Nordic American Offshore Ltd. (NYSE:NAO) 2Q2014 Dividend and Earnings Report: The Company is successfully listed on the NYSE as of June 12, 2014.
Link to the complete 2nd Quarter report:
Hamilton, Bermuda, August 6, 2014.
Nordic American Offshore Ltd. (“NAO” or “the Company”) earlier announced that it has declared a dividend of $0.45 per share for 2Q2014. This is the same as for 1Q2014. The record date is August 18, 2014 and the payment of dividend is expected to take place on or about August 29, 2014. Given that NAO was just established at the end 2013, it is gratifying indeed that the Company has been able to pay dividend so soon.
The Company had a successful IPO on the New York Stock Exchange in June 2014, raising net proceeds of around $100 million. After the IPO, the shares issued in the November 2013 private placement, which traded on the Oslo OTC market, were exchanged for NYSE traded shares. At the time of this report, the total sharecount is 23,431,370.
Following the previously announced Letters of Intent, the Company has entered into firm newbuilding contracts with Vard Aukra shipyard in Norway for the construction of two high-spec PSVs (platform supply vessels), which are expected to be delivered to us in the third quarter of 2015. These vessels are in addition to the two PSV newbuildings from the Ulstein yard that are expected to be delivered in January 2015. The Company now has four vessels on order.
Key points to consider:
Earnings per share in 2Q2014 were $0.23 compared with $0.10 for 1Q2014. The weighted average number of shares was 17,620,124 in 2Q2014 as against 16,666,666 in 1Q2014.
Net Income came to $4.1 million in 2Q2014 compared with $1.7 million in 1Q2014. Operating cash flow was $7.7 million vs $6.5 million in 1Q2014.
The Company has at the time of this report no net debt and its $60 million credit facility is undrawn.
The IPO in June 2014 strengthened the equity of the Company by about $100 million. Since then the shares have increased in value while trading on the NYSE.
NAO has a capital base to increase its fleet from the present six vessels to ten by September 2015.
Our vessels were fully utilized this quarter, a reflection of the quality and standard of our fleet and the Company’s commercial strategy.
Mr. Tor-Øyvind Bjørkli joined the Company as CEO in April 2014. Mr. Bjørkli has extensive experience, a long track-record and well-established relationships in the oil/offshore industry. This will be a significant benefit to NAO.
 Operating cash flow is a non-GAAP number. Please see later in this announcement for a reconciliation of operating cash flow to income from vessel operations.
The Board has declared a cash dividend of $0.45 per share for 2Q2014 to shareholders of record as of August 18, 2014. The payment date is about August 29, 2014.
Net income for 2Q2014 was $4.1 million. Our net income of $1.7 million for the first quarter of 2014 was impacted by a tax charge on operations of $1.2 million. We do not expect that such a charge will be incurred going forward. In March 2014, NAO entered into the UK Tonnage Tax system. Our fleet currently operates in the North Sea.
The Company’s operating cash flow was $7.7 million in 2Q2014, compared with $6.5 million for 1Q2014.
Included in the G&A costs is about $0.4 million representing direct costs associated with the start-up of NAO.
Including a planned expansion of the credit facility, the Company has the financial resources to take delivery of its four newbuildings on order. We do not expect to issue equity in connection with the delivery of these newbuildings.
As a matter of policy, the Company will always try to keep a strong balance sheet with low net debt and a focus on limiting the Company’s financial risk. At the end of 2Q2014, net debt per NAO vessel in operation was zero.
The Company has in place a non-amortizing credit facility of $60 million, which is undrawn at this time. Net working capital and undrawn amounts of the credit facility amounted to about $128 million.
We concentrate on keeping our vessel operating costs low, while always maintaining our strong commitment to safe operations. As we expand our fleet, we do not anticipate that our administrative costs will rise correspondingly.
Our primary objective is to enhance total return for our shareholders, including our quarterly dividend. The average rate achieved on the fleet is around $27,000.
Our fleet is comprised of ten high-quality PSVs including four newbuildings. We currently have six vessels in operation, all in the North Sea. Three are operating in the UK sector and three are operating in the Norwegian Sector. The vessels to be delivered next year may operate in either sector or elsewhere.
Please see the vessels and employment profile below.
|Vessel||Built||Charterer||Duration – firm periods|
|Blue Fighter||2012||Apache||February 2015|
|Blue Prosper||2012||Apache||November 2014|
|Blue Power||2013||BG UK||April 2018|
|Blue Thunder||2013||Statoil||October 2014|
|Blue Guardian||2013||Statoil||October 2014|
|Blue Protector||2013||Statoil||August 2014|
|Blue Viking||Jan. 2015||N/A|
|Blue Storm||Jan. 2015||N/A|
|Blue TBN I||Jul. 2015||N/A|
|Blue TBN II||Sep. 2015||N/A|
The Company’s objective is to ensure term employment for the fleet, including for the newbuildings. The specifications of the fleet are by and large of the same nature. NAO will seek to grow the fleet further with vessels matching our clients’ requirements. The expected delivery time for the newbuildings is listed above.
The PSV Market
The Company believes the market outlook for our PSVs is positive. An increased number of drilling rigs creates demand for the Company’s vessels. We expect a well-balanced market going forward.
Several of our vessels are suitable for operations in Arctic conditions. There is increasing activity in the Arctic region which we expect will increase demand for PSVs.
Strategy Going Forward
The main elements of the strategy of NAO have the same basis as Nordic American Tankers Limited.
The Company intends to grow its fleet. After an acquisition of vessels or other forms of expansion, the Company should be able to pay a higher dividend per share and produce higher earnings per share than had such an acquisition not taken place.
Our dividend policy will continue to enable us to achieve a competitively priced risk adjusted cash yield and a positive total return over time compared with that of other companies.
NAO is firmly committed to protecting its underlying earnings and dividend potential.
Our Company is well positioned. We shall endeavor to safeguard and further strengthen the position for our shareholders in a deliberate, predictable and transparent way.
We encourage investors who seek exposure to the Offshore Supply Vessel sector to consider shares in NAO.
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Link to the graph: http://hugin.info/159489/R/1846854/643946.pdf
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,” “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 PSV market, as a result of changes in the general market conditions of the oil and natural gas industry which influence charter hire rates and vessel values, demand in platform supply vessels, our operating expenses, including bunker prices, dry docking and insurance costs, governmental rules and regulations or actions taken by regulatory authorities as well as potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, the availability of financing and refinancing, vessel breakdowns and instances of off-hire and other important factors described from time to time in the reports filed by the Company with the Securities and Exchange Commission.
Tor-Øyvind Bjørkli, Chief Executive Officer
Nordic American Offshore Ltd.
Tel: +47 90 62 70 14
Jacob Ellefsen, Manager, IR and Research, Monaco
Nordic American Offshore Ltd.
Tel: + 377 93 25 89 07 or + 33 678 631 959
Turid M. Sørensen, Chief Financial Officer
Nordic American Offshore Ltd.
Tel: +47 90 57 29 27
Gary J. Wolfe
Seward & Kissel LLP, New York, USA
Tel: +1 212 574 1223
Herbjørn Hansson, Executive Chairman
Nordic American Offshore Ltd.
Tel: +1 866 805 9504 or + 47 901 46 291