DHT Holdings, Inc.

Good day and thank you for standing by. Welcome to the Q3 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. To withdraw your question, please press star, one, and one 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 2025 earnings call. I am joined by DHT's president and CEO, Svein Moxnes Halvorsen. As usual, we will go through financials and some highlights before we open up to 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 November 6th. 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 third quarter of 2025, we achieved revenues on TCE basis of 79.1 million, and adjusted EBITDA of 57.7 million. Net income came in at 44.8 million, equal to 28 cents per share. After adjusting for the 15.7 million gain on sale of vessels related to the sale of DHT Peony and the non-cash fair value loss related to interest rate derivatives of 0.4 million, the company had a net profit for the quarter of 29.5 million equal to 18 cents per share. Vessel operating expenses for the quarter were 18.4 million, and G&A for the quarter was 4.1 million. For the third quarter, the average TC for the vessels in the spot market was $38,700 per day. The vessels on time charters made $42,800 per day, while the average combined TC achieved for the quarter was $40,500 per day. DHD has a robust balance sheet with low leverage and significant liquidity. The third quarter ended with total liquidity of $298 million, consisting of $81.2 million in cash and $269.5 million available under two of our revolving credit facilities. At quarter end, financial leverage was 12.4% based on market values for the ships, and net debt was just below 9 million per vessel, which is well below estimated residual ship values. Looking at our cash flow for the quarter, we began with 82.7 million in cash, and we generated 57.7 million in EBITDA. Ordinary debt repayment and cash interest amounted to 17 million and 38.6 million was allocated to shareholders through a cash dividend. Maintenance capex amounted to 1.6 million and we invested 26.2 million in our new building program. Additionally, we placed a 10.7 million deposit for the acquisition of DHT Nakota. The sale of DHDP only generated proceeds of 51 million, and we used 22 million for prepayment of long-term debt. Positive changes in working capital and other items amounted to 6.8 million, and the quarter ended with 81.2 million in cash. Now let's move on to our quarterly highlights. Many of these have already been communicated as subsequent events to the second quarter, or as part of our recent business update. We 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 Kaser. It is competitively priced at SOFR plus a weighted average margin of 132 basis points. The facility has a true 12-year tenor and a 20-year repayment profile. We have also entered into a credit facility with Nordea to finance the vessel acquisition announced in June. This is a 64 million reducing revolving credit facility with a seven-year tenor and a 20-year repayment profile. It is priced at sulfur plus a margin of 150 basis points, and it's consistent with our established financing approach. The vessel, to be named DHT Nokota, is built in 2018, and we hope to take delivery in a couple of weeks' time. In September, we made a 22.1 million prepayment under the Nordea credit facility, covering all scheduled installments for the fourth quarter of 2025 and all of 2026. The facility matures in the first quarter of 2027 with only 3.7 million remaining, representing the final installment. Eight vessels serve as collateral for this facility with a current combined market value of about 650 million. During the quarter, we entered into eight three-year amortizing interest rate swap agreements, totaling $200.6 million. The average fixed interest rate is 3.32% compared to current three-month term SOFR of 3.84%, with maturity in the fourth quarter of 2028. As a subsequent event and as announced on October 13th, Svein Maksnes Harfjell was appointed to the board of directors. He will of course continue to serve as president and CEO of the company. And now over to capital allocation and dividend. In line with our capital allocation policy of paying out 100% of ordinary net income as quarterly cash dividends, The board approved a dividend of 18 cents per share for the third quarter of 2025. This marks our 63rd consecutive quarterly cash dividend. The shares will trade X dividend on November 12th, and the dividend will be paid on November 19th to shareholders of record as of November 12th. On the left side of this slide, we now present our estimated P&L and cash break-even levels for 2026. These figures include all true cash costs, and the difference between the two is estimated at $7,500 per day for next year. This discretionary cash flow will remain within the company and be allocated to general corporate purposes primarily to fund the remaining installments under our new building program. On the right side of the slide, we illustrate the accumulated dividends since we updated our capital allocation policy in the third quarter of 2022. The total accumulated amount is $2.93 per share, which reflects strong shareholder returns during a period of share price appreciation. Finally, let me update you on the bookings to date for the fourth quarter of 2025. We expect to have 901 time charter days covered for the fourth quarter at $42,200 per day. This rate includes profit sharing for the month of October and the base rate only for the months of November and December for contracts with the profit sharing future. We anticipate 1,070 spot days in this quarter, of which 68% have already been booked at an average rate of $64,900 per day. The spot P&L breakeven for the fourth quarter is estimated to be $15,200 per day. And with that, I will turn the call over to Swain.

