Press Release Details

Danaos Corporation Reports Third Quarter and Nine Months Results for the Period Ended September 30, 2020

11/05/2020

ATHENS, Greece--(BUSINESS WIRE)-- Danaos Corporation (“Danaos”) (NYSE: DAC), one of the world’s largest independent owners of containerships, today reported unaudited results for the period ended September 30, 2020.

Highlights for the Third Quarter and Nine Months Ended September 30, 2020:

  • Adjusted net income1 of $47.3 million, or $1.91 per share, for the three months ended September 30, 2020 compared to $37.9 million, or $2.46 per share, for the three months ended September 30, 2019, an increase of 24.8%. Adjusted net income1 of $123.1 million, or $4.97 per share, for the nine months ended September 30, 2020 compared to $110.7 million, or $7.23 per share, for the nine months ended September 30, 2019, an increase of 11.2%.
  • Operating revenues of $118.9 million for the three months ended September 30, 2020 compared to $111.8 million for the three months ended September 30, 2019, an increase of 6.4%. Operating revenues of $341.9 million for the nine months ended September 30, 2020 compared to $337.0 million for the nine months ended September 30, 2019, an increase of 1.5%.
  • Adjusted EBITDA 1 of $83.3 million for the three months ended September 30, 2020 compared to $79.3 million for the three months ended September 30, 2019, an increase of 5.0%. Adjusted EBITDA 1 of $235.3 million for the nine months ended September 30, 2020 compared to $232.4 million for the nine months ended September 30, 2019, an increase of 1.2%.
  • Total contracted operating revenues were $1.1 billion as of September 30, 2020, with charters extending through 2028 and remaining average contracted charter duration of 3.5 years, weighted by aggregate contracted charter hire.
  • Charter coverage of 87% for the next 12 months based on current operating revenues and 64% in terms of contracted operating days.
  • On October 12, 2020, we announced the repurchase of 4,339,271 shares of our common stock for an aggregate purchase price of $31.1 million in privately negotiated transactions, including 2,517,013 shares from the Royal Bank of Scotland and 1,822,258 shares from Sphinx Investment Corp. These transactions resulted in the Company's previously announced share repurchase program being terminated.

Three and Nine Months Ended September 30, 2020

Financial Summary - Unaudited

(Expressed in thousands of United States dollars, except per share amounts)

 

 

Three months ended

 

Three months ended

 

Nine months ended

 

Nine months ended

September 30,

September 30,

September 30,

September 30,

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

Operating revenues

$

118,932

 

$

111,830

 

$

341,952

 

$

337,040

Net income

$

42,786

 

$

33,855

 

$

110,371

 

$

97,436

Adjusted net income1

$

47,303

 

$

37,882

 

$

123,078

 

$

110,706

Earnings per share, diluted

$

1.73

 

$

2.20

 

$

4.45

 

$

6.36

Adjusted earnings per share, diluted1

$

1.91

 

$

2.46

 

$

4.97

 

$

7.23

Diluted weighted average number of shares (in thousands)

 

24,789

 

 

15,373

 

 

24,789

 

 

15,309

Adjusted EBITDA1

$

83,331

 

$

79,328

 

$

235,322

 

$

232,447

Adjusted net income, adjusted earnings per share and adjusted EBITDA are non-GAAP measures. Refer to the reconciliation of net income to adjusted net income and net income to adjusted EBITDA.

Danaos’ CEO Dr. John Coustas commented:

"We are pleased to report improved performance in the Company’s profitability during this quarter. Container trade has staged a remarkable recovery since the end of May, when 11.4% of the vessels in the global fleet stood idle. Time charter rates have increased across all vessel sizes, and the time charter market is at or close to multi-year highs for all vessel sizes. The ability of the liner companies to consistently manage capacity addressed the swift drop in volumes at the onset of the pandemic, which alleviated pressure on our customers' cash flows and stabilized freight rates. All our customers have reported strong profitability which significantly mitigates our counterparty risk.

Volumes have consistently improved, particularly in Transpacific eastbound, intra-Asia and North-South trade lanes, as volumes have recovered faster than expected. Notably, the increase in rates has been most pronounced in smaller vessel types. Danaos has the greatest amount of leverage to this segment of the market as our larger vessels are contracted on multi-year time charters. From that perspective, the short-term chartering market has been quite dynamic.

Although significant market uncertainty remains, particularly as many countries see increasing spread of COVID-19 cases, global GDP has rebounded swiftly, and IMF has recently revised its 2020 GDP estimates upwards. For 2021, the IMF forecasts global GDP growth of 5.2%, which effectively equals growth of 0.6% compared to 2019, or pre-pandemic levels. The recovery has thus far been primarily concentrated in goods rather than services, which has benefited containerized trade.

We continue to execute our strategy and we are well insulated from near-term volatility due to our high charter coverage of 87% in terms of operating revenues and 64% in terms of operating days over the next 12 months. This provides significant visibility into our cash flows during this period. We also have some leverage to the presently strong market through our smaller vessels. We are also cautiously optimistic about the medium-term market outlook. The orderbook is currently in single digits as a percentage of the world fleet for the first time in 20 years. Combined with an anticipated reduction in speeds due to the various environmental initiatives, the supply side outlook is healthy. Tighter supply will help to maintain momentum in the container market or help to bring about a swift recovery if conditions deteriorate.

