DHT Holdings Inc (DHT) Q4 2024 Earnings Call Highlights: Strong Liquidity and Strategic Moves ...

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Fri, Feb 7, 2025, 12:08 AM 4 min read

Total Liquidity: $258 million, including $78 million in cash and $180 million available under revolving credit facilities.
Financial Leverage: 18% based on market values for the ships.
Net Debt: $13.8 million per vessel.
Revenue (TCE basis): $85.5 million for Q4 2024.
EBITDA: $60.6 million for Q4 2024.
Net Income: $54.7 million ($0.34 per share) for Q4 2024; adjusted net income $26.8 million ($0.17 per share).
Vessel Operating Expenses: $20 million for Q4 2024.
General & Administrative Expenses: $5.6 million for Q4 2024, including a non-recurring item of $0.7 million.
Average TCE (Spot Market): $38,200 per day for Q4 2024.
Average TCE (Spot Vessels under 15 years): $40,500 per day for Q4 2024.
Average Combined TCE: $38,800 per day for Q4 2024.
Net Income (Full Year 2024): $181.5 million ($1.12 per share); adjusted net income $153.6 million ($0.95 per share).
Vessel Operating Expenses (Full Year 2024): $78.6 million.
General & Administrative Expenses (Full Year 2024): $18.9 million.
Depreciation (Full Year 2024): $111.9 million.
Average TCE (Full Year 2024): $45,200 per day.
Cash Flow Highlights (Q4 2024): Started with $74 million in cash, ended with $78 million in cash.
Dividend: $0.17 per share for Q4 2024.
Share Buybacks: 1.5 million shares repurchased at an average price of $8.89.
Sale of DHT Scandinavia: Sold for $43.4 million, generating a book gain of $19.8 million.

Warning! GuruFocus has detected 8 Warning Sign with DHT.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

DHT Holdings Inc (NYSE:DHT) reported a strong balance sheet with low leverage and significant liquidity, ending the fourth quarter with $258 million in total liquidity.
The company achieved revenues on a TCE basis of $85.5 million and an EBITDA of $60.6 million for the fourth quarter.
DHT Holdings Inc (NYSE:DHT) declared a dividend of $0.17 per share for the fourth quarter, marking its 60th consecutive quarterly cash dividend.
The company successfully repurchased 1.5 million shares at an average price of $8.89, which was accretive to earnings per share and net asset value.
DHT Holdings Inc (NYSE:DHT) secured a one-year time charter for DHT China at $40,000 per day, indicating strong demand for its vessels.

Negative Points

Net income for the fourth quarter was adjusted to $26.8 million, equal to $0.17 per share, after accounting for a non-cash reversal of prior impairment charges.
Vessel operating expenses for the quarter were $20 million, which included a non-recurring insurance deductible.
The average TCE for spot vessels was $38,200 per day, which is lower than the earnings for vessels under 15 years of age.
The company faces challenges in selling older ships due to potential counterparty issues and market conditions.
DHT Holdings Inc (NYSE:DHT) noted that liquidity in the market for buying and selling ships is thin, making it difficult to find good investment opportunities.

Q & A Highlights

Q: With the recent sale of the DHT Scandinavia and the time-charter of DHT China, how does DHT plan to manage its older vessels? Is selling them a better option than time-chartering? A: Svein Harfjeld, President and CEO, explained that DHT has three ships built in 2007, with two on time-charter and one in the spot market. They may consider selling one or two ships depending on timing and price, as these ships have no debt, offering an opportunity to monetize and reinvest in the company.

Q: What is the financing plan for the newbuilds, and is there interest in locking them into time-charters? A: Harfjeld stated that the base case for debt financing is $60 million per vessel, with potential to increase based on negotiations. There is significant interest in time-charters, particularly from two clients, but it's too early to confirm any deals.

Q: Can you discuss the recent jump in VLCC spot rates and their sustainability? A: Harfjeld noted that the market is very tight, with recent rate increases driven by sentiment and increased cargo availability. The fleet is getting tighter, and the market is finely balanced, suggesting a potentially sustained upward trajectory.

Q: With the stock back to one-time NAV, are buybacks still on the table, or are there better opportunities elsewhere? A: Harfjeld clarified that buybacks in December were based on market dislocation, not dependent on ship sales. Currently, buybacks are not prioritized at current share prices. They are open to vessel acquisitions but find opportunities limited.

Q: How are sanctions affecting VLCC rates, and have they impacted the market yet? A: Harfjeld indicated that initial rate increases were sentiment-driven, but changes in Chinese procurement behavior due to sanctions are starting to impact the market. This is expected to increase oil demand and affect VLCC rates positively.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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