Danaos Corporation (“Danaos”) (NYSE: DAC), one of the world’s
largest independent owners of containerships, today reported
unaudited results for the fourth quarter and the year ended
December 31, 2022.
Highlights for the Fourth Quarter and Year Ended December 31,
2022:
- Adjusted net income1 of $141.6 million, or $6.99 per share,
for the three months ended December 31, 2022 compared to $125.8
million, or $6.10 per share, for the three months ended December
31, 2021, an increase of 12.6%. Adjusted net income1 of $711.0
million, or $34.68 per share, for the year ended December 31, 2022
compared to $362.3 million, or $17.60 per share, for the year ended
December 31, 2021, an increase of 96.2%.
- Cash and cash equivalents amounted to $267.7 million as of
December 31, 2022.
- Total liquidity, including undrawn available commitments
under our Revolving Credit Facility amounted to $650.2 million as
of December 31, 2022.
- Operating revenues of $252.5 million for the three months
ended December 31, 2022 compared to $215.0 million for the three
months ended December 31, 2021, an increase of 17.4%. Operating
revenues of $993.3 million for the year ended December 31, 2022
compared to $689.5 million for the year ended December 31, 2021, an
increase of 44.1%.
- Adjusted EBITDA1 of $176.4 million for the three
months ended December 31, 2022 compared to $159.2 million for the
three months ended December 31, 2021, an increase of 10.8%.
Adjusted EBITDA1 of $851.2 million for the year ended
December 31, 2022 compared to $508.8 million for the year ended
December 31, 2021, an increase of 67.3%.
- Total contracted cash operating revenues were $2.1 billion
as of December 31, 2022 and remaining average contracted charter
duration was 3.4 years, weighted by aggregate contracted charter
hire.
- Contracted operating days charter coverage currently stands
at 92.6% for 2023 and 63.3% for 2024.
- During 2022, we made early prepayment of $909.1 million of
bank debt, lease and bond indebtedness and realized a $4.4 million
gain associated with this debt extinguishment. Additionally, during
2022 we drew down $185.25 million from new credit facilities while
we also entered into a $382.5 million Revolving Credit Facility
that is available and undrawn as of December 31, 2022.
- As a result of the above, as of December 31, 2022, Net
Debt2 was $243.3 million, Net Debt / LTM Adjusted EBITDA was
0.29x, while 42 of our vessels are debt-free currently.
- Danaos has declared a dividend of $0.75 per share of common
stock for the fourth quarter of 2022, which is payable on March 14,
2023 to stockholders of record as of February 28, 2023.
Three Months and Year Ended
December 31, 2022
Financial Summary –
Unaudited
(Expressed in thousands of United
States dollars, except per share amounts)
Three months ended
Three months ended
Year ended
Year ended
December 31,
December 31,
December 31,
December 31,
2022
2021
2022
2021
Operating revenues
$252,483
$215,038
$993,344
$689,505
Net income
$152,721
$165,997
$559,210
$1,052,841
Adjusted net income1
$141,651
$125,839
$710,980
$362,257
Earnings per share, diluted
$7.54
$8.05
$27.28
$51.15
Adjusted earnings per share, diluted1
$6.99
$6.10
$34.68
$17.60
Diluted weighted average number of shares
(in thousands)
20,268
20,623
20,501
20,584
Adjusted EBITDA1
$176,422
$159,164
$851,160
$508,803
1Adjusted 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 provided below.
2Net Debt is defined as total debt gross
of deferred finance costs less cash and cash equivalents.
Danaos’ CEO Dr. John Coustas
commented:
“This past year marked the peak of the container market, and the
exceptionally strong market conditions we saw over the last two
years are behind us. The decline in box rates to pre-pandemic
levels across all sailing routes, foreshadows difficult times
ahead. The liner companies are projecting 2023 earnings materially
lower when compared with 2022, and we are still waiting to see the
full effect of the looming recession. Charter rates have fallen
significantly but remain higher than pre-pandemic levels. However,
charter durations rarely exceed 12 months.
Fortunately, we are insulated from current market conditions as
93% of our available days are already contracted for 2023,
providing us with excellent visibility for the year ahead. Given
our limited near-term downside risk and our minimal debt
obligations, we have ample firepower to opportunistically take
advantage of the forthcoming downturn.
