James Small - General Counsel Lois Zabrocky - Chief Executive Officer Jeffrey Pribor - Chief Financial Officer Bill Nugent - Head of Ship Operations Derek Solon - Chief Commercial Officer Wale Oshodi - Controller.

Magnus Fyhr - Seaport Global John Gandolfo - Clarksons Platou Securities Amit Mehrotra - Deutsche Bank.

Good day, and welcome to the International Seaways Fourth Quarter and Full Year 2016 Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please note, this event is being recorded.

I would now like to turn the conference over to James Small, General Counsel. Please go ahead..

Thank you. Good morning, everyone, and welcome to International Seaways' earnings release conference call for fiscal year 2016. Before we begin, I would like to start off by advising everyone on the call with us today of the following.

During this conference call, International Seaways management may make forward-looking statements regarding International Seaways or the industry in which it operates, which could include, without limitation, statements about the outlook for various tanker markets, change in oil trading patterns, forecast of world and regional economic activity, and demand for and production of oil and petroleum products; International Seaways strategy; expectations regarding revenues and expenses, including both G&A expenses and vessel expenses; estimated bookings and TCE rates for the first quarter of and other periods in 2017; estimated capital expenditures for 2017 or other future periods; projected scheduled dry-dock and off-hire days; the anticipated successful conclusion of ongoing commercial negotiations; International Seaways' consideration of strategic alternatives and its ability to achieve its financing and other objectives; and regulatory developments in the United States and elsewhere.

Any such forward-looking statements take into account various assumptions made by management based on its experience and perception of historical trends, current conditions, expected in future developments and other factors management believes are appropriate to consider in its circumstances.

Forward-looking statements are subject to various risks, uncertainties and assumptions, many of which are beyond the control of International Seaways, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements.

Factors, risks and uncertainties that could cause International Seaways' actual results to differ from expectations include those described in International seaways' Annual report on Form 10-K for 2016 and in other filings that International Seaways has made or in the future may make with the U.S. Securities and Exchange Commission.

Now with that out of the way, I would like to turn the call over to our President and Chief Executive Officer, Ms. Lois Zabrocky.

Lois?.

Thank you, James. Good morning, everyone, and thank you for joining International Seaways, Inc., for our first earnings calls since successfully completing our separation. Let me start by saying I'm honored to lead our experienced team as International Seaways benefits from both a rich history and a compelling future.

We are starting our journey with a tanker fleet of scale, a solid balance sheet and the right people to effectively execute on our strategy. Before we get started, let me introduce Jeff Pribor, our CFO, who's joining me today on this call and who started at International Seaways in November.

Jeff brings both public-company shipping CFO experience and a wealth of maritime banking experience and has already been a major asset to the team here.

James Small, our Chief Administrative Officer, who you just heard from, has worked with us for two years after almost 20 years with Cleary Gottlieb, advising on transactional and governance matters and has provided invaluable counsel to the organization and has been a driving force behind numerous corporate initiatives.

Rounding out the senior team here at International Seaways and also on the call are Bill Nugent, our Head of Ship Operations; Derek Solon, our Chief Commercial Officer; and Wale Oshodi, our Controller. Please turn to slide four. Let me start by providing an update on the spinoff. As many of you know, we completed our separation back on November 30.

And on December 1, we began trading as an independent public company on the New York Stock Exchange under the ticker symbol INSW. A lot of time and effort from our dedicated employees went into ensuring the successful completion of that transaction, and I wanted to recognize those efforts and thank our team.

The completion of the separation simplifies our operating structure. It enhances our strategic focus. It creates a more distinct investment profile, allowing us to attract a broader base of shareholders.

We’ve had the opportunity to meet with many of you at the Investor Day we held in December and at the conferences and nondeal roadshows that we have participated in since then. We look forward to maintaining a close interaction with the investment community going forward.

We appreciate the receptivity International Seaways has had from both the shipping and investment community. We reported fourth quarter results today with a net loss, reflecting the impact of noncash vessel impairment charges that Jeff will discuss in more detail. Adjusted EBITDA in the quarter was $37.5 million on TCE revenues of $82 million.

