DHT Holdings, Inc. Second Quarter 2023 Results

HAMILTON, BERMUDA, August 7, 2023 – DHT Holdings, Inc. (NYSE: DHT) (“DHT” or the “Company”) today announced:

FINANCIAL HIGHLIGHTS:

QUARTERLY HIGHLIGHTS:

OPERATIONAL HIGHLIGHTS:

During the quarter, the freight market experienced meaningful volatility. However, when compared to earlier comparable periods, the lows have been significantly higher with ships of Eco-design and fitted with Exhaust Gas Cleaning Systems bottoming out in the high $30k to low $40k per day levels, well above our net income and cash break-even even levels. This suggests to us that the current underlying freight market is between balanced and tight, and easily triggered for upward movements and stronger earnings for our company.     

The key agency implied balances in the oil market have tightened on upward revisions to general demand with the second half outlook still bullish. Chinese demand has been revised higher, despite the economic recovery so far being more measured than expected. The announced supply cuts from Saudi Arabia and Russia, and Saudi’s increased Official Selling Prices, are resulting in inventory draws hence their game plan to strengthen oil prices is possibly starting to bite. Certain markets, and China in particular, are understood to be sourcing shortfalls from the Atlantic, including Russia, hence likely increasing transportation distances. The current inventory draws, that should be followed by a period of stock rebuild, and forecasts of increased demand during the second half of the year should in combination bode for a rewarding market for our business.       

Despite recent ordering of up to possibly 10 VLCCs set for delivery predominantly in 2026, we understand general interest in contracting large new tankers to be very limited. This reflects high asking prices from ship builders without any significant design improvements to justify such prices, increased cost of debt capital, and uncertainties related to future fuels, hereunder their price and availability, to credibly meet decarbonization ambitions and targets. 

An interesting supply dynamic currently playing out is that brokers estimate that some 15 to 18% of the global VLCC fleet is employed in what is referred to as the shadow markets. The key consequence is that two distinct markets are developing, with no or very limited cross employment between these two markets taking place thereby reducing the productivity of the fleet.     

In this constructive market environment, we are convinced of the merits of our strategy. We continue to focus on running our business as efficiently as we can with strong revenue generation for our assets, a competitive cost base and low financial leverage. With this backdrop, we believe our policy of returning 100% of net income as quarterly cash dividends will reward our shareholders. 

As of June 30, 2023, DHT had a fleet of 23 VLCCs, with a total dwt of 7,160,266. For more details on the fleet, please refer to the web site: https://www.dhtankers.com/fleetlist/

SUBSEQUENT EVENT HIGHLIGHTS:

OUTLOOK:

^* The month of July includes a profit-sharing. The months of August and September assumes only the base rate.

¹Shipping revenues net of voyage expenses.

² Shipping revenues net of voyage expenses, other revenues, vessel operating expenses and general and administrative expenses.

³Diluted shares include the dilutive effect of the convertible senior notes and restricted shares granted to management and members of the board of directors.

⁴Per common share.

⁵Operating days are the aggregate number of calendar days in the period in which the vessels are owned by the Company or chartered by the Company.

⁶Revenue days are the aggregate number of calendar days in the period in which the vessels are owned by the Company or chartered by the Company less days on which a vessel is off hire or repositioning days in connection with sale.

⁷ As % of total operating days in period.

The Company reported shipping revenues for the second quarter of 2023 of $152.0 million compared to shipping revenues of $99.2 million in the second quarter of 2022. The increase from the 2022 period to the 2023 period includes $62.6 million attributable to higher tanker rates, partially offset by $9.9 million attributable to a decrease in total revenue days.

Other revenues for the second quarter of 2023 were $1.1 million compared to $0.7 million in the second quarter of 2022 and mainly relate to technical management services provided.

The Company did not record any gain or loss related to sale of vessels in the second quarter of 2023. In the second quarter of 2022, the Company recorded a gain of $12.7 million related to the sale of DHT Hawk and DHT Falcon.

Voyage expenses for the second quarter of 2023 were $39.1 million, compared to voyage expenses of $45.2 million in the second quarter of 2022. The change was mainly related to a decrease in bunker expenses of $7.5 million, partially offset by an increase in broker commission of $0.7 million.

Vessel operating expenses for the second quarter of 2023 were $19.7 million compared to $18.0 million in the second quarter of 2022. The increase was mainly related to an increase of $1.1 million related to spares and consumables and an increase of $0.8 million related to insurance.

