DHT Holdings, Inc.

Good morning and good afternoon, everyone. Welcome and thank you for joining DHT Holdings' fourth quarter 2024 earnings call. I am joined by DHT's president and CEO, Svein Moxnes Harfjer. 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 February 13th. In addition, our earnings press release will be available on our website and on the SSC Edgar system as an exhibit to our form 6K. As a reminder, on this conference call, we'll 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 SSE ecosystem, 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 continue to show a very strong balance sheet with low leverage and significant liquidity. The fourth quarter ended with total liquidity of 258 million, consisting of 78 million in cash and 180 million available under our revolving credit facilities. At quarter end, financial leverage was 18% based on market values for the ships and net debt was 13.8 million per vessel, way below estimated residual ship values. Now over to the P&L. We achieved revenues on TC basis of 85.5 million and EBITDA of 60.6 million for the fourth quarter. Net income came in at 54.7 million, equal to 34 cents per share. After adjusting for a non-cash reversal of prior impairment charges of 27.9 million, net income came in at 26.8 million, equal to 17 cents per share. Vessel operating expenses for the quarter were 20 million, and G&A for the quarter was $5.6 million, of which the latter included a non-recurring item of $0.7 million. For the fourth quarter, the average TCE for all the vessels in the spot market was $38,200 per day, while the spot vessels under 15 years of age achieved earnings of $40,500 per day. The vessels on Time Charger also made $40,500 per day, while the average combined TCE achieved for the quarter was $38,800 per day. Net income for the full year of 2024 was $181.5 million, equal to $1.12 per share. Adjusted for the non-cash reversal of prior impairment charges booked in the fourth quarter of 27.9 million, Net income for 2024 came in at 153.6 million, equal to 95 cents per share. Yet another strong year for THT. Vessel operating expenses for 2024 were 78.6 million, which includes a non-recurring insurance deductible. And G&A for 2024 was 18.9 million. We estimate G&A for 2025 to be about 18 million, equal to an average quarterly run rate of 4.5 million. Depreciation for 2024 was 111.9 million, and based on our current fleet, we estimate our annual depreciation for 2024 to be about 110 million. For 2024, our spot vessels achieved $47,200 per day, while the average combined TCE came in at $45,200 per day. The spot vessels under 15 years of age achieved earnings of $49,800 per day for the full year of 2024. On this slide, we present the cash flow highlights for the fourth quarter. We started the quarter with $74 million in cash, and we generated $60.6 million in OTA. Ordinary debt repayment and cash interest amounts to $15.1 million. $35.5 million was allocated to shareholders through a cash dividend, and $13.2 million was used for share buyback. 12.9 million was used for our new building program, while 10 million was drawn under our available RCF. Positive changes in working capital amounted to 9.3 million, and the quarter ended with 78 million in cash. And with that, I will turn the call over to Svein.

