DHT(DHT) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported revenues on a TCE basis of $113 million and EBITDA of $90 million for the quarter, with net income at $57 million, equating to $0.35 per share [10] - The weighted average TCE achieved for the quarter was $56,300 per day, with spot market vessels earning $64,800 per day and time charter vessels earning $36,200 per day [3][10] - The quarter ended with $130.6 million in cash, and total liquidity was $359 million, consisting of $131 million in cash and SEK 228 million available under a revolving credit facility [4][34] Business Line Data and Key Metrics Changes - The company allocated $9 million to shareholders through share buybacks during the quarter and invested $20 million in fleet enhancements, including $1.8 million in maintenance CapEx and $8.6 million for exhaust gas cleaning systems [4][10] - The company took delivery of the newly acquired vessel, DHT Appaloosa, which is expected to be accretive to earnings and improve fleet efficiencies [5][37] Market Data and Key Metrics Changes - The current market is described as balanced to tight, with increased transportation distances due to higher seaborne crude volumes [7] - The estimated P&L breakeven for the second half of the year for the fleet is about $27,000 per day, with the spot fleet requiring about $25,900 per day [15][39] Company Strategy and Development Direction - The company aims to maintain a solid balance sheet with low leverage and significant liquidity, focusing on capital allocation towards dividends and share buybacks [34][36] - The company has no plans for new building orders, preferring to invest in existing assets that can generate immediate returns [56] Management's Comments on Operating Environment and Future Outlook - Management noted that OPEC+ production cuts are typically not favorable for tanker markets, but the current supply picture is constructive due to a low order book for new VLCCs [41] - The company anticipates a potential stock rebuilding and increased refinery runs, which could drive demand for tanker services [42] Other Important Information - The company has completed all retrofit projects for exhaust gas cleaning systems, ensuring all ships are now fitted with these systems [37] - The company has a 10b5 program in place for share buybacks, allowing for opportunistic purchases based on market conditions [13][50] Q&A Session Summary Question: Thoughts on the VLCC spot market and future demand - Management indicated that demand for VLCCs is influenced by trade flows and pricing dynamics, particularly in relation to U.S. crude exports to Europe and Asia [20][21] Question: Impact of Saudi cuts on market weakness - Management acknowledged the complexity of estimating the impact of Saudi cuts but noted that maintaining higher prices could support demand in the fourth quarter [27][28] Question: Clarification on the buyback program - The buyback program is opportunistic, with management deciding on purchases based on market conditions and stock valuation [29][50] Question: VLCC supply side and shadow markets - Management confirmed that a significant portion of the VLCC fleet is trading in shadow markets, which has reduced fleet productivity but may support higher realized averages [30][54] Question: Future fuels and new building plans - Management expressed no plans for new buildings, citing high costs and the need for immediate revenue-generating assets [56][70]