DHT Maritime (DHT) Q2 2021 Earnings Call Transcript

DHT Maritime (DHT 0.89%)
Q2 2021 Earnings Call
Aug 10, 2021, 8:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and thank you for standing by. Welcome to the second-quarter 2021 DHT Holdings, Inc. earnings conference call. [Operator instructions] We have three speakers today, the co-CEOs, Svein Harfjeld, Trygve Munthe; and our CFO, Laila Halvorsen.

I'd now like to hand the conference over to your first speaker today, CFO Laila Halvorsen. Please go ahead.

Laila Halvorsen -- Chief Financial Officer

Thank you. Good morning, and good afternoon, everyone. Welcome, and thank you for joining DHT Holdings second-quarter 2021 earnings call. I'm joined by DHT's Co-CEOs, Svein Moxnes Harfjeld and Trygve Munthe.

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 at our website, dhtankers.com, until August 17.

In addition, our earnings press release will be available on our website and on the SEC EDGAR system as an exit 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, including DHT's prospects, dividends, share repurchases and debt repayment, the outlook for the tanker markets in general, daily charter high rates and vessel utilization, forecast of world economic activity, oil prices and oil trading patterns, anticipated levels of newbuildings and scrapping and projected dry dock schedules. 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. Looking at the P&L highlights, EBITDA for the second quarter of 2021 was $21 million, and net income came in at $0.8 million. The result includes the profit of $13.6 million related to the sale of the DHT Lake and DHT Raven, a non-cash gain of $3 million related to refinancing and a non-cash gain in fair value related to interest rate derivatives of $2.2 million. Opex for the quarter was $19.6 million, equal to $7,800 per day and G&A for the quarter was $4.7 million.

In the second quarter of 2021, the company achieved an average TCE of $19,500 per day, while the average TCE for the first half of 2021 amounted to $25,500 per day. In a historically very difficult and challenging tanker market we are pleased to have recorded positive numbers for both the second quarter and the first half of 2021. Moving over to the balance sheet. The quarter ended with $52 million of cash.

At quarter end, the company's availability under both the revolving credit facilities was $182 million, putting total liquidity at $235 million as of June 30. We have continued to strengthen the balance sheet with the refinancing of the Nordea credit facility and the prepayments done during the quarter. Financial leverage is about 30% based on market values for the ships, and net debt per vessel was $17.6 million at quarter end. Looking at the cash bridge.

The quarter started with $54 million of cash, and we generated $21 million in EBITDA. Ordinary debt repayment and cash interest amounted to $6 million. $29 million was used related to share buyback and dividend payment. $17 million was used for maintenance and scrubber capex and positive changes in working capital amounted to $18 million.

Proceeds from sale of vessels net of debt repayment was $51 million, $55 million net was issued in connection with the refinancing, $93 million was used to prepay long term debt and the quarter ended with $52 million of cash. With that, I will turn the call over to Trygve.

Trygve Munthe -- Co-Chief Executive Officer

Thank you, Laila. Switching now to capital allocation. For the second quarter, a total of $25.8 million will be returned to shareholders. As previously announced, the company bought back 2.2% of outstanding shares during the quarter for a total consideration of $22.5 million.

In addition, the company will pay a dividend of $0.02 per share for the quarter. It will be payable on the 26th of August to shareholders record of the 19th of August. And with that, the company has now paid dividends every quarter for 11 and a half years. And then we wanted to provide you a little update on the fleet side.

And again, as previously announced, we bought and took delivery of two modern scrubber-fitted eco ships during the first half, the DHT Harrier and DHT Osprey. We paid $68 million per ship, and note that broker value assessments now are some 10% higher. We also sold our three older ships, all 2004 built, during the spring. The Lake and Raven were delivered during the second quarter, and we recorded a $13.6 million gain on these sales.

