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Danaos Corporation Reports Third Quarter and Nine Months Results for the Period Ended September 30, 2018

ATHENS, Greece, Nov. 14, 2018 /PRNewswire/ -- Danaos Corporation ("Danaos") (DAC), one of the world's largest independent owners of containerships, today reported unaudited results for the period ended September 30, 2018.

Highlights for the Third Quarter and Nine Months Ended September 30, 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 $37.5 million, or $0.23 per share, for the three months ended September 30, 2018 compared to $30.1 million, or $0.27 per share, for the three months ended September 30, 2017, an increase of 24.6%. Adjusted net income1 of $94.6 million, or $0.74 per share, for the nine months ended September 30, 2018 compared to $83.7 million, or $0.76 per share, for the nine months ended September 30, 2017, an increase of 13.0%.
  • Operating revenues of $117.8 million for the three months ended September 30, 2018 compared to $113.6 million for the three months ended September 30, 2017, an increase of 3.7%. Operating revenues of $343.1 million for the nine months ended September 30, 2018 compared to $337.6 million for the nine months ended September 30, 2017, an increase of 1.6%.
  • Adjusted EBITDA1 of $82.7 million for the three months ended September 30, 2018 compared to $79.8 million for the three months ended September 30, 2017, an increase of 3.6%. Adjusted EBITDA1 of $237.7 million for the nine months ended September 30, 2018 compared to $230.4 million for the nine months ended September 30, 2017, an increase of 3.2%.
  • Total contracted operating revenues were $1.7 billion as of September 30, 2018, with charters extending through 2028 and remaining average contracted charter duration of 5.1 years, weighted by aggregate contracted charter hire.
  • Charter coverage of 90% for the next 12 months based on current operating revenues and 78% in terms of contracted operating days.

 

 

Three and Nine Months Ended September 30, 2018

Financial Summary - Unaudited

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



Three months ended


Three months ended


Nine months ended


Nine months ended

September 30,

September 30,

September 30,

September 30,


2018


2017


2018


2017









Operating revenues

$117,781


$113,588


$343,101


$337,563

Net income

$127,217


$22,427


$148,047


$61,099

Adjusted net income1

$37,452


$30,091


$94,581


$83,650

Earnings per share, diluted

$0.77


$0.20


$1.15


$0.56

Adjusted earnings per share, diluted1

$0.23


$0.27


$0.74


$0.76

Diluted weighted average number of shares (in thousands)

165,597


109,825


128,603


109,825

Adjusted EBITDA1

$82,745


$79,753


$237,677


$230,362

____________________________

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 completed a very significant refinancing transaction in the 3rd quarter of 2018 that reduced our debt by $551 million, reset financial covenants and extended debt maturities to the end of 2023 on the back of a sustainable new amortization profile. This transaction has strengthened the Company's growth prospects over the next five years by removing all balloon payments and maturities of existing debt during that period.

Adjusted net income for the 3rd quarter of 2018 was $37.5 million or 23 cents per share, $7.4 million or 24.6% higher when compared to the 3rd quarter of 2017. This improvement was primarily the result of a $4.2 million increase in operating revenues due to improved re-chartering rates. Adjusted EBITDA for the 3rd quarter of 2018 was $82.7 million, $2.9 million or 3.6% higher when compared to the 3rd quarter of 2017.

Since our last earnings report, the charter market has remained consistently soft. Uncertainty about the potential impact of ongoing trade tensions, combined with higher newbuilding prices due to increasing steel prices and wages in China have discouraged new ordering except some feeder projects by some Asian liners.  This is positive for the medium term market outlook. Instead, market participants have been focusing on the 2020 regulations and in particular investments on scrubbers for vessels from 6,500 TEU upwards.

Danaos has been actively focused on positioning our fleet ahead of the implementation of the new regulations. Thus far, we have committed to install exhaust cleaning systems, or scrubbers, on six vessels, two of which are owned by our joint venture Gemini Shipholdings Corporation. These vessels have been chartered out for periods of at least three years in duration and since these are all vessels that are currently on short term charters, these transactions significantly improve income visibility. Additionally, the charter rate fixtures provide a full payback of the investment over three years, and we also benefit from the enhancement in the value of the upgraded underlying assets. We are also currently in discussions to install scrubbers on a further five vessels.