For the full year 2016, we generated a net loss due to the impairment charges. Adjusted EBITDA for the full year was $222 million on TCE revenues of $385 million.

In the fourth quarter, we announced our FSO joint ventures received a letter of award from North Oil Company, a joint venture between Qatar Petroleum and Total, for a 5-year contract for our FSOs deployed on the Al Shaheen field, processing all 300,000 barrels per day of Al Shaheen crude off the coast of Qatar.

This award is subject to negotiating and finalizing documentation, including the services contract. We are pleased with the commercial terms that we have provisionally agreed to and would anticipate providing further information as it is appropriate to do so. Let's turn to Slide 5.

Before giving a market update on each of our sectors, I wanted to provide an overview of the vessels owned and operated by International Seaways. As you can see on Slide 5, we had a diversified tanker fleet positioned to optimize revenues through a balanced mix of contracted cash flows and spot market leverage.

Our lean and scalable model and low breakevens along with our strong financial position allows us to navigate through the volatility in the tanker cycle while providing significant operating leverage to take advantage of a market recovery.

In 2016, revenues from our 10 vessels on time charter and distributions from our joint ventures provided over $100 million in cash, more than adequately covering our fixed costs for debt service, G&A, drydockings and other CapEx.

While time charter revenue can be expected to decline somewhat in 2017, given renewals and a slower market, we still expect contracted revenue and distributions to more than cover debt service and G&A, which had also both declined, as well as drydocking and CapEx.

At the same time, we remain with 39 vessels with low breakevens in the spot market, providing ample operating leverage upside. Now turning to Slide 6 and an update on the crude sector.

As we move into the seasonally stronger fourth quarter, we did see rates improve from the lows we experienced in the summer months, particularly on the Vs as seasonal demand ramped up and OPEC boosted crude production ahead of the announced production cuts.

On January 1, the OPEC and non OPEC production cuts took effect with producers agreeing to cut production by 1.8 million barrels per day for 6 months in an effort to eliminate the oil inventory overhang and rebalance the market. We are seeing the impact of the removal of oil from the market in the crude TCEs late in the first quarter.

This is unfavorable for crude tanker demand, even if producers fall short of full compliance across the board. However, the OPEC production cuts are also creating some market volatility that is having a positive impact and somewhat offsetting the ton mile demand.

The shift in the location of crude supply versus crude demand is prompting buyers in Asia to source oil from elsewhere. They're pulling a lot of volume from the Atlantic to the Pacific. This translates into longer haul movements from the West to the East, offsetting some of the immediate ton mile impact of the production cuts.

In the near term, the majority of supply increases will likely come from the Atlantic basin, including the U.S. Gulf and Brazil, while the demand increases will continue to come from Asia.

The OPEC cuts have increased the relative price of Middle East barrels, making the Atlantic grades more affordable to refiners in Asia, creating arbitrage opportunities. Crude exports to Asia from the North Sea averaged a record 400,000 barrels per day in January, double the average of 200,000 barrels per day in 2016. And recently, we saw U.S.

crude exports surge to a record 1.2 million barrels a day in the week ending February 17, with the most of the incremental volumes destined for the Far East.

Global demand continued strong, although slowing from record rates seen recently with IEA estimates of growth for 2017 now at 1.4 million barrels per day, down from an estimated 1.6 million barrels per day in 2016 but still strong growth.

China continues to be the main growth driver in the crude market with 2016 imports growing at the fastest pace in 6 years, 13.6% above 2015. China was the world's biggest buyer in December with crude imports rising to a record 8.6 million barrels per day.

At the same time, China's domestic crude production dropped by 335,000 barrels per day or 7% in 2016, and production is forecast to continue slipping as state run companies shut down fields that are too expensive to operate under the current pricing environment, driving increased imports. Indian oil imports continue to grow as well.

2016 imports were up 11% to 4.4 million barrels per day compared with the same period last year with crude imports in December rising 18% year over year. With 80% of its crude oil requirements met through imports, India is a bright spot for crude oil demand. On the supply side, new billing orders in 2016 were at the lowest levels since 1995.

As owners face financing constraints and there has been a steady decrease in shipyard capacity as yards struggle to return to profitability, seek funding and reorganize.