Thank you, Laila. As you all have likely noticed, the VLCC market is demonstrating significant strength. This strength should positively impact our earnings for the latter part of the fourth quarter. The current freight market strength is driven by growing demand for seaborne transportation of crude oil in combination with the increasingly aging and fragmented structure of the fleet. Importantly for VLCCs, the workhorse of the crude oil transportation market, they are regaining their market share though its most competitive freight offering and efficiency. New politics, trade and traffic dynamics, sanctions and conflicts are adding to the picture, creating disruptions and focus on security of supply as the global fleet is reducing its efficiency and productivity. The US-China meeting in Kuala Lumpur agreed for a one-year postponement on many issues, including the port fees. OPEC's decision to reduce spare capacity by reversing production cuts and bringing more crude oil to the market seems to be well absorbed, partly supported by the Chinese demand for both consumption and stockpiling. Research suggests Chinese stockpiling to not only be short-term and optimistic, but to longer-term need to fill its increased storage capacity and meet defined requirements for strategic storage. Further, it suggests a need to boost its oil security with concerns of interruption in supply from sanctions and potential regional political conflicts playing a part. Lastly, a diversification in foreign reserves by buying oil and gold is said to be a consideration. Goldman Sachs reports that the world's biggest oil companies are expected to press ahead with plans to accelerate production growth when they report earnings. Analyst estimates compiled by Bloomberg suggest planned output growth between 3.9% and 4.7% to be in the cards. We have, as per usual, been traveling to spend time with our customers, and these reports mirror some of the key takeaways from our most recent trip. Several of our customers expect to expand their footprints and are presenting opportunities with demand for our services and more ships. We are grateful for this encouraging support, which leaves us highly constructive on our franchise and future. As always, we are looking into opportunities to develop DHT with continuous improvements in our service offerings and possible expansion. We have what we believe to be a resilient strategy with a focus on solid customer relations, offering safe and reliable services, maintaining a competitive cost structure with robust break-even levels, a strong balance sheet, and a clear capital allocation policy. The whole DSC team continues to work hard and operate with leading governance standards and a high level of integrity. And with that, we open up for questions. Operator?

Thank you. As a reminder, to ask a question, please press star 1 1 on the telephone and wait for your name to be announced. To answer your question, please press star 1 1 again. We will now take the first question. Coming from the line of Frode Morg-Dedal from Clarkson Securities. Please go ahead.

Thank you.

Hi, Brian. Hi, Leila.

Hi, Frode.

So on this port fee, that's interesting. Suspended for a year. So I guess the question I had is like, Is this a good thing for the market? Because I guess a lot of people had some type of inefficiencies because of it, especially on the Chinese port fees, right? So maybe if things go back to normal, what's the impact on the market and maybe on your own positions?

So the jury, of course, is still out. But if I reflect on when the port fees were introduced, then the market typically took a timeout. So you had a very quiet short period before people got their heads around what was going on, and then went on to continue fixing ships. Of course, some of that havoc maybe improved the sentiment a little bit, and you had some replacement jobs and all that with short notice that could drive rates. As for the later period now, you would note that most of the biggest ship owners, they are responding to the questionnaires that were presented by the Chinese authorities, including disclaimers on information and stuff like that. I think it appeared that there was a relatively modest part or minor part of the fleet that were actually exposed to this and that it creates a true cost disruption. Right now, of course, with the news again that this is being put on hold for a year, you will have a little time out and then I think people will restart with the fixed ships again. So let's see how it plays out. But as you said on the prepared remarks there, we do believe that the strength in the market in general is because there is simply strong demand and fragmented and shrinking fleet. But exactly how it translates into TC earnings is, of course, too early to say.

