Danaos Corporation (“Danaos”) (NYSE: DAC), one of the world’s
largest independent owners of containerships, today reported
unaudited results for the period ended June 30, 2022.
Highlights for the Second Quarter and Half Year Ended June
30, 2022:
- Adjusted net income1 of $157.1 million, or $7.59 per share,
for the three months ended June 30, 2022 compared to $68.9 million,
or $3.34 per share, for the three months ended June 30, 2021, an
increase of 128.0%. Adjusted net income1 of $392.4 million, or
$18.95 per share, for the six months ended June 30, 2022 compared
to $126.9 million, or $6.17 per share, for the six months ended
June 30, 2021, an increase of 209.2%.
- Liquidity in cash and marketable securities was $588.2
million as of June 30, 2022.
- Operating revenues of $250.9 million for the three months
ended June 30, 2022 compared to $146.4 million for the three months
ended June 30, 2021, an increase of 71.4%. Operating revenues of
$480.8 million for the six months ended June 30, 2022 compared to
$278.5 million for the six months ended June 30, 2021, an increase
of 72.6%.
- Adjusted EBITDA1 of $192.1 million for the three
months ended June 30, 2022 compared to $103.7 million for the three
months ended June 30, 2021, an increase of 85.2%. Adjusted
EBITDA1 of $461.6 million for the six months ended June 30,
2022 compared to $200.0 million for the six months ended June 30,
2021, an increase of 130.8%.
- Total contracted cash operating revenues were $2.3 billion
as of June 30, 2022 and remaining average contracted charter
duration was 3.6 years, weighted by aggregate contracted charter
hire.
- Contracted operating days charter coverage currently stands
at 99.3% for 2022 and 79.6% for 2023 while for the next 12 months,
charter coverage stands at 91.7%.
- During the three months ended June 30, 2022, we made early
prepayment of $434.1 million of debt and lease indebtedness and
realized a $22.9 million gain associated with this debt
extinguishment. As a result, as of June 30, 2022, Net Debt was
$679.7 million, Net Debt / LTM Adjusted EBITDA was 0.9x, while 15
of the Company’s vessels are debt-free currently.
- As of the end of July 2022, we had repurchased 409,200
shares of our common stock in the open market for $25.1 million,
under our share repurchase program of up to $100 million announced
in June 2022.
- Danaos has declared a dividend of $0.75 per share of common
stock for the second quarter of 2022, which is payable on August
29, 2022 to stockholders of record as of August 17, 2022.
Three and Six Months Ended
June 30, 2022
Financial Summary –
Unaudited
(Expressed in thousands of United
States dollars, except per share amounts)
Three months
Three months
Six months
Six months
ended June 30,
ended June 30,
ended June 30,
ended June 30,
2022
2021
2022
2021
Operating revenues
$250,923
$146,434
$480,824
$278,552
Net income
$8,224
$372,837
$339,689
$669,617
Adjusted net income1
$157,110
$68,860
$392,407
$126,871
Earnings per share, diluted
$0.40
$18.10
$16.40
$32.57
Adjusted earnings per share, diluted1
$7.59
$3.34
$18.95
$6.17
Diluted weighted average number of shares
(in thousands)
20,708
20,599
20,712
20,557
Adjusted EBITDA1
$192,148
$103,736
$461,632
$200,018
1 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:
“Danaos business model continued to generate strong results in
the second quarter, more than doubling our adjusted net income
compared with a year ago. Given our fixed charter coverage over the
next 12 months, we expect these metrics to improve further. At the
same time, however, we are closely following macroeconomic
conditions and the potential impacts to our industry.
A confluence of factors, including high energy prices,
inflation, and the effects of the war in Ukraine, will likely
result in slowing economic growth and negatively impact trade
volumes. On the other hand, persistent inefficiencies on the shore
side of the supply chain and Covid resurgence in China are keeping
the vessel utilization high with increased waiting times in port.
Additionally, the increase in fuel cost will likely prompt liner
companies to reduce vessel sailing speeds as soon as vessels are
available, however we do not expect this to happen until the 2nd
quarter of 2023 and onwards. Environmental regulations,
particularly the CII compliance, is leading liner companies to
redesign their operating loops with lower speeds to ensure that
they do not breach requirements and to also assure their customers
that they are actively reducing CO2 emissions. These mitigating
factors point to a weakening, rather than a collapse, of the market
that we expect will result in rates much higher than pre-pandemic
levels. For the time being charter rates are holding firm as the
available tonnage is very scarce.
The company is very well positioned with a strong liquidity
position and a balance sheet that can sustain a severe
deterioration of economic conditions. This is reflected in the
upgrades by both S&P and Moody’s to the highest level among
public shipping companies, validating our efforts to create a
leader in our sector.
We are also insulated from rising interest rates as we have
reduced our floating rate debt to a level nearly equal to our cash
and marketable securities. We will continue to use our balance
sheet opportunistically, with a continued focus on state-of-the-art
newbuildings with environmental profiles desired by our liner
customers which also gives us great confidence about the future of
our already ordered six methanol-ready green newbuildings.
