The company has 46,898,782 shares out.
They are paying a .30 cent dividend.
IN THE SAME RELEASE they state they are so happy their operating cash flow was 10,800,000.
So we have a company, which also admits that prices of second hand tankers are weakening (meaning the company's book value is dropping, since they only have tankers as assets), and on top of that the dividend is THREE MILLION DOLLARS more than the whole operating cash flow of the company?
So are they paying a dividend of MORE than they make?
What am I missing here?
Even worse, this overpayment only brings the forward yield to (.30x4/22.50 closing price) 5.3% going forward?
You are correct. In the past NAT has consistently paid out div based on operating cash flow. In recent quarters NAT has boosted div beyond cash flow occasionally, but it hasn't been the norm historically. I suspect that Herbjorn is cramped by low share price, which takes away his MO of issue new shares and still claim that it's not dilutive.
Disclosure: Past shareholder and neither long nor short now.
You're not interpreting the numbers correctly. see pg 7 of 9 of company's announcement -- in the table, CONDENSED STATEMENTS OF CASH FLOW. The bottom line -- Cash and Cash Equivalents at End of Period (Mar 2011) is $14,680M. So cash ($14,680,000) divided by stocks outstanding (46,898,782) equals $0.313, hence a 30 cent dividend
Cramer asked HH about it last night.
Cramer cited Cantor Fitzgerald's analysis which suggested part of their divi was a return on capital.
HH said, divi was slightly more than operating cash flow, and called it "a little cream on the cake".
Asked why? He said because the industry is in trouble right now, and he wanted to show strength b/c their company is in excellenct shape. 55th consecutive dividend. And this is a signal to shareholders that "you are part of a jolly good company!"
This is often the case with tanker companies as they depreciate the ships and return money to share holders. The long term trend is for share and dividend increase as global rates recover and older ships get converted to drillers, bulkers etc....
Buy shares and study this. You will find odd quarters and discounts, but end up happily recieving income. NAT is going to the $40s again.
The operating cash flow calculation is on Page 8 of 9 of the report. They start with NOI which does not include dividends, so the $10.8 million does not include dividends. Interestingly enough, the NOI number they start that calculation with uses -$6,372,000 vs. -$6,972,000 on the financials earlier in the report. One of those numbers is wrong.
Doesn't the cash flow from this quarter include the dividend payout from last quarter? I'm pretty sure it does. If so, the $10M cash flow they reported today is net of the $0.25 dividends paid out last quarter. So the $.30 dividend really only represents knocking an incremental $0.05 * 47M shares = ~$2.5M off the current $10M cash flow. Plus we have an additional tanker trading as of last week so we can expect incremental growth for the current quarter.
Lets do this simply. ALL from today's release.
16 ships in the water for Q1.
90 Days in the quarter
18000 was the average received, 11,300 was the breakeven (for a 20 ship fleet so I am being generous here).
so (18000-11300)*16*90 = 9,648,000.
Now assume that they made a million of other types of money (management, trading, bonuses for early delivery, whatever).
This company brought in 10 million dollars for the quarter TOTAL. It costs 11,300 a day to run their ships (as per their breakeven). How are they paying 14 million dollars of dividend in a quarter where they simply didn't bring in that much money.
Ships * Days * profit on ships is the only income this company has. And that number is simply NOT 14 million. This company is beautiful because you can figure out its earnings. It appears to me they are now paying a dividend out of bank cash. Cash they raised selling stock.
That is REALLY bad if I am right.
Please explain what I am missing.