This is the third paper I've written covering the Tanker Industry results from Q2 2015 and the companies that make up the Industry:
- The Tanker Industry: Q2 2015 Comparison Of Expenses
- The Tanker Industry: Q2 2015 Comparison Of Revenue
I've started this comparison as a way to compare how the various companies are able to utilize their assets to maximize value for shareholders. All the companies have a different strategy for entering their ships into the spot market, time charter, or voyage charter. Some of the strategies are more profitable than others right now and some will be more profitable as the market attempts to recover.
The intent of this article is to compare the health of the companies using a common reference on a per ship and per DWT basis. By breaking down the debt, cash on hand, and assets it helps to compare like units (even though some will argue there are qualitative aspects not taken into account) it helps to level the playing field.
The companies looked at are Ardmore Shipping (NYSE:ASC), DHT Holdings (NYSE:DHT), EuroNav (NYSE:EURN), Frontline Ltd (NYSE:FRO), Navios Maritime Acquisition (NYSE:NNA), Nordic American Tankers (NYSE:NAT), Teekay Tankers (NYSE:TNK), and Taskos Energy Navigation (NYSE:TNP).
(Source: data compiled from Nasdaq.com and company websites on 21 September 2015)
Cash on Hand
Cash on hand has increased from last quarter for all the companies except DHT and FRO. In the case of DHT, the company made installment payments related to VLCC newbuildings.
When compared on a per ship level, DHT, NAT, and TNP had the highest levels of cash. When compared on a per DWT basis, ASC, NAT, and TNP had the highest levels.
All of the companies are working to refill the coffers after the long shipping rates drought. Both NAT and TNP seem to be filling those coffers to relatively strong levels.
While Total Assets includes cash on hand, the value of the ships is the biggest asset the companies have. TNP and NNA are both above average on a per Ship and per DWT basis. DHT, EURN, and NAT are also above average when looked at a per Ship basis while ASC is high on the list on a per DWT basis.
As in last quarter, FRO is at the bottom in both categories. Investors will need to remember that most of FRO's fleet is leased from Ship Finance International Limited (NYSE:SFL), thus it doesn't actually own most of its ships and can't count them on their books. It is also going thru a merger with Frontline 2012 right now, and when completed the total fleet count will increase along with the Total Asset value for the company.
Liabilities balance out the other side of the company books. Again, comparing them on a per ship and per DWT basis helps to show which companies have taken on massive debt and which ones have managed it.
While NNA and TNP had strong asset values, they are also on the high end of liabilities on both a per ship and per DWT basis.
Looking specifically at Long Term Debt shows similar results:
ASC has the highest level of debt on a per DWT basis, but when averaged out on a per ship basis it comes in below average. Both NNA and TNP have the highest levels of debt on a per ship basis and area above average on a per DWT basis. EURN also has over $1B in total Long Term Debt, but when broken down by the fleet, it comes in just at the industry average on a per ship basis and is significantly under the industry average on a per DWT basis.
The industry is still recovering from a seven year down turn, but the balance sheet of these companies is starting to improve. Breaking down the balance sheet can help compare the companies in similar units.
Disclosure: I am/we are long FRO.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.