Good day, and thank you for standing by. Welcome to the Q3 2024 DHT Holdings, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, CFO, Laila Halvorsen. Please go ahead.

Thank you. Good morning and good afternoon, everyone. Welcome and thank you for joining DHT Holdings' third quarter 2024 earnings call. I am joined by DHT's President and CEO, Svein Moxnes Harfjeld. 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.com. 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 November 20th. In addition, our earnings press release will be available on our website and on the SEC EDGAR system, as an exhibit to our Form 6-K. 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 report. Actual results may differ materially from the expectations reflected in these forward-looking statements. We urge you to read our periodic reports available on our website and on the SEC EDGAR system, including the risk factors in these reports for more information regarding risks that we face. As usual, we will start the presentation with some financial highlights. Our balance sheet remains in excellent health with low leverage and significant liquidity. At quarter end, financial leverage was 17.6% based on marked values for the ships, and net debt was $13.9 million per vessel, very below estimated residual ship values. The third quarter ended with total liquidity of $264 million, consisting of $74 million in cash and $190 million available under our revolving credit facilities. Now, over to the P&L. We are pleased with the results for the quarter. We achieved revenues on a TCE basis of $92.6 million and EBITDA of $70.4 million. Net income came in at $35.2 million, equal to $0.22 per share. Vessel operating expenses for the quarter were $19 million, and G&A for the quarter was $4.2 million. For the third quarter, the average TCE for all vessels in the spot market was $43,700 per day, or less. Spot vessels under 15 years of age achieved earnings of $47,600 per day. The vessels on time charters made $38,800 per day, while the average combined TCE achieved for the quarter was $42,400 per day. Net income for the first nine months of 2024 was $126.7 million, equal to $0.78 per share. For the first nine months, our spot vessels achieved $50,100 per day, while the average combined TCE came in at $47,400 per day. The spot vessels under 15 years of age achieved earnings of $52,800 per day for the first nine months. Now over to the cash flow. The cash flow for the third quarter of 2024 was stable, and we started the quarter with $73 million in cash. We generated $70 million in EBITDA, ordinary debt repayments and cash interest amounted to $15 million, and $43.6 million was allocated to shareholders through cash dividends, while $2 million was used for maintenance CAPEX. We paid second installments for two of the new buildings amounting to $25.8 million, while $15.3 million was related to positive changes in working capital, and the quarter ended with $74 million in cash. Switching to capital allocation. DHT has a well-defined capital allocation policy, and in line with our policy, we will pay $0.22 per share as a quarterly cash dividend, equal to 100% of ordinary net income. The dividend will be payable on November 29th to shareholders of record as of November 22nd. This marks the 59th consecutive quarterly cash dividend, and the shares will trade ex-dividend from November 22nd. On the left side of this slide, we present an update on estimated P&L and cash break-even rates for 2025. P&L break-even for the full year is estimated to be $26,500 per day for the fleet, while the cash break-even is estimated to be $20,000 per day, with a projected $6,500 per day per ship in discretionary cash flow of the dividend. So assuming the vessel's own P&L break-even, this means about $56.5 million in discretionary cash flow for the year. On the right side of the slide, we illustrate the quarterly cash dividend we have returned to shareholders since we updated the dividend policy in the second half of 2022. This amounts to a total of $2.19 per share. And with that, I will turn the call over to Svein.