The DHT Condor was delivered to its new owners in July, and we expect to book a profit of about $1.5 million on that sale. On the next slide, let us then provide you an update on what has been going on, on the liability side of the balance sheet during the quarter. As previously announced, we have refinanced the old Nordea facility with a new and expanded Nordea facility. The new facility has a firm commitment of about $316 million with the addition of $250 million accordion.

The new loan carries a margin of 1.9%. It has a DHT style 20-year repayment profile, at 5.5 years tenor and carries the normal DHT covenants. Additionally, and importantly, we were able to continue to benefit of having prepaid all regular installments for 2021 and 2022 under the old facility. So the only installments we pay from now through 2022 on this facility are $2.5 million per year for each of the two new acquisitions, the Harrier and the Osprey.

During the second quarter, we extended our runway of low cash breakeven rates by prepaying all the 2022 installments under our other large credit facility, the ABN Amro loan. In a minute, Svein will provide more color on our very low cash breakeven levels for the rest of this year and next. From the table on this slide, you can see that we have $536 million of bank debt comprised of two relatively large syndicates and two smaller collateral loans. Further, we currently have $182 million of available revolver capacity.

We have a mere $5 million of regular installments for the second half of this year and no more than $10 million for all of next year. And finally, you will note that we have no refinancing needs until the fourth quarter of 2023. So as you can see, we continue to enjoy strong support from our banking universe, something that was clearly demonstrated by the terms of this refinancing, which in fact, were the best we have achieved in our 11 years at the helm of DHT. And with that, I'll pass it over to Svein.

Svein Harfjeld -- Co-Chief Executive Officer

Thank you, Trygve. On the next three slides, we'll discuss the employment of our fleets, or fire in connection with dry docks and cash breakeven levels. On the first page, you will see the expected ratios of spot and time charter employment during the last two quarters of 2021. For the third quarter, we have covered about 42% of our fleet on time charters at an average rate of $27,500 per day.

Some of these time charters are short in nature as we consider this an opportunity offering premium earnings to this spot market. Thus far, for the third quarter we have booked income for 64% of the fleet at an average rate of $22,100 per day. For the fourth quarter, we have some 23% of the fleet on time charters at an average rate of about $32,100 per day. We don't expect to enter into additional time charters in the near term, as we don't consider a combination of currently available rates and durations to be compelling.

As many of you noted a few quarters back, we started to take advantage of the weak spot market to bring forward drydocks. During the second quarter, we recorded about 100 days of fire in connection with dry docks. We expect another 80 to 100 days during the third quarter with an additional 40 to 60 days in the fourth quarter. The work to be done during this period in the second half includes the installation of ballast water treatment systems and scrubbers.

This will also mark the end to our scrubber retrofit program for now, taking our scrubber fleet to 17 out of 26 ships. A key benefit to all these efforts is that we have only 70 to 90 planned off-hire days for all of 2022. As such, we are positioning our fleet to be ready on the dance floor at the time one should expect a much healthier freight markets. Then some update of our keen focus on cash breakeven.

The time charters we have in place, in combination with the debt prepayments that we have made, ensure we enjoy very robust cash breakeven levels for our fleets. It applies both for the fleet as a whole and the spot fleet specifically. As you will see from the graph on the left on the slide, the full fleet needs to generate $16,600 per day and our spot fleet $10,200 per day for the company to be cash neutral for the second half of this year. On a similar illustration in the graph on the right, you will see that the full fleet needs to generate $14,100 per day and our spot ships $10,600 during the first half of 2022 for the company to be cash neutral.

The key drivers behind these numbers are the prepayments of debt that has been made with only $10 million in schedule and marked for the year and very limited maintenance capex, reflecting only three ships planned for drydock. We think these numbers stand out as very robust, protecting the downside without giving away the upside. We are constructive on the markets, but we think the recovery could come a bit later than what most people suggest. Oil inventory levels have been coming down and OPEC+ is gradually increasing supply.

