DHT Holdings, Inc. Third Quarter 2022 Results
HAMILTON, BERMUDA, November 7, 2022 – DHT Holdings, Inc. (NYSE: DHT) (“DHT” or the “Company”) today announced:
FINANCIAL HIGHLIGHTS:
| USD mill. (except per share) | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | Q3 2021 | 2021 | 2020 |
| Shipping revenues | 108.2 | 99.2 | 76.4 | 83.8 | 59.1 | 295.9 | 691.0 |
Adjusted net revenues1 | 55.3 | 54.1 | 38.7 | 49.3 | 37.7 | 203.4 | 550.5 |
Adjusted EBITDA2 | 35.6 | 32.5 | 14.4 | 32.0 | 14.0 | 113.7 | 450.4 |
| Profit/(loss) after tax | 7.5 | 10.0 | (17.3) | (2.9) | (21.0) | (11.5) | 266.33 |
| EPS – basic | 0.04 | 0.06 | (0.10) | (0.02) | (0.13) | (0.07) | 1.71 |
EPS – diluted4 | 0.04 | 0.06 | (0.10) | (0.02) | (0.13) | (0.07) | 1.61 |
Dividend5 | 0.04 | 0.04 | 0.02 | 0.02 | 0.02 | 0.10 | 1.08 |
| Interest bearing debt | 418.9 | 482.2 | 521.0 | 522.3 | 524.8 | 522.3 | 450.0 |
| Cash and cash equivalents | 65.7 | 105.8 | 58.6 | 60.7 | 64.5 | 60.7 | 68.6 |
| Net debt | 353.2 | 376.4 | 462.4 | 461.6 | 460.3 | 461.6 | 381.3 |
QUARTERLY HIGHLIGHTS:
| • | In the third quarter of 2022, the Company achieved combined time charter equivalent earnings of $25,400 per day, comprised of $35,300 per day for the Company’s VLCCs on time-charter and $22,000 per day for the Company’s VLCCs operating in the spot market. The result for the Company’s VLCCs operating in the spot market, measured on a discharge-to-discharge basis, was $27,100 per day for the third quarter of 2022. |
| • | Adjusted EBITDA for the third quarter of 2022 was $35.6 million. Net profit for the quarter was $7.5 million which equates to $0.04 per basic share. |
| • | In September, the Company entered into a five-year time-charter contract for DHT Puma or substitute, at $38,000 per day, with charterer’s option to extend two additional years, at $41,000 per day and $45,000 per day, respectively. The vessel is expected to deliver into the contract after the installation of an Exhaust Gas Cleaning System in the first quarter of 2023. |
| • | In August 2022, the Company entered into an agreement to sell DHT Edelweiss, a 2008 built VLCC, for $37.0 million. The vessel was not fitted with an Exhaust Gas Cleaning System and was due for its 3rd Special Survey and installation of a Ballast Water Treatment System in the first quarter of 2023. The vessel was delivered to its new owner during the third quarter of 2022 and the sale generated a gain of $6.8 million. The Company repaid the outstanding debt of $12.2 million in connection with the sale. |
| • | In September 2022, the Company announced a new dividend policy with 100% of net income being returned to shareholders in the form of quarterly cash dividends. The new policy will be implemented from the third quarter of 2022. |
| • | In September 2022, the Company prepaid $50.0 million under the Nordea Credit Facility. The voluntary prepayment was made under the revolving credit facility tranche and may be re-borrowed. |
| • | In the third quarter of 2022, the Company purchased 1,499,608 of its own shares in the open market for an aggregate consideration of $8.8 million, at an average price of $5.87 per share. All shares were retired upon receipt. |
| • | For the third quarter of 2022, the Company declared a cash dividend of $0.04 per share of outstanding common stock, payable on November 29, 2022, to shareholders of record as of November 22, 2022. This marks the 51st consecutive quarterly cash dividend. The shares will trade ex-dividend from November 21, 2022. |
OPERATIONAL HIGHLIGHTS:
| | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | Q3 2021 | 2021 | 2020 |
Operating days6 | 2,184.3 | 2,288.8 | 2,340.0 | 2,392.0 | 2,399.5 | 9,776.5 | 9,882.0 |
| Scheduled off hire days | - | 22.5 | 64.3 | 98.3 | 84.8 | 514.7 | 255.5 |
Unscheduled off hire8 | 0.0% | 0.0% | 0.6% | 0.3% | 0.0% | 0.1% | 0.8% |
Revenue days7 | 2,181.5 | 2,227.2 | 2,261.5 | 2,287.5 | 2,306.2 | 9,157.3 | 9,548.8 |