Yeah, yeah, clearly. I don't know, do you know if China still has this tariff on US crude oil? I haven't seen any news on it. Sorry, I didn't hear you. Yeah, you know, China retaliated on... having like a tariff on US crude oil specifically, right? So you didn't, you know, the US crude exports to China basically went away.

But the US crude oil export to China has been very, very modest, right? It's just a small portion of total exports. So, and the big, the two states on the oil companies in China, they also use facilities outside China to store and, you know, transship the oil and all that. But I guess the truth sort of includes everything, I would assume. So that's at least what the commercial secretary suggested after the meetings. So if there were any, I think that would probably be out of the equation as well, I would guess.

Yeah, interesting. I guess Arne's question with spot rates now clearly How's the effect on the time charter side? Do you see levels improving, or maybe duration is improving, or is this still a bit too early?

I think you've seen increased interest, and there's some shorter term charters that have been done to improve rates. Of course, with the delta on spot voyages and yesterday's time structure, it is very hard to put the right price on it. And if you consider some of these long voyages that the VCCs tend to perform, you know, a US Gulf Far East cargo is 120 days. I mean, the premium in the spot market will have a big impact on the balance earnings of a time structure and what would be required. So it's very hard to find the a midpoint that sort of works for both parties. So I think, again, here we will have to see a little bit. I would expect that if the firm market continues at sort of current levels for a while, then people will have to man up, so to say, and the bid-ask spread will have to come in, and in particular on the customer side, that they will have to pay up if they really want time-chargers.

Yeah, makes sense. And I guess... I would expect that you would consider adding time charter coverage if that happens, right?

Well, as we have stated many times, we like in general to have some level of fixed income. We have a number of time charters coming off now in the next few months. So there's an opportunity to reprice those charters if you like, or maybe develop new charters with new customers for different ships. So if we can find common ground on something that is meaningful, preferably a little bit longer, the tenor, we are open to that. And we are sort of in, I wouldn't say in negotiations, that's overstating it, but in sort of preliminary discussions on what customers might be looking for in general. But these things take quite a long time to develop. So one has to be patient.

Yeah. Perfect. That's it for me. Thank you.

Thank you for all that.

Thank you. As a reminder, to ask a question, please press star 1 and 1 on your telephone. The next question comes from the line of Jeffrey Scott from Scott Asset Management. Please go ahead.

Good morning. There's always been a reluctance from the more respectable charters to take shifts that are over 15 years old. In 2009, 2010, 2011, there were a lot of deliveries of these in those three years. They're coming up to or have just passed 15 years. Um, as prices go up for, for, uh, for charters, do you see any, uh, reduced reluctance of the major charters to take, uh, ships over 15 years? And, uh, is there any possibility that they'll actually go, uh, past 20 years to 21, 22, 22 and a half, um, in the next couple of years? Thanks.

Thank you. There's always been a bit of a dynamic when it comes to acceptance of the perceived age limit of ships and the market. So in the stronger market, when the customer has less choice, they seem to be a bit more pragmatic. I think as of recent, most customers accept ships up to 17, 18 years of age. We have three ships built in 2007. They're all on time charters to significant counterparties. But I think beyond 20, then at least for our sort of profile and what we do, the commercial opportunities are limited. There are other owners that can find some pockets and trades where they can use these ships, but it's somewhat limited, I would say. So our commercial life expectation of ships are up to age 20, although the quality of our ships operate well beyond that if the market had opportunities. It's not really for us. But, of course, this sanction trade has created a big market for older ships. I would think that that market is somewhat satisfied now, and there are some people looking to even renew in that fleet by seeing if they can scrap ships that are 25 years or even older, and then look to buy ships that are 17, 18, 19 years old to replace those ships that are five, six years older. It's a bit of a dynamic environment and it's evolving rather than changing very abruptly, I would say.

Okay, thank you.

Thank you.

Thank you. There are no further questions at this time. I would now like to turn the conference back to Laila Halforsen for closing remarks.

Okay, I will step in for Laila and say thank you very much for attending the call and wishing you all a good day ahead. Thank you. Bye-bye.

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