Danaos Corporation Reports Second Quarter and Half Year Results for the Period Ended June 30, 2018
ATHENS, Greece, Sept. 24, 2018 /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, 2018.
Highlights for the Second Quarter and Half Year Ended June 30, 2018:
-- On August 10, 2018, we consummated the agreement reached with certain of
our lenders on June 19, 2018 for the refinancing of approximately $2.2
billion of our debt maturing on December 31, 2018, reducing our debt by
approximately $551 million, resetting financial and other covenants,
modifying interest rates and amortization profiles and extending debt
maturities by approximately five years to December 31, 2023. In
connection with this refinancing, we issued approximately 99.3 million
shares of common stock to certain of our lenders. See "Debt
Refinancing".
-- Adjusted net income[1] of $29.2 million, or $0.27 per share, for the
three months ended June 30, 2018 compared to $29.0 million, or $0.26 per
share, for the three months ended June 30, 2017, an increase of 0.7%.
Adjusted net income(1) of $57.1 million, or $0.52 per share, for the six
months ended June 30, 2018 compared to $53.6 million, or $0.49 per
share, for the six months ended June 30, 2017, an increase of 6.5%.
-- Operating revenues of $113.5 million for the three months ended June 30,
2018 compared to $113.9 million for the three months ended June 30,
2017, a decrease of 0.4%. Operating revenues of $225.3 million for the
six months ended June 30, 2018 compared to $224.0 million for the six
months ended June 30, 2017, an increase of 0.6%.
-- Adjusted EBITDA(1) of $78.3 million for the three months ended June 30,
2018 compared to $78.1 million for the three months ended June 30, 2017,
an increase of 0.3%. Adjusted EBITDA(1) of $154.9 million for the six
months ended June 30, 2018 compared to $150.6 million for the six months
ended June 30, 2017, an increase of 2.9%.
-- Total contracted operating revenues were $1.6 billion as of June 30,
2018, with charters extending through 2028 and remaining average
contracted charter duration of 5.3 years, weighted by aggregate
contracted charter hire.
-- Charter coverage of 87% for the next 12 months based on current
operating revenues and 77% in terms of contracted operating days.
Three and Six Months Ended June 30, 2018
Financial Summary - Unaudited
(
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,
---
2018 2017 2018 2017
Operating revenues $113,466 $113,888 $225,320 $223,975
Net income $5,838 $20,229 $20,830 $38,672
Adjusted net income(1) $29,178 $29,037 $57,129 $53,559
Earnings per share $0.05 $0.18 $0.19 $0.35
Adjusted earnings per share(1) $0.27 $0.26 $0.52 $0.49
Weighted average number of shares (in 109,799 109,825 109,799 109,825
thousands)
Adjusted EBITDA(1) $78,294 $78,063 $154,932 $150,609
(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:
"Following the successful completion of our debt re-financing, the Company's capital structure has been strengthened by a significant debt reduction of approximately $551 million, while financial covenants have been amended and the maturities have been extended by more than 5 years until the end of 2023. We are currently fully compliant with all terms of our debt agreements and the Company is now free to resume its pursuit of growth opportunities with the goal of creating value for its shareholders.
The Company continued to achieve strong financial results in the second quarter of 2018. Adjusted net income of $29.2 million for the quarter was slightly higher when compared to $29 million for the second quarter of 2017.
The charter market, showed signs of improvement in the second quarter, but has softened by about 10 - 15% on average across all segments since June. Larger vessels have recorded slightly higher percentage reductions as they had outpaced the market average. The market is very skeptical of trade developments and the recently announced new tariffs on Chinese imports. At the same time uncertainty discourages new ordering, which is positive for the medium to long-term health of the charter market as liner companies are refraining from making substantial commitments until the outlook becomes clearer. There is interest on the new regulations and the question of scrubbers and we expect this to play out over the next few months.
We are of course largely insulated from the softening charter market since we maintain high charter contract coverage of 87% for the next 12 months based on current operating revenues and 77% in terms of contracted operating days.
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 are well positioned to take advantage of the growth opportunities in the container sector and create value for our shareholders."
Three months ended June 30, 2018 compared to the three months ended June 30, 2017
During the three months ended June 30, 2018 and June 30, 2017, Danaos had an average of 55 containerships. Our fleet utilization for the three months ended June 30, 2018 was 96.1% compared to 97.9% for the three months ended June 30, 2017. The fleet utilization excluding the off charter days of the vessels that were previously chartered to Hanjin Shipping ("Hanjin") was 98.8% in the three months ended June 30, 2017.
