Earnings call transcript: DHT Holdings Misses Q3 2025 Earnings Expectations

DHT Holdings Inc. reported its Q3 2025 earnings, revealing a slight miss in earnings per share (EPS) and revenue compared to analyst forecasts. The company's stock saw a modest decline in response, reflecting investor sentiment towards the results.

Key Takeaways

• DHT Holdings reported an EPS of $0.18, falling short of the $0.19 forecast.
• Revenue reached $79.1 million, just below the expected $79.28 million.
• Stock price decreased by 0.23% in regular trading, with further decline in premarket activity.
• The company secured a $308.4 million credit facility for newbuildings.
• Strong VLCC market conditions were highlighted, driven by global oil demand.

Company Performance

DHT Holdings' performance in Q3 2025 showed resilience despite missing earnings expectations. The company benefited from robust demand in the Very Large Crude Carrier (VLCC) market, spurred by increasing global oil transportation needs and geopolitical factors. However, the slight shortfall in earnings and revenue compared to forecasts reflected challenges in meeting market expectations.

Financial Highlights

• Revenue: $79.1 million (compared to $79.28 million forecast)
• Earnings per share: $0.18 (compared to $0.19 forecast)
• Adjusted EBITDA: $57.7 million
• Net Income: $44.8 million ($0.28 per share)
• Adjusted Net Profit: $29.5 million ($0.18 per share)

Earnings vs. Forecast

DHT Holdings posted an EPS of $0.18, slightly below the forecast of $0.19, resulting in a negative surprise of 5.26%. Revenue similarly fell short at $79.1 million against an expected $79.28 million, marking a minor revenue surprise of -0.23%. This performance contrasts with previous quarters where the company often met or exceeded expectations, indicating a potential shift in operational or market dynamics.

Market Reaction

Following the earnings announcement, DHT Holdings' stock experienced a slight decline, closing down 0.23% at $13.05. In premarket trading, the stock saw a further decrease of 0.38%, reflecting cautious investor sentiment. The stock remains within its 52-week range, with a high of $13.19 and a low of $8.67, suggesting that while the reaction was negative, it was not drastic.

Outlook & Guidance

Looking forward, DHT Holdings remains optimistic with a strong outlook for Q4 2025. The company has secured 901 time charter days at $42,200 per day and 1,070 spot days, with 68% already booked at $64,900 per day. This positive guidance underscores confidence in maintaining robust performance in the upcoming quarter.

Executive Commentary

CEO Svein Moxnes Harfjeld emphasized the company's strategic resilience, stating, "The VLCC market is demonstrating significant strength." He also highlighted the company's focus on solid customer relations and a competitive cost structure as key advantages in navigating market conditions.

Risks and Challenges

• Fluctuating global oil demand could impact shipping volumes.
• Potential geopolitical disruptions may affect market stability.
• Changes in interest rates could influence financing costs.
• Aging fleet structures might necessitate increased capital expenditure.
• Regulatory changes in environmental policies could affect operations.

Q&A

During the earnings call, analysts inquired about the impact of Chinese port fees on operations and the dynamics of time charter rates. Discussions also touched on the acceptance of older vessels in the current market, with management indicating a willingness to operate ships up to 17-18 years old.

By maintaining a strong focus on strategic initiatives and leveraging favorable market conditions, DHT Holdings aims to navigate the challenges and capitalize on growth opportunities in the coming quarters.

Full transcript - DHT Holdings Inc (DHT) Q3 2025:

Conference Operator: Good day and thank you for standing by. Welcome to the Q3 2025 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. To ask a question during the session, you will need to press Star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press Star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Laila Cecilie Halvorsen, Chief Financial Officer. Please go ahead.

Laila Cecilie Halvorsen, Chief Financial Officer, DHT Holdings Inc.: Thank you, good morning and good afternoon everyone. Welcome and thank you for joining DHT Holdings Inc. third quarter 2025 earnings call. I am joined by DHT's President and CEO Svein Moxnes Harfjeld. As usual, we will go through 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 6th. 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. In the third quarter of 2025, we achieved revenues on a TCE basis of $79.1 million and adjusted EBITDA of $57.7 million. Net income came in at $44.8 million, equal to $0.28 per share.

