DHT Holdings, Inc.

Good morning and good afternoon, everyone. Welcome and thank you for joining DHT Holdings' fourth quarter 2022 earnings call. I am joined by DHT's president and CEO, Svein Moxnes Harger. 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 February 16th. In addition, our earnings press release will be available on our website and on the SSC 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 as detailed in our financial report. 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 Edgar system, including the risk factors in these reports, for more information regarding risks that we face. Our balance sheet is in excellent shape. The quarter ended with 126 million of cash, and in addition, the company's availability under our evolving credit facilities was 234 million, putting total liquidity at 360 million as of December 31st. Financial leverage is about 19.4% based on market values for the shifts, and net debt per vessel was 11.8 million at quarter end, which is significantly below current scrap values. Reflecting on the strong freight market and our competitive cost structure, EBITDA for the fourth quarter was 95.4 million, with net income at 61.8 million equal to 38 cents per share. Affects for the quarter was 19.9 million and included some periodical variations, mainly related to stores and spares. G&A for the quarter came in at 2.8 million. In the fourth quarter, the vessels in the spot market earned $63,800 per day, and the vessels on time charter made $36,100 per day. On average, the achieved TCE for the quarter was $56,900 per day. The first three months of 2022 was more or less breakeven. Net income for the full year came in at $62 million, equal to $0.37 per share. DHT continues to show a very stable and competitive cost structure, and OPEX for the year was $73.8 million, equal to an average of $8,250 per day for the fleet. On the next slide, we present the cash bridge for the quarter. We started the quarter with $65.7 million of cash, and we generated $95.4 million in EBITDA. Ordinary debt repayment and cash interest amounted to $9.5 million. $4 million of new debt was issued in connection with the refinancing and $7.5 million was allocated to shareholders through the dividend payment. In December, we prepaid $23.7 million of long-term debt and the quarter ended with $125.9 million of cash. In the fourth quarter, we entered into a $37.5 million refinancing of DHT Tiger with Credit Agricole. The facility is repayable in quarterly installments of $625,000 per quarter, with a final payment of $22.5 million in addition to the last installment in December 2028. The new loan bear interest at a rate equal to SOFR plus 205 bits, which is equal to LIBOR plus 179 bits. As mentioned on the previous slide, in December, we prepaid 23.7 million under the Nordea credit facility. The voluntary prepayment was made for all regular installments for 2023 and reduces the company's cash break-even levels for the year. In January, we entered into a $405 million secured credit facility, including a $100 million uncommitted incremental facility. The new facility will refinance the outstanding amount on the ABN AMRO credit facility and is secured by 10 of the company's vessels. The facility is repayable in quarterly installments of $6.25 million, equal to $625,000 per vessel with maturity in January, 2029. The new loans bear interest at a rate equal to SOFR plus 190 bps, which is equivalent to LIBOR plus 164 bps. The mentioned refinancing of the Credit Agricole and the ABN AMRO credit facilities are in line with DHT style financing. which includes a 20-year repayment profile and a six-year tenor. Subsequent to these refinancings, DHT's weighted average cost of outstanding debt and revolving credit facilities is equal to LIBOR plus 177 bps. With that, I will turn the call over to Swain.