We maintain our high charter contract coverage of 90% in terms of operating revenues and 78% in terms of operating days over the next 12 months. This insulates us from the near-term soft charter market.  Through the six charters described above on vessels with scrubbers and an additional two fixtures that have been secured for durations of three years, our charter coverage has improved, and our contracted revenue has increased by more than $160 million.

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 re-financing transaction further enhances our ability to pursue growth opportunities and deliver value to our shareholders."

Three months ended September 30, 2018 compared to the three months ended September 30, 2017

During the three months ended September 30, 2018 and September 30, 2017, Danaos had an average of 55 containerships. Our fleet utilization for the three months ended September 30, 2018 was 97.4% compared to 97.0% for the three months ended September 30, 2017.

Our adjusted net income amounted to $37.5 million, or $0.23 per share, for the three months ended September 30, 2018 compared to $30.1 million, or $0.27 per share, for the three months ended September 30, 2017. We have adjusted our net income in the three months ended September 30, 2018 for the gain on debt extinguishment of $116.4 million, refinancing related professional fees of $21.8 million and a non-cash fees amortization charge and accrued finance fees of $4.8 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.

The increase of $7.4 million in adjusted net income for the three months ended September 30, 2018 compared to the three months ended September 30, 2017 is attributable mainly to a $4.2 million increase in operating revenues, a $3.4 million decrease in net finance expenses and a $0.4 million operating performance improvement on equity investments, which were partially offset by $0.6 million increase in total operating expenses.

On a non-adjusted basis, our net income amounted to $127.2 million, or $0.77 per share, for the three months ended September 30, 2018 compared to net income of $22.4 million, or $0.20 per share, for the three months ended September 30, 2017.

Operating Revenues
Operating revenues increased by 3.7%, or $4.2 million, to $117.8 million in the three months ended September 30, 2018 from $113.6 million in the three months ended September 30, 2017.

Operating revenues for the three months ended September 30, 2018 reflect:

  • $6.3 million increase in revenues in the three months ended September 30, 2018 compared to the three months ended September 30, 2017 due to the re-chartering of certain of our vessels at higher rates.
  • $2.1 million decrease in revenues due to lower fleet utilization of our vessels in the three months ended September 30, 2018 compared to the three months ended September 30, 2017.

Vessel Operating Expenses
Vessel operating expenses decreased by 2.3%, or $0.6 million, to $25.5 million in the three months ended September 30, 2018 from $26.1 million in the three months ended September 30, 2017. The average daily operating cost per vessel for vessels on time charter was $5,427 per day for the three months ended September 30, 2018 compared to $5,569 per day for the three months ended September 30, 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 7.5%, or $2.2 million, to $27.0 million in the three months ended September 30, 2018 from $29.2 million in the three months ended September 30, 2017.

Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs increased by $1.0 million, to $2.6 million in the three months ended September 30, 2018 from $1.6 million in the three months ended September 30, 2017. The increase was mainly due to the increased number of vessels dry-docked over the last nine months.

General and Administrative Expenses
General and administrative expenses increased by $2.0 million to $7.4 million in the three months ended September 30, 2018, from $5.4 million in the three months ended September 30, 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 increased by $0.3 million to $2.9 million in the three months ended September 30, 2018, from $2.6 million in the three months ended September 30, 2017.

Interest Expense and Interest Income
Interest expense decreased by 6.8%, or $1.5 million, to $20.5 million in the three months ended September 30, 2018 from $22.0 million in the three months ended September 30, 2017. The decrease in interest expense is attributed to:

(i) a $6.4 million decrease in interest expense on two of our facilities for which we have recognized an interest expense accrual of approximately $250 million during the quarter ended September 30, 2018. This interest expense accrual has been classified in our income statement under "Gain on debt extinguishment" and on our balance sheet under "Accumulated accrued interest" and represents future interest expense for the relevant facilities that has been accrued in advance as a result of the application of Troubled Debt Restructuring ("TDR") accounting in connection with our debt refinancing.

(ii) a $3.2 million increase in interest expense due to an increase in debt service cost of approximately 1.35%, partially offset by a $435 million decrease in our average debt, to $1,950.1 million in the three months ended September 30, 2018, compared to $2,385.8 million in the three months ended September 30, 2017.

(iii) a $1.7 million increase in the amortization of deferred finance costs related to our debt refinancing.

