DHT Holdings, Inc.

Good day and thank you for standing by. Welcome to the Q3 2023 DHT Holdings Inc Earnings Conference Call. At this time all participants are in a listen only mode. After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Laila Halvorsen, CFO. Please go ahead.

Thank you. Good morning and good afternoon, everyone. Welcome and thank you for joining DHT Holdings' third quarter 2023 earnings call. I'm joined by DHT's president and CEO, Svein Moxnes-Harfiast. 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 November 14th. 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 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 SSJ Edgar system, including the risk factors in these reports for more information regarding risks that we face. We retain a very strong balance sheet represented by low leverage and significant liquidity. At quarter end, financial leverage was above 21% based on market values for the ships, and net debt was some $15 million per vessel. Leverage has had a marginal increase compared to the second quarter due to an adjustment in market values for the vessels in addition to a new loan related to the acquisition of the HTA Palooza. The quarter ended with total liquidity of $292 million, consisting of $74 million in cash and $218 million available under our revolving credit facility. Now over to the P&L highlights. The quarter commenced with robust rates for the VFCC, however, with a volatile trend into the quarter driven by oil production cuts. In total, it was a good quarter and we achieved revenues on TCE basis of $89 million and EBITDA of $67 million. Net income came in at $31 million, equal to $0.19 per share. Reported vessel operating expenses for the quarter were $18.6 million and G&A was $4.3 million. Included in the OPEX number for the quarter were some advanced costs for spares and consumables associated with ships that have been in dry dock, in addition to some non-recurring items. The vessels in the spot market earned $44,700 per day, and the vessels on time starter made $35,500 per day. The average TCE achieved for the quarter was 42,500 per day. For the first nine months of 2023, we achieved revenues on TCE basis of 296 million and EBITDA of 229 million. Net income for the first nine months was 126 million, equal to 77 cents per share. Average TCE for the first nine months was $49,200 per day, whereas the vessels in the spot market earned $54,300 per day, and the vessels on time starters made $35,600 per day. On this slide, we present the cash flow highlights. We started the third quarter with $130.6 million in cash. and we generated 67 million in EBITDA. Ordinary debt repayment and cash interest amounted to 14 million, and 57 million was allocated to shareholders through the cash dividend pertaining to the second quarter of 2023. In addition to the cash dividend, we also allocated 10 million to shareholders through share buybacks during the quarter. $93 million was invested in our fleet, with $5.5 million in maintenance capex, $2.1 million for installation of exhaust gas cleaning systems, and $85.3 million for the acquired vessels. Assurance of long-term debt amounted to $54.5 million, and $4.9 million was related to changes in working capital. the quarter ended with $73.9 million in cash. Switching to capital allocation. In line with our dividend policy, we will pay $0.19 per share as a quarterly cash dividend, which is equal to 100% of net income. The dividend will be payable on November 28, to shareholders of record as of November 21. This marks the 55th consecutive quarterly cash dividends, and the shares will trade ex-dividend from November 20th. In addition to the cash dividends, we repurchased 1.1 million of the company's shares during the quarter for a total consideration of 9.9 million. The average price for the shares was 8.72, and the shares were retired upon receipt. So, to summarize, With the share repurchase and the quarterly cash dividend, DHT will return 132% of net income to our shareholders for the third quarter of 2023. With that, I will turn the call over to Svein.

