The title of a client note by Evercore ISI analyst Jonathan Chappell pretty well summed up Monday's third-quarter earnings report by Herbjorn Hansson's Nordic American Tankers.
"Everything is Awesome (No, actually it really isn't)"
On the one hand, Hansson was telling shareholders "2020 as a whole is expected to be a very good year for NAT."
On the other, NAT lost $0.07 per share for the quarter, missing Wall Street analysts' expectations of a $0.03 loss.
NAT paid its record-setting dividend once again at $0.04, even as Chappell suggested that the $5.4m the owner raised through an at the market (ATM) equity deal helped with the payment in a loss-making quarter.
With NAT restocking its ATM authorisation with a further $60m, it is likely to be able to keep paying the dividend despite the losses expected in the current quarter and a 2021 that is feared to be less than, well, awesome.
Still, investors seemed far from happy with Hansson's news, sending NAT shares down 3% to $3.08 in early trading Monday even as most tanker stocks gained, following the broader market up on more positive news related to a Covid-19 vaccine.
Despite reported daily time charter equivalent (TCE) rates of $25,000 per day last quarter – "well above the industry benchmark," said Chappell – NAT suffered from 625 off-hire days attributed to drydockings that were the equivalent of nearly seven ships in a 23-vessel fleet.
This drove revenue lower than analysts expected even as operating and interest costs were higher.
NAT lost $10m for the quarter, stumbling from a second-quarter bull market in which it had earned $49.2m or $0.33 per share.
But this was slightly better than the $13.7m, or $0.10 per share, lost in the third quarter of 2019. Revenue also improved to $37.3m from $32.3m year over year.
The quarterly dividend was down 80% from the three months ended 30 June, and was NAT's lowest payout since the fourth quarter of 2019. Even with any help from ATM raises, Chappell projects the payout to fall again in the current quarter.
NAT's dividend is likely to fall to $0.09 for all of 2021 versus $0.40 this year based on expectations of a continued weak environment for hire rates, Chappell projected.
Hansson's description of the market was somewhat different in his letter to shareholders.
"As 2020 draws to a close, we see far less uncertainty in the marketplace," Hansson wrote, citing a recovery of markets in Asia, an outcome for the US presidential election and the nearing of a vaccine for Covid-19.
"Despite a temporary slowdown, we see that 2020 as a whole will be a very good year for NAT. We believe that these positive fundamentals will continue."
As NAT shares fell Monday, peers such as Teekay Tankers and Euronav gained more than 3% each in morning trading.
