Report for the 4th Quarter 2009. Announces Dividend for the 50th Consecutive Quarter. No Change to Dividend Policy. The fleet has expanded to 18 units. Further vessel acquisitions under planning.
(Thomson Reuters ONE) - 4th Quarter 2009 Results:http://hugin.info/201/R/1384019/342816.pdfHamilton, Bermuda, February 12, 2010On or about March 5th NAT will pay a dividend for the 50th consecutive quartersince the first three vessels were delivered to the Company in the autumn of1997 when the Company commenced operations. Including the dividend for 4Q09 thetotal dividend payment amounts to $40.14 per share. Following a strengthening ofthe spot market the dividend for 4Q09 was $0.25 per share compared to $0.10 for3Q09.Some salient points of this report are as follows: * The level of the spot tanker market was higher during 4Q09 than during 3Q09. The spot tanker market for the 1Q10 has started on a positive note compared with 4Q09. There are indications that the world economy has bottomed out which is positive for the tanker business. * Earnings per share in 4Q09 was -$0.10 as against -$0.28 in 3Q09. Dividend per share was $0.25 in 4Q09 compared to $0.10 during 3Q09. * On October 5th 2009, the Company announced that it had agreed to acquire a 2002-built double hull suezmax tanker which was delivered to the Company November 17th 2009. * On November 8th the Company announced that it had agreed to acquire an additional double hull suezmax tanker which we expect will be delivered to the Company by the end of February 2010. * On January 22nd 2010 we priced a follow-on offering which is expected to enable the Company to increase its fleet and the dividend capacity. The proceeds to the Company from the follow-on offering was $137m before cash offering costs. * The Company has no net debtOperating its fleet in the spot market, except for one vessel, the Company is ina position to reap the benefits of a potential upswing in the tanker market.During 2009, NAT agreed to acquire four vessels. Three of those vessels havebeen delivered to the Company and the fourth vessel is scheduled to be deliveredby the end of February 2010. The acquisitions are accretive, and are alsoincreasing the dividend potential of the Company. The acquisitions have improvedour position relative to competitors who, in our view, have had a tough time incoping with the consequences of the international financial crisis.We have two newbuildings coming in 2010, bringing the trading fleet to 18vessels.As in the past, in order to create value for shareholders, the fleet must growfaster than the share count over time. As an example, the follow-on offeringwhich was closed January 27, 2010 increased the Company's share count by about10%. This will enable the Company to increase its fleet by about 22%, assumingan increase from 18 to 22 vessels. This is an example of accretion whilerecognizing that the net debt is expected to be slightly higher after suchprospective acquisitions.Typically, our dividend follows the level of the spot suezmax tanker freightmarket. That is why our dividend was higher in 4Q09 than in 3Q09. Generally,when spot rates in the suezmax freight market increase, our dividend can beexpected to increase. Therefore, the Company has the full upside associated witha market improvement. Going forward, we expect that spot suezmax freight ratesmay fluctuate in an unpredictable manner.The present instability in the financial markets is posing serious issues fordebt-laden shipping companies. Some of them have suspended dividends or changedtheir dividend policy and they have had to negotiate new terms with the banks. NAT is staying its course in this environment - having no net debt. We goforward with a view to preserving what we consider the strong financialsituation of the Company - both in absolute and relative terms - as we believethat is in the best interests of our shareholders.Our primary objective is to maximize total return[1] to our shareholders,including maximizing our quarterly cash dividend.The Company does not engage in any type of derivatives.After adjusting for non-recurring charges in 4Q09, net income from continuingoperations was -$0.06 per share. The spot tanker market for suezmax vessels in2010 has started out well above the level we saw in 4Q09.In 4Q09 total off-hire (time out of service) for the Company's fleet was about64 days of which planned off-hire was about 40 days. In 2010 one vessel isscheduled for dry-docking which we expect will take place in the first quarter.Financial Information:The Board has declared a dividend of $0.25 per share to shareholders on recordas of February 23, 2010 for 4Q09. A dividend of $0.10 per share was declared for3Q09. The amount of dividends per share is above all a reflection of the levelof the spot tanker market during the relevant quarter and the number of sharesoutstanding. The number of shares outstanding for the fourth quarter of 2009 was42,204,904. After the follow-on offering in January this year the number ofoutstanding shares is 46,898,782.Net income for 4Q09 was -$4.3m, or -$0.10 per share (EPS), compared to netincome of -$11.8 million or -$0.28 per share for 3Q09. One-time