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Danaos Corporation Reports Second Quarter and Half Year Results for the Period Ended June 30, 2019

ATHENS, Greece, Aug. 5, 2019 /PRNewswire/ -- Danaos Corporation ("Danaos") (DAC), one of the world's largest independent owners of containerships, today reported unaudited results for the period ended June 30, 2019.

Highlights for the Second Quarter and Half Year Ended June 30, 2019:

  • Adjusted net income1 of $34.3 million, or $2.24 per share2, for the three months ended June 30, 2019 compared to $29.2 million, or $3.72 per share2, for the three months ended June 30, 2018, an increase of 17.5%. Adjusted net income1 of $72.8 million, or $4.77 per share2, for the six months ended June 30, 2019 compared to $57.1 million, or $7.28 per share2, for the six months ended June 30, 2018, an increase of 27.5%.
  • Operating revenues of $112.3 million for the three months ended June 30, 2019 compared to $113.4 million for the three months ended June 30, 2018, a decrease of 1.0%. Operating revenues of $225.2 million for the six months ended June 30, 2019 compared to $225.3 million for the six months ended June 30, 2018.
  • Adjusted EBITDA1 of $75.6 million for the three months ended June 30, 2019 compared to $78.3 million for the three months ended June 30, 2018, a decrease of 3.4%. Adjusted EBITDA1 of $153.1 million for the six months ended June 30, 2019 compared to $154.9 million for the six months ended June 30, 2018, a decrease of 1.2%.
  • Total contracted operating revenues were $1.5 billion as of June 30, 2019, with charters extending through 2028 and remaining average contracted charter duration of 4.5 years, weighted by aggregate contracted charter hire.
  • Charter coverage of 87% for the next 12 months based on current operating revenues and 71% in terms of contracted operating days.
  • Effected 1:14 reverse stock split on May 2, 2019, which cured the previously announced NYSE deficiency caused by our stock trading below $1.
  • Concluded sale and leaseback transactions for two 13,100 TEU containerships on April 12, 2019, resulting in net proceeds of $144.8 million, which were used to repay credit facilities secured by mortgages on the vessels.

 

Three and Six Months Ended June 30, 2019

Financial Summary - 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,


2019


2018


2019


2018









Operating revenues

$112,319


$113,466


$225,210


$225,320

Net income

$30,138


$5,838


$63,581


$20,830

Adjusted net income1

$34,255


$29,178


$72,824


$57,129

Earnings per share, diluted2

$1.97


$0.74


$4.16


$2.66

Adjusted earnings per share, diluted1,2

$2.24


$3.72


$4.77


$7.28

Diluted weighted average number of shares (in thousands)2

15,314


7,843


15,276


7,843

Adjusted EBITDA1

$75,581


$78,294


$153,119


$154,932










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.

2  Earnings per share and weighted average number of shares give retroactive effect to the reverse stock split of
   1-for-14 implemented on May 2, 2019, for all periods presented.

Danaos' CEO Dr. John Coustas commented:

"The Company's adjusted net income of $34.3 million, or $2.24 per share, for the second quarter of 2019 increased by $5.1 million, or 17.5%, when compared to the second quarter of 2018. This improvement was primarily the result of a $4.4 million decrease in net finance expenses and a $2 million decrease in total operating costs, partially offset by a $1.1 million decrease in operating revenues mainly due to the re-chartering of certain of our vessels that concluded long-term charters over the last 12 months and were re-deployed at lower rates during the quarter. Adjusted EBITDA for the second quarter of 2019 was $75.6 million, $2.7 million lower than the second quarter of 2018.

The charter market for 5,500+ vessels TEU remained strong over the last three months, and the market for Panamax vessels is improving due to the lack of availability of larger vessels. Rates on smaller vessels remain stable albeit at relatively low levels. We anticipate that the implementation of IMO 2020 sulphur emissions regulations will result in a healthy charter market for the larger vessels through 2020 due to downtime related to scrubber retrofits and reduced sailing speeds that a high fuel price environment are expected to bring about. Escalations in trade tensions between the U.S. and China persist, and uncertainty on the outcome and the impact on trade flows has discouraged market participants from placing newbuilding orders. Collectively, these factors are expected to result in positive vessel supply side effects, which should support the strengthening of the charter market going forward.

Our total contracted revenues as of June 30, 2019 were $1.5 billion, and we maintain our high charter contract coverage of 87% in terms of operating revenues and 71% in terms of operating days over the next 12 months. This insulates us from near-term market weakness.

