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Danaos Corporation Reports Results for the Fourth Quarter and Year Ended December 31, 2018

ATHENS, Greece, Feb. 19, 2019 /PRNewswire/ -- Danaos Corporation ("Danaos") (DAC), one of the world's largest independent owners of containerships, today reported unaudited results for the fourth quarter and the year ended December 31, 2018.

Highlights for the Fourth Quarter and Year Ended December 31, 2018:

  • On August 10, 2018, we consummated the agreement with certain of our lenders to refinance approximately $2.2 billion of our debt maturing on December 31, 2018, reducing our debt by approximately $551 million, resetting financial and other covenants, modifying interest rates and amortization profiles and extending debt maturities by approximately five years to December 31, 2023. In connection with this refinancing, we issued approximately 99.3 million shares of common stock to certain of our lenders. See "Debt Refinancing".
  • Adjusted net income1 of $36.6 million, or $0.18 per share, for the three months ended December 31, 2018 compared to $31.2 million, or $0.28 per share, for the three months ended December 31, 2017, an increase of 17.3%. Adjusted net income1 of $131.2 million, or $0.88 per share, for the year ended December 31, 2018 compared to $114.9 million, or $1.05 per share, for the year ended December 31, 2017, an increase of 14.2%.
  • Operating revenues of $115.6 million for the three months ended December 31, 2018 compared to $114.2 million for the three months ended December 31, 2017, an increase of 1.2%. Operating revenues of $458.7 million for the year ended December 31, 2018 compared to $451.7 million for the year ended December 31, 2017, an increase of 1.5%.
  • Adjusted EBITDA1 of $80.2 million for the three months ended December 31, 2018 compared to $80.0 million for the three months ended December 31, 2017, an increase of 0.3%. Adjusted EBITDA1 of $317.8 million for the year ended December 31, 2018 compared to $310.4 million for the year ended December 31, 2017, an increase of 2.4%.
  • Total contracted operating revenues were $1.6 billion as of December 31, 2018, with charters extending through 2028 and remaining average contracted charter duration of 4.9 years, weighted by aggregate contracted charter hire.
  • Charter coverage of 88% for the next 12 months based on current operating revenues and 74% in terms of contracted operating days.

 

Three Months and Year Ended December 31, 2018

Financial Summary - Unaudited

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



Three months
ended


Three months
ended


Year ended


Year ended

December 31,

December 31,

December 31,

December 31,


2018


2017


2018


2017









Operating revenues

$115,631


$114,168


$458,732


$451,731

Net income/(loss)

$(180,983)


$22,806


$(32,936)


$83,905

Adjusted net income1

$36,605


$31,231


$131,186


$114,881

Earnings/(loss) per share, diluted

$(0.87)


$0.21


$(0.22)


$0.76

Adjusted earnings per share, diluted1

$0.18


$0.28


$0.88


$1.05

Basic and diluted weighted average
number of shares (in thousands)

209,142


109,821


148,720


109,824

Adjusted EBITDA1

$80,171


$80,016


$317,848


$310,378









1Adjusted 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:

"The 4th quarter of 2018 was the first full quarter following the completion of our recent debt refinancing which reduced indebtedness by $551 million, reset financial covenants and extended maturities through the end of 2023. As mentioned before, the refinancing has strengthened the Company's balance sheet and growth prospects by removing all balloon payments and maturities of existing debt over the next five years.

Adjusted net income for the 4th quarter of 2018 was $36.6 million, or 18 cents per share, $5.4 million or 17.3% higher when compared to the 4th quarter of 2017. This improvement was primarily the result of a $5.8 million decrease in net finance expenses, combined with a $1.4 million increase in operating revenues due to improved re-chartering rates, and partially offset by a $1.9 million increase in total operating costs. Adjusted EBITDA for the 4th quarter of 2018 was $80.2 million, $0.2 million higher than the 4th quarter of 2017.

Additionally, in the context of prudently evaluating the assets on our balance sheet, we recorded an impairment loss of $210.7 million in relation to the market value of certain of our Panamax vessels.

