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.
Wolfe
Seward & Kissel LLP
New York, USA
Tel: +1 212 574 1223
|
|
Bjørn
Giæver, CFO
Nordic American Tankers Limited
Tel: +1 888 755 8391 or +47 91 35 00 91
|
|
Herbjørn Hansson, Chairman & CEO
Nordic American Tankers Limited
Tel: +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)
Press release (PDF)
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 Tankers Limited via
Globenewswire
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