We are also continuing to return value to our shareholders
through our dividend and our share buyback program, which we have
used to reduce our number of outstanding shares by approximately
two percent.”
Three months ended June 30, 2022
compared to the three months ended June 30, 2021
During the three months ended June 30, 2022, Danaos had an
average of 71.0 containerships compared to 60.0 containerships
during the three months ended June 30, 2021. Our fleet utilization
for the three months ended June 30, 2022 was 99.9% compared to
99.1% for the three months ended June 30, 2021.
Our adjusted net income amounted to $157.1 million, or $7.59 per
share, for the three months ended June 30, 2022 compared to $68.9
million, or $3.34 per share, for the three months ended June 30,
2021. We have adjusted our net income in the three months ended
June 30, 2022 for the change in fair value of our investment in ZIM
Integrated Shipping Services Ltd. (“ZIM”) of $168.6 million, gain
on debt extinguishment of $22.9 million and a non-cash fees
amortization of $3.2 million. Please refer to the Adjusted Net
Income reconciliation table, which appears later in this earnings
release.
The $88.2 million increase in adjusted net income for the three
months ended June 30, 2022 compared to the three months ended June
30, 2021 is attributable mainly to a $104.5 million increase in
operating revenues and recognition of $13.9 million in dividends
from ZIM (net of withholding taxes), which were partially offset by
a $20.2 million increase in total operating expenses, a $7.8
million increase in net finance expenses and a $2.2 million
decrease in our equity income from our investment in Gemini
Shipholdings Corporation (“Gemini”) following our acquisition and
full consolidation of Gemini since July 1, 2021.
On a non-adjusted basis, our net income amounted to $8.2
million, or $0.40 earnings per diluted share, for the three months
ended June 30, 2022 compared to net income of $372.8 million, or
$18.10 earnings per diluted share, for the three months ended June
30, 2021. Our net income for the three months ended June 30, 2022
includes a total loss on our investment in ZIM of $154.7 million
(net of withholding taxes on dividend) and a gain on debt
extinguishment of $22.9 million.
Operating Revenues
Operating revenues increased by 71.4%, or $104.5 million, to
$250.9 million in the three months ended June 30, 2022 from $146.4
million in the three months ended June 30, 2021.
Operating revenues for the three months ended June 30, 2022
reflect:
- a $62.0 million increase in revenues in the three months ended
June 30, 2022 compared to the three months ended June 30, 2021
mainly as a result of higher charter rates;
- a $23.9 million increase in revenues in the three months ended
June 30, 2022 compared to the three months ended June 30, 2021 due
to the incremental revenue generated by newly acquired
vessels;
- a $2.9 million increase in revenue in the three months ended
June 30, 2022 compared to the three months ended June 30, 2021 due
to higher non-cash revenue recognition in accordance with US GAAP;
and
- a $15.7 million increase in revenues in the three months ended
June 30, 2022 compared to the three months ended June 30, 2021 due
to amortization of assumed time charters.
Vessel Operating Expenses
Vessel operating expenses increased by $7.7 million to $40.6
million in the three months ended June 30, 2022 from $32.9 million
in the three months ended June 30, 2021, primarily as a result of
the increase in the average number of vessels in our fleet and an
increase in the average daily operating cost for vessels on time
charter to $6,463 per vessel per day for the three months ended
June 30, 2022 compared to $6,241 per vessel per day for the three
months ended June 30, 2021. The average daily operating cost
increased mainly due to the COVID-19 related increase in crew
remuneration and increased insurance premiums between the three
months ended June 30, 2022, compared to the three months ended June
30, 2021. Management believes that our daily operating costs remain
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 29.5%, or $7.7 million, to
$33.8 million in the three months ended June 30, 2022 from $26.1
million in the three months ended June 30, 2021 due to recent
acquisitions of 11 vessels.
Amortization of Deferred Dry-docking and Special Survey
Costs
Amortization of deferred dry-docking and special survey costs
increased by $0.7 million to $3.2 million in the three months ended
June 30, 2022 from $2.5 million in the three months ended June 30,
2021.
General and Administrative Expenses
General and administrative expenses remained stable at $7.1
million in each of the three months ended June 30, 2022 and June
30, 2021.
Other Operating Expenses
Other Operating Expenses include Voyage Expenses.
Voyage Expenses
Voyage expenses increased by $4.4 million to $9.4 million in the
three months ended June 30, 2022 from $5.0 million in the three
months ended June 30, 2021 primarily as a result of the increase in
commissions due to the increase in revenue per vessel and the
increase in the average number of vessels in our fleet.