The charter market for vessels larger than 5,000 TEU has recently shown encouraging signs of recovery, and the market for smaller vessels remains stable albeit at relatively low levels. Anticipated slow steaming and re-designing of liner networks ahead of the implementation of new restrictions on sulphur emissions in 2020 together with vessels exiting service to be fitted with scrubbers are all positive supply side developments that may lead to improved charter rates. There has also been a continued abstention of new ordering as the market is still waiting on the outcome of trade talks to determine the demand side effects. Overall, we believe that the combined effect of these factors will be positive for the market outlook in the medium term from the 2nd half of the year onwards.

Our total contracted revenues as of December 31, 2018 were $1.6 billion, and we maintain our high charter contract coverage of 88% in terms of operating revenues and 74% in terms of operating days over the next 12 months. This insulates us from the near-term soft charter market.

Danaos continues to be a leader in the container shipping industry on the back of a solid track record of operational excellence and technological innovation that allows us to continually deliver high quality service to our customers. At the same time, the recently concluded refinancing transaction further enhances our ability to pursue growth opportunities and deliver value to our shareholders."

Three months ended December 31, 2018 compared to the three months ended December 31, 2017

During the three months ended December 31, 2018 and December 31, 2017, Danaos had an average of 55 containerships. Our fleet utilization for the three months ended December 31, 2018 was 97.9% compared to 97.8% for the three months ended December 31, 2017.

Our adjusted net income amounted to $36.6 million, or $0.18 per share, for the three months ended December 31, 2018 compared to $31.2 million, or $0.28 per share, for the three months ended December 31, 2017. We have adjusted our net income in the three months ended December 31, 2018 mainly for an impairment loss in relation to 10 of our vessels of $210.7 million, accelerated amortization of accumulated other comprehensive loss of $1.4 million and a non-cash fees amortization and accrued finance fees charge of $5.6 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.

The increase of $5.4 million in adjusted net income for the three months ended December 31, 2018 compared to the three months ended December 31, 2017 is attributable mainly to a $5.8 million decrease in net finance expenses, a $1.4 million increase in operating revenues and a $0.1 million operating performance improvement on equity investments, which were partially offset by a $1.9 million increase in total operating expenses.

On a non-adjusted basis, our net loss amounted to $181.0 million, or $0.87 diluted loss per share, for the three months ended December 31, 2018 compared to net income of $22.8 million, or $0.21 per share, for the three months ended December 31, 2017.

Operating Revenues
Operating revenues increased by 1.2%, or $1.4 million, to $115.6 million in the three months ended December 31, 2018 from $114.2 million in the three months ended December 31, 2017.

Operating revenues for the three months ended December 31, 2018 reflect:

  • $1.2 million increase in revenues in the three months ended December 31, 2018 compared to the three months ended December 31, 2017 due to the re-chartering of certain of our vessels at higher rates.
  • $0.2 million increase in revenues due to higher fleet utilization of our vessels in the three months ended December 31, 2018 compared to the three months ended December 31, 2017.

Vessel Operating Expenses
Vessel operating expenses decreased by 2.3%, or $0.6 million, to $25.6 million in the three months ended December 31, 2018 from $26.2 million in the three months ended December 31, 2017. The average daily operating cost per vessel for vessels on time charter was $5,446 per day for the three months ended December 31, 2018 compared to $5,583 per day for the three months ended December 31, 2017. Management believes that our daily operating cost ranks as one of 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 decreased by 3.6%, or $1.0 million, to $27.0 million in the three months ended December 31, 2018 from $28.0 million in the three months ended December 31, 2017.

Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs increased by $0.6 million, to $2.3 million in the three months ended December 31, 2018 from $1.7 million in the three months ended December 31, 2017. The increase was mainly due to the increased number of vessels dry-docked over the last year.

General and Administrative Expenses
General and administrative expenses increased by $2.1 million to $7.9 million in the three months ended December 31, 2018, from $5.8 million in the three months ended December 31, 2017. The increase was mainly due to increased remuneration costs and professional fees.