However, the current crude tanker order book is relatively heavy with a substantial portion scheduled for delivery in 2017, especially in the first half, which will provide headwinds for tanker operators in the short run. Against this increased vessel supply is an aging global fleet.

Given the strength of rate environment over the last two years, tanker scrapping has remained nearly non-existent. With owners facing escalating cost of regulatory compliance, we expect to see vessels approaching 20 years and older exiting the market through scrapping.

Putting all of this together, we remain cautious about the outlook for crude tanker rates in the near term but constructive on the outlook for 2018 and beyond. Our fourth quarter VLCC spot rate was $32,100 per day. The Aframax spot rate was $15,100 per day, and the Panamax blended rate was $16,300 per day.

Now turning to slide seven and an update on the product sector. In the product tanker market, our MR spot rate in the fourth quarter was $10,800 per day, comparable to the third quarter.

We attribute the continued weakness to elevated inventory levels and limited arbitrage trading opportunities, coupled with high number of deliveries of MRs during the first two quarters of 2016. The biggest issue has been stubbornly high inventory levels of gasoline.

However, we expect these levels will be drawn down as refineries enter maintenance season to prepare for the summer driving season. In fact, after five straight weeks of inventory draws, gasoline inventories are presently down over 15.5 million barrels from this year's high, according to the EIA.

On the supply side, the product tanker order book is at historical lows with the pace of new billing deliveries set to decline. New billing activity is limited due to constrained shipyard space and banks' continued reluctance to lend. Looking ahead, increased U.S. crude production followed by the OPEC cuts will lead to further refinery runs.

This in turn will lead to more product available to export to the U.S. Gulf to the benefit of MR ton-mile demand, particularly West of Suez. We believe the tanker market fundamentals for the product tanker market have turned and are positive, and we are well positioned to capture the charter market upside with our 20 MR vessels.

I will now turn the call over to Jeff to provide additional details on our fourth quarter and full year results..

Thanks, Lois, and good morning, everyone. I just want to say, first of all, I'm very pleased to be part of the great team here at International Seaways. It's really an exciting time to be back in the tanker business. Let's move directly to reviewing the fourth quarter and the full year 2016 results in more detail.

And can I ask you first to turn to slide nine. Consolidated TCE revenues for the fourth quarter 2016 were $82 million, a decrease of $38 million or 31% compared to the fourth quarter of 2015. Consolidated TCE revenues for the full year 2016 were $385 million, a decrease of $91 million or 19% compared with the full year 2015.

The decrease for both the quarter and the full year were both principally driven by lower daily rates. Now let me discuss the results of our business segments, beginning with the International Crude Tanker segment.

TCE revenues for crude tanker segment, our container segment, were $54 million for the quarter, down 36% compared with the fourth quarter of 2015.

This decrease is primarily due to a decline in VLCC and Aframax rates with spot rates declining to $32,100 and $15,100 per day, respectively, resulting in a $29 million decline in TCE revenues versus the prior year. TCE revenues for the crude tanker segment were $258 million for the full year 2016, down 15% compared with the full year 2015.

This decrease was primarily due to a decline in VLCC and Aframax rates with spot rates declining to $42,000 and $21,000 per day, respectively, resulting in a $65 million decline in TCE revenues overall.

This decrease is partially offset by increased revenue days in the VLCC and Aframax fleets due to fewer drydock and repair days, which accounted for a $12 million increase in TCE revenues, along with a $5 million increase in revenue resulting from the company's ULCC being taken out of layup in the first quarter 2015.

While down year-on-year given the strength of the market in the prior year 2015, for the full year 2016, crude rates were on balance healthy and in the area of historical averages, allowing International Seaways to generate over $140 million in free cash flow.

Lois earlier discussed factors that have caused rates to show us some improvement, and our first quarter performance generally reflects that trend.

We booked 86% of the available spot days -- VLCC spot days at an average of approximately $39,000 per day and 94% of the available Aframax spot days at an average of approximately $15,000 a day and, finally, 89% of the available Panamax spot days at an average of approximately $16,800 per day. Turning to product carriers.

