Danaos Corporation Reports Third Quarter and Nine Months Results for the Period Ended September 30, 2015
ATHENS, GREECE -- (Marketwired) -- 11/03/15 -- Danaos Corporation ("Danaos") (NYSE: DAC), one of the world's largest independent owners of containerships, today reported unaudited results for the period ended September 30, 2015.
Highlights for the Third Quarter and Nine Months Ended September 30, 2015:
- Operating revenues of $144.5 million for the three months ended September 30, 2015 compared to $139.5 million for the three months ended September 30, 2014, an increase of 3.6%. Operating revenues of $424.6 million for the nine months ended September 30, 2015 compared to $411.4 million for the nine months ended September 30, 2014, an increase of 3.2%.
- Adjusted EBITDA(1) of $106.8 million for the three months ended September 30, 2015 compared to $104.1 million for the three months ended September 30, 2014, an increase of 2.6%. Adjusted EBITDA(1) of $312.6 million for the nine months ended September 30, 2015 compared to $299.5 million for the nine months ended September 30, 2014, an increase of 4.4%.
- Adjusted net income(1) of $43.8 million, or $0.40 per share, for the three months ended September 30, 2015 compared to $18.0 million, or $0.16 per share, for the three months ended September 30, 2014, an increase of 143.3%. Adjusted net income(1) of $112.3 million, or $1.02 per share, for the nine months ended September 30, 2015 compared to $36.6 million, or $0.33 per share, for the nine months ended September 30, 2014, an increase of 206.8%.
- The remaining average charter duration of our fleet was 7.4 years as of September 30, 2015, weighted by aggregate contracted charter hire.
- Total contracted operating revenues were $3.3 billion as of September 30, 2015, with charters extending through 2028.
- Charter coverage of 95.0% for the next 12 months in terms of operating revenues and 88.3% in terms of contracted operating days.
- In August 2015, Danaos entered into a joint venture with its largest stockholder, to form Gemini Shipholdings Corporation ("Gemini"). Danaos' 49% initial ownership interest in Gemini was acquired through an investment of $7.35 million. Gemini has already acquired three containerships, the 6,422 TEU vessel 'NYK Lodestar' built in 2001, the 5,610 TEU vessel 'Suez Canal' built in 2002 and the 5,544 TEU vessel 'Genoa' built in 2002. Gemini has also recently entered into an in principle agreement to acquire on subjects one more 6,422 TEU containership built in 2002. The joint venture is reported under the 'Equity Method' accounting within our financial statements.
Three and Nine Months Ended September 30, 2015
Financial Summary
(Expressed in thousands of United States dollars, except per share amounts)
Three Three Nine Nine
months months months months
ended ended ended ended
September September September September
30, 30, 30, 30,
---------- ---------- ---------- ----------
2015 2014 2015 2014
---------- ---------- ---------- ----------
(unaudited)
Operating revenues $ 144,542 $ 139,496 $ 424,616 $ 411,422
Net income $ 42,068 $ 22,406 $ 110,482 $ 47,456
Adjusted net income(1) $ 43,783 $ 18,020 $ 112,336 $ 36,592
Earnings per share $ 0.38 $ 0.20 $ 1.01 $ 0.43
Adjusted earnings per share(1) $ 0.40 $ 0.16 $ 1.02 $ 0.33
Weighted average number of
shares (in thousands) 109,785 109,669 109,785 109,669
Adjusted EBITDA(1) $ 106,772 $ 104,144 $ 312,626 $ 299,511
(1) Adjusted net income, adjusted earnings per share and adjusted EBITDA are non-GAAP measures. Refer to the reconciliation of net income to adjusted net income and net income to adjusted EBITDA.
Danaos' CEO Dr. John Coustas commented:
We are pleased to report yet another strong quarter with adjusted net income of $43.8 million, or 40 cents per share, representing an improvement of 143.3% compared to the adjusted net income of $18.0 million, or 16 cents per share reported for the 3rd quarter of 2014.
The main drivers of the improvement in the company's profitability between the 2 quarters were a $21.8 million decrease in net financing costs together with a $5.0 million increase in operating revenues. Our financing costs will continue to decrease and, as a result, earnings will continue to increase, as we continue to execute our comprehensive debt reduction plan and benefit from the expiration of expensive interest rate swaps over the next 2 quarters.
