Nordic American Tankers Ltd. (NAT) on Monday reported first-quarter earnings of $29.3 million.
The Hamilton Hm 11, Bermuda-based company said it had net income of 33 cents per share. The tanker company posted revenue of $76.7 million in the period.
First-quarter spot earnings averaging about $36,000 per day generated operating cashflow of $55.9m.
The Company will have a fleet of 30 vessels of which two are under construction. By way of comparison, in the autumn of 2004, the Company had three vessels.
A company announcement read:
The Company declared a cash dividend of $0.43 on April 25, 2016, which is expected to be paid about May 27, 2016 to shareholders of record as of May 12, 2016. The number of NAT shares outstanding at the time of this report is 89,319,666. At this time the market capitalization of NAT is about $1.3 billion.
The Company’s operating cash flow in 1Q2016 was $55.9m. In 4Q2015 and 1Q2015 operating cash flow was $57.2m and $51.0m, respectively.
Earnings per share (EPS) in 1Q2016were $0.33. In 4Q2015 and 1Q2015 the EPS were $0.34 and $0.31, respectively. EPS does not take into account risk and as such, it could be a deceptive measure.
We had a total of 46 days offhire during the quarter, of which 28 days were planned offhire, related to a drydocking which commenced in December 2015. Of the 18 days of unplanned offhire, six days were due to technical reasons. The offhire includes positioning time to and from the ship yard. For the rest of 2016 eight vessels are expected to undergo drydocking.
As a matter of policy and in particular because of high volatility in the tanker market, NAT maintains a strong balance sheet with low net debt and is focusing on keeping low financial risk. At the end of 1Q2016, the Company had net debt of about $232m or about $8.9m per vessel.
During 2015 and into 2016, the Company had significantly stronger cashflow than during the preceding years. Liquidity in the stock is high compared with other tanker companies.
The Company has in place a non-amortizing credit facility of $500m maturing in December 2020, of which $315m has been drawn at the time of this report, and cash on hand is about$66m. Net working capital and undrawn amounts of the credit facility amount to about $282m.
World Economy and the Tanker Market
The development of the world economy affects the tanker industry. Seaborne imports of crude oil into the US have increased over the recent past. Imports to the Far Eastare steadily increasing. A low oil price is stimulating the world economy which is positive for the tanker market.
The Suezmax fleet (excl. shuttle tankers) counts 458 vessels at the end of 1Q2016, following an increase of three vessels so far this year.
A number of orders have been placed with the shipbuilders in the past year. The current orderbook stands at 96 vessels from now to late 2017. This represents about 21% of the Suezmax fleet. In 2009, the orderbook was at over 50% of the existing fleet. At the time of this report, the orderbook for 2016 counts 37Suezmax vessels, with 32 vessels scheduled to be delivered in the second half of the year. However, we expect the real number of deliveries for 2016 to be lower.