Danaos Corporation Reports Second Quarter and Half Year Results for the Period Ended June 30, 2017
ATHENS, Greece, July 31, 2017 /PRNewswire/ -- Danaos Corporation ("Danaos") (NYSE: DAC), one of the world's largest independent owners of containerships, today reported unaudited results for the period ended June 30, 2017.
Highlights for the Second Quarter and Half Year Ended June 30, 2017:
-- Adjusted net income(1) of $29.0 million, or $0.26 per share, for the
three months ended June 30, 2017 compared to $47.7 million, or $0.43 per
share, for the three months ended June 30, 2016, a decrease of 39.1%.
Adjusted net income(1) of $53.6 million, or $0.49 per share, for the six
months ended June 30, 2017 compared to $94.9 million, or $0.86 per
share, for the six months ended June 30, 2016, a decrease of 43.6%.
-- Operating revenues of $113.9 million for the three months ended June 30,
2017 compared to $137.0 million for the three months ended June 30,
2016, a decrease of 16.9%. Operating revenues of $224.0 million for the
six months ended June 30, 2017 compared to $274.5 million for the six
months ended June 30, 2016, a decrease of 18.4%.
-- Adjusted EBITDA(1) of $78.1 million for the three months ended June 30,
2017 compared to $99.9 million for the three months ended June 30, 2016,
a decrease of 21.8%. Adjusted EBITDA(1) of $150.6 million for the six
months ended June 30, 2017 compared to $199.2 million for the six months
ended June 30, 2016, a decrease of 24.4%.
-- Total contracted operating revenues were $1.9 billion as of June 30,
2017, with charters extending through 2028 and remaining average
contracted charter duration of 6.2 years, weighted by aggregate
contracted charter hire.
-- Charter coverage of 87% for the next 12 months based on current
operating revenues and 66% in terms of contracted operating days.
Three and Six Months Ended June 30, 2017
Financial Summary
(Expressed in thousands of United States dollars, except per share amounts)
Three months Three months Six months Six months
ended ended ended ended
June 30, June 30, June 30, June 30,
-------- -------- -------- --------
2017 2016 2017 2016
---- ---- ---- ----
Operating revenues $113,888 $136,999 $223,975 $274,473
Net income $20,229 $44,648 $38,672 $88,769
Adjusted net income(1) $29,037 $47,714 $53,559 $94,942
Earnings per share $0.18 $0.41 $0.35 $0.81
Adjusted earnings per share(1) $0.26 $0.43 $0.49 $0.86
Weighted average number of shares 109,825 109,800 109,825 109,800
(in thousands)
Adjusted EBITDA(1) $78,063 $99,858 $150,609 $199,209
(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:
"Our earnings for the second quarter of 2017 continue to reflect the effect of the Hanjin bankruptcy on the Company's financial performance. Adjusted net income came in at $29 million for this quarter compared to $47.7 million for the second quarter of 2016, a decrease of $18.7 million. This decrease was attributable to a $19.3 million decrease in the operating revenues of the vessels that were previously chartered to Hanjin, and was partially offset by marginally improved operating performance by $0.6 million. Fleet utilization increased to 97.9% this quarter compared to 96.9% in the second quarter of 2016.
As previously reported, the Company is in breach of certain financial covenants as a result of the Hanjin bankruptcy. We are currently engaged in discussions with our lenders regarding refinancing substantially all of our debt maturing in 2018. These discussions encompass potential amendments to the associated financial covenants that have been breached. In the meantime, we continue to generate positive cash flows from our operations and currently are in a position to service all our operational obligations as well as all scheduled principal amortization and interest payments under the original terms of our debt agreements.
The charter market is moving sideways at levels slightly above the lows of 2016 but we have not yet seen a meaningful improvement to signal a market recovery. Box rates have improved as a result of improved capacity deployment through the alliances and the recent industry consolidation activity has reduced our counterparty risks. On the other hand, consolidation in the liner industry combined with legacy newbuilding orders for large vessels still to be delivered is anticipated to maintain pressure on charter rates for a considerable amount of time. Danaos continues to have low near term exposure to the weak spot market with charter coverage of 87% for the next 12 months based on current operating revenues and 66% in terms of contracted operating days.