During the 3rd quarter of the year, the industry witnessed a deterioration in the fundamentals of the container market both in terms of freight rates and charter rates. Idle tonnage has now surpassed the 1 million TEU mark, which represents approximately 5% of the world fleet. This was mainly driven by slower than expected demand growth in Northern Europe and the emerging markets, a trend verified by downward revisions of GDP growth projections recently published by the IMF. The silver lining is that newbuilding ordering has effectively come to a halt, while we also expect to see increased scrapping activity over the next 12 months. The combination of supply moderation and the eventual resumption of stronger demand growth will drive the containership sector recovery, which we see beginning in the spring of 2016 and strengthening into 2017.
Undeniably, the current market offers many attractive opportunities to acquire assets, particularly in the second-hand market for Post Panamax vessels. During the 3rd quarter we established Gemini Shipholdings Corporation, a joint venture in which Danaos Corporation holds a 49% equity interest, to act against these opportunities. Gemini has already acquired two 5,500 vessels and one 6,500 TEU vessel all built in 2001/2002 and has recently agreed to acquire on subjects another 6,500 TEU containership built in 2002.
Our investment in Gemini allows us to resume our growth strategy as weakness in the containership market presents compelling value. It is important to stress that we are doing this without diluting our shareholders and in alignment with the interests of our largest shareholder.
Our charter coverage continues to be at a strong 95% in terms of operating revenues for the next 12 months, which insulates us from market weakness. At the same time, our $5,700 daily operating cost clearly positions us as one of the most efficient operators in the industry.
We will continue our strategy of deleveraging our balance sheet and managing our fleet efficiently. Additionally, as the market presents accretive acquisition opportunities, we will leverage the strength of our platform and our relationships in the financial community to deliver value to our shareholders.
Three months ended September 30, 2015 compared to the three months ended September 30, 2014
During the three months ended September 30, 2015, Danaos had an average of 56.0 containerships compared to 54.0 containerships for the three months ended September 30, 2014. Our fleet utilization increased to 100.0% in the three months ended September 30, 2015 compared to 99.5% in the three months ended September 30, 2014.
Our adjusted net income amounted to $43.8 million, or $0.40 per share, for the three months ended September 30, 2015 compared to $18.0 million, or $0.16 per share, for the three months ended September 30, 2014. We have adjusted our net income in the three months ended September 30, 2015 for unrealized gains on derivatives of $2.6 million, as well as a non-cash expense of $4.4 million for fees related to our 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 $25.8 million in adjusted net income for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 was mainly attributed to a reduction of $21.8 million in net finance costs mainly due to lower debt balances and interest rate swap expirations and an increase of $5.0 million in operating revenues, as described below, which were partially offset by a $1.0 million loss on equity investments.
On a non-adjusted basis, our net income amounted to $42.1 million, or $0.38 per share, for the three months ended September 30, 2015, compared to net income of $22.4 million, or $0.20 per share, for the three months ended September 30, 2014.
Operating Revenues Operating revenues increased by 3.6%, or $5.0 million, to $144.5 million in the three months ended September 30, 2015, from $139.5 million in the three months ended September 30, 2014.
Operating revenues for the three months ended September 30, 2015 reflect:
- $3.4 million of additional revenues in the three months ended September 30, 2015 compared to the three months ended September 30, 2014, related to the Priority and the Performance, which were added to our fleet on November 5, 2014.
- $0.3 million incremental revenues in the three months ended September 30, 2015 compared to the three months ended September 30, 2014, related to revenue recognition accounting of the Zim restructuring.
- $1.0 million of higher revenues in the three months ended September 30, 2015 compared to the three months ended September 30, 2014 due to improved re-chartering of some of our vessels at higher rates.
- $0.3 million of additional revenues due to improved fleet utilization in the three months ended September 30, 2015 compared to the three months ended September 30, 2014.
Vessel Operating Expenses Vessel operating expenses increased by 5.2%, or $1.4 million, to $28.2 million in the three months ended September 30, 2015, from $26.8 million in the three months ended September 30, 2014. The increase is mainly attributed to incremental operating expenses of $1.1 million for the vessels Priority and the Performance which were acquired on November 5, 2014.