Consistent with our growth strategy we have agreed to purchase two 9,000 TEU vessels built in 2009 which are both contracted on two year charters with a major liner company. These vessels are expected to be delivered to us between December 2020 and January 2021 and will be funded with a combination of cash and new credit facilities. With these new deliveries our fleet will for the first time exceed the 400,000 TEU mark.

In the meantime, we are generating strong cash flows from our $1.1 billion charter backlog and have a healthy liquidity position. This enabled us to opportunistically repurchase 4,339,271 shares, or 17.5% of the Company’s outstanding shares, for an aggregate price of $31.1 million in privately negotiated transactions practically tripling our $10 million original buyback program. Given the holding nature of the prior owners of these shares, these repurchases increase our per share results and valuation metrics without impacting trading liquidity.

In light of the continued uncertainty about the duration of the coronavirus pandemic and the ensuing economic recovery, we remain focused on maintaining a conservative financial profile and making thoughtful capital allocation decisions that align with our strategy and market expectations and deliver value to our shareholders."

Three months ended September 30, 2020 compared to the three months ended September 30, 2019

During the three months ended September 30, 2020, Danaos had an average of 58.0 containerships compared to 55.0 containerships during the three months ended September 30, 2019. Our fleet utilization was 98.7% in each of the three months ended September 30, 2020 and September 30, 2019.

Our adjusted net income amounted to $47.3 million, or $1.91 per share, for the three months ended September 30, 2020 compared to $37.9 million, or $2.46 per share, for the three months ended September 30, 2019. We have adjusted our net income in the three months ended September 30, 2020 for amortization of non-cash fees and accrued finance fees charge of $4.5 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.

The increase of $9.4 million in adjusted net income for the three months ended September 30, 2020 compared to the three months ended September 30, 2019 is attributable mainly to a $7.1 million increase in operating revenues, a $6.8 million decrease in net finance expenses and a $0.9 million increase in the operating performance of our equity investment in Gemini Shipholdings Corporation (“Gemini”), which were partially offset by a $5.4 million increase in total operating expenses.

On a non-adjusted basis, our net income amounted to $42.8 million, or $1.73 earnings per diluted share, for the three months ended September 30, 2020 compared to net income of $33.9 million, or $2.20 earnings per diluted share, for the three months ended September 30, 2019.

Operating Revenues

Operating revenues increased by 6.4%, or $7.1 million, to $118.9 million in the three months ended September 30, 2020 from $111.8 million in the three months ended September 30, 2019.

Operating revenues for the three months ended September 30, 2020 reflect:

  • a $11.5 million increase in revenues in the three months ended September 30, 2020 compared to the three months ended September 30, 2019 as a result of contractual increases in charter rates of vessels under long-term charters;
  • a $5.5 million increase in revenues in the three months ended September 30, 2020 compared to the three months ended September 30, 2019 due to the acquisition of new vessels;
  • a $5.6 million decrease in revenues in the three months ended September 30, 2020 compared to the three months ended September 30, 2019 due to lower non-cash revenue recognition in accordance with US GAAP;
  • a $5.1 million decrease in revenues in the three months ended September 30, 2020 compared to the three months ended September 30, 2019 as a result of lower re-chartering rates for certain of our vessels. This decrease is partially due to a $3.9 million decrease in revenues due to the re-chartering of four vessels in our fleet that concluded long-term charters over the last twelve months and were re-deployed at the prevailing lower spot rates at the time these vessels were re-chartered; and
  • a $0.8 million increase in revenues due to higher fleet utilization of our vessels in the three months ended September 30, 2020 compared to the three months ended September 30, 2019.

Vessel Operating Expenses
Vessel operating expenses increased by $2.8 million to $27.7 million in the three months ended September 30, 2020 from $24.9 million in the three months ended September 30, 2019, primarily as a result of the increase in the average number of vessels in our fleet and an overall increase in the average daily operating cost to $5,467 per vessel per day for vessels on time charter for the three months ended September 30, 2020 compared to $5,298 per vessel per day for the three months ended September 30, 2019. Management believes that our daily operating cost are among the most competitive in the industry.

Depreciation & Amortization
Depreciation & Amortization includes Depreciation and Amortization of Deferred Dry-docking and Special Survey Costs.

Depreciation
Depreciation expense increased by 6.2%, or $1.5 million, to $25.8 million in the three months ended September 30, 2020 from $24.3 million in the three months ended September 30, 2019 mainly due to the installation of scrubbers on nine of our vessels and the acquisition of the vessels Niledutch Lion, Phoebe and SM Charleston in the nine months ended September 30, 2020.

Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs increased by $0.9 million to $3.2 million in the three months ended September 30, 2020 from $2.3 million in the three months ended September 30, 2019.

General and Administrative Expenses
General and administrative expenses decreased by $0.4 million to $6.0 million in the three months ended September 30, 2020, from $6.4 million in the three months ended September 30, 2019. The decrease was mainly due to decreased non-cash recognition of share-based compensation.

Other Operating Expenses
Other Operating Expenses include Voyage Expenses.

Voyage Expenses
Voyage expenses increased by $0.8 million to $3.6 million in the three months ended September 30, 2020 from $2.8 million in the three months ended September 30, 2019 primarily as a result of the increase in the average number of vessels in our fleet.