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 our goal of delivering value to our shareholders." 

Three months ended June 30, 2019 compared to the three months ended June 30, 2018

During the three months ended June 30, 2019 and June 30, 2018, Danaos had an average of 55 containerships. Our fleet utilization for the three months ended June 30, 2019 was 99.4% compared to 96.1% for the three months ended June 30, 2018.

Our adjusted net income amounted to $34.3 million, or $2.24 per share, for the three months ended June 30, 2019 compared to $29.2 million, or $3.72 per share, for the three months ended June 30, 2018 (after giving retroactive effect to the reverse stock split of 1-for-14 implemented on May 2, 2019). We have adjusted our net income in the three months ended June 30, 2019 for non-cash fees amortization and accrued financing fees of $4.1 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.

The increase of $5.1 million in adjusted net income for the three months ended June 30, 2019 compared to the three months ended June 30, 2018 is attributable mainly to a $4.4 million decrease in net finance expenses and a $2.0 million decrease in total operating expenses, which were partially offset by a $1.1 million decrease in operating revenues and a $0.2 million decrease in the operating performance of our equity investment in Gemini.

On a non-adjusted basis, our net income amounted to $30.1 million, or $1.97 earnings per diluted share, for the three months ended June 30, 2019 compared to net income of $5.8 million, or $0.74 earnings per diluted share, for the three months ended June 30, 2018 (after giving retroactive effect to the reverse stock split of 1-for-14).

Operating Revenues 
Operating revenues decreased by 1.0%, or $1.1 million, to $112.3 million in the three months ended June 30, 2019 from $113.4 million in the three months ended June 30, 2018.

Operating revenues for the three months ended June 30, 2019 reflect:

  • a $4.1 million decrease in revenues in the three months ended June 30, 2019 compared to the three months ended June 30, 2018, mainly due to the re-chartering of certain of our vessels that concluded long-term charters over the last twelve months and were re-deployed at lower spot rates in the three months ended June 30, 2019; and
  • a $3.0 million increase in revenues due to higher fleet utilization of our vessels in the three months ended June 30, 2019 compared to the three months ended June 30, 2018.

Vessel Operating Expenses 
Vessel operating expenses increased by 2.2%, or $0.6 million, to $27.3 million in the three months ended June 30, 2019 from $26.7 million in the three months ended June 30, 2018. The average daily operating cost per vessel for vessels on time charter was $5,884 per day for the three months ended June 30, 2019 compared to $5,762 per day for the three months ended June 30, 2018. 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 10.1%, or $2.7 million, to $24.0 million in the three months ended June 30, 2019 from $26.7 million in the three months ended June 30, 2018 mainly due to decreased depreciation expense for ten vessels for which we recorded an impairment charge on December 31, 2018.

Amortization of Deferred Dry-docking and Special Survey Costs 
Amortization of deferred dry-docking and special survey costs decreased by $0.3 million, to $2.1 million in the three months ended June 30, 2019 from $2.4 million in the three months ended June 30, 2018. The decrease was mainly due to a decreased number of vessels dry-docked.

General and Administrative Expenses 
General and administrative expenses increased by $0.7 million, to $6.5 million in the three months ended June 30, 2019, from $5.8 million in the three months ended June 30, 2018. The increase was mainly due to increased share based compensation.

Other Operating Expenses 
Other Operating Expenses include Voyage Expenses.

Voyage Expenses 
Voyage expenses decreased by $0.5 million, to $2.7 million in the three months ended June 30, 2019 from $3.2 million in the three months ended June 30, 2018.

Interest Expense and Interest Income 
Interest expense decreased by 18.3%, or $4.2 million, to $18.8 million in the three months ended June 30, 2019 from $23.0 million in the three months ended June 30, 2018. The decrease in interest expense is attributable to:

(i) a $11.5 million decrease in interest expense on two of our credit facilities for which we recognized an interest expense accrual in Q3 2018, 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 2018 debt refinancing;

(ii) a $5.8 million increase in interest expense due to an increase in debt service cost by approximately 2.8%, partially offset by a $644.4 million decrease in our average debt (including leaseback obligations), to $1,630.7 million in the three months ended June 30, 2019, compared to $2,275.1 million in the three months ended June 30, 2018; and

(iii) a $1.5 million increase in the amortization of deferred finance costs and debt discount related to our 2018 debt refinancing.

As of June 30, 2019, our bank debt outstanding, gross of deferred finance costs, was $1,470.6 million and leaseback obligation was $144.4 million compared to bank debt of $2,293.9 million outstanding as of June 30, 2018.

