NAT Nordic American Tankers Limited

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Nordic American Tankers Limited (NYSE: NAT) – Report as per September 30, 2023
– The direction is up in a strong market

Wednesday, November 29, 2023

Highlights: 

Sincerely,

Herbjørn Hansson

founder, Chairman & CEO

Nordic American Tankers Ltd

Our Fleet

As of September 30, 2023 our fleet consisted of 19 well maintained Suezmax tankers with a cargo lifting capacity of 1 million barrels of oil each. We only have Suezmaxes in our fleet.

In the course of this coming week, we are scheduled to take delivery of one more vessel to our fleet. The 2016-, Hyundai-built suezmax tanker named “Nordic Hawk” will join and increase our fleet to 20 ships.

We take extra care to maintain our vessels to the highest standards for the safety of crew, cargo and the environment. The outcome of the inspections of our ships by oil companies (“vetting”) reflect the good quality and maintenance of our fleet.

NAT has one of the largest fleets of Suezmax tankers in the world. In a capital intensive industry like ours, careful maintenance of our ships and the timing & financing of expansion are key elements to ensure both our financial stability and our commitment to paying cash dividends.

Results for the third quarter and the first nine months of 2023

For the third quarter 2023, the net income was $7.5 million or an EPS of $0.04.

The first nine months of 2023 produced a Net income of $81.2 million. This is a $102.1 million improvement from the first nine months of 2022, that saw a Net loss of -$20.9 million.

The average time charter equivalent (TCE) for our fleet during the third quarter of 2023 came in at $31,235 per day per ship, up from the same quarter last year of $27,850 per day per vessel. The market has continued on a firm note although seasonal softness has been evident in both the second and third quarter of 2023. 73% of our spot voyage days in the fourth quarter 2023 have been booked at an average TCE of $43,160 per day per ship. This number is on a discharge-to-discharge basis. We currently have fifteen of our nineteen vessels in the spot market.

For detailed information about our statement of operations (P&L), balance sheet, cash flow and reconciliation of certain Non-GAAP financial measures, we refer to the tables on page 5 and 6 of this press release.

Financing

Our Net Debt (total liabilities less current assets) stood at $170.8 million, which equals $9 million per ship based on 19 vessels, as of September 30, 2023.

The details of our two financing arrangements are as follows;

The Beal/CLMG loan is after extention of final maturity with 12 months not presented as current in this report. Current portion of long term debt is now $25.9 million net of transaction costs.  $14.2 million is related to the Ocean Yield financing and $11.7 million is related to the Beal/CLMG financing. Restricted cash of $4.9 million is related to deposits held for future Drydockings of our vessels, in accordance with our borrowing agreement with Beal Bank/CLMG.

The new vessel, Nordic Hawk, to be delivered shortly, is financed through a financing arrangement with Ocean Yield. The arrangement is similar to the financing of the five vessels we already have in our fleet.

For the third quarter of 2023 a cash dividend of 6 cent ($0.06) per share has been declared. This is our 105^th consecutive quarterly dividend.

Payment of the dividend will be on January 17, 2024, to shareholders of record on December 20, 2023.  

World Economy and the Tanker Market

Oil demand continues to be strong and the higher interest rates has lowered inflation significantly in the US, while China seems prepared to do what it takes to keep its economy thrive. Political uncertainty has not eased since last quarter and we do not see this going away anytime soon. We continue to see high demand for oil,  a fragmented trade picture with logistical inefficiencies and a tight supply of ships. These are interesting dynamics for the NAT oil tankers. Seasonal variations will occur, but as we have seen so far this year, the trend supports future earnings at higher levels than in the past.

NAT in particular stands to benefit from the fact that the supply of Suezmax tankers will remain at historic low levels for at least the next two or three years. Environmental regulations, increased steel and production costs, and higher interest rates make investing in new ships quite challenging.

