Danaos Corporation Reports First Quarter Results for the Period Ended March 31, 2018
ATHENS, Greece, June 26, 2018 /PRNewswire/ -- Danaos Corporation ("Danaos") (NYSE: DAC), one of the world's largest independent owners of containerships, today reported unaudited results for the quarter ended March 31, 2018.
Highlights for the First Quarter Ended March 31, 2018:
-- On June 19, 2018, we reached an agreement with certain of our lenders
currently holding approximately $2.2 billion of debt maturing on
December 31, 2018, that will significantly strengthen the Company's
financial position through a debt reduction of approximately $551
million, the resetting of financial and other covenants, modified
interest rates and amortization profiles and an extension of existing
debt maturities by approximately five years to December 31, 2023. In
connection with this refinancing, the consummation of which is subject
to definitive documentation and certain closing conditions, we will
issue approximately 99.3 million shares of common stock to certain of
our lenders. See "Debt Refinancing".
-- Adjusted net income(1) of $27.9 million, or $0.25 per share, for the
three months ended March 31, 2018 compared to $24.5 million, or $0.22
per share, for the three months ended March 31, 2017, an increase of
13.9%.
-- Operating revenues of $111.9 million for the three months ended March
31, 2018 compared to $110.1 million for the three months ended March 31,
2017, an increase of 1.6%.
-- Adjusted EBITDA(1) of $76.6 million for the three months ended March 31,
2018 compared to $72.5 million for the three months ended March 31,
2017, an increase of 5.7%.
-- Total contracted operating revenues were $1.7 billion as of March 31,
2018, with charters extending through 2028 and remaining average
contracted charter duration of 5.4 years, weighted by aggregate
contracted charter hire.
-- Charter coverage of 90% for the next 12 months based on current
operating revenues and 81% in terms of contracted operating days.
Three Months Ended March 31, 2018
Financial Summary - Unaudited
(Expressed in thousands of United States dollars, except per share amounts)
Three months Three months
ended ended
March 31, March 31,
--------- ---------
2018 2017
---- ----
Operating revenues $111,854 $110,087
Net income $14,992 $18,443
Adjusted net income(1) $27,951 $24,522
Earnings per share $0.14 $0.17
Adjusted earnings per share(1) $0.25 $0.22
Weighted average number of shares (in thousands) 109,799 109,825
Adjusted EBITDA(1) $76,638 $72,546
(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:
"We are extremely pleased to have reached an agreement with certain of our lenders currently holding $2.2 billion of debt maturing on December 31, 2018 that will significantly strengthen the Company's capital structure through a debt reduction of $551 million.
This comprehensive debt refinancing will also strengthen the Company's financial position through a resetting of financial and certain other covenants in credit facilities, a modification of interest rates and amortization profiles and an extension of existing debt maturities by approximately five years to December 31, 2023. In connection with these debt write downs, we will issue just under 100 million shares of common stock to certain of our lenders.
This is the culmination of a lengthy negotiation process we have undertaken with our lenders that will position Danaos for long-term success. I would like to thank all of our lenders for their support, as well as our financial and legal advisors for their assistance. The Danaos management team looks forward to the completion of this transaction which is expected to occur by July 31, 2018.
In the near term, we maintain high charter contract coverage of 90% for the next 12 months based on current operating revenues and 81% in terms of contracted operating days. The charter market has stabilized at current levels although trade tensions tend to make liner companies hesitant to commit for longer periods. The benefit, conversely, may be a reduction of speculative ordering or ordering by liner companies, a condition that would improve market conditions.
Danaos continues to be a leader in the container shipping industry as a result of our intense focus on continuously enhancing our operations and leveraging technical innovation to provide the highest quality service to our customers. Our industry has undergone significant changes during the past few years, and with the improved capital structure contemplated by our comprehensive re-financing agreement, we will be well positioned to take advantage of the growth opportunities in the container sector and create value for our shareholders."
Three months ended March 31, 2018 compared to the three months ended March 31, 2017
During the three months ended March 31, 2018 and March 31, 2017, Danaos had an average of 55 containerships. Our fleet utilization for the three months ended March 31, 2018 was 95.6% compared to 92.7% for the three months ended March 31, 2017. The fleet utilization excluding the off charter days of the vessels that were previously chartered to Hanjin Shipping ("Hanjin") was 98.1% in the three months ended March 31, 2017.