Interest Expense and Interest Income
Interest expense decreased by 34.6%, or $6.3 million, to $11.9 million in the three months ended September 30, 2020 from $18.2 million in the three months ended September 30, 2019. The decrease in interest expense is attributable to:

  • a $6.8 million decrease in interest expense due to a decrease in debt service cost of approximately 2.3% and a $84.6 million decrease in our average debt (including leaseback obligations), to $1,518.5 million in the three months ended September 30, 2020, compared to $1,603.1 million in the three months ended September 30, 2019; and
  • a $0.5 million increase in the amortization of deferred finance costs and debt discount related to our 2018 debt refinancing.

As of September 30, 2020, our outstanding bank debt, gross of deferred finance costs, was $1,376.2 million and our leaseback obligation was $129.4 million compared to bank debt of $1,450.0 million and our leaseback obligation of $141.4 million as of September 30, 2019.

Interest income increased to $1.7 million in the three months ended September 30, 2020 compared to $1.6 million in the three months ended September 30, 2019.

Other finance costs, net
Other finance costs, net remained stable at $0.3 million in each of the three months ended September 30, 2020 and September 30, 2019.

Equity income on investments
Equity income on investments increased by $0.9 million to $1.5 million of income on investments in the three months ended September 30, 2020 compared to $0.6 million in the three months ended September 30, 2019 due to the improved operating performance of Gemini, in which the Company has a 49% shareholding interest.

Loss on derivatives
Amortization of deferred realized losses on interest rate swaps remained stable at $0.9 million in each of the three months ended September 30, 2020 and September 30, 2019.

Other income, net
Other income, net was $0.1 million in the three months ended September 30, 2020 compared to nil in the three months ended September 30, 2019.

Adjusted EBITDA
Adjusted EBITDA increased by 5.0%, or $4.0 million, to $83.3 million in the three months ended September 30, 2020 from $79.3 million in the three months ended September 30, 2019. As outlined above, the increase is mainly attributable to a $7.1 million increase in operating revenues and a $0.9 million increase in the operating performance of our equity investees, which were partially offset by a $4.0 million increase in operating expenses. Adjusted EBITDA for the three months ended September 30, 2020 is adjusted for stock based compensation of $0.3 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.

Nine months ended September 30, 2020 compared to the nine months ended September 30, 2019

During the nine months ended September 30, 2020, Danaos had an average of 56.9 containerships compared to 55.0 containerships during the nine months ended September 30, 2019. Our fleet utilization for the nine months ended September 30, 2020 was 95.8% compared to 98.8% for the nine months ended September 30, 2019. Adjusted fleet utilization, excluding the effect of 188 days of incremental off-hire due to shipyard delays related to the COVID-19 pandemic, was 97.0% in the nine months ended September 30, 2020.

Our adjusted net income amounted to $123.1 million, or $4.97 per share, for the nine months ended September 30, 2020 compared to $110.7 million, or $7.23 per share, for the nine months ended September 30, 2019. We have adjusted our net income in the nine months ended September 30, 2020 for amortization of non-cash fees and accrued finance fees charge of $12.7 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.

The increase of $12.4 million in adjusted net income for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 is attributable mainly to a $13.1 million decrease in net finance expenses, a $4.9 million increase in operating revenues and a $4.2 million increase in the operating performance of our equity investment in Gemini, which were partially offset by a $9.8 million increase in total operating expenses.

On a non-adjusted basis, our net income amounted to $110.4 million, or $4.45 earnings per diluted share, for the nine months ended September 30, 2020 compared to net income of $97.4 million, or $6.36 earnings per diluted share, for the nine months ended September 30, 2019.

Operating Revenues
Operating revenues increased by 1.5%, or $4.9 million, to $341.9 million in the nine months ended September 30, 2020 from $337.0 million in the nine months ended September 30, 2019.

Operating revenues for the nine months ended September 30, 2020 reflect:

  • a $26.2 million increase in revenues in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 as a result of contractual increases in charter rates of vessels under long-term charters;
  • a $10.0 million increase in revenues in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 due to the acquisition of new vessels;
  • a $6.2 million decrease in revenues due to lower fleet utilization of our vessels in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 mainly due to the scheduled installation of scrubbers and dry-dockings of our vessels, of which $3.2 million relates to incremental delays in the Chinese shipyards where these activities were being performed due to the COVID-19 pandemic;
  • a $9.3 million decrease in revenues in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 as a result of lower re-chartering rates for certain of our vessels. This decrease is due to a $12.5 million decrease in revenues due to the re-chartering of six vessels in our fleet that concluded long-term charters over the last twelve months and were re-deployed at the prevailing lower spot rates at the time these vessels were re-chartered, partially offset by a $3.2 million improvement from the re-chartering of other vessels in the fleet; and
  • a $15.8 million decrease in revenues in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 due to lower non-cash revenue recognition in accordance with US GAAP.

Vessel Operating Expenses
Vessel operating expenses increased by $4.2 million to $82.2 million in the nine months ended September 30, 2020 from $78.0 million in the nine months ended September 30, 2019, primarily as a result of the increase in the average number of vessels in our fleet, partially offset by an overall decrease in the average daily operating cost to $5,592 per vessel per day for vessels on time charter for the nine months ended September 30, 2020 compared to $5,605 per vessel per day for the nine months ended September 30, 2019. Management believes that our daily operating cost are among the most competitive in the industry.