But COVID is still impacting the demand picture, and this happens at the time when the fleet is growing because of new ships being delivered without retirement of older ships. It's tough out there and in all its simplicity, there's two little cargo and too many ships. This being said, the longer this drags out, the faster and more brutal the recovery could be. So let's sum up how we are positioned.

One, we have renewed our fleet this year by buying two modern quality ships and selling our three older ships, all at good prices than earlier. Two, we secured a new financing package at attractive terms with our supportive universe of lending banks. Three, we have a strong balance sheet to leverage at 30% paired with a healthy liquidity position. And four, we enjoy very low cash breakeven levels for our fleet for both this and next year.

So in sum, we are in excellent shape and are all working hard to control what we cannot control and are executing on the opportunities that markets presents. And with that, we'll open up for Q&A. Operator?

Questions & Answers:

Operator

Thank you. [Operator instructions] We will now take our first question from the line of Randy Giveans at Jefferies. Please go ahead. Your line is now open.

Randy Giveans -- Jefferies -- Analyst

How are you Svein, Trygve, and Laila? How is it going?

Svein Harfjeld -- Co-Chief Executive Officer

Good. Thanks. How is Texas?

Randy Giveans -- Jefferies -- Analyst

Excellent. All well. A little warm, but everything is good down here. Couple of questions for me.

I guess, starting with your fleet here. You recently sold the three oldest VLCCs, you bought these two modern VLCCs all this year. I guess, how do you feel about your fleet currently? And then you mentioned, you're not looking to do any time charter outs, but any appetite for time charter ins to grow a little bit more exposure.

Svein Harfjeld -- Co-Chief Executive Officer

I think as we've said many times before, in general, we're not really entertaining time chartering in. So there's few reasons for that. One, it is essentially 100% financing. It will negatively impact our cash breakeven levels as such.

And also, we like to have full control of the technical operations, so all the ships under our control that we use to service our customers. So time chartering doesn't really gel well with all that.

Randy Giveans -- Jefferies -- Analyst

And then in terms of additional asset sales or modern purchases?

Trygve Munthe -- Co-Chief Executive Officer

On the sell side, we have no intention of selling any further ships on this side of the recovery. As we have discussed in the past, the appreciation of secondhand values happened a little quicker and faster than we had expected. So we think that we've gotten to a level where we're actually quite pleased with the fleet that we have, and we really do not currently have any intentions to buy or sell. So it's sort of a hold territory for us and run the 26 VLCCs as well as we can.

Randy Giveans -- Jefferies -- Analyst

And then looking at that capital allocation slide, I know you've been pretty committed to that $0.02 dividend regardless of earnings. Just also looking at the share buyback, right, very good use of cash there. You returned the $22.5 to shareholders, buying the 3.7 million shares. I guess, what was the thinking behind that? How did you get to that calculation? And how much more in share repurchases are you looking at here the remainder of the year?

Trygve Munthe -- Co-Chief Executive Officer

Again, as we have said before, we are not regularly doing buybacks. It's a couple of things that need to be in alignment that we find that the NAV is on its way up, and we see a disconnect between share prices and NAVs, and that's typically when we have bought back shares over the years. We felt that after we acquired the two ships in the beginning of the year, then prices really took off. And as we just said, we weren't too intrigued by the secondhand opportunities, but the share price hasn't really accelerated to that could make a sense.

So we thought that to buy ships in the form of buying our own shares made sense. As far as forward appetite, that's going to be decided on those same factors. But it could very well be that we will continue to buy some, but there is no sort of target that we want to spend x million dollars or anything like that. So it's purely opportunistic approach from our side.

Randy Giveans -- Jefferies -- Analyst

And quickly, quarter-to-date guidance on just the spot vessels, do you have that number or the rates that you've booked so far for spot on 3Q?

Svein Harfjeld -- Co-Chief Executive Officer

It's about one-third of the spot fleet, and that's at 10,006.