Our adjusted net income amounted to $29.2 million, or $0.27 per share, for the three months ended June 30, 2018 compared to $29.0 million, or $0.26 per share, for the three months ended June 30, 2017. We have adjusted our net income in the three months ended June 30, 2018 for refinancing related professional fees of $20.1 million and a non-cash amortization charge of $3.2 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 $0.2 million in adjusted net income for the three months ended June 30, 2018 compared to the three months ended June 30, 2017 is attributable to a $1.8 million decrease in total operating expenses, a $0.5 million increase in other income and a $0.1 million operating performance improvement on equity investments, which were partially offset by a $0.4 million decrease in operating revenues and a $1.8 million increase in net finance expenses.
On a non-adjusted basis, our net income amounted to $5.8 million, or $0.05 per share, for the three months ended June 30, 2018 compared to net income of $20.2 million, or $0.18 per share, for the three months ended June 30, 2017.
Operating Revenues
Operating revenues decreased by 0.4%, or $0.4 million, to $113.5 million in the three months ended June 30, 2018 from $113.9 million in the three months ended June 30, 2017.
Operating revenues for the three months ended June 30, 2018 reflect:
-- $3.0 million increase in revenues in the three months ended June 30,
2018 compared to the three months ended June 30, 2017 due to the
re-chartering of certain of our vessels at higher rates.
-- $3.4 million decrease in revenues due to lower fleet utilization of our
vessels in the three months ended June 30, 2018 compared to the three
months ended June 30, 2017 (other than three vessels previously
chartered to Hanjin which were less utilized in the three months ended
June 30, 2017).
Vessel Operating Expenses
Vessel operating expenses decreased by 1.8%, or $0.5 million, to $26.7 million in the three months ended June 30, 2018 from $27.2 million in the three months ended June 30, 2017. The average daily operating cost per vessel for vessels on time charter was $5,762 per day for the three months ended June 30, 2018 compared to $5,734 per day for the three months ended June 30, 2017. Management believes that our daily operating cost ranks as one of the most competitive in the industry.
Depreciation & Amortization
Depreciation & Amortization includes Depreciation and Amortization of Deferred Dry-docking and Special Survey Costs.
Depreciation
Depreciation expense decreased by 8.6%, or $2.5 million, to $26.7 million in the three months ended June 30, 2018 from $29.2 million in the three months ended June 30, 2017.
Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs increased by $0.7 million, to $2.4 million in the three months ended June 30, 2018 from $1.7 million in the three months ended June 30, 2017. The increase was mainly due to the increased number of vessels dry-docked over the last six months.
General and Administrative Expenses
General and administrative expenses increased by $0.5 million to $5.8 million in the three months ended June 30, 2018, from $5.3 million in the three months ended June 30, 2017. The increase was mainly due to increased professional fees.
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, 2018 and in the three months ended June 30, 2017.
Interest Expense and Interest Income
Interest expense increased by 7.5%, or $1.6 million, to $23.0 million in the three months ended June 30, 2018 from $21.4 million in the three months ended June 30, 2017. The increase in interest expense was mainly due to the increase in average cost of debt due to the increase in US$ Libor between the two periods, which was partially offset by a decrease in our average debt by $152.5 million, to $2,275.1 million in the three months ended June 30, 2018, from $2,427.6 million in the three months ended June 30, 2017 and a $0.3 million decrease in the amortization of deferred finance costs.
As of June 30, 2018, the debt outstanding gross of deferred finance costs was $2,293.9 million compared to $2,425.3 million as of June 30, 2017.
Interest income increased by $0.1 million to $1.4 million in the three months ended June 30, 2018 compared to $1.3 million in the three months ended June 30, 2017.
Other finance costs, net
Other finance costs, net remained stable, amounting to $1.0 million in the three months ended June 30, 2018 and 2017.
Equity income on investments
Equity income on investments amounted to $0.2 million in the three months ended June 30, 2018 compared to $0.1 million in the three months ended June 30, 2017 and relates to the improved operating performance of Gemini Shipholdings Corporation ("Gemini"), in which the Company has a 49% shareholding interest.
Loss on derivatives
Amortization of deferred realized losses on interest rate swaps remained stable at $0.9 million in the three months ended June 30, 2018 and 2017.