Interest Expense and Interest Income
Interest expense decreased by 11.5%, or $2.1 million, to $16.1
million in the three months ended June 30, 2022 from $18.2 million
in the three months ended June 30, 2021. The decrease in interest
expense is a combined result of:
- a $2.2 million decrease in interest expense due to a decrease
in our average indebtedness by $311.1 million between the two
periods (average indebtedness of $1,154.2 million in the three
months ended June 30, 2022, compared to average indebtedness of
$1,465.3 million in the three months ended June 30, 2021), which
was partially offset by an increase in our debt service cost by
0.44%, mainly as a result of increased Libor rates;
- a $0.7 million decrease in the amortization of deferred finance
costs and debt discount;
- a $0.7 million decrease in interest expense due to capitalized
interest on our vessels under construction in the three months
ended June 30, 2022 compared to none in the three months ended June
30, 2021; and
- a $1.5 million reduction in the recognition through our income
statement of accumulated accrued interest that had been accrued in
2018 in relation to two of our credit facilities that were
refinanced on April 12, 2021. As a result of the refinancing, the
recognition of such accumulated interest has decreased. In May
2022, we fully repaid the facility related to the 2018 accumulated
accrued interest. The remaining accumulated accrued interest of
$26.9 million was recognized in gain on debt extinguishment on the
repayment date.
During the three months ended June 30, 2022, we reduced debt and
lease indebtedness by $467.8 million mainly as a result of $434.1
million of early debt and lease repayments and recognized a $22.9
million gain related to this early debt extinguishment. On the
other hand, our indebtedness increased by $130 million following
consummation of the loan agreement to finance our six 5,466 TEU
vessels that were acquired in 2021.
As of June 30, 2022, our outstanding debt, gross of deferred
finance costs, was $885.1 million, which includes $300 million
aggregate principal amount of our Senior Notes, and our leaseback
obligation was $105.8 million. These balances compare to debt of
$1,165.9 million and a leaseback obligation of $237.2 million,
gross of deferred finance costs, as of June 30, 2021.
Interest income decreased by $9.4 million to $0.1 million in the
three months ended June 30, 2022 compared to $9.5 million in the
three months ended June 30, 2021 mainly as a result of full
collection of accrued interest on ZIM and HMM bonds, which were
redeemed by the issuers thereof, in the year 2021.
Gain/(loss) on investments
The loss on investments of $152.4 million in the three months
ended June 30, 2022 consists of the loss in fair value of our
shareholding interest in ZIM of $168.6 million, which was offset in
part by the dividends recognized on ZIM ordinary shares of $16.2
million. In April 2022, we sold 1,500,000 of these ZIM ordinary
shares resulting in proceeds to us of $85.3 million. Our remaining
shareholding interest of 5,686,950 ordinary shares of ZIM has been
fair valued at $268.6 million as of June 30, 2022, based on the
closing price of ZIM’s ordinary shares on the NYSE on that
date.
Gain on debt extinguishment
The gain on debt extinguishment of $22.9 million in the three
months ended June 30, 2022, which related to our early
extinguishment of debt, decreased compared to $111.6 million in the
three months ended June 30, 2021, which resulted from our debt
refinancing on April 12, 2021.
Equity income on investments
Equity income on investments in Gemini decreased to nil in the
three months ended June 30, 2022 compared to $2.2 million in the
three months ended June 30, 2021 following our acquisition and full
consolidation of Gemini since July 1, 2021.
Other finance expenses
Other finance expenses decreased by $0.3 million to $0.3 million
in the three months ended June 30, 2022 compared to $0.6 million in
the three months ended June 30, 2021.
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
June 30, 2022 and June 30, 2021.
Other income, net
Other income, net was $0.4 million in the three months ended
June 30, 2022 compared to $0.2 million in the three months ended
June 30, 2021.
Income taxes
Income taxes were $2.3 million in the three months ended June
30, 2022, related to the taxes withheld on dividend income earned
on ZIM ordinary shares compared to no income tax in the three
months ended June 30, 2021.
Adjusted EBITDA
Adjusted EBITDA increased by 85.2%, or $88.4 million, to $192.1
million in the three months ended June 30, 2022 from $103.7 million
in the three months ended June 30, 2021. As outlined above, the
increase is mainly attributable to a $88.8 million increase in
operating revenues (net of $15.7 million amortization of assumed
time charters) and recognition of a $13.9 million dividend from ZIM
(net of withholding taxes) in the three months ended June 30, 2022,
which were partially offset by a $12.1 million increase in total
operating expenses and a $2.2 million decrease in our equity income
from our investment in Gemini following our acquisition and full
consolidation of Gemini since July 1, 2021. Adjusted EBITDA for the
three months ended June 30, 2022 is adjusted for a $166.4 million
change in fair value of the investment in ZIM and dividend
withholding taxes, a gain on debt extinguishment of $22.9 million
and stock-based compensation of $0.1 million. Tables reconciling
Adjusted EBITDA to Net Income can be found at the end of this
earnings release.
Six months ended June 30, 2022 compared
to the six months ended June 30, 2021
During the six months ended June 30, 2022, Danaos had an average
of 71.0 containerships compared to 60.0 containerships during the
six months ended June 30, 2021. Our fleet utilization for the six
months ended June 30, 2022 was 98.7% compared to 98.9% for the six
months ended June 30, 2021.
