DHT Holdings, Inc.

Good day, and thank you for standing by. Welcome to the Q2 2025 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. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speakers today, DHT President and CEO, Svein Moxnes Harfeld and Lila Halvorsen, CFO. Please go ahead. Your line is open.

Thank you. Good morning and good afternoon, everyone. Welcome and thank you for joining DHT Holdings' second quarter 2025 earnings call. I'm joined by DHT's President and CEO, Svein Moxnes Harfeld. 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 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 SSE 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. In the second quarter of 2025, we achieved revenues on TCE basis of 92.8 million and adjusted EBITDA of 69 million. Net income came in at 56 million equal to 35 cents per share. After adjusting for the 17.5 million gain on sale of vessels related to the sale of DHT Lotus, the company had a net profit for the quarter of 38.6 million equal to 24 cents per share. Vessel operating expenses for the quarter were $19.6 million, and G&A for the quarter was $4.6 million. For the second quarter, the average TC for the vessels in the spot market was $48,700 per day. The vessels on time charters made $42,800 per day, while the average combined TC achieved for the quarter was $46,300 per day. DHD continues to show robust balance sheet with low leverage and significant liquidity. We have continued to strengthen our balance sheet and the second quarter ended with total liquidity of 299 million consisting of 82.6 million in cash and 216.5 million available under our two revolving credit facilities. At quarter end, financial leverage was 14.1% based on market values for the ships, and net debt was 10 million per vessel, well below estimated residual ship values. On this slide, we present the cash flow highlights for the second quarter. We started the quarter with 80.5 million in cash, and we generated 69 million in EBITDA. Ordinary debt repayment and cash interest amounted to $19 million, and $24 million was allocated to shareholders through a cash dividend. $6.1 million was used to acquire the additional shares in Goodwood Ship Management. $1 million was used for maintenance capex, and $39 million was used for a new building program. Proceeds from the sale of DHC Lotus was $51 million. 52.6 million was used for prepayment of long-term debt, while net issues related to the refinancing of DHT Jaguar was 4.5 million. Positive changes in working capital and other amounted to 16.5 million, and the quarter ended with 82.7 million in cash. With that, I will turn the call over to Svein.

