Nordic American Tankers Ltd. - Form 6-K Summary
Business Context and Reporting Period
This Form 6-K, filed on August 19, 2019, reports on Nordic American Tankers Limited (NAT) for the six months ended June 30, 2019. The filing includes a revised press release correcting a previous announcement regarding a reverse stock split, which has been cancelled. NAT operates a homogeneous fleet of 23 Suezmax tankers with an average age of 11 years, focusing on crude oil transportation.
Key Financial Metrics
Revenue and Profitability (Six Months Ended June 30, 2019):
- Net Voyage Revenue: $84.3 million (up from $56.6 million in the prior year).
- Net Operating Earnings: $13.4 million (compared to a loss of $28.7 million in the prior year).
- Net Loss: $9.3 million ($0.07 per share), a significant improvement from the $46.9 million loss ($0.33 per share) in the prior year.
- Adjusted Net Operating Earnings: $45.7 million (calculated as Net Operating Earnings of $13.4M + Depreciation $31.5M + Non-cash G&A $0.8M).
- Time Charter Equivalent (TCE): $20,414 per day per ship (up from $10,850 in the prior year).
Cash Flow and Liquidity:
- Operating Cash Flow: $40.8 million provided by operating activities.
- Cash and Cash Equivalents: $42.1 million as of June 30, 2019.
- Restricted Cash: $7.3 million (deposits for future drydocking).
- Dividends Paid: $9.9 million distributed during the period.
Debt and Capital Structure:
- Total Debt: Approximately $410.5 million ($20.1 million current portion + $390.4 million long-term).
- Refinancing: In February 2019, the company secured a $306 million senior secured credit facility from CLMG Corp. (funded by Beal Bank), retiring debt from three other lenders.
Material Changes vs. Prior Period
- Operational Performance: The first half of 2019 was significantly better than the first half of 2018, driven by higher charter rates and improved market conditions. Net loss narrowed by approximately $37.6 million year-over-year.
- Debt Restructuring: The company consolidated its debt into a single $306 million facility, simplifying its capital structure and reducing the number of lenders from four to one primary lender.
- Asset Base: The balance sheet reflects the removal of "Vessels Held for Sale" ($55.4 million in 2018) as those assets were sold or reclassified, while the net vessel value increased to $923.3 million.
- Correction: A previous announcement suggesting a reverse stock split was retracted; no such plan is currently in place.
Guidance, Outlook, and Risks
Outlook and Commentary: Management views the tanker market as turning positively, citing political unrest (e.g., US-China trade tensions) and increased US oil exports as drivers for demand. A new 12-15 month time charter with Equinor commenced in August 2019. Management expects higher dividends in an improved market environment.
Dividend: A quarterly dividend of $0.01 per share was declared, payable September 20, 2019, marking the 88th consecutive quarterly distribution.
Risks and Contingencies:
- Volatility in charter rates and vessel values.
- Changes in global oil consumption, OPEC production levels, and bunker fuel prices.
- Geopolitical risks affecting shipping routes and trade patterns.
- Availability of financing and refinancing.
Investor Verification Checklist
- Verify the details of the $306 million credit facility with CLMG Corp. and the terms of the refinancing.
- Confirm the commencement date and terms of the new time charter with Equinor.
- Review the reconciliation of Non-GAAP measures (Adjusted Net Operating Earnings) to understand cash generation capabilities.
- Monitor the status of the cancelled reverse stock split to ensure no future capital structure changes are planned.
- Assess the impact of the $7.3 million restricted cash on immediate liquidity for drydocking requirements.