The average daily operating cost per vessel slightly increased to $5,669 per day for the three months ended September 30, 2015, from $5,611 per day for the three months ended September 30, 2014. 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 3.5%, or $1.2 million, to $33.2 million in the three months ended September 30, 2015, from $34.4 million in the three months ended September 30, 2014, mainly due to the lower depreciation expense on the eight 2,200 TEU vessels with respect to which we recorded an impairment charge on December 31, 2014.
Amortization of Deferred Dry-docking and Special Survey Costs Amortization of deferred dry-docking and special survey costs decreased by $0.2 million, to $0.9 million in the three months ended September 30, 2015, from $1.1 million in the three months ended September 30, 2014. The decrease is mainly due to the expiration of the amortization periods related to certain vessels over the last twelve months.
General and Administrative Expenses General and administrative expenses increased by $0.3 million, to $5.5 million in the three months ended September 30, 2015, from $5.2 million in the three months ended September 30, 2014. Effective January 1, 2015, our management fees were adjusted to a fee of $850 per day, a fee of $425 per vessel per day for vessels on bareboat charter and a fee of $850 per vessel per day for vessels on time charter.
Other Operating Expenses Other Operating Expenses include Voyage Expenses.
Voyage Expenses Voyage expenses decreased by $0.1 million, to $3.0 million in the three months ended September 30, 2015, from $3.1 million in the three months ended September 30, 2014.
Interest Expense and Interest Income Interest expense decreased by 10.7%, or $2.1 million, to $17.6 million in the three months ended September 30, 2015, from $19.7 million in the three months ended September 30, 2014. The change in interest expense was mainly due to the decrease in our average debt by $217.4 million, to $2,875.0 million in the three months ended September 30, 2015, from $3,092.4 million in the three months ended September 30, 2014, as well as the decrease in the cost of debt service in the three months ended September 30, 2015 compared to the three months ended September 30, 2014, mainly driven by the accelerated amortization of our fixed rate debt, which bears a higher cost compared to our floating rate debt.
The Company is rapidly deleveraging its balance sheet. As of September 30, 2015, the debt outstanding was $2,860.1 million compared to $3,063.2 million as of September 30, 2014.
Interest income remained stable amounting to $0.9 million in the three months ended September 30, 2015 and in the three months ended September 30, 2014.
Other finance costs, net Other finance costs, net decreased by $0.4 million, to $4.6 million in the three months ended September 30, 2015, from $5.0 million in the three months ended September 30, 2014. This decrease was mainly due to the $0.3 million decrease in amortizing finance fees (which were deferred and are amortized over the term of the respective credit facilities) in the three months ended September 30, 2015 compared to the three months ended September 30, 2014.
Equity loss on investments Equity loss on investments of $1.0 million in the three months ended September 30, 2015 relates to the investment in Gemini made in August 2015.
Unrealized gain on derivatives Unrealized gain on interest rate swaps amounted to $2.6 million in the three months ended September 30, 2015 compared to a gain of $9.1 million in the three months ended September 30, 2014. The unrealized gains were attributable to mark to market valuation of our swaps due to the discontinuation of hedge accounting since July 1, 2012, as well as reclassification of unrealized losses from Accumulated Other Comprehensive Loss to our earnings.
Realized loss on derivatives Realized loss on interest rate swaps decreased by $19.6 million, to $12.2 million in the three months ended September 30, 2015, from $31.8 million in the three months ended September 30, 2014. This decrease is attributable to a $1,617.4 million lower average notional amount of swaps during the three months ended September 30, 2015 compared to the three months ended September 30, 2014 as a result of swap expirations.
Adjusted EBITDA Adjusted EBITDA increased by 2.6%, or $2.7 million, to $106.8 million in the three months ended September 30, 2015, from $104.1 million in the three months ended September 30, 2014. As outlined earlier, this increase is mainly attributed to a $5.0 million increase in operating revenues partially offset by a $1.4 million increase in vessel operating expenses and $1.0 million loss on equity investments. Adjusted EBITDA for the three months ended September 30, 2015 is adjusted for unrealized gain on derivatives of $2.6 million and realized losses on derivatives of $11.1 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.
Nine months ended September 30, 2015 compared to the nine months ended September 30, 2014
During the nine months ended September 30, 2015, Danaos had an average of 56.0 containerships compared to 56.1 containerships for the nine months ended September 30, 2014. Our fleet utilization increased to 99.2% in the nine months ended September 30, 2015 compared to 97.3% in the nine months ended September 30, 2014.
