Frontline Ltd. (NYSE:FRO) Q3 2019 Earnings Conference Call - Final Transcript

Nov 27, 2019 • 09:00 am ET

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Frontline Ltd. (NYSE:FRO) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to today's Q3 2019 Frontline Limited Earnings Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] I must advise you that this conference is being recorded today, Wednesday, 27th of November 2019.

I would now like to hand the conference to your speaker today, Mr. Robert Macleod. Please go ahead, sir.

Executive
Robert Hvide Macleod

Thank you very much, operator. Thank you for dialing into Frontline's earnings call for the third quarter. We find the markets very favorable at present. It looks to have turned in our favor and the second half of 2019 represent completely different fundamentals and earnings compared to the first half. Let's go straight to the first slide please and look at Q3. We reported a net loss of $10 million or $0.06 per share. Earnings were $22,900 on V's; $16,200 on Suezmaxes; and $15,900 for LR2s. Q4 is at completely different levels. With V's showing close to $65,000 on days booked, Suezmaxe is almost $50,000 and LR2 around $30,000 mark. As you've seen in the report we do expect this to fall or this will fall as we booked to ballast days towards the end of the quarter.

On these numbers, I would like to highlight Suezmaxes. We held back most deliberately in the Atlantic in Q3, in anticipation of stronger fundamentals. This explains relatively low numbers for Q3, but a great start to Q4. I think it's important to always look at earnings over time, not just one quarter and always have a clear chartering strategy. The support from our largest shareholder is unquestionable. The $275 million facility was rolled until May 21. And it has done a great job securing commitment from ICBC to finance the 10 Suezmaxes we acquired in Q3. And you can expect cash breakeven for Suezmaxes to soon drop. The Board also declared at its discretion a $0.10 dividend for Q3, despite the loss in the quarter and we expect Q4 to show more cash to our shareholders, building on the $6 billion worth of dividends, we have paid since listing in the US.

With that, I'll hand the word over to Inger.

Executive
Inger M. Klemp

Thanks, Robert, and good morning and good afternoon, ladies and gentlemen. Let's then turn to Slide 4 and 5 and look at the financial highlights and the income statement. Frontline achieved total operating revenues, net of voyage expenses of $94 million and EBITDA adjusted for certain non-cash items of $43 million in the third quarter. Sometimes we reported a net loss of $10 million, equivalent to $0.06 per share and a net loss adjusted for certain non-cash items of $10.1 million equivalent to $0.06 per share in the third quarter. The non-cash items this quarter consisted of $0.7 million unrealized gain on marketable securities, at $2 million share results of associated company and a $2.6 million loss on derivatives.

The third quarter shows a