DHT Holdings, Inc.

Good day and thank you for standing by. Welcome to the Q2 2024 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 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Leila Halvorsen, CFO. Please go ahead.

Thank you. Good morning and good afternoon, everyone. Welcome and thank you for joining DHT Holdings' second quarter 2024 earnings call. I am joined by DHT's President and CEO, Svein Moxnes Haifjell. 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 on our website dhtankers.com. until August 20th. 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. As usual, we will start the presentation with some financial highlights. We maintain a very strong balance sheet represented by low leverage and significant liquidity. At quarter end, financial leverage was 18.6% based on market values for the ships, and net debt was 14.2 million per vessel. The second quarter ended with total liquidity of 263 million, consisting of 73 million in cash and 191 million available under our revolving credit facilities. Now over to the P&L. We are pleased with the results for the quarter. We achieved revenues on TCE basis of 103.7 million and EBITDA of 80 million. Net income came in at 44.5 million, equal to 27 cents per share. Vessel operating expenses for the quarter were 20.4 million, which included some one-offs in addition to timing of purchases of spares and consumables. G&A for the quarter was 4.5 million. The vessels in the spot market achieved robust earnings with $52,700 per day, and the vessels on time charters made $36,400 per day. The average TC achieved for the quarter was $49,100 per day. For the first half of 2024, our spot vessels achieved $53,400 per day, while the average combined time charter equivalent earnings came in at $50,000 per day. Net income for the first half of 2024 came in at 91.6 million, equal to 57 cents per share. And then over to the cash flow highlights. The cash flow for the second quarter of 2024 was stable, and we started the quarter with 73 million in cash. We generated 80 million in EBITDA, Ordinary debt repayment and cash interest amounted to 16 million, and 46.8 million was allocated to shareholders through a cash dividend, while 0.8 million was used for maintenance capex. We paid first installments for all four new buildings, amounting to 51.5 million, and we drew 25 million on the ING revolving credit facility. to partly fund the installments together with our discretionary cash flow. Further, 8.8 million was related to changes in working capital, and the quarter ended with 73 million in cash. Switching to capital allocation. DHT has a defined and predictable capital allocation policy. And in line with our policy, we will pay 27 cents per share as a quarterly cash dividend, which is equal to 100% of ordinary net income. The dividend will be payable on August 30 to shareholders of record as of August 23. This marks the 58th consecutive quarterly cash dividend, and the shares will trade ex-dividend from August 23. On the left side of this slide, we present an update on estimated P&L and cash breakeven rates for 2024. P&L breakeven for the full year is estimated to $27,700 per day for the fleet, while cash breakeven is estimated to $18,500 per day, resulting in $9,200 per day per ship. in discretionary cash flow after dividends. So assuming the vessels earn P&L break even, this means about 79 million in discretionary cash flow for the year. On the right side of the slide, we illustrate the quarterly cash dividend we have returned to shareholders since we updated the dividend policy in the second half of 22. This amounts to a total of $1.97 per share. And with that, I will turn the call over to Svein.

Thank you, Laila. Here is the updated outlook for the third quarter for the company. We have 552 time charter days covered for the third quarter at 37,700. This rate assumes only the base rate for the two Time Charter contracts that have profit-sharing features. The forecast includes the Time Charter for DST Europe, built 2007, at 49,500 per day that commenced at the end of June. We expect to have 1,630 spot days in this quarter, of which 75% have been booked at an average rate of 42,100. The current spot market is below this level, hence there is a risk that the average for the quarter will come down from this number. The spot P&L breakeven for the quarter is estimated to be 23,600, a number that should assist you in estimating the net income contribution from our spot fleets. Here we present you with an update for our new building program. We have achieved meaningful improvements in the delivery schedules for all four ships. The delivery schedule is now February, April, May, and July in 26. This results in a significant increase in revenue days for the year. When compared to the schedules at the time of entering into the contract, we now expect increase in revenue days to be in the range of 550 to 600 days for the year. As you will note, the ships under construction have been all allocated names. As indicated during our previous earnings call, the options for additional ships were not declared and have as such expired. The advance schedule was made possible as certain projects for other ship types have been revised at the shipyards. We are very pleased with this outcome and that our relationship to the yards resulted in us being afforded this priority. The spot market is currently in a seasonal week period. As many analysts and research reports are suggesting, we are now in a waiting game for refinery maintenance to complete and for runs to increase. On the graph to the left, you will see that seaborne transportation of crude oil hit about 41.7 million barrels per day in February and March this year. In the past two months, this has come down to about 40.3 million barrels per day, i.e. down some 1.5 million barrels per day. As you will see in the graph to the right, this development resulted in inventory bills largely in April, and we understand in China particularly. This reversed in June and July as refiners started to draw on inventories, being the key culprit behind the reduced demand for transportation. We believe the prior slide to jive well with this illustration. On the left, you can note that refining margins softened during the second quarter. In the graph on the right, you can see that refiners have built inventories of diesel and gasoline during the same period. The forward curve suggests that refining margins could improve and would offer an opportunity to reduce decent inventories. We think it logical to assume that this will play out and that it will generate increased demand for crude oil feedstock and our services to rebuild crude oil inventories. In general, our markets offer attractive fundamentals and prospects with continued oil demand growth, longer transportation distances, and a limited supply of new ships in combination with rapidly aging fleet. Our strategic pillars remain with disciplined execution. We believe we are well structured for the markets we operate in, focusing on solid customer relations, offering safe and reliable services, supported by a solid balance sheet, strong liquidity, robust break-even levels, all matched up to the defined and shareholder-friendly dividend policy. With that, operator, over to you.