Randy Giveans -- Jefferies -- Analyst

10, six. All right. Well, hey, thank you so much.

Svein Harfjeld -- Co-Chief Executive Officer

Thank you.

Operator

We will now take our next question from the line of Omar Nokta from Clarksons Securities. Please go ahead. Your line is now open.

Omar Nokta -- Clarksons Securities -- Analyst

Thank you very much. Hey, guys. Good afternoon. Just maybe following up a little bit on Randy's question regarding the -- or sort of the discussion around time charters.

Given we've had such extremes here over the past two years, it's clearly paid off, at least for you to have several of your ships on time charter that you booked last year. And so, this past quarter you earned $10,000 on the spot market, but your overall fleetwide TCE was much -- it was closer to $20,000, basically. I guess, going forward, how do you think, just in general -- I know that very near term, there aren't that many opportunities. But in the grand scheme when you think about DHT on an ongoing basis, what percentage do you want to have your vessels on time charter?

Svein Harfjeld -- Co-Chief Executive Officer

We don't have a fixed percentage that we target, but we look at the nominal numbers. And, obviously, last year, numbers were very attractive, so we did really as much as we could. Some of these shorter charters this year has been more of an alternative to trading in the spot market. So -- but in the next recovery, you should certainly expect us to do a lot of time charters and when numbers are very healthy, we'll do as much as we can.

So -- but it's not a fixed percentage. That's the guidance. It's just what makes good economic sense for the DHT and its shareholders.

Omar Nokta -- Clarksons Securities -- Analyst

And I guess, maybe another follow-up to the prior discussion points. Clearly, especially with the Delta variant, recently, there has been a bit of a, call it a delay in this tanker recovery or at least an expected delay, at least from the part of what we're seeing with respect to the stock performance. Given the order book has become very tight here with no real slots available, especially for tankers come maybe late '24 and really in '25, it does paint a positive picture, as you mentioned in your opening remarks for basically a duration of the upswing once rates do turn. And I know you're fine standing pat at the moment, but how do you feel about investing capital when it's time to invest knowing that perhaps even '22 we're looking at a healthier market and then a healthy market for '22, '23, '24, potentially beyond that just based on the supply side, how do you feel then about deploying capital? Is it -- you bought the 2016 earlier this year.

What's the sweet spot when you do think about investing?

Svein Harfjeld -- Co-Chief Executive Officer

As we also said earlier, for us to invest, the ships have to be of equal design, and that means built sort of late '15 and younger. We felt from a sort of a cash return point of view, that is five-year-olds were really the sweet spots. So the fuel economics of five-year-old and one-year-old is basically the same, so we're very happy with those investments. Keep in mind that in the sort of recovery, when it happens, this company will churn out a lot of money with the 26 ships it already has.

But it's important for us when we invest to also look at the required rates over the life -- the remaining life of the ships that you buy, not just what you can earn in 12 or 24 or 36 months. So this is the reason why we took a step back once asset prices sort of ratchet up much quicker than we had expected in the spring. So if for some reason, there would be opportunities to look at levels not too dissimilar to what we invested at earlier this year, we are certainly open to consider it. So we're not against buying more ships, but they has to be at levels that we think will represent good investments over the remaining half of the ships.

Omar Nokta -- Clarksons Securities -- Analyst

Got it. Thanks. Thanks for that color, Svein. I'll turn it over.

Operator

We will now take our next question from the line of Chris Tsung from Webber Research. Please go ahead. Your line is now open.

Chris Tsung -- Webber Research -- Analyst

Good afternoon, everyone. How are you? Hello? Hello?

Svein Harfjeld -- Co-Chief Executive Officer

Yes. Hello. Go ahead.

Chris Tsung -- Webber Research -- Analyst

Hi. Sorry. Sorry. Thanks.