TCE revenues for the International Product Carrier segment were $27 million for the quarter, down 23% compared with the fourth quarter 2015. This decrease was primarily due to the decline in MR spot rates with spot rates declining to $10,800 per day. The decline in blended MR rates resulted in a $12 million decline in TCE revenue for the period.

This decrease was partially offset by increased revenues in the LR1 and MR fleets due to fewer drydock and repair days, which accounted for a $4 million increase in TCE revenues. Looking at the full year 2016. TCE revenues for product carriers were $126 million, down 26% compared with the full year 2015.

This decrease is primarily due to a decline in MR spot rates with spot rates decline to $13,100 per day. The decline in blended MR rates results in a $41 million decline in TCE revenues.

Also contributing was a decrease in revenue days in the MR fleet [ due to a ] sale of a 1998-built MR in July 2015 as well as the redelivery of an MR to its owners at the expiry of its time charter in March 2015. Looking forward, we have booked 86% of our first quarter MR spot days at an average of approximately $13,300 per day.

Moving next to Slide 10. Turning back to International Seaways' consolidated results. Net loss for the fourth quarter was $58 million compared with a net income of $38 million for the fourth quarter of 2015.

The decrease principally reflects the impact of impairment charges of $16 million recorded in the current quarter and $6 million of separation and transition costs as well as the decline in TCE revenues I just discussed. Excluding those onetime costs, net income for the quarter would be approximately $8 million or $0.28 per share.

I want to take a moment to discuss the impairment charges. Management concluded that there were a number of factors that resulted in changes in values of assets in the International Flag market since the third quarter 2016, which were viewed as impairment charges for 8 of our International Flag vessels.

We conducted an impairment test in accordance with U.S. Flag rules, resulting in an impairment charge totaling $30 million in the international fleet on 1 Panamax and 7 MRs. Similarly, both the LNG and FSO JVs were tested for impairment, and it was determined that an impairment charge of $30 million should be taken for the FSO JV.

Looking at the full year, net loss for the full year 2016 was $18 million compared with net income of $172 million in the full year 2015.

The decrease reflects the impact of impairment charges of $110 million, $9 million of separation and transition costs, as well as a decline in TCE revenues, partly offset by a decrease in general and administrative expenses of $10 million in 2016.

Excluding impairment and onetime separation costs, net income for the full year would have been approximately $101 million or $3.46 per share. Adjusted EBITDA was $38 million for the quarter, a decrease of $33 million compared with the fourth quarter 2015.

For the full year, adjusted EBITDA was $220 million, a decrease of $77 million compared to the full year 2015. Please now turn to Slide 11. The cash cost TCE breakeven rates for 2016 were $16,800 a day for VLCCs, $13,600 per day for Aframaxes, also $13,600 per day for Panamaxes and $12,500 per day for MRs.

Seaway's overall breakeven rate was $14,000 per day for 2016 across the fleet. These rates are the all in daily rates our owned vessels must earn to cover operating costs, drydocking, CapEx, G&A expense and interest expense.

Our low TCE breakeven rates allow Seaways to navigate low points in the tanker cycle while providing significant operating leverage in rising markets.

Providing a little more detail on this slide and a view towards 2017, I would note that the OpEx per day by vessel class for 2016 were VLCC, $9,109 per day; Aframax, $8,065; Panamax, $8,534; and MRs, $7,736. The corresponding budgeted amounts for 2017 are VLCC, $9,300 per day; Aframax, $8,600 per day; Panamax, $8,300; and MRs, $7,400 per day.

G&A for 2016 was $2,176 per vessel per day fleetwide. And as previously disclosed, it's budgeted for 2017 at $25 million or $1,400 per vessel per day. Drydock and maintenance capital expenditures totaled $11 million in 2016. Our budget calls for $28 million in 2017.

Finally, on this page, we voluntarily amortized debt during the first quarter and third quarter 2016. Accordingly, we would expect interest expense for 2017, which includes both cash interest and amortization of deferred cost to look like the fourth quarter's cost annualized. Now if you can turn to Slide 12.

Moving from left to right, we began the fourth quarter with total cash of $110 million. During the quarter, we generated $38 million of adjusted EBITDA. Additionally, we had $6 million of separation and transition costs and expended $7 million on dry-docking and improvements to our vessels. Cash, interest and amortization of our debt was $9 million.