Our adjusted net income amounted to $27.9 million, or $0.25 per share, for the three months ended March 31, 2018 compared to $24.5 million, or $0.22 per share, for the three months ended March 31, 2017. We have adjusted our net income in the three months ended March 31, 2018 for refinancing related professional fees of $9.6 million and a non-cash amortization charge of $3.4 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 increase of $3.4 million in adjusted net income for the three months ended March 31, 2018 compared to the three months ended March 31, 2017 is attributable mainly to a $3.9 million decrease in total operating expenses and $1.8 million increase in operating revenues, which were partially offset by a $2.3 million increase in net finance expenses.
On a non-adjusted basis, our net income amounted to $15.0 million, or $0.14 per share, for the three months ended March 31, 2018 compared to net income of $18.4 million, or $0.17 per share, for the three months ended March 31, 2017.
Operating Revenues
Operating revenues increased by 1.6%, or $1.8 million, to $111.9 million in the three months ended March 31, 2018 from $110.1 million in the three months ended March 31, 2017.
Operating revenues for the three months ended March 31, 2018 reflect:
-- $3.2 million increase in revenues in the three months ended March 31,
2018 compared to the three months ended March 31, 2017 due to the
re-chartering of certain of our vessels at higher rates.
-- $1.4 million decrease in revenues due to lower fleet utilization for
vessels in our fleet, other than the three vessels previously chartered
to Hanjin which did not earn any revenues in the three months ended
March 31, 2017, compared to the three months ended March 31, 2018.
Vessel Operating Expenses
Vessel operating expenses decreased by 2.5%, or $0.7 million, to $26.8 million in the three months ended March 31, 2018 from $27.5 million in the three months ended March 31, 2017. The average daily operating cost per vessel for vessels on time charter was $5,849 per day for the three months ended March 31, 2018 compared to $5,756 per day for the three months ended March 31, 2017. Management believes that our daily operating cost ranks as one of the most competitive in the industry.
Depreciation & Amortization
Depreciation & Amortization includes Depreciation and Amortization of Deferred Dry-docking and Special Survey Costs.
Depreciation
Depreciation expense decreased by 6.2%, or $1.8 million, to $27.1 million in the three months ended March 31, 2018 from $28.9 million in the three months ended March 31, 2017.
Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs increased by $0.1 million, to $1.8 million in the three months ended March 31, 2018 from $1.7 million in the three months ended March 31, 2017.
General and Administrative Expenses
General and administrative expenses decreased by $0.9 million, to $5.2 million in the three months ended March 31, 2018, from $6.1 million in the three months ended March 31, 2017. The decrease was due to decreased professional fees.
Other Operating Expenses
Other Operating Expenses include Voyage Expenses.
Voyage Expenses
Voyage expenses decreased by $0.6 million, to $3.2 million in the three months ended March 31, 2018 from $3.8 million in the three months ended March 31, 2017. The decrease is mainly due to decreased bunkering expenses.
Interest Expense and Interest Income
Interest expense increased by 9.1%, or $1.9 million, to $22.8 million in the three months ended March 31, 2018 from $20.9 million in the three months ended March 31, 2017. The increase in interest expense was mainly due to the increase in average cost of debt due to the increase in US$ Libor by about 60 bps between the two periods, which was partially offset by a decrease in our average debt by $182.5 million, to $2,301.4 million in the three months ended March 31, 2018, from $2,483.9 million in the three months ended March 31, 2017 and a $0.4 million decrease in the amortization of deferred finance costs.
As of March 31, 2018, our debt outstanding gross of deferred finance costs was $2,299.9 million compared to $2,474.1 million as of March 31, 2017.
Interest income decreased by $0.1 million to $1.4 million in the three months ended March 31, 2018 compared to $1.5 million in the three months ended March 31, 2017.
Other finance costs, net
Other finance costs, net remained stable at $1.0 million in the three months ended March 31, 2018 and 2017.
Equity income/(loss) on investments
Equity income/(loss) on investments decreased by $0.2 million in the three months ended March 31, 2018 from equity income on investments of $0.2 million in the three months ended March 31, 2017 and relates to the operating performance of Gemini, in which the Company has a 49% shareholding interest.
