Danaos Corporation Reports First Quarter Results for the Period Ended March 31, 2022

ATHENS, Greece--()--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, 2022.

Highlights for the First Quarter Ended March 31, 2022:

  • Adjusted net income1 of $235.3 million, or $11.36 per share, for the three months ended March 31, 2022 compared to $58.0 million, or $2.83 per share, for the three months ended March 31, 2021, an increase of 305.7%.
  • Net income of $331.5 million, or $16.00 per share, for the three months ended March 31, 2022 compared to $296.8 million, or $14.47 per share, for the three months ended March 31, 2021.
  • Liquidity in cash and marketable securities was $708 million as of March 31, 2022.
  • Operating revenues of $229.9 million for the three months ended March 31, 2022 compared to $132.1 million for the three months ended March 31, 2021, an increase of 74.0%.
  • Adjusted EBITDA1 of $269.5 million for the three months ended March 31, 2022 compared to $96.3 million for the three months ended March 31, 2021, an increase of 179.9%.
  • Total contracted operating revenues were $2.7 billion as of March 31, 2022, with charters extending through 2028 and remaining average contracted charter duration of 3.8 years, weighted by aggregate contracted charter hire.
  • Charter coverage of 95.5% for the next 12 months based on current operating revenues and 96.2% in terms of contracted operating days.
  • Danaos has declared a dividend of $0.75 per share of common stock for the first quarter of 2022, which is payable on June 8, 2022 to stockholders of record as of May 27, 2022.
  • During the second quarter of 2022 we have repaid and are committed to repay early $437 million of debt and leasing obligations as a result of which 13 vessels in our fleet will become unencumbered.

Three Months Ended March 31, 2022
Financial Summary - Unaudited
(Expressed in thousands of United States dollars, except per share amounts)

 

Three months

ended

 

Three months

ended

March 31,

March 31,

 

2022

 

2021

 

 

 

 

Operating revenues

$

229,901

 

 

$

132,118

 

Net income

$

331,465

 

 

$

296,780

 

Adjusted net income1

$

235,297

 

 

$

58,011

 

Earnings per share, diluted

$

16.00

 

 

$

14.47

 

Adjusted earnings per share, diluted1

$

11.36

 

 

$

2.83

 

Diluted weighted average number of shares (in thousands)

 

20,717

 

 

 

20,513

 

Adjusted EBITDA1

$

269,484

 

 

$

96,282

 

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:

"The first quarter of 2022 was another exceptional one for Danaos. Having already seeded the future with $2.7 billion of contracted revenue, we are operating from a position of strength and confidence. This allowed us to invest in the future by ordering six vessels in the 7,000 - 8,000 TEU range, to be delivered between March and September 2024, that are ready to be converted to run on green methanol when such fuel is widely available. Our position in ZIM continues to generate solid returns, including $110 million in net dividends declared in the first quarter.

The broader market has been affected by geopolitical events, high energy prices, inflation, the interest rate outlook, and China's "Zero-Covid" policy. Although box freight rates and charter rates have not been significantly affected, sentiment has changed, and market participants have adopted a more conservative short-term attitude. On the other hand, supply chain inefficiencies continue unabated and there is little likelihood that conditions improve this year. This has led to record profits for the liner companies and, most importantly, higher contract levels. Also, fuel oil prices are reaching levels not seen for more than a decade at the same time as supply chain disruptions have resulted in an increase in average sailing speed. Over time, the global container network will normalize as new vessels are delivered and sailing speeds are reduced to enable the industry to comply with decarbonization timelines.

In the midst of an uncertain backdrop, Danaos is well positioned to continue to execute our strategy. We are simultaneously pursuing fleet growth, returning value to shareholders, and further enhancing our balance sheet. Most recently, we have accelerated de-leveraging to minimize the impact of rising interest rates. During the second quarter of 2022 we have already repaid early $364 million in debt and lease obligations while another $73 million, for which we have issued early repayment notices, will also be repaid early through the end of the second quarter. As a result of this overall leverage reduction of $437 million, 13 vessels in our fleet will become unencumbered.

