DHT Holdings (DHT) Misses Q1 EPS by 5c

DHT Holdings (NYSE: DHT) reported Q1 EPS of $0.15, $0.05 worse than the analyst estimate of $0.20. Revenue for the quarter came in at $70.7 million versus the consensus estimate of $73.25 million.

• Adjusted EBITDA for the quarter of $50.6 million. Net income for the quarter of $14.3 million or $0.15 per basic share. After adjusting for an impairment charge totaling $7.5 million related to the sale of DHT Ann and DHT Phoenix, net income is $21.8 million or $0.23 per basic share.
• The Company's VLCCs achieved time charter equivalent earnings of $40,100 per day in the first quarter of 2017 of which the Company's VLCCs on time-charter earned $38,800 per day and the Company's VLCCs operating in the spot market achieved $40,900 per day.
• For the first quarter of 2017, the Company will return $15.1 million to shareholders, equating to 69% of net income adjusted for the $7.5 million impairment charge. The return of capital is comprised of $5.0 million of buy-back of convertible senior notes and $10.1 million, or $0.08 per share, as cash dividends payable on May 31, 2017 for shareholders of record as of May 22, 2017.
• In March DHT entered into an agreement with BW Group Limited ("BW") for the acquisition of BW's VLCC fleet. The fleet consists of 11 VLCCs, including two newbuildings due for delivery in 2018. BW's VLCC fleet has a value of approximately $538 million at prevailing broker valuations. DHT is financing the acquisition by issuing approximately $256 million of DHT stock to BW at $5.37 per share. DHT will also pay BW Group $177.4 million in cash and assume approximately $104.2 million in remaining capex related to the two newbuildings. The cash requirements associated with the purchase will be financed with bank debt. Following delivery of all vessels and novation of newbuilding contracts, BW will own approximately 33.5% of the company. DHT has to date taken delivery of 7 of the vessels and novated the two newbuilding contracts. A total of about 31.2 million shares of common stock have been issued to BW to date. DHT expects the remaining 2 vessels to be delivered during the second quarter. As a result of the acquisition, DHT will have a fleet with an average age of 6.9 years, consisting of 30 VLCCs (including four newbuildings for delivery in 2018), and two Aframaxes.
• The Board of Directors of DHT expanded the size of the board by one director and appointed BW's designee, Mr. Carsten Mortensen, CEO of BW Group.
• In April 2017, the Company entered into a six year term loan and revolving credit facility agreement totaling $300.0 million, of which $74.0 is a revolving credit facility, with ABN Amro, DNB and Nordea for the financing of the cash portion of the acquisition of BW's VLCC fleet as well as the remaining installments under the two newbuilding contracts. $204.0 million is expected to be drawn in connection with the delivery of the nine vessels in the water and the remaining $96.0 million in connection with the delivery of the two newbuildings in the second quarter of 2018. Borrowings bear interest at a rate equal to Libor + 2.40% and are repayable with quarterly installments calculated based on the borrowings being repaid to zero assuming a 20 year economic life for the vessels.
• On January 16, 2017 the Company took delivery of the last of its six VLCC newbuildings ordered from HHI in 2013 and 2014. The vessel is named DHT Tiger and is trading in the spot market.
• In February 2017, we agreed to the sale of DHT Phoenix for a price $19.1 million. The vessel is expected to be delivered to the buyers in the second quarter of 2017 and is expected to retire from the trading fleet. The vessel is debt free. We recorded a book loss of about $3.5 million in the first quarter 2017 in connection with the sale.
• In March 2017, we agreed to the sale of DHT Ann, a 2001 built VLCC, for a price $24.8 million. The vessel was delivered to the buyers in May 2017 and is expected to retire from the trading fleet. About $13.3 million of bank debt, which has been recorded as current portion of long term debt as of March 31, 2017, was repaid in connection with the sale. The company recorded a book loss of about $4.0 million in the first quarter 2017 related to the sale.
• In January 2017 DHT entered into an agreement with HHI for the construction of two VLCCs of 318,000 dwt scheduled for delivery in July and September 2018. The newbuilding contracts will be financed with cash at hand and bank debt.
• In February 2017, we obtained a financing commitment totaling $82.5 million to fund the acquisition of the two VLCC newbuildings ordered from HHI in January 2017 through a secured term credit facility with DNB and Nordea. The credit facility is divided 50/50 between a term loan and a revolving credit facility, will be for a five-year term and borrowings will bear interest at a rate equal to LIBOR plus a margin of 250 basis points. Borrowings are repayable with quarterly installments calculated based on the borrowings being repaid to zero assuming a 20 year economic life for the vessels.
• DHT has a fleet of 30 VLCCs, 26 in the water and four under construction, as well as two Aframaxes. Seven of the VLCCs and the two Aframaxes are on fixed rate time charters

For earnings history and earnings-related data on DHT Holdings (DHT) click here.

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