Thank you, Reina. We announced our new dividend policy last year. With our strong balance sheet and no new building capex, we simply think our new dividend policy to distribute 100% of net income to be good business. And as promised in our last earnings call, we are showing you the money. Based on the 22 fourth quarter financial results, we will pay 38 cents per share as a quarterly cash dividend on February 24, to shareholders on record as of February 17. In connection with our new dividend policy, we will on a regular basis inform the market on how much our ships have made on a time-chartered equivalent basis. This advice will be released shortly after every quarterly close, so well ahead of our quarterly financial results. Additionally, we will at the same time advise of bookings made to date for the subsequent quarter. The purpose is to be transparent and to guide on our SHIB's earnings, thereby assisting you all in setting out your expectations for our financial results. We are here updating you on our bookings to date for the first quarter of 2023. As you will see, we expect 510 days to be covered by our term contracts at an average rate of 33,900. We expect to have 1,390 spot plays for the quarter, of which about 66% has been booked at an average rate of 66,400 per day. Combined, as of today, this indicates bookings of 75% of the total days at weighted average earnings of 48,400 per day. In the last line, we are estimating the spot P&L break-even for the first quarter, allowing you to model a net income contribution based on your own assumptions for the unfixed spot dates. You saw a dip in the freight rates towards the end of last year. and there were decent resistance levels reflecting on the underlying market balance. And based on what we see now, we expect rates to improve for the balance of the quarter. We think our plan for guiding to make good sense in relation to our new dividend policy. On this slide, we are sharing our estimated breakeven levels for the year of 2023. The estimated P&L breakeven for the fleet as a whole is about 27,200 per day. This includes the increased annual depreciation of 7.2 million related to our retrofit program for exhaust gas cleaning systems. When adjusted for the fixed income that we have, the P&L breakeven for the spot fleet is about 25,400 per day. The estimated cash breakeven for the fleet as a whole to be 18,100 per day, with the spot chips requiring to make 14,200 per day for the company to be cash neutral. Keep in mind that our cash breakeven numbers include all true cash costs, i.e. OPEX, G&A, maintenance capex, cash interest, and debt amortization. This illustrates a headroom of about 9,000 per day between cash breakeven and net income breakeven levels for the fleet. with these potential cash flows being allocated to general corporate purposes. Here we provide you with an update on our project to retrofit the remainder of our fleet with exhaust gas cleaning systems. We have to date completed two of the retrofits and there are two currently at the yard. Another two will enter the yard later this quarter and the final two early in the second quarter. The project is developing according to plan, both from a cost perspective and in terms of planned off-fire days for the ships. The fuel spreads are holding up well, resulting in premium earnings for ships with systems installed. We are not facing any operational issues and are pleased with our decision to fit the last batch of our ships with these systems. Following this, our entire fleet will be fitted with exhaust gas cleaning systems. Additionally, these ships are attracting increased interest from customers for long-term charters. There are very favorable fundamentals in our market, and we expect these to have legs resulting in good earnings for the tanker sector. We see the early innings of the impact of China's reopening. The size of the now second batch of crude oil import quotas for refiners in China suggests expansive domestic demand requiring increasing refinery runs. Non-OPEC supply is growing, supporting longer haul transportation. Additionally, geopolitical events are disrupting certain trades, reducing the productivity of the larger fleets. This disruption is not expected to disappear anytime soon. And as we all know, there's hardly any new supply or ships coming in. The VCC order book now stands at 2.2% of the sailing fleet. The older part of the fleet is growing quickly with about 14% of the fleet being older than 20 years of age and 30% being older than 15 years. These numbers will expand rapidly over the coming years and at the time when regulatory requirements are expected to result in reduced speed for a good part of the fleet. An increasing number of ships are engaged in trades either partly or fully sanctioned. This fleet is also referred to as the shadow fleet. Although these ships currently serve a purpose in the greater markets, we find it hard to believe that they will stay in business over time. or ever return to the compliant market. We believe this could be viewed as the new scrapping. In due course, our expectation is that the fleet will start shrinking over the next couple of years. So, going forward, our plan is clean and simple. You should expect continued strong discipline in executing our business model and strategy. We have a great team of people in a no-nonsense company culture, all focused on delivering safe, reliable services to our customers and strong results for our shareholders. We are tuned for rewarding times with a quality fleet of ships all in the water, a rock-solid balance sheet, premium revenue generation and a low-cost structure. We think returning 100% of net income to shareholders could be fair and square and good business. And with that, we open up for questions.

Thank you. As a reminder to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Please stand by while we compile the Q&A roster. We will take our first question, and the question comes from the line of Evan Koldgaard from Clarkson Securities. Please co-ed, your line is open.