Depreciation & Amortization
Depreciation & Amortization includes Depreciation and Amortization of Deferred Dry-docking and Special Survey Costs.

Depreciation
Depreciation expense increased by 4.9%, or $3.5 million, to $75.6 million in the nine months ended September 30, 2020 from $72.1 million in the nine months ended September 30, 2019 mainly due to the installation of scrubbers on nine of our vessels and the acquisition of the vessels Niledutch Lion, Phoebe and SM Charleston in the nine months ended September 30, 2020.

Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs increased by $1.9 million to $8.4 million in the nine months ended September 30, 2020 from $6.5 million in the nine months ended September 30, 2019.

General and Administrative Expenses
General and administrative expenses decreased by $1.9 million to $17.9 million in the nine months ended September 30, 2020, from $19.8 million in the nine months ended September 30, 2019. The decrease was mainly due to decreased non-cash recognition of share-based compensation.

Other Operating Expenses
Other Operating Expenses include Voyage Expenses.

Voyage Expenses
Voyage expenses increased by $2.1 million to $10.9 million in the nine months ended September 30, 2020 from $8.8 million in the nine months ended September 30, 2019 primarily as a result of the increase in the average number of vessels in our fleet.

Interest Expense and Interest Income
Interest expense decreased by 23.7%, or $13.0 million, to $41.9 million in the nine months ended September 30, 2020 from $54.9 million in the nine months ended September 30, 2019. The decrease in interest expense is attributable to:

  • a $12.5 million decrease in interest expense due to a decrease in debt service cost by approximately 1.3% and a $97.3 million decrease in our average debt (including leaseback obligations), to $1,532.5 million in the nine months ended September 30, 2020, compared to $1,629.8 million in the nine months ended September 30, 2019; and
  • a $0.5 million decrease in the amortization of deferred finance costs and debt discount related to our 2018 debt refinancing.

As of September 30, 2020, our outstanding bank debt, gross of deferred finance costs, was $1,376.2 million and our leaseback obligation was $129.4 million compared to bank debt of $1,450.0 million and our leaseback obligation of $141.4 million as of September 30, 2019.

Interest income increased by $0.2 million to $5.0 million in the nine months ended September 30, 2020 compared to $4.8 million in the nine months ended September 30, 2019.

Other finance costs, net
Other finance costs, net decreased by $0.4 million to $2.0 million in the nine months ended September 30, 2020 compared to $2.4 million in the nine months ended September 30, 2019 mainly due to the decrease in finance costs related to the leaseback obligations, partially offset by lease termination fees in the nine months ended September 30, 2020.

Equity income on investments
Equity income on investments increased by $4.2 million to $4.7 million of income on investments in the nine months ended September 30, 2020 compared to $0.5 million in the nine months ended September 30, 2019 due to the improved operating performance of Gemini, in which the Company has a 49% shareholding interest.

Loss on derivatives
Amortization of deferred realized losses on interest rate swaps remained stable at $2.7 million in each of the nine months ended September 30, 2020 and September 30, 2019.

Other income, net
Other income, net was $0.3 million in the nine months ended September 30, 2020 compared to $0.4 million in income in the nine months ended September 30, 2019.

Adjusted EBITDA
Adjusted EBITDA increased by 1.2%, or $2.9 million, to $235.3 million in the nine months ended September 30, 2020 from $232.4 million in the nine months ended September 30, 2019. As outlined above, the increase is mainly attributable to a $4.9 million increase in operating revenues, a $4.2 million increase in the operating performance of our equity investees and a $0.4 million decrease in other finance expenses, which were partially offset by a $6.6 million increase in operating expenses. Adjusted EBITDA for the nine months ended September 30, 2020 is adjusted for stock based compensation of $0.9 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.

Recent Developments
On October 12, 2020, we announced the repurchase of 4,339,271 shares of our common stock for an aggregate purchase price of $31.1 million in privately negotiated transactions, including 2,517,013 shares from the Royal Bank of Scotland and 1,822,258 shares from Sphinx Investment Corp. These transactions resulted in the Company's previously announced share repurchase program being terminated.

On October 16, 2020, we entered into agreements to acquire two 9,000 TEU container vessels built in 2009 for a gross aggregate purchase price of $62.0 million. These vessels are expected to be delivered to us by the end of January 2021.

Conference Call and Webcast
On Friday, November 6, 2020 at 9:00 A.M. ET, the Company's management will host a conference call to discuss the results.

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 844 802 2437 (US Toll Free Dial In), 0800 279 9489 (UK Toll Free Dial In) or +44 (0) 2075 441 375 (Standard International Dial In). Please indicate to the operator that you wish to join the Danaos Corporation earnings call.

A telephonic replay of the conference call will be available until November 13, 2020 by dialing 1 877 344 7529 (US Toll Free Dial In) or 1-412-317-0088 (Standard International Dial In) and using 10149664# as the access code.

Audio Webcast
There will also be a live and then archived webcast of the conference call on the Danaos website (www.danaos.com). Participants of the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

Slide Presentation
A slide presentation regarding the Company and the containership industry will also be available on the Danaos website (www.danaos.com).