And working capital was the use of cash in the quarter and primarily relates to an increase in receivables and changes in certain pension liabilities related to the split. The result was we ended the quarter with approximately $92 million of cash.

Additionally, we have access to undrawn revolving credit facility of $50 million, bringing total available liquidity at December 31, 2016, to $142 million. As of today, cash is approximately $100 million, and the revolver remains undrawn. Turning now to slide 13. Let me talk about the balance sheet.

We have $1.1 billion of conventional vessel assets, against which we have $440 million of term debt. Our term debt is Term Loan B. The original amount was $628 million. But over the past year, prior to our spinoff, we significantly delevered, and now we're down to $440 million.

The nature of Term Loan B is that generally it's low authorization, and we have only 1% mandatory amortization. So this contributes to our low breakevens compared to our peers. So we were at 2x leverage on a debt to EBITDA basis for 2016, a total debt to book capital stood at 27%, and we have a net loan to value as of that time of less than 40%.

Overall, the strong balance sheet and low cash breakevens as well as substantial contracted revenue protect us during low forces of the tanker cycle, while our 39 spot vessels provide ample upside in a rising market. Now we can turn, please, to slide 14, which illustrates net operating leverage.

Every $1,000 a day of TCE spread across our fleet provides $14.2 million additional EBITDA and net income.

As you could see on this slide, adding $5,000 per day to our crude fleet and $2,500 per day to our MRs would result in an incremental $52 million in EBITDA or $274 million in total versus the $222 million in actual adjusted EBITDA we reported in 2016.

As you can see from the table at the bottom of this slide, this approximately equals the 12-year average of so-called mid-cycle earnings. The columns to the right show how this plays out further as rates go above average levels. This concludes my comments on the financial statements. I'd now like turn the call back to Lois for her closing comments..

Thank you very much, Jeff. Please turn to summary page, slide 16. We are very pleased with our performance in the fourth quarter and full year despite challenging market conditions in the second half of the year 2016.

While we expect the year ahead to present a number of challenges, I'm confident in the solid foundation we built and the measures we continue to take to create a platform for success.

We have a strong financial position, low leverage and cash breakeven, a diversified 55-vessel fleet positioned to optimize revenue, a balanced commercial deployment, lean and scalable model, and a rigorous capital allocation strategy.

We are launching International Seaways at a favorable time in the cycle as periods of market weakness will create attractive opportunities, and we are well positioned to take advantage of those to renew our fleet and create value for our shareholders. We will now open the call up to questions..

Thank you. We will now begin the question-and-answer session [Operator Instructions]. Our first question comes from Magnus Fyhr of Seaport Global. Please go ahead..

Yeah, good morning. Just you mentioned you have a strong balance sheet and you're looking at opportunities. You painted a little bit more positive picture on the product tanker market, vis-à-vis the crude tanker market.

Can you talk a little bit maybe how you think about those 2 markets going forward, if the product tanker market may be ahead a little bit of the crude tanker market?.

Well, I think that you’re absolutely correct in that from the fourth quarter of 2016, worldwide product inventories started to draw down. And that – and we believe that the markets are linked and that, that will start and then crude will follow. So we do believe that – we like being diversified.

We think both of the markets will be positive, starting with the products and followed by the crude..

Okay. If you do nothing going forward, you’d have about seven MRs that – or time charted in.

So I mean, will the focus be, if you're going to maintain that balance, are you looking to time charter or renew those time charters or potentially do acquisitions on the product tanker market?.

There are four vessels that will indeed -- time charter that will expire in the middle of this year, and we are taking a look at whether or not we would extend those. We have not done so at this point in time. The three variables don’t expire until sometime in 2018.

And then we prefer – we know we’re going to look at the secondhand market for acquisitions and prefer not to – we like being diversified. We think both of the two sectors are areas we want to be in, but we’re not going to tip our hand as to whether we would look at MR purchases right now..

Okay. Thank you. And then just one last question. I mean, the last week here we’ve seen a significant increase in the MR market.

Can you put some – can you give some color on what's going on in the product tanker market currently, that has resulted in these strong rates?.

