Nordic American Tankers Announces 1st Quarter 2019 Results

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(Image Courtesy: Nordic American Tankers Limited)

Nordic American Tankers today announced the company’s first quarter 2019 report. NAT in its report stated that it is all set for a strong start to a ‘promising year’.

The highlights of NAT’s first quarter results are as follows:

  1. 1Q2019 WAS A BUSY QUARTER AND ALSO SAW THE BEST RESULT FOR NAT SINCE 2Q2016
  2. THE TCE (TIME CHARTER EQUIVALENT) FOR OUR VESSELS IN 1Q2019 SAW AN IMPROVEMENT OF 30% FROM THE PREVIOUS QUARTER AND CAME IN AT AN AVERAGE OF $26,025 PER DAY PER SHIP COMPARED TO $20,100 IN 4Q2018.
  3. THE NET PROFIT FOR 1Q2019, (AFTER DEPRECIATION, G&A AND FINANCE CHARGES) TOTALED $5.6 MILLION COMPARED TO A NET LOSS OF $10.5 MILLION IN 4Q2018 AND A NET LOSS OF $19.7 MILLION IN 1Q2018. THIS WAS $16.1 MILLION BETTER THAN THE PREVIOUS QUARTER AND $25.3 MILLION BETTER THAN SAME QUARTER LAST YEAR.
  4. THE NET OPERATING EARNINGS IMPROVED BY $12.9 MILLION FROM THE PREVIOUS QUARTER TOTALING $18.3 MILLION FOR 1Q2019 COMPARED TO $5.4 MILLION IN 4Q2018.
  5. A BETTER REFLECTION OF THE COMPANY’S CASH GENERATION, THE ADJUSTED NET OPERATING EARNINGS[1] WAS $34.3 MILLION FOR 1Q2019 COMPARED TO $23.6 MILLION IN 4Q2018 AND $4.4 MILLION IN 1Q2018. 1Q2019 WAS $10.7 MILLION BETTER THAN THE PREVIOUS QUARTER AND $29.9 MILLION BETTER THAN THE SAME QUARTER LAST YEAR.
  6. NAT MADE NET CASH REPAYMENTS OF OUR DEBT OF $17.7 MILLION DURING THE QUARTER AND OUR NET DEBT AT MARCH 31, 2019 STOOD AT $341 MILLION EQUAL TO $14.8 MILLION PER VESSEL.

NAT Fleet

NAT’s fleet consists of 23 well maintained Suezmax tankers with an aggregate cargo capacity of 23 million barrels of crude oil. The average age of the fleet is about 11 years; 10 units were built from 2010 onwards, 13 units were built between 2000 and 2009. NAT has one of the largest fleet of Suezmax tankers in the world.

Financing

NAT’s fleet is financed through two financing arrangements; the $306 million 5-year senior secured credit agreement with CLMG Corp., funded by Beal Bank of Dallas, Texas and the Ocean Yield financing for its 3 vessels delivered last year.

Both financing arrangements contain an element of down-payment that will reduce our debt going forward, while still maintaining our flexibility to distribute generous dividends in improving tanker markets. 

“The debt level of NAT has always been among the lowest in the industry. The NAT board has focus on further reducing the debt to a level that NAT maintained a few years ago. We made net cash repayments of our debt of $17.7 million during the quarter and our net debt at March 31, 2019 stood at $341 million equal to $14.8 million per vessel,” the company said.

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. 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 & Jones Act tankers) counts 514 vessels at the end of 1Q2019. The total delivery during 2018 was 28 vessels.  For 2019 we expect a similar number of vessels as in 2018, and in 2020 we currently see 22 vessels scheduled for delivery. During 2018, 21 Suezmax vessels were scrapped.

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.

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,” the company added.

Sea News, May 15