For the second consecutive year, we had our best financial results since becoming an independent public company in 2016. Shipping revenues and TCE Revenues achieved in 2023 were $1.1 billion and $1.1 billion, respectively, of which approximately 51% were generated from our Product Carriers segment and 49% from our Crude Tankers segment. Income from vessel operations increased by $172.7 million to $615.4 million in 2023, from $442.7 million in 2022, primarily driven by higher average daily rates across most of INSW’s fleet sectors. We achieved an Adjusted EBITDA (see Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations for definition) of $723.8 million in 2023 compared to $549.1 million in 2022.
In addition, we continued to build a strong balance sheet by increasing total liquidity to $601.2 million from $541.1 million at the end of 2022, prepaying $323.5 million of outstanding debt in addition to regular principal amortization of $152.2 million and ended the year with 41% (i.e., 30 vessels) of our fleet unencumbered, a net loan to value ratio of 17%, and a net debt-to-capital ratio of 23.8%. We made approximately $241.2 million in capital investments for vessel and other property purchases, vessel improvements, vessel construction and drydocking. We also returned capital to our shareholders through cash dividends totaling $308.2 million and $13.9 million in repurchases of our common stock.
During 2023 we continued to focus on (i) maximizing our fleet’s earning potential through safe and reliable operations, opportunistic charter-ins/charter-outs, and sales and purchases of vessels, (ii) building on our track record as a disciplined capital allocator, and (iii) executing transactions that would ultimately unlock the value of our shares to investors.
We executed these goals during 2023 by:
| ● | Building on our track record as a disciplined capital allocator |
| o | In a cyclical business such as ours, we believe that capital allocation is not a formula embedded in a financial metric but levers that we pull at the right times in the cycle. We have a track record of buying vessel assets at low points, voluntarily decreasing our leverage and returning a substantial amount of cash to shareholders. |
| o | We paid out $322.1 million in returns to our shareholders during 2023. |
| o | We finalized the construction of our three dual-fuel LNG VLCCs, which were delivered during the first half of 2023 and commenced employment on seven-year time charters with the oil major Shell. |
| o | Completed the $42.3 million purchase of two 2009-built Aframaxes that were previously bareboat chartered-in. |
| ● | Maintaining our fleet optimization program: |
| o | We sold three 2008-built MRs, resulting in net proceeds of approximately $38.8 million after debt repayment. |
| o | We entered into construction contracts for four dual-fuel ready LR1 product carriers, which are expected to deliver between the third quarter of 2025 and the first quarter of 2026. The total construction cost for the vessels will be approximately $231 million, which will be paid for through a combination of long-term financing and available liquidity. |
| o | We opportunistically locked in $172.6 million of minimum revenues (before reduction for brokerage commissions) on non-cancelable time charters with durations of two to three years for one Suezmax, one Aframax and six MRs with charter expiry dates ranging from February 2025 to June 2026. These charters have increased the contracted future minimum revenues remaining under our time charter agreements (excluding any applicable profit share) to approximately $354.3 million from January 1, 2024 through charter expiry. |
| ● | Executed a number of liquidity enhancing, deleveraging and financing diversification initiatives, including: |
| o | We prepaid $323.5 million of outstanding debt under our $750 Million Facility Term Loan and COSCO Lease Financing during 2023. This ultimately resulted in the release of 30 vessels from the collateral packages of the respective credit facilities. |
| o | As a result of the principal prepayments made under the $750 Million Facility Term Loan during 2023, the scheduled quarterly principal amortization under the $750 Million Facility Term Loan decreased from $30.2 million at the beginning of the year to $19.0 million at the end of the year. |
| o | We entered into a secured $160 million revolving credit facility, which matures on March 27, 2029 and reduces on a 20-year age-adjusted profile. |
See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Liquidity and Sources of Capital,” for further details on these financing transactions.
