DHT Holdings, Inc. Second Quarter 2021 Results

Source: www.gulfoilandgas.com 8/9/2021, Location: South America

QUARTERLY HIGHLIGHTS:
• In the second quarter of 2021, the Company’s VLCCs achieved an average rate of $19,500 per day.
• Adjusted EBITDA for the second quarter of 2021 was $21.0 million. Net income for the quarter was $0.8 million which equates to $0.00 per basic share. The result includes a profit related to sale of vessels of $13.6 million and non-cash gains in fair value related to interest rate derivatives of $2.2 million and to the refinancing of $3.0 million.
• For the first half of 2021, the Company’s VLCCs achieved an average rate of $25,500 per day and net income was $12.4 million.
• For the second quarter of 2021, the Company will return $25.8 million to shareholders. The return of capital is comprised of $22.5 million in the form of share buyback and $3.4 million in the form of a cash dividend. The cash dividend of $0.02 per share of outstanding common stock is payable on August 26, 2021 to shareholders of record as of August 19, 2021. This marks the 46th consecutive quarterly dividend. The shares will trade exdividend from August 18, 2021.
• On April 12, 2021, the Company took delivery of DHT Osprey, the second of the two VLCCs acquired in January 2021. The first vessel, DHT Harrier, was delivered on February 18, 2021.
• In the second quarter of 2021, the Company entered into three separate agreements to sell its three 2004 built VLCCs, DHT Raven, DHT Lake and DHT Condor, for an aggregate of $88.75 million. DHT Raven was delivered April 28, DHT Lake was delivered May 11, and DHT Condor was delivered July 8. The Company booked a profit of $13.6 million in the second quarter of 2021 related to the sale of DHT Raven and DHT Lake and expects to book a profit of about $1.5 million in the third quarter of 2021 related to the sale of DHT Condor.
• In May 2021, the Company entered into agreement with seven banks for a new $316.2 million credit facility with Nordea as agent. In June 2021, the Company drew down $233.8 million under the new facility and repaid the total outstanding under the old facility, amounting to $175.9 million. The new facility bears interest at a rate equal to Libor + 1.90% and has final maturity in January 2027. Additionally, the facility includes an uncommitted “accordion” of $250 million.
• In June 2021, the Company paid down a total of $99.5 million on the ABN Amro Credit Facility. The total comprised of a) $60.0 million repayment under the revolving tranche, b) $33.4 million prepayment of all regular installments for 2022, and c) $6.1 million repayment of the loan on DHT Condor.

OPERATIONAL HIGHLIGHTS:
• Scheduled off hire for the quarter was 100 days as the Company took advantage of the weak freight market to bring forward dry dockings and planned installations of scrubbers and ballast water treatment systems.
• Our business remains impacted by the Covid-19 virus outbreak with operational challenges related to our seafarers and our ability to change crews at regular intervals. There are still numerous restrictions affecting crew changes with strict transit and quarantine procedures and a limited number of geographical options to execute crew changes. We 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. We note that as of late, decreases in inventories and estimates of demand are slowly resuming indicating a recovery in demand for oil transportation in the conceivable future.

SUBSEQUENT EVENT HIGHLIGHTS:
• On July 8, 2021, DHT Condor was delivered to its new owner and the Company expects to book a profit of about $1.5 million in the third quarter of 2021 related to the sale.

OUTLOOK:
• Thus far in the third quarter of 2021, 64% of the available VLCC days have been booked at an average rate of $22,100 per day on a discharge to discharge basis (not including any potential profit splits on time charters).
• The Company will continue to take advantage of the weak freight market to bring forward dry dockings and planned installations of scrubbers and ballast water treatment systems. Scheduled off hire is expected to be in the range between 80 and 100 days during the third quarter of 2021.

