北欧美国油轮运输有限公司（NAT）

USA | Maritime GroupNordic American 1Q results miss on lower revenues NAT reported 1Q EPS of $0.02, though excluding a $9.5 million vessel sale gain,it recorded an adjusted EPS loss of $0.02 that missed expectations. Its fleetaveraged $24,714/day and, despite the loss, declared a dividend of $0.07/sh.Dividends have been the main priority for NAT and its large cash position, whichhas been boosted by recent refinancing, has been key to supporting its payoutin excess of earnings. We maintain our Hold rating and $3 target. 1Q miss as realized rates come in lower than expected:NAT reported an EPS of $0.02, thoughadjusted for a $9.5 million sale gain, adjusted EPS came in at a loss of $0.02. This was belowconsensus of $0.01 and our estimate of $0.00. Similarly, adjusted EBITDA of $14.9 million missedconsensus of $21.2 million and our forecast of $21.9 million. NAT's fleet of Suezmaxes averaged aTCE of $24,714/day, below our modeled $27,600/day, leading to 1Q net revenues of $37.9 million($45.1 million modeled). The results imply a high degree of off-hire days, likely due to drydockings,though NAT did not give specifics in the earnings release. Takes delivery of newer vessels as fleet renewal takes shape:NAT took delivery of its two 2016-built Suezmaxes, theNordic MoonandNordic Galaxy,in April for the previously disclosed price of$66 million each. These ships effectively replace two of its oldest ships, the 2003-builtNordic Apolloand the 2004-builtNordic Castorwhich were sold for total proceeds of $45 million. TheNordic Apollodelivered in February with theNordic Castorto be delivered in June, which keeps NAT's pro formafleet count at 20 vessels. NAT's average fleet age stands at 12.3 years, slightly below where it wasa year ago of 12.6 years which otherwise would have stood at 13.6 years had it remained stagnant.By comparison, the global Suezmax fleet age is 12.8 years. Five of its ships remain above the ageof 20, and we expect NAT to look to replace these with more modern tonnage. Dividends still the priority:NAT declared a dividend of $0.07/sh, continuing its generous payoutpolicy in excess of earnings. NAT appears to have pivoted from actively deleveraging over the past 3years. In February, it refinanced the outstanding $72 million Beal Bank loan with a new $150 millionfacility, unlocking $78 million in cash while releasing 7 ships as collateral (2 of which have beensold). Its newly-delivered ships were financed through Ocean Yield leases at 50% leverage, and itrefinanced leases on two ships and on another ship to unlock $45 million in cash. Its cash balancefollowing the dividend and refinancings stands at $133 million, with its net-LTV creeping up to nowover 30% versus mid/low 20% a year prior. Maintain Hold rating and $3 price target:NAT has remained steadfast with its dividend sinceinception, and we expect that will continue. We look for higher 2Q results on the back of strongerSuezmax spot rates. We maintain our Hold rating and $3 target. Omar Nokta * | Equity Analyst1 (212) 778-8405 | onokta@jefferies.comJaeyoung McGarry * | Equity Associate(212) 778-8358 | jmcgarry@jefferies.comEmily Harkins * | Equity Associate+1 (212) 778-8584 | eharkins@jefferies.com The Long View: Nordic American Investment Thesis / Where We Differ NAT has focused exclusively on Suezmaxes since its founding over 25 yearsago and has aimed to keep a low breakeven and high dividend payout policythroughout much of its history. The past few years have been difficult formany shipowners, and NAT took several steps to strengthen its balancesheet, including refinancing its vessels, selling older ships, and issuing equityvia ATMs. NAT now stands with a solid balance sheet and looks poised tobenefit from stronger tanker market dynamics, though age of fleet is becominga concern with one-third of its vessels built pre-2010, which is having anoticeable impact on realized freight rates. Downside Scenario,$2, -25% Upside Scenario,$4.5, +70% Base Case,$3, +13% •Spot rates surge above breakeven levels•OPEC raises output faster than expected•Non-OPEC production increases sooner thanprojected•Global oil inventories remain at low levels•Iran sanctions lead to tighter tanker capacity•Secondhand ship values increase 25%•Shares trade in line with adjusted forward NAV,equal to $4.50 •Spot VLCC rates remain below breakeven forextended period•OPEC unable to maintain targets•Non-OPEC output growth slower than expected•Global oil inventories increase rapidly•Secondhand ship values decrease 25%•Shares trade at a 20% discount to our adjustedforward NAV, equal to $2 •Prevailing ship values remain unchanged•OPEC production remains unchanged•Non-OPEC production increases gradually•Shares trade in line with NAV of $3 Sustainability Matters Catalysts Top Material Issue(s): 1) Energy Management -NAT is committed to operating in accordance with thehighest standards of quality and safety in the marine transportation industry. All of its Suezmax tankersar