INSW

International Seaways is a high-quality crude and product tanker operator (70-vessel fleet, 8.4M dwt, with four LR1 newbuilds arriving in 2026) running with genuinely strong unit economics: 41.0% operating margin, 36.7% net margin, and 15.3% ROE on FY2025 results. The balance sheet is the standout — liabilities/equity of just 0.32x, long-term debt down 15.2% YoY to $541M against $2.02B of equity, and retained earnings up 45.8% to $524M. This is a company that used the 2022-2023 tanker upcycle to delever and build optionality, exactly what you want from a cyclical operator.

The problem is the cycle is clearly turning. Revenue fell 11.4% to $843M, net income dropped 25.8% to $309M, diluted EPS fell 25.7% to $6.23, and operating cash flow collapsed 30.5% to $380M. The five-year history makes the rollover obvious: revenue went $273M → $865M → $1.07B → $952M → $843M, with net income tracking the same shape ($388M → $556M → $417M → $309M). Management's own MD&A flags exactly the right pressure points — the Risk Factors lead with 'highly cyclical nature of the industry may lead to volatile changes in charter rates and vessel values,' and call out 'changes in the worldwide supply of vessels or an expansion of the capacity of newly-built vessels' as a rate risk. With four LR1 newbuilds being delivered into a softening rate environment, near-term EPS pressure is more likely than relief.