SECOND QUARTER 2021 FINANCIALS
The Company reported shipping revenues for the second quarter of 2021 of $65.9 million compared to shipping revenues of $245.9 million in the second quarter of 2020. The decrease from the 2020 period to the 2021 period includes $168.9 million attributable to lower tanker rates and $11.1 million attributable to a decrease in total revenue days as a result of scheduled off hire in connection with special surveys and scrubber installations. The Company took advantage of the weak freight market to bring forward dry dockings and planned installations of scrubbers and ballast water treatment systems.

Voyage expenses for the second quarter of 2021 were $20.7 million, compared to voyage expenses of $43.2 million in the second quarter of 2020. The decrease was due to fewer vessels in the spot market representing a $15.3 million decrease in bunker expenses, a $2.5 million decrease in port cost and a $2.1 million decrease in broker commission.

Vessel operating expenses for the second quarter of 2021 were $19.6 million compared to $19.7 million in the second quarter of 2020.

Depreciation and amortization, including depreciation of capitalized survey expenses, was $32.2 million for the second quarter of 2021, compared to $30.8 million in the second quarter of 2020. The increase was due to increased depreciation related to scrubbers of $1.4 million.

The Company recorded a profit of $13.6 million for the second quarter of 2021 related to the sale of DHT Raven and DHT Lake.

General & administrative expense (“G&A”) for the second quarter of 2021 was $4.7 million, consisting of $3.8 million cash and $0.9 million non-cash charge, compared to $5.0 million in the second quarter of 2020, consisting of $3.1 million cash and $1.9 million non-cash charge. Non-cash G&A includes accrual for social security tax.

Net financial expenses for the second quarter of 2021 were $1.7 million compared to $11.2 million in the second quarter of 2020. The decrease was mainly due a $4.0 million decrease in interest expenses due to reduced outstanding debt and a reduction in 3-Month Libor, a $3.0 million gain related to the debt modification, in addition to a non-cash gain of $2.2 million related to interest rate derivatives in the second quarter of 2021 compared to a non-cash loss of $0.1 million in the second quarter of 2020.

As a result of the foregoing, the Company had net income in the second quarter of 2021 of $0.8 million, or income of $0.00 per basic share and $0.00 per diluted share, compared to net income in the second quarter of 2020 of $135.8 million, or an income of $0.92 per basic share and $0.81 per diluted share. The decrease from the 2020 period to the 2021 period was mainly due to lower tanker rates.

Net cash provided by operating activities for the second quarter of 2021 was $33.9 million compared to $186.6 million for the second quarter of 2020. The change of $152.7 million is comprised of a $135.0 million decrease in net income, a $20.0 million decrease in non-cash items included in net income, partially offset by a $2.3 million increase in changes in operating assets and liabilities.

Net cash provided by investing activities was $40.1 million in the second quarter of 2021 comprising $57.5 million related to sale of vessels, partially offset by $17.3 million related to investment in vessels. Net cash used in investing activities was $9.7 million in the second quarter of 2020 and was mainly related to investment in vessels.

Net cash used in financing activities for the second quarter of 2021 was $75.8 million comprising $175.9 million related to repayment of long-term debt in connection with refinancing, $93.4 million related to prepayment of longterm debt, $22.5 million related to purchase of treasury shares, $6.8 million related to cash dividend paid, $6.1 million related to repayment of long-term debt in connection with sale of vessel and $1.9 million related to scheduled repayment of long-term debt, partially offset by $230.9 million related to issuance of long-term debt. Net cash used in financing activities for the second quarter of 2020 was $115.0 million comprising $59.2 million related to prepayment of long-term debt, $51.5 million related to cash dividend paid and $17.7 million related to scheduled repayment of long-term debt, partially offset by $13.5 million related to issuance of long-term debt. As of June 30, 2021, the cash balance was $52.2 million, compared to $68.6 million as of December 31, 2020.

The Company monitors its covenant compliance on an ongoing basis. As of the date of the most recent compliance certificates submitted for the second quarter of 2021, the Company is in compliance with its financial covenants. As of June 30, 2021, the Company had 167,918,183 shares of common stock outstanding compared to 170,798,328 shares as of December 31, 2020.