Loss on derivatives
Amortization of deferred realized losses on interest rate swaps remained stable at $0.9 million in the three months ended March 31, 2018 and 2017.
Other income/(expenses), net
Other income/(expenses), net was $9.4 million in expenses in the three months ended March 31, 2018 mainly due to $9.6 million of refinancing-related professional fees compared to $2.4 million in expenses in the three months ended March 31, 2017 due to a $2.4 million realized loss on sale of HMM securities.
Adjusted EBITDA
Adjusted EBITDA increased by 5.7%, or $4.1 million, to $76.6 million in the three months ended March 31, 2018 from $72.5 million in the three months ended March 31, 2017. As outlined above, this increase is mainly attributable to a $2.2 million decrease in operating expenses and a $1.8 million increase in operating revenues. Adjusted EBITDA for the three months ended March 31, 2018 is adjusted for refinancing-related professional fees of $9.6 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.
Debt Refinancing
On June 19, 2018, we reached an agreement with certain of our lenders currently holding approximately $2.2 billion of debt maturing on December 31, 2018 that will significantly strengthen the Company's capital structure and result in a debt reduction of approximately $551 million. Pursuant to a comprehensive debt refinancing agreement ("RA") with certain of its lenders, as well as Danaos Investment Limited as Trustee of the 883 Trust ("DIL"), its largest stockholder, and its manager, Danaos Shipping Co. Ltd., the Company will strengthen its financial position through a significant debt reduction, resetting of financial and certain other covenants in credit facilities, modified interest rates and amortization profiles and an extension of existing debt maturities by approximately five years to December 31, 2023. In connection with this debt refinancing, the Company will issue 99,342,271 new shares of Danaos common stock to certain of the Company's lenders, which represents 47.5% of the Company's outstanding common stock after giving effect to such issuance and will dilute existing shareholders ratably. The closing of the transaction is expected to occur by July 31, 2018, and is subject to definitive documentation and certain closing conditions and commitments by the Company and DIL. For additional information regarding the debt refinancing agreement, see the Company's Report on Form 6-K filed with the SEC on June 25, 2018.
Conference Call and Webcast
On Wednesday, June 27, 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 July 4, 2018 by dialing 1 877 344 7529 (US Toll Free Dial In) or +1 412 317 0088 (Standard International Dial In) and using 10117035# 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 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 RA and transactions contemplated thereby, the expected timing of completion of the transactions contemplated by the RA, the expected benefits of the transactions contemplated by the RA, growth opportunities in the container sector 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 proposed refinancing transactions contemplated by the RA; the risk that conditions to completion of the transactions contemplated by the RA may not be met; the risk that we may not complete the refinancing transactions within the expected timing; Danaos' ability to achieve long-term success and remain an industry leader following the refinancing transactions; the actions that Danaos may take in the event the RA is terminated; the occurrence of any event, change, or other circumstance that could give rise to the termination of the RA; the effects of actions taken by NYSE against the Company during the pendency of 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 91 unscheduled off-hire days in the three months ended March 31, 2018. The following table summarizes vessel utilization and the impact of the off-hire days on the Company's revenue.