After adjusting for the $15.7 million gain on sale of vessel related to the sale of DHT Peony and the non-cash fair value loss related to interest rate derivatives of $0.4 million, the company had a net profit for the quarter of $29.5 million, equal to $0.18 per share. Vessel operating expenses for the quarter were $18.4 million and G&A for the quarter was $4.1 million. For the third quarter, the average TCE for the vessels in the spot market was $38,700 per day. The vessels on time charters made $42,800 per day, while the average combined TCE achieved for the quarter was $40,500 per day. DHT has a robust balance sheet with low leverage and significant liquidity. The third quarter ended with total liquidity of $298 million, consisting of $81.2 million in cash and $216.5 million available under two of our revolving credit facilities.

At quarter end, financial leverage was 12.4% based on market values for the ships, and net debt was just below $9 million per vessel, which is well below estimated residual ship values. Looking at our cash flow for the quarter, we began with $82.7 million in cash and we generated $57.7 million in EBITDA. Ordinary debt repayment and cash interest amounted to $17 million, and $38.6 million was allocated to shareholders through a cash dividend maintenance. CapEx amounted to $1.6 million, and we invested $26.2 million in our newbuilding program. Additionally, we placed a $10.7 million deposit for the acquisition of DHT Nokota. The sale of DHTP only generated proceeds of $51 million, and we used $22 million for prepayment of long-term debt. Positive changes in working capital and other items amounted to $6.8 million, and the quarter ended with $81.2 million in cash.

Now let's move on to our quarterly highlights. Many of these have already been communicated as subsequent events to the second quarter or as part of our recent business update. We entered into a $308.4 million secured credit facility to finance our four newbuildings. The facility is co-arranged by ING and Nordea with backing from Kayshur. It is competitively priced at SOFR plus a weighted average margin of 132 basis points. The facility has a true 12-year tenure and a 20-year repayment profile. We have also entered into a credit facility with Nordea to finance the vessel acquisition announced in June. This is a $64 million reducing revolving credit facility with a 7-year tenure and a 20-year repayment profile. It is priced at SOFR plus a margin of 150 basis points, and it's consistent with our established financing approach.

The vessel to be named DHT Nokota is booked in 2018, and we hope to take delivery in a couple of weeks' time. In September, we made a $22.1 million prepayment under the Nordea Credit Facility covering all scheduled installments for the fourth quarter of 2025 and all of 2026. The facility matures in the first quarter of 2027 with only $3.7 million remaining, representing the final installment. Eight vessels serve as collateral for this facility with a current combined market value of about $650 million. During the quarter, we entered into eight three-year amortizing interest rate swap agreements totaling $200.6 million. The average fixed interest rate is 3.32% compared to current three-month term SOFR of 3.84%, with maturity in the fourth quarter of 2028. As a subsequent event and as announced on October 13, Svein Moxnes Harfjeld was appointed to the Board of Directors.

He will of course continue to serve as President and CEO of the company. Now over to Capital Allocation and Dividend. In line with our capital allocation policy of paying out 100% of ordinary net income as quarterly cash dividend, the Board approved a dividend of $0.18 per share for the third quarter of 2025. This marks our 63rd consecutive quarterly cash dividend. The shares will trade ex-dividend on November 12 and the dividend will be paid on November 19 to shareholders of record as of November 12. On the left side of this slide, we now present our estimated P&L and cash breakeven levels for 2026. These figures include all true cash costs and the difference between the two is estimated at $7,500 per day for next year.

This discretionary cash flow will remain within the company and be allocated to general corporate purposes, primarily to fund the remaining installments under our newbuilding program. On the right side of the slide, we illustrate the accumulated dividends. Since we updated our capital allocation policy in the third quarter of 2022, the total accumulated amount is $2.93 per share, which reflects strong shareholder returns during a period of share price appreciation. Finally, let me update you on the bookings to date. For the fourth quarter of 2025, we expect to have 901 time charter days covered for the fourth quarter at $42,200 per day. This rate includes profit sharing for the month of October and the base rate only for the months of November and December.

For contracts with the profit sharing feature, we anticipate 1,070 spot days in this quarter, of which 68% have already been booked at an average rate of $64,900 per day. The spot P&L breakeven for the fourth quarter is estimated to be $15,200 per day and with that I will turn the call over to Svein.

Svein Moxnes Harfjeld, President and CEO, DHT Holdings Inc.: Thank you Laila. As you all have likely noticed, the VLCC market is demonstrating significant strength. This strength should positively impact our earnings for the latter part of the fourth quarter. The current freight market strength is driven by growing demand for seaborne transportation of crude oil in combination with the increasingly aging and fragmented structure of the fleet. Importantly for VLCCs, the workhorse of the crude oil transportation market, they are regaining their market share through its most competitive freight offering and efficiency. Geopolitics, trade and tariff dynamics, sanctions and conflicts are adding to the picture, creating disruptions and focus on security of supply as the global fleet is reducing its efficiency and productivity. The U.S.-China meeting in Kuala Lumpur agreed for a one year postponement on many issues including the portfolios.