Liquidity also stands very strong. As at the end of the first quarter we had $708 million in cash and marketable securities, while during the second quarter we received $239 million of charter hire prepayment related to charter contracts for 15 of our vessels, representing partial prepayment of charter hire payable during the period from May 2022 through January 2027.

As a result of our actions, Danaos has the strongest balance sheet in the industry, which will enable us to continue to pursue attractive opportunities when they arise for the benefit of our shareholders."

Three months ended March 31, 2022 compared to the three months ended March 31, 2021

During the three months ended March 31, 2022, Danaos had an average of 71.0 containerships compared to 60.0 containerships during the three months ended March 31, 2021. Our fleet utilization for the three months ended March 31, 2022 was 97.4% compared to 98.6% for the three months ended March 31, 2021.

Our adjusted net income amounted to $235.3 million, or $11.36 per share, for the three months ended March 31, 2022 compared to $58.0 million, or $2.83 per share, for the three months ended March 31, 2021. We have adjusted our net income in the three months ended March 31, 2022 for the change in fair value of our investment in ZIM Integrated Shipping Services Ltd. (“ZIM”) of $99.5 million and a non-cash fees amortization and accrued finance fees charge of $3.4 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.

The $177.3 million increase in adjusted net income for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 is attributable mainly to a $97.8 million increase in operating revenues and recognition of a $110.0 million dividend from ZIM (net of withholding taxes), which were partially offset by a $22.9 million increase in total operating expenses, a $5.8 million increase in net finance expenses and a $1.8 million decrease in our equity income on investment in Gemini Shipholdings Corporation (“Gemini”) following our acquisition and full consolidation of Gemini since July 1, 2021.

On a non-adjusted basis, our net income amounted to $331.5 million, or $16.00 earnings per diluted share, for the three months ended March 31, 2022 compared to net income of $296.8 million, or $14.47 earnings per diluted share, for the three months ended March 31, 2021. Our net income for the three months ended March 31, 2022 includes a total gain on our investment in ZIM of $209.5 million (net of withholding taxes on dividend).

Operating Revenues

Operating revenues increased by 74.0%, or $97.8 million, to $229.9 million in the three months ended March 31, 2022 from $132.1 million in the three months ended March 31, 2021.

Operating revenues for the three months ended March 31, 2022 reflect:

  • a $48.9 million increase in revenues in the three months ended March 31, 2022 compared to the three months ended March 31, 2021 mainly as a result of higher charter rates;
  • a $20.8 million increase in revenues in the three months ended March 31, 2022 compared to the three months ended March 31, 2021 due to the incremental revenue generated by newly acquired vessels;
  • a $11.4 million increase in revenue in the three months ended March 31, 2022 compared to the three months ended March 31, 2021 due to higher non-cash revenue recognition in accordance with US GAAP; and
  • a $16.7 million increase in revenues in the three months ended March 31, 2022 compared to the three months ended March 31, 2021 due to amortization of assumed time charters.

Vessel Operating Expenses

Vessel operating expenses increased by $8.1 million to $39.2 million in the three months ended March 31, 2022 from $31.1 million in the three months ended March 31, 2021, primarily as a result of the increase in the average number of vessels in our fleet and an increase in the average daily operating cost for vessels on time charter to $6,307 per vessel per day for the three months ended March 31, 2022 compared to $5,954 per vessel per day for the three months ended March 31, 2021. The average daily operating cost increased mainly due to the COVID-19 related increase in crew remuneration and insurance expenses due to increased insured values of the vessels. Management believes that our daily operating costs remain among 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 increased by 29.5%, or $7.6 million, to $33.4 million in the three months ended March 31, 2022 from $25.8 million in the three months ended March 31, 2021 due to recent acquisitions of eleven vessels.

Amortization of Deferred Dry-docking and Special Survey Costs

Amortization of deferred dry-docking and special survey costs increased by $0.2 million to $2.7 million in the three months ended March 31, 2022 from $2.5 million in the three months ended March 31, 2021.

General and Administrative Expenses

General and administrative expenses decreased by $3.5 million to $7.4 million in the three months ended March 31, 2022, from $10.9 million in the three months ended March 31, 2021. The decrease was mainly attributable to decreased stock-based compensation expenses.