I guess it's two-part question regarding scrubbers, like what sort of spreads are you guys seeing between the scrubber and non-scrubber fitted vessel? And secondly, with the sales that you guys announced on the 2004 vessel, they all had scrubbers on it. So is that a requirement to sell vessels?

Svein Harfjeld -- Co-Chief Executive Officer

To answer the latter part first, maybe there has been ships sold not from us, but without scrubbers in the market, so there is appetite for that as well. But that has mainly been ships coming out of Japan with more -- maybe more basic specifications, and they've typically been picked up by private owners as such. So for us, there was particular interest in our ships maybe because they have scrubbers, but they're also very well maintained. And it was an industrial player that bought these ships, that will use them for own transportation needs.

So there's also good numbers in that. Currently, the annual benefit of a non-eco ship with a scrubber is about $2 million over the year. So that's sort of the additional earnings you can -- you will get. So you can do the rest of the math yourself, I guess.

Chris Tsung -- Webber Research -- Analyst

And I guess, just turning to the second part of my question was just, could we -- I know you guys are not planning to sell any more vessels. You guys have stopped your scrubber program at 17. But just kind of thinking about it, if you guys were to entertain selling a vessel, could it be from the part of your fleet that has a scrubber or does not?

Trygve Munthe -- Co-Chief Executive Officer

Yes. When you run a tanker running company, essentially everything is for sale. It all depends on the price. It's not carved in stone that we only sell the older ships with scrubber or without scrubbers.

It really is where we think it behooves to shareholders and where it makes sense to us. But with all that said, traditionally, we have been selling out from the older end of the fleet and you will note that basically all of our older ships are scrubber-fitted or will soon be scrubber fitted. So, hopefully, that adds some color to your question.

Chris Tsung -- Webber Research -- Analyst

Yes. That's perfect. Thank you all. I'll turn it over.

Trygve Munthe -- Co-Chief Executive Officer

Thank you.

Operator

We will now take our next question from the line of Jon Chappell from Evercore. Please go ahead. Your line is now open.

Sean Morgan -- Evercore ISI -- Analyst

Hey, everyone. This is actually Sean Morgan on for Jon Chappell this morning. So it appears that you signed some extended four to five TCs since the Q1 results. Just wondering if we could get the types of rates those are being signed on.

And should we just use ship over figures for the one year, or is there a higher extension rate that those well-time charters last year?

Svein Harfjeld -- Co-Chief Executive Officer

It's a mixed bag. We have not disclosed the rates of the particular charter. So I think you should relate to the numbers we have disclosed now what's the average for the coverage ratio for each quarter.

Sean Morgan -- Evercore ISI -- Analyst

And then on the breakeven slide, I think that's interesting, you're able to reduce the maintenance capex for the coming quarter. But is there any ability to offset some of the opex costs or are those pretty efficient at this point in terms of just reducing the breakeven even further?

Trygve Munthe -- Co-Chief Executive Officer

Yes. We have a long-term view in the way we operate our ships. So how much we spend on opex is totally independent on what type of market we're in. But you also see that we run this quite competitively and cost efficiently.

So as Laila said, for the quarter it was $7,800 per day per ship, and we find that to be quite sharp and competitive. But to your question specifically, no, we don't think there is any room to cut in opex just to obtain a lower cash breakeven.

Sean Morgan -- Evercore ISI -- Analyst

Yeah. OK. Thank you.

Trygve Munthe -- Co-Chief Executive Officer

Welcome.

Operator

We will now take our next question from the line of Ben Nolan from Stifel. Please go ahead. Your line is now open.

Ben Nolan -- Stifel Financial Corp. -- Analyst

Yes. Thanks. I wanted to get back to scrubbers, but maybe from a different perspective. It sounds like you're done here at 17.

Is that simply a capital allocation decision that you're preserving capital. It's a challenging market, maybe don't have as many dry docks coming beyond this quarter. But -- or is it sort of the ships that don't have scrubbers or sufficiently efficient enough so that you don't really feel like they would benefit enough.