Thank you, Rada. As addressed during the last quarter, we acquired a 2018 built VCC for 94.5 million. We took delivery of the vessel in late July and she immediately entered the shipyard to undertake her first special survey and dry dock. The purchase was funded with a combination of cash at hand and a new competitively priced loan facility in line with the DST style financing. She is named DST Apalusa and is now trading in the spot market. We are pleased with this acquisition, both from a value and quality perspective, an acquisition that is expected to be accretive to our earnings and to further improve our fleet's efficiency. As per normal, we maintain our focus on robust breakeven levels and here offer you an update on the levels for 2024. The estimated P&L breakeven for the year for the fleet as a whole is 27,500 per day. When adjusted for the fixed income that we have, the P&L breakeven for the spot fleet is 25,000 per day. Further, we estimate the cash breakeven for the fleet as a whole to be 21,400 per day, with the spot chips requiring to make 17,300 per day for the company to be cash neutral. Repeating our earlier messaging, and if you set out to compare these numbers with our peers, you should keep in mind that our cash breakeven numbers include all true cash costs, i.e. OPEX, G&A, cash interest, debt amortization, and maintenance capex. We will now go through the fourth quarter outlook. We expect 420 days to be covered by our term contracts at an average rate of 36,000 per day. We expect to have a total of 1,790 spot days for the quarter, of which 1,280 days equal to 71% have been booked at an average rate of 41,500 per day. As of today, this suggests combined bookings of 77% of the total days at weighted average earnings of 40,200 per day. You can compare these spot booking numbers with our estimated spot P&L breakeven rate of 24,700 per day for the fourth quarter, allowing you to model a net income contribution based on your own assumptions for the unfixed spot days. During the third quarter, we put four vessels through dry dock. One was brought earlier than the schedule, two were on schedule, and one was related to the DHT Appaloosa that we acquired during the quarter. But here is also a brief update on our dry dock schedule for the next couple of years. The demographics of our fleet is such that we are very light on maintenance capex in both 2024 and 2025. Importantly, this also means we will have a high number of operating days during this period, a period for which we have a very constructive market outlook. In short, we are tuned for rewarding times. This slide illustrates the VCC market over the past four quarters. The blue line is the earnings of the reference ship used by most analysts. The earnings are an average of the three key transportation routes, TD3C being the Middle East to China, TD15 being West Africa to China, and TD22 being US Gulf to China. The orange line shows you the average of these routes with a number of 45,600 per day over the period. We then compare this with our own average earnings per day of 57,000 over the same period. DHC clearly outperforms this most commonly used reference in the markets. But this is, however, not comparing apples and apples. Our fleet is in general more efficient than this commonly used reference. This reflects our quality fleet of ships with excellent vesting statistics operated by highly skilled seafarers and a very competent shoreside organization. The upturn we are at the early innings of is supported by historically low order books with visibility for the next three years at least. Adding to this picture, fleet efficiency regulations will start to bite, reducing productivity of the mature end of the fleet. The order book for VLCCs is now at 2.6% of the ships in the water, a marginal increase from a quarter ago, but still insignificant. Six vessels have been contracted since we last reported, taking the order book to 17 ships. Think of this number in comparison to a sailing fleet of some 900 ships. We have again not seen any scrapping, resulting in 30% of the current fleet being older than 15 years of age and 14% being older than 20 years of age. If one assumes no ships will be scrapped over the next two years, about 20% of the fleet will be older than 20 years of age by the end of 2025. In the second-hand market, the appetite to acquire older ships seems to be fading a bit. We think the key reason for this is that the shadow markets and sanctioned markets to possibly be satisfied. If this is correct, the older part of the fleet not engaged in these markets will increasingly find it hard to identify commercial opportunities. A small event, but another point in the Shadow Fleet discussion, is that Venezuelan crude exports to China has come to a halt, with now its small production basically only going to the US. This trade used to employ a number of older VCCs in very inefficient trade involving at least one, if not two, transshipments to cover up the origin of the crude, and this crude then typically went to China. and actually sucked up a lot of all the ships. This story is to be continued, we think. In an increasingly complex geopolitical environment that on balance should bode well for our business, we are staying focused on what is within our reach and control. We repeat the gospel and again outline the DHT DNA. This includes concentrating on disciplined execution of our strategy and maintaining what we have been told is a highly regarded level of corporate governance. We believe our company is structured for cyclical and volatile markets with our solid balance sheet and strong liquidity at its foundation. As always, we keep our eyes on maintaining robust breakeven levels while still having meaningful market exposure and operating leverage, being as profitable as we can. All the above with a defined and shareholder-friendly capital allocation policy of paying out 100% of net income as quarterly cash dividends. And with that, operator, over to you to receive 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 queue. Our first question comes from the line of Omar Nocta from Jefferies. Please go ahead.

Thank you.

