Link to the complete 4th Quarter 2016 report:
http://hugin.info/201/R/2076096/780706.pdf
Hamilton, Bermuda, February 6, 2017
2016 was a very good year for NAT in a volatile
tanker market. The results for the fourth quarter (TCE $21,600)
came out solidly higher than the third quarter (TCE $16,700). So
far, 2017 has started at levels (TCE $25,000) well above the fourth
quarter. We are now reaping the benefits of increasing our fleet
over the last few years.
A key part of our business model is our
relentless focus on efficiency and operating costs. It is also a
priority to have a low leverage. NAT has the best Total Return[1]
for our shareholders. Our annual Total Return (profitability) since
1997 is about 10% p.a. In the same period, the NAT dividend yield
is about 11%. Risk management is important for a company in order
to be successful in both a strong and a weak market.
In addition to paying a quarterly dividend, we
wish to continue building a cash position in order to keep the low
debt level when we grow our fleet.
The success of the placement of $120m in the
autumn of 2016 was due to our proven business model.The capital we
raised strengthened our company by allowing NAT to enter into
agreements with Samsung Heavy Industries Co. Ltd., for the
construction of three Suezmax tankers of about 157,000 deadweight
tons to be delivered during the second half of 2018. The
newbuildings are expected to be financed mostly with proceeds from
the offering, cash from operations and with debt.
Growth of a homogenous Suezmax fleet is a key success factor for
NAT. The three additional newbuildings will increase the fleet by
10%, enlarging dividend and earnings capacity. We are engaged in
transportation of crude oil. NAT has no investments in the dry
cargo or container sectors that are facing challenges.
We consider our close dialogue with big oil in
the West and in the East as important undertakings. Our services
are strongly related to safety for our crew, the environment and
our assets.
NAT has a cash break-even rate below $11,000 per
day per ship, including financial charges and G&A costs. The
operating expenses for our vessels are low; about $8,400 per vessel
per day. Operating expenses for all of our vessels are more or less
the same. This is above all a result of strict maintenance
procedures and a homogenous fleet. The drydocking costs for those
of our vessels that are more than 15 years are on average less than
$2.0m per vessel which is at the same level as the rest of our
fleet.
As expressed earlier, shipbuilding technology
for crude oil tankers has not changed much over the last 20 years.
Whether a ship has been around five years or fifteen years or
longer does not matter as long as they are well maintained.
In the tanker sector, the NAT stock has
significant liquidity, allowing investors to buy and sell shares
whenever they wish. In 4Q2016 about 2m shares on average were
traded daily with an average daily trading value of around $18m per
day. The average volume for 2016 for NAT was about 1.7m shares per
day.
On January 23, 2017, NAT declared a cash
dividend of $0.20 per share for 4Q2016, payable to shareholders of
record as of February 10, 2017. Payment of the dividend is expected
to be on or about February 24, 2017.
Some observations:
- NAT has paid quarterly dividends 78 times of $48.11 per share
during the period since 1997.
- Some observers in the industry do not understand that Net Asset
Value (NAV), or the steel value of a vessel, is irrelevant when
valuing NAT as a going concern.
- Together with our shareholders, our customers are the most
important constituency in the Nordic American sphere.
- The recent equity offering of $120m was for expansion beyond
the present 30 vessel fleet. In October 2016, NAT announced
agreements with Samsung to build three Suezmax newbuildings for
delivery in 2018. Including these three newbuildings, we expect
that the NAT fleet will consist of minimum 33 vessels. The delivery
of our newbuilding MT Nordic Space is expected to take place at the
end of February this year.
- The quality of the NAT fleet is at the top as evidenced by our
vetting statistics, that is, inspections of our ships by clients.
In such vetting processes safety for our crew, the environment and
our assets are in focus.
- Generally, a low oil price is positive for the tanker market as
it is stimulating the world economy.
- Adjusted Net Operating Earnings[2] (cash surplus) has been as
follows: $28.2m for 4Q2016, $21.7m for 3Q2016 and $57.2m for
4Q2015.
- NAT has a credit facility of $500m, maturing in December 2020.
- A homogenous fleet reduces our cash operating costs, which
helps to keep our cash break-even rate below $11,000 per day per
vessel, including financial charges and G&A costs.
For further accounting information, please see
below. Our Annual Report 2015 on Form 20-F contains a large amount
of information about NAT. This report was filed with the SEC March
23, 2016 and can be found on our web site www.nat.bm.