Thank you, Laila. Following up on Laila's capital allocation slide, we present an overview of how our balance sheet has developed over the past 10 years in combination with accumulated quarterly cash dividends we have paid for the same period. Importantly, the company has also invested in its fleet during this period, including new buildings, secondhand acquisitions, and an exhaust gas cleaning system program for the entire fleet. The sale of the ships for shares transaction in 2017, when we acquired BW's VLCC fleet, proved to be an excellent investment. We have not issued equity in the market since the fall of 2014. The leverage level is illustrated by the yellow line and measured in percentage of book values. It was 48% at the start of this period and went up to the mid-50s in 2018, following the mentioned fleet expansion in 2017. The general freight market in 2020 enabled us to reduce the debt level by about half to some 28%. The green bars present the accumulated quarterly cash dividends for each year in which the quarterly cash dividend was paid. Again, you will note that 2020 was a generous year, with substantial profits resulting in significant dividends. Stating the obvious, we paid out significant dividends and invested in the balance sheet simultaneously. Over the 10-year period, we have paid out a total of $750 million in quarterly cash dividends. The last two periods, 2023 and the 2024 year-to-date, illustrate how the present capital allocation policy implemented during the fall of 2022, with 100% of ordinary net income being paid in quarterly cash dividends, has played out. Here with the updated bookings to date for the fourth quarter for the company. We expect to have 596 time charter days covered for the fourth quarter at $40,000 per day. This rate assumes the base rate and profit sharing for October and November for the two time charter contracts that have this feature, and the base rate only for December. We assume 1,610 spot days in this quarter, of which 64% have been booked at an average rate of $41,000 per day. Our ships that are younger than 15 years of age have been booked at $44,800 per day. You will note that we have improved the rates on the bookings when compared to our business update on October 9th; an excellent effort from the DHT team given that the general market softened during this period. The spot P&L breakeven for the quarter is estimated at $21,500 per day, a number that should assist in estimating the net income contribution from our spot fleet. Now, some market commentary. Everyone is, of course, waiting for the seasonal upturn. We note that during the last two years, the first quarter offered the highest rates. Chinese economic growth and oil demand have year-to-date not met projections. While China is deploying various inducements to its economy, we are yet to see whatever it takes regarding levels of economic policy changes and stimuli. The stimuli announced last week focused on resolving debt levels. It did not address a needed boost in consumption. Chinese officials indicated that the next step would be significant and will endeavor to address lackluster consumption, among others. It has been suggested that China will, to some extent, seek to tailor the next step in response to anticipated policies to be implemented by the incoming Trump administration. As the world's second-largest economy, we think it is reasonable to expect efforts from China that should revitalize the economy and lead to increased consumption, including an uptick in oil demand. The result of the U.S. election leads us to anticipate certain policy changes that we think will be constructive for our business. Tightening of Iranian sanctions should reimpose pressure on Iranian oil exports, barrels that could be replaced by other Middle Eastern producers. Should this play out, the transportation work will shift from the shadow fleet to the compliant fleet. A reversal of current de-carbonization regulations could imply higher medium-term demand for fossil fuels towards 2030, and pro-drilling policies should further stimulate U.S. production growth and exports. By restraining production, OPEC Plus aims to balance the market and support prices, especially in the face of increasing competition from Atlantic Basin producers. This strategy also includes targeting Asian customers' inventory levels of crude oil below the five-year average, creating a tighter market for when economic conditions improve. However, limited transparency in China's crude oil inventory data complicates the assessment of actual levels. If Chinese inventories are indeed low, as indicated, and as vessel inventories are relatively higher than in Asia, one should expect Atlantic-based barrels to increasingly go east. Additionally, recovering refinery margins in Asia, in combination with increasing Chinese crude oil import quotas heading into next year, should shift the dynamics in favor of a stronger freight market. Based on positive feedback and encouragement from our key stakeholders—namely shareholders, customers, and lending banks—we believe we have an appropriate strategy tailored to the structure of our markets, focusing on solid customer relations, offering safe and reliable services, maintaining a competitive cost structure with robust cash breakeven levels, a solid balance sheet, and a clear capital allocation policy. The whole DHT team appreciates the encouragement and continues to work hard and operate with leading governance standards and a high level of integrity. And with that, operator, I'll turn it over to you.

Thank you. Your first question comes from Frode Mørkedal at Clarksons Securities. Please go ahead.

Thank you. Hi Svein, I wanted to ask you about what you see in the physical sale and purchase market. Secondhand value specifically, and the reason for asking is when I look at the stock price developments, given huge discounts to NAVs, the stock market seems to be factoring in quite a large decline in ship values. So basically, what are you seeing actually happening in the market today?