Hi, guys. Good morning. Good afternoon. Just wanted to, you know, first off, thanks for the update. And, you know, I wanted to ask about, you know, the DHT footprint today. You just discussed kind of your outlook, and at least for the next three years, things are looking pretty solid. And, you know, DHT overall, you've got a pretty solid track record, I would say, over the past 10 years of effectively buying at the right time of the cycle. and also selling at the right time. Where do you think we are at the moment in terms of the DHT platform itself? Are you encouraged to put capital to work? You obviously bought the Appaloosa recently. How do you think about where DHT is now given your liquidity, the flexibility you have, the outlook you have, and just any comment you can sort of give a big picture on that.

Thank you, Omar. You know, we do think we are at the early innings of what can be a very exciting cycle and longer than what we have seen for quite some time. And part of this, of course, is given the non-existing order book, basically, and an aging fleet. When it comes to investments, Appaloosa was, we think, a very attractive opportunity. And as you saw then, our balance sheet liquidity allows us to capture these opportunities on on very short notice when they appear. This does not mean that in general we are trying to hoover the market for any ship that's for sale. Far from it. But we are very constructive on the next few years. If the right opportunities come along, we will try to capture them. But I don't think you should expect it to follow any market development in terms of asset prices. We think investors should focus on stocks and we will focus on making as much money as we possibly can. But of course, you should not exclude us picking up assets if the right sort of deal comes along, right? But it's harder to find now than what it was just a couple of years ago.

Yeah, thanks. Fine. And then maybe just a follow up. Obviously, leverage has been very low for quite some time. roughly I would say maybe 20% or below on a net LTV basis. Is that basically kind of where you want to have it long term? Do you see bumping that up to the 30 range, 40? What do you think about sort of the leverage ratio going forward?

Well, the current leverage ratio is also, you know, by design enabling us to you know, pick up assets if we want to, without really distorting what we think is sort of sustainable leverage over time. So if that means we increase leverage, you know, a bit, we don't really have a fixed number on that, but if it goes to 25 or 30% in combination with some very meaningful and attractive opportunities, we think that's okay. But beyond that, I don't think you should have any expectation.

Got it. Okay, thank you. I'll turn it over.

Thank you. Once again, if you'd like to register a question, please press star 1 and 1 on your telephone. And to withdraw your question, please press star 1 and 1 again.

We'll now move on to our next question.

Our next question comes from the line of Frode Morkadal from Clarksons. Please go ahead.

Thank you.

My first question, I have noticed that brokers recently have marked up time charter rate ideas. I just wanted to know, what do you think are realistic time charter rates now for, let's say, two, three-year contracts?

at this point what's your preference for spot versus contracts i think there is a bit of a spread between the bid ask on charters but i think today you will have customers potentially willing to pay say 50 for three years and 45 maybe 46 for five years And I think for one year, it's a bit of a challenge given the spot market, but it will at least start with a six-handle, I think. But again, it also depends on the ship. So at some point, we will start to build more visibility on earnings, but we think it's a bit early in the cycle to do this. We might pick up the right deal at the right time for the right ship, for lack of a better explanation. But it will not be like we did in 2020 when we pushed out two-thirds of the fleet in a very short timeframe and capturing fantastic earnings over a period of 12 to 18 months when the market sort of fell apart. So I think now there's going to be a very rewarding time also in the small market, but it also means that there will be opportunities to build true long-term cash flow at some point. So you will see that gradually taking place over the next two to three years.

Yeah, makes sense.

Just to follow up on Omar's question on the cyclicality, which I agree you have navigated quite well. And I also know that you have this action plan of what to do at the different phases of the cycle. And yeah, I guess the dividend policy you have speaks a lot of where you think we are in the cycle. But maybe you could just talk a bit more about How are you positioned, DHT, to capitalize on this strong market ahead of us?

Well, we do have the vast majority of our fleet on the dance floor, as we said last quarter, right? So available to capture these rates that we expect will be available going forward. And that, of course, is going to be a massive value creator. And the majority of these monies will be paid out to shareholders. So this is, I think, a clear message to where we think we are to the to the owners of the company. But we do generate some additional cash flow after net income, so that will be allocated to general corporate purposes, as one would say. But as you've seen in the past, now we've picked up a ship, we've been buying back some stock. All of these things are just to try to further tune the business and make it even more rewarding for owners, either primarily to increase earnings per share for the owners.

Sounds good. Thank you very much.

Thank you. There are no further questions at this time, so I'll hand the call back to Sven for closing remarks.

