Q4 2023 DHT Holdings Inc Earnings Call
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Operator: Thank you for listening. Have a great day, and thank you.
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Operator: Welcome to the Q4 2023 DHT Holdings Inc earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press stars 1 and 1 on your telephone.
Welcome to the Q4 2023, DHT Holdings, Inc earnings Conference call.
At this time all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session.
You ask a question during the session you will need to press star one and one on your telephone you will then have an automated message advising Johann just raised to withdraw your question. Please press star one and one again.
Operator: You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, Laila Halvorsen, CFO. Please go ahead.
Please be advised that today's conference is being recorded.
I would now like to hand, the conference over to your first speaker today Laila Halvorsen CFO. Please go ahead.
Laila C. Halvorsen: Thank you. Good morning and good afternoon, everyone. Welcome and thank you for joining DHT Holdings' fourth quarter 2023 learning. I'm joined by DHT's President and CEO, Svein Mokhtar. As usual, we will go through the financials and some highlights before we open up for your questions. The link to the slide deck can be found on our website, dhtankers.org.
Laila C. Halvorsen: Thank you.
Laila C. Halvorsen: Good morning, and good afternoon, everyone welcome and thank you for joining.
Laila C. Halvorsen: Fourth quarter 2023 earnings call.
Laila C. Halvorsen: I'm joined by Dht's, President and CEO, Brian Smith.
Laila C. Halvorsen: Okay.
As usual I will go through financial highlights before we open up for your questions.
Laila C. Halvorsen: A link to the slide deck can be found on our website th tankers dot com.
Laila C. Halvorsen: Before we get started with today's call, I would like to make the following remarks. A replay of this conference call will be available on our website, DHTankers.com, until February 14th. In addition, our earnings press release will be available on our website and on the SSE Edgar system as an exhibit to our forum. As a reminder, on this conference call, we will discuss matters that are forward-looking in nature. These forward-looking statements are based on our current expectations about future events as detailed in our financial statements. However, actual results may differ materially from the expectations reflected in this forward-looking statement. We urge you to read our periodic report available on our website and on the SSE Edgars website, including the risk factors in these reports.
Laila C. Halvorsen: Before we get started with todays call I would like to make the following remarks.
Laila C. Halvorsen: You play on this conference call will be available on our website th tankers dot com.
Laila C. Halvorsen: February 14th.
Laila C. Halvorsen: In addition, our earnings press release will be available on our website.
Laila C. Halvorsen: On the SSD Edgar system as an extra beds to our form 6K.
Laila C. Halvorsen: As a reminder, on this conference call, we will discuss matters that are forward looking in nature.
Laila C. Halvorsen: These forward looking statements are based on our current expectations about future events as detailed in our financial reports.
Laila C. Halvorsen: Actual results may differ materially from expectations reflected in these forward looking statements.
Laila C. Halvorsen: We urge you to read our periodic report.
Laila C. Halvorsen: On our website and on the E S.
Laila C. Halvorsen: Our system.
Laila C. Halvorsen: The risk factors none of these reports for more information regarding risks that we face.
Laila C. Halvorsen: For more information regarding risks that we maintain a very strong balance sheet, represented by low leverage and significantly, At year-end, financial leverage was below 20% based on market value, and Net Debt was below $15 million per capita. The fourth quarter ended with total liquidity of $268 million, consisting of $75 million in cash and $193 million available under our revolving credit. Now over to the P&L highlights for the quarter. We achieved revenues on a GCE basis of $94.5 million and EBITDA of $73 million.
Laila C. Halvorsen: We maintain a very strong balance sheet represented by leveraging our significant liquidity.
Laila C. Halvorsen: At yearend financial leverage was below 20% based on market values for the ships and that's well below $15 million of perpetual.
Laila C. Halvorsen: The fourth quarter ended with total liquidity of 268 million consisting of $75 million in cash and $193 million available under our revolving credit facility.
Speaker Change: Now over to the P&L highlights for the quarter.
Speaker Change: We achieved revenue funky ebay state of 94, and a half million and EBITDA of 73 million.
Laila C. Halvorsen: Net income came in at $35.3 million, equal to $0.22 per share. We continue to show good cost control, and operating expenses for the quarter were $18.7 million, and G&A was $4 million. The vessels in the spot market earned $43,600 per day, and the vessels on time charters made $39,600 per day, and this includes profit-sharing for two of the five vessels on time charters. The average TC achieved for the quarter was $42,800 per day. 2023 was the second best year in the company's history with net income of 161.4 million, equal to 99 cents per share. We achieved revenues on a TC basis of $390 million and EBITDA of $302 million.
Speaker Change: Net income came in at $35 3 million equal to 22 cents per share.
Speaker Change: Sure.
Speaker Change: We continue to show good costs and controlling operating expenses for the quarter were $18 7 million and G&A was $4 million.
Speaker Change: The vessels in the spot market earned $43600 per day.
Speaker Change: Vessels on time charters made $39600 per day and this includes profit sharing for two of the five vessels on time charters.
Speaker Change: The average TCE achieved for the quarter was what did you close them $800 per day.
Speaker Change: Finally, 23 was the second best year in the company's history with net income of 161 4 million equal to 99 cents per share.
Speaker Change: We achieved revenues on TCE basis up 390 million and EBITDA of $302 million.
Laila C. Halvorsen: Average TCE for 2023 was 47,500 per day, where the vessels in the spot market earned $51,200 per day, and the vessels on time charters made $36,400. On this slide, we present the cash flow highlights. We started the fourth quarter with $74 million in cash, and we generated $73 million in EBITDA.
Speaker Change: Average TCE for 2023.
Speaker Change: What is it seven and a half million dollars.
Speaker Change: Sorry $47 per.
Per day, whereas the vessels in the spot market.
Speaker Change: 51000 children per day.
Speaker Change: Sometimes charterers Smith $36400 per day.
Speaker Change: On this slide we present the cash flow highlights we started the fourth quarter with $74 million in cash, which generated $73 million and habitat.
Laila C. Halvorsen: Ordinary debt repayment in cash interest amounted to $16 million, and $30.6 million was allocated to shareholders through the cash dividends pertaining to the third quarter of 2023, 2.2 million of which were used for May. We prepaid all installments for 2024 under the Nordea credit facility, amounting to $23.7 million. And we drew down $24 million on RCS, which was subsequently repaid in January. $ 23 million was related to changes in working capital, and the quarter ended with 74.7 million. Switching to left lower case In line with our dividend policy, we will pay $0.22 per share as a quarterly cash dividend, which is equal to 100% of ordinary net income. The dividend will be payable on February 28 to shareholders of record as of February. This marks the 56th consecutive quarterly cash dividend, and the shares will trade ex-dividend from February 2020. Total cash dividends for the full year equals $0.99 per share, and below is an illustration of the quarterly cash dividends we have returned to shareholders since we updated the dividend policy in the second half of 2020.
Speaker Change: Ordinary debt repayments and cash interest amounted to 610 milligram and.
Speaker Change: 36 million was allocated to shareholders through the cash dividend pertaining to the third quarter of 2023 well two.
Speaker Change: $2 2 million was used for maintenance Capex.
