Nordic American Tankers Limited (NYSE:NAT) - Letter to Shareholders from the Chairman & CEO on the Tanker Market and the Way Forward.
(Thomson Reuters ONE) -
Hamilton, Bermuda, April 5, 2016
Dear Shareholder,
Nordic American Tankers continues to build on its strengths. 2015 was a great
year for NAT, with the highest operating cash flow since we started in 1997. We
achieved about $212 million in cash flow, or about one sixth of our current
market cap. NAT is in a solid financial position, we have a strong balance sheet
and we are positioning ourselves to grow and refresh the fleet.
We recently released our annual report for 2015 on Form 20-F. As with everything
else at NAT, we try to keep our report simple and transparent. I would urge
those with an interest in our company to read the report, since it contains far
more information than we can include in our regular updates. Please
see www.nat.bm for the report.
We have not conducted equity offerings in the past two years. During this
period we have strengthened our position and the stock price has moved up.
Further expansion will be more profitable to our shareholders when the time is
right for new acquisitions.
The current fleet counts 26 vessels, including two newbuildings to be delivered
in August this year and January 2017. These vessels will be funded via internal
NAT resources. We are constantly assessing vessels offered to us, and you can
rest assured we only move to grow when we feel the time is right. Our management
does not have a fee incentive to grow indiscriminately. Some companies engage in
such practices but at NAT we have always felt such conduct causes a misalignment
between management and shareholders.
In the coming weeks we will release dividend information for the first quarter
2016. Dividends are a core part of the NAT strategy. We have paid dividends for
the past 74 quarters and we aim at paying out many more dividends in the years
to come. Our dividend policy has always been to have a floating dividend
reflecting the performance of the company in the volatile shipping market.
Nordic American is proud to have an outstanding Board of Directors who determine
the level of the dividend on a quarterly basis depending on our situation and
our needs going forward, but with a focus on maximizing total return to
shareholders. The facts speak for themselves, since we have created more
shareholder value over time than any other company in the tanker industry.
Since the summer of 2014, the price of oil has dropped significantly. Many
investors think this is bad news for the energy sector. We are not in the energy
sector - a distinction that sometimes appears lost for investors who are looking
at dozens or even hundreds of companies.
Investors must ask themselves "Why is the oil price low?" The simple answer is
that there is too much oil. When there is too much oil, it must be shipped or
stored, creating demand for oil tankers which is one key to understanding the
strong results achieved in 2015.
We believe that some of the concern shown by investors revolves around what
happens if the price of oil rebounds. A production cut seems unlikely at this
point, and the driver behind an oil price recovery will be the growth in demand
that we are seeing. This in turn keeps tanker demand high. It is true that the
number of ships is expected to increase over the next couple of years. There is
still plenty of work for tankers and the entry of new vessels into the fleet
does not alter our general belief that the fundamentals remain positive going
forward.
NAT has a cash break-even level of less than $12,000 a day per ship. This tells
two stories. The first is that we are highly cost efficient and our solid
balance sheet keeps interest payments to a minimum. The second is that our model
is strong enough to sustain the volatility of the business we are in. Many
others failed to take this into consideration and shareholders in such companies
got badly hurt during weak tanker markets.
We are not concerned with discussions surrounding the age of some of our
vessels. We are not in the business of constantly acquiring shiny new
toys, because that really is not in the interest of shareholders. It is the
difference between owning and maintaining a durable and dependable car and
buying a new car every year just for the sake of showing off the latest model to
your neighbors. Making money and generating returns, however, is what we always
focus on. The question of age is brought up by those people who have never owned
or operated a tanker.
It's a simple choice for us. We could sell two or three older tankers and use
the proceeds to buy a new shiny one, which may earn a little more in the spot
market. The problem is that we then have one ship instead of two or three. As
the market stands today, and given the quality of our vessels and our
relationships with our customers, there is nothing to suggest this would be
right for our shareholders.
There is a point where the vessels become too costly to maintain or unattractive
to customers, but that is not the reality we are dealing with. When considering
an expansion, we always consider the expected lifetime return or unlevered
IRR (Internal Rate of Return) of that ship. Sometimes markets are such that it
would make sense to order a new ship from a shipyard, but that is not the
situation we face today.
I hope that this letter serves to help investors better appreciate our thinking.
Sometimes we have been told we are doing things wrong, uttered by people who in
no quantifiable way are doing it better. Facts are facts, and the facts say we
are the best in our industry when it comes to return on your investment.
I would like to personally thank all those investors who support us and take the
time to write to us with their questions and feedback. Shareholder communication
is an important part of what we do, and as always I welcome your comments at
herbjorn.hansson(at)scandicamerican.com
Kind regards,
Herbjorn Hansson
Chairman & CEO
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 world
wide 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:
Herbjørn Hansson, Chairman & CEO
Nordic American Tankers Limited
Tel: +1 866 805 9504 or +47 90 14 62 91
Gary J. Wolfe
Seward & Kissel LLP, New York, USA
Tel: +1 212 574 1223
Web-site: www.nat.bm
Press Release (PDF):
http://hugin.info/201/R/2000565/738067.pdf
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Nordic American Tankers Limited via GlobeNewswire
[HUG#2000565]
Unternehmensinformation / Kurzprofil:
Datum: 05.04.2016 - 11:35 Uhr
Sprache: Deutsch
News-ID 461845
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contact information:
Town:
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