Other Operating Expenses

Other Operating Expenses include Voyage Expenses.

Voyage Expenses

Voyage expenses increased by $3.0 million to $7.2 million in the three months ended March 31, 2022 from $4.2 million in the three months ended March 31, 2021 primarily as a result of the increase in commissions due to the increase in revenue per vessel and the increase in the average number of vessels in our fleet.

Interest Expense and Interest Income

Interest expense increased by 13.2%, or $2.0 million, to $17.1 million in the three months ended March 31, 2022 from $15.1 million in the three months ended March 31, 2021. The increase in interest expense is a combined result of:

  • a $5.6 million reduction in the recognition through our income statement of accumulated accrued interest that had been accrued in 2018 in relation to two of our credit facilities that were refinanced on April 12, 2021. As a result of the refinancing, the recognition of such accumulated interest has decreased;
  • a $2.1 million decrease in interest expense due to a decrease in our average indebtedness by $257.8 million between the two periods (average indebtedness of $1,356.7 million in the three months ended March 31, 2022, compared to average indebtedness of $1,614.5 million in the three months ended March 31, 2021), which was partially offset by an increase in our debt service cost by approximately 0.2%; and
  • a $1.5 million decrease in the amortization of deferred finance costs and debt discount related to our 2018 debt refinancing.

As of March 31, 2022, our outstanding debt, gross of deferred finance costs, was $1,118.6 million, which includes $300 million aggregate principal amount of our Senior Notes, and our leaseback obligation was $210.2 million. These balances compare to debt of $1,306.8 million and a leaseback obligation of $117.5 million as of March 31, 2021. See “Recent Developments” below.

Interest income decreased by $2.0 million to nil in the three months ended March 31, 2022 compared to $2.0 million in the three months ended March 31, 2021 mainly as a result of full collection of accrued interest on ZIM and HMM bonds, which were redeemed by the issuers thereof in the year 2021.

Gain on investments

The gain on investments of $221.7 million in the three months ended March 31, 2022 consists of the change in fair value of our shareholding interest in ZIM of $99.5 million and dividends recognized on ZIM ordinary shares of $122.2 million. Our remaining shareholding interest of 7,186,950 ordinary shares of ZIM has been fair valued at $522.6 million as of March 31, 2022, based on the closing price of ZIM’s ordinary shares on the NYSE on that date. Subsequently, in April 2022, we sold 1,500,000 of these ZIM ordinary shares resulting in proceeds to us of $85.3 million.

Equity income on investments

Equity income on investments in Gemini decreased to nil in the three months ended March 31, 2022 compared to $1.8 million in the three months ended March 31, 2021 following our acquisition and full consolidation of Gemini since July 1, 2021.

Other finance expenses, net

Other finance expenses, net increased by $0.1 million to $0.6 million in the three months ended March 31, 2022 compared to $0.5 million in the three months ended March 31, 2021.

Loss on derivatives

Amortization of deferred realized losses on interest rate swaps remained stable at $0.9 million in each of the three months ended March 31, 2022 and March 31, 2021.

Other income, net

Other income, net was $0.5 million in the three months ended March 31, 2022 compared to $4.0 million in the three months ended March 31, 2021. The decrease was mainly due to the collection from Hanjin Shipping of $3.9 million as a partial payment of common benefit claim and interest in the three months ended March 31, 2021.

Income taxes

Income taxes were $12.2 million in the three months ended March 31, 2022, related to the taxes withheld on dividend income earned on ZIM ordinary shares and compared to no income tax in the three months ended March 31, 2021.

Adjusted EBITDA

Adjusted EBITDA increased by 179.9%, or $173.2 million, to $269.5 million in the three months ended March 31, 2022 from $96.3 million in the three months ended March 31, 2021. As outlined above, the increase is mainly attributable to a $81.1 million increase in operating revenues (net of $16.7 million amortization of assumed time charters) and recognition of a $110.0 million dividend from ZIM (net of withholding taxes) in the three months ended March 31, 2022, which were partially offset by a $16.1 million increase in total operating expenses and a $1.8 million decrease in equity investment in Gemini following our acquisition and full consolidation since July 1, 2021. Adjusted EBITDA for the three months ended March 31, 2022 is adjusted for a $111.8 million change in fair value of the investment in ZIM and dividend withholding taxes and stock-based compensation of $0.1 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.