As of September 30, 2018, the debt outstanding, gross of deferred finance costs, was $1,694.5 million compared to $2,381.7 million as of September 30, 2017.

Interest income increased by $0.1 million to $1.5 million in the three months ended September 30, 2018 compared to $1.4 million in the three months ended September 30, 2017.

Other finance costs, net
Other finance costs, net decreased by $0.3 million to $0.7 million in the three months ended September 30, 2018 compared to $1.0 million in the three months ended September 30, 2017 mainly due to decreased exit fees expenses.

Equity income on investments
Equity income on investments amounted to $0.7 million in the three months ended September 30, 2018 compared to $0.3 million in the three months ended September 30, 2017 and relates to the improved operating performance of Gemini Shipholdings Corporation ("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 three months ended September 30, 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 remained stable at $0.9 million in each of the three months ended September 30, 2018 and 2017.

Other income/(expenses), net
Other income/(expenses), net was $21.6 million in expenses in the three months ended September 30, 2018 compared to $3.9 million in expenses in the three months ended September 30, 2017 mainly due to the increase in refinancing-related professional fees.

Adjusted EBITDA
Adjusted EBITDA increased by 3.6%, or $2.9 million, to $82.7 million in the three months ended September 30, 2018 from $79.8 million in the three months ended September 30, 2017. As outlined above, this increase is mainly attributable to a $4.2 million increase in operating revenues and a $0.4 million operating performance improvement on our equity investments, which were partially offset by a $1.7 million increase in total operating expenses. Adjusted EBITDA for the three months ended September 30, 2018 is adjusted for a gain on debt extinguishment of $116.4 million, refinancing-related professional fees of $21.8 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.

Nine months ended September 30, 2018 compared to the nine months ended September 30, 2017

During the nine months ended September 30, 2018 and September 30, 2017, Danaos had an average of 55 containerships. Our fleet utilization for the nine months ended September 30, 2018 was 96.4% compared to 95.9% for the nine months ended September 30, 2017. The fleet utilization excluding the off charter days of the vessels that were previously chartered to Hanjin was 98.0% in the nine months ended September 30, 2017.

Our adjusted net income amounted to $94.6 million, or $0.74 per share, for the nine months ended September 30, 2018 compared to $83.7 million, or $0.76 per share, for the nine months ended September 30, 2017. We have adjusted our net income in the nine months ended September 30, 2018 for the gain on debt extinguishment of $116.4 million, refinancing related professional fees of $51.5 million and a non-cash fees amortization charge and accrued finance fees of $11.4 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.

The increase of $10.9 million in adjusted net income for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 is attributable to a $5.5 million increase in operating revenues, a $5.3 million decrease in total operating expenses, a $0.7 million increase in other income and a $0.3 million increase in the operating performance of our equity investment in Gemini, which were partially offset by $0.9 million increase in net finance expenses.

On a non-adjusted basis, our net income amounted to $148.0 million, or $1.15 per share, for the nine months ended September 30, 2018 compared to net income of $61.1 million, or $0.56 per share, for the nine months ended September 30, 2017.

Operating Revenues
Operating revenues increased by 1.6%, or $5.5 million, to $343.1 million in the nine months ended September 30, 2018 from $337.6 million in the nine months ended September 30, 2017.

Operating revenues for the nine months ended September 30, 2018 reflect:

  • $12.5 million increase in revenues in the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 due to the re-chartering of certain of our vessels at higher rates.
  • $7.0 million decrease in revenues due to lower fleet utilization of our vessels in the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 (other than three vessels previously chartered to Hanjin which were less utilized in the nine months ended September 30, 2017).

Vessel Operating Expenses
Vessel operating expenses decreased by 2.1%, or $1.7 million, to $79.1 million in the nine months ended September 30, 2018 from $80.8 million in the nine months ended September 30, 2017. The average daily operating cost per vessel for vessels on time charter was $5,678 per day for the nine months ended September 30, 2018 compared to $5,687 per day for the nine months ended September 30, 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 7.4%, or $6.5 million, to $80.8 million in the nine months ended September 30, 2018 from $87.3 million in the nine months ended September 30, 2017.

Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs increased by $1.9 million, to $6.9 million in the nine months ended September 30, 2018 from $5.0 million in the nine months ended September 30, 2017. The increase was mainly due to the increased number of vessels dry-docked over the last nine months.