Speaker Change: We prepaid all installments for 'twenty to 'twenty four under the Nordea credit facility amounting to $23 7 million and we drew down 24 million on our steps, which was subsequently repaid in January 24.
Speaker Change: 23 million was related to changes in working capital in the quarter ended with 74 7 million in cash.
Speaker Change: Switching to capital allocation.
Speaker Change: In line with our dividend policy, we will pay 22 cents per share quarterly cash dividend, which is equal to 100% of ordinary net income.
Speaker Change: The dividend will be payable on February 28 to shareholders of record on February 21st.
Speaker Change: This marks the fifth to sixth.
Speaker Change: David coordinate cash dividend.
Speaker Change: <unk> will trade ex dividend from February 20th.
Speaker Change: Total cash dividend for the full year equals 99 cents per share and below is there now.
Speaker Change: Australian of quarterly cash dividends, we have returned to shareholders. Since we updated the dividend policy in the second half of 'twenty two.
Laila C. Halvorsen: This amounts to a total of $1.41 per share. We have shown robust spot earnings during 2023, with quarterly average rates ranging from $43,600 up to $64,800 per day. Average spot earnings from Q4 2020 through Q4-23 were $53,700 per day, which compares well with the average TD3C index for the same period of $40,100 per day or the 25-year average spot rate reported by Clarkson's of $41,400. Outlook for DHT Spot Trade for Q124 shows $55,900 per day booked today. On the left side of this slide, we present an update on estimated P&L and cash breakeven P&L breakeven is estimated to $27,400 per day for the fleet, while cash breakeven is estimated to $18,500 per day, resulting in $8,900 per day per shift in discretionary cash flow after the. So, assuming the vessels are in P&L breakeven, this means about $76 million in discretionary cash flow for the year. On the right side of the slide, we illustrate estimated earnings per share for 2024 based on different rate scenarios. Assuming $50,000 per day, earnings per share will be $1.04, while $75,000 per day estimates $1.85, and a spot rate of $100,000 per day estimates $2.65.
Speaker Change: This amounts to a total of $1.41 per share.
Speaker Change: We have shown robust spot earnings during 2023 with quarterly average rates ranging from $43600 up to $64800 per day.
Speaker Change: Average spot earnings from Q4 'twenty to Q.
Speaker Change: Q4, 23 was $53700 per day, which compares well with the average T. Three P index for the same period of 2001.
Speaker Change: $100 per day for the 25 year average spot rate reported by Clarksons of $41400 per day.
Speaker Change: Outlook for DHT upgrades for Q1, 'twenty four shows $55900 per day booked to date.
Speaker Change: On the left side of the stride with present, an update on estimate the P&L on a cash breakeven rates for 2024.
Speaker Change: P&L breakeven that's estimated to $27400 per day for the fleet.
Speaker Change: Cash breakeven its estimated $2500 per day, resulting in $8900 per day per ship and discretionary cash flow after dividends.
Speaker Change: So assuming the vessels Zorn P&L breakeven this means about 76 million in discretionary cash flow for the year.
Speaker Change: On the right side of the slide.
Speaker Change: That's great estimated earnings per share for 2024 based on different rate scenarios.
Speaker Change: Assuming $50000 per day earnings per share will be one dollar and corresponds well 75000 per day estimates $1 85.
Speaker Change: Upgrade of hundred thousand per day estimate $2.65 in earnings per share.
Laila C. Halvorsen: We will now go through the first quarter of. We expect 455 days to be covered by our time-sharter contract at an average rate of $36,600. This concludes reported profit sharing for January and February for two of the five vettels on TimeShark. By and large, only a few states.
Speaker Change: We will now go through the first quarter outlook.
Speaker Change: We expect 455 day should be covered by our time charter contracts.
Speaker Change: Average rate of $36600 per day.
Speaker Change: Hey, Thank you just reported profit sharing for January and February for two of the five vessels on time charters.
Speaker Change: March only assumes base strength.
Laila C. Halvorsen: Further, we expect to have a total of 1,630 spot days for the quarter, of which 1,270 days, equal to 78%, have been booked at an average rate of $55,900 per day. As of today, this suggests combined bookings of 83% of the total days at an average rate of $50,800. You can compare these spot booking numbers with the estimated spot P&L break-even rate of $25,900 per day for the first quarter, allowing you to model a net income contribution based on your own assumptions for the unfixed spot P&L. With that, I will turn the call over to Svein. Thank you, Laila.
Speaker Change: Further we expect to have a total of <unk>.
Speaker Change: <unk> hundred 30, <unk> updates for the quarter of which 270 days equal to 78%.
Speaker Change: <unk> booked an average rate of $55900 per day.
Speaker Change: As of today. This suggests combined bookings.
Speaker Change: Chris one of the total base.
Speaker Change: Average rate up $50800 per day.
Speaker Change: You cannot compare this booked bookings.
Speaker Change: Numbers with the estimated spot PMO breakeven rate of $25900 per day for the first quarter, allowing you to model. Our net income contribution based on your own assumptions for the Unfixed spot days.
Speaker Change: With that I will turn the call over to Simon.
Svein Moxnes Harfjeld: In this slide, we wanted to discuss the fleet development and its demographics. On the graph to the left, we illustrate with a blue line the average historical age of the VCC fleet since 1996. As you will see, the average age in the 1990s was about 13 years.
Simon: Thank you.
Simon: In this slide you wanted to discuss the fleets of our clinic.
Simon: Graphics.
Simon: On the graph to the left illustrate with Blue line, the average historical H or the VLCC fleet since 90 96.
Simon: Yes, you will see that.
Simon: Rich aged in the nineties for both European years.
Svein Moxnes Harfjeld: As the double hull concept evolved in response to the planned phase-out of single-hull tankers, the fleet aged reduced to about eight at the beginning of the 2000s, and it further reduced to some seven years following the extensive deliveries between 2007 and 2012. Fleet renewal stagnated, however, despite a meaningful number of ships being delivered once the EcoDesigns came to the market in 2015. Today, the average age of the VCC fleet is 11 and a half years.
Simon: That's a double all concepts evolve in response to the client faced off with single Hull tankers. The fleet faced reduced to about eight at the beginning of the 2000.
Simon: It further reduced some seven years following an extensive deliveries between 2700 <unk> tasked by 12.
Simon: Fleet renewal staggered method. However, despite the meaningful number of ships being delivered once the eco designs came to the market in 2015.
Simon: Today, the average age of the VLCC fleet is 11 years.
Svein Moxnes Harfjeld: In stark contrast to this development, general fleet renewal has abated, resulting in the current order book standing at 2.5%. Looking at the graph to the right, to illustrate the anticipated fleet over the next three years, we assume no scrapping as this has been non-existent in the recent past. If you look to the end of 2026...
Simon: Historical tested this development General fleet renewal is debated, resulting in the current order book, starting at two and a half.
Simon: Looking at the graph to the right.
Simon: Illustrates anticipated fleet over the next three years.
Simon: Assume no scrapping as this has been non existent in the recent past.
Simon: If you look to end 2026.
Svein Moxnes Harfjeld: The fleet that will be older than 20 years will reach 200 ships, a big number. However, looking at how many ships will be older than 15 years of age by the end of 2026... the number is huge.
Simon: That will be older than 20 years will reach 200 chips a big number.