We are closely following the developments in the liner space,
and the dismantling of the 2M alliance will definitely be positive
for the non-operating owners as there will be less efficiency in
the networks. Additionally, the effects of decarbonization have not
been factored in the forecasts for effective fleet supply reduction
through the anticipated reduction in service speeds. Liner
companies are just now beginning to study the Carbon Intensity
Indicator, or CII, of their owned and chartered vessels, and due to
widespread criticism of the current structure of the index and the
expectation that it will most likely be modified, no concrete
action is being taken to redesign networks with a view to conform
to the index.
Danaos is actively investigating various decarbonization
strategies for our existing fleet and is actively involved in the
optimization of the six environmentally friendly newbuildings that
are being delivered to us next year. We remain committed to our
strategy of accretive growth and delivering superior results for
our shareholders.”
Three months ended December 31, 2022
compared to the three months ended December 31, 2021
During the three months ended December 31, 2022, Danaos had an
average of 69.8 containerships compared to 70.9 containerships
during the three months ended December 31, 2021. Our fleet
utilization for the three months ended December 31, 2022 was 94.8%
compared to 97.4% for the three months ended December 31, 2021. The
decrease in utilization was mainly due to the increased days of
scheduled dry-docking of our vessels.
Our adjusted net income amounted to $141.6 million, or $6.99 per
share, for the three months ended December 31, 2022 compared to
$125.8 million, or $6.10 per share, for the three months ended
December 31, 2021. We have adjusted our net income in the three
months ended December 31, 2022 for gain on sale of vessels of $37.2
million, loss on debt extinguishment of $18.6 million, stock based
compensation of $5.4 million and a non-cash fees amortization of
$2.1 million. Please refer to the Adjusted Net Income
reconciliation table, which appears later in this earnings
release.
The $15.8 million increase in adjusted net income for the three
months ended December 31, 2022 compared to the three months ended
December 31, 2021 is attributable mainly to a $37.5 million
increase in operating revenues and a $5.5 million decrease in net
finance expenses, which were partially offset by a $16.2 million
decrease in dividends from ZIM (net of withholding taxes), a $7.8
million increase in prior service cost and a $3.2 million increase
in total operating expenses.
On a non-adjusted basis, our net income amounted to $152.7
million, or $7.54 earnings per diluted share, for the three months
ended December 31, 2022 compared to net income of $166.0 million,
or $8.05 earnings per diluted share, for the three months ended
December 31, 2021. Our net income for the three months ended
December 31, 2022 includes a gain on sale of vessels of $37.2
million and a loss on debt extinguishment of $18.6 million.
Operating Revenues
Operating revenues increased by 17.4%, or $37.5 million, to
$252.5 million in the three months ended December 31, 2022 from
$215.0 million in the three months ended December 31, 2021.
Operating revenues for the three months ended December 31, 2022
reflect:
- a $72.9 million increase in revenues in the three months ended
December 31, 2022 compared to the three months ended December 31,
2021 mainly as a result of higher charter rates;
- a $1.6 million decrease in revenues in the three months ended
December 31, 2022 compared to the three months ended December 31,
2021 due to vessel disposals
- a $7.9 million decrease in revenues in the three months ended
December 31, 2022 compared to the three months ended December 31,
2021 due to amortization of assumed time charters; and
- a $25.9 million decrease in revenue in the three months ended
December 31, 2022 compared to the three months ended December 31,
2021 due to lower non-cash revenue recognition in accordance with
US GAAP.
Vessel Operating Expenses
Vessel operating expenses increased by $2.8 million to $40.0
million in the three months ended December 31, 2022 from $37.2
million in the three months ended December 31, 2021, primarily as a
result of the increase in the average daily operating cost for
vessels on time charter to $6,417 per vessel per day for the three
months ended December 31, 2022 compared to $5,861 per vessel per
day for the three months ended December 31, 2021, which was
partially offset by a slight decrease in the average number of
vessels in our fleet. The average daily operating cost increased
mainly due to the COVID-19 and Ukraine war related increase in crew
remuneration, increased insurance premiums and repairs in the three
months ended December 31, 2022 compared to the three months ended
December 31, 2021. 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 decreased by 2.9%, or $1.0 million, to
$33.0 million in the three months ended December 31, 2022 from
$34.0 million in the three months ended December 31, 2021 mainly
due to a sale of our two vessels Leo C and Catherine C in November
2022.
Amortization of Deferred Dry-docking and Special Survey
Costs
Amortization of deferred dry-docking and special survey costs
increased by $0.6 million to $3.2 million in the three months ended
December 31, 2022 from $2.6 million in the three months ended
December 31, 2021.
General and Administrative Expenses
General and administrative expenses decreased by $3.7 million,
to $14.9 million in the three months ended December 31, 2022 from
$18.6 million in the three months ended December 31, 2021 mainly
due to a $3.6 million decrease in stock-based compensation.