Financial Information
The Company declared a cash dividend of $0.20 on
January 23, 2017, which is expected to be paid on or about February
24, 2017 to shareholders of record as of February 10, 2017. The
number of NAT shares outstanding at the time of this report is
101,969,666. In 3Q2016, the dividend was $0.26 per share, including
about $0.05 per share created by the one-time settlement with Gulf
Navigation.
Earnings per share (EPS) in 4Q2016 were -$0.02.
In 3Q2016 and 4Q2015 the EPS were -$0.08 and $0.34, respectively.
EPS does not take account of financial risk.
The Company's Adjusted Net Operating Earnings in
4Q2016 was $28.2m. In 3Q2016 and 4Q2015 Adjusted Net Operating
Earnings was $21.7m and $57.2m, respectively.
For the whole fleet, we had a total of 180 days
offhire during the quarter, of which 159 days were planned offhire.
The average time at the yard during drydocking of our four
vessels was on average about 14 days. The offhire statistics are
evidently reflecting the high quality of our fleet.
NAT continues to maintain a strong balance sheet
with low net debt and is focusing on keeping a low financial risk.
At the end of 4Q2016, the Company had net debt of about $305m
or about $10.5m per vessel.
The table on the right shows our Adjusted Net
Operating Earnings, stock liquidity and dividend over the last
eight quarters. Liquidity in our stock is high compared with other
tanker companies.
For further information on our financial
position for 4Q2016, 3Q2016 and 4Q2015, please see later in this
release.
Link to the graph:
http://hugin.info/201/R/2076096/780706.pdf
The Fleet
The Company will have a fleet of 30 trading
vessels in early 2017. By way of comparison, in the autumn of
2004, the Company had three vessels.
NAT is focused on maintaining top technical
quality of the fleet. Our operational performance remains at the
forefront of the industry. 4Q2016 inspections had an average of 2.3
observations which we consider an excellent result. NAT's
performance can be considered industry best practice.
World Economy and the Tanker Market
The development of the world economy affects the
tanker industry. A low oil price is stimulating the world economy
which is positive for the tanker market.
The drybulk and container sectors are weak.
Therefore, some owners are unable to expand into the crude tanker
sector, which is currently strong. The yard industry is struggling
with low orders over the last years. For NAT, a strong balance
sheet and access to financing are competitive advantages.
The Suezmax fleet (excl. shuttle tankers) counts
475 vessels at the end of 4Q2016, following an increase of 27
vessels in 2016.
During the years 2014 and 2015, a number of
orders were placed with shipyards. In 2016 twelve new ships were
ordered at the shipyards including three from NAT. The current
orderbook of crude tankers stands at 80 vessels from now to the end
of 2018. This represents about 16% of the Suezmax fleet. Slippage
and cancellations may take place, thereby reducing the orderbook.
In 2016, it was a fleet growth of 6.0% with no scrapping of
vessels.
The graph to the below shows the average yearly
spot rates since 2000 as reported by Clarksons Platou. The rates
are an indication of the level of the market and its direction.
Link to the graph:
http://hugin.info/201/R/2076096/780706.pdf
The supply of tanker tonnage is inelastic in the
short term. When there are too many ships, rates tend to go down.
When there is scarcity of ships, rates tend to go up.
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.
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. The Company is in a position to reap the benefits
of strong markets.
Our dividend policy will continue to enable us
to achieve a competitive cash yield.
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.
Going forward we believe the recent acquisitions
of vessels will increase NAT's Total Return.
*****
Link to the graph:
http://hugin.info/201/R/2076096/780706.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: |
|
Jan H. A. Moller, Head of
Investor Relations & Financial ManagerNordic American Tankers
LimitedTel: +1 888 755 8391 or +47 90 11 53 75
|
Rolf Amundsen,
AdvisorNordic American Tankers LimitedTel: +1 800 601 9079 or + 47
908 26 906 |
Turid M. Sørensen, CFO
& EVPNordic American Tankers LimitedTel: +47 33 42 73 00 or +47
90 57 29 27 |
Herbjørn Hansson, Chairman
& CEONordic American Tankers LimitedTel: +1 866 805
9504 or +47 90 14 62 91 |
Gary J. WolfeSeward &
Kissel LLPNew York, USATel: +1 212 574 1223 |
Web-site:
www.nat.bm |
|
|
[1] Total Return is defined as stock price plus dividends,
assuming dividends are reinvested in the stock.
[2] Adjusted Net Operating Earnings is an important dimension in
the shipping industry, but 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).
Attachments:
http://www.globenewswire.com/NewsRoom/AttachmentNg/779a87aa-1472-493c-8bd1-d80d04e62c04
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