Thank you, Laila. We'll talk about our business update. During December, we took advantage of the soft period in the capital markets to repurchase our own shares to the tune of 1.5 million shares, just shy of 1% of the company. The average price was $8.89, almost $3 lower than yesterday's closing price, and accretive to earnings per share and net asset value by a good margin. We entered into agreement to sell our oldest ship, the DHT Scandinavia, built in 2006 for a price of 43.4 million. The vessel was debt-free, and we expect the sale to generate a book gain of about 19.8 million. The cash proceeds will be allocated to general corporate purposes here under investments in vessels, share buybacks, and prepayment of debts. The vessel was delivered to our new owners during January. During the quarter, we paid 12.8 million in installments under our new building program, taking total installments during 2024 to 90.1 million. Subsequent to the quarter, we secured a one-year time charter for DHT China, built 2007, at $40,000 per day. The contract commenced towards the end of January. On this slide, we will discuss capital allocation at dividend specifically. The dividend for the fourth quarter of 2024 is declared at 17 cents per share. This is as per our capital allocation policy of paying out 100% of ordinary net income as quarterly cash dividends and marks our 60th consecutive quarterly cash dividend. The shares will trade ex-dividend on February 18 and the dividend will be paid on February 25. In the graph to the left, we update our estimated P&L and cash breakeven levels for 2025. As you will see, the difference between the two is estimated at $7,000 per day for the year. This discretionary cash flow will remain in the company and be allocated to general corporate purposes with the intention being to fund installments under our new building program. The graph on the right illustrates the accumulated dividends since updating our capital allocation policy from the third quarter of 2022. The accumulated amount is $2.36 per share and reflects well during a period in which our share price has appreciated, and we made share buybacks totaling 32 million, equal to 2.3% of the company. We will now discuss the bookings to date for the first quarter of 2025. We expect to have 604 time-sharded days covered for the first quarter at 41,700 per day, a marginal improvement when compared to the prior quarter. This rate assumes only the base rate for February and March for the time-sharded contract that has profit-sharing feature. We assume 1,475 spot days in the quarter, of which 74% have been booked at an average rate of 36,400. Our ships that are younger than 15 years of age have been booked at 37,100 per day. You will note that we have improved the rates on the bookings when compared to our business update of January 5. The current spot market for modern vessels with exhaust gas cleaning systems are in the $55,000 to $60,000 range. The spot P&L breakeven for the quarter is estimated to be $21,700 per day, a number you might use to estimate the net income contribution from our spot fleet for the first quarter. We believe our market is increasingly becoming a highly constructive supply story. Here we illustrate the demographics of the VLCC fleet. Maybe not news to many of you, but nevertheless, we think it's important to reinforce the obvious, which is that the VLCC fleet is set to shrink, and at a time when demand for our services is growing. By the end of 2026, we estimate 444 VLCCs to be older than 15 years of age. At the same point in time, 202 are estimated to be older than 20 years and 184 to be older than 25 years. These are staggering numbers and will increasingly support our business. In the same context, we estimate almost 200 VLCCs to belong to the so-called shadow fleet. Following the recent additional sanctions, 97 VLCCs are now sanctioned. making it harder for these vessels to operate and serve a purpose. For avoidance of doubt, these vessels are mostly in the older end of the sailing fleet, hence included in the prior stated fleet demographics. The order book for new seats is benign, with about 9.3% of capacity on order. There will be five ships delivered this year, 24 in 26, 44 in 27, and 14 estimated for 28. Next slide here, we will give some general market commentary. The U.S. is actively announcing sanctions and tariffs. Some will have limited impact on our market, but some could be of significant support to freight rates. Overall, we expect sanctions and tariffs to somewhat disrupt trade, but in contrast to the impacts from the Russia-Ukraine conflict, we expect these to cease to be in high demand. Sanctions and fiscal issues with some of the teapot refinery industry in China is resulting in changed procurement behavior of crude oil, as state-owned refiners are increasingly taking a prominent role, which likely results in a reduced role for the shadow fleet. China has announced supportive fiscal policy measures and stimuli, which we assume will drive increased economic activity and consumption. This combined with net new refining capacity coming on stream should result in some 300,000 barrels per day increased demand for 2025. We further note that refining margins in China has lately improved signaling a successful reduction in inventories and increased economic activity. As mentioned in the business outlook, the spot market for modern VCCs with exhaust gas cleaning systems are now in the $55,000 to $60,000 a day range, with good support and a possibly continued upward trajectory. There is significant interest from customers for time-sharded contracts, reflecting an aligned view that the market is fast becoming tighter as the modern and compliant fleet is set to shrink over the next few years. Based on positive feedback and encouragement from our key stakeholders, namely shareholders, customers, and lending banks, we believe we have an appropriate strategy tailored to the structure of our market, focusing on solid customer relations, offering safe and reliable services, maintaining a competitive cost structure with robust breakeven levels, a solid balance sheet, and a clear capital allocation policy. The whole DSC team appreciates this encouragement and continues to work hard and operate with leading governance standards and a high level of integrity. Operator, over to you.

Thank you. If you would like 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. Thank you. We will start with our first question. This is from the line of John Chappell from Evercore ISI. Please go ahead.