DHT Holdings Announces Fourth Quarter 2020 Results

Source: www.gulfoilandgas.com 2/8/2021, Location: South America

DHT Holdings, Inc. announced:
DHT made $266.3 million in net income in 2020 - the highest yearly result in the Company’s history. Adjusted for a non-cash change in fair value related to interest rate derivatives of $8.1 million and a non-cash impairment charge of $12.6 million, net income would be $286.9 million, equivalent to $1.84 per basic share.

As of December 31, 2020, interest bearing debt to total assets (based on market values) was 29%, and net debt per ship was $14.1 million.

QUARTERLY HIGHLIGHTS:
- In the fourth quarter of 2020, the Company’s VLCCs achieved an average rate of $33,800 per day.
- Adjusted EBITDA for the fourth quarter of 2020 was $51.1 million. Net income of $7.6 million equates to $0.04 per basic share. Adjusted for a non-cash change in fair value related to interest rate derivatives of $2.4 million and a non-cash impairment charge of $7.6 million, net income would be $12.9 million, equivalent to $0.08 per basic share.
- For the fourth quarter of 2020, the Company declared a cash dividend of $0.05 pershare of outstanding common stock, payable on February 25, 2021 to shareholders of record as of February 18, 2021. This marks the 44 the consecutive quarterly dividend. The shares will be traded ex-dividend from February 17, 2021.
- DHT currently has 16 of its vessels on time charters, where four vessels have profit sharing structures on top of base rates, whilst the other 12 have fixed rates. The average of the fixed elements in these 16 time charters, i.e. of the four base rates and the 12 fixed rates, is $41,965 per day. Of the 16 vessels on time charters, seven are estimated to redeliver during first quarter 2021.
- In the fourth quarter of 2020, the Company prepaid $25.8 million under the Nordea Credit Facility. The voluntary prepayment was made for all regular installments for 2022.
- Mrs. Sophie Rossini, Senior Business Manager at MAN AHL, was appointed to the Board of DHT Holdings, Inc. and joined the board effective November 15, 2020.
- Scheduled off hire for the quarter was 180 days as the Company took advantage of the weak freight market to bring forward drydockings and planned installations of scrubbers and ballast water treatment systems.
- The Covid-19 virus outbreak is still impacting our business. The main operational challenge in 2020 related to our seafarers and our ability to change crews at regular intervals. Crews have stayed onboard longer than planned, awaiting opportunities to go ashore and for replacements to come onboard. Our crews are demonstrating cooperation and understanding to support continuation of our services. The challenge has abated compared to Q2 and Q3, but hurdles remain as several geographical areas curb these operations. We consumed 16.0 days of scheduled off hire during the quarter because of deviations and longer port stays to enable crew changes. We will continue to do everything we reasonably can to facilitate safe and regular crew changes. The virus outbreak led to reduced global consumption of refined oil products resulting in a build-up of shorebased inventories of both feedstock and end products. Further, leading oil producers have reduced supply with the view to rebalance the oil markets. As such, demand is partly being satisfied by drawing down on inventories, resulting in reduced demand for transportation.

SUBSEQUENT EVENT HIGHLIGHT:
- On January 21, 2021, the Company announced that it has entered into agreement to acquire two VLCCs built 2016 at DSME (Daewoo) for a total of $136 million. The vessels are scheduled to deliver during the first half of 2021. The Company will finance the acquisition with available liquidity and projected mortgage debt hence it is expected to be accretive to DHT’s earnings per share. The vessels were built to high specifications by their current owner and are fuel efficient, scrubber fitted Eco-designs that will further improve the DHT fleet’s efficiencies, amongst other its Annual Efficiency Ratio (AER) and Energy Efficiency Operational Index (EEOI) metrics. The Company has drawn $15 million under one of its revolving credit facilities funding the deposit for the two VLCCs.

OUTLOOK:
- Thus far in the first quarter of 2021, 77% of the available VLCC days have been booked at an average rate of $34,700 per day on a discharge to discharge basis (not including any potential profit splits on four time charters).
- The Company will continue to take advantage of the weak freight market to bring forward drydockings and planned installations of scrubbers and ballast water treatment systems and expect scheduled offhire to be in the range between 200 and 230 days during the first quarter of 2021.