Our adjusted net income amounted to $112.3 million, or $1.02 per share, for the nine months ended September 30, 2015 compared to $36.6 million, or $0.33 per share, for the nine months ended September 30, 2014. We have adjusted our net income in the nine months ended September 30, 2015 for unrealized gains on derivatives of $11.6 million and a non-cash expense of $13.4 million for fees related to our 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 $75.7 million in adjusted net income for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 was mainly attributed to a reduction of $58.4 million in net finance costs mainly due to lower debt balances and interest rate swap expirations, a $5.3 million improvement in total operating costs and an increase of $13.2 million in operating revenues, as described below, which were partially offset by a $1.0 million loss on equity investments.
On a non-adjusted basis our net income amounted to $110.5 million, or $1.01 per share, for the nine months ended September 30, 2015, compared to net income of $47.5 million, or $0.43 per share, for the nine months ended September 30, 2014.
Operating Revenues Operating revenues increased by 3.2%, or $13.2 million, to $424.6 million in the nine months ended September 30, 2015, from $411.4 million in the nine months ended September 30, 2014.
Operating revenues for the nine months ended September 30, 2015 reflect:
- $9.0 million of additional revenues in the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014, related to the Priority and the Performance, which were added to our fleet on November 5, 2014.
- $4.6 million increase in revenues in the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014, related to revenue recognition accounting of the Zim restructuring that became effective on July 16, 2014.
- $1.0 million increase in revenues in the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 due to improved re-chartering of some of our vessels at higher rates.
- $2.1 million decrease in revenues in the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014, related to the Commodore, the Messologi and the Mytilini, which were generating revenues in the nine months ended September 30, 2014 and were sold within 2014.
- $0.7 million of additional revenues due to improved fleet utilization in the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014.
Vessel Operating Expenses Vessel operating expenses decreased by 1.0%, or $0.9 million, to $85.1 million in the nine months ended September 30, 2015, from $86.0 million in the nine months ended September 30, 2014. The reduction is attributable to an improvement in the average daily operating cost per vessel between the two periods.
The average daily operating cost per vessel decreased to $5,770 per day for the nine months ended September 30, 2015, from $5,895 per day for the nine months ended September 30, 2014, mainly as a result of an 17.7% improvement in the average Euro to Dollar exchange rate between the two periods. 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 3.8%, or $3.9 million, to $98.6 million in the nine months ended September 30, 2015 from $102.5 million in the nine months ended September 30, 2014, mainly due to the lower depreciation expense on the eight 2,200 TEU vessels with respect to which we recorded an impairment charge on December 31, 2014.
Amortization of Deferred Dry-docking and Special Survey Costs Amortization of deferred dry-docking and special survey costs decreased by $0.3 million, to $2.9 million in the nine months ended September 30, 2015, from $3.2 million in the nine months ended September 30, 2014. The decrease is mainly due to the expiration of the amortization periods related to certain vessels during the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014.
General and Administrative Expenses General and administrative expenses increased by $0.2 million, to $16.1 million in the nine months ended September 30, 2015, from $15.9 million the nine months ended September 30, 2014. Effective January 1, 2015, our management fees were adjusted to a fee of $850 per day, a fee of $425 per vessel per day for vessels on bareboat charter and a fee of $850 per vessel per day for vessels on time charter.
Other Operating Expenses Other Operating Expenses include Voyage Expenses.
Voyage Expenses Voyage expenses decreased by $0.4 million, to $9.2 million in the nine months ended September 30, 2015, from $9.6 million in the nine months ended September 30, 2014.
Gain on sale of vessels Gain on sale of vessels was nil in the nine months ended September 30, 2015 compared to a gain of $5.7 million in the nine months ended September 30, 2014. During the nine months ended September 30, 2014, we sold the Marathonas on February 26, 2014, the Commodore on April 25, 2014, the Duka on May 15, 2014, the Mytilini on May 15, 2014 and the Messologi on May 20, 2014. There were no vessel sales during the nine months ended September 30, 2015.