Dividend Payment

Danaos has declared a dividend of $0.75 per share of common stock for the first quarter of 2022, which is payable on June 8, 2022 to stockholders of record as of May 27, 2022.

Recent Developments

In March 2022, we entered into an agreement to build two 7,100 TEU container vessels in Dalian Shipbuilding in China for a contracted price of $156 million and in April 2022, we entered into an agreement to build four 8,000 TEU container vessels in Daehan Shipbuilding in South Korea for a contracted price of $372.7 million. All these fuel-efficient vessels are expected to be delivered to us in 2024.

In April 2022, we sold 1,500,000 ordinary shares of ZIM resulting in proceeds of $85.3 million.

On May 12, 2022, we early extinguished our leasing obligation amounting to $97.4 million as of March 31, 2022 related to the vessels CMA CGM Melisande, CMA CGM Attila, CMA CGM Tancredi, CMA CGM Bianca and CMA CGM Samson and we also early extinguished $270.0 million of the outstanding Natwest loan principal of the Citibank/Natwest $815 mil. Facility, which reduced the future quarterly installments of the remaining facility to $12.9 million and the balloon payment at maturity was reduced to $309.0 million. Additionally, on May 12, 2022, we sent notice of early full repayment to our lenders related to (i) $43 million loan outstanding with the Macquarie Bank to be fully repaid on June 30, 2022, (ii) $20.55 million loan outstanding with Eurobank to be fully repaid on May 25, 2022 and (iii) $9.8 million loan outstanding with SinoPac to be fully repaid on July 1, 2022.

In April 2022, we entered into a preliminary term sheet agreement for a $130.0 million loan facility with major financial institutions, subject to final documentation, which will be secured by our six 5,466 TEU sister vessels acquired in 2021. This facility is expected to be drawn down in the 2nd quarter of 2022.

Conference Call and Webcast

On Tuesday, May 16, 2022 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 May 24, 2021 by dialing 1 877 344 7529 (US Toll Free Dial In) or 1-412-317-0088 (Standard International Dial In) and using 2700349# 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 71 containerships aggregating 436,589 TEUs and 6 under construction containerships aggregating 46,200 TEUs 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 impact of the COVID-19 pandemic and efforts throughout the world to contain its spread, including effects on global economic activity, demand for seaborne transportation of containerized cargo, the ability and willingness of charterers to perform their obligations to us, charter rates for containerships, shipyards performing scrubber installations, drydocking and repairs, changing vessel crews and availability of financing; Danaos’ ability to achieve the expected benefits of the 2021 debt refinancing and comply with the terms of its new credit facilities and other financing agreements; 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, including the conflict in Ukraine and related sanctions, 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 16 unscheduled off-hire days in the three months ended March 31, 2022. The following table summarizes vessel utilization and the impact of the off-hire days on the Company’s revenue.

Vessel Utilization (No. of Days)

First Quarter

First Quarter

2022

2021

Ownership Days

6,390

5,400

Less Off-hire Days:

Scheduled Off-hire Days

(148)

(22)

Other Off-hire Days

(16)

(51)

Operating Days

6,226

5,327

Vessel Utilization

97.4%

98.6%

 

Operating Revenues (in '000s of US Dollars)

$229,901

$132,118

Average Gross Daily Charter Rate

$36,926

$24,802

Fleet List

The following table describes in detail our fleet deployment profile as of May 16, 2022:

Vessel Name

Vessel Size

(TEU)

 

Year Built

 

Expiration of Charter(1)

Hyundai Ambition

13,100

 

2012

 

June 2024

Hyundai Speed

13,100

 

2012

 

June 2024

Hyundai Smart

13,100

 

2012

 

May 2024

Hyundai Respect

13,100

 

2012

 

March 2024

Hyundai Honour

13,100

 

