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DHT Holdings: Looking At The Numbers

May 07, 2020 11:18 AM ETDHT Holdings, Inc. (DHT)34 Comments
RockieK profile picture


  • DHT Holdings reported earnings after the close on May 5th.
  • The company disclosed EPS of $0.49 on revenue of $211.9MM.
  • Spot Time Charter Equivalent for Q1 was $66,400 when average VLCC rates averaged over $77,000 per day.

DHT Holdings (NYSE:DHT) operates an independent fleet of very large crude carriers (VLCC) in both the spot market and on fixed time charter. Management claims; "A counter cyclical philosophy with respects to investments, employment of our fleet and capital allocation." So, it is not surprising that the company announced six 12-month time charters on April 1st of this year.

However, those fixtures would not have affected first quarter results, which were released after the market close on Tuesday, May 5th.

Image: DHT Stallion from DHTankers.com corporate website

This article is intended to follow up DHT Holdings And Crude Oil Storage, by taking a closer look at the earnings report just released. In it, we will look at gross revenues, expenses such as voyages, operations, and administrative, and reconcile net income by looking at component values of interest, taxes, gains and losses, and depreciation/amortization. Finally, we will discuss fleet availability and calculate Time Charter Equivalent rates.

Backstory And Last Quarter

DHT last reported quarterly earnings February 5th, 2020 for Q4 2019. The company had reported EPS of $0.52 on revenue of $191MM, and had just declared a $0.32 dividend. It was a nice surprise for shareholders compared to the minimal dividend the company had been paying since the beginning of 2017.

As 2020 began, VLCC rates were in a slow decline from elevated levels relative to the volatile swings seen at the end of 2019. After reporting, those rates seemed to settle out in the high $20K to low $30K range before skyrocketing as we transitioned from Q1 to Q2. As a result, average rates across routes was higher than the spot time charter equivalent the company reported in Q4.

Although investors had the prospect of similar high rates in Q1 and the possibility of another high dividend, the per share price

This article was written by

RockieK profile picture
My name is G. "Rockie" Kennedy and although I am professionally licensed, I comment and submit articles as an individual for informational and entertainment purposes only.  I am a registered investment advisor and principal of Hanover Personal Financial Services.  I am experienced in the industry since 1997 with an education in finance and economics.  My degree is in finance with a concentration of financial planning.  Prior to financial services industry, was a veteran of the armed services experienced in engineering and nuclear power operations.  In the industry I have worked as an associate financial advisor, stock broker, and investment and tax consultant.  I have been publishing on Seeking Alpha anonymously since 2013.I am a student of Dow Theory in that I believe the markets are leading indicators for the U.S. Economy.  I follow a collection of individual stocks in my personal portfolios and select others in the transportation and industrial sectors.  Periodically I will submit an article on a stock or fund that has caught my attention for other reasons, but none of my articles are intended to be investment advice. I believe in modern portfolio theory, using a core and satellite approach in an attempt to generate alpha in a portfolio, and that individuals should be responsible for, and free to include individual securities in their portfolios.

Analyst’s Disclosure: I am/we are long DHT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This information is not investment advice, nor is it a recommendation to either buy or sell any securities. Retail investors should do their own research and fully understand the risks associated with this company.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (34)

Great assessment. Thank you!!
TimUwe profile picture
Thanks for the article. I found it very valuable. I enjoy reading and listening to earnings calls. You learn a lot about a business. I also read the transcripts afterwards to try and digest the financials. That can be daunting. Especially when you are following multiple companies. Your summary was insightful and saved me a lot of time. I hope to see more of your work.
RockieK profile picture
Thank you for the comment. I am glad to know that you take the time to listen to the earning calls or read the transcripts. Many retail investors overlook these information sources. Good luck with all your trades.
codepro profile picture
RockieK, great article. I now see that DHT uses derivatives to hedge interest rate adjustments and also this caused a $12mil loss this quarter. I don't really understand the workings of these derivatives butt I'm rather certain that rates will stay low for the next two quarters. With this assumption of low interest rates moving forward could you please give an educated guess as to how low interest rates will affect the gain/loss of these hedges in the second quarter?
codepro profile picture
Follow up, I just found this while combing through the earnings release but can't quite decipher it:

Interest rate swaps
As of March 31, 2020, the Company has nine amortizing interest rate swaps totaling $374.2 million with maturity ranging from the second quarter 2023 to the third quarter 2023. The average fixed interest rate is 2.95%. As of March 31, 2020, the fair value of the derivative financial liability related to the swaps amounted to $28.2 million.
RockieK profile picture
Great question, and great legwork coming up with the answer. I especially appreciate that you are willing to share it.
HariSeldon522 profile picture
Dear authort, I am verty thankful for your article!!!
RockieK profile picture
@HariSeldon522, And I am very grateful for your read and your comment.
Very informative article, thanks sir.
RockieK profile picture
And thank you for the compliment.

are these new charters or old news?
RockieK profile picture
@looking-for-a-cut, thanks for the link. The Wall Street Journal was reporting about 100 supertankers being used for floating storage at the end of last month. They did not break down if they are all on vlcc, or how many suezmax or afraid max were in the mix. Your argument article has >100 total and does break it down by size.

So, I'm going to have to assume that the announcement is new info.
I believe they are new charters
Interesting... reading the transcript of the Euronav quarterly call the CEO mentioned that they're now getting charter inquiries not just from contango speculators but also from oil producers looking to store current production.

Presumably this is because there is no more land storage available for lease and shutting down a shale well is an absolute last resort as they then need to be refracted (at enormous capital cost) to restart production.

Very bullish for high charter rates extending thru Q3
It has been said but worth repeating - DHT prepaid $57.8M in their ABN credit facility, which is nearly .04/share (basic) on a reported miss of .09. This management team is very prudently running the business, and their Q2 is going to be big. It amazes me that this stock is trading the way that it is.
RockieK profile picture
Great comment. It's not just DHT, but the entire sector.
TNK is another winner. The are paying down debt with this wind fall. Some people don't realize paying down debt is money in the bank. (Like paying off your mortgage)
RockieK profile picture
Good points. Thanks for the comment.
Thanks for the good article @RockieK. I'm a recent convert to $DHT. What is your take (or anybodies) on the last few days price action on this bad boy?
Price action is not good. It takes guts, but logic says it is a buying opportunity. Full disclosure, I am NOT in yet, as I have two large tanker positions, but I like DHT, their earnings, con call, etc.
RockieK profile picture
@mikefconnell - there is definitely a disconnect between the fundamentals, earnings, and the stock prices. A lot of the results that we say in Q1 earnings have to do with fixtures from Q4. Perhaps retail doesn't realize that. Perhaps retail is getting scared because of a slow down in charter activity and dropping rates. Perhaps smart money is moving money from thin positions to risk off.

In six months to a year, we will have our answer. I wish I had a better one for you, sorry. Good luck with your trades.
Since the March lows, $DHT has had a cyclical series of higher highs and higher lows. I think what drove the price down the last few days was traders (who could have jumped in at the front of the latest price cycle that started about a month ago). They drove up the price because of all the positive conditions favoring the company. After the record quarter results were announced, they took profits and got out.

I hope they are gone. Otherwise, maybe tankers are harder than I think. I guess I'll learn since I'm in for the long haul now.
William777 profile picture
Agreed. Thanks very much.
RockieK profile picture
And thank you for the read and comment.
bd4uandu profile picture
Excellent, thank you.
RockieK profile picture
You are welcome, and thanks for the read.
Bsoidonym profile picture
Thanks for the article.
Today $EURN reported. Incredible numbers and a massive dividend.
Market doesn't agree and prefers to throw money at companies, that report losses and cut dividends.
Completely irrational and insane.
Everyone should just buy $TOPS or better yet, set their cash on fire. Crazy!
RockieK profile picture
Thanks for the comment. I will be digging through $EURN over the next couple of days.
Bsoidonym profile picture
Even the "Nr.1 expert" aka neurotic superpessimist called it incredible.
It was so good, that he didn't recommend a Sell like he did with DHT.
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