(Source: Business Wire)
DHT Maritime, Inc. (NYSE:DHT) today announced results for the period from January 1 to March 31, 2009. Total revenues for this period were $29.8 million and net income was $6.9 million, or $0.17 per share (diluted). Effective January 1, 2009 DHT no longer accounts for interest rate swaps as hedges for accounting purposes and as a result, net income for the first quarter of 2009 includes non-cash financial expenses related to interest rate swaps totaling $3.5 million. Adjusted for these non-cash financial expenses net income was $10.4 million and earnings per share was $0.26. Distributable cash flow per share for the quarter was $0.431.
The Board of Directors of DHT has decided to pay a dividend of $0.25 per share for the first quarter 2009. The dividend will be paid on June 16, 2009 to shareholders of record as of the close of business on June 3, 2009.
DHT plans to host a conference call at 8:30 am ET on May 19, 2009 to present the results for the quarter. See below for further details.
Accounting Changes
Effective January1, 2009, DHT changed the basis on which it prepares its financial statements from U.S. GAAP, to International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. Previously reported financial statements have been converted to IFRS, but did not result in any changes to the Statement of Operations for 2008, and the changes to the Balance Sheet as of January 1, 2008 and December 31, 2008 are immaterial. A conversion document has been prepared and includes a further discussion of the change to IFRS including Balance Sheet as of January 1, 2008 and December 31, 2008 in accordance with IFRS. The conversion document has been filed as an attachment to the interim financial report filed with the SEC on form 6-K.
Note 1) Distributable cash flow is equal to net income plus depreciation plus non-cash financial expenses related to interest rate swaps.
In addition, effective January1, 2009, DHT changed the way it accounts for interest rate swaps. The Company will no longer account for its interest rate swaps as hedges for accounting purposes. Therefore, effective January1, 2009, changes in the fair value of our interest rate swaps and amortization of unrealized loss on interest rate swaps of $26.4 million as of December 31, 2008 will be reflected in the Company's statement of operations. In the quarter ended March 31, 2009, non cash expenses related to the interest rate swaps totaled $3.5 million, of which $2.7 million is included in interest expense.
First Quarter 2009 Results
Total revenues for the first quarter were $29.8 million, an increase of $4.9 million compared to the first quarter of 2008. Total revenues for the quarter consisted of $22.5 million in base charter hire and $7.3 million in additional hire under the company's profit sharing arrangements with the charterer of DHT's vessels, Overseas Shipholding Group, Inc. ("OSG"). Of the total base charter hire, $17.8 million relates to the seven vessels on time charter and $4.7 million relates to the two vessels on bareboat charter. Of the additional hire, $4.6 million relates to the three Very Large Crude Carriers ("VLCCs"), $2.3 million relates to the four Aframax tankers and $0.4 million relates to one of the Suezmax tankers, the Overseas Newcastle.
Through the profit sharing elements of the time charter agreements for the VLCCs and the Aframax tankers, DHT earns an additional amount equal to 40% of the excess of the vessels' actual net time charter equivalent ("TCE") earnings in the commercial pools over the base charter hire rates for the quarter, calculated on a fleet wide basis and on a four quarter rolling average. The Overseas Newcastle has a profit sharing arrangement whereby DHT earns an additional amount equal to 33% of the vessel's TCE earnings above $35,000 per day.
In the quarter ended March 31, 2009, DHT's VLCCs achieved average TCE earnings in the commercial pool of $45,400 per day (compared to $62,300 per day in the fourth quarter of 2008 and $96,100 per day in the first quarter of 2008) and the three Aframax tankers which operate in the Aframax International pool achieved average TCE earnings of $30,200 per day (compared to $35,200 per day in the fourth quarter of 2008 and $33,600 per day in the first quarter of 2008). The Suezmax tanker Overseas Newcastle achieved average TCE earnings for the first quarter of $39,600 per day (compared to $45,100 per day in the fourth quarter 2008 and $38,000 per day in the first quarter of 2008).
The revenue days for the quarter were 269 for the VLCCs (compared to 270 revenue days in the first quarter of 2008) and 348 for the Aframaxes (compared to 364 revenue days in the first quarter of 2008). The Aframax Overseas Rebecca had 11 off hire days in the quarter related to scheduled drydocking which is expected to be completed in the second quarter 2009.
DHT's vessel expenses for the quarter, including insurance costs, were $7.1 million reflecting the new technical management contracts effective January 16, 2009. Depreciation and amortization expenses were $6.5 million, general and administrative expenses were $1.1 million and net finance expenses were $8.3 million of which $3.5 million were non cash expenses related to the interest rate swaps.
Market Update
DHT's policy of employing the vessels on medium to long term charters is benefitting the Company in a period where there is a significant downward trend on freight rates. A significant number of vessels are used for storage as a result of an oil price contango. This, together with an increase in transportation distances and reduced viability of single hull tankers, has helped to better balance the demand and supply factors although not sufficiently to offset the increase in the fleet from newbuilding deliveries and the effect of cuts in OPEC production.
With the profit sharing arrangement for DHT's vessels based on a four quarter rolling average, there is potential for the vessels to also earn additional hire and generate cash flow over and above the base hire in the second quarter of 2009.
The strength of DHT's balance sheet is serving the Company well at a time when there is pressure on vessel values. With its current liquidity position of approximately $100 million and steady future cash flow from period charters with OSG, the Company is well positioned in the current economic downturn.
For the second quarter of 2009 the pools in which DHT's VLCCs and Aframax tankers operate report booking of pool capacity as of April 17, 2009 at TCE rates averaging $37,000 per day for the VLCCs with 44% the second quarter revenue days booked and $22,500 per day for the Aframax tankers with 33% of the second quarter revenue days booked. Also, OSG has reported that 44% of the second quarter Suezmax days have been booked at an average TCE of $23,000 per day.
Vessels' Charter Arrangements and Vessel Operations
Of the fleet of nine vessels, seven vessels are time chartered to OSG until the second quarter of 2012 to the second quarter of 2013. The two Suezmax tankers are bareboat chartered to OSG until 2014 and 2018, respectively.
The Company expects the base hire component of each of its charters will provide for stable cash flow during the current volatile and uncertain market, as the charters provide for fixed monthly base hire payments regardless of prevailing market rates, so long as the vessel is not-off hire. In addition, with respect to eight of the nine charters, if market rates exceed the daily base hire rates set forth in such charters, DHT will have the opportunity to participate in any such excess under the profit sharing component of the applicable charter arrangements.
DHT's two Suezmax tankers which are bareboat chartered to OSG, have their charter hire payable 365 days per year, and no operating expenses for the account of DHT. The vessels provide for stable earnings over the period of the charters. One of the two Suezmax tankers, the Overseas Newcastle, has a profit sharing arrangement.
Unlike the vessels on bareboat charter, vessels on time charter may go off-hire. The seven vessels on time charter are subject to scheduled periodic dry docking for the purpose of special survey and other interim inspections that result in off-hire. In addition to scheduled off-hire, these vessels may be subject to unscheduled off-hire for ongoing maintenance purposes. Total off-hire for running repairs and mandatory inspections amounted to 13 days during the first quarter of 2009, of which 11 days relate to the Overseas Rebecca's which is currently undergoing Class Special Survey at Gdansk, Poland as well as ensuring compliance with the charterers' requirements.
Overseas Ania is scheduled to undergo Class Special Survey in the third quarter of 2009, and is expected to be off-hire for approximately 40 days.
Overseas Ann is currently scheduled to undergo Class Interim Survey mid-May in Fujairah, followed by Overseas Chris in the third quarter and Overseas Regal in early 2010.