Other Operating Expenses
Other Operating Expenses include Voyage Expenses.
Voyage Expenses
Voyage expenses increased by $1.1 million to $8.2 million in the
three months ended December 31, 2022 from $7.1 million in the three
months ended December 31, 2021 primarily as a result of the
increase in commissions due to the increase in revenue per
vessel.
Gain on sale of vessels
In November 2022, we completed the sale of the Catherine C and
Leo C for net proceeds of $128.0 million resulting in a gain of
$37.2 million.
Interest Expense and Interest Income
Interest expense decreased by 26.1%, or $4.6 million, to $13.0
million in the three months ended December 31, 2022 from $17.6
million in the three months ended December 31, 2021. The decrease
in interest expense is a combined result of:
- a $1.7 million decrease in interest expense due to a decrease
in our average indebtedness by $589.4 million between the two
periods (average indebtedness of $807.9 million in the three months
ended December 31, 2022 compared to average indebtedness of
$1,397.3 million in the three months ended December 31, 2021),
which was partially offset by an increase in our debt service cost
by 2.38 percentage points, mainly as a result of increase in the
reference rates for our floating rate debt;
- a $1.4 million decrease in the amortization of deferred finance
costs and debt discount;
- a $3.0 million decrease in interest expense due to capitalized
interest on our vessels under construction in the three months
ended December 31, 2022 compared to none in the three months ended
December 31, 2021; and
- a $1.5 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 and subsequently fully repaid on May
15, 2022, at which point the remaining accumulated accrued interest
of $26.9 million was recognized in gain on debt
extinguishment.
As of December 31, 2022, our outstanding debt, gross of deferred
finance costs, was $438.0 million, which includes $262.8 million
aggregate principal amount of our Senior Notes, and our leaseback
obligation was $72.9 million. These balances compare to debt of
$1,142.0 million and a leaseback obligation of $226.5 million,
gross of deferred finance costs, as of December 31, 2021.
Interest income increased by $2.6 million to $3.2 million in the
three months ended December 31, 2022 compared to $0.6 million in
the three months ended December 31, 2021 mainly as a result of
increased interest income earned on time deposits in the three
months ended December 31, 2022.
Gain on investments
The gain on investments of $70.2 million in the three months
ended December 31, 2021 consisted of the change in fair value of
our shareholding interest in ZIM of $52.2 million and dividends
recognized on ZIM ordinary shares of $18.0 million. This compares
to no gain in the three months ended December 31, 2022 due to the
sale of all our remaining ZIM ordinary shares in September
2022.
Loss on debt extinguishment
The loss on debt extinguishment of $18.6 million in the three
months ended December 31, 2022 related to our early extinguishment
of debt compared to none in the three months ended December 31,
2021.
Other finance expenses
Other finance expenses increased by $0.3 million to $0.5 million
in the three months ended December 31, 2022 compared to $0.2
million in the three months ended December 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
December 31, 2022 and December 31, 2021.
Other income/(expenses), net
Other expenses, net were $7.9 million in the three months ended
December 31, 2022 compared to other income, net of $0.1 million in
the three months ended December 31, 2021. The decrease was mainly
due to reclassification of prior service cost of a defined benefit
obligation of $7.8 million in the three months ended December 31,
2022.
Income taxes
Income taxes were nil in the three months ended December 31,
2022 compared to $1.8 million taxes withheld on dividend income
earned on ZIM ordinary shares in the three months ended December
31, 2021.
Adjusted EBITDA
Adjusted EBITDA increased by 10.8%, or $17.2 million, to $176.4
million in the three months ended December 31, 2022 from $159.2
million in the three months ended December 31, 2021. As outlined
above, the increase is mainly attributable to a $45.3 million
increase in operating revenues (net of $7.9 million decrease in
amortization of assumed time charters), which were partially offset
by a $11.9 million increase in total operating expenses and a $16.2
million decrease in dividends from ZIM (net of withholding taxes).
Adjusted EBITDA for the three months ended December 31, 2022 is
adjusted for a $37.2 million gain on sale of vessels, a $18.6
million loss on debt extinguishment and stock-based compensation of
$5.6 million. Tables reconciling Adjusted EBITDA to Net Income can
be found at the end of this earnings release.
Year ended December 31, 2022 compared
to the year ended December 31, 2021
During the year ended December 31, 2022, Danaos had an average
of 70.7 containerships compared to 64.2 containerships during the
year ended December 31, 2021. Our fleet utilization for the year
ended December 31, 2022 was 97.3% compared to 98.2% for the year
ended December 31, 2021. The decrease in utilization was mainly due
to the increased days of scheduled dry-docking of our vessels.