Our commitment to provide best in class service to our customers is now being reinforced by the utilization of our in-house developed IT tool for online acquisition and analysis of big data for online performance monitoring of our vessels, a unique feature for efficient ship management in the industry.
During this extended period of market weakness which has presented many challenges, we remain focused on taking necessary actions to preserve the value of our company by managing our fleet efficiently and taking prudent measures to manage and ultimately deleverage our balance sheet."
Three months ended June 30, 2017 compared to the three months ended June 30, 2016
During the three months ended June 30, 2017 and June 30, 2016, Danaos had an average of 55 containerships. Our fleet utilization for the second quarter of 2017 was 97.9%, while fleet utilization for the vessels under employment, excluding the off charter days of the vessels that were previously chartered to Hanjin Shipping ("Hanjin"), increased to 98.8% in the three months ended June 30, 2017 compared to 96.9% in the three months ended June 30, 2016.
Our adjusted net income amounted to $29.0 million, or $0.26 per share, for the three months ended June 30, 2017 compared to $47.7 million, or $0.43 per share, for the three months ended June 30, 2016. We have adjusted our net income in the three months ended June 30, 2017 for one-off refinancing professional fees of $5.2 million and a non-cash amortization charge of $3.6 million for fees related to our 2011 comprehensive financing plan (comprised of non-cash, amortizing and accrued finance fees). Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.
The decrease of $18.7 million in adjusted net income for the three months ended June 30, 2017 compared to the three months ended June 30, 2016 is attributable to a $19.3 million decrease in operating revenues as a result of the Hanjin bankruptcy and a further decline in operating revenues of $4.3 million as a result of weaker charter market conditions, which were partially offset by a $0.5 million increase in operating revenues due to higher fleet utilization, a $3.5 million decrease in total operating expenses, a $0.5 million decrease in net finance costs mainly due to interest rate swap expirations, and a $0.4 million improvement in the operating performance of our equity investment in Gemini Shipholdings Corporation ("Gemini").
On a non-adjusted basis, our net income amounted to $20.2 million, or $0.18 per share, for the three months ended June 30, 2017 compared to net income of $44.6 million, or $0.41 per share, for the three months ended June 30, 2016.
Operating Revenues
Operating revenues decreased by 16.9%, or $23.1 million, to $113.9 million in the three months ended June 30, 2017 from $137.0 million in the three months ended June 30, 2016.
Operating revenues for the three months ended June 30, 2017 reflect:
-- $19.3 million decrease in revenues in the three months ended June 30,
2017 compared to the three months ended June 30, 2016 due to loss of
revenue from cancelled charters with Hanjin for eight of our vessels due
to Hanjin's bankruptcy. These vessels were re-chartered at lower rates
and in some cases experienced off hire time in the 2017 period.
-- $4.3 million decrease in revenues in the three months ended June 30,
2017 compared to the three months ended June 30, 2016 due to the
re-chartering of certain of our vessels at lower rates.
-- $0.5 million increase in revenues due to higher fleet utilization in the
three months ended June 30, 2017 compared to the three months ended June
30, 2016.
Vessel Operating Expenses
Vessel operating expenses decreased by 2.9%, or $0.8 million, to $27.2 million in the three months ended June 30, 2017 from $28.0 million in the three months ended June 30, 2016. The decrease is mainly attributable to a 1.2% decrease in the average daily operating cost per vessel during the three months ended June 30, 2017 compared to the three months ended June 30, 2016 to $5,734 per day for the three months ended June 30, 2017 from $5,802 per day for the three months ended June 30, 2016. 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 9.0%, or $2.9 million, to $29.2 million in the three months ended June 30, 2017 from $32.1 million in the three months ended June 30, 2016, mainly due to decreased depreciation expense for twenty-five vessels for which we recorded an impairment charge on December 31, 2016.
Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs increased by $0.3 million, to $1.7 million in the three months ended June 30, 2017 from $1.4 million in the three months ended June 30, 2016. The increase was mainly due to the increased payments for dry-docking and special survey costs related to certain vessels over the last year.