FOURTH QUARTER 2020 FINANCIALS
The Company reported shipping revenues for the fourth quarter of 2020 of $91.0 million compared to shipping revenues of $191.8 million in the fourth quarter of 2019. The decrease from the 2019 period to the 2020 period includes $91.0 million attributable to lower tanker rates and $9.8 million attributable to change in total revenue days. The decrease in total revenue days was a result of scheduled off hire in connection with special surveys and scrubber installation.

Voyage expenses for the fourth quarter of 2020 were $13.3 million, compared to voyage expenses of $50.1 million in the fourth quarter of 2019. The decrease was mainly due to a $32.7 million decrease in bunker expenses and a $4.9 million decrease in port cost due to less vessels in the spot market.

Vessel operating expenses for the fourth quarter of 2020 were $22.1 million compared to $21.9 million in the fourth quarter of 2019. The increase was mainly related to higher costs for crew changes due to Covid-19 and up storing of spares and consumables in relation to IMO2020.

Depreciation and amortization, including depreciation of capitalized survey expenses, was $32.0 million for the fourth quarter of 2020, compared to $30.7 million in the fourth quarter of 2019. The increase was mainly due to depreciation related to scrubbers of $0.9 million.

Due to a decline in values for second-hand tankers, we adjusted the carrying value of our fleet through a non-cash impairment charge of $7.6 million in the fourth quarter of 2020. No impairment charge was recorded in the fourth quarter of 2019.

General & administrative expense (“G&A”) for the fourth quarter of 2020 was $4.5 million, consisting of $3.5 million cash and $1.0 million non-cash charges, compared to $3.5 million in the fourth quarter of 2019, consisting of $2.7 million cash and $0.8 million non-cash charges. Non-cash G&A includes accrual for social security tax.

Net financial expenses for the fourth quarter of 2020 were $3.6 million compared to $9.8 million in the fourth quarter of 2019. The decrease was due to a $6.7 million decrease in interest expenses due to reduced outstanding debt partially offset by a non-cash gain of $2.4 million related to interest rate derivatives in the fourth quarter of 2020 compared to a non-cash gain of $3.0 million in the fourth quarter of 2019.

The Company had net income in the fourth quarter of 2020 of $7.6 million, or income of $0.04 per basic share and $0.04 per diluted share, compared to net income in the fourth quarter of 2019 of $75.9 million, or income of $0.52 per basic share and $0.47 per diluted share. The change from the 2019 period to the 2020 period was mainly due to lower tanker rates.

Net cash provided by operating activities for the fourth quarter of 2020 was $81.4 million compared to net cash provided by operating activities of $49.9 million for the fourth quarter of 2019. The change is mainly due to $91.1 million related to changes in operating assets and liabilities and $8.7 million related to items included in net income not affecting cash flows partially offset by net income of $7.6 million in the fourth quarter of 2020 compared to net income of $75.9 million in the fourth quarter of 2019.

Net cash used in investing activities was $10.6 million in the fourth quarter of 2020 comprising $11.4 million related to investment in vessels, partially offset by $0.8 million related to a dividend received from associated company. Net cash used in investing activities was $20.0 million in the fourth quarter of 2019 comprising $20.5 million related to investment in vessels, partially offset by $0.5 million related to a dividend received from associated company.

Net cash used in financing activities for the fourth quarter of 2020 was $77.3 million comprising $34.2 million related to cash dividend paid, $25.8 million related to prepayment of long-term debt and $16.8 million related to scheduled repayment of long-term debt. Net cash used in financing activities for the fourth quarter of 2019 was $77.8 million comprising $57.3 million related to prepayment of long-term debt, $16.7 million related to scheduled repayment of long-term debt, $7.3 million related to cash dividend paid and $6.4 million related to repayment of convertible bonds partially offset by $10 million related to issuance of long-term debt.

As of December 31, 2020, the cash balance was $68.6 million, compared to $67.4 million as of December 31, 2019. The Company monitors its covenant compliance on an ongoing basis. As of the date of the most recent compliance certificates submitted for the fourth quarter of 2020, the Company is in compliance with its financial covenants.