About Danaos Corporation
Danaos Corporation is one of the largest independent owners of modern, large-size containerships. Our current fleet of 63 containerships aggregating 385,769 TEUs, including five vessels owned by Gemini Shipholdings Corporation, a joint venture, ranks Danaos among the largest containership charter owners in the world based on total TEU capacity. Our fleet is chartered to many of the world's largest liner companies on fixed-rate charters. Our long track record of success is predicated on our efficient and rigorous operational standards and environmental controls. Danaos Corporation's shares trade on the New York Stock Exchange under the symbol "DAC".

Forward-Looking Statements
Matters discussed in this release may constitute forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements reflect our current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The forward-looking statements in this release are based upon various assumptions. Although Danaos Corporation believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, Danaos Corporation cannot assure you that it will achieve or accomplish these expectations, beliefs or projections. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the impact of the COVID-19 pandemic and efforts throughout the world to contain its spread, including effects on global economic activity, demand for seaborne transportation of containerized cargo, the ability and willingness of charterers to perform their obligations to us, charter rates for containerships, shipyards performing scrubber installations, drydocking and repairs, changing vessel crews and availability of financing; the effects of the 2018 refinancing transactions; Danaos’ ability to achieve the expected benefits of the refinancing and comply with the terms of its new credit facilities and other agreements entered into in connection with the 2018 refinancing; the strength of world economies and currencies, general market conditions, including changes in charter hire rates and vessel values, charter counterparty performance, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled dry-docking, changes in Danaos Corporation's operating expenses, including bunker prices, dry-docking and insurance costs, ability to obtain financing and comply with covenants in our financing arrangements, actions taken by regulatory authorities, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists.

Risks and uncertainties are further described in reports filed by Danaos Corporation with the U.S. Securities and Exchange Commission.

Visit our website at www.danaos.com

Appendix

Fleet Utilization

Danaos had 60 unscheduled off-hire days in the three months ended September 30, 2020. The following table summarizes vessel utilization and the impact of the off-hire days on the Company’s revenue.

Vessel Utilization (No. of Days)

First Quarter

Second Quarter

Third Quarter

 

2020

 

 

2020

 

 

2020

 

Total

Ownership Days

 

5,073

 

 

5,193

 

 

 

5,336

 

 

15,602

 

Less Off-hire Days:

Scheduled Off-hire Days

 

(336

)

 

(60

)

 

(10

)

 

(406

)

Other Off-hire Days

 

(104

)

 

(92

)

 

(60

)

 

(256

)

Operating Days

 

4,633

 

 

5,041

 

 

5,266

 

 

14,940

 

Vessel Utilization

 

91.3

%

 

97.1

%

 

98.7

%

 

95.8

%

 

Operating Revenues (in '000s of US Dollars)

$

106,196

 

$

116,824

 

$

118,932

 

$

341,952

 

Average Gross Daily Charter Rate

$

22,922

 

$

23,175

 

 

$

22,585

 

$

22,888

 

 
 

Vessel Utilization (No. of Days)

First Quarter

Second Quarter

Third Quarter

 

2019

 

 

2019

 

 

2019

 

Total

Ownership Days

 

4,950

 

 

5,005

 

 

 

5,060

 

 

15,015

 

Less Off-hire Days:

Scheduled Off-hire Days

 

-

 

 

(22

)

 

(41

)

 

(63

)

Other Off-hire Days

 

(90

)

 

(10

)

 

(24

)

 

(124

)

Operating Days

 

4,860

 

 

4,973

 

 

4,995

 

 

14,828

 

Vessel Utilization

 

98.2

%

 

99.4

%

 

98.7

%

 

98.8

%

 

Operating Revenues (in '000s of US Dollars)

$

112,891

 

$

112,319

 

$

111,830

 

$

337,040

 

Average Gross Daily Charter Rate

$

23,229

 

$

22,586

 

 

$

22,388

 

$

22,730

 

Fleet List

The following table describes in detail our fleet deployment profile as of November 5, 2020:

Vessel Name

Vessel Size

(TEU)

 

Year Built

 

Expiration of Charter(1)

Containerships

 

 

 

 

 

 

 

 

 

 

 

Hyundai Ambition (ex MSC Ambition)

13,100

 

2012

 

June 2024

Hyundai Speed (ex Maersk Exeter)

13,100

 

2012

 

June 2024

Hyundai Smart (ex Maersk Enping)

13,100

 

2012

 

May 2024

Hyundai Respect

13,100

 

2012

 

March 2024

Hyundai Honour

13,100

 

2012

 

February 2024

Express Rome

10,100

 

2011

 

February 2022

Express Berlin

10,100

 

2011

 

April 2022

Express Athens

10,100

 

2011

 

February 2022

Le Havre

9,580

 

2006

 

April 2023

Pusan C

9,580

 

2006

 

March 2023

Niledutch Lion

8,626

 

2008

 

February 2022

SM Charleston

8,533

 

2005

 

December 2021

CMA CGM Melisande

8,530

 

2012

 

May 2024

CMA CGM Attila

8,530

 

2011

 

October 2023

CMA CGM Tancredi

8,530

 

2011

 

November 2023

CMA CGM Bianca

8,530

 

2011

 

January 2024

CMA CGM Samson

8,530

 

2011

 

March 2024

America

8,468

 

2004

 

February 2023

Europe

8,468

 

2004

 

March 2023

Phoebe

8,463

 

2005

 

April 2022

CMA CGM Moliere

6,500

 

2009

 

February 2022

CMA CGM Musset

6,500

 