Other Operating Expenses
Other Operating Expenses include Voyage Expenses.

Voyage Expenses
Voyage expenses remained stable at $3.0 million in the three months ended December 31, 2018 and 2017.

Impairment Loss
We have recognized an impairment loss of $210.7 million in relation to 10 of our vessels as of December 31, 2018 compared to nil in the comparable period.

Interest Expense and Interest Income
Interest expense decreased by 13.1%, or $2.9 million, to $19.3 million in the three months ended December 31, 2018 from $22.2 million in the three months ended December 31, 2017. The decrease in interest expense is attributable to a:

(i) $10.4 million decrease in interest expense on two of our credit facilities for which we have recognized an interest expense accrual, which has been classified on our balance sheet under "Accumulated accrued interest" and represents future interest expense for the relevant facilities that has been recognized in advance as a result of the application of Troubled Debt Restructuring ("TDR") accounting in connection with our debt refinancing.

(ii) $4.8 million increase in interest expense due to an increase in debt service cost of approximately 2.4%, partially offset by a $656.1 million decrease in our average debt, to $1,684.7 million in the three months ended December 31, 2018, compared to $2,340.8 million in the three months ended December 31, 2017.

(iii) $2.7 million increase in the amortization of deferred finance costs and debt discount related to our debt refinancing.

As of December 31, 2018, the debt outstanding, gross of deferred finance costs, was $1,666.2 million compared to $2,340.8 million as of December 31, 2017.

Interest income increased by $0.1 million to $1.5 million in the three months ended December 31, 2018 compared to $1.4 million in the three months ended December 31, 2017.

Other finance costs, net
Other finance costs, net decreased by $0.6 million to $0.4 million in the three months ended December 31, 2018 compared to $1.0 million in the three months ended December 31, 2017 mainly due to decreased exit fees expenses.

Equity income on investments
Equity income on investments amounted to $0.4 million in the three months ended December 31, 2018 compared to $0.3 million in the three months ended December 31, 2017 and relates to the improved operating performance of Gemini Shipholdings Corporation ("Gemini"), in which the Company has a 49% shareholding interest.

Loss on derivatives
Amortization of deferred realized losses on interest rate swaps increased by $1.4 million to $2.3 million in the three months ended December 31, 2018 compared to $0.9 million in the three months ended December 31, 2017 due to the accelerated amortization of accumulated other comprehensive loss.

Other income/(expenses), net
Other income/(expenses), net was $0.1 million in income in the three months ended December 31, 2018 compared to $4.3 million in expenses in the three months ended December 31, 2017 mainly due to the decrease in refinancing-related professional fees.

Adjusted EBITDA
Adjusted EBITDA increased by 0.3%, or $0.2 million to $80.2 million in the three months ended December 31, 2018 from $80.0 million in the three months ended December 31, 2017. As outlined above, the increase of $1.4 million in operating revenues and a $0.1 million operating performance improvement on our equity investments, were partially offset by a $1.3 million increase in total operating expenses. Adjusted EBITDA for the three months ended December 31, 2018 is adjusted mainly for impairment loss of $210.7 million, accelerated amortization of accumulated other comprehensive loss of $1.4 million and stock based compensation of $0.8 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.

Year ended December 31, 2018 compared to the year ended December 31, 2017

During the year ended December 31, 2018 and December 31, 2017, Danaos had an average of 55 containerships. Our fleet utilization for the year ended December 31, 2018 was 96.8% compared to 96.4% for the year ended December 31, 2017. The fleet utilization excluding the off charter days of the vessels that were previously chartered to Hanjin was 97.9% in the year ended December 31, 2017.

Our adjusted net income amounted to $131.2 million, or $0.88 per share, for the year ended December 31, 2018 compared to $114.9 million, or $1.05 per share, for the year ended December 31, 2017. We have adjusted our net income in the year ended December 31, 2018 for the impairment loss of $210.7 million, the gain on debt extinguishment of $116.4 million, refinancing related professional fees of $51.3 million, a non-cash fees amortization and accrued finance fees charge of $17.0 million and an accelerated amortization of accumulated other comprehensive loss of $1.4 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.