Spot exposure8 | 74.5% | 76.1% | 76.3% | 73.9% | 57.2% | 54.7 % | 63.5 % |
| VLCC time charter rate per day | $ 35,300 | $33,800 | $33,200 | $33,900 | $27,600 | $32,600 | $50,400 |
| VLCC spot rate per day | $ 22,000 | $21,200 | $11,900 | $16,900 | $7,400 | $13,200 | $62,000 |
Covid-19 restrictions related to our seafarers and the ability to change crews are easing, save for restrictions in China. Some customers have implemented their own restrictions adding complexities to managing crew changes. We continue to do everything reasonably possible to facilitate safe and regular crew changes. As of the date of this report, all our seafarers are fully vaccinated at the time of joining a vessel, as is the majority of our onboard sailing crew.
The market recovery has commenced with more cargo in the market when compared to last year and the first half of this year. In addition, trade disruptions are resulting in increased transportation distances, reducing the productivity of the global tanker fleet hence driving rates upwards. The Covid-19 lockdown in China still prevails but a policy change would likely support a stronger recovery. The geopolitical events challenging the energy security situation, in combination with macro-economic issues, are impacting the oil market, the oil price curve and volatility. OPEC+ has introduced reductions in production quotas but actual production levels will likely only be partly impacted. The leading agencies are forecasting increased global oil demand next year. As incremental supply is mainly seaborne, combined with increasing transportation distances, this should continue to be positive for demand for oil transportation.
The world fleet is aging at a time when ordering of new ships is very limited. One could envisage the fleet to shrink at a time when demand for transportation is recovering, creating a rewarding environment for large tankers. All things considered, we are convinced of the merits of our strategy with reduced financial leverage and low cash break-even levels to protect the downside without giving away the upside. We believe our company is well structured for cyclical markets and that our strategy will reward our shareholders.
As of September 30, 2022, DHT had a fleet of 23 VLCCs, with a total dwt of 7,152,498. For more details on the fleet, please refer to the web site: https://www.dhtankers.com/fleetlist/
SUBSEQUENT EVENT HIGHLIGHTS:
OUTLOOK:
| | Estimated Q4 2022 |
| Fixed time charter days | 510 |
| Average fixed time charter rate ($/day) | $34,800 |
| Spot days | 1,500 |
| Spot days booked | 58 % |
| Average spot rate ($/day) | $59,900 |
| Spot P&L break-even | 27,800 |
| • | Thus far in the fourth quarter of 2022, 58% of the available VLCC spot days have been booked at an average rate of $59,900 per day on a discharge-to-discharge basis. 69% of the available VLCC days, combined spot and time-charter days, have been booked at an average rate of $50,200 per day (not including any potential profit splits on time charters). |
Footnotes:
1Shipping revenues net of voyage expenses.
2 Shipping revenues net of voyage expenses, other revenues, vessel operating expenses and general and administrative expenses.
32020 includes impairment charge of $12.6 million.
4Diluted shares include the dilutive effect of the convertible senior notes and restricted shares granted to management and members of the board of directors.
5Per common share.
6Operating 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.
7Revenue 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.
8 As % of total operating days in period.
THIRD QUARTER 2022 FINANCIALS
The Company reported shipping revenues for the third quarter of 2022 of $108.2 million compared to shipping revenues of $59.1 million in the third quarter of 2021. The increase from the 2021 period to the 2022 period includes $52.3 million attributable to higher tanker rates partially offset by $3.2 million attributable to a decrease in total revenue days.