The world’s Suezmax fleet (excl. shuttle, product & Jones Act tankers) counted 579 vessels as of September 30, 2023. With a fairly high ordering activity during the quarter, the orderbook for Suezmax tankers now counts 56 vessels which equals 10% of the world’s conventional suezmax fleet spread over the next 4 years (The historic average for orderbook in percent of existing fleet is 20%).

Only four new vessels will enter the fleet in 2024, 26 in 2025, 21 in 2026 and the rest in 2027. The fleet growth for the coming three years is set to be very muted.

The available shipyard capacity for large oil tankers (Suezmax and VLCCs) has to a large extent been booked by larger container and gas ships, leaving very limited capacity to build additional Suezmax tankers with quality yards on this side of 2026.

This is very good news for the long term market dynamics in our industry and we could potentially see net negative fleet growth in the conventional suezmax market in the coming two to three years.

All of the above are good news for the short- and long term outlook for our tankers. It is anticipated that the tanker markets will continue strong in the coming years.

The supply of tanker tonnage is inelastic in the short-term. When there are too many ships in an area, rates tend to go down. When there is scarcity of ships, rates tend to go up. Short-term spot tanker rates may be expected to be volatile.

Corporate Governance/Conflict of Interests

It is vital to ensure that there is no conflict of interests among shareholders, management, affiliates and related parties. Interests must be aligned. From time to time in the shipping industry, we see that questionable transactions take place which are not in harmony with sound corporate governance principles, both as to transparency and related party aspects. We have zero tolerance for corruption.

Strategy Going Forward

The NAT strategy is built on expanding and maintaining a homogenous and top quality fleet, leveraging on our industry network and close customer relationships with major oil companies and oil traders.

We are a dividend company with the objective of having a strong balance sheet and low G&A costs, enabling us to distribute free cash flows to our shareholders.

In an improved market, higher dividends can be expected.

Our fleet of 20 more or less identical vessels, after the latest purchase, is a special feature of NAT that is particularly valuable to our customers.

NAT is firmly committed to protecting its underlying earnings and dividend potential. We shall safeguard and further strengthen this position in a deliberate, predictable and transparent way.

* * * * *

NORDIC AMERICAN TANKERS LIMITED
CONSOLIDATED CONDENSED STATEMENTS OF OPERATION (UNAUDITED)		Three Months Ended												Nine Months Ended
Amounts in USD '000		Sept. 30, 2023				Jun. 30, 2023				Sept. 30, 2022				Sept. 30, 2023				Sept. 30, 2022
Net Voyage Revenue			48,036				67,796				47,382				202,927				97,728
Vessel Operating Expenses			(14,607	)			(15,922	)			(14,829	)			(44,483	)			(48,212	)
Depreciation Expenses			(12,669	)			(12,726	)			(12,299	)			(38,119	)			(37,688	)
Gain on Disposal of Vessels			0				0				1,173				0				28
General and Administrative Expenses			(6,292	)			(5,002	)			(4,282	)			(17,034	)			(13,712	)
Operating Expenses			(33,568	)			(33,650	)			(30,237	)			(99,636	)			(99,584	)
Net Operating Income (Loss)			14,468				34,146				17,145				103,291				(1,856	)
Interest Income			604				352				98				1,260				115
Interest Expense			(7,556	)			(7,704	)			(7,278	)			(23,294	)			(19,008	)
Other Financial Income (Expenses)			(29	)			15				43				(49	)			(182	)
Total Other Expenses			(6,981	)			(7,337	)			(7,137	)			(22,083	)			(19,075	)
Net Income (Loss)			7,487				26,809				10,009				81,208				(20,931	)
Basic and Diluted Earnings (Loss) per Share			0.04				0.13				0.05				0.39				(0.10	)
Weighted Average Number of Common Shares Outstanding			208,796,444				208,796,444				206,904,866				208,796,444				199,705,596
Common Shares Outstanding			208,796,444				208,796,444				208,796,444				208,796,444				208,796,444

