DHT Holdings, Inc. Q3 FY2026 earnings call

• Record Financial Performance: Q3 2026 set a new quarterly record, surpassing Q2 2026. The first nine months of 2026 already exceeded the previous full-year record, with Q4 expected to further surpass Q3, establishing a new annual earnings record.
• Fleet Updates and Deliveries: Delivered DHT Bohemia in July 2026 for $51 million in cash proceeds. Took delivery of DHT Impala (the final vessel of the 2026 new building program) five months early on July 24, 2026. Completed dry dockings for seven vessels within budget and schedule.
• Chartering Activity: Entered into three-year time charter contracts for DHT Jaguar ($75,000/day) and DHT Panther ($100,000/day). For Q4 2026, booked 1,174 time-chartered days at an average of $100,200/day and 630 spot days (68% of anticipated 930 spot days) at an average of $579,900/day.
• New Building Orders: Signed a contract for DHT Table (delivery April 2029) with Hamla Ocean, bringing the order book to two vessels. Both orders feature competitive delivery slots and will be financed via internal resources, operational cash flow, and new mortgage debt.
• Market Dynamics: Highlighted logistical disruptions, shifting crude procurement patterns, and EU political risks regarding the Strait of Hormuz as drivers for strong freight rates. Noted that energy security concerns are driving inventory restocking, boosting transport demand above consumption levels.
• Balance Sheet Strength: Maintained conservative leverage with total liquidity of $555 million ($154.7 million cash + $400.7 million revolver). Net debt is approximately $50 million per vessel, well below residual values.

The provided transcript does not break down financial performance by specific product segments (e.g., crude vs. product tankers). However, it reports consolidated financial highlights for the third quarter of 2026, which was a record quarter for the company. Total revenues on a Time Charter Equivalent (TCE) basis were $290 million, and adjusted EBITDA reached $269.5 million. Net income was $270.9 million ($1.68 per share), while ordinary net income (adjusted for non-cash fair value gains and gains on vessel sales) was $234.5 million ($1.45 per share). The average combined daily clean rate for the fleet was $141,300, with spot market vessels earning an average of $167,100 per day and time charter vessels earning $114,200 per day.

• Q4 2026 Expectations: Management anticipates Q4 2026 will surpass Q3 2026 earnings, driven by strong bookings. Specifically, they expect 1,174 time-chartered days at ~$100,200/day and significant spot market exposure with 630 days already booked at ~$579,900/day.
• Annual Outlook: Given the strength of current bookings and Q3 results, management confirms that 2026 will establish a new annual earnings record for the company.
• Break-even Estimates: Estimated P&L break-even for 2027 is $29,200/day, and cash break-even is $20,600/day. The discretionary cash flow margin is estimated at $8,600/day per vessel.
• Dividend Policy: Reiterated commitment to paying out 100% of ordinary net income as quarterly cash dividends. Approved a dividend of $1.45 per share for Q3 2026.

• Geopolitical Volatility: Persistent EU political risk and the possibility of partial closure of the Strait of Hormuz alter long-term risk perceptions, though traffic has resumed.
• Operational Inefficiencies: Ongoing logistical disruptions create inefficiencies and expand transportation distances, supporting rates but indicating structural supply chain fragility.
• Market Volatility: Spot rates remain volatile; nominal drops from extreme highs ($800k-$900k/day) to lower still-high levels ($600k/day) represent significant shifts. Bid-ask spreads in interim contracts are large.
• Fleet Renewal Pressure: A global fleet renewal is required as 44% of the fleet will be older than 15 years by end of 2030. China’s shipyard industry dominance (77% of VCC order book) presents both a supply opportunity and a competitive landscape shift.
• Supply Constraints: Limited effective fleet supply growth due to aging vessels, vessels operating outside mainstream trades, and limited near-term newbuilding deliveries.

Q: Analyst Omar Nokta asked how the tanker market outlook would change if a US-Iran agreement leads to the reopening of the Strait of Hormuz, compared to the current shuttling/shift-to-shift transfer market where rates are elevated. / A: CEO Svein Moxnes Harfjeld stated that even if traffic resumes, it will take considerable time to unwind existing logistical inefficiencies, so he does not expect rates to fall significantly. He noted that while trades around the Middle East hold up better than South American trades, the market is dynamic and currently offers strong interest for available spot vessels, maintaining confidence despite potential nominal rate adjustments from extreme peaks.

Q: Analyst Omar Nokta followed up on how DHT plans to handle vessels rolling off lucrative 12-month charters next quarter, asking whether the company prefers extending fixed-rate contracts, moving to spot, or using profit-sharing structures given the wide bid-ask spread in the charter market. / A: The CEO responded that it is too early to make specific decisions regarding these future chartering strategies, noting there is still significant time before the roll-off occurs. He did not provide details on specific preferences or negotiations with charterers at this stage.

Q: Analyst Jonathan Chappell sought clarification on the math behind time charter earnings, questioning why reported earnings seemed higher than what two profit-sharing vessels (Appaloosa and Puma) should generate, and asked if other profit-sharing arrangements exist or if such structures are drying up in the current market. / A: The CEO confirmed only two ships have profit-sharing mechanisms and declined to disclose their specific terms, stating the numbers reflect the rewarding nature of these structures for shareholders. He acknowledged that Puma expires in Q1 next year and admitted that the extraordinary freight environment makes implementing traditional profit-sharing difficult, though the company remains open to alternative structures.