Depreciation and amortization, including depreciation of capitalized survey expenses, was $26.4 million for the second quarter of 2023, compared to $32.3 million in the second quarter of 2022. The decrease was mainly due to decreased depreciation of exhaust gas cleaning systems of $4.2 million and decreased depreciation of $1.9 million related to vessels and drydocking.

General and administrative (“G&A”) expense for the second quarter of 2023 was $4.5 million, consisting of $3.5 million cash and $1.0 million non-cash charge, compared to $4.2 million in the second quarter of 2022, consisting of $3.3 million cash and $0.9 million non-cash charge. Non-cash G&A includes accrual for social security tax.

Net financial expenses for the second quarter of 2023 were $6.2 million compared to $2.8 million in the second quarter of 2022. The increase was mainly due to a non-cash gain of $4.3 million related to interest rate derivatives in the second quarter of 2022 compared to a non-cash loss of $0.1 million in the second quarter of 2023 and increased interest expense of $0.9 million due to increased interest rates, partially offset by interest income of $2.0 million in the second quarter of 2023 compared to $0.1 million in the second quarter of 2022.

As a result of the foregoing, the Company had a net profit in the second quarter of 2023 of $57.1 million, or income of $0.35 per basic share and $0.35 per diluted share, compared to a net profit in the second quarter of 2022 of $10.0 million, or income of $0.06 per basic share and $0.06 per diluted share. The increase from the 2022 period to the 2023 period was mainly due to higher tanker rates.

Net cash provided by operating activities for the second quarter of 2023 was $87.0 million compared to $26.5 million for the second quarter of 2022. The increase was due to a profit of $57.1 million in the second quarter of 2023 compared to a profit of $10.0 million in the second quarter of 2022, a $11.5 million increase in non-cash items included in net income and a $1.9 million change in operating assets and liabilities.

Net cash used in investing activities was $18.1 million in the second quarter of 2023 and was related to investment in vessels. Net cash provided by investing activities was $79.9 million in the second quarter of 2022 and comprised $76.2 million related to sale of vessels and $8.3 million related to acquisition of subsidiary, net of cash paid, partially offset by $4.5 million related to investment in vessels.

Net cash used in financing activities for the second quarter of 2023 was $55.6 million comprised of $37.5 million related to cash dividend paid, $8.9 million related to purchase of treasury shares and $8.1 million related to scheduled repayment of long-term debt. Net cash used in financing activities for the second quarter of 2022 was $59.1 million comprised of $23.1 million related to prepayment of long-term debt, $15.9 million related to purchase of treasury shares, $13.3 million related to repayment of long-term debt in connection with sale of vessels, $3.3 million related to cash dividend paid and $3.1 million related to scheduled repayment of long-term debt.

As of June 30, 2023, the cash balance was $130.6 million, compared to $125.9 million as of December 31, 2022.

The Company monitors its covenant compliance on an ongoing basis. As of June 30, 2023, the Company was in compliance with its financial covenants.

As of June 30, 2023, the Company had 162,389,004 shares of common stock outstanding compared to 162,653,339 shares as of December 31, 2022.

The Company declared a cash dividend of $0.35 per common share for the second quarter of 2023 payable on August 30, 2023, for shareholders of record as of August 23, 2023.

The Company reported shipping revenues for the first half of 2023 of $283.5 million compared to $175.6 million in the first half of 2022. The increase from the 2022 period to the 2023 period includes $130.1 million attributable to higher tanker rates partially offset by $22.3 million attributable to decreased total revenue days.

Other revenues for the first half of 2023 were $2.2 million compared to $0.7 million in the first half of 2022 and mainly relates to technical management services provided. In May 2022, the Company acquired an additional 3.2% of Goodwood Ship Management Pte. Ltd. and increased the ownership to 53.2% through a step acquisition. Other revenues for the first half of 2022 applies for the period from May 31 to June 30, 2022.

The Company did not record any gain or loss related to sale of vessels in the first half of 2023. In the first half of 2022, the Company recorded a gain of $12.7 million related to the sale of DHT Hawk and DHT Falcon.

Voyage expenses for the first half of 2023 were $76.7 million compared to voyage expenses of $82.8 million in the first half of 2022. The change was mainly related to a decrease in bunker expenses of $8.1 million, partially offset by an increase in broker commission of $1.4 million.

Vessel operating expenses for the first half of 2023 were $38.1 million compared to $36.3 million in the first half of 2022. The increase was mainly due to $1.2 million related to the consolidation of Goodwood, an increase of $0.5 million related to spares and consumables and an increase of $0.5 million related to insurance, partially offset by $0.3 million related to repair and maintenance.