2010

 

August 2022

CMA CGM Nerval

6,500

 

2010

 

October 2022

CMA CGM Rabelais

6,500

 

2010

 

December 2022

CMA CGM Racine

6,500

 

2010

 

January 2023

YM Mandate

6,500

 

2010

 

January 2028

YM Maturity

6,500

 

2010

 

April 2028

Performance

6,402

 

2002

 

December 2020

Dimitra C

6,402

 

2002

 

January 2023

YM Seattle

4,253

 

2007

 

December 2020

YM Vancouver

4,253

 

2007

 

November 2020

Derby D

4,253

 

2004

 

November 2020

ANL Tongala

4,253

 

2004

 

November 2020

Rio Grande (ex ZIM Rio Grande)

4,253

 

2008

 

November 2020

ZIM Sao Paolo

4,253

 

2008

 

December 2020

ZIM Kingston

4,253

 

2008

 

February 2021

ZIM Monaco

4,253

 

2009

 

February 2021

ZIM Dalian

4,253

 

2009

 

February 2021

ZIM Luanda

4,253

 

2009

 

May 2021

Dimitris C

3,430

 

2001

 

December 2020

Express Black Sea

3,400

 

2011

 

December 2020

Express Spain

3,400

 

2011

 

November 2020

Express Argentina

3,400

 

2010

 

November 2020

Express Brazil

3,400

 

2010

 

September 2021

Express France

3,400

 

2010

 

October 2021

Singapore

3,314

 

2004

 

October 2021

Colombo

3,314

 

2004

 

November 2020

Zebra (ex MSC Zebra)

2,602

 

2001

 

November 2020

Amalia C

2,452

 

1998

 

May 2021

Danae C

2,524

 

2001

 

November 2020

Advance

2,200

 

1997

 

November 2020

Future

2,200

 

1997

 

November 2020

Sprinter

2,200

 

1997

 

November 2020

Stride

2,200

 

1997

 

November 2020

Progress C

2,200

 

1998

 

November 2020

Bridge

2,200

 

1998

 

February 2021

Highway

2,200

 

1998

 

March 2021

Vladivostok

2,200

 

1997

 

November 2020

 

 

 

 

 

 

Belita ľ2)

8,533

 

2006

 

September 2021

Catherine C (2)

6,422

 

2001

 

January 2023

Leo C (2)

6,422

 

2002

 

August 2022

Suez Canal(2)

5,610

 

2002

 

December 2020

Genoaľ2)

5,544

 

2002

 

September 2021

 

 

 

 

 

 

(1)

Earliest date charters could expire. Some charters include options to extend their terms.

(2)

Vessels acquired by Gemini Shipholdings Corporation, in which Danaos holds a 49% equity interest.

DANAOS CORPORATION

Condensed Consolidated Statements of Income - Unaudited

(Expressed in thousands of United States dollars, except per share amounts)

 

 

Three months ended

 

Three months ended

 

Nine months ended

 

Nine months ended

September 30,

September 30,

September 30,

September 30,

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

 

 

 

 

 

 

 

 

OPERATING REVENUES

$

118,932

 

 

$

111,830

 

 

$

341,952

 

 

$

337,040

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

Vessel operating expenses

 

(27,662

)

 

 

(24,858

)

 

 

(82,232

)

 

 

(78,035

)

Depreciation & amortization

 

(28,939

)

 

 

(26,607

)

 

 

(84,029

)

 

 

(78,666

)

General & administrative

 

(6,048

)

 

 

(6,422

)

 

 

(17,901

)

 

 

(19,783

)

Other operating expenses

 

(3,552

)

 

 

(2,792

)

 

 

(10,887

)

 

 

(8,794

)

Income From Operations

 

52,731

 

 

 

51,151

 

 

 

146,903

 

 

 

151,762

 

 

 

 

 

 

 

 

 

OTHER INCOME/(EXPENSES)

 

 

 

 

 

 

 

Interest income

 

1,650

 

 

 

1,586

 

 

 

4,952

 

 

 

4,751

 

Interest expense

 

(11,907

)

 

(18,216

)

 

(41,865

)

 

(54,903

)

Other finance expenses

 

(330

)

 

(308

)

 

(1,990

)

 

(2,402

)

Equity income on investments

 

1,464

 

 

 

560

 

 

 

4,729

 

 

 

508

 

Other income/(loss), net

 

91

 

 

 

(5

)

 

 

361

 

 

 

429

 

Realized loss on derivatives

 

(913

)

 

 

(913

)

 

 

(2,719

)

 

 

(2,709

)

Total Other Expenses, net

 

(9,945

)

 

 

(17,296

)

 

 

(36,532

)

 

 

(54,326

)

 

 

 

 

 

 

 

 

Net Income

$

42,786

 

 

$

33,855

 

 

$

110,371

 

 

$

97,436

 

 

 

 

 

 

 

 

 

EARNINGS PER SHARE

 

 

 

 

 

 

 

Basic earnings per share

$

1.74

 

 

$

2.27

 

 

$

4.49

 

 

$

6.52

 

Diluted earnings per share

$

1.73

 

 

$

2.20

 

 

$

4.45

 

 

$

6.36

 

Basic weighted average number of common shares (in thousands of shares)

 

24,573

 

 

 

14,939

 

 

24,573

 

 

 

14,939

 

