There is nothing to worry about regarding Nordic American Tankers’ rising general and administrative expenses, Herbjorn Hansson said.
The longtime head of the New York-listed, Sandefjord-based suezmax specialist told TradeWinds on Friday that everything is “going excellently in our company” following criticism from Evercore analyst Jonathan Chappell that controllable expenses were spiring upward.
“In short, a company can go three ways, that is up, sideways or down,” he said. “If it goes sideways or down, [general and administrative expenses] go down and this company is going up.
“If you understand our accounts, you understand everything. If you don’t understand our accounts, you don’t understand anything.”
Nordic American Tankers’ third-quarter performance was largely in line with expectations as the suezmax tanker market weakened during the three months ending on 30 September before rising into the last stanza of 2023.
It recorded a $7.49m profit for the quarter, down from $10m year-over-year as it issued its 106th consecutive dividend, paying back shareholders $0.06 per share.
Chappell — who ultimately retained an in-line rating and a $4.50 price target — said the dividend was higher than expected and was reminiscent of when the company would still issue them even if “earnings could not justify a payout”.
While the market had improved, the veteran analyst noted the upside was limited, due to both Nordic American Tankers’ weak forward bookings versus rivals and the rising general and administrative expenses.
He said that line item, $6.3m for the quarter, was the highest absolute figure in the company’s history and a 47% increase from the third quarter of 2022, when the figure was $4.3m.
The organisation has also recorded large increases in recent years.
From 2018 into 2019, general and administrative expenses jumped 30.5% from $13.5m to $17.6m mainly related to salary increases and “the termination of a cost-sharing agreement with a former associate”, according to the company’s annual report.
From 2021 into 2022, a 20.3% increase, from $15.6m to $18.8m was attributed to increased travel and marketing costs plus staff costs.
Nordic American Tankers shares closed at $3.88 on Thursday, down $0.04 or 1%.
In pre-market trading in New York on Friday, shares had gained $0.03 to $3.91.