We’ve spent a good amount of time looking at the fundamentals and trying to understand what’s moving the market. It looks like there were a lot of product movement into West Africa, where ships tend to sit for some period of time before they get discharged, and that corresponded with a drawdown gasoline inventories on the East Coast.

You also have refineries coming back online down in the Gulf. So you're pushing product out of the Gulf. You're pulling it into the East Coast from the continent. And at the same time, you have ships on longer voyages with delays..

Okay.

Have you seen any changes in opportunities on the time charter opportunities? Or is it too early to tell with the recent strength?.

Are you specifically speaking on the MR side?.

Yeah, on the MR side..

Yeah. I mean, the market is somewhere around $13,500 per day. And it would – if you were to – now speaking about putting vessels out on time charter, it seems a little bit early to us..

Okay. Thank you..

Thanks, Magnus..

Our next question comes from John Gandolfo of Clarksons Platou Securities. Please go ahead..

Just wanted to touch base on the FSO JV and was wondering on the long term view for those assets. I understand the JV is expected to pay down its remaining debt by the conclusion of its current contract.

And is there maybe potential to refinance those assets and then take the cash out now and use it towards acquisitions?.

Hey, John. Yes. I think as Lois said in her remarks, I believe, and as we've talked about, the first focus is just get the contracts done. But you're at and so that's what we're working hard on and expected to do. That said, you're right that they will be unlevered as the new contract kicks in, so I think we'll look at all options.

And as I said, look at all options on our conventional tanker balance sheet. It's just one of a myriad of options for capital for us, but we will look at it..

Okay. And then lastly, just wanted to touch on Ballast water treatment. Was wondering if there are any vessels expected to be retrofitted this year.

Or has that been pretty much push forward?.

We will see the majority of the impact in 2019 and 2020. We do have something like $5 million to $6 million in the 2017 budget for taking delivery of systems that will eventually go on to the ship. So it's a small portion of the fleet..

Okay. Got you. Now have those systems actually been approved by the U.S.

Coast Guard that you've already invested in?.

The Coast Guard actually approved the specific company system. Ours have not yet been approved. However, we are working with a company that has proven technology, and we have a guarantee of performance. Otherwise, we would get our initial investment back..

[Operator Instructions] Our next question comes from Amit Mehrotra of Deutsche Bank. Please go ahead..

Jeff, just wanted to follow up on the FSO question. I totally understand you can't talk about it until that's all buttoned up. But aside from that, just trying to get your priorities around capital structure movements over the next year, 1.5 years.

I mean, the company obviously has a nice debt amortization profile, which is great during this transition period of the market.

But as we look out 1 year, 1.5 years from now, if you could just help us think about how the cap structure will evolve? And just what areas around financing outside of the FSO are some of the priorities for you?.

Yes. Amit, good to talk to you. Yes, I mean, you hit on it. We have a nice balance sheet right now with low leverage in asset charge and relative to the group. And so we're pleased about that. We're in no rush to lever way up.

I would say that we'll enjoy the position we're in, look at the various opportunities that are there relative to fleet renewal and growth as Lois has talked about. So, I think that we don't anticipate any major changes in that we would currently capitalize apart from appropriately financing acquisitions as we make them.

Does that make sense?.

Yes. It makes sense. I mean, if I could, let me just push back a little bit on you on that.

You know this obviously and Lois knows this way better than I do, but if you just look at shipping companies that create the most equity value overtime, typically the balance sheet expands at the weakest point in the cycle and then delevers as the market recovers.

And I understand we're coming out of this weird period in the shipping market, capital markets in particular, where companies that are underlevered are awarded. So you want to maintain some balance noting where we are today.

But at the same time, I mean, it just seems that you guys are maybe being a little bit too conservative with the balance sheet today. And that may be the right thing to do. And if you think it is, just please tell me to shut up.

But in terms of the companies that are creating most value, you would think that you would have a little bit more leverage or a lot more leverage at this point in the cycle. If you can just talk to that and just how you guys think about that..

Yes, well, won't tell you to shut up, okay. Let's start with that. But I think what I was trying to say before about this, I'll just maybe try to make it more clear now is, as Lois said, we are looking judiciously to allocate capital towards assets right now, right.