Simon: However, looking at how many ships will be older than 15 years of age.
Simon: The number is huge.
Svein Moxnes Harfjeld: In this scenario, we will reach 445 vessels, equal to almost 50% of the fleet. On this slide, we continue the same theme, and apologies if this comes across as repetitive. The graph to the left points out how ordering on new VHDCs more or less came to a halt in the first half of 2021.
Simon: This scenario reached 445 vessels equal to almost 50% sort of leaks.
Simon: On this slide we continue the same team.
Speaker Change: And apologies if this comes across as repetitive.
Speaker Change: The graph to the left.
Speaker Change: Our ordering of movies to see it's more or less came to a halt in the first half of <unk>.
Svein Moxnes Harfjeld: Three years later, we have seen some activity pick up, but the order book is, as we said, still only two and a half percent. The graph to the right shows the number of ships scheduled for delivery over the coming five years against ships turning 20 or 25 years old. For all practical purposes, the 2026 delivery is now sold out.
Speaker Change: Three years later, we have seen some activity pick up but the order book is as you said, it's still only two and a half presents.
Speaker Change: The graph to the right shows the number of ships scheduled for delivery over the coming five years against ships, turning 20 or 25 years.
Speaker Change: But for all practical purposes.
Speaker Change: Fixed delivery is now sold out.
Svein Moxnes Harfjeld: Shipyards are offering 2027 deliveries, however, in strong competition with other ship types such as LMGs, LPGs, ammonia carriers, container carriers, and large boat carriers. Even a significant effort to contract new ships will struggle to put a dent in this highly constructive supply picture. The CIA regime will likely result in part of the fleet having to slow down to stay in business, thereby reducing capacity further. There are likely numerous reasons why the order book has ended up where it is.
Speaker Change: Shipyard federal frame 2027 deliveries, however, and strong competition with other ship types, such as Lng's lpg's ammonia carriers container carriers and large bulk carriers.
Speaker Change: Even though a significant effort to contract new ships will struggle to debit in this highly constructive supply picture.
The CIA regime will likely result in part of the fleet, having to slow down with sustained business, thereby reducing capacity further.
Speaker Change: They are likely numerous resource by the order book has summed it up pretty well.
Svein Moxnes Harfjeld: We suggest uncertainty related to future fuels to be one. Further, many ship owners have alternative investment opportunities and not only in other sectors than shipping. We see many private companies with meaningful capital being allocated to family offices, private equity, and real estate. This slide presents research from Reisberg Energy.
Speaker Change: Are you, suggesting circle K related to future fuels to be well.
Speaker Change: Further many ship owners have alternative investment opportunities are not only in other sectors in shipping.
Speaker Change: We see many private companies with meaningful capital being allocated to family offices private equity and real estate.
Speaker Change: This slide presents research from well regarded the rice energy.
Svein Moxnes Harfjeld: It depicts the prospective uptake of either ammonia or methanol as fuel in different shipping sectors. These two fuels are likely not the only alternatives we will see in the future, but they seem to be the most talked about. Following a deep dive into this interesting issue, they have mapped out the construction of potential future production facilities, the expected cost of these fuels, and how and where these fuels can be delivered to the market.
Speaker Change: It depicts the prospective uptake either ammonia or methanol as fuel in different shipping sectors.
Speaker Change: These two fuels are likely not the only alternative we will see in the future, but there seem to be the most talked about.
Speaker Change: Floating a deep dive into this interesting issue they havent laptops construction of potential future production facilities.
Speaker Change: The expected cost of these fuels.
Speaker Change: Oh, and where these fuels can be delivered to the market and lastly are there any other industries or sectors and our own.
Svein Moxnes Harfjeld: And lastly, are there any other industries or sectors than our own that have a willingness or ability to pay a higher price? Additional aspects include consideration of energy density and how that can be solved here under bunker capacity on board ships and whether that will result in redesigns that make ships larger or having to reduce carrying capacity. All in all, a very complex picture.
Speaker Change: Willingness or ability to pay a higher price.
Speaker Change: Additional aspects include consideration of energy density and how that can be sold here on their broker capacity onboard ships and whether that will result in redesigns that makes ships larger or having to reduce carrying capacity.
All the very complex picture.
Svein Moxnes Harfjeld: These two graphs look out to 2040 and suggest tankers, as illustrated by the green lines, will have a slow uptake or changeover. You might see uptaken LNG as a transitionary fuel and biofuels being blended into conventional products. Current Propulsion Systems looks set to have many more years in this. This slide is a familiar picture. Energy Aspects, another highly respected firm, has laid out the dislocation between where future crude oil supply will come from and where it will be consumed.
Speaker Change: These two graphs looks out to 2014.
Speaker Change: Tankers Herbart illustrated by the Green lines will have a slower uptake or changeover.
Speaker Change: They might see uptake in LNG as a transition fuel and biofuels being blended into conventional products.
Speaker Change: <unk> current propulsion systems looks set to have many more years in business.
Speaker Change: This slide is a familiar picture.
Speaker Change: G aspects another highly respected firm that's laid out the dislocation between the near future crude oil supply will come from and where it will be consumed.
Svein Moxnes Harfjeld: No surprises here, but nevertheless interesting as the analysis has a detailed bottom-up approach. The key takeaway is, as we have stated many times, the Atlantic is long crude oil, and the demand growth is in Asia. This will be carried on ships, and the majority most likely on the industry workhorse, the ECCs, currently carrying almost 50% of all seaborne crude oil.
Speaker Change: No surprises here, but nevertheless interesting analysis has a detailed bottom up approach.
Speaker Change: The key takeaways SCS stated many times over the Atlantic is long crude oil and the demand growth is in Asia.
Speaker Change: This will be carried on ships and the majority most likely on the industry where of course vlccs currently carrying almost 50% of all seaborne crude oil.
Svein Moxnes Harfjeld: Within all the geopolitical noise, we should not forget to consider the fundamentals supporting our business. Continued growth in oil demand. Longer transportation distances, and hardly any new shipping capacity coming to market against a rapidly aging fleet.
Speaker Change: Within all the geopolitical noise, we should not forget to consider a fundamental supporting our business.
Speaker Change: Continued growth in oil demand.
Speaker Change: Longer transportation distances.
Speaker Change: And hardly any new shifting capacity coming to market against a rapidly aging fleets.
Svein Moxnes Harfjeld: We are staying focused on what is within our control, concentrating on the disciplined execution of our strategy, and maintaining what we have been told is a highly regarded level of corporate governance. We believe our company is well-structured for cyclical and volatile markets with a solid balance sheet and strong liquidity at its foundation. As always, we keep our eyes on maintaining robust cash break-even levels while still having meaningful market exposure and operating leverage, and being as profitable as we can. All these companies bow with a defined and shareholder-friendly capital allocation policy of paying out 100% of ordinary net income as quarterly cash dividends.
Speaker Change: We are staying focused on what is within our control concentrating on disciplined execution of our strategy maintaining what we have been told is a highly regarded level of corporate governance.
Speaker Change: We believe our company is well structured for cyclical and volatile markets with our solid balance sheet and strong liquidity as its foundation.
Speaker Change: As always we keep our eyes on maintaining robust cash breakeven levels.