Trygve Munthe -- Co-Chief Executive Officer

The latter part of your question is correct, right? So these are really eco ships. So they consume much less fuel and they are sort of more mature end of the fleet. So that means the payback will be longer. The investment is not that compelling simply.

So we're sort of pleased with how we set it up now. That it's really older ships that got scrubbers and then there are some eco ships then without scrubbers.

Ben Nolan -- Stifel Financial Corp. -- Analyst

So there -- at least from where we sit now, those more modern ships probably never will have scrubbers or at least not any time in the near future. Is that fair?

Trygve Munthe -- Co-Chief Executive Officer

That's correct.

Ben Nolan -- Stifel Financial Corp. -- Analyst

And then sort of getting back to the cash breakeven. First, it's nice that you've been able to retool the debt and very little amortization associated with that. But just thinking through, as we hopefully get into a better market perhaps at some point next year. Obviously, the low cash breakeven is a pretty easy bar.

And then looking beyond, assuming that you are generating substantially more cash than sort of needed to cover that debt, is there sort of a need to pick that amortization back up to a little bit of a higher level and maybe a little bit more linear with respect to debt repayment? Or would you imagine that should cash flow be available, it would be available to distribution to shareholders at one point or the other?

Trygve Munthe -- Co-Chief Executive Officer

There's definitely no need to ramp up the debt amortization, Ben. So we're totally free to do whatever we want with the available cash flow once the market recovers. But I think it's premature today sit and sort of indicate what we're going to do once the market returns to healthy numbers. But what we enjoy is to have the freedom to do what we think is the right thing to do when that time comes.

Svein Harfjeld -- Co-Chief Executive Officer

Keep in mind that our loan facilities are straight-line amort. We have just elected to prepay, schedule the amort for particular periods to -- that will improve the position of the company. So it's not because we have non-amortizing debt so there's sort of a wall of debt coming at some point in period. And also, our capital allocation is minimum 60% of ordinary net income to be distributed to shareholders.

So, obviously, its -- cash flows are phenomenal, the company can consider to sort of use that capital allocation policy, right?

Trygve Munthe -- Co-Chief Executive Officer

As we saw for the second quarter.

Svein Harfjeld -- Co-Chief Executive Officer

Yes.

Ben Nolan -- Stifel Financial Corp. -- Analyst

Great. Thanks.

Operator

[Operator instructions] And we will now take our next question from the line of Robert Silvera from Marine Surveyors. Please, go ahead. Your line is now open.

Unknown speaker

Thank you for taking my call. I appreciate very much of what you guys have accomplished in this very, very difficult quarter that we've just been through. I find it quite fascinating that you have reduced in the last two years debt levels of over $900 million to that nominal -- notional debt now of on $536 million. This, to me, is a wonderful job done in an incredibly difficult market now.

I would like to suggest that what would you have been as far as earnings this quarter if you still had $900 or so million in debt, I doubt if it would be anywhere near where you are now. In any case, for the future, I know you've been buying shares. I would like to suggest that you sell some $5 put options period. I realized that this will not bring you a ton of money, but it will bring you something, OK? Especially, if you do them for next January and you have the cash set aside to cover whatever options you're able to sell and that will simply reduce the cost of any shares that you are repurchasing as well as straight repurchases if you continue to do that as well.

In any case, I think that the way you guys have run this company is a Harvard Business class, classic of how to do it. So that's my input.

Trygve Munthe -- Co-Chief Executive Officer

Well, thank you, thank you for your kind words. And we certainly recognize sort of the option market as something we can also get into, and we have discussed this in the past. But, overall, we find that the liquidity may not be what it needs to be in order for us to do something there. But we appreciate your input.

Unknown speaker

Well, you don't have to do a lot, but it just shows that you can do some. And I would much rather see you build your cash for the opportunities that may come, because we, as you said, will probably go through a longer tough period before we get into a really great market like we had in early 2020. And I'm sure like to, as a shareholder many years now, see that happen.