2012

 

February 2024

Express Rome

10,100

 

2011

 

March 2023

Express Berlin

10,100

 

2011

 

June 2023

Express Athens

10,100

 

2011

 

March 2023

Le Havre

9,580

 

2006

 

June 2028

Pusan C

9,580

 

2006

 

May 2028

Bremen

9,012

 

2009

 

January 2028

C Hamburg

9,012

 

2009

 

January 2028

Niledutch Lion

8,626

 

2008

 

May 2026

Kota Manzanillo (ex Charleston)

8,533

 

2005

 

February 2026

Belita

8,533

 

2006

 

July 2026

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

 

April 2028

Europe

8,468

 

2004

 

May 2028

Phoebe

8,463

 

2005

 

August 2026

CMA CGM Moliere

6,500

 

2009

 

March 2027

CMA CGM Musset

6,500

 

2010

 

October 2022

CMA CGM Nerval

6,500

 

2010

 

December 2022

CMA CGM Rabelais

6,500

 

2010

 

February 2023

CMA CGM Racine

6,500

 

2010

 

March 2023

YM Mandate

6,500

 

2010

 

January 2028

YM Maturity

6,500

 

2010

 

April 2028

Catherine C

6,422

 

2001

 

November 2022

Leo C

6,422

 

2002

 

November 2022

Zim Savannah

6,402

 

2002

 

May 2024

Dimitra C

6,402

 

2002

 

January 2023

Suez Canal

5,610

 

2002

 

March 2023

Kota Lima

5,544

 

2002

 

November 2024

Wide Alpha

5,466

 

2014

 

March 2024

Wide Bravo

5,466

 

2014

 

June 2025

Maersk Euphrates

5,466

 

2014

 

April 2024

Wide Hotel

5,466

 

2015

 

May 2024

Wide India

5,466

 

2015

 

September 2025

Wide Juliet

5,466

 

2015

 

June 2023

Seattle C

4,253

 

2007

 

October 2024

Vancouver

4,253

 

2007

 

November 2024

Derby D

4,253

 

2004

 

January 2027

Tongala

4,253

 

2004

 

January 2023

Rio Grande

4,253

 

2008

 

November 2024

ZIM Sao Paolo

4,253

 

2008

 

February 2023

ZIM Kingston

4,253

 

2008

 

April 2023

ZIM Monaco

4,253

 

2009

 

February 2023

Dalian

4,253

 

2009

 

November 2022

ZIM Luanda

4,253

 

2009

 

August 2025

Dimitris C

3,430

 

2001

 

November 2025

Express Black Sea

3,400

 

2011

 

January 2025

Express Spain

3,400

 

2011

 

January 2025

Express Argentina

3,400

 

2010

 

May 2023

Express Brazil

3,400

 

2010

 

June 2025

Express France

3,400

 

2010

 

September 2025

Singapore

3,314

 

2004

 

May 2024

Colombo

3,314

 

2004

 

January 2025

Zebra

2,602

 

2001

 

November 2024

Amalia C

2,452

 

1998

 

January 2023

Artotina

2,524

 

2001

 

April 2025

Advance

2,200

 

1997

 

January 2025

Future

2,200

 

1997

 

December 2024

Sprinter

2,200

 

1997

 

December 2024

Stride

2,200

 

1997

 

January 2025

Progress C

2,200

 

1998

 

November 2024

Bridge

2,200

 

1998

 

December 2024

Highway

2,200

 

1998

 

August 2022

Vladivostok

2,200

 

1997

 

March 2025

Vessels under construction

 

 

 

 

 

Hull No. C7100-7

7,100

 

2024

 

 

Hull No. C7100-8

7,100

 

2024

 

 

Hull No. HN4009

8,000

 

2024

 

 

Hull No. HN4010

8,000

 

2024

 

 

Hull No. HN4011

8,000

 

2024

 

 

Hull No. HN4012

8,000

 

2024

 

 

(1)

Earliest date charters could expire. Some charters include options for the charterer to extend their terms.

