Danaos Corporation Reports Third Quarter and Nine Months Results for the Period Ended September 30, 2019
ATHENS, Greece, Nov. 4, 2019 /PRNewswire/ -- Danaos Corporation ("Danaos") (NYSE: DAC), one of the world's largest independent owners of containerships, today reported unaudited results for the period ended September 30, 2019.
Highlights for the Third Quarter and Nine Months Ended September 30, 2019:
-- Adjusted net income(1) of $37.9 million, or $2.46 per share(2), for the
three months ended September 30, 2019 compared to $37.5 million, or
$3.17 per share(2), for the three months ended September 30, 2018, an
increase of 1.1%. Adjusted net income(1) of $110.7 million, or $7.23 per
share(2), for the nine months ended September 30, 2019 compared to $94.6
million, or $10.30 per share(2), for the nine months ended September 30,
2018, an increase of 17.0%.
-- Operating revenues of $111.8 million for the three months ended
September 30, 2019 compared to $117.8 million for the three months ended
September 30, 2018, a decrease of 5.1%. Operating revenues of $337.0
million for the nine months ended September 30, 2019 compared to $343.1
million for the nine months ended September 30, 2018, a decrease of
1.8%.
-- Adjusted EBITDA(1) of $79.3 million for the three months ended September
30, 2019 compared to $82.7 million for the three months ended September
30, 2018, a decrease of 4.1%. Adjusted EBITDA(1) of $232.4 million for
the nine months ended September 30, 2019 compared to $237.7 million for
the nine months ended September 30, 2018, a decrease of 2.2%.
-- Total contracted operating revenues were $1.4 billion as of September
30, 2019, with charters extending through 2028 and remaining average
contracted charter duration of 4.3 years, weighted by aggregate
contracted charter hire.
-- Charter coverage of 89% for the next 12 months based on current
operating revenues and 75% in terms of contracted operating days.
Three and Nine Months Ended September 30, 2019
Financial Summary - Unaudited
(
Expressed in thousands of United States dollars, except per share amounts
)
Three months
Three months
Nine months
Nine months
ended ended ended ended
September
September
September
September
30, 30, 30, 30,
---
2019 2018 2019 2018
Operating revenues $111,830 $117,781 $337,040 $343,101
Net income $33,855 $127,217 $97,436 $148,047
Adjusted net income(1) $37,882 $37,452 $110,706 $94,581
Earnings per share, diluted(2) $2.20 $10.76 $6.36 $16.12
Adjusted earnings per share, diluted1,2 $2.46 $3.17 $7.23 $10.30
Diluted weighted average number of shares (in thousands)(2) 15,373 11,828 15,309 9,186
Adjusted EBITDA(1) $79,328 $82,745 $232,447 $237,677
(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 $37.9 million for the third quarter of 2019 increased by $0.4 million, or 1.1%, when compared to the third quarter of 2018. This improvement was primarily the result of a $4.6 million decrease in total operating costs and a $1.9 million decrease in net finance expenses, partially offset by a $6 million decrease in operating revenues mainly due to the re-chartering of certain of our vessels that concluded long-term above market charters over the last 12 months and were re-deployed at market rates during the quarter. Adjusted EBITDA for the third quarter of 2019 was $79.3 million, a decrease of $3.4 million compared to the third quarter of 2018.
The charter market has strengthened considerably during the last six months particularly for vessels larger than 5,500 TEU, although we have also seen an improvement in charter rates for Panamax vessels. This may be partially due to a decrease in fleet capacity as vessels are being temporarily removed from the fleet to be retrofitted with scrubbers in preparation for IMO 2020 sulphur emissions regulations. Larger vessel classes have seen the greatest downtime, and we expect this to continue through 2020 and help contribute to a healthy charter market. This coincides with improving underlying market demand supply fundamentals.
For 2020, we are aligned with the shipping analyst reports and our expectation is that container trade demand growth will outpace supply growth for the first time in almost 10 years. The IMF currently forecasts world GDP growth of 3.5% for 2020, and we expect that the multiplier of containerized trade growth vs GDP growth will slightly exceed 1x and that containerized trade will grow by up to 4% in 2020. On the supply side, capacity growth is not expected to exceed 3% in 2020. Market participants, mainly liner companies, have generally remained reluctant to place newbuilding orders until the U.S. - China trade talks are settled and the IMO regulations come into effect, also taking the opportunity from the favorable demand / supply balance to gain pricing power on freight rates. The combined result of these factors should support the strengthening of the charter market going forward.
