DHT Holdings, Inc.

Good morning and good afternoon, everyone. Welcome and thank you for joining DHT Holdings' fourth quarter 2021 earnings call. I am joined by DHT's co-CEO, Svein Moxnes Harfjell, and Trygve Mønster. As usual, we will go through financial sense and highlights before we open up for your questions. A 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 dshtankers.com until February 15th. In addition, our earnings press release will be available on our website and on the SSE EDGAR system as an exhibit to our Form 6-K. 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 DHG's prospects, dividends, share repurchases, and debt repayments, outlook for the tanking market in general, daily shorter high rates and less utilization, forecasts of world economic activity, oil prices and oil trading patterns, anticipated levels of new building and scrapping, and projected dried-off 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. DHT continues to show a healthy and strong balance sheet, and the quarter ended with $60.7 million of cash. At quarter end, the company's availability under both revolving credit facilities was $178.7 million, putting total liquidity at $239 million as of December 31st. Financial leverage is about 30% based on market values for the SHIPS, and net deaths per vessel was 17.8 million at quarter end, which is well below current scrap values. Looking at the P&L highlights, EBITDA for the fourth quarter was 32 million and net loss came in at 2.9 million. We believe this is a very competitive result given the current tanker market. The result includes the cash distribution of equity of 4.6 million from the mutual worries club and a non-cash gain in fair value related to interest rates derivatives of 4.5 million. The company continues to show a very good cost control with OPEX for the quarter at 19.9 million. Average OPEX for 2021 was equal to $7,900 per day per shift. G&A for the quarter was $1.9 million, which was low due to a reversal of accruals related to performance compensation. G&A for the full year was $16.6 million, equal to $1,700 per shift day. We will revert with guidance related to G&A for 2022 in connection with our first quarter results. In the fourth quarter of 2021, the company achieved an average TCE of $21,500 per day, while the average TCE for the full year of 2021 amounted to $22,200 per day. For the first quarter of 2022, 69% of the available days have been booked at an average rate of $19,900 per day. 59% of available spot dates have been booked at an average rate of $12,600 per day. Let's go through the cash bridge. We started the quarter with $64.5 million of cash and we generated $32 million in EBITDA. Ordinary debt repayment and cash interest amounted to $8.8 million. while $6.3 million was allocated to shareholders through share buybacks and the dividend payment. $14.2 million was used for maintenance and scrubber capex. Changes in working capital amounted to $7.6 million, mainly resulting from re-delivery of vessels on time-starter, and we ended the quarter with $60.7 million of cash. As you will note, and despite the very challenging freight market, our operations were again cash positive. With that, I will turn the call over to Svein.

Thank you, Laila. On this slide, we will discuss a topic which is core to running a shipowning company. How much one operationally gets out of the capital one has been entrusted. As you surely will agree, it's best illustrated through the eVita margin a company delivers, and not just through a quarter or a single year, but over time. The slide illustrates this very issue over the past five years. We have taken the liberty to compare our margin with the three most relevant peers in the public space. As you will see, DST represented by the green bars comes out on top every year over this period. No easy feat, but maybe no coincidence either. We think this reflects our quality fleet run by a team of some of the best people in this industry within our no-nonsense company culture. Another consistent feature in our strategy is how we allocate capital. Firstly, and including this reporting quarter, we will have paid quarterly cash dividends for 48 quarters in a row. Secondly, our capital allocation policy was introduced and has remained unchanged seven years ago. and including positive capital gains to our formula of calculating the dividend. And keep in mind, it is minimum 60% of ordinary net income. For the fourth quarter, we will return a total of 6.3 million to shareholders. As we have previously announced, we bought back 561,000 of our own shares at an average price of 528. The shares were retired upon receipt. In addition to the share buybacks, we will pay a cash dividend of 2 cents per share for the quarter. It will be payable on the 24th of February to shareholders of record on the 17th of February. As mentioned, this marks our 48th consecutive quarterly cash dividend. For 2021 as a whole, we will be returning 49 million to shareholders, consisting of 17 million in cash dividends and 32 million in share buybacks. This slide offers an update on our time charter portfolio. We currently have six ships on time charter, four of which will expire during this year. The cover is equal to about 23% for the first half, moving down to about 5% during the second half. The average rate of these time charters for 2022 is $34,300 per day, excluding profit sharing, if any. We are not actively pursuing additional time charters in the current market. There could be exceptions in relation to possible extensions of current time charters with our customers, subject, of course, to rates and other terms being acceptable. And with that, and for the last time, I will turn the call over to Tegla.

Thank you, Svein. Let us now update you on where we stand with respect to our strategy of protecting the downside without giving away the upside. Let's look at cash break even first. The number we want you to remember from this slide is that our spot shifts only need to generate $10,900 per day in 2022 in order for DHT to be cash neutral. You should recognize this as a sharp and very competitive number. And we can inform you that even in the dreadful current market, our spot shifts are making more than this. As Lila said, First quarter spot bookings to date stand at 59% of available days booked at over $12,600 a day. So we dare to state that if you generate cash in this market, you have protected your downside very well. Let us then switch to the upside. We currently have six shifts on time charters, four of which will expire within the year. As you can see, DHG offers great operational leverage and immediate participation once the market recovery finally happens. As an example, if we were to see $50,000 a day average spot rates for the year, we stand to generate $287 million in free cash flow, which equates to $1.70 per share. You should also note that a $5,000 a day change in spot rates equals some $38 million in annual cash flow, equivalent to almost a quarter a share. Finally, let us summarize the key messages in this presentation. One, DHT has the strongest balance sheet in the peer group. Two, whilst we were not profitable in 2021, we are proud of having limited the loss to $11.5 million in the worst tanker market in over a generation. Although just one of the others have reported so far, we believe this number will compare very favorably to peers. Three, DHT consistently generates superior EBITDA margin compared to peers. Four, with a spot cash break even of just 10,900 a day, we are cash flow positive even in today's market. we have 20 VLCCs in the spot market now giving immediate participation once the market recovers. And five, we continue to deliver on our capital allocation policy. In 2021, we certainly exceeded a minimum 60% when a total of 49 million was returned in the combination of cash dividends and share buybacks. Before we open up for your questions, Let me also add some brief comments about my retirement that was announced a couple of weeks ago. When Sven and I decided to team up just after the great financial crisis of 2008, it was with a desire to build a ship-owning company that was doing all the right things. Namely, investing counter-cyclically, building a balance sheet suitable for the business, and staying disciplined through the cycles. DHT became our platform, and I'm very proud of how we have been able to transform what was a small tonnage provider to the sizable and highly regarded LCC owner we are today. We have done it together with a small group of talented and dedicated shipping professionals, without whom it just couldn't have happened. The company is in excellent shape with a great fleet, strong balance sheet, and a terrific team both ashore and aboard the ships. So why in the world would I want to step down from this? A good question indeed, but the simple reason is that I've always wanted to retire in time to be able to enjoy and pursue my many hobbies while still young and strong. It really is as simple as that. I feel that all of us at DHT have accomplished what Sven and I set out to do some 13 years ago, and it doesn't stop here. I'm convinced the future holds great things for DHT. I'm very proud of what DHT has become, and I'm totally confident Svein and the team will continue to do the right things and skillfully navigate the DHT ship through the coming tanker market cycles. It has been a great journey, and I'd like to thank all my wonderful colleagues for the ride. So with that, we are now ready to take your questions. Operator?