Depreciation and amortization, including depreciation of capitalized survey expenses, was $52.1 million for the first half of 2023, compared to $65.4 million in the first half of 2022. The decrease was mainly due to decreased depreciation of exhaust gas cleaning systems of $9.1 million and decreased depreciation of $4.7 million related to vessels and drydocking.

G&A for the first half of 2023 was $9.2 million, consisting of $7.3 million cash and $1.9 million non-cash charge, compared to $10.3 million, consisting of $7.3 million cash and $2.9 million non-cash charge for the first half of 2022.

Net financial expenses for the first half of 2023 were $14.2 million, compared to $1.3 million in the first half of 2022. The increase was due to a non-cash gain of $12.1 million related to interest rate derivatives in the first half of 2022 compared to a non-cash loss of $0.5 million in the first half of 2023 and increased interest expense of $2.3 million due to increased interest rates, partially offset by interest income of $2.4 million in the first half of 2023 compared to $0.1 million in the first half of 2022.

The Company had net income for the first half of 2023 of $95.1 million, or income of $0.58 per basic share and $0.58 per diluted share compared to net loss of $7.3 million, or loss of $0.05 per basic share and $0.05 per diluted share in the first half of 2022. The difference between the two periods mainly reflects higher tanker rates.

Net cash provided by operating activities for the first half of 2023 was $153.4 million compared to $32.2 million for the first half of 2022. The increase was mainly due to net income of $95.1 million in the first half of 2023 compared to net loss of $7.3 million in the first half of 2022, $11.2 million increase in non-cash items included in net income and a $7.6 million change in operating assets and liabilities.

Net cash used in investing activities for the first half of 2023 was $33.0 million and was related to investment in vessels. Net cash provided by investing activities for the first half of 2022 was $77.6 million comprising $76.2 million related to sale of vessels and $8.3 million related to acquisition of subsidiary, net of cash paid, partially offset by $6.9 million related to investment in vessels.

Net cash used in financing activities for the first half of 2023 was $115.6 million comprising $216.8 million related to repayment of long-term debt in connection with refinancing, $99.4 million related to cash dividends paid, $8.9 million related to purchase of treasury shares and $8.7 million related to scheduled repayment of long-term debt, partially offset by $216.2 million related to issuance of long-term debt and $3.3 million related to proceeds from sale of derivatives. Net cash used in financing activities for the first half of 2022 was $64.5 million comprising $23.1 million related to prepayment of long-term debt, $15.9 million related to purchase of treasury shares, $13.3 million related to repayment of long-term debt in connection with sale of vessels, $6.7 million related to cash dividends paid and $5.1 million related to scheduled repayment of long-term debt.

The Company assesses the financial performance of its business using a variety of measures. Certain of these measures are termed “non-GAAP measures” because they exclude amounts that are included in, or include amounts that are excluded from, the most directly comparable measure calculated and presented in accordance with IFRS, or are calculated using financial measures that are not calculated in accordance with IFRS. These non-GAAP measures include “Adjusted Net Revenue”, “Adjusted EBITDA” and “Adjusted spot time charter equivalent per day”. The Company believes that these non-GAAP measures provide useful supplemental information for its investors and, when considered together with the Company’s IFRS financial measures and the reconciliation to the most directly comparable IFRS financial measure, provide a more complete understanding of the factors and trends affecting the Company’s operations. In addition, DHT’s management measures the financial performance of the Company, in part, by using these non-GAAP measures, along with other performance metrics. The Company does not regard these non-GAAP measures as a substitute for, or as superior to, the equivalent measures calculated and presented in accordance with IFRS. Additionally, these non-GAAP measures may not be comparable to other similarly titled measures used by other companies and should not be considered in isolation or as a substitute for analysis of the Company’s operating results as reported under IFRS.

