DHT Holdings, Inc.

Good morning and good afternoon, everyone. Welcome and thank you for joining DHT Holdings' second quarter 2021 earnings call. I'm joined by DHT's co-CEOs, Svein Moxnes Harfjell and Trygve Munte. As usual, we will go through financials and some highlights before we open up for your questions. The link to the slide deck can be found on our website, dhtankers.com. Before we get started with today's call, I would like to make the following remarks. A replay of this conference call will be available at our website, dhtankers.com, until August 17th. In addition, our earnings press release will be available on our website and on the SSB Edgar system as an exhibit to our Form 6K. As a reminder, on this conference call, we will discuss matters that are forward-looking in nature. These forward-looking statements are based on our current expectations about future events, including DHT's prospects, dividends, share rate purchases and debt repayments, the outlook for the tanker markets in general, daily shorter hire rates and investor utilization, forecast of world economic activity, oil prices and oil trading patterns, anticipated level of new buildings and scrapping, and projected dry dock schedules. Actual results may differ materially from the expectations reflected in these forward-looking statements. We urge you to read our periodic reports available on our website and on the SSC Editor System, including the risk factors in these reports, for more information regarding risks that we face. Looking at the P&L highlights, EBITDA for the second quarter of 2021 was 21 million, and net income came in at $0.8 million. The result includes the profit of $13.6 million related to the sale of DHT Lake and DHT Raven, a non-cash gain of $3 million related to refinancing, and a non-cash gain in fair value related to interest rate derivatives of $2.2 million. Offex for the quarter was $19.6 million equal to $7,800 per day, and G&A for the quarter was 4.7 million. In the second quarter of 2021, the company achieved an average TCE of $19,500 per day, while the average TCE for the first half of 2021 amounted to $25,500 per day. In a historically very difficult and challenging tanker market, we are pleased to have recorded positive numbers for both the second quarter and the first half of 2021. Moving over to the balance sheet, the quarter ended with 52 million of cash. At quarter end, the company's availability under both the revolving credit facilities was 182 million. putting total liquidity at 235 million as of June 30th. We have continued to strengthen the balance sheet with the refinancing of the Nordea credit facility and the prepayments done during the quarter. Financial average is about 30% based on market values for the ships, and net debt per vessel was 17.6 million at quarter end. Looking at the cash bridge, the quarter started with $54 million of cash, and we generated $21 million in EBITDA. Ordinary debt repayment and cash interest amounted to $6 million. $29 million was used related to share buyback and dividend payment. $17 million was used for maintenance and scrubber capex. And positive changes in working capital amounted to $18 million. Proceeds from sale of vessels, net of debt repayment was 51 million. 55 million net was issued in connection with the refinancing. 93 million was used to prepay long-term debt, and the quarter ended with 52 million of cash. With that, I will turn the call over to Trigla.

Thank you, Laila. Switching now to capital allocation. For the second quarter, a total of 25.8 million will be returned to shareholders. As previously announced, the company bought back 2.2% of outstanding shares during the quarter for a total consideration of 22.5 million. In addition, the company will pay a dividend of two cents per share for the quarter. It will be payable on the 26th of August to shareholders of record of the 19th of August. And with that, the company has now paid dividends every quarter for 11 and a half years. And then we wanted to provide you a little update on the fleet side. And again, as previously announced, we bought and took delivery of two modern scrubber fitted eco ships during the first half, the DHT Harrier and DHT Osprey. We paid 68 million per ship and note that broker value assessments now are some 10% higher. We also sold our three older ships, all 2004 built during the spring. The Lake and Raven were delivered during the second quarter, and we recorded a 13.6 million gain on these sales. The DHT Condor was delivered to its new owners in July, and we expect to book a profit of about 1.5 million on that sale. On the next slide, let us then provide you an update on what has been going on on the liability side of the balance sheet during the quarter. As previously announced, we have refinanced the old Nordea facility with a new and expanded Nordea facility. The new facility has a firm commitment of $316 million with the addition of a $250 million accordion. The new loan carries a margin of 1.9%. It has a DHT-style 20-year repayment profile a five and a half years tenor, and carries the normal VHD covenants. Additionally, and importantly, we were able to continue the benefit of having prepaid all regular installments for 2021 and 2022 under the old facility. So the only installments we pay from now through 2022 on this facility are two and a half million per year for each of the two new acquisitions, the Harrier and the Osprey. During the second quarter, we extended our runway of low cash break-even rates by prepaying all the 2022 installments under our other large credit facility, the ABN AMRO loan. In a minute, Svein will provide more color on our very low cash break-even levels for the rest of this year and next. From the table on this slide, you can see that we have $536 million in bank debt, comprised of two relatively large syndicates and two smaller bilateral loans. Further, we currently have 182 million of available revolver capacity. We have a mere 5 million of regular installments for the second half of this year, and no more than 10 million for all of next year. And finally, you will note that we have no refinancing needs until the fourth quarter of 2023. So as you can see, we continue to enjoy strong support from our banking universe, something that was clearly demonstrated by the terms of this refinancing, which in fact were the best we've achieved in our 11 years at the helm of DHT. And with that, I'll pass it over to Signe.