Our total contracted revenues as of September 30, 2019 were $1.4 billion, and we maintain our high charter contract coverage of 89% in terms of operating revenues and 75% in terms of operating days over the next 12 months. Our larger vessels remain employed on multi-year charters, and improving market conditions provide upside for the balance of our fleet. We remain committed to operational excellence and technological innovation, which allows us to continually deliver a high quality service to our customers. We are also well-positioned to pursue growth opportunities and deliver value to our shareholders due to our significantly improved financial position."
Three months ended September 30, 2019 compared to the three months ended September 30, 2018
During the three months ended September 30, 2019 and September 30, 2018, Danaos had an average of 55 containerships. Our fleet utilization for the three months ended September 30, 2019 was 98.7% compared to 97.4% for the three months ended September 30, 2018.
Our adjusted net income amounted to $37.9 million, or $2.46 per share, for the three months ended September 30, 2019 compared to $37.5 million, or $3.17 per share, for the three months ended September 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 September 30, 2019 for non-cash fees amortization and accrued financing fees of $4.0 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.
The increase of $0.4 million in adjusted net income for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 is attributable mainly to a $4.6 million decrease in total operating expenses and a $1.9 million decrease in net finance expenses, which were partially offset by a $6.0 million decrease in operating revenues and a $0.1 million decrease in the operating performance of our equity investment in Gemini.
On a non-adjusted basis, our net income amounted to $33.9 million, or $2.20 earnings per diluted share, for the three months ended September 30, 2019 compared to net income of $127.2 million (including gain on debt extinguishment and refinancing-related professional fees described below), or $10.76 earnings per diluted share, for the three months ended September 30, 2018 (after giving retroactive effect to the reverse stock split of 1-for-14).
Operating Revenues
Operating revenues decreased by 5.1%, or $6.0 million, to $111.8 million in the three months ended September 30, 2019 from $117.8 million in the three months ended September 30, 2018.
Operating revenues for the three months ended September 30, 2019 reflects a $6.0 million decrease in revenues 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 September 30, 2019.
Vessel Operating Expenses
Vessel operating expenses decreased by 2.4%, or $0.6 million, to $24.9 million in the three months ended September 30, 2019 from $25.5 million in the three months ended September 30, 2018. The average daily operating cost per vessel for vessels on time charter was $5,298 per day for the three months ended September 30, 2019 compared to $5,427 per day for the three months ended September 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 10.0%, or $2.7 million, to $24.3 million in the three months ended September 30, 2019 from $27.0 million in the three months ended September 30, 2018 mainly due to decreased depreciation expense for 10 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 $2.3 million in the three months ended September 30, 2019 from $2.6 million in the three months ended September 30, 2018. The decrease was mainly due to a decreased number of vessels dry-docked.
General and Administrative Expenses
General and administrative expenses decreased by $1.0 million, to $6.4 million in the three months ended September 30, 2019, from $7.4 million in the three months ended September 30, 2018. The decrease was mainly due to decreased remuneration expenses.
Other Operating Expenses
Other Operating Expenses include Voyage Expenses.
Voyage Expenses
Voyage expenses decreased by $0.1 million, to $2.8 million in the three months ended September 30, 2019 from $2.9 million in the three months ended September 30, 2018.
Interest Expense and Interest Income
Interest expense decreased by 11.2%, or $2.3 million, to $18.2 million in the three months ended September 30, 2019 from $20.5 million in the three months ended September 30, 2018. The decrease in interest expense is attributable to:
(i) a $4.9 million decrease in interest expense on two of our credit facilities for which we recognized an interest expense accrual in the third quarter of 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 $3.1 million increase in interest expense due to an increase in debt service cost by approximately 1.7%, partially offset by a $347.7 million decrease in our average debt (including leaseback obligations), to $1,603.1 million in the three months ended September 30, 2019, compared to $1,950.8 million in the three months ended September 30, 2018; and
(iii) a $0.5 million decrease in the amortization of deferred finance costs and debt discount related to our 2018 debt refinancing.