Other income/(expenses), net
Other income/(expenses), net was $19.5 million in expenses in the three months ended June 30, 2018 compared to $5.1 million in expenses in the three months ended June 30, 2017 mainly due to a $14.9 million increase in refinancing-related professional fees, which were partially offset by a $0.5 million increase in other income.
Adjusted EBITDA
Adjusted EBITDA increased by 0.3%, or $0.2 million, to $78.3 million in the three months ended June 30, 2018 from $78.1 million in the three months ended June 30, 2017. As outlined above, this increase is attributable to a $0.5 million increase in other income and a $0.1 million operating performance improvement on equity investments, which were partially offset by a $0.4 million decrease in operating revenues. Adjusted EBITDA for the three months ended June 30, 2018 is adjusted for refinancing-related professional fees of $20.1 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.
Six months ended June 30, 2018 compared to the six months ended June 30, 2017
During the six months ended June 30, 2018 and June 30, 2017, Danaos had an average of 55 containerships. Our fleet utilization for the six months ended June 30, 2018 was 95.9% compared to 95.3% for the six months ended June 30, 2017. The fleet utilization excluding the off charter days of the vessels that were previously chartered to Hanjin was 98.5% in the six months ended June 30, 2017.
Our adjusted net income amounted to $57.1 million, or $0.52 per share, for the six months ended June 30, 2018 compared to $53.6 million, or $0.49 per share, for the six months ended June 30, 2017. We have adjusted our net income in the six months ended June 30, 2018 for refinancing related professional fees of $29.7 million and a non-cash amortization charge of $6.6 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 increase of $3.5 million in adjusted net income for the six months ended June 30, 2018 compared to the six months ended June 30, 2017 is attributable to a $5.7 million decrease in total operating expenses, a $1.3 million increase in operating revenues and a $0.8 million increase in other income, which were partially offset by a $4.1 million increase in net finance expenses and a $0.2 million decrease in the operating performance of our equity investment in Gemini.
On a non-adjusted basis, our net income amounted to $20.8 million, or $0.19 per share, for the six months ended June 30, 2018 compared to net income of $38.7 million, or $0.35 per share, for the six months ended June 30, 2017.
Operating Revenues
Operating revenues increased by 0.6%, or $1.3 million, to $225.3 million in the six months ended June 30, 2018 from $224.0 million in the six months ended June 30, 2017.
Operating revenues for the six months ended June 30, 2018 reflect:
-- $6.2 million increase in revenues in the six months ended June 30, 2018
compared to the six months ended June 30, 2017 due to the re-chartering
of certain of our vessels at higher rates.
-- $4.9 million decrease in revenues due to lower fleet utilization of our
vessels in the six months ended June 30, 2018 compared to the six months
ended June 30, 2017 (other than three vessels previously chartered to
Hanjin which were less utilized in the six months ended June 30, 2017).
Vessel Operating Expenses
Vessel operating expenses decreased by 2.0%, or $1.1 million, to $53.6 million in the six months ended June 30, 2018 from $54.7 million in the six months ended June 30, 2017. The average daily operating cost per vessel for vessels on time charter was $5,806 per day for the six months ended June 30, 2018 compared to $5,745 per day for the six months ended June 30, 2017. Management believes that our daily operating cost ranks as one of the most competitive in the industry.
Depreciation & Amortization
Depreciation & Amortization includes Depreciation and Amortization of Deferred Dry-docking and Special Survey Costs.
Depreciation
Depreciation expense decreased by 7.2%, or $4.2 million, to $53.8 million in the six months ended June 30, 2018 from $58.0 million in the six months ended June 30, 2017.
Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs increased by $0.9 million, to $4.3 million in the six months ended June 30, 2018 from $3.4 million in the six months ended June 30, 2017. The increase was mainly due to the increased number of vessels dry-docked over the last six months.
General and Administrative Expenses
General and administrative expenses decreased by $0.5 million, to $11.0 million in the six months ended June 30, 2018, from $11.5 million in the six months ended June 30, 2017.
Other Operating Expenses
Other Operating Expenses include Voyage Expenses.
Voyage Expenses
Voyage expenses decreased by $0.8 million, to $6.3 million in the six months ended June 30, 2018 from $7.1 million in the six months ended June 30, 2017.
