Nordic American Tankers' Declares 2Q Cash dividend

 

The second quarter 2015 produced better results than the first quarter 2015. So far in the third quarter, we have secured higher average rates than in the two preceding quarters of the year. In 2Q 2015, NAT continued to benefit from both a solid Suezmax tanker market and a top quality fleet (22 vessels in operation in 2Q 2015 and 4 vessels expected to be included later in 2015 and thereafter).

Cashflow from operations was $54.5m, compared with $51.0m in 1Q 2015. For all of 2014, cashflow from operations was $77.7m compared with -$11.1m in 2013.

For NAT shareholders, the significant liquidity in the stock continues to be an attractive factor for those investors looking to be able to buy and sell shares related to the crude tanker market. During 2Q 2015 more than 1.6 million shares were on average traded daily, equating to more than $20m worth of shares changing hands every day.

On July 15, 2015, NAT declared a cash dividend of $0.40 per share payable to shareholders of record as of July 29, 2015. The dividend is expected to be paid about August 12, 2015. Since NAT commenced operations in the fall of 1997, the Company has paid a dividend for 72 consecutive quarters, with total dividend payments over the period amounting to $46.16 per share, including the dividend to be paid
about August 12, 2015.

On July 27, 2015, NAT announced the acquisition of two Suezmax tankers. The vessels were built in 2010. The vessels are expected to join the fleet in September and October this year. The total price was about $122 million. NAT does not plan to issue equity to cover commitments for these vessels or its two newbuildings to be delivered in 2016 and 2017. This growth further enhances our dividend and earnings capacity.

During the last year, oil prices have decreased significantly. This has positively impacted the tanker market through increased transportation requirements and lower fuel costs.

Key points to consider:

 Tanker rates achieved on average for 2Q 2015 were about $38,800 per day per vessel for our trading fleet, as against $37,000 per day per vessel achieved in 1Q 2015 and $12,100 in 2Q 2014.

 Earnings per share in 2Q 2015 came to $0.35 compared with $0.31 for 1Q 2015 and -$0.19 for 2Q 2014.

 The balance sheet was strengthened in 2Q2015 as we retained about $19m of cashflow from operations during the quarter. The net operating cash flow itself would have allowed for $0.61 per
share in dividend based on a full payout of cash flow.

  * The undrawn part of our credit facility plus net working capital stood at about $338m at the end of 2Q 2015.
  * The two newbuildings for delivery August 2016 and January 2017 are on schedule
  * 13 vessels were vetted (inspected by clients) during 2Q2015. NAT came out with 3.3 observations on average, an excellent result, reflecting the top quality of our fleet.

Nordic American Tankers is very different from other tanker companies.
Nordic American Tankers has an operating model that is sustainable in both a weak and a strong tanker market. Accretive fleet growth, low net debt per vessel and quarterly dividend payments are central elements of the strategy. NAT has one type of vessel – the Suezmax vessel that can carry one million barrels of oil. A homogenous fleet reduces our operating costs, which is helping to keep our cash break even for NAT below $12,000 per day per vessel. Net asset value (NAV) is a measure that is linked to the steel value of each individual ship, which has no relevance when it comes to the valuation of the Nordic American Tankers as an ongoing business.

Financial Information

The Company declared a cash dividend of $0.40 on July 15, 2015, which is expected to be paid about August 12, 2015 to shareholders of record as of July 29, 2015. The number of NAT shares outstanding at the time of this report is 89,182,001. At the same time the market capitalization of NAT is about $1.3 billion. Quarterly dividend payments will continue to be a central part of our strategy.

The investment in NAO is accounted for using the equity method. This change, which is also reflected in the comparable figures, is due to our strategic long term view of our investment in NAO.

Earnings per share in 2Q 2015 was $0.35, compared with $0.31 for 1Q 2015 and -$0.19 for 2Q 2014.

The Company's operating cash flow in 2Q2015 was $54.5m, compared with $51.0m in 1Q 2015, and $4.3m in 2Q 2014.

The appreciation of USD vs NOK had a positive impact on NAT’s G&A cost, of which a substantial part is in Norwegian kroner.

We had a total of 81 days offhire during the quarter, of which 51 were related to drydockings. In 2015 we expect a total of six vessels to be drydocked; ie. three more vessels are scheduled to enter drydock later this year.

As a matter of policy, NAT keeps a strong balance sheet with low net debt and is focusing on keeping a low financial risk. At the end of 2Q2015 the Company had net debt of about $105m or about $4.4m per
vessel.