OPEC's decision to reduce spare capacity by reversing production cuts and bringing more crude oil to the market seems to be well absorbed, partly supported by the Chinese demand for both consumption and stockpiling. Research suggests Chinese stockpiling to not only be short term and optimistic, but a longer term need to fill its increased storage capacity and meet defined requirements for strategic storage. Further, it suggests a need to boost its oil security with concerns of interruption in supply from sanctions and potential regional political conflicts playing a part. Lastly, a diversification in foreign reserves by buying oil and gold is said to be a consideration. Goldman Sachs reports that the world's biggest oil companies are expected to press ahead with plans to accelerate production growth when they report earnings. Analyst estimates compiled by Bloomberg suggest planned output growth between 3.9% and 4.7% to be in the cards.

We have, as per usual, been traveling to spend time with our customers and these reports mirror some of the key takeaways from our most recent trip. Several of our customers expect to expand their footprints and are presenting opportunities with demand for our services and more ships. We are grateful for this encouraging support which leaves us highly constructive on our franchise and future. As always, we are looking into opportunities to develop DHT with continuous improvements in our service offerings and possible expansion. We have what we believe to be a resilient strategy with a focus on solid customer relations, offering safe and reliable services, maintaining a competitive cost structure with robust breakeven levels, a strong balance sheet and a clear capital allocation policy.

The whole DHT team continues to work hard and operate with leading governance standards and a high level of integrity, and with that we open up for questions. Operator.

Conference Operator: Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 1. Again, we will now take the first question coming from the line of Frode Morkedal from Clarksons Platou Securities AS. Please go ahead.

Frode Morkedal, Analyst, Clarksons Platou Securities AS: Thank you.

Conference Operator: Hi, Brian.

Frode Morkedal, Analyst, Clarksons Platou Securities AS: Hi, Lyna.

Svein Moxnes Harfjeld, President and CEO, DHT Holdings Inc.: Hi, Frodo.

Frode Morkedal, Analyst, Clarksons Platou Securities AS: On this portfolio, that's interesting to spend it for a year. I guess the question I had is, is this a good thing for the market? I guess a lot of people had some type of inefficiencies because of it, especially on the Chinese port fees.

Svein Moxnes Harfjeld, President and CEO, DHT Holdings Inc.: Right.

Frode Morkedal, Analyst, Clarksons Platou Securities AS: If things go back to normal, what's the impact on the market and maybe on your own positions?

Svein Moxnes Harfjeld, President and CEO, DHT Holdings Inc.: The jury of course is still out, but if I reflect on when the port fees were introduced, the market, you know, typically took a timeout. Right. You had a very quiet short period before people sort of got their heads around what was going on and then went on to continue fixing ships. Of course, some of that havoc maybe improved the sentiment a little bit and you had some replacement jobs and all that with short notice. That could drive rates, but sort of the later period. Now you would note that most of the biggest ship owners are responding to the questionnaires that were presented by the Chinese authorities, including disclaimers on information and stuff like that.

I think it appeared that there was a relatively modest part or minor part of the fleet that were actually exposed to this and that would create sort of a true cost disruption. Right now, of course, with the news again that this is being put on hold for a year, you will have a little timeout and then I think people will restart the fixed ships again. Let's see how it plays out. As you said on the prepared remarks there, we do believe that the strength in the market in general is because there is simply strong demand and fragmented and shrinking fleet. Exactly how it translates into TC earnings is of course too early to say.

Frode Morkedal, Analyst, Clarksons Platou Securities AS: Yeah, clearly, I don't know. Do you know if China still has this tariff on U.S. crude oil? I haven't seen any news on it.

Svein Moxnes Harfjeld, President and CEO, DHT Holdings Inc.: Sorry, I didn't hear you.

Frode Morkedal, Analyst, Clarksons Platou Securities AS: Yeah, you know, China retaliated on having like a tariff on U.S. crude oil specifically. Right. You didn't, you know, the U.S. crude exports to China basically went away.