charges in 4Q09are $1.7m or $0.04 per share. Therefore, income from ongoing operations was-$0.06 per share.Reflecting a stronger spot market in the quarter, the Company's operating cashflow[2] was $10.5m for 4Q09, compared to $3.8 million for 3Q09.The follow-on offering of 4.6 million shares which was priced January 22nd andclosed January 27th produced proceeds of $137 million before cash offeringcosts. This offering will enable the Company to acquire more vessels withoutgoing to the equity market.We consider our general and administrative costs per day per ship to be at a lowlevel. We also continue to concentrate on keeping our vessel operating costslow, while always maintaining our commitment to safe vessel operations.We estimate that our average cash breakeven level for our fleet is below $10,000per day per vessel. When the freight market is above this level, the Company canbe expected to pay a dividend. The breakeven rate is the amount of average dailyrevenues our vessels would need to earn in the spot market in order to cover ourvessel operating expenses, voyage expenses, if any, cash general andadministrative expenses, interest expense and other financial charges.At the time of this report, the Company has no net debt and has an undrawnrevolving credit facility of $500 million. The credit facility, which matures inSeptember 2013, is not subject to reduction by the lenders and there is noobligation to repay principal during the term of the facility. The Company paysinterest only on drawn amounts and a commitment fee for undrawn amounts.For further details on our financial position and for other periods such as4Q08 and for the twelve months ended December 31, 2009 and December 31, 2008,please see later in this release.The Fleet:With the delivery of the Nordic Mistral in November 2009 and the vessel expectedto be delivered to us by the end of February 2010 the Company will have 16trading vessels.By way of comparison, in the autumn of 2004 the Company had three vessels; atthe end of 2005 the Company had eight vessels; and at the end of 2006 theCompany had 12 vessels. During 2Q09, we had 13 vessels in operation. With thetwo newbuildings announced in November 2007 and the most recent acquisitions,the Company is expected to have a fleet of 18 vessels later in 2010, assuming nofurther acquisitions in the meantime. Please see fleet list below. We expectthat further vessels will be added to our fleet in the foreseeable future. Vessel Dwt Employment Gulf Scandic 151,475 Fixed charter until November 2010 Nordic Hawk 151,475 Spot Nordic Hunter 151,400 Spot Nordic Voyager 149,591 Spot Nordic Fighter 153,328 Spot Nordic Freedom 163,455 Spot Nordic Discovery 153,328 Spot Nordic Saturn 157,332 Spot Nordic Jupiter 157,411 Spot Nordic Cosmos 159,998 Spot Nordic Moon 159,999 Spot Nordic Apollo 159,999 Spot Nordic Sprite 147,188 Spot Nordic Grace 149,921 Spot Nordic Mistral 164,236 Spot Nordic Passat 164,274 Delivery expected by end February 2010 Nordic Galaxy 163,000 Delivery expected by end June 2010 Nordic Vega 163,000 Delivery expected by end September 2010 Total 2,820,410No scheduled dry-dockings were undertaken during 4Q09 except for one vessel thatunderwent ballast tank maintenance work at a Chinese yard. Typically, this typeof work is often carried through while the vessels are trading or during planneddrydockings of vessels. However, because of the low tanker market last Octoberwe decided to do the work at a shipyard with very good results. In 1Q10, onedry-docking is expected to take place. During 4Q09, we had in total 24 days ofunplanned off-hire and 40 days of planned off-hire (tank maintenance work) forour fleet.Financial Instability and the Tanker Market:In our quarterly reports to shareholders we have often stressed the significanceof the development of the world economy for the tanker industry. Presently,there are some bright spots on the horizon for the world economy. The decreasein exports of oil from OPEC to the West seems to have bottomed out. We considerthis to be good news for the tanker markets.For NAT, an improved freight tanker market can be expected to result in a higherdividend. However, as a matter of policy the Company does not predict futurespot rates.The recession is reducing the demand for transportation capacityinternationally. The demand side for tankers to some extent continues to beimpacted positively by the use of tankers for storage.On the supply side, we now see clearly that the current financial situation formany shipping companies has led to delayed deliveries of newbuildings and tocancellation of newbuilding orders.The average daily rate for our spot vessels was $18,700 per day net to us during4Q09 compared with $14,075 per day for 3Q09 after adjustment of one time chargesand accounting for lost time.Spot market rates for suezmax tankers are very volatile. The average spot marketrate for modern suezmax tankers as reported by Imarex was $23,682 per day in4Q09 compared to $13,012 per day during 3Q09. The average Imarex rate so far in1Q10 is $41,592 per day.The graph shows the average yearly spot rates since 2000 as reported by R.S.Platou Economic Research a.s. The