General and Administrative Expenses
General and administrative expenses increased by $1.5 million, to $18.4 million in the nine months ended September 30, 2018, from $16.9 million in the nine months ended September 30, 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 $9.2 million in the nine months ended September 30, 2018 from $9.6 million in the nine months ended September 30, 2017.

Interest Expense and Interest Income
Interest expense increased by 3.3%, or $2.1 million, to $66.4 million in the nine months ended September 30, 2018 from $64.3 million in the nine months ended September 30, 2017. The decrease in interest expense is attributed to:

(i) a $6.4 million decrease in interest expense on two of our facilities for which we have recognized an interest expense accrual of approximately $250 million during the quarter ended September 30, 2018. This interest expense accrual has been classified in our income statement under "Gain on debt extinguishment" and on our balance sheet under "Accumulated accrued interest" and represents future interest expense for the relevant facilities that has been accrued in advance as a result of the application of TDR accounting in connection with our debt refinancing.

(ii) a $7.4 million increase in interest expense due to an increase in debt service cost of approximately 0.94%, partially offset by a $257.6 million decrease in our average debt, to $2,174.5 million in the three months ended September 30, 2018, compared to $2,432.1 million in the three months ended September 30, 2017.

(iii) a $1.1 million increase in the amortization of deferred finance costs related to our debt refinancing.

As of September 30, 2018, the debt outstanding, gross of deferred finance costs, was $1,694.5 million compared to $2,381.7 million as of September 30, 2017.

Interest income increased by $0.1 million to $4.3 million in the nine months ended September 30, 2018 compared to $4.2 million in the nine months ended September 30, 2017.

Other finance costs, net
Other finance costs, net decreased by $0.5 million, to $2.6 million in the nine months ended September 30, 2018 from $3.1 million in the nine months ended September 30, 2017 mainly due to decreased exit fees expenses.

Equity income on investments
Equity income on investments amounted to $0.9 million in the nine months ended September 30, 2018 compared to $0.6 million in the nine months ended September 30, 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 nine months ended September 30, 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 remained stable at $2.8 million in each of the nine months ended September 30, 2018 and 2017.

Other income/(expenses), net
Other income/(expenses), net was $50.6 million in expenses in the nine months ended September 30, 2018 compared to $11.5 million in expenses in the nine months ended September 30, 2017 mainly due to a $42.2 million increase in refinancing-related professional fees, which were partially offset by a $0.7 million increase in other income and a $2.4 million realized loss on sale of HMM securities in the nine months ended September 30, 2017 that did not recur in the 2018 period.

Adjusted EBITDA
Adjusted EBITDA increased by 3.2%, or $7.3 million, to $237.7 million in the nine months ended September 30, 2018 from $230.4 million in the nine months ended September 30, 2017. As outlined above, this increase is attributable to a $5.5 million increase in operating revenues, a $0.8 million decrease in total operating expenses, a $0.7 million increase in other income and a $0.3 million increase in operating performance on our equity investments in the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017. Adjusted EBITDA for the nine months ended September 30, 2018 is adjusted for a gain on debt extinguishment of $116.4 million, refinancing-related professional fees of $51.5 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.

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 after giving effect to this issuance and diluting 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 Thursday, November 15, 2018 at 9:00 A.M. ET, the Company's management will host a conference call to discuss the results.

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

A telephonic replay of the conference call will be available until November 22, 2018 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 111 unscheduled off-hire days in the three months ended September 30, 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



2018

2018


2018


Total

Ownership Days

4,950


5,005


5,060


15,015

Less Off-hire Days:








Scheduled Off-hire Days

(125)


(111)


(22)


(258)

Other Off-hire Days

(91)


(84)


(111)


(286)

Operating Days

4,734


4,810


4,927


14,471

Vessel Utilization

95.6%


96.1%


97.4%


96.4%









Operating Revenues (in '000s of US Dollars)

$111,854


$113,466


$117,781


$343,101

Average Gross Daily Charter Rate 

$23,628


$23,590


$23,905


$23,710

















Vessel Utilization (No. of Days)

First Quarter


Second Quarter


Third Quarter



2017

2017


2017


Total

Ownership Days

4,950


5,005


5,060


15,015

Less Off-hire Days:








Scheduled Off-hire Days

(15)