Speaker Change: Having meaningful market exposure on operating leverage being as profitable as hey, Kevin.
Older boat with a defined and shareholder friendly capital allocation policy of paying out 100% of ordinary net income as quarterly cash dividends.
Operator: And with that, operator, over to you. We will now begin the question and answer session. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced.
Speaker Change: And with that operator over to you.
Speaker Change: Thank you we will now begin the question and answer session to ask a question you will need to press star one and one on your telephone and wait for your name to be announced and to withdraw. Your question. Please press star one on one again.
Operator: And to withdraw your question, please press star 1 and 1 again. Thank you. We'll now take our first question. Stand by.
Speaker Change: Thank you, we'll now take our first question.
Speaker Change: Please standby.
Frodo Morkadel: First question from the line of Frodo Morkadel from Clerks and Securities: please go ahead. Thank you. Hi, everyone. I'm Laila.
Jonathan Chappell: First question from the line of <unk> <unk> from Clarksons <unk> Securities. Please go ahead.
Jonathan Chappell: Thank you.
Linda: And then Linda.
Linda: Hello.
Svein Moxnes Harfjeld: Hello, for the... Very interesting slides you had there on the supply and demand picture. So how do you see investments given that backdrop? mentioned growing interest in new builds, still low numbers. The fleet is rapidly aging, right? So... Would you consider investing in new builds or secondhand investments today?
unknown: Very interesting slides you had there on the supply and demand.
unknown: Sure.
unknown: <unk>.
Linda: So how do you see investments given that backdrop.
Linda: You mentioned.
Linda: Growing interest in Jabil.
<unk>.
Linda: Sydney low numbers and glass.
Linda: The fleet is rapidly ageing right. So.
Speaker Change: Would you consider.
That being a <unk> or a second hand vessels today.
Svein Moxnes Harfjeld: You know, DHT today already has significant exposure to the market, and we feel we are very well positioned to sort of harvest a very interesting period ahead of us. That being said, we are, of course, turning every stone to look at opportunities that can create value for our shareholders and increase earnings per share accordingly, and that includes aspects of potential growth.
Speaker Change: DSC today already has got significant exposure to the market and do you feel we are very well positioned to sort of harvest still a very interesting period ahead of us.
Speaker Change: That being said we are of course.
Speaker Change: Turning every stone to look at opportunities that can create value for our shareholders and increase earnings per share accordingly.
Speaker Change: That includes also aspects of potential growth.
Svein Moxnes Harfjeld: It looks at secondhand vessels; we're looking at M&A, and, of course, also looking at new buildings. And if we decide to do something, we will, of course, notify the market once that is considered a firm business. And if I may ask, what kind of financial leverage ratios do you prefer now? Well, you have very low length values of 20%.
Speaker Change: At second hand vessels Youre looking at M&A and of course also looking at new buildings.
Speaker Change: If we decide to do something we will of course notify the market turbulence.
Speaker Change: Consider that for our business.
Speaker Change: Yeah.
Speaker Change: Sure.
Speaker Change: And if I may ask.
Speaker Change: What kind of financial leverage ratios do you prefer a mouse.
Speaker Change: Yeah, well you have very low loan to values.
Speaker Change: But the performance.
Svein Moxnes Harfjeld: Do you plan to keep it relatively low leveraged, or could you increase it? Let's say, I guess in order to keep up the 100% of earnings per share as a dividend, there's definitely room for that maybe that conversation. Appreciate it. What do you think?
Speaker Change: Do you plan to.
Speaker Change: Yes.
Speaker Change: Relatively low leveraged or could you increase it.
Speaker Change: Let's say I guess in order to keep up the 100%.
Speaker Change: Earnings per share as dividend.
Speaker Change: The room too.
Speaker Change: Increased debt maybe that Delek has also opposite.
Speaker Change: Depreciation.
Speaker Change: Dr targets.
Svein Moxnes Harfjeld: So, you know, our balance sheet today has a meaningful capacity to invest, and we hope to find the right opportunities to expand the company, you know, with the right transactions. And in that regard, we will use the balance sheet, and I will lever it up a bit. So leverage today marks the market is just shy of 20%. I think another sort of good reference for this is that, on book value, we only have 28%.
Speaker Change: Do you think.
Speaker Change: So you know our balance sheet today has meaningful capacity to invest so we.
Hope to find the right opportunities to expand the company.
Speaker Change: I'll do the right transactions and in that regard.
Speaker Change: We will use the balance sheet and lever up with it so our leverage today Mark to market is just shy of 20% I think another thing sort of good reference on this is that booked.
Speaker Change: Book value, we only have 28%.
Svein Moxnes Harfjeld: So we could sort of move leverage, you know, on the market to market, say, comfortably to around the 30% mark, and this will not impair the dividend capacity and sort of earnings per share. And that's very important for us because, you know, anything we do has to be accretive to earnings per share and not really distort the commitment to pay out 100% of net income. Good to hear from you. Thank you. Thank you for that. In the line of Jon Chappell from Evercore, please go ahead.
Speaker Change: We could sort of a new leverage.
Speaker Change: On a mark to market say comfortably at two around.
Speaker Change: Around the 30% Park.
Speaker Change: This will look to impair the dividend capacity and then that's it.
Speaker Change: The earnings per share. So that's very important for us is that.
Speaker Change: Anything we do has to be accretive to earnings per share looked really distort the commitment to pay out 100% of net income.
Speaker Change: Yeah.
Speaker Change: Good to hear.
Speaker Change: Thank you Robert.
Speaker Change: Thank you, we'll now take our next question.
Speaker Change: And this is from the line of Jon Chappell from Evercore. Please go ahead.
Jonathan Chappell: Thank you. Good afternoon. Just a quick housekeeping one first. If I look at the first quarter's spot days expected, it looks like it's maybe 80 short of what the spot fleet times the number of days in the quarter would be. So maybe just for the full year, is there a dry docking schedule or a number of off-hire days schedule for every quarter this year that we could know at this point? We are, in general, very light on dry docks this year, but there are some dry docking days in the first quarter, so our older ships, three of them, will go into dry dock and have service really in the first half, and some of those days are in the first
Jonathan Chappell: Thank you good afternoon.
Jonathan Chappell: Just a quick housekeeping one first if I look at the first quarter spot days expected. It looks like it's maybe 80 short of what the spot fleet times the number of days in the quarter. It would be so maybe just for the full year.
Jonathan Chappell: They're a drydocking schedule or a number of off hire days schedule for every quarter. This year that we could no at this point.
Jonathan Chappell: Yes.
Jonathan Chappell: General very light on Drydocks this year, but there are some drydocking days in the first quarter.
Jonathan Chappell: The older ships.
Speaker Change: Three of them will go into dry dock.
Speaker Change: And that service.
Speaker Change: In the first half and some of those base or in the first quarter.
Svein Moxnes Harfjeld: Okay, and then nothing really in the second half of the year. Yeah, that's correct. So I think we have one shift if my correction is correct next year. So, one next year. Okay, great. And then Svein, just kind of the bigger picture.
Speaker Change: Okay, and then nothing really in the second half of the year.
Speaker Change: Yes, that's correct. So I think that's correct and we have one ship Microdevices correct next year. So.