Interest income increased by $0.2 million to $1.6 million in the three months ended June 30, 2019 compared to $1.4 million in the three months ended June 30, 2018.

Other finance costs, net 
Other finance costs, net increased by $0.8 million to $1.8 million in the three months ended June 30, 2019 compared to $1.0 million in the three months ended June 30, 2018 mainly due to increased finance costs, which were partially offset by decreased exit fees expenses.

Equity income/(loss) on investments 
Equity income/(loss) on investments decreased by $0.2 million to nil in the three months ended June 30, 2019 compared to equity income on investments amounting to $0.2 million in the three months ended June 30, 2018 and relates to the 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 remained stable at $0.9 million in each of the three month periods ended June 30, 2019 and 2018.

Other income/(expenses), net 
Other income/(expenses), net was $0.4 million in income in the three months ended June 30, 2019 compared to $19.5 million in expenses in the three months ended June 30, 2018 mainly due to $20.1 million of refinancing-related professional fees in the prior period.

Adjusted EBITDA 
Adjusted EBITDA decreased by 3.4%, or $2.7 million, to $75.6 million in the three months ended June 30, 2019 from $78.3 million in the three months ended June 30, 2018. As described above, the decrease is mainly attributable to a $1.4 million increase in net finance expenses, a $1.1 million decrease in operating revenues and a $0.2 million decrease in operating performance on our equity investments. Adjusted EBITDA for the three months ended June 30, 2019 is adjusted for stock based compensation of $1.0 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.

Six months ended June 30, 2019 compared to the six months ended June 30, 2018

During the six months ended June 30, 2019 and June 30, 2018, Danaos had an average of 55 containerships. Our fleet utilization for the six months ended June 30, 2019 was 98.8% compared to 95.9% for the six months ended June 30, 2018.

Our adjusted net income amounted to $72.8 million, or $4.77 per share, for the six months ended June 30, 2019 compared to $57.1 million, or $7.28 per share, for the six months ended June 30, 2018 (after giving retroactive effect to the reverse stock split of 1-for-14 implemented on May 2, 2019). We have adjusted our net income in the six months ended June 30, 2019 for non-cash fees amortization and accrued financing fees of $9.2 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.

The increase of $15.7 million in adjusted net income for the six months ended June 30, 2019 compared to the six months ended June 30, 2018 is attributable to a $12.0 million decrease in net finance expenses and a $4.0 million decrease in total operating expenses, which were partially offset by a $0.2 million decrease in the operating performance of our equity investment in Gemini and a $0.1 million decrease in the operating revenue.

On a non-adjusted basis, our net income amounted to $63.6 million, or $4.16 per diluted share, for the six months ended June 30, 2019 compared to net income of $20.8 million, or $2.66 per diluted share, for the six months ended June 30, 2018 (after giving retroactive effect to the reverse stock split of 1-for-14).

Operating Revenues 
Operating revenues decreased by $0.1 million, to $225.2 million in the six months ended June 30, 2019 from $225.3 million in the six months ended June 30, 2018.

Operating revenues for the six months ended June 30, 2019 reflect:

  • a $4.0 million decrease in revenues in the six months ended June 30, 2019 compared to the six months ended June 30, 2018, mainly due to the re-chartering of certain of our vessels that concluded long-term charters over the last twelve months and were re-deployed at lower spot rates in the six months ended June 30, 2019; and
  • a $3.9 million increase in revenues due to higher fleet utilization of our vessels in the six months ended June 30, 2019 compared to the six months ended June 30, 2018.

Vessel Operating Expenses 
Vessel operating expenses decreased by 0.7%, or $0.4 million, to $53.2 million in the six months ended June 30, 2019 from $53.6 million in the six months ended June 30, 2018. The average daily operating cost per vessel for vessels on time charter was $5,761 per day for the six months ended June 30, 2019 compared to $5,806 per day for the six months ended June 30, 2018. 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 11.1%, or $6.0 million, to $47.8 million in the six months ended June 30, 2019 from $53.8 million in the six months ended June 30, 2018 mainly due to decreased depreciation expense for ten vessels for which we recorded an impairment charge on December 31, 2018.

Amortization of Deferred Dry-docking and Special Survey Costs 
Amortization of deferred dry-docking and special survey costs remained stable at $4.3 million in each of the six month periods ended June 30, 2019 and 2018.