Thank you, Trygve. On the next three slides, we'll discuss the employment of our fleet, our firing connection with dry docks, and cash break-even levels. On the first page, you will see the expected ratios of spot and time charter employment during the last two quarters of 2021. For the third quarter, we have covered about 42% of our fleet on time charters at an average rate of $27,500 per day. Some of these time charters are of shorter nature as we consider these an opportunity offering premium earnings to the spot market. Thus far for the third quarter, we have booked income for 64% of the fleet at an average rate of 22,100 per day. For the fourth quarter, we have some 23% of the fleet on time charters at an average rate of about 32,100 per day. We don't expect to enter into additional time charters in the near term, as we don't consider the combination of currently available rates and durations to be compelling. As many of you noted a few quarters back, we started to take advantage of the weak stock market to bring forward dry docks. During the second quarter, we recorded about 100 days of fire in connection with dry docks. We expect another 80 to 100 days during the third quarter, with an additional 40 to 50 days in the fourth quarter. The work to be done during this period in the second half includes installation of ballast water treatment systems and scrubbers. This will also mark the end to our scrubber retrofit program for now, taking our scrubber fleet to 17 out of 26 ships. A key benefit to all these efforts is that we have only 70 to 90 planned off our days for all of 2022. As such, we are positioning our fleet to be ready on the dance floor at a time one should expect a much healthier freight market. Then to an update of our keen focus on cash breakeven. The time charges we have in place in combination with the debt prepayments that we have made ensure we enjoy very robust cash breakeven levels for our fleets. It applies both for the fleet as a whole and the spot fleet specifically. As you will see from the graph on the left on the slide, the full fleet needs to generate 16,600 per day and our spot fleet 10,200 per day for the company to be cash neutral for the second half of this year. On a similar illustration in the graph on the right, you will see that the full fleet needs to generate 14,100 per day and our spot ships 10,600 during the first half of 2022 for the company to be cash neutral. The key drivers behind these numbers are the prepayments of debt that has been made with only 10 million in scheduled AMORC for the year, and very limited maintenance capex reflecting only three ships planned for dry dock. We think these numbers stand out as very robust, protecting the downside without giving away the upside. We are constructive on the markets, but we think the recovery could come a bit later than what most people suggest. Oil inventory levels have been coming down, and OPEC Plus is gradually increasing supply. But COVID is still impacting the demand picture, and this happens at a time when the fleet is growing because of new ships being delivered without the retirement of older ships. It's tough out there, and in all its simplicity, there's too little cargo and too many ships. This being said, the longer this drags out, the faster and more brutal the recovery could be. So let's sum up how we are positioned. One, we have renewed our fleet this year by buying two modern quality ships and selling our three older ships, all at good prices in our view. Two, we secured a new financing package at attractive terms with our supportive universe of lending banks. Three, we have a strong balance sheet with leverage at 30%, paired with a healthy liquidity position. And four, we enjoy very low cash breaking levels for our fleet for both this and next year. So in sum, we are in excellent shape and are all working hard to control what we can control and are executing on the opportunities the markets present. And with that, we open up the Q&A. Operator?