Speaker Change: One next year, Okay great.
Speaker Change: And then Brian just kind of bigger picture I think we spoke about this last call.
Svein Moxnes Harfjeld: I think we spoke about this on this last call. There's a lot of volatility in smaller ships for, you know, many of the geopolitical reasons that you spoke about or that we already know about. The VLCCs have done well, but you know, they certainly haven't done quite to the extent that maybe the smaller crude or even the bigger product tankers have. What do you think it's going to take for the VLCCs to kind of show some of the upside volatility, maybe some of the others? Is it strictly reliant on OPEC increasing production again? Is it maybe cannibalizing some of the strength in the Afro-Mex and Suez-Mex markets, or is there something even beyond that? You probably think of several things, right?
Speaker Change: Carl maybe.
Speaker Change: There's a lot of volatility in the smaller size ships for many of the geopolitical reasons that you spoke to her that we already know about the visa have done well, but they certainly haven't done quite to the extent.
Speaker Change: That may be the smaller crude or even the bigger product tankers have what.
Speaker Change: What do you think it's going to take for the Vlccs to kind of.
Speaker Change: Shows some of the upside volatility.
Speaker Change: If some of the others is it strictly reliant on OPEC, increasing production again is it maybe cannibalization of some of the strength in the Aframax and Suezmax Maxx markets or is there something even beyond that.
Speaker Change: It's probably a several things right.
Svein Moxnes Harfjeld: You know, we do sense and hear that there is some increasing level of fatigue in being able to receive and, you know, transport, you know, in sort of the more shadowy market, so to say. And it creates, you know, challenges for receivers to plan logistics, efficient port utilization, and all this. So, and it also costs more.
Speaker Change: Reduced hence o'hare that there is some.
Speaker Change: Increasing level of fatigue in.
Speaker Change: Being able to receive them.
Speaker Change: Transport.
Speaker Change: And so the more side of the market so to say.
Speaker Change: It creates challenges for our receivers to proudly logistics efficient reported utilization of all of this so it's also costly cost more than we see now there is I think we understand there is some tend to order ships.
Svein Moxnes Harfjeld: And we see now there's, I think we understand there's some 10-12 ships storing sanctioned crude in Southeast Asia that have been unsuccessful in delivering those crudes to end-users because of payment problems. So I think all this, you know, all this sanctioned activity is sort of slowly starting to bite. And then, of course, people start to increasingly look at, you know, energy security and more sort of compliant and reliant supply chain. So that, I think, will evolve, but this is not happening overnight. But just taking a step back, you know, if you look at our earnings last year, it's, you know, it's a pretty healthy number. And although VCC historically has been the most volatile, the mold, certainly we are not now.
Speaker Change: Storing sanctioning crude southeast Asia.
Speaker Change: Unsuccessful to deliver those crudes to end users because the payment problems.
Speaker Change: I think all of this.
Speaker Change: Obviously sanctioning activity.
Speaker Change: Sort of slowly starting to bite.
Speaker Change: And then of course people start to increasingly look at.
Speaker Change: Energy security and then more sort of compliance on reliant.
Speaker Change: Supply chain, so that I think will evolve, but this is not happening overnight.
Speaker Change: Just taking a step back.
Speaker Change: If you look at our earnings last year.
Speaker Change: It's a pretty healthy number and although these disease historically has been the most volatile now suddenly we are not.
Svein Moxnes Harfjeld: And we're, you know, quite stable and giving a sort of very, I think, good prospects going forward. We have a sense now that some of the biggest refineries in the Far East, maybe in China in particular, are drawing on inventories. So there is a sort of imbalance now, and this has to be fixed. And this is likely a first half event, whether this is just after Chinese New Year or May or June, you know, I don't know, but where there will be more oil coming to market as inventory levels are likely to be at quite a low level. And you also see at the same time signs that the economy is, you know, looking more promising than it has done for quite a while, and there are small drips of good news coming along the way.
Speaker Change: Quite quite stable.
Speaker Change: Giving us a very I think good prospects going forward.
Speaker Change: Have a sense now that.
Speaker Change: Some of the biggest refineries in the far east maybe in China particular, drawing on inventories. So there is sort of in balance now and this has to be fixed and this is likely a first half event.
Speaker Change: It's just after Chinese new year or May or June I don't know.
Speaker Change: Where there will be more oil coming to market as the inventory levels are likely to occur at a quite low level and you also see at the same time signs that the economy is.
Speaker Change: Looking more promising than it has done for quite a while.
Speaker Change: And then sort of.
Small drift so good news coming along the way so they might not be one big dramatic event that changes the game.
Svein Moxnes Harfjeld: So there might not be one big dramatic event that changes the game, but there will be a tipping point where suddenly these things start moving. And I think then the big ships will stand to be well rewarded. Great. I appreciate it. Thank you, Svein.
Speaker Change: There will be a tipping point, where suddenly these things move.
Speaker Change: I think the big ships.
Speaker Change: I'll stand to be well rewarded.
Speaker Change: Great I appreciate it thank you Scott.
Omar Nokta: Thank you. We will now take our next question, from the line of Omar Nokta from Jeffreys, please go ahead. Thank you. Hi, Svein. Hi, Laila.
Speaker Change: Thank you.
Speaker Change: We now take our next question.
Speaker Change: And this is from the line of Omar <unk> from Jefferies. Please go ahead.
Omar: Thank you hi sign highlighted that.
Svein Moxnes Harfjeld: I just wanted to follow up on John's question, just kind of about the market as it is. And, you know, for VLCC specifically, we've seen the Red Sea has been an issue now for, you know, for a few months now, but really, over the past few weeks, we started to see the acceleration of tankers diverting. And obviously, that's been much more of a midsize situation, not necessarily the VLCCs, but just wanted to get sort of your perspective on how you think this all starts to play out for VLCCs in the near term. Obviously, who knows how long the diversions will last for, but just based off of what we're seeing in the market today, with the ships that are now transitioning away for longer, how do you see that eventually impacting the VLCC?
Omar: Just wanted to follow up on Johns question, just kind of about the market as it has been for Vlccs, specifically, we've seen directly had been an issue now for a few months now but really over the past few weeks, we started to see the acceleration of tankers by burden.
Omar: So thats been much more of a mid sized.
Omar: Situation not necessarily the vlccs, but just wanted to get sort of your perspective on how do you think this all starts to play out for VLCC.
Omar: In the near term, obviously, who knows how long the diversions of last four but just based off of what we're seeing in the market today with the shifts that are now transitioning away for longer how do you see that eventual impacting the VLCC.
Svein Moxnes Harfjeld: Well, the Red Sea issue has had a fairly limited impact on the business. So if the issue is being removed, it will also have a limited impact. But it looks like it will stay on for a little while, and I think it will gradually or exponentially increase transportation costs for smaller ships going around, thereby making the bigger ships more favorable. So that could sort of be something that plays out.
Speaker Change: Well the Red Sea is here.
Speaker Change: Is that a fairly limited impact on <unk> business. So if the issue is being removed.
Speaker Change: Also have a limited impact but.
Speaker Change: It looks like at full sales worldwide and I think.
Speaker Change: It will incrementally exponentially, rather increased transportation cost for smaller ships going around and thereby making the bigger ships more is more favorable.
