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 andb) 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
& CEONordic American Tankers LimitedTel: +1 866 805
9504 or +47 90 14 62 91 Turid M. Sørensen, CFO &
EVPNordic American Tankers LimitedTel: +47 33 42 73 00 or +47 90 57
29 27 |
|
Gary J. WolfeSeward &
Kissel LLPNew York, USATel: +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
Attachments:
http://www.globenewswire.com/NewsRoom/AttachmentNg/ded4d868-758e-4731-97f6-f113a97f4c53
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