Our adjusted net income amounted to $711.0 million, or $34.68
per share, for the year ended December 31, 2022 compared to $362.3
million, or $17.60 per share, for the year ended December 31, 2021.
We have adjusted our net income in the year ended December 31, 2022
for the change in fair value of our investment in ZIM of $176.4
million, gain on sale of vessels of $37.2 million, gain on debt
extinguishment of $4.4 million, a non-cash fees amortization of
$11.5 million and stock based compensation of $5.4 million. Please
refer to the Adjusted Net Income reconciliation table, which
appears later in this earnings release.
The $348.7 million increase in adjusted net income for the year
ended December 31, 2022 compared to the year ended December 31,
2021 is attributable mainly to a $303.8 million increase in
operating revenues and a $118.7 million increase in dividends from
ZIM (net of withholding taxes), which were partially offset by a
$52.5 million increase in total operating expenses, a $5.6 million
increase in net finance expenses, a $7.8 million increase in prior
service costs, a $4.0 million decrease in our equity income from
our investment in Gemini Shipholdings Corporation following our
acquisition and full consolidation of Gemini since July 1, 2021 and
a partial collection of common benefit claim of $3.9 million from
Hanjin Shipping in the year ended December 31, 2021.
On a non-adjusted basis, our net income amounted to $559.2
million, or $27.28 earnings per diluted share, for the year ended
December 31, 2022 compared to net income of $1,052.8 million, or
$51.15 earnings per diluted share, for the year ended December 31,
2021. Our net income for the year ended December 31, 2022 includes
a gain on sale of vessels of $37.2 million, a total loss on our
investment in ZIM of $29.2 million (net of withholding taxes on
dividend) and a gain on debt extinguishment of $4.4 million.
Operating Revenues
Operating revenues increased by 44.1%, or $303.8 million, to
$993.3 million in the year ended December 31, 2022 from $689.5
million in the year ended December 31, 2021.
Operating revenues for the year ended December 31, 2022
reflect:
- a $260.6 million increase in revenues in the year ended
December 31, 2022 compared to the year ended December 31, 2021
mainly as a result of higher charter rates;
- a $55.8 million increase in revenues in the year ended December
31, 2022 compared to the year ended December 31, 2021 due to the
incremental revenue generated by newly acquired vessels;
- a $29.0 million increase in revenues in the year ended December
31, 2022 compared to the year ended December 31, 2021 due to
amortization of assumed time charters;
- a $1.6 million decrease in revenues in the year ended December
31, 2022 compared to the year ended December 31, 2021 due to vessel
disposals; and
- a $40.0 million decrease in revenue in the year ended December
31, 2022 compared to the year ended December 31, 2021 due to lower
non-cash revenue recognition in accordance with US GAAP.
Vessel Operating Expenses
Vessel operating expenses increased by $23.1 million to $159.0
million in the year ended December 31, 2022 from $135.9 million in
the year ended December 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 $6,339 per vessel per day for the year ended December
31, 2022 compared to $5,986 per vessel per day for the year ended
December 31, 2021. The average daily operating cost increased
mainly due to the COVID-19 and Ukraine war related increase in crew
remuneration and increased insurance premiums in the year ended
December 31, 2022 compared to the year ended December 31, 2021.
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 14.9%, or $17.4 million, to
$134.3 million in the year ended December 31, 2022 from $116.9
million in the year ended December 31, 2021 due to recent
acquisitions of 11 vessels.
Amortization of Deferred Dry-docking and Special Survey
Costs
Amortization of deferred dry-docking and special survey costs
increased by $2.0 million to $12.2 million in the year ended
December 31, 2022 from $10.2 million in the year ended December 31,
2021.
General and Administrative Expenses
General and administrative expenses decreased by $7.4 million to
$36.6 million in the year ended December 31, 2022, from $44.0
million in the year ended December 31, 2021. The decrease was
mainly attributable to a $9.3 million decrease in stock-based
compensation, which was partially offset by a $2.0 million increase
in management fees (due to increased average size of our fleet) in
the year ended December 31, 2022 compared to the year ended
December 31, 2021.
Other Operating Expenses
Other Operating Expenses include Voyage Expenses.
Voyage Expenses
Voyage expenses increased by $10.8 million to $35.1 million in
the year ended December 31, 2022 from $24.3 million in the year
ended December 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.