CONSOLIDATED CONDENSED BALANCE SHEET (UNAUDITED)
Amounts in USD '000		Sept. 30, 2023				Dec. 31, 2022
Cash and Cash Equivalents			69,151				59,583
Restricted Cash			4,893				3,719
Accounts Receivable, Net			21,960				20,474
Prepaid Expenses			5,184				5,975
Inventory			22,192				25,430
Voyages in Progress			7,238				23,997
Other Current Assets			1,998				3,484
Total current assets			132,616				142,662
Vessels, Net			702,239				735,134
Other Non-Current Assets			1,477				2,087
Total Non-Current Assets			703,716				737,221
Total Assets			836,332				879,883
Accounts Payable			3,988				6,960
Accrued Voyage Expenses			5,913				11,315
Other Current Liabilities			10,514				14,439
Dividends Payable			27,144				0
Current Portion of Long Term Debt			25,865				39,700
Total Current liabilities			73,424				72,414
Long-Term Debt			229,308				266,337
Other Non-Current Liabilities			660				1,150
Total Non-current Liabilities			229,968				267,487
Shareholders' Equity			532,940				539,982
Total Liabilities and Shareholders' Equity			836,332				879,883

NORDIC AMERICAN TANKERS LIMITED
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW (UNAUDITED)
		Nine Months Ended				Twelve Months Ended
Amounts in USD '000		Sept. 30, 2023				Dec. 31, 2022
Net Cash Provided by Operating Activities			126,073				24,134
Investment in Vessels			(484	)			(5,116	)
Investment in Newbuildings			0				(90,301	)
Proceeds from Vessel Sales			0				81,074
Net Cash Used in Investing Activities			(484	)			(14,343	)
Proceeds from Issuance of Common Stock			0				49,096
Proceeds from Vessel Financing			0				88,000
Repayments of Vessel Financing			(10,592	)			(11,476	)
Repayment of Borrowing Facility			(41,529	)			(93,933	)
Dividends Distributed			(62,639	)			(22,682	)
Net Cash Provided by (Used in) Financing Activities			(114,760	)			9,005
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash			10,829				18,796
Effect of exchange rate changes on Cash			(87	)			(142	)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period			63,302				44,648
Cash, Cash Equivalents and Restricted Cash at End of Period			74,044				63,302
Cash and Cash Equivalents			69,151				59,583
Restricted Cash			4,893				3,719

NORDIC AMERICAN TANKERS LIMITED
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)		Three Months Ended												Nine Months Ended
Amounts in USD '000		Sept. 30, 2023				Jun. 30, 2023				Sept. 30, 2022				Sept. 30, 2023				Sept. 30, 2022
Voyage Revenue			78,450				99,100				104,879				298,983				229,133
Voyage Expense			(30,414	)			(31,304	)			(57,497	)			(96,056	)			(131,405	)
Net Voyage Revenue (1)			48,036				67,796				47,382				202,927				97,728
		Three Months Ended												Twelve Months Ended
Amounts in USD '000		Sept. 30, 2023				Jun. 30, 2023				Sept. 30, 2022				Dec. 31, 2022
Net Income			7,487				26,809				10,009				15,101
Interest Expense (Income), net			6,952				7,352				7,180				26,698
Depreciation Expense			12,669				12,726				12,299				50,421
EBITDA (2)			27,108				46,887				29,488				92,220
Gain on Disposal of Vessels			0				0				(1,173	)			(5,691	)
ADJUSTED EBITDA			27,108				46,887				28,315				86,529

(1)	Net voyage revenues represents voyage revenues less voyage expenses such as bunker fuel, port fees, canal tolls and brokerage commissions. Net voyage revenues is included because certain investors use this data to measure a shipping company's financial performance. Net voyage revenues is not required by accounting principles generally accepted in the United States and should not be considered as an alternative to net income or any other indicator of the Company's performance required by accounting principles generally accepted in the United States.
(2)	EBITDA is included because certain investors use this data to measure a shipping company's financial performance. EBITDA is not required by accounting principles generally accepted in the United States and should not be considered as an alternative to net income or any other indicator of the Company's performance required by accounting principles generally accepted in the United States.

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.