The increase of $16.3 million in adjusted net income for the year ended December 31, 2018 compared to the year ended December 31, 2017 is attributable to a $7.0 million increase in operating revenues, a $4.8 million decrease in net finance expenses, a $4.1 million decrease in total operating expenses and a $0.4 million increase in the operating performance of our equity investment in Gemini.

On a non-adjusted basis, our net loss amounted to $32.9 million, or $0.22 loss per share, for the year ended December 31, 2018 compared to net income of $83.9 million, or $0.76 per share, for the year ended December 31, 2017.

Operating Revenues
Operating revenues increased by 1.5%, or $7.0 million, to $458.7 million in the year ended December 31, 2018 from $451.7 million in the year ended December 31, 2017.

Operating revenues for the year ended December 31, 2018 reflect:

  • $13.8 million increase in revenues in the year ended December 31, 2018 compared to the year ended December 31, 2017 due to the re-chartering of certain of our vessels at higher rates.
  • $6.8 million decrease in revenues due to lower fleet utilization of our vessels in the year ended December 31, 2018 compared to the year ended December 31, 2017 (other than three vessels previously chartered to Hanjin which were less utilized in the year ended December 31, 2017).

Vessel Operating Expenses
Vessel operating expenses decreased by 2.2%, or $2.4 million, to $104.6 million in the year ended December 31, 2018 from $107.0 million in the year ended December 31, 2017. The average daily operating cost per vessel for vessels on time charter was $5,619 per day for the year ended December 31, 2018 compared to $5,661 per day for the year ended December 31, 2017. Management believes that our daily operating cost ranks as one of 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 decreased by 6.4%, or $7.4 million, to $107.8 million in the year ended December 31, 2018 from $115.2 million in the year ended December 31, 2017.

Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs increased by $2.5 million, to $9.2 million in the year ended December 31, 2018 from $6.7 million in the year ended December 31, 2017. The increase was mainly due to the increased number of vessels dry-docked over the last year.

General and Administrative Expenses
General and administrative expenses increased by $3.6 million, to $26.3 million in the year ended December 31, 2018, from $22.7 million in the year ended December 31, 2017. The increase was mainly due to increased remuneration costs and professional fees.

Other Operating Expenses
Other Operating Expenses include Voyage Expenses.

Voyage Expenses
Voyage expenses decreased by $0.4 million, to $12.2 million in the year ended December 31, 2018 from $12.6 million in the year ended December 31, 2017.

Impairment Loss
We have recognized an impairment loss of $210.7 million in relation to 10 of our vessels as of December 31, 2018 compared to nil in the year ended December 31, 2017.

Interest Expense and Interest Income
Interest expense decreased by 1.0%, or $0.9 million, to $85.7 million in the year ended December 31, 2018 from $86.6 million in the year ended December 31, 2017. The decrease in interest expense is attributable to a:

(i) $16.9 million decrease in interest expense on two of our credit facilities for which we have recognized an interest expense accrual, which has been classified on our balance sheet under "Accumulated accrued interest" and represents future interest expense for the relevant facilities that has been recognized in advance as a result of the application of TDR accounting in connection with our debt refinancing.

(ii) $12.2 million increase in interest expense due to an increase in debt service cost of approximately 1.1%, partially offset by a $358.1 million decrease in our average debt, to $2,051.0 million in the year ended December 31, 2018, compared to $2,409.1 million in the year ended December 31, 2017.

(iii) $3.8 million increase in the amortization of deferred finance costs and debt discount related to our debt refinancing.

As of December 31, 2018, the debt outstanding, gross of deferred finance costs, was $1,666.2 million compared to $2,340.8 million as of December 31, 2017.

Interest income increased by $0.2 million to $5.8 million in the year ended December 31, 2018 compared to $5.6 million in the year ended December 31, 2017.