Other revenues for the third quarter of 2022 were $1.7 million and mainly relate to technical management services provided.
Voyage expenses for the third quarter of 2022 were $52.9 million, compared to voyage expenses of $21.4 million in the third quarter of 2021. The increase was mainly due to more vessels in the spot market and higher bunker prices, resulting in a $27.5 million increase in bunker expenses and a $5.3 million increase in port cost.
Vessel operating expenses for the third quarter of 2022 were $17.6 million compared to $19.2 million in the third quarter of 2021. The decrease was mainly due to fewer operating days in Q3 2022, equal to 2,184 operating days, compared to 2,400 operating days in Q3 2021.
Depreciation and amortization, including depreciation of capitalized survey expenses, was $30.2 million for the third quarter of 2022, compared to $31.7 million in the third quarter of 2021. The change was mainly due to decreased depreciation of vessels and docking of $2.1 million, partially offset by increased depreciation related to scrubbers of $0.3 million.
The Company recorded a gain of $6.8 million for the third quarter of 2022 related to the sale of DHT Edelweiss compared to a gain of $1.6 million for the third quarter of 2021 related to the sale of DHT Condor.
General and administrative expense (“G&A”) for the third quarter of 2022 was $3.9 million, consisting of $3.2 million cash and $0.6 million non-cash charge, compared to $4.4 million in the third quarter of 2021, consisting of $3.6 million cash and $0.8 million non-cash charge. Non-cash G&A includes accrual for social security tax.
Net financial expenses for the third quarter of 2022 were $4.5 million compared to $4.7 million in the third quarter of 2021. The decrease was mainly due to a non-cash gain of $2.8 million related to interest rate derivatives in the third quarter of 2022 compared to a non-cash gain of $2.3 million in the third quarter of 2021, partially offset by profit from associated company of $0.3 million in the third quarter of 2021.
As a result of the foregoing, the Company had a net profit in the third quarter of 2022 of $7.5 million, or income of $0.04 per basic share and $0.04 per diluted share, compared to a net loss in the third quarter of 2021 of $21.0 million, or a loss of $0.13 per basic share and $0.13 per diluted share. The increase from the 2021 period to the 2022 period was mainly due to higher tanker rates.
Net cash provided by operating activities for the third quarter of 2022 was $5.5 million compared to net cash used in operating activities of $3.1 million for the third quarter of 2021. The increase was due to a profit of $7.5 million in the third quarter of 2022 compared to a loss of $21.0 million in the third quarter of 2021, partially offset by a $13.0 million change in operating assets and liabilities and a $6.9 million decrease in non-cash items included in net income.
Net cash provided by investing activities was $34.6 million in the third quarter of 2022 and comprised of $37.0 million related to the sale of DHT Edelweiss, partially offset by $2.3 million related to investment in vessels. Net cash provided by investing activities was $27.6 million in the third quarter of 2021 comprised of $29.6 million related to the sale of DHT Condor, partially offset by $1.9 million related to investment in vessels.
Net cash used in financing activities for the third quarter of 2022 was $79.8 million, comprised of $50.0 million related to prepayment of long-term debt, $12.2 million related to repayment of long-term debt in connection with sale of a vessel, $8.8 million related to purchase of treasury shares, $6.5 million related to cash dividend paid and $1.9 million related to scheduled repayment of long-term debt. Net cash used in financing activities for the third quarter of 2021 was $12.3 million comprised of $6.7 million related to purchase of treasury shares, $3.3 million related to cash dividend paid, and $1.9 million related to scheduled repayment of long-term debt.
As of September 30, 2022, the cash balance was $65.7 million, compared to $60.7 million as of December 31, 2021.
The Company monitors its covenant compliance on an ongoing basis. As of September 30, 2022, the Company was in compliance with its financial covenants.