Our adjusted net income amounted to $392.4 million, or $18.95
per share, for the six months ended June 30, 2022 compared to
$126.9 million, or $6.17 per share, for the six months ended June
30, 2021. We have adjusted our net income in the six months ended
June 30, 2022 for the change in fair value of our investment in ZIM
of $69.1 million, gain on debt extinguishment of $22.9 million and
a non-cash fees amortization of $6.6 million. Please refer to the
Adjusted Net Income reconciliation table, which appears later in
this earnings release.
The $265.5 million increase in adjusted net income for the six
months ended June 30, 2022 compared to the six months ended June
30, 2021 is attributable mainly to a $202.3 million increase in
operating revenues and recognition of $123.9 million in dividends
from ZIM (net of withholding taxes), which were partially offset by
a $39.2 million increase in total operating expenses, a $13.6
million increase in net finance expenses, a $4.0 million decrease
in our equity income from our investment in Gemini following our
acquisition and full consolidation of Gemini since July 1, 2021 and
a partial collection of common benefit claim of $3.9 million from
Hanjin Shipping in the six months ended June 30, 2021.
On a non-adjusted basis, our net income amounted to $339.7
million, or $16.40 earnings per diluted share, for the six months
ended June 30, 2022 compared to net income of $669.6 million, or
$32.57 earnings per diluted share, for the six months ended June
30, 2021. Our net income for the six months ended June 30, 2022
includes a total gain on our investment in ZIM of $54.8 million
(net of withholding taxes on dividend) and a gain on debt
extinguishment of $22.9 million.
Operating Revenues
Operating revenues increased by 72.6%, or $202.3 million, to
$480.8 million in the six months ended June 30, 2022 from $278.5
million in the six months ended June 30, 2021.
Operating revenues for the six months ended June 30, 2022
reflect:
- a $110.9 million increase in revenues in the six months ended
June 30, 2022 compared to the six months ended June 30, 2021 mainly
as a result of higher charter rates;
- a $44.7 million increase in revenues in the six months ended
June 30, 2022 compared to the six months ended June 30, 2021 due to
the incremental revenue generated by newly acquired vessels;
- a $14.3 million increase in revenue in the six months ended
June 30, 2022 compared to the six months ended June 30, 2021 due to
higher non-cash revenue recognition in accordance with US GAAP;
and
- a $32.4 million increase in revenues in the six months ended
June 30, 2022 compared to the six months ended June 30, 2021 due to
amortization of assumed time charters.
Vessel Operating Expenses
Vessel operating expenses increased by $15.7 million to $79.7
million in the six months ended June 30, 2022 from $64.0 million in
the six months ended June 30, 2021, primarily as a result of the
increase in the average number of vessels in our fleet and an
increase in the average daily operating cost for vessels on time
charter to $6,385 per vessel per day for the six months ended June
30, 2022 compared to $6,098 per vessel per day for the six months
ended June 30, 2021. The average daily operating cost increased
mainly due to the COVID-19 related increase in crew remuneration
and increased insurance premiums between the six months ended June
30, 2022, compared to the six months ended June 30, 2021.
Management believes that our daily operating costs remain 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 29.3%, or $15.2 million, to
$67.1 million in the six months ended June 30, 2022 from $51.9
million in the six months ended June 30, 2021 due to recent
acquisitions of 11 vessels.
Amortization of Deferred Dry-docking and Special Survey
Costs
Amortization of deferred dry-docking and special survey costs
increased by $0.9 million to $5.9 million in the six months ended
June 30, 2022 from $5.0 million in the six months ended June 30,
2021.
General and Administrative Expenses
General and administrative expenses decreased by $3.5 million to
$14.5 million in the six months ended June 30, 2022, from $18.0
million in the six months ended June 30, 2021. The decrease was
mainly attributable to decreased stock-based compensation.
Other Operating Expenses
Other Operating Expenses include Voyage Expenses.
Voyage Expenses
Voyage expenses increased by $7.4 million to $16.6 million in
the six months ended June 30, 2022 from $9.2 million in the six
months ended June 30, 2021 primarily as a result of the increase in
commissions due to the increase in revenue per vessel and the
increase in the average number of vessels in our fleet.