Other finance costs, net
Other finance costs, net decreased by $1.1 million, to $3.0 million in the year ended December 31, 2018 from $4.1 million in the year ended December 31, 2017 mainly due to decreased exit fees expenses.

Equity income on investments
Equity income on investments amounted to $1.4 million in the year ended December 31, 2018 compared to $1.0 million in the year ended December 31, 2017 and relates to the improved operating performance of Gemini, in which the Company has a 49% shareholding interest.

Gain on debt extinguishment
The gain on debt extinguishment of $116.4 million in the year ended December 31, 2018 relates to our debt refinancing described below and consists of debt principal reduction net of refinancing related fees.

Loss on derivatives
Amortization of deferred realized losses on interest rate swaps increased by $1.4 million to $5.1 million in the year ended December 31, 2018 compared to $3.7 million in the year ended December 31, 2017 due to the accelerated amortization of accumulated other comprehensive loss.

Other income/(expenses), net
Other income/(expenses), net was $50.5 million in expenses in the year ended December 31, 2018 compared to $15.8 million in expenses in the year ended December 31, 2017 mainly due to a $37.0 million increase in refinancing-related professional fees, which were partially offset by a $2.4 million realized loss on sale of HMM securities in the year ended December 31, 2017 that did not recur in the 2018 period. 

Adjusted EBITDA
Adjusted EBITDA increased by 2.4%, or $7.4 million, to $317.8 million in the year ended December 31, 2018 from $310.4 million in the year ended December 31, 2017. As outlined above, this increase is mainly attributable to a $7.0 million increase in operating revenues and a $0.4 million increase in operating performance on our equity investments in the year ended December 31, 2018 compared to the year ended December 31, 2017. Adjusted EBITDA for the year ended December 31, 2018 is adjusted for impairment loss of $210.7 million, a gain on debt extinguishment of $116.4 million, accelerated amortization of accumulated other comprehensive loss of $1.4 million, refinancing-related professional fees of $51.3 million and stock based compensation of $1.0 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.

Debt Refinancing
On August 10, 2018, we consummated the agreement reached with certain of our lenders on June 19, 2018 for the refinancing of approximately $2.2 billion of our debt maturing on December 31, 2018, reducing our debt by approximately $551 million. This agreement significantly strengthened our capital structure and financial position through this significant debt reduction, resetting financial and certain other covenants in our credit facilities, modifying interest rates and amortization profiles and extending debt maturities by approximately five years to December 31, 2023. In connection with this debt refinancing, we issued 99,342,271 new shares of Danaos common stock to certain of our lenders, which represented 47.5% of our outstanding common stock immediately after this issuance and diluted existing shareholders ratably. For additional information regarding the debt refinancing, see the Company's Reports on Form 6-K filed with the SEC on June 25, 2018 and August 14, 2018.

Conference Call and Webcast
On Wednesday, February 20, 2019 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 February 27, 2019 by dialing 1 877 344 7529 (US Toll Free Dial In) or +44 (0) 2036 088 021 (Standard International Dial In) and using 10126336# as the access code.

Audio Webcast
There will also be a live and then archived webcast of the conference call, including a slide presentation providing additional company information, through 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.

About Danaos Corporation
Danaos Corporation is one of the largest independent owners of modern, large-size containerships. Our current fleet of 59 containerships aggregating 351,614 TEUs, including four 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, including statements about the expected benefits of the refinancing and other statements that are forward looking. 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 effects of the 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 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 74 unscheduled off-hire days in the three months ended December 31, 2018. 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


Fourth
Quarter



2018

2018


2018


2018


Total

Ownership Days

4,950


5,005


5,060


5,060


20,075

Less Off-hire Days:










Scheduled Off-hire Days

(125)


(111)


(22)


(33)


(291)

Other Off-hire Days

(91)


(84)


(111)


(74)


(360)

Operating Days

4,734


4,810


4,927


4,953


19,424

Vessel Utilization

95.6%


96.1%


97.4%


97.9%


96.8%











Operating Revenues (in '000s of US Dollars)

