Link to the complete 1st Quarter 2019 report:
http://hugin.info/201/R/2244420/886311.pdf
Hamilton, Bermuda, May 14, 2019
Highlights:
- 1Q2019 was a busy quarter and also saw the best result for NAT
since 2Q2016
- With this report we announce our 87th consecutive quarterly
distribution. The dividend is 0.03 cents per share payable on June
12, 2019, to shareholders on record May 28, 2019. It is our
objective to increase the dividend as tanker markets improve.
- the TCE (time charter equivalent) for our vessels in 1Q2019 saw
an improvement of 30% from the previous quarter and came in at an
average of $26,025 per day per ship compared to $20,100 in
4Q2018.
- The Net profit for 1Q2019, (after depreciation, G&A and
finance charges) totaled $5.6 million compared to a net loss of
$10.5 million in 4Q2018 and a net loss of $19.7 million in 1Q2018.
This was $16.1 million better than the previous quarter and $25.3
million better than same quarter last year. This is a substantial
improvement and gives us a strong start to the year.
- the net operating earnings improved by $12.9 million from the
previous quarter totaling $18.3 million for 1Q2019 compared to $5.4
million in 4Q2018.
- A better reflection of the company's cash generation, The
Adjusted Net Operating earnings[1] was $34.3 million for 1Q2019
compared to $23.6 million in 4Q2018 and $4.4 million in 1Q2018.
1Q2019 was $10.7 million better than the previous quarter and $29.9
million better than the same quarter last year.
- We made net cash repayments of our debt of $17.7 million during
the quarter and our net debt at March 31, 2019 stood at $341
million equal to $14.8 million per vessel.
- During 1Q2019 we refinanced our credit facility with a $306
million secured loan and registered a $40 million ATM. Together
with our 3 vessels delivered and financed last year, we now have a
financial structure in place for all of our 23 vessels with better
flexibility and longer maturities than we had only a few months
ago.
- Later in this report we have included relevant financial
information for NAT 1Q2019 and for other periods.
- We expect to see volatility in the tanker market during 2019
due to refinery adjustments that must be made to meet the new fuel
regulations that come into full effect from 2020. these adjustments
will be positive for tanker demand and we expect 2019 to be a
better year than 2018. With the majority of our fleet in the spot
market, NAT is well positioned for an improving tanker market in
the coming years.
Our Fleet
Our fleet consists of 23 well maintained Suezmax
tankers with an aggregate cargo capacity of 23 million barrels of
crude oil, illustrating the size of NAT. The average age of our
fleet is about 11 years; 10 units were built from 2010 onwards, 13
units were built between 2000 and 2009.
The outcome of the inspections of our ships by
oil companies ("vetting") reflects the good quality of our
fleet.
NAT has one of the largest fleet of Suezmax
tankers in the world. In a capital intensive industry like ours,
timing and financing are the key issues to achieve a sound cost
structure.
Financing
Our fleet is financed through two financing
arrangements; the $306 million 5-year senior secured credit
agreement with CLMG Corp., funded by Beal Bank of Dallas, Texas and
the Ocean Yield financing for our 3 vessels delivered last year.
Both financing arrangements contain an element of down-payment that
will reduce our debt going forward, while still maintaining our
flexibility to distribute generous dividends in improving tanker
markets.
The debt level of NAT has always been among the
lowest in the industry. The NAT board has focus on further reducing
the debt to a level that NAT maintained a few years ago.
We made net cash repayments of our debt of $17.7
million during the quarter and our net debt at March 31, 2019 stood
at $341 million equal to $14.8 million per vessel.
During 1Q2019 we also registered a $40.0 million
At-the-Market issuance agreement (ATM). This facility was
established to ensure we have financial flexibility at all times.
As of the date of this report, no shares have been issued under
this agreement.
Dividend
For 1Q2019 a cash dividend of $0.03 per share
has been declared. This represents 75% of our Earnings Per Share in
the quarter. Payment of the dividend is expected to be on or about
June 12, 2019, to shareholders of record on May 28,
2019.
In an improved tanker market, higher dividends
can be expected.
Nordic American Offshore Ltd. (NYSE:
NAO)
At the date of this report, major steps have
been taken by new shareholders in NAO, introduced and welcomed by
NAT's Chairman & CEO, to secure a robust financial structure to
take the Company through the challenging market. After a series of
transactions by the new investors, aimed at strengthening NAO's
balance sheet, NAT now owns 5.33% and the NAT Chairman & CEO
and his immediate family owns 4.11% of Nordic American Offshore
Ltd. The NAO shareholding is no longer classified as a capital
asset in our accounts, but is recorded as an investment security.
We remain supportive to the new shareholder and management of
NAO.
World Economy and the Tanker Market
The world economy is enjoying its strongest
upswing since 2010. What is good for the world economy and world
trade is by nature positive for the crude oil tanker business. In
addition to the role of major oil companies, large oil traders have
become important for the tanker industry.
The world Suezmax fleet (excl. shuttle, product
& Jones Act tankers) counts 514 vessels at the end of 1Q2019.
The total delivery during 2018 was 28 vessels. For 2019 we
expect a similar number of vessels as in 2018, and in 2020 we
currently see 22 vessels scheduled for delivery. During 2018, 21
Suezmax vessels were scrapped.
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.
Short-term spot tanker rates may be expected to be volatile.
Corporate Governance/Conflict of
Interests
It is vital 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
The NAT strategy is built on expanding and
maintaining a homogenous and top quality fleet, leveraging on our
industry network and close customer relationships with big oil.
Employment of our ships with big oil is a priority.
A strong balance sheet, combined with a
homogenous fleet and economies of scale is giving a low cash
break-even level, enabling NAT to distribute free cashflow to our
shareholders.
This strategy will benefit in both a strong
tanker market and in a weak one. In an improved market, higher
dividends can be expected and vice versa.
Our dividend policy should continue to enable us
to achieve a competitive cash yield.
Our fleet of 23 more or less identical vessels
is a special feature of NAT that is particularly valuable to our
customers.
NAT is firmly committed to protecting its
underlying earnings and dividend potential. We shall safeguard and
further strengthen this position in a deliberate, predictable and
transparent way.
*
* * * *Link to the graph:
http://hugin.info/201/R/2244420/886311.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 worldwide 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: |
|
Gary J. WolfeSeward &
Kissel LLPNew York, USATel: +1 212 574 1223 |
|
Bjørn Giæver, CFONordic American
Tankers LimitedTel: +1 888 755 8391 or +47 91 35 00
91 |
|
Herbjørn Hansson, Chairman
& CEONordic American Tankers LimitedTel: +1 866 805
9504 or +47 90 14 62 91 |
|
|
|
Web-site: www.nat.bm |
|
[1] Adjusted Net Operating Earnings (Loss) represents Net
Operating Earnings or Loss before depreciation and non-cash
administrative charges. Please see later in this announcement for a
reconciliation of non-GAAP financial measures and Adjusted Net
Operating Earnings (Loss).
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