Okay. Thank you to all for being interested in DST and for attending, so wishing you a good day ahead. All the best. Bye.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Speakers please stand by.

Thank you. you you Thank you. Thank you.

Good morning and good afternoon, everyone. Welcome and thank you for joining DHT Holdings' third quarter 2023 earnings call. I'm joined by DHT's president and CEO, Svein Moxnes Harfi. 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 November 14th. 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 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. We retained a very strong balance sheet represented by low leverage and significant liquidity. At quarter end, financial leverage was about 21% based on market values for the ships, and net debt was some $15 million per vessel. Leverage has had a marginal increase compared to the second quarter due to an adjustment in market values for the vessels in addition to a new loan related to the acquisition of DHT Appaloosa. The quarter ended with total liquidity of $292 million consisting of $74 million in cash and $218 million available under our revolving credit facility. Now over to the P&L highlights. The quarter commenced with robust rates for the VFCC, however, with a volatile trend into the quarter driven by oil production cuts. In total, it was a good quarter, and we achieved revenues on TCE basis of 89 million and EBITDA of 67 million. Net income came in at 31 million, equal to 19 cents per share. Reported vessel operating expenses for the quarter were 18.6 million, and GNA was 4.3 million. Included in the OPEX number for the quarter were some advanced costs for spares and consumables associated with ships that have been in dry dock, in addition to some non-recurring items. The vessels in the spot market earned $44,700 per day, and the vessels on time structure made 35 and a half thousand per day. The average TCE achieved for the quarter was 42 and a half thousand per day. For the first nine months of 2023, we achieved revenues on TCE basis of 296 million and EBITDA of 229 million. Net income for the first nine months was I'm sorry, 126 million, equal to 77 cents per share. Average TCE for the first nine months was $49,200 per day, where the vessels in the spot market earned $54,300 per day, and the vessels on time starters made $35,600 per day. On this slide, we present the cash flow highlights. We started the third quarter with 130.6 million in cash, and we generated 67 million in EBITDA. Ordinary debt repayment and cash interest amounted to 14 million, and 57 million was allocated to shareholders through the cash dividend pertaining to the second quarter of 2023. In addition to the cash dividend, we also allocated 10 million to shareholders through through share buybacks during the quarter. 93 million was invested in our fleet, with 5.5 million in maintenance capex, 2.1 million for installation of exhaust gas cleaning systems, and 85.3 million for the acquired vessels. Assurance of long-term debt amounted to 54.5 million, and 4.9 million was related to changes in working capital. the quarter ended with 73.9 million in cash. Switching to capital allocation. In line with our dividend policy, we will pay 19 cents per share as a quarterly cash dividend, which is equal to 100% of net income. The dividend will be payable on November 28th to shareholders of record as of November 21st. This marks the 55th consecutive quarterly cash dividends, and the shares will trade ex-dividend from November 20th. In addition to the cash dividends, we repurchased 1.1 million of the company's shares during the quarter for a total consideration of 9.9 million. The average price for the shares was 8.72, and the shares were retired upon receipt. So, to summarize, With the share repurchase and the quarterly cash dividend, DHT will return 132% of net income to our shareholders for the third quarter of 2023. With that, I will turn the call over to Svein.

