International Seaways boss Lois Zabrocky has made a strong case for its business model at a Fearnley Securities webinar, while ensuring that listeners had an old Janet Jackson tune going through their heads.
The US chief executive said she wanted to spend a little time talking about the question “What have you done for me lately?”, a query made famous by the superstar in her 1986 smash.
Management at the tanker company has come under fire in recent months from major shareholder John Fredriksen, but Zabrocky launched a robust defence of its record.
“Our 75 tankers are essentially evenly split, trading crude and products. And this makes us a little bit differentiated from all of our peers here today. And the market in the tanker space is ideal for having both crude and product carriers today,” she told the webinar.
“And this is really the second year running, and it looks like that will continue going forward to really be an advantageous leap,” the CEO added.
Zabrocky said the oil tanker business is “extremely competitive”.
“At Seaways, we’re working very hard to make sure that we really move with the cycle,” she explained.
The shipping company will close 2023 with $800m in debt, the same level as four years ago.
But now the owner has two and a half times the value in its fleet, compared to that point, Zabrocky said.
“And this is a result of acquisitions, upgrading, high-grading the fleet, the [Diamond S] merger, you know, multiple efforts to really improve the balance sheet and to really showcase International Seaways,” she said.
The CEO argued that timing is critical in the sector.
Acquired ships paying off
The merger with compatriot owner Diamond S took place two years ago, adding 13 suezmaxes, one aframax and 50 MR product tankers.
“And if you look at the MR fleet over the last five quarters, we’ve earned nearly $34,000 per day. So you’re essentially looking at $20,000 above break-even levels, which over this five-quarter period is around $9m per MR,” Zabrocky said.
For the suezmaxes, Seaways has managed $30,000 per day above their break-even levels in the past year, or $11m per ship.
For the 2012-built suezmaxes, this would already equate to around 40% of what the company paid for the ships, she pointed out.
“So I just think it really stands in stark relief, the importance of the work that we do when the market is low and then being able to have that upside leverage as we do today when the market is very strong,” the CEO told the webinar.
She also said Seaways has taken some time-charter coverage that it felt was at healthy levels, but remains “very exposed to what we view as a very strong market”.
“And finally, with our capital allocation, we’ve been hitting all the levers. We have invested in our tanker fleet, we have reduced our debt and we have returned 15% over the last year based on our market cap,” Zabrocky concluded.