USD in thousands except time charter equivalent per day	Q2 2023	Q1 2023	Q4 2022	Q3 2022	Q2 2022	2022	2021
Reconciliation of adjusted net revenue
Shipping revenues	151,993	131,468	166,522	108,227	99,233	450,381	295,853
Voyage expenses	(39,092)	(37,569)	(49,781)	(52,882)	(45,180)	(185,502)	(92,405)
Adjusted net revenues	112,902	93,899	116,741	55,345	54,053	264,880	203,448
Reconciliation of adjusted EBITDA
Profit/(loss) after tax	57,081	38,041	61,819	7,457	9,956	61,979	(11,507)
Income tax expense	94	191	111	246	141	587	360
Other financial (income)/expenses	606	366	272	469	1,529	2,826	(645)
Fair value (gain)/loss on derivative financial liabilities	70	433	(56)	(2,788)	(4,284)	(14,983)	(12,450)
Interest expense	7,492	7,586	6,462	6,938	6,633	26,197	25,727
Interest income	(1,966)	(398)	(886)	(80)	(110)	(1,076)	(6)
Share of profit from associated companies	-	-	-	-	(978)	(1,327)	(1,278)
(Gain)/loss, sale of vessel	-	-	-	(6,829)	(12,683)	(19,513)	(15,153)
Depreciation and amortization	26,376	25,726	27,692	30,198	32,318	123,255	128,639
Adjusted EBITDA	89,753	71,946	95,414	35,610	32,522	177,946	113,688
Reconciliation of adjusted spot time charter equivalent per day*
Spot time charter equivalent per day	64,800	54,600	63,800	22,000	21,200	29,000	13,200
IFRS 15 impact on spot time charter equivalent per day**	(3,000)	3,900	100	5,100	(3,200)	1,200	500
Adjusted spot time charter equivalent per day	61,800	58,500	63,900	27,100	18,000	30,200	13,700

* Per revenue days. Revenue days are the aggregate number of calendar days in the period in which the vessels are owned by the Company or chartered by the Company less days on which a vessel is off hire.

** For vessels operating on spot charters, voyage revenues are calculated on a discharge-to-discharge basis. Under IFRS 15, spot charter voyage revenues are calculated on a load-to-discharge basis. IFRS 15 impact refers to the timing difference between discharge-to-discharge and load-to-discharge basis.

EARNINGS CONFERENCE CALL AND WEBCAST INFORMATION

The Company will host a conference call and webcast, which will include a slide presentation, at 8:00 a.m. ET/14:00 CET on Wednesday, August 9, 2023, to discuss the results for the quarter.

To access the conference call the participants are required to register using this link:

Upon registering, each participant will be provided with participant dial-in numbers, and a unique personal PIN. Participants will need to use the conference access information provided in the e-mail received at the point of registering. Participants may also use the Call Me feature instead of dialing the nearest dial-in number.

The webcast, which will include a slide presentation, will be available on the following link:

https://edge.media-server.com/mmc/p/5f3qmtef and can also be accessed in the Investor Relations section of DHT’s website at http://www.dhtankers.com.

ABOUT DHT HOLDINGS, INC.

DHT is an independent crude oil tanker company. Our fleet trades internationally and consists of crude oil tankers in the VLCC segment. We operate through our integrated management companies in Monaco, Norway, and Singapore. You may recognize us by our renowned business approach as an experienced organization with focus on first rate operations and customer service; our quality ships; our prudent capital structure that promotes staying power through the business cycles; our combination of market exposure and fixed income contracts for our fleet; our counter cyclical philosophy with respect to investments, employment of our fleet, and capital allocation; and our transparent corporate structure maintaining a high level of integrity and good governance. For further information please visit http://www.dhtankers.com.

FORWARD LOOKING STATEMENTS

This press release contains certain forward-looking statements and information relating to the Company that are based on beliefs of the Company’s management as well as assumptions, expectations, projections, intentions and beliefs about future events. When used in this document, words such as “believe,” “intend,” “anticipate,” “estimate,” “project,” “forecast,” “plan,” “potential,” “will,” “may,” “should” and “expect” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. These statements reflect the Company’s current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements represent the Company’s estimates and assumptions only as of the date of this press release and are not intended to give any assurance as to future results. For a detailed discussion of the risk factors that might cause future results to differ, please refer to the Company’s Annual Report on Form 20-F, filed with the Securities and Exchange Commission on March 23, 2023.

The Company undertakes no obligation to publicly update or revise any forward-looking statements contained in this press release, whether as a result of new information, future events or otherwise, except as required by law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this press release might not occur, and the Company’s actual results could differ materially from those anticipated in these forward-looking statements.

CONTACT:

Laila C. Halvorsen, CFO

Phone: +1 441 295 1422 and +47 984 39 935

For the period from April 1, 2023, to June 30, 2023, five customers represented $36.0 million, $22.6 million, $11.2 million, $10.8 million, and $10.3 million, respectively, of the Company’s shipping revenues. The five customers in aggregate represented $90.8 million, equal to 60 percent of the shipping revenues of $152.0 million for the period from April 1, 2023, to June 30, 2023.

January 1, 2023, to June 30, 2023.

April 1, 2022, to June 30, 2022.

January 1, 2022, to June 30, 2022.