$111,854


$113,466


$117,781


$115,631


$458,732

Average Gross Daily Charter Rate 

$23,628


$23,590


$23,905


$23,346


$23,617





















Vessel Utilization (No. of Days)

First
Quarter


Second
Quarter


Third
Quarter


Fourth
Quarter



2017

2017


2017


2017


Total

Ownership Days

4,950


5,005


5,060


5,060


20,075

Less Off-hire Days:










Scheduled Off-hire Days

(15)


(6)


(15)


(10)


(46)

Other Off-hire Days

(347)


(99)


(139)


(99)


(684)

Operating Days

4,588


4,900


4,906


4,951


19,345

Vessel Utilization

92.7%


97.9%


97.0%


97.8%


96.4%











Operating Revenues (in '000s of US Dollars)

$110,087


$113,888


$113,588


$114,168


$451,731

Average Gross Daily Charter Rate 

$23,995


$23,242


$23,153


$23,060


$23,351

Fleet List
The following table describes in detail our fleet deployment profile as of February 19, 2019:

Vessel Name

Vessel Size

(TEU)


Year
Built


Expiration of Charter(1)

Containerships












MSC Ambition

13,100


2012


June 2024

Maersk Exeter

13,100


2012


June 2024

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 (ex CSCL Le Havre)

9,580


2006


November 2022

Pusan C (ex CSCL Pusan)

9,580


2006


November 2022

CMA CGM Melisande

8,530


2012


November 2023

CMA CGM Attila

8,530


2011


April 2023

CMA CGM Tancredi

8,530


2011


May 2023

CMA CGM Bianca

8,530


2011


July 2023

CMA CGM Samson

8,530


2011


September 2023

America (ex CSCL America)

8,468


2004


November 2022

Europe

8,468


2004


November 2022

CMA CGM Moliere

6,500


2009


August 2021

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


May 2019

Dimitra C (ex Priority)

6,402


2002


March 2019

YM Seattle

4,253


2007


July 2019

YM Vancouver

4,253


2007


September 2019

Derby D

4,253


2004


March 2019

ANL Tongala (ex Deva)

4,253


2004


March 2019

ZIM Rio Grande

4,253


2008


May 2020

ZIM Sao Paolo

4,253


2008


August 2020

ZIM Kingston

4,253


2008


September 2020

ZIM Monaco

4,253


2009


November 2020

ZIM Dalian

4,253


2009


February 2021

ZIM Luanda

4,253


2009


May 2021

Dimitris C

3,430


2001


June 2019

Express Black Sea

3,400


2011


November 2019

Express Spain

3,400


2011


March 2019

Express Argentina

3,400


2010


May 2019

Express Brazil

3,400


2010


July 2019

Express France

3,400


2010


September 2019

Singapore

3,314


2004


October 2019

Colombo

3,314


2004


March 2019

MSC Zebra

2,602


2001


September 2020

Amalia C

2,452


1998


August 2019

Danae C

2,524


2001


January 2020

Advance

2,200


1997


July 2019

Future

2,200


1997


March 2019

Sprinter

2,200


1997


June 2019

Stride

2,200


1997


February 2019

Progress C (ex Hyundai Progress)

2,200


1998


June 2019

Bridge

2,200


1998


August 2019

Highway

2,200


1998


May 2019

Vladivostok

2,200


1997


March 2019







Catherine C (ex NYK Lodestar)(2)

6,422


2001


November 2022

Leo C (ex NYK Leo)(2)

6,422


2002


November 2022

Suez Canal(2)

5,610


2002


March 2019

Genoaľ2)

5,544


2002


July 2019









(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 Operations-Unaudited

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




Three months
ended


Three months
ended


Year ended


Year ended

December 31,

December 31,

December 31,

December 31,



2018


2017


2018


2017










OPERATING REVENUES

$115,631


$114,168


$458,732


$451,731










OPERATING EXPENSES









Vessel operating expenses

(25,552)


(26,196)


(104,604)


(106,999)