Interest Expense and Interest Income
Interest expense increased by 8.5%, or $3.6 million, to $45.9 million in the six months ended June 30, 2018 from $42.3 million in the six months ended June 30, 2017. The increase in interest expense was mainly due to the increase in average cost of debt due to the increase in US$ Libor between the two periods, which was partially offset by a decrease in our average debt by $167.5 million, to $2,288.2 million in the six months ended June 30, 2018, from $2,455.6 million in the six months ended June 30, 2017 and a $0.6 million decrease in the amortization of deferred finance costs.
As of June 30, 2018, the debt outstanding gross of deferred finance costs was $2,293.9 million compared to $2,425.3 million as of June 30, 2017.
Interest income remained stable, amounting to $2.8 million in the six months ended June 30, 2018 and 2017.
Other finance costs, net
Other finance costs, net decreased by $0.2 million, to $1.9 million in the six months ended June 30, 2018 from $2.1 million in the six months ended June 30, 2017.
Equity income on investments
Equity income on investments amounted to $0.2 million in the six months ended June 30, 2018 compared to $0.4 million in the six months ended June 30, 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 $1.8 million in the six months ended June 30, 2018 and 2017.
Other income/(expenses), net
Other income/(expenses), net was $28.9 million in expenses in the six months ended June 30, 2018 compared to $7.6 million in expenses in the six months ended June 30, 2017 mainly due to a $24.5 million increase in refinancing-related professional fees, which were partially offset by a $0.8 million increase in other income and a $2.4 million realized loss on sale of HMM securities in the six months ended June 30, 2017 that did not recur in the 2018 period.
Adjusted EBITDA
Adjusted EBITDA increased by 2.9%, or $4.3 million, to $154.9 million in the six months ended June 30, 2018 from $150.6 million in the six months ended June 30, 2017. As outlined above, this increase is mainly attributable to a $2.3 million decrease in operating expenses, a $1.3 million increase in operating revenues and a $0.8 million increase in other income, which were partially offset by a $0.2 million decrease in operating performance on our equity investments. Adjusted EBITDA for the six months ended June 30, 2018 is adjusted for refinancing-related professional fees of $29.7 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.
Debt Refinancing
On August 10, 2018, we consummated the agreement reached with certain of our lenders on June 19, 2018 for the refinancing of approximately $2.2 billion of our debt maturing on December 31, 2018, reducing our debt by approximately $551 million. This agreement significantly strengthened our capital structure and financial position through this significant debt reduction, resetting financial and certain other covenants in our credit facilities, modifying interest rates and amortization profiles and extending debt maturities by approximately five years to December 31, 2023. In connection with this debt refinancing, we issued 99,342,271 new shares of Danaos common stock to certain of our lenders, which represent 47.5% of our outstanding common stock after giving effect to this issuance and diluting existing shareholders ratably. For additional information regarding the debt refinancing, see the Company's Reports on Form 6-K filed with the SEC on June 25, 2018 and August 14, 2018.
Conference Call and Webcast
On Tuesday, September 25, 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 October 2, 2018 by dialing 1 877 344 7529 (US Toll Free Dial In) or +44 (0) 2036 088 021 (Standard International Dial In) and using 10124356# 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 expected benefits of the refinancing and other statements that are forward looking. Forward-looking statements reflect our current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The forward-looking statements in this release are based upon various assumptions. Although Danaos Corporation believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, Danaos Corporation cannot assure you that it will achieve or accomplish these expectations, beliefs or projections. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the effects of the refinancing transactions; Danaos' ability to achieve the expected benefits of the refinancing and comply with the terms of its new credit facilities and other agreements entered into in connection with the refinancing; the strength of world economies and currencies, general market conditions, including changes in charter hire rates and vessel values, charter counterparty performance, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled dry-docking, changes in Danaos Corporation's operating expenses, including bunker prices, dry-docking and insurance costs, ability to obtain financing and comply with covenants in our financing arrangements, actions taken by regulatory authorities, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists.
Risks and uncertainties are further described in reports filed by Danaos Corporation with the U.S. Securities and Exchange Commission.
Visit our website at www.danaos.com.
Appendix
Fleet Utilization
Danaos had 84 unscheduled off-hire days in the three months ended June 30, 2018. The following table summarizes vessel utilization and the impact of the off-hire days on the Company's revenue.