Diluted weighted average number of common shares (in thousands of shares)

 

24,789

 

 

 

15,373

 

 

24,789

 

 

 

15,309

 

Non-GAAP Measures1

Reconciliation of Net Income to Adjusted Net Income – Unaudited

 

 

Three months ended

 

Three months ended

Nine months ended

Nine months ended

September 30,

September 30,

September 30,

September 30,

 

2020

 

2019

2020

2019

Net income

$

42,786

 

$

33,855

$

110,371

$

97,436

Amortization of financing fees, debt discount & finance fees accrued

 

4,517

 

 

4,027

 

12,707

 

13,270

Adjusted Net Income

$

47,303

 

$

37,882

$

123,078

$

110,706

Adjusted Earnings Per Share, diluted

$

1.91

 

$

2.46

$

4.97

$

7.23

Diluted weighted average number of shares (in thousands)

 

24,789

 

 

15,373

 

24,789

 

15,309

1 The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures used in managing the business may provide users of this financial information additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain items that impact the overall comparability. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. See the Table above for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three and nine months ended September 30, 2020 and 2019. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP.

DANAOS CORPORATION

Condensed Consolidated Balance Sheets - Unaudited

(Expressed in thousands of United States dollars)

 

 

 

 

As of

 

As of

September 30,

December 31,

 

 

 

 

2020

 

 

 

2019

 

ASSETS

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

Cash and cash equivalents

 

$

106,368

 

 

$

139,170

 

 

Accounts receivable, net

 

 

10,846

 

 

 

7,145

 

 

Other current assets

 

 

45,406

 

 

 

44,071

 

 

 

 

 

162,620

 

 

 

190,386

 

NON-CURRENT ASSETS

 

 

 

 

 

Fixed assets, net

 

 

2,441,815

 

 

 

2,389,874

 

 

Deferred charges, net

 

 

16,427

 

 

 

11,455

 

 

Investments in affiliates

 

 

13,694

 

 

 

8,965

 

 

Other non-current assets

 

 

61,465

 

 

 

82,339

 

 

 

 

 

2,533,401

 

 

 

2,492,633

 

TOTAL ASSETS

 

$

2,696,021

 

 

$

2,683,019

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

Long-term debt, current portion

 

$

126,326

 

 

$

119,673

 

 

Accumulated accrued interest, current portion

 

 

29,679

 

 

 

34,137

 

 

Long-term leaseback obligations, current portion

 

 

24,166

 

 

 

16,342

 

 

Accounts payable, accrued liabilities & other current liabilities

 

 

37,302

 

 

 

52,928

 

 

 

 

 

217,473

 

 

 

223,080

 

LONG-TERM LIABILITIES

 

 

 

 

 

Long-term debt, net

 

 

1,222,971

 

 

 

1,270,663

 

 

Accumulated accrued interest, net of current portion

 

 

132,319

 

 

 

156,583

 

 

Long-term leaseback obligations, net

 

 

101,522

 

 

 

121,872

 

 

Other long-term liabilities

 

 

22,024

 

 

 

29,131

 

 

 

 

 

1,478,836

 

 

 

1,578,249

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

Common stock

 

 

248

 

 

 

248

 

 

Additional paid-in capital

 

 

786,171

 

 

 

785,274

 

 

Accumulated other comprehensive loss

 

 

(110,180

)

 

 

(116,934

)

 

Retained earnings

 

 

323,473

 

 

 

213,102

 

 

 

 

 

999,712

 

 

 

881,690

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

2,696,021

 

 

$

2,683,019

 

DANAOS CORPORATION

Condensed Consolidated Statements of Cash Flows - Unaudited

(Expressed in thousands of United States dollars)

 

 

 

Three months ended

 

Three months ended

 

Nine months ended

 

Nine months ended

September 30,

September 30,

September 30,

September 30,

 

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

Operating Activities:

 

 

 

 

 

 

 

 

Net income

$

42,786

 

 

$

33,855

 

 

$

110,371

 

 

$

97,436

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

25,765

 

 

 

24,336

 

 

 

75,604

 

 

 

72,141

 

 

Amortization of deferred drydocking & special survey costs, finance cost, debt discount and other finance fees accrued

 

7,691

 

 

 

6,298

 

 

 

21,662

 

 

 

19,795

 

 

PIK interest

 

686

 

 

 

850

 

 

 

2,236

 

 

 

2,545

 

 

Payments for drydocking/special survey

 

(17

)

 

 

(3,524

)

 

 

(13,397

)

 

 

(5,214

)

 

Amortization of deferred realized losses on cash flow interest rate swaps

 

913

 

 

 

913

 

 

 

2,719

 

 

 

2,709

 

 

Equity income on investments

 

(1,464

)

 

 

(560

)

 

 

(4,729

)

 

 

(508

)

 

Stock based compensation

 

301

 

 

 

1,195

 

 

 

897

 

 

 

3,060

 

 

Accounts receivable

 

1,706

 

 

 

(141

)

 

 

(3,701

)

 

 

1,588

 

 

Other assets, current and non-current

 

3,031

 

 

 

(2,923

)

 

 

2,342

 

 

 

(13,996

)

 

Accounts payable and accrued liabilities

 

(8,323

)

 

 

(379

)

 

 

614

 

 

 

(563

)

 

Other liabilities, current and long-term

 

(3,911

)