Interest Expense and Interest Income Interest expense decreased by 12.3%, or $7.5 million, to $53.5 million in the nine months ended September 30, 2015, from $61.0 million in the nine months ended September 30, 2014. The change in interest expense was mainly due to the decrease in our average debt by $219.7 million, to $2,926.0 million in the nine months ended September 30, 2015, from $3,145.7 million in the nine months ended September 30, 2014, as well as the decrease in the cost of debt servicing in the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014, mainly driven by the accelerated amortization of our fixed rate debt, which bears a higher cost compared to our floating rate debt.
The Company is rapidly deleveraging its balance sheet. As of September 30, 2015, the debt outstanding was $2,860.1 million compared to $3,063.2 million as of September 30, 2014.
Interest income amounted to $2.5 million in the nine months ended September 30, 2015 compared to $0.9 million in the nine months ended September 30, 2014. This increase is attributed to the interest income related to the Zim restructuring that became effective on July 16, 2014.
Other finance costs, net Other finance costs, net, decreased by $0.7 million, to $14.2 million in the nine months ended September 30, 2015, from $14.9 million in the nine months ended September 30, 2014. This decrease was due to the $0.6 million decrease in amortizing finance fees (which were deferred and are amortized over the term of the respective credit facilities) in the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014.
Equity loss on investments Equity loss on investments of $1.0 million in the nine months ended September 30, 2015 relates to the investment in Gemini made in August 2015.
Unrealized gain on derivatives Unrealized gain on interest rate swaps amounted to $11.6 million in the nine months ended September 30, 2015 compared to a gain of $19.3 million in the nine months ended September 30, 2014. The unrealized gains were attributable to mark to market valuation of our swaps due to the discontinuation of hedge accounting since July 1, 2012, as well as reclassification of unrealized losses from Accumulated Other Comprehensive Loss to our earnings.
Realized loss on derivatives Realized loss on interest rate swaps decreased by $49.3 million, to $47.8 million in the nine months ended September 30, 2015, from $97.1 million in the nine months ended September 30, 2014. This decrease is attributable to $1,373.8 million lower average notional amount of swaps during the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 as a result of swap expirations.
Adjusted EBITDA Adjusted EBITDA increased by 4.4%, or $13.1 million, to $312.6 million in the nine months ended September 30, 2015, from $299.5 million in the nine months ended September 30, 2014. As outlined earlier this increase is mainly attributed to a $13.2 million increase in operating revenues. Adjusted EBITDA for the nine months ended September 30, 2015 is adjusted for unrealized gain on derivatives of $11.6 million and realized losses on derivatives of $44.8 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.
Recent news Gemini, in which Danaos holds a 49% equity interest, has agreed to acquire on subjects a 6,422 TEU vessel built in 2002, which is expected to be delivered in February 2016.
Conference Call and Webcast On Wednesday, November 4, 2015 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: 1 866 652 5200 (US Toll Free Dial In), 0800 279 9489 (UK Toll Free Dial In) or +44 (0) 2075 441 375 (Standard International Dial In). Please quote "Danaos Corporation" to the operator.
A telephonic replay of the conference call will be available until November 16, 2015 by dialing 1 877 344 7529 (US Toll Free Dial In) or +44 (0) 036 088 021 (Standard International Dial In). Access Code: 10074737#.
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 351,815 TEUs, including three 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 predominantly chartered to many of the world's largest liner companies on fixed-rate, long-term 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 safeharbor 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, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. 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 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 drydocking, 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 2 unscheduled off-hire days in the three months ended September 30, 2015. The following table summarizes vessel utilization and the impact of the off-hire days on the Company's revenue.