As of September 30, 2019, our bank debt outstanding, gross of deferred finance costs, was $1,450.0 million and leaseback obligation was $141.4 million compared to bank debt of $1,694.5 million outstanding as of September 30, 2018.
Interest income increased by $0.1 million to $1.6 million in the three months ended September 30, 2019 compared to $1.5 million in the three months ended September 30, 2018.
Other finance costs, net
Other finance costs, net decreased by $0.4 million to $0.3 million in the three months ended September 30, 2019 compared to $0.7 million in the three months ended September 30, 2018 mainly due to decreased exit fees expenses.
Equity income on investments
Equity income on investments decreased by $0.1 million to $0.6 million in the three months ended September 30, 2019 compared to $0.7 million in the three months ended September 30, 2018 and relates to the 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 related to our 2018 debt refinancing and consisted 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 month periods ended September 30, 2019 and 2018.
Other income/(expenses), net
Other income/(expenses), net was nil in the three months ended September 30, 2019 compared to $21.6 million in expenses in the three months ended September 30, 2018 mainly due to $21.8 million of refinancing-related professional fees in the prior period.
Adjusted EBITDA
Adjusted EBITDA decreased by 4.1%, or $3.4 million, to $79.3 million in the three months ended September 30, 2019 from $82.7 million in the three months ended September 30, 2018. As described above, the decrease is mainly attributable to a $6.0 million decrease in operating revenues and a $0.1 million decrease in operating performance on our equity investments, which were partially offset by a $2.7 million decrease in total operating expenses. Adjusted EBITDA for the three months ended September 30, 2019 is adjusted for stock based compensation of $1.2 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.
Nine months ended September 30, 2019 compared to the nine months ended September 30, 2018
During the nine months ended September 30, 2019 and September 30, 2018, Danaos had an average of 55 containerships. Our fleet utilization for the nine months ended September 30, 2019 was 98.8% compared to 96.4% for the nine months ended September 30, 2018.
Our adjusted net income amounted to $110.7 million, or $7.23 per share, for the nine months ended September 30, 2019 compared to $94.6 million, or $10.30 per share, for the nine months ended September 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 nine months ended September 30, 2019 for non-cash fees amortization and accrued financing fees of $13.3 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.
The increase of $16.1 million in adjusted net income for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 is attributable to a $14.0 million decrease in net finance expenses and a $8.6 million decrease in total operating expenses, which were partially offset by a $6.1 million decrease in the operating revenue and a $0.4 million decrease in the operating performance of our equity investment in Gemini.
On a non-adjusted basis, our net income amounted to $97.4 million, or $6.36 per diluted share, for the nine months ended September 30, 2019 compared to net income of $148.0 million (including gain on debt extinguishment and refinancing-related professional fees described below), or $16.12 per diluted share, for the nine months ended September 30, 2018 (after giving retroactive effect to the reverse stock split of 1-for-14).
Operating Revenues
Operating revenues decreased by $6.1 million, to $337.0 million in the nine months ended September 30, 2019 from $343.1 million in the nine months ended September 30, 2018.
Operating revenues for the nine months ended September 30, 2019 reflect:
-- a $10.0 million decrease in revenues in the nine months ended September
30, 2019 compared to the nine months ended September 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 nine months ended September 30, 2019; and
-- a $3.9 million increase in revenues due to higher fleet utilization of
our vessels in the nine months ended September 30, 2019 compared to the
nine months ended September 30, 2018.
Vessel Operating Expenses
Vessel operating expenses decreased by 1.4%, or $1.1 million, to $78.0 million in the nine months ended September 30, 2019 from $79.1 million in the nine months ended September 30, 2018. The average daily operating cost per vessel for vessels on time charter was $5,605 per day for the nine months ended September 30, 2019 compared to $5,678 per day for the nine months ended September 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 10.7%, or $8.6 million, to $72.1 million in the nine months ended September 30, 2019 from $80.7 million in the nine months ended September 30, 2018 mainly due to decreased depreciation expense for 10 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 $0.4 million, to $6.5 million in the nine months ended September 30, 2019 compared to $6.9 million in the nine months ended September 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 $1.4 million, to $19.8 million in the nine months ended September 30, 2019, from $18.4 million in the nine months ended September 30, 2018. The increase was mainly due to increased share based compensation costs.