Vessel Utilization (No. of Days) First First
Quarter Quarter
---
2018 2017
---- ----
Ownership Days 4,950 4,950
Less Off-hire Days:
Scheduled Off-hire Days (125) (15)
Other Off-hire Days (91) (347)
--- ----
Operating Days 4,734 4,588
===== =====
Vessel Utilization 95.6% 92.7%
Operating Revenues (in '000s of US Dollars) $111,854 $110,087
Average Gross Daily Charter Rate $23,628 $23,995
Fleet List
The following table describes in detail our fleet deployment profile as of June 26, 2018:
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 January 2019
Express Berlin 10,100 2011 September 2019
Express Athens 10,100 2011 January 2019
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 June 2019
Europe 8,468 2004 January 2019
CMA CGM Moliere 6,500 2009 August 2021
CMA CGM Musset 6,500 2010 February 2022
CMA CGM Nerval 6,500 2010 April 2022
CMA CGM Rabelais 6,500 2010 June 2022
CMA CGM Racine 6,500 2010 July 2022
YM Mandate 6,500 2010 January 2028
YM Maturity 6,500 2010 April 2028
Performance 6,402 2002 May 2019
Priority 6,402 2002 August 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 November 2018
Express Argentina 3,400 2010 May 2019
Express Brazil 3,400 2010 September 2018
Express France 3,400 2010 October 2018
Singapore 3,314 2004 October 2019
Colombo 3,314 2004 March 2019
MSC Zebra 2,602 2001 October 2018
Amalia C 2,452 1998 August 2019
Danae C 2,524 2001 January 2020
Advance 2,200 1997 December 2018
Future 2,200 1997 July 2018
Sprinter 2,200 1997 October 2018
Stride 2,200 1997 July 2018
Progress C (ex Hyundai Progress) 2,200 1998 October 2018
Bridge 2,200 1998 July 2018
Highway 2,200 1998 November 2018
Vladivostok 2,200 1997 July 2018
Lodestar (ex NYK Lodestar)(2) 6,422 2001 July 2018
NYK Leo(2) 6,422 2002 February 2019
Suez Canal(2) 5,610 2002 November 2018
Genoa?2) 5,544 2002 July 2018
(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 Three months
ended ended
March 31, March 31,
--------- ---------
2018 2017
---- ----
OPERATING REVENUES $111,854 $110,087
OPERATING EXPENSES
Vessel operating expenses (26,849) (27,455)
Depreciation & amortization (28,903) (30,592)
General & administrative (5,182) (6,129)
Other operating expenses (3,161) (3,839)
Income From Operations 47,759 42,072
------ ------
OTHER INCOME/(EXPENSES)
Interest income 1,375 1,471
Interest expense (22,849) (20,900)
Other finance expenses (971) (1,047)
Equity income on investments (26) 206
Other income/(expenses), net (9,385) (2,448)
Realized loss on derivatives (911) (911)
Total Other Expenses, net (32,767) (23,629)
------- -------
Net Income $14,992 $18,443
======= =======
EARNINGS PER SHARE
Basic & diluted earnings per share $0.14 $0.17
===== =====
Basic & diluted weighted average number of common shares 109,799 109,825
(in thousands of shares)
Non-GAAP Measures*
Reconciliation of Net Income to Adjusted Net Income - Unaudited
Three months Three months
ended ended
March 31, March 31,
--------- ---------
2018 2017
---- ----
Net income $14,992 $18,443
Amortization of
financing fees
& finance fees
accrued 3,351 3,722
Refinancing
professional
fees 9,608 -
Loss on sale of
securities - 2,357
--- -----
Adjusted Net
Income $27,951 $24,522
======= =======
Adjusted
Earnings Per
Share $0.25 $0.22
===== =====
Weighted average
number of
shares (in
thousands) 109,799 109,825
* 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 months ended March 31, 2018
and 2017. Non-GAAP financial
measures should be viewed in
addition to, and not as an
alternative for, the Company's
reported results prepared in
accordance with GAAP.
DANAOS CORPORATION
Condensed Consolidated Balance Sheets - Unaudited
(Expressed in thousands of United States dollars)
As of As of
March 31, December 31,
--------- ------------
2018 2017
---- ----
ASSETS
CURRENT ASSETS
Cash and cash equivalents $62,979 $66,895
Restricted cash - 2,812
Accounts receivable, net 6,741 6,502
Other current assets 53,086 49,790
122,806 125,999
------- -------
NON-CURRENT ASSETS
Fixed assets, net 2,769,627 2,795,971
Deferred charges, net 13,512 8,962
Investments in affiliates 5,972 5,998
Other non-current assets 54,334 49,466
2,843,445 2,860,397
--------- ---------
TOTAL ASSETS $2,966,251 $2,986,396
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Long-term debt, current portion $2,291,351 $2,329,601
Accounts payable, accrued liabilities & other current liabilities 54,740 50,238
2,346,091 2,379,839
--------- ---------
LONG-TERM LIABILITIES
Other long-term liabilities 54,100 57,852
54,100 57,852
------ ------
STOCKHOLDERS' EQUITY
Common stock 1,098 1,098
Additional paid-in capital 546,898 546,898
Accumulated other comprehensive loss (111,713) (114,076)
Retained earnings 129,777 114,785
566,060 548,705
------- -------
Total liabilities and stockholders' equity $2,966,251 $2,986,396