General and Administrative Expenses
General and administrative expenses decreased by $0.1 million to $5.3 million in the three months ended June 30, 2017, from $5.4 million in the three months ended June 30, 2016.
Other Operating Expenses
Other Operating Expenses include Voyage Expenses.
Voyage Expenses
Voyage expenses remained stable, amounting to $3.2 million in the three months ended June 30, 2017 and in the three months ended June 30, 2016.
Interest Expense and Interest Income
Interest expense increased by 3.9%, or $0.8 million, to $21.4 million in the three months ended June 30, 2017 from $20.6 million in the three months ended June 30, 2016. The increase in interest expense was mainly due to the increase in average cost of debt due to the increase in US$ Libor by almost 50 bps between the two periods, which was partially offset by a decrease in our average debt by $259.2 million, to $2,427.6 million in the three months ended June 30, 2017, from $2,686.8 million in the three months ended June 30, 2016 and a $0.4 million decrease in the amortization of deferred finance costs.
As of June 30, 2017, the debt outstanding gross of deferred finance costs was $2,425.3 million compared to $2,676.9 million as of June 30, 2016. As a result principally of the cancellation of eight charters with Hanjin, we expect the rate at which we reduce our leverage to decline.
Interest income increased by $0.4 million to $1.3 million in the three months ended June 30, 2017 compared to $0.9 million in the three months ended June 30, 2016. The increase was mainly attributed to the interest income recognized on HMM notes receivable.
Other finance costs, net
Other finance costs, net decreased by $0.1 million, to $1.0 million in the three months ended June 30, 2017 from $1.1 million in the three months ended June 30, 2016.
Equity income/(loss) on investments
Equity income on investments amounted to $0.2 million in the three months ended June 30, 2017 compared to the equity loss on investments of $0.2 million in the three months ended June 30, 2016 and relates to the improved operating performance of Gemini, in which the Company has a 49% shareholding interest.
Unrealized gain on derivatives
Unrealized gain on interest rate swaps amounted to nil in the three months ended June 30, 2017 compared to a gain of $1.0 million in the three months ended June 30, 2016. The unrealized gains in the three months ended June 30, 2016 were attributable to mark to market valuation of our swaps, which all expired by December 31, 2016.
Realized loss on derivatives
Realized loss on interest rate swaps decreased to $0.9 million in the three months ended June 30, 2017 from a loss of $2.1 million in the three months ended June 30, 2016. This decrease is attributable to swap expirations. As of December 31, 2016, all of our interest rate swaps have expired.
Other income/(expenses), net
Other income/(expenses), net was $5.1 million in expenses in the three months ended June 30, 2017 compared to nil in the three months ended June 30, 2016 due to the increased professional fees related to the refinancing discussions with our lenders.
Adjusted EBITDA
Adjusted EBITDA decreased by 21.8%, or $21.8 million, to $78.1 million in the three months ended June 30, 2017 from $99.9 million in the three months ended June 30, 2016. As outlined earlier, this decrease is attributed to a $23.1 million decrease in operating revenues, which was partially offset by a $0.9 million decrease in operating expenses and a $0.4 million operating performance improvement on equity investments. Adjusted EBITDA for the three months ended June 30, 2017 is adjusted for one-off refinancing professional fees of $5.2 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.
Six months ended June 30, 2017 compared to the six months ended June 30, 2016
During the six months ended June 30, 2017 and June 30, 2016, Danaos had an average of 55 containerships. Our fleet utilization in the six months ended June 30, 2017 was 95.3%, while fleet utilization for the vessels under employment, excluding the off charter days of the vessels that were previously chartered to Hanjin Shipping ("Hanjin"), increased to 98.5% in the six months ended June 30, 2017 compared to 95.7% in the six months ended June 30, 2016.
Our adjusted net income amounted to $53.6 million, or $0.49 per share, for the six months ended June 30, 2017 compared to $94.9 million, or $0.86 per share, for the six months ended June 30, 2016. We have adjusted our net income in the six months ended June 30, 2017 for one-off refinancing professional fees of $5.2 million, a non-cash amortization charge of $7.3 million for fees related to our 2011 comprehensive financing plan (comprised of non-cash, amortizing and accrued finance fees) and a loss on sale of Hyundai Merchant Marine ("HMM") securities of $2.4 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.
