Link to the complete 2nd Quarter 2018
report:
http://hugin.info/201/R/2210734/860760.pdf
Hamilton, Bermuda, August 14th
2018
Highlights:
-
On July 25, 2018, we announced
our 84th consecutive quarterly dividend ($0.02 per share). This is
an unparalleled dividend performance in the volatile tanker
industry. With improved market conditions, higher dividends can be
expected.
-
The time charter equivalent for
our vessels during 2Q2018 was $10,500 per day per ship.
In 1Q2018 it was $11,200 per day per vessel and in 2Q2017 it was
$16,100 per day per vessel.
-
In June we entered into a
3-year fixed time charter contract with a major energy company for
our second newbuilding for delivery in August this year. The
contract is expected to commence in the autumn of 2018 and has a
base rate of $21,000/day. Two optional periods at higher
rates could extend the TC contract into 2023.
-
Also in 2Q2018, spot market
rates were below our cash break even. We are well familiar with the
volatile nature of our business. We have seen in the past that
markets can turn quickly. We see a strengthening of the world
economy which is good for NAT. Ironically, political uncertainty
may also stimulate the tanker market. We are optimistic going
forward as NAT is well positioned when the tanker market
improves.
-
NAT Net Loss for 2Q2018 (after
depreciation, G&A and finance charges) came in at -$27.2M
against a Net Loss for 1Q2018 of -19.7M. A better reflection of the
performance for the quarter, the Adjusted Net Operating Earnings*,
came in at $0.8M for 2Q2018, down from $4.4M in 1Q 2018.
* 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)
** Net Debt is
working capital, less long-term debt, adjusted for deposits paid
for the three newbuilds, divided by 28 vessels
Our Fleet
As described in our Highlights, we
have sold altogether 8 Suezmax vessels during this summer. After
two of these vessels were delivered to their new owners, our fleet
at June 30, 2018 consisted of 28 well maintained Suezmax tankers
and 3 newbuildings to be delivered in the course of the next few
months.
After delivery of our 3
newbuildings and delivery of our sold vessels we will have 10
vessels built between 2010 and 2018, 13 vessels built from 2000
through 2009 and 2 vessels built at the turn of the century. The
average age of our fleet will after these adjustments be 11
years.
The above developments are several
of many important steps to renew and grow the NAT fleet in the
years to come. In a capital intensive industry like ours, timing
and financing are the key issues to achieve a sound capital
structure.
The outcome of the inspections of
our ships by oil companies ("vetting") continues to reflect the
excellent quality of our fleet.
Financing
Our net debt at 2Q2018 stood at a
conservative $7.3M per vessel which is among the lowest in the
industry. **
After cancelling the contemplated
bond issue we are assessing what financing will best suit our
company going forward. As in the past, it is an objective to keep
debt low.
Dividend
For 2Q2018 a cash dividend of
$0.02 per share has been declared. NAT has a policy to
maximize dividend payments. Payment of the dividend is expected to
be on or about September 7, 2018, to shareholders of record on
August 22, 2018.
In an improved tanker market,
higher dividends can be expected.
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 positive for the crude oil tanker business.
Recent macroeconomic data are giving further positive signals for
the world economy and consequently for NAT business. Major oil
companies and large oil traders are important for the tanker
industry. Uncertain political developments may in fact be
good.
The world Suezmax fleet (excluding
shuttle, product and Jones Act tankers) counts 495 vessels at the
end of 2Q2018. The total delivery during 2017 was 50 units. 2017
represented a peak year for deliveries. For 2018 we expect 27
vessels, and in 2019 and 2020 we see 17 and 2 vessels for delivery,
respectively.
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 are 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
The NAT strategy is built on
expanding and maintaining a homogenous and top quality fleet,
leveraging on our industry network and close customer
relationships.
A strong balance sheet, combined
with a homogenous fleet and economies of scale are giving a low
cash break-even level.
The NAT strategy is effective 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 28 more or less
identical vessels is a special feature of NAT that is particularly
valuable to our customers. (fleet count as per June 30, 2018)
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/2210734/860760.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 |
|
2nd Quarter 2018 Result
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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