========== ==========
DANAOS CORPORATION
Condensed Consolidted Statements of Cash Flows - Unaudited
(Expressed in thousands of United States dollars)
Three months Three months
ended ended
March 31, March 31,
--------- ---------
2018 2017
---- ----
Operating Activities:
Net income $14,992 $18,443
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 27,060 28,851
Amortization of deferred drydocking & special survey costs, 5,194 5,463
finance cost and other finance fees accrued
Payments for drydocking/special survey (6,393) (4,094)
Amortization of deferred realized losses on cash flow interest rate 911 911
swaps
Equity income on investments 26 (206)
Loss on sale of securities - 2,357
Accounts receivable (239) (1,330)
Other assets, current and non-current (6,712) 210
Accounts payable and accrued liabilities 6,636 2,042
Other liabilities, current and long-term (5,886) (8,314)
Net Cash provided by Operating Activities 35,589 44,333
------ ------
Investing Activities:
Vessel additions (716) (1,527)
Net Cash used in Investing Activities (716) (1,527)
---- ------
Financing Activities:
Debt repayment (41,601) (53,958)
Net Cash used in Financing Activities (41,601) (53,958)
------- -------
Net Decrease in cash, cash equivalents and restricted cash (6,728) (11,152)
Cash, cash equivalents and restricted cash, beginning of period 69,707 76,529
------ ------
Cash, cash equivalents and restricted cash, end of period $62,979 $65,377
======= =======
DANAOS CORPORATION
Reconciliation of Net Income to Adjusted EBITDA - Unaudited
(Expressed in thousands of United States dollars)
Three months Three months
ended ended
March 31, March 31,
--------- ---------
2018 2017
---- ----
Net income $14,992 $18,443
Depreciation 27,060 28,851
Amortization of deferred drydocking & special survey 1,843 1,741
costs
Amortization of deferred finance costs and other 3,351 3,722
finance fees accrued
Amortization of deferred realized losses on interest rate 911 911
swaps
Interest income (1,375) (1,471)
Interest expense 20,248 17,992
Refinancing professional fees 9,608 -
Loss on sale of securities - 2,357
Adjusted EBITDA(1) $76,638 $72,546
======= =======
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 and
refinancing professional fees.
However, Adjusted EBITDA is not a
recognized measurement under U.S.
generally accepted accounting
principles, or "GAAP." We believe
that the presentation of Adjusted
EBITDA is useful to investors
because it is frequently used by
securities analysts, investors and
other interested parties in the
evaluation of companies in our
industry. We also believe that
Adjusted EBITDA is useful in
evaluating our operating
performance compared to that of
other companies in our industry
because the calculation of
Adjusted EBITDA generally
eliminates the effects of
financings, income taxes and the
accounting effects of capital
expenditures and acquisitions,
items which may vary for different
companies for reasons unrelated to
overall operating performance. In
evaluating Adjusted EBITDA, you
should be aware that in the future
we may incur expenses that are the
same as or similar to some of the
adjustments in this presentation.
Our presentation of Adjusted
EBITDA should not be construed as
an inference that our future
results will be unaffected by
unusual or non-recurring items.
Note: Items to consider for
comparability include gains and
charges. Gains positively
impacting net income are reflected
as deductions to net income.
Charges negatively impacting net
income are reflected as increases
to net income.
The Company reports its financial
results in accordance with U.S.
generally accepted accounting
principles (GAAP). However,
management believes that certain
non-GAAP financial measures used
in managing the business may
provide users of these financial
information additional meaningful
comparisons between current
results and results in prior
operating periods. Management
believes that these non-GAAP
financial measures can provide
additional meaningful reflection
of underlying trends of the
business because they provide a
comparison of historical
information that excludes certain
items that impact the overall
comparability. Management also
uses these non-GAAP financial
measures in making financial,
operating and planning decisions
and in evaluating the Company's
performance. See the Tables above
for supplemental financial data
and corresponding reconciliations
to GAAP financial measures for the
three months ended March 31, 2018
and 2017. Non-GAAP financial
measures should be viewed in
addition to, and not as an
alternative for, the Company's
reported results prepared in
accordance with GAAP.
----------------------------------
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SOURCE Danaos Corporation
