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 |
|
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