General and Administrative Expenses 
General and administrative expenses increased by $2.4 million, to $13.4 million in the six months ended June 30, 2019, from $11.0 million in the six months ended June 30, 2018. The increase was mainly due to increased share based compensation and professional fees.

Other Operating Expenses 
Other Operating Expenses include Voyage Expenses.

Voyage Expenses 
Voyage expenses decreased by $0.3 million, to $6.0 million in the six months ended June 30, 2019 from $6.3 million in the six months ended June 30, 2018.

Interest Expense and Interest Income 
Interest expense decreased by 20.0%, or $9.2 million, to $36.7 million in the six months ended June 30, 2019 from $45.9 million in the six months ended June 30, 2018. The decrease in interest expense is attributable to:

(i)  a $22.9 million decrease in interest expense on two of our credit facilities for which we recognized an interest expense accrual in Q3 2018, 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 2018 debt refinancing;

(ii)  a $9.8 million increase in interest expense due to an increase in debt service cost of approximately 2.6%, partially offset by a $644.8 million decrease in our average debt (including leaseback obligations), to $1,643.4 million in the six months ended June 30, 2019, compared to $2,288.2 million in the six months ended June 30, 2018; and

(iii) a $3.9 million increase in the amortization of deferred finance costs and debt discount related to our 2018 debt refinancing.

As of June 30, 2019, our bank debt outstanding, gross of deferred finance costs, was $1,470.6 million and leaseback obligation was $144.4 million compared to bank debt of $2,293.9 million outstanding as of June 30, 2018.

Interest income increased by $0.4 million to $3.2 million in the six months ended June 30, 2019 compared to $2.8 million in the six months ended June 30, 2018.

Other finance costs, net 
Other finance costs, net increased by $0.2 million, to $2.1 million in the six months ended June 30, 2019 from $1.9 million in the six months ended June 30, 2018.

Equity income/(loss) on investments 
Equity income/(loss) on investments decreased by $0.2 million to nil in the six months ended June 30, 2019 compared to $0.2 million income in the six months ended June 30, 2018 and relates to the operating performance of Gemini, in which the Company has a 49% shareholding interest.

Loss on derivatives 
Amortization of deferred realized losses on interest rate swaps remained stable at $1.8 million in each of the six month periods ended June 30, 2019 and 2018.

Other income/(expenses), net 
Other income/(expenses), net was $0.4 million in income in the six months ended June 30, 2019 compared to $28.9 million in expenses in the six months ended June 30, 2018 mainly due to $29.7 million of refinancing-related professional fees in the prior period.

Adjusted EBITDA 
Adjusted EBITDA decreased by 1.2%, or $1.8 million, to $153.1 million in the six months ended June 30, 2019 from $154.9 million in the six months ended June 30, 2018. As described above, this decrease is mainly attributable to a $1.4 million increase in other finance costs, to a $0.2 million decrease in operating performance on our equity investments and a $0.1 million decrease in operating revenue. Adjusted EBITDA for the six months ended June 30, 2019 is adjusted for stock based compensation of $1.9 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.

Recent Developments 
On April 16, 2019, our Board of Directors determined to effect a reverse stock split of our issued and outstanding shares of common stock by a ratio of 1-for-14. The reverse stock split occurred, and our common stock began trading on a split adjusted basis as of the opening of trading on the NYSE on May 2, 2019 under the existing trading symbol "DAC". The reverse stock split reduced the number of our outstanding shares of common stock from 213,324,455 to 15,237,456 and affected all issued and outstanding shares of common stock. No fractional shares were issued in connection to the reverse stock split. Stockholders who would otherwise hold a fractional share of our common stock received a cash payment in lieu of such fractional share. The par value and other terms of our common stock were not affected by the reverse stock split. All share and per share data in this Earnings Release give retroactive effect to this reverse stock split, for all periods presented.

Conference Call and Webcast 
On Tuesday, August 6, 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 August 14, 2019 by dialing 1 877 344 7529 (US Toll Free Dial In) or +44 (0) 2036 088 021 (Standard International Dial In) and using 10134150# 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.