Speaker Change: So that's sort of the.
Speaker Change: Something that plays out.
Svein Moxnes Harfjeld: But I think in the actual freight market, as I said, the Red Sea issue had a very limited impact. It has maybe had a bigger impact on the stock market in how people try to trade the event and the noise. And, you know, are there more missiles hitting ships, or are there some peace talks being negotiated? So I don't know if it's affecting the capital markets, but the underlying business is relatively stable. Although I would say right now, as we speak, the freight market is moving higher. So, especially, you know, cargoes out of the Middle East.
Speaker Change: I think in the extra freight market as I said, the Red CACI had very limited impact. It does maybe you had a bigger impact in the stock market.
Speaker Change: People try to trade event for the noise.
Speaker Change: Are there more midsized ships or is there some.
Speaker Change: Peace talks taking negotiate will block this is influencing the capital markets, but the underlying business is.
Speaker Change: Yes.
Speaker Change: Relatively stable, although I would say right now as we speak the freight market is say is moving up.
Speaker Change: Especially.
Speaker Change: Carlos Auto Middle East.
Svein Moxnes Harfjeld: The list of ships is now very tight, and you have owners that have been a bit reluctant to go to the airline in general. So this has maybe impacted why the ship lists are shorter. So now AGE is on par with the U.S. Gulf and Far East trade, essentially. So modern ships are earning now in the low-mid 50s for a sort of straight-run business. And I would be surprised if this does not get more legs in the imminent future.
Speaker Change: The list of ships are very tight and you have owners that had been a bit reluctant to go to the area. In general. So this is may be impacted by the simplest are shorter so.
Speaker Change: AG East is on par with the U S Gulf far east the trades essentially ASO modern ships are earning now in the low to mid fifties for sort of a straight loan business.
Speaker Change: And I would be surprised if this low test scope more legs.
Speaker Change: And in the imminent future.
Operator: Thank you. As a reminder, if you would like to ask a question, you can press star 1 and 1 on your telephone. And I'll take our next question. Next question is from the line of Robert Silvera from RE Silvera and Associate Marine Surveyors. Please go ahead. Yes, thank you for taking my call. I'd like to look at the objects.
Speaker Change: Thank you.
Speaker Change: As a reminder, if you would like to ask a question you can press star one and one on your telephone.
Speaker Change: We will now take our next question.
Speaker Change: Next question is from the line of Robert Silva from Avi Silver of an associate.
Mike Webber: Please go ahead.
Mike Webber: Yes, Thank you for taking my call.
Mike Webber: I'd like to look at.
Mike Webber: The optics.
Mike Webber: Both of them.
Robert Silvera: Your Net Earnings, of course. Earnings per share $0.22. Senior Genes, Luke.
Mike Webber: Net earnings of course.
Mike Webber: Earnings per share 22, Samsung you're generally.
Mike Webber: With 22 cents.
Svein Moxnes Harfjeld: That outlook and the outlook of owners not contracting for many new ships says that it is a cash cow business, which is not great. I personally and my company think that that is a big mistake. Oil is going to be around, and the need to ship it by ocean is going to be around for a very long time. We, from our perspective, would love to see you. When you come up with a $0.22 dividend, retain approximately 10% and keep it at that. Bill Kadd, We don't know what the future holds. Obviously, the world can be quite unstable, and usually when that takes place, cash. For one reason or another.
Mike Webber: Yes.
Mike Webber: Optic and the optic.
Mike Webber: Ship owners, not contracting or normal new ships.
Mike Webber: So that group.
Mike Webber: As a cash cow business with not a great future.
Mike Webber: Personally in my company.
Mike Webber: It's a big mistake oil is going to be around and they need to ship it on oceans.
Mike Webber: Is going to be around for a very long time.
Mike Webber: We from our perspective, we would love to see you.
Mike Webber: When we come up with only 22 dividend.
Mike Webber: Approximately 10% and keep it at.
Mike Webber: At 20 cents save.
Mike Webber: During the two songs to build cash.
Mike Webber: We don't know what the future holds obviously.
Mike Webber: The world can be quiet on stable lead times and usually when that takes place cash is king.
Mike Webber: One reason or another.
Svein Moxnes Harfjeld: So we would love to see you on a proposed like your $0.22 this time. Instead, just issue $0.20. Keep the two cents and keep showing the market that you really believe in the future, and that you're building your care, so that we're not working for banks when an emergency comes, but rather we are getting more and more cash. As time goes on, that. That's the first part of my question.
Mike Webber: So we would love to see you.
Mike Webber: On a proportion like your 'twenty two time, instead, just issued 20 cents.
Mike Webber: Could two songs on keep showing the market that you really believe in the future.
Mike Webber: And that you are building your cash so that we're not working for banks went on emergency Commons, but rather we are getting more and more cash rich.
Mike Webber: As time goes on.
Mike Webber: Yeah.
Mike Webber: That's.
Mike Webber: First part of my question.
Svein Moxnes Harfjeld: Thank you for sharing your views. So we are already building cash but still being able to retain 100% of net income as a dividend because, The cash break-even is, as Laila talked about, for 2024, is $8,900 per day lower than the P&L break-even, which is the threshold for dividends. So this is because depreciation is higher than amortization.
Speaker Change: Thank you for sharing your views so.
Speaker Change: We are already building cash.
Speaker Change: Being able to retain the whole represents net income as a dividend because.
Speaker Change: The cash breakeven is.
Speaker Change: <unk> talked about before is athos alignment of those per day lower than the P&L breakeven, which is the threshold for dividends. So this is because depreciation.
Is higher than the amortization.
Svein Moxnes Harfjeld: So we are building cash without having to be, you know, making smaller adjustments to the dividend. And I think there is some merit in having a very clear and well-defined dividend policy that people understand that this fixed percentage of net income will allow investors, although we are in a market where earnings vary, it's very clear what they will get out of the business without sort of impairing the balance sheet of the company or reducing our ability to really invest. So we are committed to the current policy, and that is what you should expect going forward. Okay, well, from our standpoint...
Speaker Change: We are building cash.
Speaker Change: Without sort of having to be.
Speaker Change: <unk>, making smaller adjustments to the dividend and I think there is some merit and having a very clear and well defined dividend policy that people understand that this fix percentage of net income it will allow the investors. Although we are in the market for earnings very it's very clear what they will get out of it.
Speaker Change: Without impairing.
Speaker Change: Comparing the balance sheets of the company or reducing our ability needed to be able to invest so so.
Speaker Change: Committed to their current policy and that is what you should expect going forward.
Speaker Change: Okay welcome.
Speaker Change: Our standpoint.
Speaker Change: Carnival optic.
Speaker Change: 2022.
Speaker Change: Awesome.
Speaker Change: And so at the end of the year were 125 26 Marlin at the end of this year youre down to $75 million approximately so overall year over year your cash is dropping.
Svein Moxnes Harfjeld: It's kind of an experiment. Look at 2022. Cash and cash equivalents at the end of the year were $126 million. At the end of this year, you're down to $75 million, approximately. So overall, you're up. I don't know, despite paying out 100% of net income.
Speaker Change: No thats it.
Speaker Change: Excuse me for interrupting you for a moment there, but you have you are forgetting that we have.