(6)


(15)


(36)

Other Off-hire Days

(347)


(99)


(139)


(585)

Operating Days

4,588


4,900


4,906


14,394

Vessel Utilization

92.7%


97.9%


97.0%


95.9%









Operating Revenues (in '000s of US Dollars)

$110,087


$113,888


$113,588


$337,563

Average Gross Daily Charter Rate 

$23,995


$23,242


$23,153


$23,452

 

 

Fleet List
The following table describes in detail our fleet deployment profile as of November 13, 2018:

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


September 2019

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


December 2018

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 2018

Express Spain

3,400


2011


January 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


December 2018

Future

2,200


1997


December 2018

Sprinter

2,200


1997


February 2019

Stride

2,200


1997


February 2019

Progress C (ex Hyundai Progress)

2,200


1998


February 2019

Bridge

2,200


1998


February 2019

Highway

2,200


1998


January 2019

Vladivostok

2,200


1997


March 2019







Catherine C (ex NYK Lodestar)(2)

6,422


2001


November 2022

NYK Leo(2)

6,422


2002


November 2022

Suez Canal(2)

5,610


2002


February 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 Income-Unaudited

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




Three months ended


Three months ended


Nine months ended


Nine months ended

September 30,

September 30,

September 30,

September 30,



2018


2017


2018


2017










OPERATING REVENUES

$117,781


$113,588


$343,101


$337,563










OPERATING EXPENSES









Vessel operating expenses

(25,461)


(26,132)


(79,052)


(80,803)


Depreciation & amortization

(29,631)


(30,855)


(87,640)


(92,304)


General & administrative

(7,431)


(5,388)


(18,390)


(16,857)


Other operating expenses

(2,883)


(2,570)


(9,230)


(9,625)

Income From Operations

52,375


48,643


148,789


137,974










OTHER INCOME/(EXPENSES)









Interest income

1,505


1,386


4,298


4,201


Interest expense

(20,509)


(22,016)


(66,378)


(64,329)


Other finance expenses

(679)


(1,042)


(2,611)


(3,129)


Equity income on investments

728


278


912


633


Gain on debt extinguishment

116,365


-


116,365


-


Other income/(expenses), net

(21,637)


(3,891)


(50,565)


(11,488)


Realized loss on derivatives

(931)


(931)


(2,763)


(2,763)

Total Other Income/(Expenses), net

74,842


(26,216)


(742)


(76,875)










Net Income

$127,217


$22,427


$148,047


$61,099










EARNINGS PER SHARE








Basic earnings per share

$0.77


$0.20


$1.15


$0.56

Diluted earnings per share

$0.77


$0.20


$1.15


$0.56

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

164,870


109,825


128,358


109,825

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

165,597


109,825


128,603


109,825

 

 

 

Non-GAAP Measures*

Reconciliation of Net Income to Adjusted Net Income – Unaudited



Three months ended


Three months ended


Nine months ended


Nine months ended

September 30,

September 30,

September 30,

September 30,


2018


2017


2018


2017

Net income

$127,217


$22,427


$148,047


$61,099

Gain on debt extinguishment

$(116,365)


-


$(116,365)


-

Amortization of financing fees & finance fees accrued

4,834


3,538


11,432


10,882

Refinancing professional fees

21,766


4,126


51,467


9,312

Loss on sale of securities

-


-


-


2,357

Adjusted Net Income

$37,452


$30,091


$94,581


$83,650

Adjusted Earnings Per Share, diluted

$0.23


$0.27


$0.74


$0.76

Diluted weighted average number of shares (in thousands)

165,597


109,825


128,603


109,825



*

 The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures used in managing the business may provide users of this financial information additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain items that impact the overall comparability. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. See the Table above for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three and nine months ended September 30, 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