Svein Moxnes Harfjeld, President and CEO, DHT Holdings Inc.: U.S. crude oil export to China has been very, very modest. It's just a small portion of total exports. The two state-owned oil companies in China also use facilities outside China to store and transship oil and all that. I guess this truth sort of includes everything, I would assume. That's at least what the Commercial Secretary suggested after the meetings. If there were any, I think that would probably be out of the equation as well, I would guess.

Frode Morkedal, Analyst, Clarksons Platou Securities AS: Yeah. Interesting. I guess Arn's question, with spot rates now clearly very high, how's the effect on the time charter side? Do you see levels improving or maybe duration is improving, or is this still a bit too early?

Svein Moxnes Harfjeld, President and CEO, DHT Holdings Inc.: I think you've seen increased interest and there's some shorter term charters that have been done at improved rates. Of course, with the delta on spot voyages and yesterday's time charter rates, it's very hard to put the right price on it. If you consider some of these long voyages that the VLCCs tend to perform, you know, a U.S. Gulf Far East cargo is 120 days. I mean the premium in the spot market will have a big impact on the balance earnings of a time charter and what would be required. It's very hard to find a midpoint that sort of works for both parties. I think again here we will have to see a little bit.

I would expect that if the firm market continues at sort of current levels for a while, people will have to man up, so to say, and the bid ask spread will have to come in, and in particular on the customer side that they will have to pay up if they really want time charters.

Frode Morkedal, Analyst, Clarksons Platou Securities AS: Yeah, makes sense. I guess I would expect that you would consider adding time charter coverage if that happens, right.

Svein Moxnes Harfjeld, President and CEO, DHT Holdings Inc.: As we have stated many times, we like in general to have some level of fixed income. We have a number of time charters coming off now in the next few months. There is an opportunity to reprice those charters if you like, or maybe develop new charters with new customers for different ships. If we can find common ground on something that is meaningful, prefer a bit longer tenor, we are open to that. We are sort of in, I wouldn't say negotiations, that's overstating it, but in sort of preliminary discussions on what customers might be looking for in general. These things take quite a long time to develop, so one has to be patient.

Frode Morkedal, Analyst, Clarksons Platou Securities AS: Yeah, perfect. That's it for me. Thank you.

Svein Moxnes Harfjeld, President and CEO, DHT Holdings Inc.: Thank you for all that.

Conference Operator: Thank you. As a reminder to ask a question, please press Star one and one on your telephone. The next question comes from the line of Geoffrey Scott from Scott Asset Management. Please go ahead.

Geoffrey Scott, Analyst, Scott Asset Management: Good morning. There's always been a reluctance from the more respectable charters to take ships that are over 15 years old. In 2009, 2010, 2011, there were a lot of deliveries of these in those three years. They're coming up to or have just passed 15 years. As prices go up for charters, do you see any reduced reluctance of the major charters to take ships over 15 years? Is there any possibility that they'll actually go past 20 years to 21, 22, 22.5 in the next couple of years? Thanks.

Svein Moxnes Harfjeld, President and CEO, DHT Holdings Inc.: Thank you. There's always been a bit of a dynamic when it comes to acceptance of the age, the perceived age limit of ships and the market. In a stronger market, when the customer has less choice, they seem to be a bit more pragmatic. I think as of recent, most customers accept ships up to 17, 18 years. We have three ships built in 2007. They are all on time charters to significant counterparties. I think beyond 20, then at least for our sort of profile and what we do, the commercial opportunities are limited. There are other owners that can find some pockets and trades where they can use these ships, but it's somewhat limited, I would say. Our commercial life expectation of ships is up to age 20, although the quality of our ships could operate well beyond that if the market had opportunities.

It's not really for us. Of course, these sanctions trade have created a big market for all the ships. I would think that market is somewhat satisfied now. There are some people looking to even renew in that fleet by seeing if they can scrap ships that are, you know, 25 years or even older and then look to buy ships that are 17, 18, 19 years old to replace those ships that are five, six years older. It's a bit of a dynamic environment and it's evolving rather than changing very abruptly, I would say.

Geoffrey Scott, Analyst, Scott Asset Management: Okay, thank you.

Svein Moxnes Harfjeld, President and CEO, DHT Holdings Inc.: Thank you.

Conference Operator: Thank you. There are no further questions at this time. I would now like to turn the conference back to Laila Cecilie Halvorsen for closing remarks.

Svein Moxnes Harfjeld, President and CEO, DHT Holdings Inc.: Okay. I will step in for Laila and say thank you very much for attending the call and wishing you all a good day ahead. Thank you. Bye bye.

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

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.