DANAOS CORPORATION
Condensed Consolidated Statements of Income - Unaudited
(Expressed in thousands of United States dollars, except per share amounts)

Three months

ended

 

Three months

ended

March 31,

March 31,

 

2022

 

2021

 

 

 

 

OPERATING REVENUES

$229,901

 

$132,118

 

 

 

 

OPERATING EXPENSES

 

 

 

Vessel operating expenses

(39,164)

 

(31,078)

Depreciation & amortization

(36,079)

 

(28,308)

General & administrative

(7,391)

 

(10,895)

Other operating expenses

(7,189)

 

(4,228)

Income From Operations

140,078

 

57,609

 

 

 

 

OTHER INCOME/(EXPENSES)

 

 

 

Interest income

1

 

1,978

Interest expense

(17,114)

(15,111)

Gain on investments

221,717

247,875

Other finance expenses

(605)

(452)

Equity income on investments

-

 

1,803

Other income, net

499

 

3,971

Realized loss on derivatives

(893)

 

(893)

Total Other Income/(Expenses), net

203,605

 

239,171

Income Before Income Taxes

343,683

 

296,780

Income taxes

(12,218)

 

-

Net Income

$331,465

 

$296,780

EARNINGS PER SHARE

 

 

 

Basic earnings per share

$16.02

 

$14.62

Diluted earnings per share

$16.00

 

$14.47

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

20,697

 

20,293

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

20,717

 

20,513

Non-GAAP Measures1
Reconciliation of Net Income to Adjusted Net Income – Unaudited

 

Three months

ended

 

Three months

ended

March 31,

March 31,

 

2022

 

2021

Net income

$331,465

 

$296,780

Change in fair value of investments

(99,539)

 

(247,875)

Amortization of financing fees, debt discount & finance fees accrued

3,371

 

5,028

Stock based compensation

-

 

4,078

Adjusted Net Income

$235,297

 

$58,011

Adjusted Earnings Per Share, diluted

$11.36

 

$2.83

Diluted weighted average number of shares (in thousands)

20,717

 

20,513

1 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, 2022 and 2021. 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,

 

 

2022

 

2021

ASSETS

 

 

 

 

CURRENT ASSETS

 

 

 

 

Cash, cash equivalents and restricted cash

 

$198,664

 

$129,756

Accounts receivable, net

 

7,133

 

7,118

Other current assets

 

716,825

 

495,618

 

 

922,622

 

632,492

NON-CURRENT ASSETS

 

 

 

 

Fixed assets, net

 

2,909,777

 

2,941,093

Deferred charges, net

 

18,336

 

11,801

Other non-current assets

 

53,486

 

41,739

 

 

2,981,599

 

2,994,633

TOTAL ASSETS

 

$3,904,221

 

$3,627,125

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

Long-term debt, current portion

 

$94,150

 

$95,750

Accumulated accrued interest, current portion

 

7,911

 

6,146

Long-term leaseback obligations, current portion

 

86,116

 

85,815

Accounts payable, accrued liabilities & other current liabilities

 

134,344

 

131,596

 

 

322,521

 

319,307

LONG-TERM LIABILITIES

 

 

 

 

Long-term debt, net

 

998,052

 

1,017,916

Accumulated accrued interest, net of current portion

 

20,955

 

24,155

Long-term leaseback obligations, net

 

120,454

 

136,513

Other long-term liabilities

 

37,271

 

41,211

 

 

1,176,732

 

1,219,795

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

Common stock

 

207

 

207

Additional paid-in capital

 

770,800

 

770,676

Accumulated other comprehensive loss

 

(70,562)

 

(71,455)

Retained earnings

 

1,704,523

 

1,388,595

 

 

2,404,968

 

2,088,023

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$3,904,221

 

$3,627,125

DANAOS CORPORATION
Condensed Consolidated Statements of Cash Flows - Unaudited
(Expressed in thousands of United States dollars)

Three months

ended

 

Three months

ended

March 31,

March 31,

 

2022

 

2021

Operating Activities:

 

 

 

Net income

$331,465

 

$296,780

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

 

 

 

Depreciation and amortization of right-of-use assets

33,359

 

25,799

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

6,091

 