Thank you, Laila. As addressed during the last quarter, we acquired a 2018 built VLCC for 94.5 million. We took delivery of the vessel in late July, and she immediately entered the shipyard to undertake her first special survey and dry dock. The purchase was funded with a combination of cash at hand and a new competitively priced loan facility in line with the DHT-style financing. She is named DHT Aparlusa and is now trading in the spot market. We are pleased with this acquisition, both from a value and quality perspective, an acquisition that is expected to be accretive to our earnings and to further improve our fleet's efficiency. As per normal, we maintain our focus on robust breakeven levels and here offer you an update on the levels for 2024. The estimated P&L breakeven for the year for the fleet as a whole is 27,500 per day. When adjusted for the fixed income that we have, the P&L breakeven for the spot fleet is 25,000 per day. Further, we estimate the cash breakeven for the fleet as a whole to be 21,400 per day, with the spot chips requiring to make 17,300 per day for the company to be cash neutral. Repeating our earlier messaging, and if you set out to compare these numbers with our peers, you should keep in mind that our cash breakeven numbers include all true cash costs, i.e. OPEX, G&A, cash interest, debt amortization, and maintenance capex. We will now go through the fourth quarter outlook. We expect 420 days to be covered by our term contracts at an average rate of 36,000 per day. We expect to have a total of 1,790 spot days for the quarter, of which 1,280 days equal to 71% have been booked at an average rate of 41,500 per day. As of today, this suggests combined bookings of 77% of the total days at weighted average earnings of 40,200 per day. You can compare these spot booking numbers with our estimated spot P&L breakeven rate of 24,700 per day for the fourth quarter, allowing you to model a net income contribution based on your own assumptions for the unfixed spot days. During the third quarter, we put four vessels through dry dock. One was brought earlier than the schedule, two were on schedule, and one was related to the DHT of Palusa that we acquired during the quarter. But here is also a brief update on our dry dock schedule for the next couple of years. The demographics of our fleet is such that we are very light on maintenance capex in both 2024 and 2025. Importantly, this also means we will have a high number of operating days during this period, a period for which we have a very constructive market outlook. In short, we are tuned for rewarding times. This slide illustrates the VCC market over the past four quarters. The blue line is the earnings of the reference chip used by most analysts. The earnings are an average of the three key transportation routes, TD3C being the Middle East to China, TD15 being West Africa to China, and TD22 being US Gulf to China. The orange line shows you the average of these routes with a number of 45,600 per day over the period. We then compare this with our own average earnings per day of 57,000 over the same period. DHT clearly outperforms this most commonly used reference in the markets. But this is, however, not comparing apples and apples. Our fleet is in general more efficient than this commonly used reference. This reflects our quality fleet of ships with excellent vesting statistics operated by highly skilled seafarers and a very competent shoreside organization. The upturn we are at the early innings of is supported by historically low order books with visibility for the next three years at least. Adding to this picture, fleet efficiency regulations will start to bite, reducing productivity of the mature end of the fleet. The order book for VLCCs is now at 2.6% of the ships in the water, a marginal increase from a quarter ago, but still insignificant. Six vessels have been contracted since we last reported, taking the order book to 17 ships. Think of this number in comparison to a sailing fleet of some 900 ships. We have again not seen any scrapping, resulting in 30% of the current fleet being older than 15 years of age and 14% being older than 20 years of age. If one assumes no ships will be scrapped over the next two years, about 20% of the fleet will be older than 20 years of age by the end of 2025. In the second-hand market, the appetite to acquire older ships seems to be fading a bit. We think the key reason for this is that the shadow markets and sanctioned markets to possibly be satisfied. If this is correct, the older part of the fleet not engaged in these markets will increasingly find it hard to identify commercial opportunities. A small event, but another point in the Shadow Fleet discussion, is that Venezuelan crude exports to China has come to a halt, with now its small production basically only going to the US. This trade used to employ a number of older VCCs in very inefficient trade involving at least one, if not two, transshipments to cover up the origin of the crude, and this crude then typically went to China. and actually sucked up a lot of older ships. This story is to be continued, we think. In an increasingly complex geopolitical environment that on balance should bode well for our business, we are staying focused on what is within our reach and control. We repeat the gospel and again outline the DHT DNA. This includes concentrating on disciplined execution of our strategy and maintaining what we have been told is a highly regarded level of corporate governance. We believe our company is structured for cyclical and volatile markets with our solid balance sheet and strong liquidity at its foundation. As always, we keep our eyes on maintaining robust breakeven levels while still having meaningful market exposure and operating leverage, being as profitable as we can. all the above with a defined and shareholder-friendly capital allocation policy of paying out 100% of net income as quarterly cash dividends. And with that, operator, over to you to receive 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 queue. Our first question comes from the line of Omar Nocta from Jefferies. Please go ahead.

Thank you.

Hi, guys. Good morning. Good afternoon. Just wanted to, you know, first off, thanks for the update. And, you know, I wanted to ask about, you know, the DHT footprint today. You just discussed kind of your outlook, and at least for the next three years, things are looking pretty solid. And, you know, DHT overall, you've got a pretty solid track record, I would say, over the past 10 years of effectively buying at the right time of the cycle. and also selling at the right time. Where do you think we are at the moment in terms of the DHT platform itself? Are you encouraged to put capital to work? You obviously bought the Appaloosa recently. How do you think about where DHT is now given your liquidity, the flexibility you have, the outlook you have, and just any comment you can sort of give a big picture on that.