 

 

(3,731

)

 

 

(8,586

)

 

 

(11,348

)

Net Cash provided by Operating Activities

 

69,164

 

 

 

56,189

 

 

 

186,032

 

 

 

167,645

 

 

 

 

 

 

 

 

 

 

Investing Activities:

 

 

 

 

 

 

 

 

Vessel additions and advances

 

(7,403

)

 

 

(4,124

)

 

 

(106,149

)

 

 

(14,762

)

 

Investments

 

-

 

 

 

-

 

 

 

(75

)

 

 

-

 

Net Cash used in Investing Activities

 

(7,403

)

 

 

(4,124

)

 

 

(106,224

)

 

 

(14,762

)

 

 

 

 

 

 

 

 

 

Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from sale-leaseback of vessels

 

-

 

 

 

-

 

 

 

139,080

 

 

 

146,523

 

 

Proceeds from long-term debt

 

13,300

 

 

 

-

 

 

 

36,700

 

 

 

-

 

 

Payments of leaseback obligations

 

(5,877

)

 

 

(3,063

)

 

 

(147,942

)

 

 

(5,149

)

 

Debt repayment

 

(34,573

)

 

 

(25,578

)

 

 

(99,749

)

 

 

(231,389

)

 

Payments of accumulated accrued interest

 

(5,284

)

 

 

(8,979

)

 

 

(20,786

)

 

 

(26,846

)

 

Finance costs

 

(7,914

)

 

 

(10,425

)

 

 

(19,913

)

 

 

(30,474

)

Net Cash used in Financing Activities

 

(40,348

)

 

 

(48,045

)

 

 

(112,610

)

 

 

(147,335

)

Net Increase/(Decrease) in cash and cash equivalents

 

21,413

 

 

 

4,020

 

 

 

(32,802

)

 

 

5,548

 

Cash and cash equivalents, beginning of period

 

84,955

 

 

 

78,803

 

 

 

139,170

 

 

 

77,275

 

Cash and cash equivalents, end of period

$

106,368

 

 

$

82,823

 

 

$

106,368

 

 

$

82,823

 

DANAOS CORPORATION

Reconciliation of Net Income to Adjusted EBITDA - Unaudited

(Expressed in thousands of United States dollars)

 

 

Three months ended

 

Three months ended

 

Nine months ended

 

Nine months ended

September 30,

September 30,

September 30,

September 30,

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

Net income

$

42,786

 

 

$

33,855

 

 

$

110,371

 

 

$

97,436

 

Depreciation

 

25,765

 

 

 

24,336

 

 

 

75,604

 

 

 

72,141

 

Amortization of deferred drydocking & special survey costs

 

3,174

 

 

 

2,271

 

 

 

8,425

 

 

 

6,525

 

Amortization of deferred finance costs, debt discount and other finance fees accrued

 

4,517

 

 

 

4,027

 

 

 

12,707

 

 

 

13,270

 

Amortization of deferred realized losses on interest rate swaps

 

913

 

 

 

913

 

 

 

2,719

 

 

 

2,709

 

Interest income

 

(1,650

)

 

 

(1,586

)

 

 

(4,952

)

 

 

(4,751

)

Interest expense

 

7,525

 

 

 

14,317

 

 

 

29,551

 

 

 

42,057

 

Stock based compensation

 

301

 

 

 

1,195

 

 

 

897

 

 

 

3,060

 

Adjusted EBITDA(1)

$

83,331

 

 

$

79,328

 

 

$

235,322

 

 

$

232,447

 

1)

Adjusted EBITDA represents net income before interest income and expense, depreciation, amortization of deferred drydocking & special survey costs, amortization of deferred finance costs, debt discount and other finance fees accrued, amortization of deferred realized losses on interest rate swaps and stock based compensation. However, Adjusted EBITDA is not a recognized measurement under U.S. generally accepted accounting principles, or “GAAP.” We believe that the presentation of Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. We also believe that Adjusted EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry because the calculation of Adjusted EBITDA generally eliminates the effects of financings, income taxes and the accounting effects of capital expenditures and acquisitions, items which may vary for different companies for reasons unrelated to overall operating performance. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

 

Note: Items to consider for comparability include gains and charges. Gains positively impacting net income are reflected as deductions to net income. Charges negatively impacting net income are reflected as increases to net income.

 

The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures used in managing the business may provide users of these financial information additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain items that impact the overall comparability. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. See the Tables above for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three and nine months ended September 30, 2020 and 2019. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP.

 

Evangelos Chatzis
Chief Financial Officer
Danaos Corporation
Athens, Greece
Tel.: +30 210 419 6480
E-Mail: cfo@danaos.com

Iraklis Prokopakis
Senior Vice President and Chief Operating Officer
Danaos Corporation
Athens, Greece
Tel.: +30 210 419 6400
E-Mail: coo@danaos.com

Investor Relations and Financial Media
Rose & Company
New YorkTel. 212-359-2228
E-Mail: danaos@rosecoglobal.com

Source: Danaos Corporation

Connect

Corporate

C/O Danaos Shipping Co Ltd.
3, Christaki Kompou Street Peters House 3011, Limassol Cyprus
Tel:  +30 210 419 6480
+30 213 017 6480
Fax: +30 210 419 6489

Athens Branch
14, Akti Kondyli, Piraeus Athens, 18545 Greece