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. 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 10 unscheduled off-hire days in the three months ended June 30, 2019. 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



2019

2019


Total

Ownership Days

4,950


5,005


9,955

Less Off-hire Days:






Scheduled Off-hire Days

-


(22)


(22)

Other Off-hire Days

(90)


(10)


(100)

Operating Days

4,860


4,973


9,833

Vessel Utilization

98.2%


99.4%


98.8%







Operating Revenues (in '000s of US Dollars)

$112,891


$112,319


$225,210

Average Gross Daily Charter Rate 

$23,229


$22,586


$22,903













Vessel Utilization (No. of Days)

First Quarter


Second Quarter



2018

2018


Total

Ownership Days

4,950


5,005


9,955

Less Off-hire Days:






Scheduled Off-hire Days

(125)


(111)


(236)

Other Off-hire Days

(91)


(84)


(175)

Operating Days

4,734


4,810


9,544

Vessel Utilization

95.6%


96.1%


95.9%







Operating Revenues (in '000s of US Dollars)

$111,854


$113,466


$225,320

Average Gross Daily Charter Rate 

$23,628


$23,590


$23,609

 

Fleet List 
The following table describes in detail our fleet deployment profile as of August 5, 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

9,580


2006


December 2022

Pusan C

9,580


2006


November 2022

CMA CGM Melisande

8,530


2012


May 2024

CMA CGM Attila

8,530


2011


October 2023

CMA CGM Tancredi

8,530


2011


November 2023

CMA CGM Bianca

8,530


2011


January 2024

CMA CGM Samson

8,530


2011


March 2024

America

8,468


2004


January 2023

Europe

8,468


2004


December 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 2020

Dimitra C

6,402


2002


January 2020

YM Seattle

4,253


2007


October 2019

YM Vancouver

4,253


2007


September 2019

Derby D

4,253


2004


May 2020

ANL Tongala

4,253


2004


May 2020

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 2020

Express Black Sea

3,400


2011


November 2019

Express Spain

3,400


2011


August 2019

Express Argentina

3,400


2010


May 2020

Express Brazil

3,400


2010


September 2019

Express France

3,400


2010


September 2019

Singapore

3,314


2004


October 2019

Colombo

3,314


2004


February 2020

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


August 2019

Future

2,200


1997


August 2019

Sprinter

2,200


1997


August 2019

Stride

2,200


1997


August 2019

Progress C

2,200


1998


August 2019

Bridge

2,200


1998


August 2019

Highway

2,200


1998


October 2019

Vladivostok

2,200


1997


October 2019







Catherine C (2)

6,422


2001


November 2022

Leo C (2)

6,422


2002


November 2022

Suez Canal(2)

5,610


2002


April 2020

Genoaľ2)

5,544


2002


September 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 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,



2019


2018


2019


2018










OPERATING REVENUES

$112,319


$113,466


$225,210


$225,320










OPERATING EXPENSES









Vessel operating expenses

(27,306)


(26,742)


(53,177)


(53,591)


Depreciation & amortization

(26,102)


(29,106)


(52,059)


(58,009)


General & administrative

(6,492)


(5,777)


(13,361)


(10,959)


Other operating expenses

(2,732)


(3,186)


(6,002)


(6,347)

Income From Operations

49,687


48,655


100,611


96,414










OTHER INCOME/(EXPENSES)









Interest income

1,569


1,418


3,165


2,793


Interest expense

(18,844)


(23,020)


(36,687)


(45,869)


Other finance expenses

(1,770)


(961)


(2,094)


(1,932)


Equity income/(loss) on investments

32


210


(52)


184


Other income/(expenses), net

367


(19,543)


434


(28,928)


Realized loss on derivatives

(903)


(921)


(1,796)


(1,832)

Total Other Expenses, net

(19,549)


(42,817)


(37,030)


(75,584)










Net Income

$30,138


$5,838


$63,581


$20,830










EARNINGS PER SHARE








Basic earnings per share1

$2.02


$0.74


$4.26


$2.66

Diluted earnings per share1

$1.97


$0.74


$4.16


$2.66

Basic weighted average number of common shares (in thousands of shares)1

14,939


7,843


14,939


7,843

Diluted weighted average number of common shares (in thousands of shares)1

15,314


7,843


15,276


7,843

 

 

Non-GAAP Measures2

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,


2019


2018


2019


2018

Net income

$30,138


$5,838


$63,581


$20,830

Amortization of financing fees, debt discount & finance fees accrued

4,117


3,247


9,243


6,598

Refinancing professional fees

-


20,093


-


29,701

Adjusted Net Income

$34,255


$29,178


$72,824


$57,129

Adjusted Earnings Per Share, diluted1

$2.24


$3.72


$4.77


$7.28

Diluted weighted average number of shares (in thousands)1

15,314


7,843


15,276


7,843


1   Basic and diluted earnings per share and basic and diluted weighted average number of shares give retroactive
    effect to the 1-for-14 reverse stock split effected on May 2, 2019, for all periods presented. 