Interest Expense and Interest Income
Interest expense decreased by 0.3%, or $0.1 million, to $33.2
million in the six months ended June 30, 2022 from $33.3 million in
the six months ended June 30, 2021. The decrease in interest
expense is a combined result of:
- a $4.3 million decrease in interest expense due to a decrease
in our average indebtedness by $284.6 million between the two
periods (average indebtedness of $1,254.9 million in the six months
ended June 30, 2022, compared to average indebtedness of $1,539.5
million in the six months ended June 30, 2021), which was partially
offset by an increase in our debt service cost by 0.31%, mainly as
a result of increased Libor rates;
- a $2.3 million decrease in the amortization of deferred finance
costs and debt discount;
- a $0.7 million decrease in interest expense due to capitalized
interest on our vessels under construction in the six months ended
June 30, 2022 compared to none in the six months ended June 30,
2021; and
- a $7.2 million reduction in the recognition through our income
statement of accumulated accrued interest that had been accrued in
2018 in relation to two of our credit facilities that were
refinanced on April 12, 2021. As a result of the refinancing, the
recognition of such accumulated interest has decreased. In May
2022, we fully repaid the facility related to the 2018 accumulated
accrued interest. The remaining accumulated accrued interest of
$26.9 million was recognized in gain on debt extinguishment on the
repayment date.
During the six months ended June 30, 2022, we reduced debt and
lease indebtedness by $507.6 million mainly as a result of $434.1
million of early debt and lease repayments and recognized a $22.9
million gain related to this early debt extinguishment. On the
other hand, our indebtedness increased by $130 million following
consummation of the loan agreement to finance our six 5,466 TEU
vessels that were acquired in 2021.
As of June 30, 2022, our outstanding bank debt, gross of
deferred finance costs, was $885.1 million, which includes $300
million aggregate principal amount of our Senior Notes, and our
leaseback obligation was $105.8 million. These balances compare to
bank debt of $1,165.9 million and a leaseback obligation of $237.2
million, gross of deferred finance costs, as of June 30, 2021.
Interest income decreased by $11.4 million to $0.1 million in
the six months ended June 30, 2022 compared to $11.5 million in the
six months ended June 30, 2021, mainly as a result of full
collection of accrued interest on ZIM and HMM bonds, which were
redeemed by the issuers thereof, in the year 2021.
Gain/(loss) on investments
The gain on investments of $69.3 million in the six months ended
June 30, 2022 consists of the change in fair value of our
shareholding interest in ZIM of $69.1 million and dividends
recognized on ZIM ordinary shares of $138.4 million. In April 2022,
we sold 1,500,000 of these ZIM ordinary shares resulting in
proceeds to us of $85.3 million. Our remaining shareholding
interest of 5,686,950 ordinary shares of ZIM has been fair valued
at $268.6 million as of June 30, 2022, based on the closing price
of ZIM’s ordinary shares on the NYSE on that date.
Gain on debt extinguishment
The gain on debt extinguishment of $22.9 million in the six
months ended June 30, 2022, which related to our early
extinguishment of debt, decreased compared to $111.6 million in the
six months ended June 30, 2021, which resulted from our debt
refinancing on April 12, 2021.
Equity income on investments
Equity income on investments in Gemini decreased to nil in the
six months ended June 30, 2022 compared to $4.0 million in the six
months ended June 30, 2021 following our acquisition and full
consolidation of Gemini since July 1, 2021.
Other finance expenses
Other finance expenses decreased by $0.1 million to $0.9 million
in the six months ended June 30, 2022 compared to $1.0 million in
the six months ended June 30, 2021.
Loss on derivatives
Amortization of deferred realized losses on interest rate swaps
remained stable at $1.8 million in each of the six months ended
June 30, 2022 and June 30, 2021.
Other income, net
Other income, net was $0.9 million in the six months ended June
30, 2022 compared to $4.1 million in the six months ended June 30,
2021. The decrease was mainly due to the collection from Hanjin
Shipping of $3.9 million as a partial payment of common benefit
claim and interest in the six months ended June 30, 2021.
Income taxes
Income taxes were $14.5 million in the six months ended June 30,
2022, related to the taxes withheld on dividend income earned on
ZIM ordinary shares and compared to no income tax in the six months
ended June 30, 2021.
Adjusted EBITDA
Adjusted EBITDA increased by 130.8%, or $261.6 million, to
$461.6 million in the six months ended June 30, 2022 from $200.0
million in the six months ended June 30, 2021. As outlined above,
the increase is mainly attributable to a $169.9 million increase in
operating revenues (net of $32.4 million amortization of assumed
time charters) and a recognition of a $123.9 million dividend from
ZIM (net of withholding taxes) in the six months ended June 30,
2022, which were partially offset by a $24.3 million increase in
total operating expenses, a $4.0 million decrease in our equity
income from our investment in Gemini following our acquisition and
full consolidation of Gemini since July 1, 2021 and a partial
collection of common benefit claim of $3.9 million from Hanjin
Shipping in the six months ended June 30, 2021. Adjusted EBITDA for
the six months ended June 30, 2022 is adjusted for a $54.6 million
change in fair value of the investment in ZIM and dividend
withholding taxes, a gain on debt extinguishment of $22.9 million
and stock based compensation of $0.2 million. Tables reconciling
Adjusted EBITDA to Net Income can be found at the end of this
earnings release.
Dividend Payment
Danaos has declared a dividend of $0.75 per share of common
stock for the second quarter of 2022, which is payable on August
29, 2022 to stockholders of record as of August 17, 2022.