As of December 31, 2020, the Company had 170,798,328 shares of common stock outstanding compared to 146,819,401 shares as of December 31, 2019.

The Company declared a cash dividend of $0.05 per common share for the fourth quarter of 2020 payable on February 25, 2021 for shareholders of record as of February 18, 2021.

2020 FINANCIALS
- The Company reported shipping revenues for 2020 of $691.0 million compared to $535.1 million in 2019. The increase from the 2019 period to the 2020 period includes $151.4 million attributable to higher tanker rates and $4.5 million attributable to increased total revenue days.
- Voyage expenses for 2020 were $140.6 million compared to voyage expenses of $187.5 million in 2019. The decrease was mainly due to a $50.1 million decrease in bunker expenses and a $4.2 million decrease in port cost due to less vessels in the spot market partially offset by $6.1 million related to voyage expenses which are capitalized and amortized under IFRS 15.
- Vessel operating expenses for 2020 were $82.2 million, compared to $78.3 million in 2019. The increase was mainly related to up storing of spares and consumables in relation to IMO2020, higher costs for crew changes due to Covid19 in addition to deductibles on insurance.
- Depreciation and amortization, including depreciation of capitalized survey expenses, was $124.2 million for 2020, compared to $115.6 million in 2019. The increase was mainly due to depreciation related to scrubbers of $7.4 million.
- Due to a decline in values for second-hand tankers, we adjusted the carrying value of our fleet through a non-cash impairment charge of $12.6 million in 2020. No impairment charge was recorded in 2019.
- General & administrative expense (“G&A”) for 2020 was $17.9 million, consisting of $13.1 million cash and $4.8 million non-cash, compared to $14.8 million, consisting of $12.3 million cash and $2.5 million non-cash for 2019. Non-cash G&A includes accrual for social security tax.
- Net financial expenses for 2020 were $46.4 million, compared to $65.1 million in 2019. The decrease was due to a $16.9 million decrease in interest expenses due to reduced outstanding debt and a reduction in Libor in addition to a non-cash loss of $8.1 million related to interest rate derivatives in 2020 compared to a non-cash loss of $9.9 million in 2019.
- The Company had net income for 2020 of $266.3 million, or income of $1.71 per basic share and $1.61 per diluted share compared to net income of $73.7 million, or income of $0.51 per basic share and $0.51 per diluted share in 2019. The difference between the two periods mainly reflects higher tanker rates.
- Net cash provided by operating activities for 2020 was $529.9 million compared to net cash provided by operating activities of $156.0 million for 2019. The increase was mainly due to net income of $266.3 million in 2020 compared to net income of $73.7 million in 2019, $161.9 million related to changes in operating assets and liabilities and $19.4 million related to items included in net income not affecting cash flows.
- Net cash used in investing activities for 2020 was $26.7 million comprising $27.1 million related to investment in vessels and $0.4 million related to investment in property, plant and equipment, partially offset by $0.8 million related to a dividend received from associated company. Net cash used in investing activities for 2019 was $53.4 million comprising $53.8 million related to investment in vessels, partially offset by $0.5 million related to a dividend received from associated company.
- Net cash used in financing activities for 2020 was $501.9 million comprising $292.4 million related to prepayment of long-term debt, $214.7 million related to cash dividends paid and $65.2 million related to scheduled repayment of long-term debt, partially offset by $70.9 million related to issuance of long-term debt. Net cash used in financing activities for 2019 was $130.2 million comprising $92.3 million related to prepayment of long-term debt, $64.2 million related to scheduled repayment of long-term debt, $28.7 million related to cash dividends paid, $6.4 million related to repayment of convertible bonds and $3.2 million related to repurchase of shares partially offset by $65.0 million related to issuance of long-term debt.
- As of December 31, 2020, our cash balance was $68.6 million, compared to $67.4 million as of December 31, 2019.
- As of December 31, 2020, the Company had 170,798,328 shares of our common stock outstanding compared to 146,819,401 as of December 31, 2019.


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