Other Operating Expenses
Other Operating Expenses include Voyage Expenses.
Voyage Expenses
Voyage expenses decreased by $0.4 million, to $8.8 million in the nine months ended September 30, 2019 from $9.2 million in the nine months ended September 30, 2018.
Interest Expense and Interest Income
Interest expense decreased by 17.3%, or $11.5 million, to $54.9 million in the nine months ended September 30, 2019 from $66.4 million in the nine months ended September 30, 2018. The decrease in interest expense is attributable to:
(i) a $27.8 million decrease in interest expense on two of our credit facilities for which we recognized an interest expense accrual in the third quarter of 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 $12.9 million increase in interest expense due to an increase in debt service cost of approximately 2.3%, partially offset by a $544.7 million decrease in our average debt (including leaseback obligations), to $1,629.8 million in the nine months ended September 30, 2019, compared to $2,174.5 million in the nine months ended September 30, 2018; and
(iii) a $3.4 million increase in the amortization of deferred finance costs and debt discount related to our 2018 debt refinancing.
As of September 30, 2019, our bank debt outstanding, gross of deferred finance costs, was $1,450.0 million and leaseback obligation was $141.4 million compared to bank debt of $1,694.5 million outstanding as of September 30, 2018.
Interest income increased by $0.5 million to $4.8 million in the nine months ended September 30, 2019 compared to $4.3 million in the nine months ended September 30, 2018.
Other finance costs, net
Other finance costs, net decreased by $0.2 million, to $2.4 million in the nine months ended September 30, 2019 from $2.6 million in the nine months ended September 30, 2018.
Equity income on investments
Equity income on investments decreased by $0.4 million to $0.5 million in the nine months ended September 30, 2019 compared to $0.9 million in the nine months ended September 30, 2018 and relates to the 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 related to our 2018 debt refinancing 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 $2.7 million in each of the nine months ended September 30, 2019 and 2018.
Other income/(expenses), net
Other income/(expenses), net was $0.4 million in income in the nine months ended September 30, 2019 compared to $50.6 million in expenses in the nine months ended September 30, 2018 mainly due to $51.5 million of refinancing-related professional fees in the prior period.
Adjusted EBITDA
Adjusted EBITDA decreased by 2.2%, or $5.3 million, to $232.4 million in the nine months ended September 30, 2019 from $237.7 million in the nine months ended September 30, 2018. As described above, this decrease is mainly attributable to a $6.1 million decrease in operating revenue, a $1.3 million increase in other finance costs and a $0.4 million decrease in operating performance on our equity investments, which were partially offset by a $2.5 million decrease in total operating expenses. Adjusted EBITDA for the nine months ended September 30, 2019 is adjusted for stock based compensation of $3.1 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.
Recent Developments
On October 2, 2019, we entered into an agreement to acquire a 8,500 TEU container vessel built in 2005 for a gross purchase price of $25.0 million. This vessel is expected to be delivered to us prior to the end of May 2020.
Conference Call and Webcast
On Tuesday November 5, 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 November 12, 2019 by dialing 1 877 344 7529 (US Toll Free Dial In) or 1-412-317-0088 (Standard International Dial In) and using 101366720# as the access code.
Audio Webcast
There will also be a live and then archived webcast of the conference call on the Danaos website (www.danaos.com). Participants of the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.
Slide Presentation
A slide presentation regarding the Company and the containership industry will also be available on the Danaos website (www.danaos.com).