2 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, 2019 and 2018. 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,




2019


2018

ASSETS





CURRENT ASSETS






Cash and cash equivalents


$78,803


$77,275


Accounts receivable, net


7,496


9,225


Other current assets


36,566


33,250




122,865


119,750

NON-CURRENT ASSETS






Fixed assets, net


2,433,731


2,480,329


Deferred charges, net


10,467


13,031


Investments in affiliates


7,311


7,363


Other non-current assets


73,931


59,369




2,525,440


2,560,092

TOTAL ASSETS


$2,648,305


$2,679,842







LIABILITIES AND STOCKHOLDERS' EQUITY





CURRENT LIABILITIES






Long-term debt, current portion


$113,826


$113,777


Accumulated accrued interest, current portion


35,351


35,782


Long-term leaseback obligations, current portion


14,097


-


Accounts payable, accrued liabilities & other current liabilities


60,034


73,142




223,308


222,701

LONG-TERM LIABILITIES






Long-term debt, net


1,318,207


1,508,108


Accumulated accrued interest, net of current portion


178,065


200,574


Long-term leaseback obligations, net


130,340


-


Other long-term liabilities


42,916


57,606




1,669,528


1,766,288







STOCKHOLDERS' EQUITY






Common stock1


154


152


Additional paid-in capital1


729,425


727,562


Accumulated other comprehensive loss


(119,540)


(118,710)


Retained earnings


145,430


81,849




755,469


690,853

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY


$2,648,305


$2,679,842


1   Common stock and Additional paid-in capital as of December 31, 2018 give retroactive effect to the 1-for-14
    reverse stock split. 

 

 

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,



2019


2018


2019


2018

Operating Activities:









Net income

$30,138


$5,838


$63,581


$20,830


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









Depreciation

24,039


26,697


47,805


53,757


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

6,180


5,656


13,497


10,850


PIK interest

855


-


1,695


-


Payments for drydocking/special survey

(1,569)


(3,958)


(1,690)


(10,351)


Amortization of deferred realized losses on cash flow interest rate swaps

903


921


1,796


1,832


Equity loss on investments

(32)


(210)


52


(184)


Stock based compensation

1,035


-


1,865


-


Accounts receivable

(53)


(9,053)


1,729


(9,292)


Other assets, current and non-current

(3,907)


(2,116)


(11,073)


(8,828)


Accounts payable and accrued liabilities

(1,102)


1,457


(184)


8,093


Other liabilities, current and long-term

(4,033)


(5,229)


(7,617)


(11,115)

Net Cash provided by Operating Activities

52,454


20,003


111,456


55,592










Investing Activities:









  Vessel additions and advances

(8,971)


(967)


(10,638)


(1,683)

Net Cash used in Investing Activities

(8,971)


(967)


(10,638)


(1,683)










Financing Activities:









  Proceeds from sale-leaseback of vessels

146,523


-


146,523


-


  Debt  repayment

(176,097)


(6,780)


(205,811)


(48,381)


  Payments of leaseback obligations

(2,086)


-


(2,086)


-


  Payments of accumulated accrued interest

(8,767)


-


(17,867)


-


  Finance costs

(5,562)


-


(20,049)


-

Net Cash used in Financing Activities

(45,989)


(6,780)


(99,290)


(48,381)

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

(2,506)


12,256


1,528


5,528

Cash, cash equivalents and restricted cash, beginning of period

81,309


62,979


77,275


69,707

Cash, cash equivalents and restricted cash, end of period

$78,803


$75,235


$78,803


$75,235

 

 

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,


2019


2018


2019


2018

Net income

$30,138


$5,838


$63,581


$20,830

Depreciation

24,039


26,697


47,805


53,757

Amortization of deferred drydocking & special survey costs

2,063


2,409


4,254


4,252

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

4,117


3,247


9,243


6,598

Amortization of deferred realized losses on interest rate swaps

903


921


1,796


1,832

Interest income

(1,569)


(1,418)


(3,165)


(2,793)

Interest expense

14,855


20,507


27,740


40,755

Stock based compensation

1,035


-


1,865


-

Refinancing professional fees

-


20,093


-


29,701

Adjusted EBITDA(1)

$75,581


$78,294


$153,119


$154,932


1)  Adjusted EBITDA represents net income before interest income and expense, depreciation, amortization of
     deferred drydocking & special survey costs, amortization of deferred finance costs, debt discount and other
     finance fees accrued, amortization of deferred realized losses on interest rate swaps, 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 and six months ended June 30, 2019 and 2018. 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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