the SUEZ MAX is that, you know, prior to, I would say, the last three years had a very tight correlation on pretty systematically with VLCCs, with, you know, something along eighty-five to ninety percent correlation with the V’s. And I think that, you know, as you see the components of trade coming into place piece by piece with a lot of the political news that we read every day and the over four hundred and fifty ships or, like, a hundred of these on OPEC list. You know, as you see those components start to build, and the V’s can, you know, hopefully get a little bit more of a ground swell here and continue to improve. You’re gonna see the SUEZ MAXs come along for that ride.

Liam Burke: Great. Thank you. Jeff, on the with your liquidity, since you have a tremendous amount of flexibility, are opportunistic buybacks in the mix or is the payout ratio your primary method of returning cash to shareholders?

Jeffrey Pribor: Liam, is the simple answer not to be sued as both? Right. I mean, the payout ratio is the primary method that we anticipate that we have been returning and expect to continue returning cash. However, as you asked, sharing purposes. Alright. In the mix? In the sense that we have a fifty million dollar share of purchase program, twenty-five million dollars of shared purchasing. Right? After we sold the ship for roughly the same amount, and in last year. Accord? So we have the ability to look at that again. But I’d say the primary plan is evident. So focus on the payout ratio. But we have the flexibility to do share repurchase as well. Great.

Liam Burke: Thank you, Lois. Thank you, Jeff.

Jeffrey Pribor: Thank you. Thanks, Liam.

Operator: Our next question comes from Sherif Elmaghrabi with BTIG.

Sherif Elmaghrabi: Hey. Good morning. Thanks for taking my questions. So a couple on, I guess, Charter’s sentiment. You highlighted that nearly twenty percent of the tanker fleet is over twenty years old. But given that newbuild deliveries aren’t gonna replace those older vessels at the same rate, do you think we could see charters relaxing their specification requirements if there isn’t as much modern tonnage available?

Lois Zabrocky: I would say that you do see a bit of flex on the margin from charters depending upon one what the tonnage availability is and what the strength of the overall markets are. Right? So, you know, very well-maintained vessels, I think, could retain their ability to trade and their efficiency. On the other hand, you know, the OPEC list of a hundred V’s, those vessels then is a rare exception that there’s one under, you know, a few there that are under twenty years. No. Right? So, you know, you do tend to see these ships that are on the water and, yeah, highly efficient and really marginalized being, you know, older and certainly controlled by those that are not doing a high level of maintenance. So I think it’ll be incremental from the charters. It’s never gonna be wholesale.

Sherif Elmaghrabi: And then on Red Sea transit, I appreciate nobody wants to be the first mover in the Red Sea, and everyone has a different opinion on when transits could resume, but is this something that charters are pushing for at this time?

Lois Zabrocky: I’m gonna turn it over to our head of ops, William Nugent, and just have him give a little bit of an opening there.

William Nugent: Thank you, Lois. Yeah. We don’t talk about our specific security measures or policies. What I can say, I think, is that the whole market is looking for a bit more of a sustained stability in the region and the de-escalation. So to answer your question, I’m not aware of any pressure or inquiries from charters to go through, and, you know, grateful for their support and like think it. Thank you.

Sherif Elmaghrabi: Got it. Thanks, Lois, and thanks, Bill.

Operator: And that was our final question. So I will hand back over to you, Lois, for any final remarks.

Lois Zabrocky: No. I would just like to thank everyone for joining us today, and we live in very interesting times and are watching the news frequently. Right? So we see an overall construction and tanker market to be really rather robust. And we hope to hear from you next quarter. Thank you very much.

Operator: So this concludes today’s call. Thank you, everyone, for joining and participating. Have a great day. You may now disconnect.