Gain on sale of vessels
In November 2022, we completed the sale of the Catherine C and
Leo C for net proceeds of $128.0 million resulting in a gain of
$37.2 million.
Interest Expense and Interest Income
Interest expense decreased by 10.0%, or $6.9 million, to $62.1
million in the year ended December 31, 2022 from $69.0 million in
the year ended December 31, 2021. The decrease in interest expense
is a combined result of:
- a $7.6 million decrease in interest expense due to a decrease
in our average indebtedness by $407.4 million between the two
periods (average indebtedness of $1,070.7 million in the year ended
December 31, 2022 compared to average indebtedness of $1,478.1
million in the year ended December 31, 2021), which was partially
offset by an increase in our debt service cost by 0.96 percentage
points, mainly as a result of increase in the reference rates on
our floating rate debt;
- a $4.4 million decrease in the amortization of deferred finance
costs and debt discount;
- a $5.0 million decrease in interest expense due to capitalized
interest on our vessels under construction in the year ended
December 31, 2022 compared to none in the year ended December 31,
2021; and
- a $10.1 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 and subsequently fully repaid on May
15, 2022, at which point the remaining accumulated accrued interest
of $26.9 million was recognized in gain on debt
extinguishment.
During the year ended December 31, 2022, we reduced debt, bond
and lease indebtedness by $1,042.8 million mainly as a result of
$909.1 million early debt and lease repayments and recognized a
$4.4 million gain related to this early debt extinguishment. On the
other hand, our indebtedness increased by $130 million following
consummation of the loan agreement to finance our six 5,466 TEU
vessels that were acquired in 2021 and by a further $55.25 million,
following consummation of a new credit facility during the quarter
ended December 31, 2022. Additionally, during the quarter ended
December 31, 2022 we entered into a $382.5 million Revolving Credit
Facility which remains available and undrawn.
As of December 31, 2022, our outstanding bank debt, gross of
deferred finance costs, was $438.0 million, which includes $262.8
million aggregate principal amount of our Senior Notes, and our
leaseback obligation was $72.9 million. These balances compare to
debt of $1,142.0 million and a leaseback obligation of $226.5
million, gross of deferred finance costs, as of December 31,
2021.
Interest income decreased by $7.6 million to $4.6 million in the
year ended December 31, 2022 compared to $12.2 million in the year
ended December 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/(loss) on investments
A loss on investments of $11.0 million in the year ended
December 31, 2022 consists of the change in fair value of our
shareholding interest in ZIM of $176.4 million and dividends
recognized on ZIM ordinary shares of $165.4 million. In April 2022,
we sold 1,500,000 of these ZIM ordinary shares resulting in
proceeds to us of $85.3 million. In September 2022, we sold all of
our remaining 5,686,950 ZIM ordinary shares resulting in proceeds
to us of $161.3 million.
Gain on debt extinguishment
The gain on debt extinguishment of $4.4 million in the year
ended December 31, 2022, which related to our early extinguishment
of debt, decreased compared to $111.6 million in the year ended
December 31, 2021, which resulted from our debt refinancing on
April 12, 2021.
Equity income on investments
Equity income on investments in Gemini decreased to nil in the
year ended December 31, 2022 compared to $68.0 million in the year
ended December 31, 2021 following our acquisition and full
consolidation of Gemini since July 1, 2021.
Other finance expenses
Other finance expenses increased by $0.3 million to $1.6 million
in the year ended December 31, 2022 compared to $1.3 million in the
year ended December 31, 2021.
Loss on derivatives
Amortization of deferred realized losses on interest rate swaps
remained stable at $3.6 million in each of the year ended December
31, 2022 and December 31, 2021.
Other income/(expenses), net
Other expenses, net were $6.6 million in the year ended December
31, 2022 compared to other income, net of $4.5 million in the year
ended December 31, 2021. The decrease was mainly due to
reclassification of prior service cost of a defined benefit
obligation of $7.8 million in the year ended December 31, 2022 and
the collection from Hanjin Shipping of $3.9 million as a partial
payment of common benefit claim and interest in the year ended
December 31, 2021.
Income taxes
Income taxes were $18.3 million in the year ended December 31,
2022, related to the taxes withheld on dividend income earned on
ZIM ordinary shares and compared to $5.9 million taxes withheld on
dividend income in the year ended December 31, 2021.