The decrease of $41.3 million in adjusted net income for the six months ended June 30, 2017 compared to the six months ended June 30, 2016 is attributable to a $41.3 million decrease in operating revenues as a result of the Hanjin bankruptcy, a further decline in operating revenues of $9.7 million as a result of weaker charter market conditions and a $0.4 million decrease in other income, which were partially offset by a $0.5 million increase in operating revenues due to higher fleet utilization, a $6.2 million decrease in total operating expenses, a $2.1 million decrease in net finance costs mainly due to interest rate swap expirations and increased interest income, and a $1.3 million improvement in the operating performance of our equity investment in Gemini Shipholdings Corporation ("Gemini").
On a non-adjusted basis, our net income amounted to $38.7 million, or $0.35 per share, for the six months ended June 30, 2017 compared to net income of $88.8 million, or $0.81 per share, for the six months ended June 30, 2016.
Operating Revenues
Operating revenues decreased by 18.4%, or $50.5 million, to $224.0 million in the six months ended June 30, 2017 from $274.5 million in the six months ended June 30, 2016.
Operating revenues for the six months ended June 30, 2017 reflect:
-- $41.3 million decrease in revenues in the six months ended June 30, 2017
compared to the six months ended June 30, 2016 due to loss of revenue
from cancelled charters with Hanjin for eight of our vessels due to
Hanjin's bankruptcy. These vessels were re-chartered at lower rates and
in some cases experienced off hire time in the 2017 period.
-- $9.7 million decrease in revenues in the six months ended June 30, 2017
compared to the six months ended June 30, 2016 due to the re-chartering
of certain of our vessels at lower rates.
-- $0.5 million increase in revenues due to higher fleet utilization in the
six months ended June 30, 2017 compared to the six months ended June 30,
2016.
Vessel Operating Expenses
Vessel operating expenses decreased by 3.9%, or $2.2 million, to $54.7 million in the six months ended June 30, 2017 from $56.9 million in the six months ended June 30, 2016. The decrease is attributable to a 2.5% decrease in the average daily operating cost per vessel during the six months ended June 30, 2017 compared to the six months ended June 30, 2016 to $5,745 per day for the six months ended June 30, 2017 from $5,893 per day for the six months ended June 30, 2016. 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 9.5%, or $6.1 million, to $58.0 million in the six months ended June 30, 2017 from $64.1 million in the six months ended June 30, 2016, mainly due to decreased depreciation expense for twenty-five vessels for which we recorded an impairment charge on December 31, 2016.
Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs increased by $1.0 million, to $3.4 million in the six months ended June 30, 2017 from $2.4 million in the six months ended June 30, 2016. The increase was mainly due to the increased payments for dry-docking and special survey costs related to certain vessels over the last year.
General and Administrative Expenses
General and administrative expenses increased by $0.8 million, to $11.5 million in the six months ended June 30, 2017, from $10.7 million in the six months ended June 30, 2016.
Other Operating Expenses
Other Operating Expenses include Voyage Expenses.
Voyage Expenses
Voyage expenses increased by $0.4 million, to $7.1 million in the six months ended June 30, 2017 from $6.7 million in the six months ended June 30, 2016.
Interest Expense and Interest Income
Interest expense increased by 3.7%, or $1.5 million, to $42.3 million in the six months ended June 30, 2017 from $40.8 million in the six months ended June 30, 2016. The increase in interest expense was mainly due to the increase in average cost of debt due to the increase in US$ Libor by almost 50 bps between the two periods, which was partially offset by a decrease in our average debt by $257.0 million, to $2,455.6 million in the six months ended June 30, 2017, from $2,712.6 million in the six months ended June 30, 2016 and a $0.8 million decrease in the amortization of deferred finance costs.
As of June 30, 2017, the debt outstanding gross of deferred finance costs was $2,425.3 million compared to $2,676.9 million as of June 30, 2016. As a result principally of the cancellation of eight charters with Hanjin, we expect the rate at which we reduce our leverage to decline.
