- Financial Leverage: 18.6% based on market values for the ships.
- Net Debt: $14.2 million per vessel.
- Total Liquidity: $263 million (including $73 million in cash and $191 million available under revolving credit facilities).
- Revenue (TCE basis): $103.7 million.
- EBITDA: $80 million.
- Net Income: $44.5 million, equal to $0.27 per share.
- Vessel Operating Expenses: $20.4 million.
- G&A Expenses: $4.5 million.
- Spot Market Earnings: $52,700 per day.
- Time Charter Earnings: $36,400 per day.
- Average TCE for Q2: $49,900 per day.
- Average TCE for H1: $50,000 per day.
- Net Income for H1: $91.6 million, equal to $0.57 per share.
- Cash Flow from Operations: $80 million in EBITDA.
- Debt Repayment and Cash Interest: $16 million.
- Cash Dividend: $46.8 million.
- Maintenance CapEx: $0.8 million.
- Newbuilding Installments: $51.5 million.
- Revolving Credit Facility Draw: $25 million.
- Changes in Working Capital: $8.8 million.
- Quarter-End Cash Balance: $73 million.
- Quarterly Cash Dividend: $0.27 per share.
- P&L Breakeven for Full Year: $27,700 per day.
- Cash Breakeven for Full Year: $18,500 per day.
- Discretionary Cash Flow After Dividends: $9,200 per day per ship.
- Estimated Discretionary Cash Flow for the Year: Above $79 million.
- Time Charter Days for Q3: 552 days at $37,700 per day.
- Spot Days for Q3: 1,630 days, 75% booked at $42,100 per day.
- Spot Period P&L Breakeven for Q3: $23,600 per day.
- Newbuilding Delivery Schedule: February, April, May, and July 2026.
- Increase in Revenue Days for the Year: 550 to 600 days.
Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- DHT Holdings Inc (DHT, Financial) maintains a very strong balance sheet with low leverage and significant liquidity, ending the quarter with $263 million in total liquidity.
- The company achieved robust financial results for the quarter, with revenues on a TCE basis of $103.7 million, EBITDA of $80 million, and net income of $44.5 million.
- DHT Holdings Inc (DHT) has a defined and predictable capital allocation policy, paying a quarterly cash dividend of $0.27 per share, marking the 58th consecutive quarterly cash dividend.
- The company has made meaningful improvements in the delivery schedules for all four newbuildings, resulting in a significant increase in revenue days for the year.
- DHT Holdings Inc (DHT) has strong customer relations and offers safe and reliable services, supported by a solid balance sheet, strong liquidity, and robust breakeven levels.
Negative Points
- The spot market is currently in a seasonally weak period, which may impact the average rate for the quarter.
- There is some concern about the potential weakness in China, which could affect the demand for crude oil transportation.
- The decision to not exercise options for additional ships was influenced by the potential impact on the company's ability to pay 100% of earnings in dividends.
- The company faces risks related to the timing and financing of payments for newbuildings, with $89.9 million expected within the next 12 months.
- There are uncertainties regarding the future interest and negotiations for long-term charters for the newbuildings, which may affect the company's revenue stability.
Q & A Highlights
Q: With the new accelerated schedule on the new buildings, what's the payment schedule look like between now and delivery? Any more payments this year, and the cadence for next year? And then also, is this all going to be cash-funded, or do you plan on drawing down debt at delivery for the floor?
A: (Laila Halvorsen, CFO) In our press release, under Note 5, we've included a table with future expected payments. Within the next 12 months, we expect payments of $89.9 million, and then the rest after that. We've looked into different financing projects, and we are very pleased with the suggestions that we have, but nothing is decided yet. (Svein Harfjeld, CEO) There are timing differences when we generate the cash flow that we'll use for the equity component of these ships. So, we may draw RCFs and then generate cash flow back and forth on that.
Q: Have you had any interest at this point with delivery now within the next 24 months on time charters, or do you just assume that those would be implemented in the spot market upon delivery?
A: (Svein Harfjeld, CEO) There is some initial interest, but it's not at the level that provides for negotiations. We have the intention and interest in seeing if we can develop this. It will take a bit of time and is probably a next year event. Our ambition is to build more long-term, fixed income for the company in general.
Q: Have you seen any signs that maybe China is weakening and it's a bit more beyond seasonality? There's some cyclical component to it, or do you truly just think it's a function of refinery shutdowns at this time of year?
A: (Svein Harfjeld, CEO) I think there's a bit of both. Heavy trucking is starting to implement LNG as fuel, which has been a meaningful contributor to global demand growth. On the positive side, there is meaningful growth in the pet-chem industry in China. The new refining capacity coming on in China has around 80% of pet-chem output, predominantly crude oil-based. This development will take 12 to 24 months.
Q: Regarding the new deductions, is the decision to not exercise them due to the fact that it could impact the ability to pay 100% of earnings in dividends? Or is it a view on the new build prices themselves?
A: (Svein Harfjeld, CEO) If we had declared, it would be a meaningful increase in CapEx and change the structure of our balance sheet considerably. The core plan was to do the four ships. If we had early interest in long-term charters, we might have considered it, but that did not materialize. We felt it prudent to do the four ships.
Q: There's been some talk about the VLCC cleaning up to do CPP cargoes. What's the magnitude of that activity? And is that something you've also considered?
A: (Svein Harfjeld, CEO) It's mostly Suezmaxes, around 20 that have done that. There have been some VLCC cargoes, about a handful. It should coincide with a relatively modern ship going through drydock. We did not have any ships suited for this business opportunity at this point, but it's not unknown territory for DHT.
Q: Is reverse lightening onto VLCCs becoming a standard thing? And is that also something that maybe will move the needle on VLCCs?
A: (Svein Harfjeld, CEO) Yes, there have been cargoes where Aframaxes have been heading South and then reverse lightening onto VLCCs, predominantly to China. This is meaningfully cheaper than sending an Aframax directly from Vancouver to China. This is a new trade that will evolve.
Q: How do you think the VLCCs will continue to fare in a market where OPEC is flat to down, but the Atlantic is growing?
A: (Svein Harfjeld, CEO) That would be a positive. The Atlantic barrels out to Asia is truly a VLCC business. If OPEC decides to release barrels to the market, it's because there is true evidence of demand growth. OPEC's clear objective is managing price more than anything.
Q: Can VLCCs carrying clean cargoes do a series of cargoes, or is it just one cargo before going to drydock?
A: (Svein Harfjeld, CEO) It's done in connection with the drydock so that you clean up and load the refined product. These cargoes typically go to the Atlantic basin. It's really for one cargo unless you decide to balance back to try to do a second cargo, but that is normally not done.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