Recent Developments
As of the end of July 2022, we had repurchased 409,200 shares of
our common stock in the open market for $25.1 million, under our
share repurchase program of up to $100 million announced in June
2022.
Subsequent to June 30, 2022 we terminated, as planned, the
finance lease liability related to our vessels Suez Canal and Kota
Lima and assumed full ownership of these vessels. As a result, 15
of our vessels are currently debt-free.
Conference Call and
Webcast
On Tuesday, August 2, 2022 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 August 9, 2022 by dialing 1 877 344 7529 (US Toll Free Dial
In) or 1-412-317-0088 (Standard International Dial In) and using
2538355# 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 71
containerships aggregating 436,589 TEUs and 6 under construction
containerships aggregating 46,200 TEUs 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 constructing our
contracted newbuilding vessels, performing scrubber installations,
drydocking and repairs, changing vessel crews and availability of
financing, Danaos’ ability to achieve the expected benefits of the
2021 debt refinancing and comply with the terms of its new credit
facilities and other financing agreements; 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, including the conflict in
Ukraine and related sanctions, 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 8 unscheduled off-hire days in the three months ended
June 30, 2022. 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
2022
2022
Total
Ownership Days
6,390
6,461
12,851
Less Off-hire Days:
Scheduled Off-hire Days
(148)
-
(148)
Other Off-hire Days
(16)
(8)
(24)
Operating Days
6,226
6,453
12,679
Vessel Utilization
97.4%
99.9%
98.7%
Operating Revenues (in '000s of US
Dollars)
$229,901
$250,923
$480,824
Average Gross Daily Charter
Rate
$36,926
$38,885
$37,923
Vessel Utilization (No. of
Days)
First
Quarter
Second
Quarter
2021
2021
Total
Ownership Days
5,400
5,460
10,860
Less Off-hire Days:
Scheduled Off-hire Days
(22)
(33)
(55)
Other Off-hire Days
(51)
(15)
(66)
Operating Days
5,327
5,412
10,739
Vessel Utilization
98.6%
99.1%
98.9%
Operating Revenues (in '000s of US
Dollars)
$132,118
$146,434
$278,552
Average Gross Daily Charter
Rate
$24,802
$27,057
$25,938
Fleet List
The following table describes in detail our fleet deployment
profile as of July 31, 2022:
Vessel Name
Vessel Size
(TEU)
Year Built
Expiration of
Charter(1)
Hyundai Ambition
13,100
2012
June 2024
Hyundai Speed
13,100
2012
June 2024
Hyundai Smart
13,100
2012
May 2024
Hyundai Respect
13,100
2012
March 2024
Hyundai Honour
13,100
2012
February 2024
Express Rome
10,100
2011
March 2023
Express Berlin
10,100
2011
June 2023
Express Athens
10,100
2011
March 2023
Le Havre
9,580
2006
June 2028
Pusan C
9,580
2006
May 2028
Bremen
9,012
2009
January 2028
C Hamburg
9,012
2009
January 2028
Niledutch Lion
8,626
2008
May 2026
Kota Manzanillo (ex
Charleston)
8,533
2005
February 2026
Belita
8,533
2006
July 2026
CMA CGM Melisande
8,530
2012
June 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
April 2028
Europe
8,468
2004
May 2028
Phoebe
8,463
2005
August 2026
CMA CGM Moliere
6,500
2009
March 2027
CMA CGM Musset
6,500
2010
September 2025
CMA CGM Nerval
6,500
2010
December 2022
CMA CGM Rabelais
6,500
2010
February 2023
CMA CGM Racine
6,500
2010
March 2023
YM Mandate
6,500
2010
January 2028
YM Maturity
6,500
2010
April 2028
Catherine C
6,422
2001
November 2022
Leo C
6,422
2002
November 2022
Zim Savannah
6,402
2002
May 2024
Dimitra C
6,402
2002
January 2023
Suez Canal
5,610
2002
March 2023
Kota Lima
5,544
2002
November 2024
Wide Alpha
5,466
2014
March 2024
Stephanie C (ex Wide Bravo)
5,466
2014
June 2025
Maersk Euphrates
5,466
2014
April 2024
Wide Hotel
5,466
2015
May 2024
Wide India
5,466
2015
September 2025
Wide Juliet
5,466
2015
June 2023
Seattle C
4,253
2007
October 2024
Vancouver
4,253
2007
November 2024
Derby D
4,253
2004
January 2027
Tongala
4,253
2004
January 2023
Rio Grande
4,253
2008
November 2024
ZIM Sao Paolo
4,253
2008
February 2023
ZIM Kingston
4,253
2008
April 2023
ZIM Monaco
4,253
2009
February 2023
Dalian
4,253
2009
November 2022
ZIM Luanda
4,253
2009
August 2025
Dimitris C
3,430
2001
November 2025
Express Black Sea
3,400
2011
January 2025
Express Spain
3,400
2011
January 2025
Express Argentina
3,400
2010
May 2023
Express Brazil
3,400
2010
June 2025
Express France
3,400
2010
September 2025
Singapore
3,314
2004
May 2024
Colombo
3,314
2004
January 2025
Zebra
2,602
2001
November 2024
Amalia C
2,452
1998
January 2023
Artotina
2,524
2001
May 2025
Advance
2,200
1997
January 2025
Future
2,200
1997
December 2024
Sprinter
2,200
1997
December 2024
Stride
2,200
1997
January 2025
Progress C
2,200
1998
November 2024
Bridge
2,200
1998
December 2024
Highway
2,200
1998
August 2022
Vladivostok
2,200
1997
March 2025
Vessels under
construction
Hull No. C7100-7
7,100
2024
Hull No. C7100-8
7,100
2024
Hull No. HN4009
8,000
2024
Hull No. HN4010
8,000
2024
Hull No. HN4011
8,000
2024
Hull No. HN4012
8,000
2024
(1) Earliest date charters could
expire. Some charters include options for the charterer to extend
their terms.