Interest income increased by $1.0 million to $2.8 million in the six months ended June 30, 2017 compared to $1.8 million in the six months ended June 30, 2016. The increase was mainly attributed to the interest income recognized on HMM notes receivable.
Other finance costs, net
Other finance costs, net decreased by $0.1 million, to $2.1 million in the six months ended June 30, 2017 from $2.2 million in the six months ended June 30, 2016.
Equity income/(loss) on investments
Equity income on investments amounted to $0.4 million in the six months ended June 30, 2017 compared to the equity loss on investments of $0.9 million in the six months ended June 30, 2016 and relates to the improved operating performance of Gemini, in which the Company has a 49% shareholding interest.
Unrealized gain on derivatives
Unrealized gain on interest rate swaps amounted to nil in the six months ended June 30, 2017 compared to a gain of $2.1 million in the six months ended June 30, 2016. The unrealized gains in the six months ended June 30, 2016 were attributable to mark to market valuation of our swaps, which all expired by December 31, 2016.
Realized loss on derivatives
Realized loss on interest rate swaps decreased to $1.8 million in the six months ended June 30, 2017 from a loss of $5.3 million in the six months ended June 30, 2016. This decrease is attributable to swap expirations. As of December 31, 2016, all of our interest rate swaps have expired.
Other income/(expenses), net
Other income/(expenses), net decreased to $7.6 million in expenses in the six months ended June 30, 2017 from $0.4 million in income in the six months ended June 30, 2016 mainly due to a $5.2 million increase in professional fees related to the refinancing discussions with our lenders and a $2.4 million realized loss on sale of HMM securities in the six months ended June 30, 2017.
Adjusted EBITDA
Adjusted EBITDA decreased by 24.4%, or $48.6 million, to $150.6 million in the six months ended June 30, 2017 from $199.2 million in the six months ended June 30, 2016. As outlined earlier, this decrease is mainly attributed to a $50.5 million decrease in operating revenues and a $0.4 million decrease in other income, which were partially offset by a $1.0 million decrease in operating expenses and a $1.3 million operating performance improvement on equity investments. Adjusted EBITDA for the six months ended June 30, 2017 is adjusted for one-off refinancing professional fees of $5.2 million and a loss on sale of HMM securities of $2.4 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.
Recent Developments
As a result of a decrease in our operating income and the charter-attached market value of certain of our vessels caused principally by the cancellation of eight charters with Hanjin Shipping, which is currently under bankruptcy proceedings with the Seoul Central District Court, we were in breach of the minimum security cover, consolidated net leverage and consolidated net worth financial covenants contained in our Bank Agreement and our other credit facilities as of June 30, 2017 and December 31, 2016. We had obtained waivers of the breaches of these financial covenants until April 1, 2017 and have therefore classified our long-term debt, net of deferred finance costs as current. We are currently in discussions with our lenders regarding our non-compliance with these covenants and refinancing the 2018 maturities of substantially all of our debt. However, we continue to generate positive cash flows from our operations and currently are in a position to service all our operational obligations as well as all scheduled principal amortization and interest payments under the original terms of our debt agreements.
Conference Call and Webcast
On Tuesday, August 1, 2017 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 8, 2017 by dialing 1 877 344 7529 (US Toll Free Dial In) or +44 (0) 2036 088 021 (Standard International Dial In) and using 10111169# as the access code.
