Link to the complete 2nd Quarter
2017 report:
http://hugin.info/159489/R/2125963/811523.pdf
Hamilton, Bermuda, August 7, 2017
For the interest it may have, below is a press
release from Nordic American Tankers Limited (NAT) that was
announced today. NAT owns 22.6% of the NAO common shares.
-------------
Nordic American Tankers Limited
(NYSE:NAT) - 2Q2017 Earnings Report. NAT is a strong company with
focus on results, shareholders, customers and dividend which is
paid for the 80th
time.
Hamilton, Bermuda, August 7, 2017
NAT continues to enjoy the
advantages of a homogeneous Suezmax fleet. Operationally,
strategically and financially, NAT and its worldwide customers and
shareholders benefit from having 30 identical vessels on the water
with excellent quality. Average Time Charter Equivalent ("TCE") for
2Q2017 was about $16,100 per day per vessel. The Company
maintains among the lowest cash break-even levels in the
tanker industry, totalling about $11,500 per day per vessel,
including financial charges and cash G&A costs. Our policy of
paying dividends every quarter remains unchanged, with the amount,
of course, varying with conditions in the tanker industry.
As an example, an average of $30,000 per day per vessel could
give the basis for a dividend of about $2.00 per year. Going
forward, NAT wishes to consider a more diversified capital
structure, including bond financing and other instruments.
NAT has a unique business model.
Therefore, it is wrong to compare NAT with others in the tanker
industry (so-called "peers").
In the following we highlight
important NAT facts:
-
The NAT Total Return[1] is
at the top among listed shipping companies. Total Return is
the stock price plus the dividend reinvested in the stock - a
correct expression of value creation. The table below
shows the development of our Total Return since we received
our first vessels in 1997. A shareholder paying $15.21 per share in
October 1997, today has $63.84 per share which is an increase of
about 325%. Additionally, the shareholder also has the value of the
stock. The unlevered internal rate of return (IRR) is 7.6% -
compounded based on the share price of end July 2017. Earnings per
share (EPS) does not take account of risk and may be a deceptive
measure.
Link to the
graph: http://hugin.info/159489/R/2125963/811523.pdf
-
The average dividend yield for
the same period is about 12%. The dividend yield can be
compared with the interest on deposits you get at the
bank.
-
We indicated in our message to
shareholders of May 29, 2017 that the 2Q2017 would be lower than in
1Q2017 ($22,700/day). The average daily TCE achieved by NAT was
$16,100 per day per vessel for 2Q2017.
The direction of NAT cannot be
meaningfully assessed based on a period of 90 days only.
For 2Q2017 NAT declared a dividend
July 21, 2017 with a value of about $0.15 per share,
consisting of two components;
a) a cash dividend of $ 0.10 per
share and
b) a portion of the shares that NAT owns in Nordic American
Offshore Ltd. ("NAO"), equivalent to $0.05 per NAT share.
Payment of the cash dividend and
the distribution of shares are expected to be on or about August
31, 2017 to shareholders of record August 14, 2017. NAT
will distribute one NAO share per 24.4 NAT shares. NAT will not
distribute fractional NAO shares. Fractional shares will be
compensated by a cash dividend based on the NAO closing price on
July 20, 2017, which was $1.22.
Before the distribution of NAO
shares to NAT shareholders, NAT owns 22.6% of the NAO common shares
and the NAT Chairman & CEO and his immediate family own 10.8%
of the common shares of NAO. Over the last three weeks, a
significant improvement in the Platform Supply Vessel (PSV) market
has taken place. We are cautious in predicting the
future.
NAT is scheduled to take delivery
of three Suezmax newbuildings during the second half of 2018. An
amount equivalent to 30% was paid cash on contract signature. The
balance of $116m for the three ships will be paid at the time of
delivery. NAT has under review a financing arrangement for these
three newbuildings.
The size of its fleet allows NAT
to reap immediate and sizeable profits when the tanker market
improves. At this time, NAT has several TC arrangements with major
oil companies.
The NAT stock has significant
liquidity, allowing investors to buy and sell shares whenever they
wish.
Financial
Information
We refer to page 4 in this report
where details on Earnings per share, the Company's Adjusted Net
Operating Earnings[2], and other
financial information are disclosed.
NAT continues to maintain a strong
balance sheet with low net debt[3] and is
focusing on keeping a low financial risk. At the end of 2Q2017, the
Company had net debt of about [$321m] or about [$10.7m] per vessel
based on a 30 vessels fleet.
World Economy and
the Tanker Market
The development of the world
economy affects the tanker industry and the demand for oil. A low
oil price is positive for the tanker industry. The strength of the
Far Eastern economies, including China and India, is often
underestimated by observers in the Western world. NAT is active in
the Far East and does business with major oil companies in the
area.