Thank you, Laila. It has been an active quarter for DHT, both closing projects that had been in the works for some time, as well as new ones. We will here take you through our quarterly highlights, although several of these events have been communicated previously as subsequent events to the first quarter report or as separate events post the first quarter report or in the most recent business update. Firstly, the DHT Appaloosa entered a seven to nine year time charter contract with the global energy major. The contract has a fixed base rate of 41,000 per day, plus a profit sharing structure in which earnings in excess of the base rate will be shared 50-50 between the customer and us. She delivered into the contract in May. We entered into agreement to acquire a modern second-hand vessel built at Hyundai South Korea in 2018. She has large dead weight, is fitted with exhaust gas cleaning system and is a sister of vessels already in our fleet. We have very good experience with these ships both commercially and operationally. The price is 107 million and is in line with current broker values. This fleet addition will replace some of the divested earnings following the sale of older ships. The acquisition will be financed with available liquidity and projected new mortgage debt. Expect to take delivery towards the end of this quarter. We sold the DSG Lotus and DSG Peony built in 2011 at Buhai Shipbuilding in China. The two vessels were sold for a combined price of 103 million. These two vessels were acquired in 2017 as part of the acquisition of BW Group's VHC fleet for an aggregate price of 115.8 million, and have served as well. The DHT Lotus was delivered in April, and we recorded a capital gain of 17.5 million during the quarter, and net proceeds were 50.9 million. The DSG Peony was delivered in July, and we expect to record a gain of $50.5 million in the third quarter, with net cash proceeds of $50.1 million. DSG Bahinia, built in 2007, was fixed on a one-year time charter contract with Global Energy Company at $41.5 thousand per day. She commenced the contract in May. Then we acquired minority legacy shareholder positions in Goodwood Ship Management for 6.1 million and the company is now 100% owned by DHC. The company undertakes technical management and crewing for all our vessels including recruitment, employment and training of our seafarers through our offices in Singapore and Mumbai, India. The entire DSC fleet has been re-flagged to the Marshall Island registry and there were some expenses recorded in OPEX related to this during the second quarter. We have entered into a new credit facility to refinance the DSC Jaguar built 2015. The facility is 30 million with a six-year tenor and a 20-year repayment profile. It is priced at SOFR plus a margin of 175 bps and is otherwise in line with the DHT-style financing. On this slide, we will provide you with a new building financing update. We have entered into a 308.4 million secured credit facility to finance our four new buildings. The facility is co-arranged by ING and Nordea with backing from KSHORE. It is competitively priced at SOFR plus an average weighted margin of 132 bps. The facility has a 12-year tenor and a 20-year repayment profile. We should highlight that the facility does not include a prepayment option in favor of the lenders halfway through the tenor. Hence, it has a true 12-year tenor with respect to both maturity and pricing. The financing underscores the confidence existing lenders have in DHT, our robust financial position and our strategy. The new building project has a total capex just shy of 520 million. We have paid basically 180 million in installments to date. Combined with the announced credit facility of 308 million, we have an estimated 31.6 million in remaining capex, which we plan to fund through cash flows from operations and or existing liquidity. We view this as a very comfortable position for the company. Now we will discuss capital allocation and dividends. As per our capital allocation policy of paying out 100% of ordinary net income as quarterly cash dividends, the dividend for the second quarter of 2025 is declared at 24 cents per share and marks our 60 seconds consecutive quarterly cash dividend. The shares will trade ex-dividend on August 18 and the dividend will be paid on August 25 to shareholders of record as of August 18. In the graph to the left, we estimate our estimated P&L and cash break even levels for the second half of 2025. As you will see, the difference between the two is estimated at $7,800 per day for this period. This discretionary cash flow will remain in the company and be allocated to general corporate purposes, with the intention being to fund the remaining 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 now $2.75 per share and reflects well during a period in which our share price has appreciated and we made share buybacks equal to 2.3% of the company in addition to the quarterly cash dividends. Now with an update on the bookings to date for the third quarter of 2025. We expect to have 805 time charter days covered for the second quarter at $40,500 per day. This rate assumes profit sharing for the month of July and only the base rate for the month of August and September for the time charter contracts that has profit sharing features. We assume 1,150 spot days in this quarter, of which 73% have been booked at an average rate of $38,500 per day. The third quarter started in a disappointing fashion, but we sense a potential turnaround as we speak. The spot P&L breakeven for the third quarter is estimated at $20,000 per day, a number you may use to estimate the net income contribution from our spot fleet for the third quarter. As we have repeatedly stated, it is our view that the dynamics of our market is increasingly being a favorable supply story, with a rapidly aging fleet exceeding a benign order book of new ships and a string of sanctions making it increasingly challenging to trade older ships in the shadow fleet. There are a number of other factors as well that we expect to come into play. The US is proposing tariffs on India's continued import of Russian oil, There are already signals of a shift in India sourcing its seed stock, supporting the SUSEMAX and the VFCC trades. OPEC has announced several increases in production. So far, this has had limited impact on our market. But with peak season for domestic power generation demand in the Middle East nearing its end, we expect a rise in seaborne exports towards the end of the third quarter. We notice that refining margins are reassuring, supporting demand for feedstock. And Brazil has recently entered into a supply contract for crude oil to China, which is supportive of the VLCC trade. In addition, we see several potential triggers that could act as tipping points in favor for a very strong VLCC market. One, improved arbitrage economics for Atlantic Basin Barrel to be sold to Asia. 2. Escalating levels of sanctions and importantly enforcement of these. 3. Reentry of Venezuelan crude oil into the compliant markets. 4. Renewed attention to transshipment of sanctioned oil in Malaysian waters. 5. De-escalating in trade and tariff tensions. 6. Macro tailwinds with a resilient global economy, reasonable oil prices and a positive Chinese economic read-through. We continue as always to focus on what we can control and delivering on what we believe is a resilient business approach and strategy. We receive encouragement from our key stakeholders, shareholders, customers and lending banks. Irrespective of which constituency you belong to, you should expect us to focus on solid customer relations with safe and reliable services, a competitive cost structure with robust break-even levels, a solid balance sheet a clear capital allocation policy to create long-term shareholder value. We appreciate the encouragement, and the entire DSG team continue to work hard and operate a leading governance standard and a high level of integrity. And with that, we open up for questions. Operator?