The Company declared a cash dividend of $0.02 per common share for the second quarter of 2021 payable on August 26, 2021 for shareholders of record as of August 19, 2021.

FIRST HALF 2021 FINANCIALS
The Company reported shipping revenues for the first half of 2021 of $152.9 million compared to $457.9 million in the first half of 2020. The decrease from the 2020 period to the 2021 period includes $282.0 million attributable to lower tanker rates and $22.9 million attributable to decreased total revenue days.

Voyage expenses for the first half of 2021 were $36.4 million compared to voyage expenses of $102.6 million in the first half of 2020. The decrease was due to fewer vessels in the spot market representing a $53.2 million decrease in bunker expenses, a $8.2 million decrease in port expenses and a $3.7 million decrease in broker commission.

Vessel operating expenses for the first half of 2021 were $38.6 million, compared to $39.5 million in the first half of 2020. The decrease was mainly related to up-storing of spares and consumables in 2020 in relation to IMO2020.

Depreciation and amortization, including depreciation of capitalized survey expenses, was $64.2 million for the first half of 2021, compared to $61.1 million in the first half of 2020. The increase was mainly due to increased depreciation related to scrubbers of $2.3 million and increased depreciation related to capitalized survey expenses of $1.1 million.

The Company recorded a profit of $13.6 million for the first half of 2021 related to the sale of DHT Raven and DHT Lake.

G&A for the first half of 2021 was $10.2 million, consisting of $7.4 million cash and $2.8 million non-cash charge, compared to $9.3 million, consisting of $6.5 million cash and $2.8 million non-cash charge for the first half of 2020. Net financial expenses for the first half of 2021 were $4.6 million, compared to $36.7 million in the first half of 2020. The decrease was due to a non-cash gain of $5.7 million related to interest rate derivatives in the first half of 2021 compared to a non-cash loss of $13.1 million in the first half of 2020, a $10.2 million decrease in interest expenses due to reduced outstanding debt and a reduction in 3-Month Libor and a $3.0 million gain related to the debt modification recorded in the second quarter of 2021.

The Company had net income for the first half of 2021 of $12.4 million, or income of $0.07 per basic share and $0.07 per diluted share compared to net income of $208.0 million, or income of $1.41 per basic share and $1.26 per diluted share in the first half of 2020. The difference between the two periods mainly reflects higher tanker rates.

Net cash provided by operating activities for the first half of 2021 was $44.8 million compared to $317.2 million for the first half of 2020. The decrease was mainly due to net income of $12.4 million in the first half of 2021 compared to net income of $208.0 million in the first half of 2020, $41.6 million related to changes in operating assets and liabilities and $35.3 million related to items included in net income not affecting cash flows.

Net cash used in investing activities for the first half of 2021 was $101.0 million comprising $158.5 million related to investment in vessels, partially offset by $57.5 million related to sale of vessels. Net cash used in investing activities for the first half of 2020 was $12.8 million comprising $12.4 million related to investment in vessels and $0.4 million related to investment in property, plant and equipment.

Net cash provided by financing activities for the first half of 2021 was $39.8 million comprising $355.9 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, $22.5 million related to purchase of treasury shares, $15.4 million related to cash dividends paid, $6.1 million related to repayment of long-term debt in connection with sale of vessel and $2.6 million related to scheduled repayment of long-term debt. Net cash used in financing activities for the first half of 2020 was $234.1 million comprising $116.9 million related to prepayment of long-term debt, $98.5 million related to cash dividends paid, $31.9 million related to scheduled repayment of longterm debt, partially offset by $13.5 million related to issuance of long-term debt. As of June 30, 2021, our cash balance was $52.2 million, compared to $68.6 million as of December 31, 2020.

As of June 30, 2021, the Company had 167,918,183 shares of our common stock outstanding compared to 170,798,328 as of December 31, 2020.


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