Depreciation & amortization

(29,354)


(29,672)


(116,994)


(121,976)


Impairment loss

(210,715)


-


(210,715)


-


General & administrative

(7,944)


(5,815)


(26,334)


(22,672)


Other operating expenses

(2,977)


(2,962)


(12,207)


(12,587)

Income/(Loss) From Operations

(160,911)


49,523


(12,122)


187,497










OTHER INCOME/(EXPENSES)









Interest income

1,483


1,375


5,781


5,576


Interest expense

(19,328)


(22,227)


(85,706)


(86,556)


Other finance expenses

(415)


(997)


(3,026)


(4,126)


Equity income on investments

453


332


1,365


965


Gain on debt extinguishment

-


-


116,365


-


Other income/(expenses), net

109


(4,269)


(50,456)


(15,757)


Realized loss on derivatives

(2,374)


(931)


(5,137)


(3,694)

Total Other Income/(Expenses), net

(20,072)


(26,717)


(20,814)


(103,592)










Net Income/(Loss)

$(180,983)


$22,806


$(32,936)


$83,905










EARNINGS PER SHARE








Basic and diluted earnings/(loss) per share

$(0.87)


$0.21


$(0.22)


$0.76

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

209,142


109,821


148,720


109,824

 

Non-GAAP Measures*


Reconciliation of Net Income/(Loss) to Adjusted Net Income – Unaudited





Three months
ended


Three months
ended


Year ended


Year ended

December 31,

December 31,

December 31,

December 31,


2018


2017


2018


2017

Net income/(loss)

$(180,983)


$22,806


$(32,936)


$83,905

Gain on debt extinguishment

-


-


(116,365)


-

Amortization of financing fees, debt discount &
finance fees accrued

5,584


3,440


17,016


14,322

Impairment loss

210,715


-


210,715


-

Accelerated amortization of accumulated other comprehensive loss

1,443


-


1,443


-

Refinancing professional fees

(154)


4,985


51,313


14,297

Loss on sale of securities

-


-


-


2,357

Adjusted Net Income

$36,605


$31,231


$131,186


$114,881

Adjusted Earnings Per Share, basic and diluted

$0.18


$0.28


$0.88


$1.05

Basic and diluted weighted average number of shares (in thousands)

209,142


109,821


148,720


109,824


* 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 months and years ended December 31, 2018 and 2017. 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

December 31,

December 31,




2018


2017

ASSETS





CURRENT ASSETS






Cash and cash equivalents


$77,275


$66,895


Restricted cash


-


2,812


Accounts receivable, net


9,225


6,502


Other current assets


33,250


49,790




119,750


125,999

NON-CURRENT ASSETS






Fixed assets, net


2,480,329


2,795,971


Deferred charges, net


13,031


8,962


Investments in affiliates


7,363


5,998


Other non-current assets


59,369


49,466




2,560,092


2,860,397

TOTAL ASSETS


$2,679,842


$2,986,396







LIABILITIES AND STOCKHOLDERS' EQUITY





CURRENT LIABILITIES






Long-term debt, current portion


113,777


$2,329,601


Accumulated accrued interest, current portion


35,782


-


Accounts payable, accrued liabilities & other current liabilities


73,142


50,238




222,701


2,379,839

LONG-TERM LIABILITIES






Long-term debt, net


1,508,108


-


Accumulated accrued interest, net of current portion


200,574


-


Other long-term liabilities


57,606


57,852




1,766,288


57,852







STOCKHOLDERS' EQUITY






Common stock


2,133


1,098


Additional paid-in capital


725,581


546,898


Accumulated other comprehensive loss


(118,710)


(114,076)


Retained earnings


81,849


114,785




690,853


548,705

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY


$2,679,842


$2,986,396

 

DANAOS CORPORATION

Condensed Consolidated Statements of Cash Flows - Unaudited

(Expressed in thousands of United States dollars)




Three months
ended


Three months
ended


Year ended


Year ended

December 31,

December 31,

December 31,

December 31,



2018


2017


2018


2017

Operating Activities:









 Net income/(loss)

$(180,983)


$22,806


$(32,936)


$83,905


 Adjustments to reconcile net income/(loss) to net cash provided
 by operating activities:









 Depreciation

27,005


27,961


107,757


115,228


 Impairment loss

210,715


-


210,715


-


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

7,933


5,151


26,253


21,070


 Gain on debt extinguishment

-


-


(116,365)


-


 PIK interest

1,019


-


1,433


-


 Payments for drydocking/special survey

(1,401)


(1,103)


(13,306)


(7,511)


 Amortization of deferred realized losses on cash flow interest
 rate swaps

2,374


931


5,137


3,694


 Equity income on investments

(453)


(332)


(1,365)


(965)


 Stock based compensation

849


-


1,006


-


 Loss on sale of securities

-


-


-


2,357


 Accounts receivable

(407)


541


(2,723)


(2,544)


 Other assets, current and non-current

(6,226)


(4,599)


2,286


(7,832)


 Accounts payable and accrued liabilities

(3,338)


(1,667)


(4,350)


(23)


 Other liabilities, current and long-term

(3,897)


(4,442)


(18,856)


(26,306)

Net Cash provided by Operating Activities

53,190


45,247


164,686


181,073










Investing Activities:









 Vessel additions and advances

(6,167)


(782)


(8,250)


(4,478)


 Net proceeds from sale of securities

-


-


-


6,236

Net Cash provided by/(used in) Investing Activities

(6,167)


(782)


(8,250)


1,758










Financing Activities:









 Proceeds from long-term debt

-


-


325,852


-


 Debt  repayment

(33,883)


(41,723)


(440,990)


(189,653)


 Payments of accumulated accrued interest

(7,960)


-


(8,556)


-


 Finance costs

(8,038)


-


(35,005)


-


 Paid-in capital

-


-


10,000


-


 Share issuance costs

-


-


(169)


-

Net Cash used in Financing Activities

(49,881)


(41,723)


(148,868)


(189,653)

Net Increase/(Decrease) in cash, cash equivalents and restricted
cash

(2,858)


2,742


7,568


(6,822)

Cash, cash equivalents and restricted cash, beginning of period

80,133


66,965


69,707


76,529

Cash, cash equivalents and restricted cash, end of period

$77,275


$69,707


$77,275


$69,707

 

DANAOS CORPORATION

Reconciliation of Net Income/(Loss) to Adjusted EBITDA - Unaudited

(Expressed in thousands of United States dollars)



Three months
ended


Three months
ended


Year ended


Year ended

December 31,

December 31,

December 31,

December 31,


2018


2017


2018


2017

Net income/(loss)

$(180,983)


$22,806


$(32,936)


$83,905

Depreciation

27,005


27,961


107,757


115,228

Amortization of deferred drydocking & special survey
costs

2,349


1,711


9,237


6,748

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

5,584


3,440


17,016


14,322

Amortization of deferred realized losses on interest rate swaps

931


931


3,694


3,694

Interest income

(1,483)


(1,375)


(5,781)


(5,576)

Interest expense

13,915


19,557


70,749


75,403

Impairment loss

210,715


-


210,715


-

Gain on debt extinguishment

-


-


(116,365)


-

Accelerated amortization of accumulated other comprehensive loss

1,443


-


1,443


-

Stock based compensation

849


-


1,006


-

Refinancing professional fees

(154)


4,985


51,313


14,297

Loss on sale of securities

-


-


-


2,357

Adjusted EBITDA(1)

$80,171


$80,016


$317,848


$310,378



1)

Adjusted EBITDA represents net income before interest income and expense, depreciation, amortization of deferred drydocking & special survey costs deferred finance costs and debt discount, amortization of deferred realized losses on interest rate swaps, loss on sale of securities, gain on debt extinguishment, impairment loss, accelerated amortization of accumulated other comprehensive loss, stock based compensation and refinancing professional fees. 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 months and years ended December 31, 2018 and 2017. 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.

 

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