Adjusted EBITDA
Adjusted EBITDA increased by 67.3%, or $342.4 million, to $851.2
million in the year ended December 31, 2022 from $508.8 million in
the year ended December 31, 2021. As outlined above, the increase
is mainly attributable to a $274.8 million increase in operating
revenues (net of $29.0 million increase in amortization of assumed
time charters) and a $118.7 million increase in dividends from ZIM
(net of withholding taxes) in the year ended December 31, 2022,
which were partially offset by a $43.2 million increase in total
operating expenses, a $4.0 million decrease in our equity income
from our investment in Gemini following our acquisition and full
consolidation of Gemini since July 1, 2021 and a partial collection
of common benefit claim of $3.9 million from Hanjin Shipping in the
year ended December 31, 2021. Adjusted EBITDA for the year ended
December 31, 2022 is adjusted for a $158.1 million change in fair
value of the investment in ZIM and dividend withholding taxes, a
gain on sale of vessels of $37.2 million, a gain on debt
extinguishment of $4.4 million and stock based compensation of $6.0
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 fourth quarter of 2022, which is payable on March 14,
2023 to stockholders of record as of February 28, 2023.
Recent Developments
In December 2022, we completed the refinancing of our
Citibank/Natwest facility with an Alpha Bank term loan facility of
$55.25 million and a Citibank revolving credit facility of up to
$382.5 million (out of which nil is drawn down as of December 31,
2022).
In December 2022, we repurchased $37.2 million aggregate
principal amount of our unsecured senior notes in a privately
negotiated transaction.
In December 2022, we entered into an agreement to sell Amalia C
for an aggregate gross consideration of $5.1 million, which was
delivered to its buyers in January 2023.
In January 2023, we gave early termination notice to Oriental
Fleet about our intention to fully repay our outstanding leaseback
obligations related to two of our vessels by May 12, 2023.
Conference Call and
Webcast
On Wednesday, February 15, 2023 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 February 22, 2023 by dialing 1 877 344 7529 (US Toll Free
Dial In) or 1-412-317-0088 (Standard International Dial In) and
using 6753609# 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 68
containerships aggregating 421,293 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 constructing our
contracted newbuilding vessels, performing scrubber installations,
drydocking and repairs, changing vessel crews and availability of
financing, Danaos’ ability to achieve the expected benefits of
refinancing our Citibank/Natwest credit facility, 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 23 unscheduled off-hire days in the three months
ended December 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
Second Quarter
Third Quarter
Fourth Quarter
2022
2022
2022
2022
Total
Ownership Days
6,390
6,461
6,532
6,424
25,807
Less Off-hire Days:
Scheduled Off-hire Days
(148)
-
(169)
(311)
(628)
Other Off-hire Days
(16)
(8)
(21)
(23)
(68)
Operating Days
6,226
6,453
6,342
6,090
25,111
Vessel Utilization
97.4%
99.9%
97.1%
94.8%
97.3%
Operating Revenues (in '000s of US
Dollars)
$229,901
$250,923
$260,037
$252,483
$993,344
Average Gross Daily Charter
Rate
$36,926
$38,885
$41,002
$41,459
$39,558
Vessel Utilization (No. of
Days)
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
2021
2021
2021
2021
Total
Ownership Days
5,400
5,460
6,043
6,527
23,430
Less Off-hire Days:
Scheduled Off-hire Days
(22)
(33)
-
(79)
(134)
Other Off-hire Days
(51)
(15)
(137)
(89)
(292)
Operating Days
5,327
5,412
5,906
6,359
23,004
Vessel Utilization
98.6%
99.1%
97.7%
97.4%
98.2%
Operating Revenues (in '000s of US
Dollars)
$132,118
$146,434
$195,915
$215,038
$689,505
Average Gross Daily Charter
Rate
$24,802
$27,057
$33,172
$33,816
$29,973
Fleet List
The following table describes in detail our fleet deployment
profile as of February 13, 2023:
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
June 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
Kota Santos (ex Phoebe)
8,463
2005
August 2026
CMA CGM Moliere
6,500
2009
March 2027
CMA CGM Musset
6,500
2010
September 2025
CMA CGM Nerval
6,500
2010
November 2025
CMA CGM Rabelais
6,500
2010
January 2026