About Danaos Corporation
Danaos Corporation is one of the largest independent owners of modern, large-size containerships. Our current fleet of 60 containerships aggregating 360,147 TEUs, including five 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 24 unscheduled off-hire days in the three months ended September 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 Second Third
Quarter Quarter Quarter
---
2019 2019 2019 Total
---
Ownership Days 4,950 5,005 5,060 15,015
Less Off-hire Days:
Scheduled Off-hire Days - (22) (41) (63)
Other Off-hire Days (90) (10) (24) (124)
Operating Days 4,860 4,973 4,995 14,828
Vessel Utilization 98.2% 99.4% 98.7% 98.8%
Operating Revenues (in '000s of US Dollars) $112,891 $112,319 $111,830 $337,040
Average Gross Daily Charter Rate $23,229 $22,586 $22,388 $22,730
Vessel Utilization (No. of Days) First Second Third
Quarter Quarter 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
Fleet List
The following table describes in detail our fleet deployment profile as of November 4, 2019:
Vessel Name Vessel Size Year
Expiration of Charter(1)
Built
(TEU)
---
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
December 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
March 2023
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
November 2019
YM Vancouver 4,253 2007
April 2020
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
December 2019
Express Spain 3,400 2011
March 2020
Express Argentina 3,400 2010
May 2020
Express Brazil 3,400 2010
September 2020
Express France 3,400 2010
October 2020
Singapore 3,314 2004
March 2020
Colombo 3,314 2004
February 2020
MSC Zebra 2,602 2001
September 2020
Amalia C 2,452 1998
March 2020
Danae C 2,524 2001
January 2020
Advance 2,200 1997
April 2020
Future 2,200 1997
November 2019
Sprinter 2,200 1997
March 2020
Stride 2,200 1997
April 2020
Progress C 2,200 1998
March 2020
Bridge 2,200 1998
September 2020
Highway 2,200 1998
February 2020
Vladivostok 2,200 1997
November 2019
Belita ?2) 8,533 2006
September 2021
Catherine C (2) 6,422 2001
December 2022
Leo C (2) 6,422 2002
September 2022
Suez Canal(2) 5,610 2002
April 2020
Genoa?2) 5,544 2002
August 2020
(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
Three
Nine
Nine
months months months months
ended ended ended ended
September September September September
30, 30, 30, 30,
---
2019 2018 2019 2018
OPERATING REVENUES $111,830 $117,781 $337,040 $343,101
OPERATING EXPENSES
Vessel operating expenses (24,858) (25,461) (78,035) (79,052)
Depreciation & amortization (26,607) (29,631) (78,666) (87,640)
General & administrative (6,422) (7,431) (19,783) (18,390)
Other operating expenses (2,792) (2,883) (8,794) (9,230)
Income From Operations 51,151 52,375 151,762 148,789
---
OTHER INCOME/(EXPENSES)
Interest income 1,586 1,505 4,751 4,298
Interest expense (18,216) (20,509) (54,903) (66,378)
Other finance expenses (308) (679) (2,402) (2,611)
Equity income on investments 560 728 508 912
Gain on debt extinguishment 116,365 116,365
Other income/(expenses), net (5) (21,637) 429 (50,565)
Realized loss on derivatives (913) (931) (2,709) (2,763)
Total Other Income/(Expenses), net (17,296) 74,842 (54,326) (742)
---
Net Income $33,855 $127,217 $97,436 $148,047
===
EARNINGS PER SHARE
Basic earnings per share(1) $2.27 $10.80 $6.52 $16.15
===
Diluted earnings per share(1) $2.20 $10.76 $6.36 $16.12
===
Basic weighted average number of common shares (in thousands of
shares)(1) 14,939 11,776 14,939 9,168
Diluted weighted average number of common shares (in thousands of
shares)(1) 15,373 11,828 15,309 9,186
Non-GAAP Measures(2)
Reconciliation of Net Income to Adjusted Net Income - Unaudited
Three
Three
Nine
Nine
months months months months
ended ended ended ended
September September September September
30, 30, 30, 30,
---
2019 2018 2019 2018
Net income $33,855 $127,217 $97,436 $148,047
Gain on debt extinguishment - (116,365) (116,365)
Amortization of financing fees, debt discount & finance fees accrued 4,027 4,834 13,270 11,432
Refinancing professional fees - 21,766 51,467
---
Adjusted Net Income $37,882 $37,452 $110,706 $94,581
Adjusted Earnings Per Share, diluted(1) $2.46 $3.17 $7.23 $10.30
Diluted weighted average number of shares (in thousands)(1) 15,373 11,828 15,309 9,186
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 nine months ended
September 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
September 30,
December 31,
--- ---
2019 2018
ASSETS
CURRENT ASSETS