Thank you, Omar. You know, we do think we are at the early innings of what can be a very exciting cycle and longer than what we have seen for quite some time. And part of this, of course, is given the non-existing order book, basically, and an aging fleet. When it comes to investments, Appaloosa was, we think, a very attractive opportunity. And as you saw then, our balance sheet liquidity allows us to capture these opportunities on on very short notice when they appear. This does not mean that in general we are trying to hoover the market for any ship that's for sale. Far from it. But we are very constructive on the next few years. If the right opportunities come along, we will try to capture them. But I don't think you should expect it to follow any market development in terms of asset prices. We think investors should focus on stocks and we will focus on making as much money as we possibly can. But of course, you should not exclude us picking up assets if the right sort of deal comes along. But it's harder to find now than what it was just a couple of years ago.

Yep. Thanks, Vein. And then maybe just a follow up. Obviously, leverage has been very low for quite some time. I would say maybe 20% or below on a net LTV basis. Is that basically kind of where you want to have it long term? Do you see bumping that up to the 30 range, 40? What do you think about sort of the leverage ratio going forward?

Well, the current leverage ratio is also, you know, by design enabling us to you know, pick up assets if we want to, without really distorting what we think is sort of sustainable leverage over time. So if that means we increase leverage, you know, a bit, we don't really have a fixed number on that, but if it goes to 25 or 30% in combination with some very meaningful and attractive opportunities, we think that's okay. But beyond that, I don't think you should have any expectation.

Got it. Okay, thank you. I'll turn it over.

Thank you. Once again, if you'd like to register a question, please press star 1 and 1 on your telephone. And to withdraw your question, please press star 1 and 1 again.

We'll now move on to our next question.

Our next question comes from the line of Frode Morkadal from Clarksons. Please go ahead.

Thank you.

My first question, I have noticed that brokers recently have marked up time charter rate ideas. I just wanted to know, what do you think are realistic time charter rates now for, let's say, two, three-year contracts?

at this point what's your preference for spot versus contracts i think there is a bit of a spread between the bid ask on charters but i think today you will have customers potentially willing to pay say 50 for three years and 45 maybe 46 for five years uh and uh i think for one year it's a you know a bit of a challenge given the spot market but it will at least start with the six handle i think but again you also depend on the ship so at some point we will start to build more visibility on earnings but we think it's a bit early in the cycle to do this and we might you know we might pick up the right deal at the right time and for the right ship for lack of a better explanation But it will not be like we did in 2020 when we, you know, pushed out two-thirds of the fleet in a very short timeframe and capturing fantastic earnings over a period of 12 to 18 months when the market sort of fell apart. So I think now there is going to be a very rewarding time also in the small market, but it also means that there will be opportunities to build true long-term cash flow at some point. So you will see that gradually taking place over the next two to three years.

Makes sense.

Just to follow up on Omar's question on the cyclicality, which I agree you have navigated quite well. And I also know that you have this action plan of what to do at the different phases of the cycle. And yeah, I guess the dividend policy you have speaks a lot of where you think we are in the cycle. But maybe you could just talk a bit more about How are you positioned, DHT, to capitalize on this strong market ahead of us?

Well, we do have the vast majority of our fleet on the dance floor, as we said last quarter, right? So available to capture these rates that we expect will be available going forward. And that, of course, is going to be a massive value creator. And the majority of these monies will be paid out to shareholders. So this is, I think, a clear message to where we think we are to the to the owners of the company. But we do generate some additional cash flow after net income, so that will be allocated to general corporate purposes, as one would say. But as you've seen in the past, now we've picked up a ship, we've been buying back some stock. All of these things are just to try to further tune the business and make it even more rewarding for owners, either primarily to increase earnings per share for the owners.

Sounds good. Thank you very much.

Thank you. There are no further questions at this time, so I'll hand the call back to Sven for closing remarks.

Okay. Thank you to all for being interested in DST and for attending, so wishing you a good day ahead. All the best. Bye.