So when we do that, we'll be thinking about the cash we have on hand on that as well as the balance sheet moves we can make to finance that. So I think rather than just looking for financial engineering, lever up kind of stuff, you're going to see us use our balance sheet, and the balance sheet will evolve relative to acquisitions and fleet renewal.

So I get you about where we are in the cycle, but I think we have a natural tendency, or a natural opportunity to do that as we renew the fleet. So I think we're….

Okay, that makes sense. It's a good segue into my follow question, if I could. And there's obviously been a lot of strategic or M&A rumblings in the crude segment.

Jeff, just given your experience in corporate finance and then, obviously, the CFO of the company, just like to get your perspective on what you think these types of headlines and actions kind of signal to you in terms of where we are in the cycle.

And then International Seaways itself is kind of in an interesting position because you already have a substantial balance sheet capacity, the equity currency has increased significantly in value, and then the company does have a need to bring down the average age of the fleet.

So from that context, just curious if you've been tempted to enter into some strategic start to or even do some ship repair deals? Can we expect something like that given it would kind of seem to potentially check a lot of the boxes, the strategic boxes for the company?.

Well, thanks. You addressed the question to me, so I'll start but I'll then turn it over to Lois. I mean, I think we do see things in the market, but we just look at them all as part of the overall evaluation of all the opportunities that we have. I don't know.

Lois, you want to comment on how we look at M&A?.

Yes, I, we've repeated this a lot of time with our investors. We think it's very important to be able to execute on a daily basis with one or two ship deals and get the company moving forward to renew the fleet.

We will opportunistically look at consolidation, M&A, the other options you had put forward, but we don't think that you can count on growing and running the company in that way. So that's really the fulsome answer.

We are very open minded into how we will renew our fleet, but we're going to make sure that we aren't just counting on an M&A opportunity to deliver the age reduction to us..

Yes, if I could bring that back to the CFO half of your question, Amit. Yes, because that's what you asked before. Our low leverage, low breakevens, that's actually a real plus in the context of thinking about M&A. So we approach it from a very favorable financial position, we think. So I hope that and answer get to what you’re asking about..

Yeah. I mean, it just seems the message I’m taking away, which is just from a strategic standpoint is continue to run the business effectively and then maybe take an incremental approach to growth as opposed to maybe a transformational approach.

Is that the correct takeaway?.

Not really. We’re going to look at all the opportunities that would be transformational. In the meantime, we’re going to be moving the ball down the field with the fleet. So we would look at both..

Got it. Okay. That’s helpful. Thanks for taking my question [Indiscernible] from the first earnings call. Appreciated guys..

Thank you..

Thanks..

Our next question is a follow-up question from Magnus Fyhr of Seaport Global. Please go ahead..

Thank you. Question for you, Jeff. You mentioned the guidance for next year on G&A is $25 million. Looked like the number was a little higher in the fourth quarter.

Anything going on there?.

Yeah, I think the – all of 2016 was a transition year to the 2017 business-as-new-usual year for International Seaways. So we’ve talked about this. It was mainly headcount reduction to appropriately size us for being an independent spun-off company, and that wasn’t done until year-end..

So by first – I mean, first quarter, you’re almost done with the first quarter so you feel comfortable with that run rate, about $6 million a quarter?.

Well, we’re saying $25 million, and that included – and we said this at the Investor Day. That includes $1 million of – in this calendar year, fiscal year of onetime cost. So it’s $25 million to $24 million on a run-rate basis. But in terms of what we expect, because there is that $1 million in there, I’d say $25 million.

So I had that modeled $6.25 million..

Okay.

But it’s pretty consistent through the quarters? Or is that going to be higher in the first quarter?.

I think it’s pretty consistent during the quarters..

Okay. Thank you..

Thanks, Magnus..

[Operator Instructions] This concludes our question and answer session. I would like to turn the conference back over to Lois Zabrocky for any closing remarks..

Thank you, Nicole. We wanted to thank everyone for your interest in International Seaways, and we look forward to the continued relationship with you as we move forward. Thank you very much..

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect..