Episode Details

International Seaways (INSW) Q2 2026 — Q2 2026 (three months to June 30; the Item 2.02 8-K cleared EDGAR at 07:30 ET on Monday August 10, BEFORE the open - so the reaction session is Monday August 10 itself, down 2.18 pct to USD90.40. The shares then recovered to USD97.05 by Friday August 14, a 12-month closing high.) International Seaways printed the best quarter in its ten-year history - record net income of USD294.9M, record adjusted EBITDA of USD345.2M, record free cash flow of USD260.7M and the largest dividend it has ever declared - and the shares closed DOWN 2.18 pct on the day. The whole quarter is rate, not scale: revenue days FELL 17.1 pct because seven ships were sold in the first quarter, while the blended TCE rate went to USD79,726 a day from USD28,740. At USD97.05 the market pays about 1.20x the value of the fleet itself. We rate INSW HOLD, 3/5, fair value USD83. THE CALL: HOLD (3/5, MEDIUM - A SUPERB QUARTER, AT A PRICE ABOVE THE FLEET THAT EARNED IT) — base-case value ~$83.00 vs ~$97.05 today. KEY METRICS: - CALL: HOLD, 3/5. Fair value USD83 against the USD97.05 close, -14.5 pct. Built from mid-cycle distributable cash of USD9.34 a share (USD42,500 a day blended TCE over 22,000 revenue days, less USD21,341 of cash breakeven) capitalised at 11 pct, blended with net asset value of USD81.04. - THE ANGLE - RATE, NOT SCALE: revenue days FELL 17.1 pct to 5,446 from 6,570 after seven ships were sold in Q1, yet TCE revenue rose 129.9 pct. The blended rate went to USD79,726 a day from USD28,740, up 2.77x. Every dollar of the increase is price. None of it is volume. - THE PRINT: shipping revenue USD467.3M up 138.8 pct; TCE revenue USD434.2M up 129.9 pct; adjusted EBITDA USD345.2M up 240 pct; net income USD294.9M against USD61.6M; diluted EPS USD5.91 against USD1.25; free cash flow USD260.7M, beating the prior record by nearly USD100M. All company records. - THE BAR AND THE BASIS: GAAP diluted EPS and adjusted EPS are BOTH USD5.91 this quarter - the only reconciling item was a USD43,000 disposal LOSS. Consensus was USD5.55 on one feed and USD5.28 on another, so the beat is 6 to 12 pct. Q1 2026's USD5.75 included USD88M of vessel gains, about USD1.77 a share. - NO HEDGE IN THE BOOK: the time charters are not fixed. The VLCC charter bucket earned USD214,216 a day against USD118,883 on spot, on profit sharing. Only 13 vessels are on charter, averaging 1.5 years and USD240M of contracted revenue to expiry - against USD434M earned in this one quarter. - THE DIVIDEND: a record USD5.05 declared August 7, payable September 24 to holders of record September 10. It costs USD250M against USD260.7M of free cash flow, so it consumes 96 pct of it. Policy is 85 pct of adjusted net income, so it tracks the spot rate. LTM declared USD12.61 is 13.0 pct at USD97.05. - PRICED ABOVE THE STEEL: the company's own approximately 6 pct net loan-to-value implies a fleet market value of USD3.94B against USD2.19B of carrying value. Marked to it, NAV is USD81.04 a share and the stock trades at 1.20x. The Street is 10 buy and 3 hold, but its USD93.33 average target sits BELOW the close. What to watch: UP: the September-quarter blended TCE rate, reported in early November, prints above USD42,500 a day again - which would say our mid-cycle assumption is too low - or the shares move back toward the USD81.04 of net asset value. DOWN: the blended rate normalises toward USD30,000 a day, which is only USD3.82 a share of cash on this cost base, and vessel values re-rate with it, taking the asset floor down alongside the earnings. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision. Learn investing free in the Charged Alpha app: https://chargedalpha.com/app?source=youtube&ref=video Educational only. Not financial advice.