Nordic American Tankers (NAT) has proclaimed itself to be in “the best position ever” and hinted at a higher payout to shareholders as it posted a strong first-quarter result on healthy spot earnings.
The New York-listed owner of 23 suezmaxes recorded a net profit of $39.5m between in the period, which was an improvement on $5.6m in the same period of last year.
Net voyage revenue rose to $86.2m from $53.6m.
“At the end of first-quarter 2020 NAT is in the best position ever,” said the Norwegian suezmax specialist in its quarterly report, adding that a higher dividend is likely.
The company achieved earnings per share were $0.27 in the first quarter, roughly in line with the street consensus of $0.26.
NAT, whose shares are often the most traded among US-listed tanker stocks, announced a dividend of $0.14 per share for the first quarter on 24 March.
Daily time charter equivalent earnings of NAT’s fleet reached $44,100 per ship, up from $26,025 in the first quarter of last year.
"Higher-than-expected net TCE rates for NAT’s suezmax fleet drove the upside to our projection, though the top-line beat was partially offset by higher costs than we estimated," analysts at Evercore ISI said.
Also, the company has achieved daily time-charter equivalent rates of $50,000 per ship for 75% of the trading days in the second quarter.
“This is an encouraging signal for dividend payments for second-quarter 2020,” NAT said.
Based on a 50% payout ratio of operating cash flows less quarterly debt amortisation, Evercore expects NAT's second-quarter dividend to reach $0.19 per share.
Still bullish
Having risen to $5.25 in the pre-market session, shares of NAT traded down nearly 4% at $4.83 during Monday's mid-day trading.
"NAT shares have come down from recent extremes, following the massive increase in its trading volumes, and the current share price offers a compelling yield in our view," Clarksons Platou Securities analyst Omar Nokta said.
On 28 April, shares of NAT went berserk due to their popularity among retail investors, trading 110m shares worth $807m.
According to some equity experts, NAT chairman and chief executive Herbjorn Hansson’s appearance on the “Mad Money” CNBC show even contributed to a rush of investors to US tanker stocks at that time.
Further looking, the company remains as bullish as ever despite the recent correction of spot earnings.
“We see encouraging signals of rapidly recovering Asian economies that bodes well for world economy and the tanker markets going forward,” NAT said.
“The ordering activity for new ships is muted and the orderbook in percent of the existing tanker fleet has not been lower in decades.”
According to its estimates, only 16 newbuilding suezmaxes are due to be delivered for the remainder of 2020, 21 in 2021, and nine in 2022.