There's very limited activity, to be frank. So the last sort of transaction we have for modern ships was when Marinakis, a Greek ship owner, sold its fleet to Bahri, the ship-owning arm of Saudi Aramco. That transaction was, for what we know or expect, around $1 billion, which would sort of price the five-year-old ship at around $114 million, $115 million, $116 million, depending on how you differentiate the different age groups. Since then, no sort of modern ships have changed hands and there are no real sellers out there either. I'm not so sure that many buyers at those levels exist as well, but there could be a couple out there. So, I think in general, the people that sit on these assets own them with very low acquisition costs and they are also very constructive on the market. So I don't think there's a reason for those prices to change meaningfully. What could change that, of course, is if people really lost faith in the freight market, but I don't think there's any reason to do that. In the older end—say ships that are between 15 and 20—it's a bit sideways, I would say. You had a 2007-built ship sold some 10 days ago for about 45. This was a Japanese seller, a ship without a scrubber. So a ship of similar vintage with a scrubber, 2007-built, should probably then be worth 48, just a bigger number. In between that, it's a long time since we've seen any transactions. And again, I think there are limited proper ships on offer. Again, this supports the statement that people are constructive or at least holding out for what is expected. Time charter rates are also quite attractive. So the alternative, I think, for at least some of those systems is, of course, to secure time charter contracts for years, to buy time if they want to sell at a later point in time.

Okay. That's good color. Good to hear. The second question is you mentioned a lot of good supporting factors on the, let's say, supply/demand picture here. But what do you think about inventory buildup? We've been through a fairly steep backwardated market, and now it seems more flattish, and people expect we will come back to a contango situation quite soon, right? So what is the impact on the tanker market from those developments year-over-year?

I think when you look at inventory levels, the levels in OECD are a bit different than some of the key economies in Asia. So—there's more data available on OECD and, of course, people tend to look at that, what's available. From what we gather from people that watch this very closely, is that inventories in China are indeed not very high. As we talked about on our prior call, inventory levels on gasoline and diesel did increase, and that was really kept a lid on crude oil inventories as runs sort of reduced in response to very tight or lower refining margins. So I think it doesn't take much change on the demand side to really make quite a dramatic change on how the market will respond. I guess this is OPEC's game in a way. Also, when we say— I think they really have inventory levels in Asia, a strong focus on that and how they manage supply now and why it's postponed. So let's see what the next meeting on December 1st will bring. But I think the longer this lasts, the stronger recovery you will likely have. That's my sort of two cents on it.

Good, it is perfect. Thank you.

Thank you. Your next question comes from the line of Jon Chappell from Evercore. Please go ahead.

Thank you, good afternoon. Svein, first time I recall you specifically calling out your sub 15-year-old vessels in the chartering activity, I think you did it twice. Clearly, a couple of older ships left in the fleet. You just talked about asset values—maybe it's a bit more squishy for vessels at that age. But given maybe that the cycle is a bit longer than the two, if you're seeing a differentiation in the rates you can earn based on the ages of those vessels, is there a plan to modernize the fleet and maybe use proceeds from some of those older ships to help finance those new builds you have in order?

So I think the number one observation is that when you are in sort of soft patches in the freight market, then the older ships suffer more than a more modern ship. So you do get the deltas, and part of the third quarter was certainly softish. But keep in mind also that this summer, we fixed out one of these older ships for a one-year time charter at $49,500 per day. And at that point, the freight market was a bit more balanced. So I would not—certainly not rule out good freight opportunities for these ships, but you need the sentiment to be at the right time. These older ships are in technically very good condition. They have hardly any debt and very low book value. So in a way, they would contribute meaningfully if they were to be sold at some point. As you know, as we mentioned, we do have the new buildings coming in the first half of 2026, so we think that delivery schedule drives well with when these older ships close in on 20. It might be that we will elect to divest a couple of them in the next few months or one year. That capital can, of course, be used for the new buildings, but can also be used for other things. So it's part of our plan, but it has to be the right opportunity, and there could also be other good opportunities to charter out these ships. So let's see what makes more sense when the decision time is up.