September 30,

December 31,




2018


2017

ASSETS





CURRENT ASSETS






Cash and cash equivalents


$80,133


$66,895


Restricted cash


-


2,812


Accounts receivable, net


8,818


6,502


Other current assets


30,729


49,790




119,680


125,999

NON-CURRENT ASSETS






Fixed assets, net


2,717,302


2,795,971


Deferred charges, net


13,979


8,962


Investments in affiliates


6,910


5,998


Other non-current assets


63,476


49,466




2,801,667


2,860,397

TOTAL ASSETS


$2,921,347


$2,986,396







LIABILITIES AND STOCKHOLDERS' EQUITY





CURRENT LIABILITIES






Long-term debt, current portion


118,517


$2,329,601


Accumulated accrued interest, current portion


35,815


-


Accounts payable, accrued liabilities & other current liabilities


85,092


50,238




239,424


2,379,839

LONG-TERM LIABILITIES






Long-term debt, net


1,527,390


-


Accumulated accrued interest, net of current portion


210,827


-


Other long-term liabilities


61,861


57,852




1,800,078


57,852







STOCKHOLDERS' EQUITY






Common stock


2,133


1,098


Additional paid-in capital


724,732


546,898


Accumulated other comprehensive loss


(107,852)


(114,076)


Retained earnings


262,832


114,785




881,845


548,705

Total liabilities and stockholders' equity


$2,921,347


$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


Nine months ended


Nine months ended

September 30,

September 30,

September 30,

September 30,



2018


2017


2018


2017

Operating Activities:









Net income

$127,217


$22,427


$148,047


$61,099


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









Depreciation

26,995


29,221


80,752


87,267


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

7,470


5,172


18,320


15,919


Gain on debt extinguishment

(116,365)


-


(116,365)


-


PIK interest

414


-


414


-


Payments for drydocking/special survey

(1,554)


(1,892)


(11,905)


(6,408)


Amortization of deferred realized losses on cash flow interest rate swaps

931


931


2,763


2,763


Equity income on investments

(728)


(278)


(912)


(633)


Stock based compensation

157


-


157


-


Loss on sale of securities

-


-


-


2,357


Accounts receivable

6,976


731


(2,316)


(3,085)


Other assets, current and non-current

17,340


(4,869)


8,512


(3,233)


Accounts payable and accrued liabilities

(9,701)


(974)


(1,608)


1,644


Other liabilities, current and long-term

(3,844)


(4,694)


(14,959)


(21,864)

Net Cash provided by Operating Activities

55,308


45,775


110,900


135,826










Investing Activities:









Vessel additions

(400)


(1,084)


(2,083)


(3,696)


Net proceeds from sale of securities

-


-


-


6,236

Net Cash provided by/(used in) Investing Activities

(400)


(1,084)


(2,083)


2,540










Financing Activities:









Proceeds from long-term debt

325,852


-


325,852


-


Debt  repayment

(358,726)


(44,358)


(407,107)


(147,930)


Finance costs

(26,967)


-


(26,967)


-


Paid-in capital

10,000


-


10,000


-


Share issuance costs

(169)


-


(169)


-

Net Cash used in Financing Activities

(50,010)


(44,358)


(98,391)


(147,930)

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

4,898


333


10,426


(9,564)

Cash, cash equivalents and restricted cash, beginning of period

75,235


66,632


69,707


76,529

Cash, cash equivalents and restricted cash, end of period

$80,133


$66,965


$80,133


$66,965

 

 

 

DANAOS CORPORATION

Reconciliation of Net Income to Adjusted EBITDA - Unaudited

(Expressed in thousands of United States dollars)



Three months ended


Three months ended


Nine months ended


Nine months ended

September 30,

September 30,

September 30,

September 30,


2018


2017


2018


2017

Net income

$127,217


$22,427


$148,047


$61,099

Depreciation

26,995


29,221


80,752


87,267

Amortization of deferred drydocking & special survey costs

2,636


1,634


6,888


5,037

Amortization of deferred finance costs and other finance fees accrued

4,834


3,538


11,432


10,882

Amortization of deferred realized losses on interest rate swaps

931


931


2,763


2,763

Interest income

(1,505)


(1,386)


(4,298)


(4,201)

Interest expense

16,079


19,262


56,834


55,846

Gain on debt extinguishment

(116,365)


-


(116,365)


-

Stock based compensation

157




157


-

Refinancing professional fees

21,766


4,126


51,467


9,312

Loss on sale of securities

-


-


-


2,357

Adjusted EBITDA(1)

$82,745


$79,753


$237,677


$230,362



1)

Adjusted EBITDA represents net income before interest income and expense, depreciation, amortization of deferred drydocking & special survey costs and deferred finance costs, amortization of deferred realized losses on interest rate swaps, loss on sale of securities, gain on debt extinguishment, 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 nine months ended September 30, 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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