CMA CGM Racine
6,500
2010
February 2024
YM Mandate
6,500
2010
January 2028
YM Maturity
6,500
2010
April 2028
Zim Savannah
6,402
2002
May 2024
Dimitra C
6,402
2002
January 2024
Suez Canal
5,610
2002
February 2024
Kota Lima
5,544
2002
November 2024
Wide Alpha
5,466
2014
March 2024
Stephanie C (ex 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
November 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
November 2024
Rio Grande
4,253
2008
November 2024
ZIM Sao Paolo
4,253
2008
July 2023
ZIM Kingston
4,253
2008
April 2023
ZIM Monaco
4,253
2009
October 2024
Dalian
4,253
2009
April 2026
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
Artotina
2,524
2001
May 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
July 2023
Phoenix D (ex 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
Year ended
Year ended
December 31,
December 31,
December 31,
December 31,
2022
2021
2022
2021
OPERATING REVENUES
$252,483
$215,038
$993,344
$689,505
OPERATING EXPENSES
Vessel operating expenses
(40,043)
(37,180)
(158,972)
(135,872)
Depreciation & amortization
(36,182)
(36,562)
(146,441)
(127,098)
General & administrative
(14,891)
(18,584)
(36,575)
(43,951)
Other operating expenses
(8,193)
(7,076)
(35,145)
(24,325)
Gain on sale of vessels
37,225
-
37,225
-
Income From Operations
190,399
115,636
653,436
358,259
OTHER INCOME/(EXPENSES)
Interest income
3,147
569
4,591
12,230
Interest expense
(12,980)
(17,583)
(62,141)
(68,991)
Gain/(loss) on investments
-
70,216
(10,987)
577,994
Gain/(loss) on debt extinguishment
(18,588)
-
4,351
111,616
Other finance expenses
(494)
(193)
(1,590)
(1,326)
Equity income on investments
-
-
-
68,028
Other income/(expenses), net
(7,850)
61
(6,578)
4,543
Realized loss on derivatives
(913)
(913)
(3,622)
(3,622)
Total Other Income/(Expenses),
net
(37,678)
52,157
(75,976)
700,472
Income Before Income Taxes
152,721
167,793
577,460
1,058,731
Income taxes
-
(1,796)
(18,250)
(5,890)
Net Income
$152,721
$165,997
$559,210
$1,052,841
EARNINGS PER SHARE
Basic earnings per share
$7.54
$8.15
$27.30
$51.75
Diluted earnings per share
$7.54
$8.05
$27.28
$51.15
Basic weighted average number of common
shares (in thousands of shares)
20,249
20,380
20,482
20,345
Diluted weighted average number of common
shares (in thousands of shares)
20,268
20,623
20,501
20,584
Non-GAAP Measures1
Reconciliation of Net Income
to Adjusted Net Income – Unaudited
Three months ended
Three months ended
Year ended
Year ended
December 31,
December 31,
December 31,
December 31,
2022
2021
2022
2021
Net income
$152,721
$165,997
$559,210
$1,052,841
Change in fair value of investments
-
(52,249)
176,386
(543,653)
Equity income on investments
-
-
-
(64,063)
(Gain)/loss on debt extinguishment
18,588
-
(4,351)
(111,616)
Gain on sale of vessels
(37,225)
-
(37,225)
-
Amortization of financing fees, debt
discount & finance fees accrued
2,127
3,483
11,520
16,062
Stock based compensation
5,440
8,608
5,440
12,686
Adjusted Net Income
$141,651
$125,839
$710,980
$362,257
Adjusted Earnings Per Share,
diluted
$6.99
$6.10
$34.68
$17.60
Diluted weighted average number of shares
(in thousands of shares)
20,268
20,623
20,501
20,584
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 and year ended
December 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
December 31,
December 31,
2022
2021
ASSETS
CURRENT ASSETS
Cash, cash equivalents and restricted
cash
$267,668
$129,756
Accounts receivable, net
5,635
7,118
Other current assets
99,218
495,618
372,521
632,492
NON-CURRENT ASSETS
Fixed assets, net
2,721,494
2,941,093
Advances for vessels under
construction
190,736
-
Deferred charges, net
25,554
11,801
Other non-current assets
89,923
41,739
3,027,707
2,994,633
TOTAL ASSETS
$3,400,228
$3,627,125
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
Long-term debt, current portion
$27,500
$95,750
Accumulated accrued interest, current
portion
-
6,146
Long-term leaseback obligations, current
portion
27,469
85,815
Accounts payable, accrued liabilities
& other current liabilities
173,438
131,596
228,407
319,307
LONG-TERM LIABILITIES
Long-term debt, net
402,440
1,017,916
Accumulated accrued interest, net of
current portion
-
24,155
Long-term leaseback obligations, net
44,542
136,513
Other long-term liabilities
164,425
41,211
611,407
1,219,795
STOCKHOLDERS’ EQUITY
Common stock
203
207
Additional paid-in capital
748,109