Okay. And also, I mean, you mentioned the time charters, not only did you get the $49.5, but for the line you got $55,000. I understand it was different market sentiment again. But given the little softness right now, have you seen a vast change in the rates available for time charters? And again, would you look for other opportunities, like which you do after the line to lock in more given maybe some of the greater volatility in the spot market today?

I would say that the bid/offer spread has widened a bit. So the ask is probably unchanged, but the bids are lower, reflecting the spot market. But I think increasing customers are going. They recognize the demography of the fleet, whereby it's aging quite quickly, and significant portions of the fleet are controlled by state-owned entities that service their own needs. So if you want to sort of go for the VLCC for that matter, to go through a ship owner who has a sizable fleet that can service them with many types of services, not just spot voyage or on time charter, I think they recognize the need to engage more with customers. And that's something we are working closely on. Our stated ambition is to build more fixed income for the company, and we will spend some time doing that. But we expect that the next sort of call it a year or two will offer interesting opportunities to build more fixed income for the company. Again, we think this will be well-suited given our capital allocation policy and will offer more predictability on earnings in the longer term. So that's our sort of line of thinking on how we think about continuing to build the business.

Great, thank you Svein.

Thank you. Your next question comes from Omar Nokta at Jefferies. Please proceed.

Thank you. Hi Svein. A couple of questions—just a couple of questions from me on more on the geo macro and geopolitics side of things. You mentioned the outcome of the U.S. elections and the potential for tougher sanctions on Iran. How do you think the—potentially the—if those volumes from Iran export volumes diminish and get replaced by OPEC, clearly sets up a positive backdrop for tankers or at least, say, the free market tankers. Is there a risk you think on your side, kind of how you see things in terms of the shadow fleet following those barrels into the free market barrels—is that a risk?

I think it's an academic risk, but I don't think it's a real risk. Almost all the ships in that business are older than 20 years of age. When they transport oil today, they either load in Iran or Venezuela, or they do transshipments. They're not approved to enter into terminals—they lack vetting and proper insurance. There are a lot of things that have to fit the bill to get approved to operate in the compliance markets, so I think that is really unrealistic. So I think this will almost certainly be a positive for the market if this plays out. I see now people that are expected to come into Trump’s administration are already making statements on how they want to approach Iran. So let's see how it plays out. But I think there is a reasonable probability of some of this taking place.

Okay, thanks. It makes sense. And then maybe I guess, obviously, Russia, Ukraine, it's had an impact on the broader tanker market, perhaps not so—clearly not so on VLCCs. But the question basically is how does this tanker market look pretty much since the war broke out and you've had the surge in overall dynamics? But since the war broke out, the question is then how does this market look like without Russia, Ukraine? So I guess in your eyes, how do you think the VLCCs would act if there were a peace deal reached between Russia and Ukraine?

I think the market actually did impact VLCCs, but on a relative basis, it impacted them negatively. The smaller—our smaller siblings sort of enjoyed the higher earnings for a good period of time. But that has sort of come down to earth after a while. I'm also sure that if there was a—if it is peace, it depends on how it all plays out; how does peace become a peace. I’m not too sure Europe will venture out buying Russian oil sort of immediately after a peace deal has been agreed. I think the sentiment in Europe as this war goes on in the backyard of Europeans is a bit different than maybe what people might feel in the U.S., right. So I think it will be a long and winding road to get those barrels back into the market; that's how I would think it will play out. So it's not an immediate change.

Okay, thanks. And maybe just a quick follow-up on that. You did mention that it was perhaps a negative development for VLCCs. So is it conceivable then that it could be a positive if the war ends?

Yes, I think so because refiners, in general, what they care about is the most cost-efficient way of transport, and there's nothing that can beat the VLCC in that regard.

Thank you. There are currently no further questions. I will now hand the call back to CEO, Svein Moxnes Harfjeld, for closing remarks.

Thank you to all for listening in on DHT and following our company. Have a good day.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.