Audio Webcast
There will also be a live and then archived webcast of the conference call 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 352,600 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 safeharbor 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, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. 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 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 drydocking, changes in Danaos Corporation's operating expenses, including bunker prices, dry-docking and insurance costs, ability to obtain financing, including to refinance our existing debt upon maturity, 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 99 unscheduled off-hire days in the three months ended June 30, 2017. 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 Second
Quarter Quarter
---
2017 2017 Total
---- ---- -----
Ownership Days 4,950 5,005 9,955
Less Off-hire Days:
Scheduled Off-hire Days (15) (6) (21)
Other Off-hire Days (347) (99) (446)
---- --- ----
Operating Days 4,588 4,900 9,488
===== ===== =====
Vessel Utilization 92.7% 97.9% 95.3%
Operating Revenues (in '000s of US Dollars) $110,087 $113,888 $223,975
Average Gross Daily Charter Rate $23,995 $23,242 $23,606
Vessel Utilization (No. of Days) First Second
Quarter Quarter
---
2016 2016 Total
---- ---- -----
Ownership Days 5,013 5,005 10,018
Less Off-hire Days:
Scheduled Off-hire Days (31) (45) (76)
Other Off-hire Days (242) (110) (352)
---- ---- ----
Operating Days 4,740 4,850 9,590
===== ===== =====
Vessel Utilization 94.6% 96.9% 95.7%
Operating Revenues (in '000s of US Dollars) $137,474 $136,999 $274,473
Average Gross Daily Charter Rate $29,003 $28,248 $28,621
Fleet List
The following table describes in detail our fleet deployment profile as of July 31, 2017:
Vessel Name Vessel Size Year Expiration of Charter(1)
Built
(TEU)
--- ----
Containerships
--------------
MSC Ambition (ex Hyundai
Ambition) 13,100 2012 June 2024
Maersk Exeter (ex Hyundai
Speed) 13,100 2012 June 2024
Maersk Enping (ex Hyundai
Smart) 13,100 2012 May 2024
Hyundai Respect (ex Hyundai
Tenacity) 13,100 2012 March 2024
Hyundai Honour (ex Hyundai
Together) 13,100 2012 February 2024
Express Rome 10,100 2011 August 2017
Express Berlin 10,100 2011 August 2017
Express Athens 10,100 2011 August 2017
CSCL Le Havre 9,580 2006 September 2018
CSCL Pusan 9,580 2006 July 2018
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
CSCL America 8,468 2004 August 2017
Europe 8,468 2004 August 2017
CMA CGM Moliere (2) 6,500 2009 August 2021
CMA CGM Musset (2) 6,500 2010 February 2022
CMA CGM Nerval (2) 6,500 2010 April 2022
CMA CGM Rabelais (2) 6,500 2010 June 2022
CMA CGM Racine (2) 6,500 2010 July 2022
YM Mandate 6,500 2010 January 2028
YM Maturity 6,500 2010 April 2028
Performance 6,402 2002 May 2018
Priority 6,402 2002 November 2017
YM Singapore 4,300 2004 October 2019
YM Seattle 4,253 2007 July 2019
YM Vancouver 4,253 2007 September 2019
Derby D 4,253 2004 September 2017
Deva 4,253 2004 August 2017
ZIM Rio Grande 4,253 2008 May 2020
ZIM Sao Paolo 4,253 2008 August 2020
ZIM Kingston (ex OOCL
Istanbul) 4,253 2008 September 2020
ZIM Monaco 4,253 2009 November 2020
ZIM Dalian (ex OOCL
Novorossiysk) 4,253 2009 February 2021
ZIM Luanda 4,253 2009 May 2021
Dimitris C 3,430 2001 February 2018
Express Black Sea 3,400 2011 February 2018
Express Spain 3,400 2011 August 2017
Express Argentina 3,400 2010 August 2017
Express Brazil 3,400 2010 August 2017
Express France 3,400 2010 August 2017
Colombo 3,314 2004 March 2019
MSC Zebra 2,602 2001 October 2017
Amalia C 2,452 1998 September 2017
Danae C 2,524 2001 January 2020
Advance (ex Hyundai
Advance) 2,200 1997 June 2019
Hyundai Future 2,200 1997 August 2017
Hyundai Sprinter 2,200 1997 August 2017
Stride (ex Hyundai Stride) 2,200 1997 February 2018
Hyundai Progress 2,200 1998 December 2017
Hyundai Bridge 2,200 1998 January 2018
Hyundai Highway 2,200 1998 January 2018
Vladivostok (ex Hyundai
Vladivostok) 2,200 1997 August 2017
NYK Lodestar(3) 6,422 2001 September 2017
NYK Leo(3) 6,422 2002 February 2019
Suez Canal(3) 5,610 2002 August 2017
Genoa(3) 5,544 2002 June 2018
(1) Earliest date charters could expire.
