Link to the complete 4th Quarter 2017 report:
http://hugin.info/201/R/2168042/834731.pdf
Hamilton, Bermuda, February, 12 2018
Highlights:
- We expect the tanker market to turn for the better in
2018.
- The NAT cash build-up from operations during 4Q2017 was
$11.2 million as against a negative cash development in 3Q2017
(-$0.7 million).
- Despite the volatility in the stock markets, the world
economy is enjoying its strongest upswing since 2010. What is good
for the world economy and world trade is positive for the crude oil
tanker business. Recent upbeat macroeconomic data released by the
International Monetary Fund in Washington, are giving further
positive signals for the world economy and consequently for the NAT
business.
- On January 26, 2018, we announced our 82nd consecutive
quarterly dividend distribution of 3 cents per share, the same as
in 3Q2017.
- During 4Q2017 we took three important steps in our
recapitalization program. We signed an agreement for the full
financing of our three newbuilds for delivery in June, August and
October 2018. On December 12, 2017, we raised $110 million in new
equity. Thirdly, we agreed to establish a new credit facility, as
part of the plan to replace the original credit facility of
2004.
- Our net debt[1] at the end of 4Q2017 stood at about $253
million equal to about $8.4 million per vessel, which is lower than
the scrap value of a suezmax vessel today.
- NAT is well positioned when the tanker market improves. The
historic average market rate for the last 25 years was about
$30,000 per day per Suezmax vessel. Such earnings would give a free
cashflow from operations of about $1.40 per share per year. As of
today, a $1.40 annual dividend per share would represent a cash
yield well above 50%.
- The Net result for 4Q2017, (after depreciation, G&A and
finance charges), was -$21.9 million. In 3Q2017 the Net result was
-$34.3 million. The Adjusted Net Operating Earnings[2] were $11.2
million for 4Q2017. In 3Q2017 the Adjusted Net Operating Earnings
were -$0.7 million. I.e. cash-wise the 4Q2017 was $11.9 million
better than the previous quarter. Later in this report we
have included relevant financial information for 4Q2017 and for
other periods.
- When analyzing the data, with such volatile assets as in the
tanker industry, we must make a distinction between accounting
numbers and cash development.
- We would note that The TCE (timecharter equivalent) for
4Q2017 was $13,800 per day per ship compared to $10,600 in 3Q2017.
For several reasons, the TCE is not an adequate measure of
performance for NAT.
We continue our unbroken practice of paying
dividends. Tanker markets are volatile but our strategy remains
steadfast.
Our Fleet
Our fleet consists of 33 (including 3 newbuilds)
well maintained Suezmax tankers (all our ships above 15 years of
age has a CAP 1 class notation, which above all is related to steel
quality) with an aggregate cargo capacity of 33 million barrels of
crude oil, illustrating the size of NAT.
The average age of our fleet is about 13 years;
10 units (including our 3 newbuilds) were built from 2010 onwards,
13 units were built between 2000 and 2009 and the remaining 10 were
built in the late 1990s. This is a balanced portfolio.
The outcome of the inspections of our ships by
oil companies ("vetting") reflects the good quality of our
fleet.
NAT has 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
4Q2017 was an important quarter for NAT with the
first major steps in the recapitalization program being
completed.
During the quarter NAT announced the full
financing of its three newbuilds to be delivered in June, August
and October 2018. The financing was completed with Ocean Yield ASA
at the end of November 2017, on attractive terms.
Our net debt at year end 2017 stood at a
conservative $8.4 million per vessel and is among the lowest in the
industry. Our existing Revolving Credit Facility (RCF) dates back
to 2004, when we only had 4 vessels in our fleet. This facility has
become "outdated" and is getting restrictive on our business. The
objective is to retire the existing RCF and replace it with a new
and smaller facility, in combination with other financing. As part
of this plan we raised $110 million in new equity on the 12th of
December 2017.
We plan that the recapitalization program shall
be finalized by the end of 2Q2018, at the latest. When the
recapitalization is completed, the financial flexibility is greatly
enhanced.
As per 31st December 2017 we were in compliance with all
financial covenants. Recent volatility in the financial equity
markets can impact financial covenants.
Dividend
For 4Q2017 a cash dividend of $0.03 per share
has been declared. NAT has a policy to maximize dividend
payments within a framework of a conservative attitude. Payment of
the dividend is expected to be on or about March 9, 2018, to
shareholders of record on February 21, 2018.
In an improved tanker market, higher dividends
can be expected.
Nordic American Offshore Ltd. (NYSE:
NAO)
NAT owns 16.1% of Nordic American Offshore Ltd.
and the NAT Chairman & CEO and his immediate family own 13.4%
of NAO. NAO owns 10 PSVs (Platform Supply Vessels).
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.
Recent upbeat macroeconomic data released by the International
Monetary Fund in Washington, are giving further positive signals
for the world economy and consequently the NAT 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 tankers) counts 493 vessels at the end of 4Q2017, following
an increase of 5 vessels in the quarter. The total delivery during
2017 was 50 units. 2017 represented a peak year for deliveries. For
2018 we expect 33 vessels, and in 2019 we see 14 vessels for
delivery.
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 33 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/2168042/834731.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: |
|
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] Net Debt is working capital, less long-term debt,
adjusted for deposits paid for the three newbuilds, divided by 30
vessels
[2] 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 Net Operating Earnings (Loss)
to Adjusted Net Operating Earnings (Loss)
Attachments:
http://www.globenewswire.com/NewsRoom/AttachmentNg/b8619f64-0568-4fd2-8b1f-49a5853f92f4
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