Nordic American Tankers Ltd (NYSE: NAT) – Third quarter 2021. Third quarter touched the bottom. The tide has now turned.

Rhea-AI Summary

Nordic American Tankers (NAT) recently published its 3Q 2021 report, revealing a net loss of $44.7 million, or EPS of -$0.27. Despite a decline in average time charter equivalent (TCE) earnings to $5,800/day from $7,800 in 2Q 2021, the company has secured long-term contracts for four vessels at rates over $20,000/day. The company aims to reduce its $259.6 million net debt and announced a dividend of $0.01 per share, marking its 97th consecutive payment. Global oil demand is nearing pre-pandemic levels, potentially benefiting NAT's operations.

Positive

• Secured long-term contracts for four vessels at rates above $20,000/day, providing revenue stability.
• Asset values for newbuildings increased to approximately $70 million each from $55 million.
• Plans to reduce net debt from $259.6 million, aiming for debt-free status.

Negative

• Reported a significant net loss of $44.7 million for 3Q 2021.
• Average time charter equivalent earnings fell to $5,800/day, substantially below historical averages.

Wednesday, November 24, 2021 

Dear Shareholders and Investors, 

 

Please see HIGHLIGHTS and enclosed 3Q 2021 report below.

 

HIGHLIGHTS: 

 

1. There is so much confusing day-to-day noise in the markets about oil and gas prices that we think many investors have decided to steer clear of the tanker sector entirely. All markets are volatile, and as history has shown volatility can be our friend when rates rise suddenly and the company’s stock price benefits. We firmly believe that successful investors buy quality companies and profit handsomely when the tide turns.
   
   
2. A main feature of the NAT strategy is that NAT has suezmaxes only. No other public company has this feature. Asset values continue to rise.
   
   
3. The International Energy Agency in Paris confirms that global oil demand is nearing pre-pandemic levels of early 2020 and more importantly, oil supply is now rising fast. This is good news for the NAT suezmaxes and provide confidence that a turn-around for the NAT fleet is getting closer by the day.
   
   
4. During recent months we have secured term contracts with prompt delivery for six months or longer at rates above $20,000/day or more for four of our vessels. The time charter rates for these ships were substantially higher than the spot market at the time and still are. These four contracts work as a hedge. Our fleet of 24 ships has significant upside.
   
   We undertook planned maintenance of three ships during 3Q 2021, withdrawing them from the market for a large part of the quarter.
   
   
5. On November 5, 2021 the “Nordic Sirius” was delivered to new owners. The price to us was between $14 – 15 million. After the transaction our fleet counts 24 units, including 2 newbuildings. The estimated value for our two newbuildings is now about $70 million per ship. They were ordered at about $55 million per ship.
   
   
6. The proceeds from the above mentioned sale has been used to pay down part of our $306 million senior secured facility with CLMG/Beal Bank of Texas. The company’s total net debt per 3Q 2021 is $259.6 million or $11.8 million per vessel (based on 22 ships). Our objective is to become debt free.
   
   
7. The pandemic has lasted longer than we anticipated at the outset in early 2020. The third quarter of 2021 was the low point. The average time charter equivalent (TCE) for our active fleet during 3Q 2021 came in at $5,800 per day per ship – this was down from 2Q 2021 at $7,800 per day. NAT is through the low point. The average earnings for a Suezmax tanker for the last 30 years has been close to $30,000 per day per ship.
   
   
8. The third quarter of 2021 produced a net loss of -$44.7 million or a earnings per share (EPS) of -$0.27. Adjusted for an impairment of $8.4 million (non-cash) the net loss was -$36.3 million and adjusted EPS of -$0.22. This compares to the previous quarter, that came in at a net loss of -$28.7 million or an EPS of -$0.18.
   
   
9. Dividend is a priority for NAT and a reflection of our earnings. The dividend for 3Q 2021 is 1 cent ($0.01) per share, payable on Tuesday December 21, 2021, to shareholders on record Tuesday December 7, 2021. This is our 97th consecutive quarterly dividend payment. When earnings improve, higher dividends will be distributed.
   
   
10. We have an excellent vetting record on our vessels, perhaps the best sign of a tanker company’s reliability. Vetting is the scorecard provided by our customers.
    
    NAT has sound corporate governance principles. The Company has zero tolerance for corruption. Our policy is to underpromise and overdeliver.
    
    
11. Financial information for the third quarter of 2021 and for other periods is included later in the report - see link below.

 

Sincerely,

Herbjorn Hansson
Founder, Chairman & CEO

Nordic American Tankers Ltd.                                                           www.nat.bm  

  

 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 worldwide 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.

NAT is a Bermuda based company.

 

Contacts:       

Gary J. Wolfe
Seward & Kissel LLP
New York, USA
Tel: +1 212 574 1223

Bjørn Giæver, CFO                                                             
Nordic American Tankers Ltd                                             
Tel: +1 888 755 8391 or +47 91 35 00 91                                 

Herbjørn Hansson, Founder, Chairman & CEO
Nordic American Tankers Ltd
Tel: +1 866 805 9504

Attachment

• NAT 3Q2021 report

FAQ

What were Nordic American Tankers' financial results for 3Q 2021?

Nordic American Tankers reported a net loss of $44.7 million, equating to an EPS of -$0.27.

What is the current dividend for NAT shareholders?

NAT declared a dividend of $0.01 per share, payable on December 21, 2021.

How has NAT's fleet value changed recently?

The estimated value of NAT's two newbuildings has risen to about $70 million each.

What is the average time charter equivalent for NAT in 3Q 2021?

The average TCE for NAT's fleet was $5,800 per day in 3Q 2021.

What is the outlook for NAT based on oil demand trends?

Global oil demand is nearing pre-pandemic levels, which may positively impact NAT's fleet operations.