Hamilton Bermuda, November 12, 2018
Highlights:
-
As we had expected, the first
half of this year saw the bottom of the tanker market. Our
predictions that freight rates for our vessels would rise during
the second half of 2018 proved correct.
-
At this time spot contract
indexes for two out of five suezmax routes for our one million
barrel tankers are above $50,000 per day, compared with the
first 9 months of 2018, when the freight indexes showed about
$6,000 per day. This is a good illustration of the volatility
in freight rates and the potential for earnings in the tanker
industry when the tanker market turns. We believe there could
be much more to come.
-
We declared $0.01 per share in
dividend for the 3rd quarter on
November 1, 2018. This is a reflection of the low market and
the subsequent low cash flow during the third quarter of 2018. This
is our 85th consecutive
quarterly dividend distribution, a record unparalleled in the
tanker industry. We assure shareholders of our commitment to
pay dividends going forward.
-
The time charter equivalent for
our vessels during 3Q2018 was $12,000 per day per ship. In
2Q2018 it was $10,500 per day per vessel. Going forward, much
higher rates can be expected.
-
During the third quarter we
took delivery of two of our three newbuildings, while the third
vessel was delivered to us on October 25, 2018. All three vessels
were delivered from a top yard in South Korea, on time and on
budget. The adjustments to the fleet have reduced the average age
of our fleet.
-
NAT Net Loss for 3Q2018 (after
depreciation, G&A and finance charges) came in at -$38M,
including a non-recurring charge of $12.7M. Net Loss for 2Q2018 was
-$27.2M. NAT Net Operating Loss for 3Q2018 came in at -$15.3M
against -$17.5 in 2Q2018. A better reflection of the performance
for the quarter, the Adjusted Net Operating Earnings*, came in at
$2.1M for 3Q2018, against $0.8M in 2Q 2018.
-
Our Net Debt** at the end of
3Q2018 stood at about $313M for the fleet, equaling about $13.0M
per vessel, which is attractive. Our net debt per vessel is among
the lowest among publicly traded tanker companies and we will work
to secure a financial structure in which NAT has no net debt as was
the case earlier.
-
Later in
this report we have included financial information for 3Q2018
and for other periods.
* Adjusted Net
Operating Earnings (Loss) represents Net Operating Earnings or Loss
before depreciation, impairment, disposal of vessels (gain/loss)
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
long term debt, less net working capital and deposit paid for
newbuilding, divided by 24 vessels.
Our Fleet
We have sold 8 suezmax vessels
during the summer of 2018. Two of these vessels were delivered to
their new owners at the end 2Q2018 and the remaining 6 were
delivered to their respective owners during 3Q2018. The Net Loss
from sale of vessels was limited to $-1.6M in 3Q2018. Our fleet at
the time of this report consist of 25 vessels.
Now NAT has 10 vessels built
between 2010 and 2018, 13 vessels built from 2000 through 2009 and
2 vessels built in the late 1990s. The average age of our fleet has
come down to about 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.
The inspections of our ships by
oil companies ("vetting") continue to reflect the excellent quality
of our fleet.
Financing
Our Net Debt at 3Q2018 after
delivery of two of our three new additions to the fleet stood at
$13.0M per vessel which is among the lowest in the industry. **
The Company decided not to pursue
a bond offering earlier this year as it was not considered in the
best interest of NAT. The decision was well received. The Back-stop
facility with its associated terms, has been cancelled. The costs
associated with the establishment of the Back-stop facility, paid
last year, has consequently been expensed in full this quarter (no
cash-effect).
Important uncertainty has been
removed with the strong tanker market.
As in the past, it is an objective
to keep debt low. We wish to come back to the financial position
about 10 years ago when NAT did not have any net debt.
Dividend
For 3Q2018 a cash dividend of
$0.01 per share has been declared. NAT has a policy to
maximize dividend payments. Payment of the dividend is expected to
be on or about December 7, 2018, to shareholders of record on
November 21, 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 497 vessels at the end of
3Q2018. For the remainder of 2018 we expect 11 vessels, and in 2019
and 2020 we see 20 and 7 vessels for delivery,
respectively.
20 vessels have been disposed during 2018, compared to 17 vessels
in 2017.
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 pay a higher dividend in a strong tanker
market that we see now.
Our fleet of 25 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.
* * * * *
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. 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 |
|
Press release (PDF)
This
announcement is distributed by West Corporation on behalf of West
Corporation 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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