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Why strong financials and vessel quality support company growth

Khyathi Dalal

Must-know: An overview of Nordic American Tankers (Part 4 of 6)

(Continued from Part 3)

Financials

1Q14 generated the best results for Nordic American Tankers (NAT) in the past several years. The time charter results of NAT were significantly better in the first quarter than in the 4Q13. For the quarter, the company recorded cash flow from operations of $27.1 million compared to $1.9 million in the 4Q13 and negative $4.9 million in the 1Q13.

Average tanker rates for trading fleet for the 1Q14 stood at $26,300 per day per vessel compared to $14,100 per day achieved in 4Q13. Earnings for the quarter stood at $0.05 per share compared to a loss of $0.59 in the 1Q13. Net voyage revenue increased to $45 million from $17.3 million in the same quarter last year.

Improving operational performance is clearly indicated by the company with observations per inspection for the 1Q14 reduced to just 3.4 observations—an excellent result and considered industry best practice.

Vessel quality fleet

During the 1Q14, 15 vessels were inspected by clients. NAT came out with excellent results, which reflects the fleet quality. Financial vetting focuses on the financial strength of shipowners. It’s relevant in the tanker industry. NAT is in good financial health, which is important for its clients.

Also, as an indication of their high quality profile NAT does business with some of the largest oil companies in the world, who demand quality at sea and onshore, on a regular basis. NAT’s prerequisite for any expansion of its fleet is to expand its dividend and earnings capacity per share unlike its peers—DHT Holdings Inc. (or DHT), Teekay Tankers Ltd. (TNK), Navios Maritime Acquisition (NNA), and Tsakos Energy Navigation Ltd. (TNP). The Guggenheim Shipping ETF (SEA) tracks these companies.

Let’s move on to see how the company’s unique business model supports its strong dividend policy.

Continue to Part 5

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