770,676
Accumulated other comprehensive loss
(74,209)
(71,455)
Retained earnings
1,886,311
1,388,595
2,560,414
2,088,023
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$3,400,228
$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
Year ended
Year ended
December 31,
December 31,
December 31,
December 31,
2022
2021
2022
2021
Operating Activities:
Net income
$152,721
$165,997
$559,210
$1,052,841
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of
right-of-use assets
33,018
34,008
134,271
116,917
Amortization of deferred drydocking &
special survey costs, finance cost, debt discount and other finance
fees accrued
5,291
6,037
23,690
26,243
Amortization of assumed time charters
(10,443)
(18,296)
(56,699)
(27,614)
Prior service cost and periodic cost
7,846
-
7,846
-
PIK interest
-
-
-
726
(Gain)/loss on investments
-
(52,249)
176,386
(543,653)
(Gain)/loss on debt extinguishment
18,588
-
(4,351)
(111,616)
Gain on sale of vessels
(37,225)
-
(37,225)
-
Payments for drydocking/special survey
(13,780)
(3,028)
(29,939)
(4,643)
Amortization of deferred realized losses
on cash flow interest rate swaps
913
913
3,622
3,622
Equity income on investments
-
-
-
(68,028)
Stock based compensation
5,599
9,223
5,972
15,278
Accounts receivable
(503)
(93)
1,483
786
Other assets, current and non-current
(13,721)
(23,929)
(67,274)
(45,022)
Accounts payable and accrued
liabilities
6,517
9,014
5,860
13,305
Other liabilities, current and
long-term
(9,324)
4,374
211,889
(1,031)
Net Cash provided by Operating
Activities
145,497
131,971
934,741
428,111
Investing Activities:
Vessel additions and advances for vessels
under construction
(104,001)
(91,642)
(199,135)
(355,720)
Proceeds from sale of vessels
116,069
-
129,069
-
Investments
-
52,307
246,638
212,572
Net Cash provided by/(used in)
Investing Activities
12,068
(39,335)
176,572
(143,148)
Financing Activities:
Proceeds from long-term debt
55,001
-
182,726
1,105,311
Debt repayment
(491,928)
(24,300)
(892,928)
(1,343,725)
Proceeds from sale-leaseback of
vessels
-
-
-
135,000
Payments of leaseback obligations
(6,680)
(16,422)
(153,546)
(53,799)
Dividends paid
(15,185)
(10,294)
(61,483)
(30,887)
Repurchase of common stock
-
-
(28,553)
-
Payments of accumulated accrued
interest
-
(1,471)
(3,373)
(10,361)
Finance costs
(448)
(3,950)
(16,244)
(22,409)
Net Cash used in Financing
Activities
(459,240)
(56,437)
(973,401)
(220,870)
Net increase/(decrease) in cash, cash
equivalents and restricted cash
(301,675)
36,199
137,912
64,093
Cash, cash equivalents and restricted
cash, beginning of period
569,343
93,557
129,756
65,663
Cash, cash equivalents and restricted
cash, end of period
$267,668
$129,756
$267,668
$129,756
DANAOS CORPORATION
Reconciliation of Net Income
to Adjusted EBITDA - Unaudited
(Expressed in thousands of
United States dollars)
Three months ended
Three months ended
Year ended
Year ended
December 31,
December 31,
December 31,
December 31,
2022
2021
2022
2021
Net income
$152,721
$165,997
$559,210
$1,052,841
Depreciation and amortization of
right-of-use assets
33,018
34,008
134,271
116,917
Amortization of deferred drydocking &
special survey costs
3,164
2,554
12,170
10,181
Amortization of assumed time charters
(10,443)
(18,296)
(56,699)
(27,614)
Amortization of deferred finance costs,
debt discount and commitment fees
2,382
3,483
11,775
16,062
Amortization of deferred realized losses
on interest rate swaps
913
913
3,622
3,622
Interest income
(3,147)
(569)
(4,591)
(12,230)
Interest expense
10,852
14,100
50,620
53,078
Income taxes
-
1,796
18,250
5,890
(Gain)/loss on investments and dividend
withholding taxes
-
(54,045)
158,136
(549,543)
Gain on sale of vessels
(37,225)
-
(37,225)
-
Equity income on investments
-
-
-
(64,063)
(Gain)/loss on debt extinguishment
18,588
-
(4,351)
(111,616)
Stock based compensation
5,599
9,223
5,972
15,278
Adjusted EBITDA(1)
$176,422
$159,164
$851,160
$508,803
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
commitment fees, amortization of deferred realized losses on
interest rate swaps, gain/loss on investments, gain on sale of
vessels, gain/loss 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 and year ended
December 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230214005820/en/
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
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