rates as reported by shipbrokers and byImarex may vary from the actual rates we achieve in the market.Strategy going forward:We believe that the operating model of the Company works to the benefit of ourshareholders.The serious financial turmoil may represent attractive opportunities for ourCompany.The Company has a sustainable strategy when the spot market is strong and alsoin a weaker market environment. Thus, the Company essentially has the followingstrategic position going forward: If the market is firm, very good results anddividend can be expected.In a weaker market, the dividend will be lower which is a minus. However, ifrates are down for a while, the Company is in a position to buy shipsinexpensively and accretively which is a plus. This plus can be expected to belarger than the minus. Several of our listed competitors have significant netdebt which could make it difficult for them to buy vessels in a weak market. Inthis way, the Company has covered both scenarios.Our policy is to grow when it is profitable and accretive to do so; that is,after an acquisition of vessels or other forms of expansion, the Company shouldbe able pay a higher dividend per share and produce higher earnings per sharethan had such an acquisition not taken place. We believe that the acquisitionsthis past year are examples of such accretive transactions.We believe that our full dividend payout policy will continue to enable us toachieve a competitive cash yield compared with that of other shipping companies.We encourage investors wishing to have exposure to the tanker sector to assessour model and invest in our Company.In the midst of the international financial instability, our Company is wellpositioned. To the best of our ability we shall endeavor to safeguard andfurther strengthen this position. * * * * *[1] Total Return is defined as stock price plus dividends, assuming dividendsare reinvested in the stock[2] Operating cash flow is a non-GAAP number. Please see later in thisannouncement for a reconciliation of operating cash flow to income from vesseloperations. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTSMatters discussed in this press release may constitute forward-lookingstatements. The Private Securities Litigation Reform Act of 1995 provides safeharbor protections for forward-looking statements in order to encouragecompanies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives,goals, strategies, future events or performance, and underlying assumptions andother statements, which are other than statements of historical facts.The Company desires to take advantage of the safe harbor provisions of thePrivate Securities Litigation Reform Act of 1995 and is including thiscautionary statement in connection with this safe harbor legislation. The words"believe," "anticipate," "intend," "estimate," "forecast," "project," "plan,""potential," "may," "should," "expect," "pending" and similar expressionsidentify forward-looking statements.The forward-looking statements in this press release are based upon variousassumptions, many of which are based, in turn, upon further assumptions,including without limitation, our management's examination of historicaloperating trends, data contained in our records and other data available fromthird parties. Although we believe that these assumptions were reasonable whenmade, because these assumptions are inherently subject to significantuncertainties and contingencies which are difficult or impossible to predict andare beyond our control, we cannot assure you that we will achieve or accomplishthese expectations, beliefs or projections. We undertake no obligation toupdate 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 differmaterially from those discussed in the forward-looking statements include thestrength of world economies and currencies, general market conditions, includingfluctuations in charter rates and vessel values, changes in demand in the tankermarket, as a result of changes in OPEC's petroleum production levels and worldwide oil consumption and storage, changes in our operating expenses, includingbunker prices, drydocking and insurance costs, the market for our vessels,availability of financing and refinancing, changes in governmental rules andregulations or actions taken by regulatory authorities, potential liability frompending or future litigation, general domestic and international politicalconditions, potential disruption of shipping routes due to accidents orpolitical events, vessels breakdowns and instances of off-hire, failure on thepart of a seller to complete a sale to us and other important factors describedfrom time to time in the reports filed by the Company with the Securities andExchange Commission, including the prospectus and related prospectus supplement,our Annual Report on Form 20-F, and our Reports on Form 6-K.Contacts:Scandic American Shipping LtdManager for:Nordic American Tanker ShippingLimitedP.O Box 56, 3201 Sandefjord, NorwayTel: + 47 33 42 73 00 E-mail: nat(at)scandicamerican.com
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Datum: 12.02.2010 - 12:58 Uhr
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