The Suezmax fleet of the world
(excl. shuttle tankers) counts 478 vessels at the end of 2Q2017,
following an increase of 17 vessels in the 2nd
quarter of 2017.
The current orderbook of Suezmax
tankers stands at 62 vessels from now to the end of 2018. This
represents about 13% of the Suezmax fleet. Slippage and
cancellations may take place, thereby reducing the orderbook. 2016
saw a fleet growth of 6.0% with no scrapping of vessels.
The supply of tanker tonnage is
inelastic in the short term. When there are too many ships in an
area, rates tend to go down. When there is scarcity of ships, rates
tend to go up. As a matter of policy we do not predict short term
spot tanker rates which may be expected to be volatile. Going
forward, we believe that NAT is well positioned.
Corporate
Governance/Conflict of Interests
It is vital for NAT to ensure that
there is no conflict of interests among shareholders, management,
affiliates and related parties. Interests must be aligned. From
time to time in the shipping industry, we see that questionable
transactions take place which are not in harmony with sound
corporate governance principles, both as to transparency and
related party aspects. We have zero tolerance for corruption.
Strategy going
forward
Our objective is to have a
strategy that is flexible and has benefits in both a strong tanker
market and a weak one. In an improved market, higher earnings and
dividends can be expected and vice versa.
Our dividend policy should
continue to enable us to achieve a competitive cash yield.
Our fleet of 30 more or less
identical vessels is valuable for our customers.
NAT is firmly committed to
protecting its underlying earnings and dividend potential. We shall
endeavor to safeguard and further strengthen this position in a
deliberate, predictable and transparent way.
*****
Link to the
graph: http://hugin.info/159489/R/2125963/811523.pdf
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Matters discussed in this press
release may constitute forward-looking statements. The
Private Securities Litigation Reform Act of 1995 provides safe
harbor protections for forward-looking statements in order to
encourage companies to provide prospective information about their
business. Forward-looking statements include statements concerning
plans, objectives, goals, strategies, future events or performance,
and underlying assumptions and other statements, which are other
than statements of historical facts.
The Company desires to take
advantage of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 and is including this cautionary
statement in connection with this safe harbor legislation. The
words "believe," "anticipate," "intend," "estimate," "forecast,"
"project," "plan," "potential," "will," "may," "should," "expect,"
"pending" and similar expressions identify forward-looking
statements.
The forward-looking statements in
this press release are based upon various assumptions, many of
which are based, in turn, upon further assumptions, including
without limitation, our management's examination of historical
operating trends, data contained in our records and other data
available from third parties. Although we believe that these
assumptions were reasonable when made, because these assumptions
are inherently subject to significant uncertainties and
contingencies which are difficult or impossible to predict and are
beyond our control, we cannot assure you that we will achieve or
accomplish these expectations, beliefs or projections. We
undertake no obligation to update any forward-looking statement,
whether as a result of new information, future events or
otherwise.
Important factors that, in our
view, could cause actual results to differ materially from those
discussed in the forward-looking statements include the strength of
world economies and currencies, general market conditions,
including fluctuations in charter rates and vessel values, changes
in demand in the tanker market, as a result of changes in OPEC's
petroleum production levels and world wide oil consumption and
storage, changes in our operating expenses, including bunker
prices, drydocking and insurance costs, the market for our vessels,
availability of financing and refinancing, changes in governmental
rules and regulations or actions taken by regulatory authorities,
potential liability from pending or future litigation, general
domestic and international political conditions, potential
disruption of shipping routes due to accidents or political events,
vessels breakdowns and instances of off-hires and other important
factors described from time to time in the reports filed by the
Company with the Securities and Exchange Commission, including the
prospectus and related prospectus supplement, our Annual Report on
Form 20-F, and our reports on Form 6-K.
Contacts: |
Herbjørn
Hansson, Chairman & CEO
Nordic American Tankers Limited
Tel: +1 866 805 9504 or +47 90 14 62 91
Turid M. Sørensen, CFO & EVP
Nordic American Tankers Limited
Tel: +47 33 42 73 00 or +47 90 57 29 27 |
|
Gary J.
Wolfe
Seward & Kissel LLP
New York, USA
Tel: +1 212 574 1223
|
www.nat.bm
[1] Total
Return is defined as stock price plus dividend, assuming dividends
are reinvested in the stock.
[2]Adjusted Net
Operating Earnings is an important dimension in the shipping
industry. It is a non-GAAP measure. Please see later in this
announcement for a reconciliation of Adjusted Net Operating
Earnings to Net Operating Earnings (Loss).
[3] Net Debt is
working capital, less long term debt, adjusted for deposits paid
for the three newbuildings, divided by 30 vessels
2nd Quarter 2017 Result
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Nordic American Offshore Ltd via
Globenewswire
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