As of September 30, 2022, the Company had 162,653,339 shares of common stock outstanding compared to 166,126,770 shares as of December 31, 2021.
The Company declared a cash dividend of $0.04 per common share for the third quarter of 2022 payable on November 29, 2022, for shareholders of record as of November 22, 2022.
NINE MONTHS 2022 FINANCIALS
The Company reported shipping revenues for the first three quarters of 2022 of $283.9 million compared to $212.0 million in the first three quarters of 2021. The increase from the 2021 period to the 2022 period includes $78.0 million attributable to higher tanker rates partially offset by $6.2 million attributable to decreased total revenue days.
Other revenues for the first three quarters of 2022 were $2.4 million and mainly relate to technical management services provided.
Voyage expenses for the first three quarters of 2022 were $135.7 million compared to voyage expenses of $57.8 million in the first three quarters of 2021. The increase was mainly due to more vessels in the spot market and higher bunker prices, resulting in a $71.0 million increase in bunker expenses and a $10.1 million increase in port expenses.
Vessel operating expenses for the first three quarters of 2022 were $53.9 million, compared to $57.9 million in the first three quarters of 2021. The decrease was mainly due to fewer operating days in the first three quarters of 2022, equal to 6,813 operating days, compared to 7,385 operating days in the first three quarters of 2021.
Depreciation and amortization, including depreciation of capitalized survey expenses, was $95.6 million for the first three quarters of 2022, compared to $95.9 million in the first three quarters of 2021. The decrease was mainly due to a decrease in depreciation related to vessels and docking of $4.4 million, partially offset by increased depreciation related to scrubbers of $4.2 million.
The Company recorded a gain of $19.5 million for the first three quarters of 2022 related to the sale of DHT Hawk, DHT Falcon, and DHT Edelweiss compared to a gain of $15.2 million for the first three quarters of 2021 related to the sale of DHT Raven, DHT Lake, and DHT Condor.
G&A for the first three quarters of 2022 was $14.1 million, consisting of $10.6 million cash and $3.5 million non-cash charge, compared to $14.6 million, consisting of $11.0 million cash and $3.6 million non-cash charge for the first three quarters of 2021.
Net financial expenses for the first three quarters of 2022 were $5.8 million, compared to $9.3 million in the first three quarters of 2021. The decrease was due to a non-cash gain of $14.9 million related to interest rate derivatives in the first three quarters of 2022 compared to a non-cash gain of $8.0 million in the first three quarters of 2021.
The Company had net income for the first three quarters of 2022 of $0.2 million, or income of $0.00 per basic share and $0.00 per diluted share compared to net loss of $8.6 million, or a loss of $0.05 per basic share and $0.05 per diluted share in the first three quarters of 2021. The difference between the two periods mainly reflects higher tanker rates.
Net cash provided by operating activities for the first three quarters of 2022 was $37.6 million compared to $41.7 million for the first three quarters of 2021. The decrease was mainly due to a decrease in non-cash items included in net income of $8.0 million, a decrease of $4.8 million related to changes in operating assets and liabilities, partially offset by net profit of $0.2 million in the first three quarters of 2022 compared to net loss of $8.6 million in the first three quarters of 2021.
Net cash provided by investing activities for the first three quarters of 2022 was $112.2 million comprised of $113.2 million related to sale of vessels and $8.3 million related to acquisition of subsidiary, net of cash paid, partially offset by $9.2 million related to investment in vessels. Net cash used in investing activities for the first three quarters of 2021 was $73.4 million comprised of $160.4 million related to investment in vessels, partially offset by $87.1 million related to sale of vessels.
Net cash used in financing activities for the first three quarters of 2022 was $144.3 million comprised of $73.1 million related to prepayment of long-term debt, $24.7 million related to purchase of treasury shares, $25.5 million related to repayment of long-term debt in connection with sale of vessels, $13.2 million related to cash dividends paid and $7.0 million related to scheduled repayment of long-term debt. Net cash provided by financing activities for the first three quarters of 2021 was $27.6 million comprised of $355.8 million related to issuance of long-term debt, partially offset by $175.9 million related to repayment of long-term debt in connection with refinancing, $93.4 million related to prepayment of long-term debt, $29.2 million related to purchase of treasury shares, $18.7 million related to cash dividends paid, $6.1 million related to repayment of long-term debt in connection with sale of vessel and $4.5 million related to scheduled repayment of long-term debt.