Some charters include options to
extend their terms.
(2) The charters with respect to the CMA
CGM Moliere, the CMA CGM Musset, the
CMA CGM Nerval, the CMA CGM Rabelais
and the CMA CGM Racine included an
option for the charterer, CMA-CGM,
to purchase the vessels eight years
after the commencement of the
respective charters, which will fall
in September 2017, March 2018, May
2018, July 2018 and August 2018,
respectively, each for $78.0
million. Each such option was
exercisable 15 months in advance of
these dates. None of these options
were exercised.
(3) Vessels acquired by Gemini
Shipholdings Corporation, in which
Danaos holds a 49% equity interest.
DANAOS CORPORATION
Condensed 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,
-------- -------- -------- --------
2017 2016 2017 2016
---- ---- ---- ----
OPERATING REVENUES $113,888 $136,999 $223,975 $274,473
OPERATING EXPENSES
Vessel operating expenses (27,216) (27,983) (54,671) (56,895)
Depreciation & amortization (30,857) (33,470) (61,449) (66,552)
General & administrative (5,340) (5,446) (11,469) (10,662)
Loss on sale of vessels - - - (36)
Other operating expenses (3,216) (3,240) (7,055) (6,690)
Income From Operations 47,259 66,860 89,331 133,638
------ ------ ------ -------
OTHER INCOME/(EXPENSES)
Interest income 1,344 890 2,815 1,840
Interest expense (21,413) (20,616) (42,313) (40,774)
Other finance expenses (1,040) (1,111) (2,087) (2,238)
Equity income/(loss) on investments 149 (211) 355 (934)
Other income/(expenses), net (5,149) (23) (7,597) 400
Realized loss on derivatives (921) (2,161) (1,832) (5,301)
Unrealized gain on derivatives - 1,020 - 2,138
Total Other Expenses, net (27,030) (22,212) (50,659) (44,869)
------- ------- ------- -------
Net Income $20,229 $44,648 $38,672 $88,769
======= ======= ======= =======
EARNINGS PER SHARE
Basic & diluted earnings per share $0.18 $0.41 $0.35 $0.81
===== ===== ===== =====
Basic & diluted weighted average number of common shares (in thousands
of shares) 109,825 109,800 109,825 109,800
Non-GAAP Measures*
Reconciliation of Net Income to Adjusted Net Income - Unaudited
Three Three Six months Six months
months months ended ended
ended ended
June 30, June 30, June 30, June 30,
-------- -------- -------- --------
2017 2016 2017 2016
---- ---- ---- ----
Net income $20,229 $44,648 $38,672 $88,769
Unrealized gain on derivatives - (1,020) - (2,138)
Amortization of financing fees & finance fees accrued 3,622 4,086 7,344 8,275
One-off refinancing professional fees 5,186 - 5,186 -
Loss on sale of securities - - 2,357 -
Loss on sale of vessels - - - 36
-----------------------
Adjusted Net Income $29,037 $47,714 $53,559 $94,942
=======
Adjusted Earnings Per Share $0.26 $0.43 $0.49 $0.86
=====
Weighted average number of shares (in thousands) 109,825 109,800 109,825 109,800
* 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, 2017 and 2016. 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 Balance Sheets - Unaudited
(Expressed in thousands of United States dollars)
As of As of
June 30, December 31,
-------- ------------
2017 2016
---- ----
ASSETS
CURRENT ASSETS
Cash and cash equivalents $63,820 $73,717
Restricted cash 2,812 2,812
Accounts receivable, net 11,844 8,028
Other current assets 48,673 51,397
127,149 135,954
------- -------
NON-CURRENT ASSETS
Fixed assets, net 2,851,721 2,906,721
Deferred charges, net 9,312 8,199
Investments in affiliates 5,388 5,033
Other non-current assets 29,545 71,157
2,895,966 2,991,110
--------- ---------
TOTAL ASSETS $3,023,115 $3,127,064
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Long-term debt, current portion $2,408,704 $2,504,932
Accounts payable, accrued liabilities & other current liabilities 55,253 61,349
2,463,957 2,566,281
--------- ---------
LONG-TERM LIABILITIES
Other long-term liabilities 65,048 73,070
65,048 73,070