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
Six months ended
Six months ended
June 30,
June 30,
June 30,
June 30,
2022
2021
2022
2021
OPERATING REVENUES
$250,923
$146,434
$480,824
$278,552
OPERATING EXPENSES
Vessel operating expenses
(40,579)
(32,940)
(79,743)
(64,018)
Depreciation & amortization
(36,955)
(28,644)
(73,034)
(56,952)
General & administrative
(7,136)
(7,130)
(14,527)
(18,025)
Other operating expenses
(9,443)
(4,966)
(16,632)
(9,194)
Income From Operations
156,810
72,754
296,888
130,363
OTHER INCOME/(EXPENSES)
Interest income
120
9,531
121
11,509
Interest expense
(16,079)
(18,204)
(33,193)
(33,315)
Gain/(loss) on investments
(152,427)
196,290
69,290
444,165
Gain on debt extinguishment
22,939
111,616
22,939
111,616
Other finance expenses
(336)
(582)
(941)
(1,034)
Equity income on investments
-
2,162
-
3,965
Other income, net
362
173
861
4,144
Realized loss on derivatives
(903)
(903)
(1,796)
(1,796)
Total Other Income/(Expenses),
net
(146,324)
300,083
57,281
539,254
Income Before Income Taxes
10,486
372,837
354,169
669,617
Income taxes
(2,262)
-
(14,480)
-
Net Income
$8,224
$372,837
$339,689
$669,617
EARNINGS PER SHARE
Basic earnings per share
$0.40
$18.32
$16.42
$32.95
Diluted earnings per share
$0.40
$18.10
$16.40
$32.57
Basic weighted average number of common
shares (in thousands of shares)
20,689
20,354
20,693
20,323
Diluted weighted average number of common
shares (in thousands of shares)
20,708
20,599
20,712
20,557
Non-GAAP Measures1
Reconciliation of Net Income
to Adjusted Net Income – Unaudited
Three months ended
Three months ended
Six months ended
Six months ended
June 30,
June 30,
June 30,
June 30,
2022
2021
2022
2021
Net income
$8,224
$372,837
$339,689
$669,617
Change in fair value of investments
168,635
(196,290)
69,096
(444,165)
Gain on debt extinguishment
(22,939)
(111,616)
(22,939)
(111,616)
Amortization of financing fees, debt
discount & finance fees accrued
3,190
3,929
6,561
8,957
Stock based compensation
-
-
-
4,078
Adjusted Net Income
$157,110
$68,860
$392,407
$126,871
Adjusted Earnings Per Share,
diluted
$7.59
$3.34
$18.95
$6.17
Diluted weighted average number of shares
(in thousands of shares)
20,708
20,599
20,712
20,557
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 six months ended June 30,
2022 and 2021. 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
June 30,
December 31,
2022
2021
ASSETS
CURRENT ASSETS
Cash, cash equivalents and restricted
cash
$332,573
$129,756
Accounts receivable, net
5,540
7,118
Other current assets
363,680
495,618
701,793
632,492
NON-CURRENT ASSETS
Fixed assets, net
2,876,866
2,941,093
Advances for vessels under
construction
81,162
-
Deferred charges, net
15,605
11,801
Other non-current assets
62,677
41,739
3,036,310
2,994,633
TOTAL ASSETS
$3,738,103
$3,627,125
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
Long-term debt, current portion
$71,500
$95,750
Accumulated accrued interest, current
portion
-
6,146
Long-term leaseback obligations, current
portion
46,285
85,815
Accounts payable, accrued liabilities
& other current liabilities
218,291
131,596
336,076
319,307
LONG-TERM LIABILITIES
Long-term debt, net
790,270
1,017,916
Accumulated accrued interest, net of
current portion
-
24,155
Long-term leaseback obligations, net
58,093
136,513
Other long-term liabilities
166,186
41,211
1,014,549
1,219,795
STOCKHOLDERS’ EQUITY
Common stock
205
207
Additional paid-in capital
759,723
770,676
Accumulated other comprehensive loss
(69,659)
(71,455)
Retained earnings
1,697,209
1,388,595
2,387,478
2,088,023
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$3,738,103
$3,627,125
DANAOS CORPORATION
Condensed Consolidated
Statements of Cash Flows - Unaudited
(Expressed in thousands of
United States dollars)
Three months ended
Three months ended
Six months ended
Six months ended
June 30,
June 30,
June 30,
June 30,
2022
2021
2022
2021
Operating Activities:
Net income
$8,224
$372,837
$339,689
$669,617
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of
