Nordic American Offshore Ltd. (NYSE:NAO) – 1Q2018 Earnings Report – Dividend important – Improved market conditions
Link to the complete 1st Quarter 2018 report:
Hamilton, Bermuda, May 15, 2018.
Nordic American Offshore Ltd (“NAO” or the “Company”) owns and operates a fleet of 10 Platform Supply Vessels (PSV) each averaging approximately 4,000 DWT and with an average age of about 4 years. The vessels are primarily engaged in the North Sea offshore market.
During 1Q2018, encouraged by improved market conditions, we decided to mobilize the three laid-up vessels and to restore our operational fleet to full capacity. Two of the three vessels are now joining our active fleet. We wish to see a more sustainable market before we activate our last ship which is ready for classification.
We remain moderately optimistic for the North Sea market and we have seen a healthy number of term fixtures in the market place. Having an attractive fleet, with 9 of our 10 vessels fully operational, improved market conditions should allow for immediate improvement in our financial results.
Results for the first quarter 2018 came in lower compared with fourth quarter 2017. The Net Operating Loss was -$8.4m for 1Q2018 as compared with -$7.1m for 4Q2017 (accounting numbers).
The Adjusted Net Operating Result was -$4.1m (cash loss) as compared to -$2.8m for 4Q2017.
The basic features of NAO are similar to the business model of the NYSE listed tanker company Nordic American Tankers Limited (“NAT”). NAT holds 16.1% of NAO’s common shares.
The Executive Chairman of NAO and his immediate family hold 13.4% of NAO’s common shares. He is also the Chairman & CEO of NAT.
The Board of Directors of NAO has declared a dividend of $0.01 per share for 1Q2018 to shareholders of record as of May 25, 2018. The payment of the dividend is expected to take place on or about June 8, 2018. Since its establishment in late 2013, NAO has paid dividends for 17 consecutive quarters, totaling $2.68 per share, including the dividend to be paid June 8, 2018.
NAO pursues a conservative financial policy. At the end of 1Q2018, the net debt per vessel was $10.9 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.
For further details on our financial position, please see the financial information reported below and this entire release.
Strategy Going Forward
The main elements of NAO’s strategy are based on quarterly dividends, low G&A costs and liquidity in the stock. NAO has about 35,000 shareholders.
We seek to achieve a competitive cash yield and Total Return, a precise measure of value creation.
NAO is committed to protecting its underlying earnings, dividend potential and strong balance sheet. We shall endeavor to safeguard and further strengthen NAO’s position in a deliberate, predictable and transparent way.
We encourage investors interested in the offshore sector to consider buying shares in NAO.
Link to the graph: http://hugin.info/159489/R/2192775/849087.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.
Gary J. Wolfe
Seward & Kissel LLP
New York, USA
Tel: +1 212 574 1223
Marianne Lie, Executive Vice Chair
Nordic American Offshore Ltd.
Tel.: +47 91 64 55 06
Bjørn Giæver, CFO
Nordic American Tankers Limited
Tel: +1 888 755 8391 or +47 91 35 00 91
Herbjørn Hansson, Executive Chairman
Nordic American Offshore Ltd.
Tel: +1 866 805 9504 or +47 90 14 62 91
 Adjusted Net Operating Result represents Net Operating Result before depreciation and non-cash administrative. charges.
 Net debt is working capital less long term debt divided by 10 vessels.
 Total Return is defined as stock price plus dividends, assuming dividends are reinvested in the stock.