DHT Holdings, Inc.

Good morning and good afternoon, everyone. Welcome and thank you for joining DHT Holdings' third quarter 2021 earnings call. I'm joined by DHT Co-CEO, Svein Moksnes-Harche, and Wilhelm Flimsig, Head of Investor Relations. As usual, we will go through some 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 November 10th. In addition, our earnings press release will be available on our website and on the SSE 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 repurchases and debt repayments, the outlook for the tanker market in general, daily charter high rates and vessel utilization, forecasts of world economic activity, oil prices and oil trading patterns, anticipated levels of new building 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 SSE EDGAR system, including the risk factors in these reports, for more information regarding risks that we face. As you all know, we are still in a historically weak tanker market, which has impacted the results for the third quarter of 2021. Looking at the P&L highlights, EBITDA for the third quarter was 14 million, and net loss came in at 21 million. The result includes a gain of 1.6 million related to the sale of DHT Condor, and a non-cash gain in fair value related to interest rate derivatives of 2.3 million. The company continues to show a very good cost control. OPEX for the quarter came in at 19.2 million, equal to $8,000 per day, while average OPEX year-to-date is equal to $7,800 per day. G&A for the quarter was 4.4 million. In the third quarter of 2021, the company achieved an average TCE of 16,300 per day, while the average TCE for the first nine months of 2021 amounted to $22,400 per day. For the fourth quarter, we have booked income for 70% of the fleet at an average rate of $20,700 per day. This includes 25% of the fleet on time shatters at an average rate of about $32,000 per day. Moving over to the balance sheet. The quarter ended with $64.5 million of cash. At quarter end, the company's availability under both revolving credit facilities was $180.5 million, putting total liquidity at $245 million as of September 30th. Financial leverage is about 30% based on market values for the ship, and net debt per vessel was 17.7 million at quarter end, which is well below current scrap values. Looking at the cash bridge, the quarter started with 52 million of cash and we generated 14 million in EBITDA. Ordinary debt repayment and cash interest amounted to 7 million, $10 million was used related to share buyback and dividend payments, and $2 million was used for maintenance and scrubber capex. Changes in working capital amounted to $11 million. Proceeds from sales of vessels were $30 million, and the quarter ended with $64.5 million of cash. The change in working capital for the quarter is mainly a result of vessels on time charters being re-delivered and bunkers being purchased back from charters. And now over to capital allocation. For the third quarter, a total of 10.1 million will be returned to shareholders. As previously announced, the company bought back 1.23 million of its own shares at an average price of $5.47. The shares were tied upon receipts. In addition to the share buyback, the company will pay a dividend of two cents per share for the quarter. It will be payable on the 23rd of November to shareholders a record of the 16th of November, and this marks the 47th consecutive quarterly cash dividend. Year-to-date, the company is returning 42.7 million to shareholders, 13.5 million in cash dividends, and 29.2 million in share buybacks. With that, I will turn the call over to Swain.

Thank you, Laila. Here on this slide, we will offer an update on our cash break-even levels. On the graph to the left, you see our cash break-even levels for the fourth quarter. The full fleet needs to generate $15,800 per day and our spot fleet $10,400 for the company to be cash neutral during this period. On the similar illustration in the graph on the right, you will see that the full fleet needs to generate $14,200 and our spot ships $10,600 during the first half of 2022 for the company to be cash neutral. This is the DHT way. a robust structure to protect the downside without giving away the upside. Then we'll discuss our dry docking program. Continuing our efforts in the two prior quarters, we have again taken advantage of the weak spot market to bring forward dry docks. During the third quarter, we recorded 85 off-fire days in connection with dry docks. We expect another 100 to 125 days during the fourth quarter. The most recent and current dry docks are extending in time as quarantine rules for ships and crew entering the shipyard we use in China has tightened, resulting in additional waiting time. Additionally, when vessels come out of dry dock, they are typically handicapped in the spot market for their first voyage and have to offer discounts and possibly encounter waiting time to commence trading. Hence, our spot earnings these last quarters were negatively impacted. For the first three quarters, we have capitalized 33 million for dry docks, installation of scrubbers and ballast water treatment systems. Our team is doing a great effort and we will by year end have dry docked 50% of our fleet, making these ships ready for what we expect to be a better market next year. For next year, there are only three ships scheduled for dry docks. The way we are positioning the company is a reflection of our constructive view on the market. On the left-hand side, we illustrate the time charter versus spot exposure for our fleet. You will note that the time charter book is coming off from what has been very beneficial levels, building market exposure into strengthening fundamentals. On the right, we estimate the discretionary cash flows in DHT at different rate levels. As an example, if spot earnings are 50,000 per day for 2022, we estimate that the discretionary cash flow could be 296 million, equal to $1.78 per share. This reveals the operational leverage and significant upside that we have put in place. So, to round it up. We have a large quality fleet and a strong and healthy balance sheet with 30% interest-bearing debt to total assets on a mark-to-market basis. We have a consistent and what we believe to be a well-designed strategy matched with a proven ability to manage the business cycles. We introduced our capital allocation policy from the second quarter 2015 and it has remained consistent. On the market, we believe that the worst is behind us and see a market recovery in the making. The recovery is at a measured pace, but key elements in the oil market drives our constructive view. These elements are, one, the recovery in global oil demand post the COVID shock, in particular related to increased mobility. Two, crude oil inventories having been drawn down to pre-COVID levels. and three OPEC plus responding with additional barrels to the market. The positive dynamics can, amongst others, be read through improved refining margins. So we think we are in great shape and are tuned for recovery. And with that, we open up for Q&A. Operator?

Thank you. Ladies and gentlemen, as a reminder, if you wish to ask a question today, please press star and one on your telephone. Our first question today comes from the line of Randy Givens of Jefferies. Please go ahead. Your line is now open.