Vessel Utilization (No. of Days) First Second
Quarter Quarter
2018 2018 Total
Ownership Days 4,950 5,005 9,955
Less Off-hire Days:
Scheduled Off-hire Days (125) (111) (236)
Other Off-hire Days (91) (84) (175)
Operating Days 4,734 4,810 9,544
Vessel Utilization 95.6% 96.1% 95.9%
Operating Revenues (in '000s of US Dollars) $111,854 $113,466 $225,320
Average Gross Daily Charter Rate $23,628 $23,590 $23,609
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
Fleet List
The following table describes in detail our fleet deployment profile as of September 21, 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
Pusan C (ex CSCL Pusan) 9,580 2006
October 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
America (ex 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
December 2018
YM Seattle 4,253 2007
July 2019
YM Vancouver 4,253 2007
September 2019
Derby D 4,253 2004
March 2019
ANL Tongala (ex Deva) 4,253 2004
March 2019
ZIM Rio Grande 4,253 2008
May 2020
ZIM Sao Paolo 4,253 2008
August 2020
ZIM Kingston 4,253 2008
September 2020
ZIM Monaco 4,253 2009
November 2020
ZIM Dalian 4,253 2009
February 2021
ZIM Luanda 4,253 2009
May 2021
Dimitris C 3,430 2001
June 2019
Express Black Sea 3,400 2011
November 2018
Express Spain 3,400 2011
November 2018
Express Argentina 3,400 2010
May 2019
Express Brazil 3,400 2010
July 2019
Express France 3,400 2010
October 2018
Singapore 3,314 2004
October 2019
Colombo 3,314 2004
March 2019
MSC Zebra 2,602 2001
August 2020
Amalia C 2,452 1998
August 2019
Danae C 2,524 2001
January 2020
Advance 2,200 1997
December 2018
Future 2,200 1997
November 2018
Sprinter 2,200 1997
October 2018
Stride 2,200 1997
October 2018
Progress C (ex Hyundai Progress) 2,200 1998
October 2018
Bridge 2,200 1998
November 2018
Highway 2,200 1998
November 2018
Vladivostok 2,200 1997
October 2018
Lodestar (ex NYK Lodestar)(2) 6,422 2001
October 2018
NYK Leo(2) 6,422 2002
February 2019
Suez Canal(2) 5,610 2002
November 2018
Genoa?2) 5,544 2002
July 2019
(1) Earliest date charters could expire. Some charters include options to extend their terms.
(2) Vessels acquired by Gemini Shipholdings Corporation, in which Danaos holds a 49% equity interest.
DANAOS CORPORATION
Condensed Consolidated Statements of Income-Unaudited
(Expressed in thousands of United States dollars, except per share amounts)
Three months
Three months Six months Six months
ended ended ended ended
June 30,
June 30, June 30, June 30,
2018 2017 2018 2017
OPERATING REVENUES $113,466 $113,888 $225,320 $223,975
OPERATING EXPENSES
Vessel operating expenses (26,742) (27,216) (53,591) (54,671)
Depreciation & amortization (29,106) (30,857) (58,009) (61,449)
General & administrative (5,777) (5,340) (10,959) (11,469)
Other operating expenses (3,186) (3,216) (6,347) (7,055)
Income From Operations 48,655 47,259 96,414 89,331
---
OTHER INCOME/(EXPENSES)
Interest income 1,418 1,344 2,793 2,815
Interest expense (23,020) (21,413) (45,869) (42,313)
Other finance expenses (961) (1,040) (1,932) (2,087)
Equity income on investments 210 149 184 355
Other income/(expenses), net (19,543) (5,149) (28,928) (7,597)
Realized loss on derivatives (921) (921) (1,832) (1,832)
Total Other Expenses, net (42,817) (27,030) (75,584) (50,659)
---
Net Income $5,838 $20,229 $20,830 $38,672
===
EARNINGS PER SHARE
Basic & diluted earnings per share $0.05 $0.18 $0.19 $0.35
===
Basic & diluted weighted average number of common 109,799 109,825 109,799 109,825
shares (in thousands of shares)
Non-GAAP Measures*
Reconciliation of Net Income to Adjusted Net Income - Unaudited
Three months
Three months Six months Six months
ended ended ended ended
June 30,
June 30, June 30, June 30,
2018 2017 2018 2017
---
Net income $5,838 $20,229 $20,830 $38,672
Amortization of financing fees & finance fees accrued 3,247 3,622 6,598 7,344
Refinancing professional fees 20,093 5,186 29,701 5,186
Loss on sale of securities 2,357
Adjusted Net Income $29,178 $29,037 $57,129 $53,559
===
Adjusted Earnings Per Share $0.27 $0.26 $0.52 $0.49
===
Weighted average number of shares (in thousands) 109,799 109,825 109,799 109,825
* 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 and six months ended June 30, 2018 and 2017. Non-GAAP financial measures should be viewed in addition to, and not as an
alternative for, the Company's reported results prepared in accordance with GAAP.