As of September 30, 2022, our cash balance was $65.7 million, compared to $60.7 million as of December 31, 2021.
As of September 30, 2022, the Company had 162,653,339 shares of our common stock outstanding compared to 166,126,770 as of December 31, 2021.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
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 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | Q3 2021 | 2021 | 2020 |
| Reconciliation of adjusted net revenue | | | | | | | |
| Shipping revenues | 108,227 | 99,233 | 76,400 | 83,835 | 59,095 | 295,853 | 691,039 |
| Voyage expenses | (52,882) | (45,180) | (37,659) | (34,567) | (21,443) | (92,405) | (140,564) |
| Adjusted net revenues | 55,345 | 54,053 | 38,741 | 49,268 | 37,652 | 203,448 | 550,475 |
| | | | | | | | |
| Reconciliation of adjusted EBITDA | | | | | | | |
| Profit/(loss) after tax | 7,457 | 9,956 | (17,252) | (2,895) | (21,032) | (11,507) | 266,281 |
| Income tax expense | 246 | 141 | 90 | 129 | 97 | 360 | 900 |
| Other financial (income)/expenses | 469 | 1,529 | 556 | 502 | 1,015 | (645) | 1,334 |
| Fair value (gain)/loss on derivative financial liabilities | (2,788) | (4,284) | (7,855) | (4,456) | (2,316) | (12,450) | 8,074 |
| Interest expense | 6,938 | 6,633 | 6,164 | 6,297 | 6,348 | 25,727 | 38,408 |
| Interest income | (80) | (110) | (1) | (1) | (4) | (6) | (212) |
| Share of profit from associated companies | - | (978) | (349) | (295) | (293) | (1,278) | (1,193) |
| (Gain)/loss, sale of vessel | (6,829) | (12,683) | - | - | (1,556) | (15,153) | - |
| Impairment charges | - | - | - | - | - | - | 12,560 |
| Depreciation and amortization | 30,198 | 32,318 | 33,047 | 32,750 | 31,734 | 128,639 | 124,245 |
| Adjusted EBITDA | 35,610 | 32,522 | 14,400 | 32,032 | 13,993 | 113,688 | 450,397 |
| | | | | | | | |
| Reconciliation of adjusted spot time charter equivalent per day* | | | | | | | |
| Spot time charter equivalent per day | 22,000 | 21,200 | 11,900 | 16,900 | 7,400 | 13,200 | 62,000 |
| IFRS 15 impact on spot time charter equivalent per day** | 5,100 | (3,200) | 2,800 | 400 | 3,000 | 500 | (2,600) |
| Adjusted spot time charter equivalent per day | 27,100 | 17,900 | 14,700 | 17,300 | 10,300 | 13,700 | 59,400 |
* 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. EST/14:00 CET on Tuesday, November 8, 2022, to discuss the results for the quarter.
To access the conference call the participants are required to register using this link:
https://register.vevent.com/register/BIe2b5c3ae9ff0442f91f3ef8c7427e9e5
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/fqr8jg9i and can also be accessed in the Investor Relations section of DHT's website at http://www.dhtankers.com.
A recording of the audio and slides presented will be available until November 15, 2022, at 19:00 CET. The recording can be accessed through the following link: https://edge.media-server.com/mmc/p/fqr8jg9i.
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, in particular regarding dividends (including our dividend plans, timing and the amount and growth of any dividends), daily charter rates, vessel utilization, the future number of newbuilding deliveries, oil prices and seasonal fluctuations in vessel supply and demand. 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 25, 2022.
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
E-mail: lch@dhtankers.com