Cash and cash equivalents $82,823 $77,275
Accounts receivable, net 7,637 9,225
Other current assets 37,128 33,250
127,588 119,750
NON-CURRENT ASSETS
Fixed assets, net 2,412,274 2,480,329
Deferred charges, net 11,720 13,031
Investments in affiliates 7,871 7,363
Other non-current assets 78,231 59,369
2,510,096 2,560,092
TOTAL ASSETS $2,637,684 $2,679,842
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Long-term debt, current portion $115,551 $113,777
Accumulated accrued interest, current portion 34,610 35,782
Long-term leaseback obligations, current portion 15,202
Accounts payable, accrued liabilities & other current liabilities 56,840 73,142
222,203 222,701
LONG-TERM LIABILITIES
Long-term debt, net 1,298,371 1,508,108
Accumulated accrued interest, net of current portion 167,237 200,574
Long-term leaseback obligations, net 126,172
Other long-term liabilities 31,945 57,606
1,623,725 1,766,288
STOCKHOLDERS' EQUITY
Common stock(1) 154 152
Additional paid-in capital(1) 730,620 727,562
Accumulated other comprehensive loss (118,303) (118,710)
Retained earnings 179,285 81,849
791,756 690,853
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,637,684 $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
Three
Nine
Nine
months months months months
ended ended ended ended
September September September September
30, 30, 30, 30,
---
2019 2018 2019 2018
Operating Activities:
Net income $33,855 $127,217 $97,436 $148,047
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 24,336 26,995 72,141 80,752
Amortization of deferred drydocking & special survey costs, finance cost, debt discount and other finance fees accrued 6,298 7,470 19,795 18,320
Gain on debt extinguishment (116,365) (116,365)
PIK interest 850 414 2,545 414
Payments for drydocking/special survey (3,524) (1,554) (5,214) (11,905)
Amortization of deferred realized losses on cash flow interest rate swaps 913 931 2,709 2,763
Equity income on investments (560) (728) (508) (912)
Stock based compensation 1,195 157 3,060 157
Accounts receivable (141) 6,976 1,588 (2,316)
Other assets, current and non-current (2,923) 17,340 (13,996) 8,512
Accounts payable and accrued liabilities (379) (9,701) (563) (1,608)
Other liabilities, current and long-term (3,731) (3,844) (11,348) (14,959)
Net Cash provided by Operating Activities 56,189 55,308 167,645 110,900
---
Investing Activities:
Vessel additions and advances (4,124) (400) (14,762) (2,083)
Net Cash used in Investing Activities (4,124) (400) (14,762) (2,083)
---
Financing Activities:
Proceeds from long-term debt 325,852 325,852
Proceeds from sale-leaseback of vessels 146,523 -
Debt repayment (25,578) (358,726) (231,389) (407,107)
Payments of leaseback obligations (3,063) (5,149) -
Payments of accumulated accrued interest (8,979) (26,846) -
Finance costs (10,425) (26,967) (30,474) (26,967)
Paid-in capital 10,000 10,000
Share issuance costs (169) (169)
Net Cash used in Financing Activities (48,045) (50,010) (147,335) (98,391)
---
Net increase in cash, cash equivalents and restricted cash 4,020 4,898 5,548 10,426
Cash, cash equivalents and restricted cash, beginning of period 78,803 75,235 77,275 69,707
---
Cash, cash equivalents and restricted cash, end of period $82,823 $80,133 $82,823 $80,133
===
DANAOS CORPORATION
Reconciliation of Net Income to Adjusted EBITDA - Unaudited
(Expressed in thousands of United States dollars)
Three months
Three months
Nine months
Nine months
ended ended ended ended
September 30,
September 30,
September 30,
September 30,
---
2019 2018 2019 2018
Net income $33,855 $127,217 $97,436 $148,047
Depreciation 24,336 26,995 72,141 80,752
Amortization of deferred drydocking & special survey costs 2,271 2,636 6,525 6,888
Amortization of deferred finance costs, debt discount and other finance fees accrued 4,027 4,834 13,270 11,432
Amortization of deferred realized losses on interest rate swaps 913 931 2,709 2,763
Interest income (1,586) (1,505) (4,751) (4,298)
Interest expense 14,317 16,079 42,057 56,834
Gain on debt extinguishment - (116,365) (116,365)
Stock based compensation 1,195 157 3,060 157
Refinancing professional fees - 21,766 51,467
Adjusted EBITDA(1) $79,328 $82,745 $232,447 $237,677
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, gain on debt
extinguishment 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, 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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SOURCE Danaos Corporation