Speaker Change: We made an investment last summer in that five year old ship $94 million.
Speaker Change: We did this without issuing any new equity and that's <unk>.
Speaker Change: Our cash reserves after a buildup.
Speaker Change: Despite paying I'll turn it over central net income and therefore accretive to earnings immediately for all the shareholders.
Svein Moxnes Harfjeld: And that was accretive to earnings immediately for all the shareholders. That's where the difference in cash position is reflected. OK. I will accept that. Thank you. The other thing, the other thing that, Troubles, you had a couple of years ago pledged, is going to aggressively lower debt compared to the days when you were around 900 million. Of course, you are down considerably from that, down to $354 million in debt. But it's up from 2022, where it was $271.
That's where the difference in cash position is reflective.
Speaker Change: Okay.
I accept.
Speaker Change: The other thing the other thing.
Speaker Change: Probably.
Speaker Change: You had a couple of years ago pledge.
Speaker Change: We're going to aggressively lower debt I remember the days when you were around 900 million.
You are down considerably.
Speaker Change: $354 million in debt.
Speaker Change: But it's up from 2022, where it was 271.
Speaker Change: We would go quite cool.
Robert Silvera: We would just like to see you come off, as if this business is going to grow very long term. The Bulletproof Executive 2013, Don't get me wrong. I think you guys have done a great job, and we've been very happy as shareholders for years now, but, um, it's an optical thing, and apparently, the ship owners, in general, aren't ordering new tankers. So the industry seems to be looking at it, at its future as if, well, oil is, and I think we both agree that that's not real; that's not realistic at all.
Speaker Change: Hum.
Speaker Change: Come off optically.
Speaker Change:
Speaker Change: Group business.
Speaker Change: Okay.
Speaker Change: Long term future.
Speaker Change: Going to grow.
Speaker Change: Local gander reward as you will have in the past don't get me wrong. I think you guys have done a great job and we're very happy shareholders for years now.
Speaker Change: But.
Speaker Change: It's an optical thing.
Speaker Change: Currently the ship owners in general, they're not placing orders for new tankers. So.
The street seems to be looking at it.
Speaker Change: Future well oil is going to disappear.
Speaker Change: I'll conclude bulk we agree that that's not real what's not realistic at all.
Svein Moxnes Harfjeld: So we would just like to see you continue on that path, significantly pointing out the reduction in debt and the idea of keeping, like I said, keeping a little bit back, not more than 10%, of what you could pay as a dividend according to the way you're going now. And this shows that we see the future brightly, and we're reserving cash; we're strengthening our balance, even more, rapidly than the rate at which you do it now. That's where we're coming from. Laila Halvorsen, Svein Harfjeld, Trygve Munthe, Mike Webber, DHT Holdings Inc. We're very happy and we thank you very much, Laila, for doing this. Thank you very much for your kind words.
Speaker Change: So we would just like you see you continue on that path.
Speaker Change: Significantly pointing out the reduction of debt.
Speaker Change: <unk>.
Speaker Change: The idea.
Speaker Change: Keeping.
Speaker Change: Keeping a little bit back by more than 10% of what you could pay us at Google then according to the way you are going now.
Speaker Change: And so we see the future.
Speaker Change: We were reserving cash we're strengthening our balance sheet even more.
Speaker Change: Rapidly than our rates.
Speaker Change: Doing well.
Speaker Change: That's where we're coming from them and Opex.
Speaker Change: We're very happy and we thank you very much.
Speaker Change: Doing such a great job.
Speaker Change: Thank you very much for your kind of works and we appreciate you sharing your thoughts with us. Thank you.
Svein Moxnes Harfjeld: We appreciate you sharing your thoughts with us. Thank you. God bless you.
Omar Nokta: Thank you. We'll now take our next question, from the line of Omar Nokta from Jefferies: please go ahead. Hi, thank you. Hi, Vine.
Speaker Change: Thank you.
Speaker Change: We will now take our next question.
This is from the line of Aman <unk> from Jefferies. Please go ahead.
Aman: Hi, Thank you Hi, Brian just wanted to put myself back in the queue, maybe two more follow ups, just one back to sort of bring it back to the Red Sea I did want to ask because you mentioned that there hasnt been much of an impact for Vlccs, but just in general is there do you think there's maybe perhaps like a backdoor way that Vlccs Ben.
Svein Moxnes Harfjeld: I just wanted to put myself back in the queue. I had maybe two more follow-ups, just one back to start to bring it back to the Red Sea. I did want to ask, because you mentioned that it hasn't been much of an impact for VLCCs, but just in general, do you think there's maybe perhaps a backdoor way that VLCCs benefit from this, just in terms of SUISMAXs and AFRMAXs that would normally be competing against VLCCs in, say, the Middle East market? Those are now diverting, and thus not as Is that something, or is there just not enough competition from them in the first place for it to really matter?
Aman: From this just in terms of Suezmax and Aframax is that would normally be competing against Vlccs in say the middle East market. Those are now diverting.
Aman: It's not as able to compete going forward.
Aman: Is that something or is there just not enough of a competition from them in the first place for it to really matter.
Svein Moxnes Harfjeld: I think, you know, if the situation stays on for a good while, that will happen. So in the short term, of course, people are sort of scrambling just to fix the immediate problem and getting the oil delivered as quickly as they can. But the cost of bringing sort of a SUSE MAX and not talking about an AFROMAX around South Africa to avoid the canal compared to doing a big ship is significant.
Speaker Change: I think if the situation.
Speaker Change: Stay at home for a good while.
Speaker Change: Happen. So in the short term of course people are sort of scrambling just to fix the immediate problem getting the oil delivered as quickly as they can but the cost of bringing solo suezmax.
Speaker Change: Talking about the Aframax around South Africa to avoid the canal compared to doing a big shift.
Svein Moxnes Harfjeld: So if this stays on for a little while longer, then people will increasingly move those barrels into bigger ships, we think. So you're right in your sort of, I guess, loaded question that the V's will stand to benefit from this if this carries on for a while. Okay, thank you. And then just one, a quick one on, you know, fleet sort of acquisitions and that type of thing. The, you know, clearly, the fleet you mentioned is aging rapidly. There's not a lot of capacity coming on until 27. You know, asset values have risen materially, and I know it makes it difficult to get deals done, although the one you mentioned last year looked like a good price at a good time. What do you think about going older in this environment?
Significant so if this stays on for NY longer than people will increasingly move those barrels into the bigger ships, we think so youre right.
Speaker Change: I guess loaded question that that previous low stand to benefit from this.
Speaker Change: This carries on for a while.
Speaker Change: Okay. Thank you and then just one.
One on the fleet.
Speaker Change: Fleet sort of acquisitions in that type of thing.
Speaker Change: Clearly the fleet you mentioned is aging rapidly there is not a lot of capacity coming on until 'twenty seven.
Speaker Change: Asset values have risen materially and I know it makes it difficult to get deals done although the one you mentioned last year was looked like a good price at a good time when do you think about going older. In this environment does it makes sense to look out for shifts in that 10 plus year range.