Svein Harfjeld -- Co-Chief Executive Officer

Yes.

Operator

We will now take our next -- sorry.

Unknown speaker

Do you have any intention at the current levels of still prepaying any of your debt?

Trygve Munthe -- Co-Chief Executive Officer

I think now we have prepaid all regular installments on the two large facilities through 2022. So I do not expect us to make additional premium payment in the near future. We feel that we have a significant runway of 18 months here with unusually low cash breakeven levels and we're certainly expecting the market to come back to more normal and healthier levels within that time frame. Currently, we do not have any intention for additional prepayments.

Unknown speaker

OK. Thank you. Well done, guys.

Trygve Munthe -- Co-Chief Executive Officer

Thank you.

Svein Harfjeld -- Co-Chief Executive Officer

Thank you.

Operator

We will now take our next question from the line of Magnus Fyhr from Wainwright. Please go ahead. Your line is now open.

Magnus Fyhr -- H.C. Wainwright & Co. -- Analyst

Yes. Hi. Good afternoon. Just two questions.

You've been extremely disciplined in your capital allocation strategy. And you also mentioned that asset values had appreciated a little faster than you have thought. Is it fair to assume that you would rather be buying back stock in your own company than buying secondhand vessels as long as the arbitrage is as wide as it is today?

Svein Harfjeld -- Co-Chief Executive Officer

What we did in the second quarter was sort of buying ships, and we bought our own ships, right? And they were certainly cheaper than what was available in the market. But the levels, of course, nominally are less compared to buying one or two or three ships. So, I think, we're fairly sort of agnostic in general. But ideally, we would like to have the opportunity to buy one or two or three more ships, but that opportunity was not there.

Trygve Munthe -- Co-Chief Executive Officer

We just think it's -- in the business we are in that over time you could argue that it's not a phenomenally high-end margin business. We think it's paramount that you buy right and by saying buying right, it's being disciplined as you phrased it, Magnus.

Magnus Fyhr -- H.C. Wainwright & Co. -- Analyst

That kind of leads me into the second question. Some of your competitors have been buying the new ships' dual-fuel capability. How do you feel about your fleet? You have a very modern fleet and how you feel like you're positioned for the new regulations and your appetite for pursuing any of these, type of new builds?

Svein Harfjeld -- Co-Chief Executive Officer

As we've said in the sort of summary, we feel that we are in excellent shape. We have a good fleet, and we are well-positioned for the sort of changes in the regulatory framework that's coming up over the next few years. So we will be able to meet that. We're quite confident in that.

So we're not here to contract new buildings at this juncture and there is two reasons for that. One is that price is right now and it is too high, we think. But, secondly, there's lack of clarity on the technology going forward. So -- but we are, of course, saying well-tuned of the developments and down the road, we might think differently.

Magnus Fyhr -- H.C. Wainwright & Co. -- Analyst

Very good. Thank you.

Trygve Munthe -- Co-Chief Executive Officer

Thanks.

Operator

As there are no further questions, I would now like to hand the call back to the company.

Svein Harfjeld -- Co-Chief Executive Officer

Well, thank you very much to all for the interest in DHT, and we are wishing all a good day ahead.

Operator

[Operator signoff]

Duration: 40 minutes

Call participants:

Laila Halvorsen -- Chief Financial Officer

Trygve Munthe -- Co-Chief Executive Officer

Svein Harfjeld -- Co-Chief Executive Officer

Randy Giveans -- Jefferies -- Analyst

Omar Nokta -- Clarksons Securities -- Analyst

Chris Tsung -- Webber Research -- Analyst

Sean Morgan -- Evercore ISI -- Analyst

Ben Nolan -- Stifel Financial Corp. -- Analyst

Unknown speaker

Magnus Fyhr -- H.C. Wainwright & Co. -- Analyst

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