DHT Holdings Inc (DHT) 2013 Q2 法說會逐字稿

Thank you. I am joined today by my colleagues, Svein Moxnes Harfjeld, CEO, and Trygve Munthe, our President. Before we get started with this call, I would like to make the following remarks.

This conference call is also being broadcast on our website, dhtankers.com, and a replay of this conference call will be available on the website. In addition, a Form 6-K evidencing this news release will be filed with the SEC.

As a reminder, this conference call contains forward-looking statements that are governed by the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which include statements regarding DHT's prospects; the outlook for tanker markets in general; expectations regarding daily charter hire rates and vessel utilization; forecasts of world economic activity; oil prices and oil trading patterns; expectations regarding seasonal fluctuations in tanker demand; anticipated levels of newbuilding and scrapping; and projected drydock schedules, involve risks and uncertainties that are more fully described in our filings made with the SEC. Actual results may differ materially from the expectations reflected in these forward-looking statements.

With that, I will turn the call over to Svein Moxnes Harfjeld.

Thank you, Eirik, and good morning to you all. Our EBITDA for the quarter came in at $0.9 million and a net loss for the quarter of $7.7 million, or equal to $0.50 per share after adjusting for loss on sale of a vessel of $0.1 million.

As of June 30, our cash balance was $43.1 million, equal to $2.79 per share. The cash balance reflects the $25 million prepayment made in connection with the restructuring of the credit agreement with the Royal Bank of Scotland during the quarter. Further, the cash balance was impacted by a $3.4 million increase in accounts receivable, a $2.6 million decrease in accounts payables during the quarter among others, due to an increase in earned but not yet received freight revenues.

We will pay a dividend of $0.02 per common share for the quarter, payable on August 28 to shareholders of record as of August 19. When determining the dividend our Board has taken into account general business conditions and the continued weak economics.

As we earlier reported in April, we amended our credit agreement with RBS whereby the minimum value covenant has been renewed in its entirety and the margin has increased to 1.75%. Furthermore, the installments scheduled to commence in 2016 have been changed from a fixed $9.1 million per quarter to a variable amount equal to our subsidiary DHT Maritime's free cash flow in the prior quarter, capped at $7.5 million per quarter.

The next scheduled installment would at the earliest take place in the second quarter of 2016. As part of the amendment, we made a prepayment of $25 million in April 2013.

DHT Maritime's financial obligations under the credit agreement with RBS are guaranteed by DHT Holdings. As a result of the amendment, a total of $1.4 million, comprising unamortized fees on the original loan as well as fees and legal costs related to the amendment, have been charged to financial cost during the second quarter.

Also as earlier reported, we sold our oldest vessel, the VLCC DHT Regal, for $23 million, and the vessel was delivered to the buyers on April 29. A loss of $0.6 million in connection with the sale was recorded in the first quarter; and a further loss of $0.1 million was recorded in the second quarter. The net proceeds from the sale were used to reduce the outstanding debt under the RBS credit facility.

The DHT Sophie completed her second special survey and drydock during the second quarter, and had a total of 17 days off-hire.

Subsequent to the end of the quarter, our Aframax DHT Sophie and our Suezmax DHT Trader have been fixed on short-term time charters for terms of 8 to 16 months and 6 to 12 months, respectively. The charters are with a trader and an oil major, respectively, and we expect the charters to commence during August.

Thank you. And then we will open up for Q&A.

(Operator Instructions) Herman Hildan, RS Platou Markets.

Good afternoon. I am wondering, now that you cleared the path in terms of your RBS facility and OSG, the next natural step for the Company would be growth. You had talked about big changes on the eco-design for VLCCs. Could you say anything in terms of, call it, where you are in your timing, pace, of commencing a growth stage for the Company?

I think as you alluded to, we are spending now an increased amount of time in considering how we can grow and expand the business. We think that the timing is now becoming quite interesting as the investment opportunities are arising. And in parallel with that, we spend a great deal of time in understanding the benefits of the new designs from shipyards. This is work that is not yet complete, but I think we find our findings so far are quite intriguing.

So this is very much front of our mind, but we have not yet concluded exactly in what shape and form we can execute on this strategy. But it is -- certainly our priority is to look at how we can expand the business.

Would that be within the VLCC segment, or are you open to also expand in the, call it, Suezmax and Aframax segment?

I think it is fair to assume that our primary focus is on the big ships, the [Su] and the VLCCs. And this plays into our belief, that is, the long-haul trade that will expand, and as such it will be the big ships that will benefit from that.

Okay. Lastly, we will see newbuild prices come up a bit on the product tankers and also some of the segments. What is your view in terms of new prices for the VLCCs? Are they coming down -- or, sorry, are they also going up? Or is it a bit different dynamics there?

I think it is probably reasonable to assume that these prices will move in tandem. But you need to take note also that quite a few of the yards haven't had any new VLCC designs ready. So whether it is up from a theoretical price level a few months ago or not, that remains to be seen.

Okay. Thank you very much, guys.

(Operator Instructions) Steven Jonas, private investor.

Good morning, gentlemen. I wanted to ask if you could provide more detail on the increase in receivables and the decrease in payables, and what caused both of those. Thank you.

As an increasing part of our fleets are treading in the spot market, there will be some fluctuations from quarter to quarter as to -- at the quarter endpoint in time, whether you have received freights or whether voyages have been completed, are in according with the calendar or not. And when bunker deals are due, etc.

So this will not run in tandem with the quarters per se, but will be related to when the voyages are complete, etc. Now also with the two ships expected to enter time charters, that will again benefit the Company from a working capital perspective (multiple speakers) in the way that the [proper] specifically pay the hire upfront and also will take care of the bunker and [port charge] expenses.

So it doesn't reflect any credit issues, either getting credit from suppliers or customers paying their bills?

No, and the majority of these change at the quarter end are some big freights that were received in July.

Thank you.

(Operator Instructions) It appears there are no further audio questions at this time.

I want to say thank you for attending our conference call. We appreciate your continued support. Thank you.