Svein Moxnes Harfjeld: Does it make sense to look out for shifts in that 10 plus year range? You know, going down a bit on the age range but perhaps getting a better ROE potential in this market? Of course, you employ less cash than an older ship, obviously. However, there is a meaningful earnings differential between the ships that were built after 15, given the eco designs and the sort of older siblings. So you need to sort of reflect that into your investment calculation. I think there are a number of customers that will have to be more dynamic in looking at the age of ships. Operating costs are a bit higher, so there's a lot of details there, not just a headline number and a quick one on the 12 seats.
Speaker Change: Going down a bit on the age range of perhaps getting a better ROE potential in this market.
Speaker Change: Yes of course.
Speaker Change: Employ less cash for Ultrashape obviously.
Speaker Change: Let me say meaningful earnings differential between.
Speaker Change: Ships that were build after 15, given the eco designs and there are sort of older siblings, so uniquely sort of reflect that into your investment calculation.
Speaker Change: I think there are a number of customers that will have to be more dynamic and were looking at H or ships.
Speaker Change: Operating costs are a bit higher so it's a lot of detail look just as a headline number in and they'll do okay quick one on the on the on the 12 seats. So.
Svein Moxnes Harfjeld: We are, of course, running numbers on everything, but I think it's important that we do get good fuel economy on all the ships. It also relates to the CII trajectory. It relates to access to time charters in due course, if that's something we want to have in the portfolio. So it's not sort of a simple fix to do that, but, you know, of course, we keep a keen eye on all these things, and if the dislocation is bigger than it is now, maybe you have to look at that. But I don't think it's sufficient to justify going older versus, you know, going younger, although the nominal number is higher on the younger end.
Speaker Change: You are of course running numbers on everything but.
Speaker Change: I think it's important.
Speaker Change: If you do get good fuel economics in all the ships also relates to the sort of trajectory.
Speaker Change: It relates to access to time charters in due course, if Pat wants to add.
Pat: That's something we want to have in the portfolio. So.
Speaker Change: It's not sort of a simple fix to do that.
Speaker Change: Sure.
Speaker Change: But of.
Speaker Change: Of course.
Speaker Change: We keep a keen eye on all these things.
Speaker Change: If the dislocation is bigger than it is now maybe you have to look at that but I don't think its sufficient to justify going older versus going and going younger over the nominal number is higher on the algorithm.
Omar Nokta: Got it. Understandable. Fine. Thank you. That's very clear. I'll turn it over.
Speaker Change: Got it understood. Thank you that's very clear I'll turn it over okay. Thank you Omar.
Operator: Okay. Thank you, Omar. Thanks. We'll now take our next question. Stand by. The next question is from a line by Stefano Grasso from Eighth Vantage. Please go ahead. Hello, hi, hi, Svein and team.
Speaker Change: Yeah.
Speaker Change: We will now take our next question.
Speaker Change: Please standby.
Speaker Change: Next question is from the line of Stefan <unk> from <unk>. Please go ahead.
Stefan: Hello, Hi, Hi design and team congratulations on the quarter.
Stefano Grasso: Congratulations on the quarter. Just to follow up on the capital allocation, it looks like we're gonna have two, three years with no deliveries and the supply and demand, you know, tightening up as we go along. Of course, we can't predict what, you know, who is gonna order what, but let's say that at some point, some vests that are gonna be ordered, it will still take like two, three years at the minimum for these deliveries to have an impact and kind of rebalance the map, the boom and bust cycle, that's probably out, you know, six plus years. Is it plausible for DHT to basically do nothing for six plus years, kind of get the cash flow from the fleet and wait for that bust further out to happen?
Stefan: Just to follow up on the.
Stefan: Capital allocation it looks like we're going to have two to three years with no.
Stefan: Deliveries and the supply demand.
Speaker Change: Tightening up as we go along.
Speaker Change: Of course, we can't predict.
Speaker Change: Who is going to order a bit of work to let's say that at some point some vessels are going to be ordered.
Speaker Change: It will still take like two three years at the minimum.
Speaker Change: For these deliveries to have an impact on kind of rebalance the market.
Speaker Change: The boom and bust cycle, that's probably out.
Speaker Change: Six plus years is.
Speaker Change: Is that plausible for DHT to basically do not sing for six plus year kind of get the cash flow from from the fleet and wait for that to bust further out to happen and then in the <unk>.
Stefano Grasso: And then, in the, you know, typical style of DHT, take advantage of that, you know, market, and get long again investors. Yeah, it's a good question. Of course, it's possible, but it will involve having a different strategic take on how to run the business because today, our fleet is just shy of 10 years old, about 10 years old on average, and if you look six years out, it becomes 16, and the company will shrink quite meaningfully, and we might be debt-free, but we will have much less ability to do things than we do today.
Speaker Change: Typical style of DHT take advantage of that.
Speaker Change: Market and get longer gain vessels.
Speaker Change: Yes, it's a good question.
Speaker Change: Yes, it's possible, but it will evolve.
Having a different strategic take on how to run the business because today. Our fleet is just shy of 10 years for about 10 years old on average and if you look six years out it becomes 16 and the company will shrink.
Speaker Change: That's meaningful.
Speaker Change: They might be debt free.
We will have much less ability to do things.
Svein Moxnes Harfjeld: So I think if a strategy like that at all were to be contemplated, it would be more sort of running the business out in totality and paying out all the money and then closing shop at some point, but that is not in the cards, and we believe it will be possible to do things, to invest in the company, and do good things for the company, and we have our eyes on that. So hopefully, we can uncover the right opportunity and put that to bed, and continue to do things to develop the company. So I think it's a bit, you know, in our current format and strategy, it's unrealistic.
Speaker Change: What we do today, so I think it's a strategy like that at all aware to be contemplated it would be more sort of running the business in totality and pay out all the ammonia then they'll shop at some point.
That is not in the cards.
Speaker Change: We believe it will be possible to do things to invest for the company.
Speaker Change: Good things for the company.
Speaker Change: And we have sort of isos.
Speaker Change: So hopefully we can.
On the call or the right opportunity.
Speaker Change: Tibet.
Speaker Change: And continue to develop the company.
Speaker Change: So I think it's a bit.
Speaker Change: In our current format constructed it's unrealistic and I think some of our key customers would also potentially.
Svein Moxnes Harfjeld: And I think some of our key customers will also potentially not be as supportive as they are today. So. Thank you. Thank you. As a final reminder, if there are any further questions, you can press stars 1 and 1 on your keypad. Please stand by whilst we check for any further questions. There are no further questions at this time.
Speaker Change: Nope.
As supportive as they are today.
Speaker Change: Sure.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you as a final reminder, after I have any further questions you can press star one and one on your keypad.
Please standby Ross for any further questions.
Speaker Change: There are no further questions at this time I will hand back to the speakers for any closing remarks. Thank you.
Operator: I will hand back to the speakers for any closing remarks. Thank you. So, thank you very much to all for listening in on DHT's quarterly earnings call. Much appreciated and wishing you all a good day ahead. Thank you. This does conclude the conference for today. Thank you for participating, and you may now disconnect. Speakers, please stand by.
Ross: Well. Thank you very much to all for listening in on the <unk> quarterly earnings call much appreciated and wishing you all a good day.
Speaker Change: Thank you. This does conclude the conference for today. Thank you for participating and you may now disconnect speakers. Please standby.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.