right-of-use assets
33,753
26,099
67,112
51,898
Amortization of deferred drydocking &
special survey costs, finance cost, debt discount and other finance
fees accrued
6,392
6,474
12,483
14,011
Amortization of assumed time charters
(15,713)
-
(32,364)
-
PIK interest
-
84
-
726
Loss/(gain) on investments
168,635
(196,290)
69,096
(444,165)
Gain on debt extinguishment
(22,939)
(111,616)
(22,939)
(111,616)
Payments for drydocking/special survey
(471)
(248)
(9,726)
(1,155)
Amortization of deferred realized losses
on cash flow interest rate swaps
903
903
1,796
1,796
Equity income on investments
-
(2,162)
-
(3,965)
Stock based compensation
124
570
248
5,479
Accounts receivable
1,593
231
1,578
444
Other assets, current and non-current
89,987
644
(43,430)
1,646
Accounts payable and accrued
liabilities
(800)
7,068
4,841
10,346
Other liabilities, current and
long-term
231,326
(109)
232,094
(2,319)
Net Cash provided by Operating
Activities
501,014
104,485
620,478
192,743
Investing Activities:
Vessel additions and advances for vessels
under construction
(82,004)
(575)
(84,047)
(1,811)
Advances for sale of vessels
-
-
13,000
-
Investments
85,333
143,485
85,333
145,877
Net Cash provided by Investing
Activities
3,329
142,910
14,286
144,066
Financing Activities:
Proceeds from long-term debt
127,725
810,925
127,725
1,105,311
Debt repayment
(358,825)
(1,223,176)
(383,125)
(1,295,025)
Proceeds from sale-leaseback of
vessels
-
135,000
-
135,000
Payments of leaseback obligations
(104,394)
(15,259)
(120,687)
(21,175)
Dividends paid
(15,535)
(10,298)
(31,070)
(10,298)
Repurchase of common stock
(6,325)
-
(6,325)
-
Payments of accumulated accrued
interest
(1,938)
(2,656)
(3,373)
(7,358)
Finance costs
(11,142)
(10,021)
(15,092)
(14,509)
Net Cash used in Financing
Activities
(370,434)
(315,485)
(431,947)
(108,054)
Net increase/(decrease) in cash, cash
equivalents and restricted cash
133,909
(68,090)
202,817
228,755
Cash, cash equivalents and restricted
cash, beginning of period
198,664
362,508
129,756
65,663
Cash, cash equivalents and restricted
cash, end of period
$332,573
$294,418
$332,573
$294,418
DANAOS CORPORATION
Reconciliation of Net Income
to Adjusted EBITDA - Unaudited
(Expressed in thousands of
United States dollars)
Three months ended
Three months ended
Six months ended
Six months ended
June 30,
June 30,
June 30,
June 30,
2022
2021
2022
2021
Net income
$8,224
$372,837
$339,689
$669,617
Depreciation and amortization of
right-of-use assets
33,753
26,099
67,112
51,898
Amortization of deferred drydocking &
special survey costs
3,202
2,545
5,922
5,054
Amortization of assumed time charters
(15,713)
-
(32,364)
-
Amortization of deferred finance costs,
debt discount and other finance fees accrued
3,190
3,929
6,561
8,957
Amortization of deferred realized losses
on interest rate swaps
903
903
1,796
1,796
Interest income
(120)
(9,531)
(121)
(11,509)
Interest expense
12,889
14,290
26,632
24,507
Income taxes
2,262
-
14,480
-
(Gain)/loss on investments and dividend
withholding taxes
166,373
(196,290)
54,616
(444,165)
Gain on debt extinguishment
(22,939)
(111,616)
(22,939)
(111,616)
Stock based compensation
124
570
248
5,479
Adjusted EBITDA(1)
$192,148
$103,736
$461,632
$200,018
1)
Adjusted EBITDA represents net
income before interest income and expense, taxes other than
withholding taxes on dividend, depreciation, amortization of
deferred drydocking & special survey costs, amortization of
assumed time charters, amortization of deferred finance costs, debt
discount and other finance fees accrued, amortization of deferred
realized losses on interest rate swaps, gain on investments, gain
on debt extinguishment 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 six months ended June 30,
2022 and 2021. 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220801005720/en/
Company Contact: 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 York Tel. 212-359-2228 E-Mail:
danaos@rosecoglobal.com
Danaos (NYSE:DAC)
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