DANAOS CORPORATION
Condensed Consolidated Balance Sheets - Unaudited
(Expressed in thousands of United States dollars)
As of
As of
June 30,
December 31,
2018 2017
ASSETS
CURRENT ASSETS
Cash and cash equivalents $72,423 $66,895
Restricted cash 2,812 2,812
Accounts receivable, net 15,794 6,502
Other current assets 51,669 49,790
142,698 125,999
NON-CURRENT ASSETS
Fixed assets, net 2,743,897 2,795,971
Deferred charges, net 15,061 8,962
Investments in affiliates 6,182 5,998
Other non-current assets 58,924 49,466
2,824,064 2,860,397
TOTAL ASSETS $2,966,762 $2,986,396
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Long-term debt, current portion $134,861 $2,329,601
Accounts payable, accrued liabilities & other current liabilities 54,733 50,238
189,594 2,379,839
LONG-TERM LIABILITIES
Long-term debt, net 2,152,957
Other long-term liabilities 50,335 57,852
2,203,292 57,852
STOCKHOLDERS' EQUITY
Common stock 1,098 1,098
Additional paid-in capital 546,898 546,898
Accumulated other comprehensive loss (109,735) (114,076)
Retained earnings 135,615 114,785
573,876 548,705
Total liabilities and stockholders' equity $2,966,762 $2,986,396
DANAOS CORPORATION
Condensed Consolidated 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,
2018 2017 2018 2017
Operating Activities:
Net income $5,838 $20,229 $20,830 $38,672
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 26,697 29,195 53,757 58,046
Amortization of deferred drydocking & special survey costs, 5,656 5,284 10,850 10,747
finance cost and other finance fees accrued
Payments for drydocking/special survey (3,958) (422) (10,351) (4,516)
Amortization of deferred realized losses on cash flow 921 921 1,832 1,832
interest rate swaps
Equity income on investments (210) (149) (184) (355)
Loss on sale of securities 2,357
Accounts receivable (9,053) (2,486) (9,292) (3,816)
Other assets, current and non-current (2,116) 1,426 (8,828) 1,636
Accounts payable and accrued liabilities 1,457 576 8,093 2,618
Other liabilities, current and long-term (5,229) (8,856) (11,115) (17,170)
Net Cash provided by Operating Activities 20,003 45,718 55,592 90,051
---
Investing Activities:
Vessel additions (967) (1,085) (1,683) (2,612)
Net proceeds from sale of securities 6,236 6,236
Net Cash provided by/(used in) Investing Activities (967) 5,151 (1,683) 3,624
---
Financing Activities:
Debt repayment (6,780) (49,614) (48,381) (103,572)
Net Cash used in Financing Activities (6,780) (49,614) (48,381) (103,572)
---
Net Increase/(Decrease) in cash, cash equivalents and 12,256 1,255 5,528 (9,897)
restricted cash
Cash, cash equivalents and restricted cash, beginning of 62,979 65,377 69,707 76,529
period
---
Cash, cash equivalents and restricted cash, end of period $75,235 $66,632 $75,235 $66,632
===
DANAOS CORPORATION
Reconciliation of Net Income to Adjusted EBITDA - 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,
---
2018 2017 2018 2017
Net income $5,838 $20,229 $20,830 $38,672
Depreciation 26,697 29,195 53,757 58,046
Amortization of deferred drydocking& special survey 2,409 1,662 4,252 3,403
costs
Amortization of deferred finance costs and other 3,247 3,622 6,598 7,344
finance fees accrued
Amortization of deferred realized losses on interest rate 921 921 1,832 1,832
swaps
Interest income (1,418) (1,344) (2,793) (2,815)
Interest expense 20,507 18,592 40,755 36,584
Refinancing professional fees 20,093 5,186 29,701 5,186
Loss on sale of securities - 2,357
Adjusted EBITDA(1) $78,294 $78,063 $154,932 $150,609
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
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SOURCE Danaos Corporation
