Nordic American Offshore Ltd. (NYSE:NAO) 2Q2016 Dividend and Earnings Report – we see opportunities.
Link to the complete 2nd Quarter 2016 report: http://hugin.info/159489/R/2033172/756965.pdf
Hamilton, Bermuda, August 4, 2016.
Nordic American Offshore Ltd. (“NAO” or “the Company”) became stock listed on the New York Stock Exchange (NYSE) on June 12, 2014. The operating cash flow for NAO was -$2.5m in 2Q2016. NAO is performing well compared with several other companies in the industry. NAO should be differentiated from other companies owning Platform Supply Vessels (PSVs).
We see opportunities to grow the Company. NAO has ten high-quality PSVs built in Norway in the period 2012-2016. Eight of these are now in operation. The NAO Horizon and NAO Galaxy were taken over on April 19, 2016 and June 16, 2016, respectively. A specific feature of our vessels is the very low fuel consumption, resulting in low emissions and in attractive transportation economics. The vessels are also particularly well suited to North Sea operations, where weather conditions can be severe.
The Board has declared a dividend of $0.05 per share for 2Q2016 to shareholders on record as of August 17, 2016. The payment of the dividend is expected to take place about September 6, 2016. Since its original establishment in late 2013, NAO has paid dividends for 10 consecutive quarters, totalling $2.54 per share, including the dividend to be paid about September 6, 2016.
The North Sea is currently the trading area for the Company’s vessels.
Key points to consider:
- Operating cash flow per share has been: -$0.12 for 2Q2016, -$0.10 for 1Q2016 and $0.14 for 2Q2015.
- Earnings per share (EPS) has been: -$0.36 for 2Q2016, -$0.30 for 1Q2016 and -$0.02 for 2Q2015. EPS does not take into account financial risk.
- NAO had at the end of 2Q2016 total net debt of $122m for its ten vessel fleet, or about $12.2m per ship. $132m of its $150m credit facility was drawn. The credit facility matures in March 2020.
- NAO maintains industry leading cash breakeven levels of about $11,000 per day per vessel, including financing costs and G&A costs.
The Board has declared a cash dividend of $0.05 per share for 2Q2016 to shareholders of record as of August 17, 2016. The payment date is on or about September 6, 2016.
The Company’s operating cash flow was -$2.5m in 2Q2016. In 1Q2016 and 2Q2015 operating cash flow was -$2.2m and $3.4m, respectively.
Net Income was -$7.4m in 2Q2016. In 1Q2016 and 2Q2015 Net Income was -$6.3m and -$0.4m, respectively.
In our 2015 Annual Report on Form-20F we gave detailed information on the cancellation of a contract for one of our ships which resulted in a cash payment to us of $3.9m in mid-2015. On a quarterly basis this amount is being booked as income up to April 2018, or about $0.3m per quarter depending upon currency movements of GBP/USD.
On May 21, 2015, NAO announced a share repurchase program allowing NAO to buy back up to 2.5 million shares in the open market over the next two years. As of this report NAO has repurchased 1,145,873 shares at an aggregate cost of about $6.9m at about $6.02 per share. In addition, NAO purchased 1,571,749 of its own shares in a private transaction on February 17, 2016 at a price of $4.50 per share. NAO currently has a total of 20,713,748 shares outstanding. Nordic American Tankers Limited is the largest shareholder of NAO, owning about 29% of the shares in NAO.
As a matter of policy, the Company always focuses on maintaining a strong balance sheet with low net debt. At the end of 2Q2016, net debt per NAO vessel in operation was $12.2m. NAO has in place until early 2020 a non-amortizing credit facility of $150m, of which $132m has been drawn as of June 30, 2016. Several service companies in our sector are in a difficult financial position. Going forward, NAO sees commercial and strategic opportunities for expansion.
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.
For further details on our financial position for 2Q2016, 1Q2016 and 2Q2015, please see later in this release. Our 2015 Annual Report on Form 20-F contains a large amount of information about NAO. This report was filed with the SEC March 23, 2016 and can be found on our web site www.nao.bm.
Our fleet is comprised of ten high-quality PSVs. All our vessels operate in the UK and in the Norwegian sectors of the North Sea. The vessels may operate in either sector or elsewhere. The significant fuel efficiency, and corresponding low emissions of our ships are attractive features.
The Company’s objective is to ensure spot or term employment for the fleet, including for the newbuildings. The specifications of the Company’s vessels are by and large the same.
Strategy Going Forward
The main elements of NAO’s strategy is based, are quarterly dividends, low debt, low G&A costs, high liquidity in the stock and full transparency.
We work to continue our dividend policy with the objective 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, dividend potential and strong balance sheet.
We shall endeavor to safeguard and further strengthen the position for our shareholders in a deliberate, predictable and transparent way.
We encourage prospective investors interested in the Offshore Supply Vessel sector to consider buying shares in NAO.
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Link to the graph: http://hugin.info/159489/R/2033172/756965.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.
Jan H. A. Moller, Head of Investor Relations & Financial Manager
Nordic American Offshore Ltd.
Tel: + 1 888 755 8391 or +47 90 11 53 75
Tor-Øyvind Bjørkli, Managing Director
Nordic American Offshore Ltd.
Tel: +47 90 62 70 14
Gary J. Wolfe
Seward & Kissel LLP, New York, USA
Tel: +1 212 574 1223