7,537

Amortization of assumed time charters

(16,651)

 

-

PIK interest

-

 

642

Gain on investments

(99,539)

 

(247,875)

Payments for drydocking/special survey

(9,255)

 

(907)

Amortization of deferred realized losses on cash flow interest rate swaps

893

 

893

Equity income on investments

-

 

(1,803)

Stock based compensation

124

 

4,909

Accounts receivable

(15)

 

213

Other assets, current and non-current

(133,417)

 

1,002

Accounts payable and accrued liabilities

5,641

 

3,278

Other liabilities, current and long-term

768

 

(2,210)

Net Cash provided by Operating Activities

119,464

 

88,258

 

 

 

 

Investing Activities:

 

 

 

Vessel additions and advances

(2,043)

 

(1,236)

Advances for sale of vessels

13,000

 

-

Investments

-

 

2,392

Net Cash provided by Investing Activities

10,957

 

1,156

 

 

 

 

Financing Activities:

 

 

 

Proceeds from long-term debt

-

 

294,386

Debt repayment

(24,300)

 

(71,849)

Payments of leaseback obligations

(16,293)

 

(5,916)

Dividends paid

(15,535)

 

-

Payments of accumulated accrued interest

(1,435)

 

(4,702)

Finance costs

(3,950)

 

(4,488)

Net Cash provided by/(used in) Financing Activities

(61,513)

 

207,431

Net Increase in cash, cash equivalents and restricted cash

68,908

 

296,845

Cash, cash equivalents and restricted cash, beginning of period

129,756

 

65,663

Cash, cash equivalents and restricted cash, end of period

$198,664

 

$362,508

DANAOS CORPORATION
Reconciliation of Net Income to Adjusted EBITDA - Unaudited
(Expressed in thousands of United States dollars)

 

Three months

ended

 

Three months

ended

March 31,

March 31,

 

2022

 

2021

Net income

$331,465

 

$296,780

Depreciation and amortization of right-of-use assets

33,359

 

25,799

Amortization of deferred drydocking & special survey costs

2,720

 

2,509

Amortization of assumed time charters

(16,651)

 

-

Amortization of deferred finance costs, debt discount and other finance fees accrued

3,371

 

5,028

Amortization of deferred realized losses on interest rate swaps

893

 

893

Interest income

(1)

 

(1,978)

Interest expense

13,743

 

10,217

Income taxes

12,218

 

-

Gain on investments and dividend withholding taxes

(111,757)

(247,875)

Stock based compensation

124

 

4,909

Adjusted EBITDA(1)

$269,484

 

$96,282

(1)

 

Adjusted EBITDA represents net income before interest income and expense, taxes other than withholding taxes on dividend, depreciation, amortization of deferred drydocking & special survey costs, amortization of assumed time charters, amortization of deferred finance costs, debt discount and other finance fees accrued, amortization of deferred realized losses on interest rate swaps, gain on investments, equity income on investments, gain on debt extinguishment and stock based compensation. 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, 2022 and 2021. 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.

 

Contacts

For further information:

Company Contact:
Evangelos Chatzis
Chief Financial Officer
Danaos Corporation
Athens, Greece
Tel.: +30 210 419 6480
E-Mail: cfo@danaos.com

Iraklis Prokopakis
Senior Vice President and Chief Operating Officer
Danaos Corporation
Athens, Greece
Tel.: +30 210 419 6400
E-Mail: coo@danaos.com

Investor Relations and Financial Media
Rose & Company
New York
Tel. 212-359-2228
E-Mail: danaos@rosecoglobal.com

Contacts

For further information:

Company Contact:
Evangelos Chatzis
Chief Financial Officer
Danaos Corporation
Athens, Greece
Tel.: +30 210 419 6480
E-Mail: cfo@danaos.com

Iraklis Prokopakis
Senior Vice President and Chief Operating Officer
Danaos Corporation
Athens, Greece
Tel.: +30 210 419 6400
E-Mail: coo@danaos.com

Investor Relations and Financial Media
Rose & Company
New York
Tel. 212-359-2228
E-Mail: danaos@rosecoglobal.com