------ ------
STOCKHOLDERS' EQUITY
Common stock 1,098 1,098
Additional paid-in capital 546,898 546,898
Accumulated other comprehensive loss (123,438) (91,163)
Retained earnings 69,552 30,880
494,110 487,713
------- -------
Total liabilities and stockholders' equity $3,023,115 $3,127,064
========== ==========
DANAOS CORPORATION
Condensed Statements of Cash Flows - Unaudited
(Expressed in thousands of United States dollars)
Three months Three months Six months Six months
ended ended ended ended
June 30, June 30, June 30, June 30,
-------- -------- -------- --------
2017 2016 2017 2016
---- ---- ---- ----
Operating Activities:
Net income $20,229 $44,648 $38,672 $88,769
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 29,195 32,075 58,046 64,122
Amortization of deferred drydocking & special survey costs, finance cost and other finance fees accrued 5,284 5,481 10,747 10,705
Payments for drydocking/special survey (422) (3,276) (4,516) (6,394)
Amortization of deferred realized losses on cash flow interest rate swaps 921 1,001 1,832 2,003
Equity (income)/loss on investments (149) 211 (355) 934
Unrealized gain on derivatives - (1,020) - (2,138)
Loss on sale of securities - - 2,357 -
Loss on sale of vessels - - - 36
Accounts receivable (2,486) (6,081) (3,816) (10,707)
Other assets, current and non-current 1,426 94 1,636 (14,314)
Accounts payable and accrued liabilities 576 (1,388) 2,618 1,012
Other liabilities, current and long-term (8,856) 643 (17,170) (236)
Net Cash provided by Operating Activities 45,718 72,388 90,051 133,792
------ ------ ------ -------
Investing Activities:
Vessel additions and vessel acquisitions (1,085) (1,613) (2,612) (1,990)
Investments in affiliates - (3,675) - (5,145)
Net proceeds from sale of securities 6,236 - 6,236 -
Net proceeds from sale of vessels - - - 5,178
Net Cash provided by/(used in) Investing Activities 5,151 (5,288) 3,624 (1,957)
----- ------ ----- ------
Financing Activities:
Debt repayment (49,614) (50,808) (103,572) (99,966)
Increase in restricted cash (2,812) (5,873) - (3,062)
Net Cash used in Financing Activities (52,426) (56,681) (103,572) (103,028)
------- ------- -------- --------
Net Increase/(Decrease) in cash and cash equivalents (1,557) 10,419 (9,897) 28,807
Cash and cash equivalents, beginning of period 65,377 90,641 73,717 72,253
------ ------ ------ ------
Cash and cash equivalents, end of period $63,820 $101,060 $63,820 $101,060
======= ======== ======= ========
DANAOS CORPORATION
Reconciliation of Net Income to Adjusted EBITDA
(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,
-------- -------- -------- --------
2017 2016 2017 2016
---- ---- ---- ----
Net income $20,229 $44,648 $38,672 $88,769
Depreciation 29,195 32,075 58,046 64,122
Amortization of deferred drydocking & special
survey costs 1,662 1,395 3,403 2,430
Amortization of deferred finance costs and write-
offs and other finance fees accrued 3,622 4,086 7,344 8,275
Amortization of deferred realized losses on
interest rate swaps 921 1,001 1,832 2,003
Interest income (1,344) (890) (2,815) (1,840)
Interest expense 18,592 17,403 36,584 34,254
One-off refinancing professional fees 5,186 - 5,186 -
Loss on sale of securities - - 2,357 -
Loss on sale of vessels - - - 36
Realized loss on derivatives - 1,160 - 3,298
Unrealized gain on derivatives - (1,020) - (2,138)
Adjusted EBITDA(1) $78,063 $99,858 $150,609 $199,209
======= ======= ======== ========
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,
unrealized gain on derivatives,
realized loss on derivatives, loss
on sale of securities, one-off
refinancing professional fees and
a loss on sale of vessels.
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, 2017 and 2016. 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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SOURCE Danaos Corporation