First Second Third
Vessel Utilization Quarter Quarter Quarter
(No. of Days) 2015 2015 2015 Total
--------- --------- --------- ---------
Ownership Days 5,040 5,096 5,152 15,288
Less Off-hire Days:
Scheduled Off-hire Days (16) (16) - (32)
Other Off-hire Days (64) (17) (2) (83)
--------- --------- --------- ---------
Operating Days 4,960 5,063 5,150 15,173
========= ========= ========= =========
Vessel Utilization 98.4% 99.4% 100.0% 99.2%
Operating Revenues (in '000s of
US Dollars) $ 138,605 $ 141,469 $ 144,542 $ 424,616
Average Gross Daily Charter Rate $ 27,945 $ 27,942 $ 28,066 $ 27,985
First Second Third
Vessel Utilization Quarter Quarter Quarter
(No. of Days) 2014 2014 2014 Total
--------- --------- --------- ---------
Ownership Days 5,277 5,079 4,968 15,324
Less Off-hire Days:
Scheduled Off-hire Days (30) (14) (9) (53)
Other Off-hire Days (225) (122) (14) (361)
--------- --------- --------- ---------
Operating Days 5,022 4,943 4,945 14,910
========= ========= ========= =========
Vessel Utilization 95.2% 97.3% 99.5% 97.3%
Operating Revenues (in '000s of
US Dollars) $ 135,486 $ 136,440 $ 139,496 $ 411,422
Average Gross Daily Charter Rate $ 26,978 $ 27,603 $ 28,210 $ 27,594
Fleet List
The following table describes in detail our fleet deployment profile as of November 3, 2015:
Vessel Size Year
Vessel Name (TEU) Built Expiration of Charter(1)
------------------------- ----------- -------- --------------------------
Containerships
-------------------------
Hyundai Ambition 13,100 2012 June 2024
Hyundai Speed 13,100 2012 June 2024
Hyundai Smart 13,100 2012 May 2024
Hyundai Tenacity 13,100 2012 March 2024
Hyundai Together 13,100 2012 February 2024
Hanjin Italy 10,100 2011 April 2023
Hanjin Germany 10,100 2011 March 2023
Hanjin Greece 10,100 2011 May 2023
CSCL Le Havre 9,580 2006 September 2018
CSCL Pusan 9,580 2006 July 2018
CMA CGM Melisande 8,530 2012 November 2023
CMA CGM Attila 8,530 2011 April 2023
CMA CGM Tancredi 8,530 2011 May 2023
CMA CGM Bianca 8,530 2011 July 2023
CMA CGM Samson 8,530 2011 September 2023
CSCL America 8,468 2004 September 2016
CSCL Europe 8,468 2004 June 2016
CMA CGM Moliere (2) 6,500 2009 August 2021
CMA CGM Musset (2) 6,500 2010 February 2022
CMA CGM Nerval (2) 6,500 2010 April 2022
CMA CGM Rabelais (2) 6,500 2010 June 2022
CMA CGM Racine (2) 6,500 2010 July 2022
YM Mandate 6,500 2010 January 2028
YM Maturity 6,500 2010 April 2028
Performance 6,402 2002 January 2016
Priority 6,402 2002 November 2015
Federal 4,651 1994 November 2015
SNL Colombo 4,300 2004 March 2019
YM Singapore 4,300 2004 October 2019
YM Seattle 4,253 2007 July 2019
YM Vancouver 4,253 2007 September 2019
Derby D 4,253 2004 January 2016
Deva 4,253 2004 December 2015
ZIM Rio Grande 4,253 2008 May 2020
ZIM Sao Paolo 4,253 2008 August 2020
OOCL Istanbul 4,253 2008 September 2020
ZIM Monaco 4,253 2009 November 2020
OOCL Novorossiysk 4,253 2009 February 2021
ZIM Luanda 4,253 2009 May 2021
Dimitris C 3,430 2001 January 2016
Hanjin Constantza 3,400 2011 February 2021
Hanjin Algeciras 3,400 2011 November 2020
Hanjin Buenos Aires 3,400 2010 March 2020
Hanjin Santos 3,400 2010 May 2020
Hanjin Versailles 3,400 2010 August 2020
MSC Zebra(3) 2,602 2001 October 2017
Amalia C 2,452 1998 March 2016
Danae C(4) 2,524 2001 December 2015
Hyundai Advance 2,200 1997 June 2017
Hyundai Future 2,200 1997 August 2017
Hyundai Sprinter 2,200 1997 August 2017
Hyundai Stride 2,200 1997 July 2017
Hyundai Progress 2,200 1998 December 2017
Hyundai Bridge 2,200 1998 January 2018
Hyundai Highway 2,200 1998 January 2018
Hyundai Vladivostok 2,200 1997 May 2017
NYK Lodestar(5) 6,422 2001 September 2017
Suez Canal(5) 5,610 2002 --
Genoa(5) 5,544 2002 --
-------------------------
(1) Earliest date charters could expire. Some charters include options to
extend their terms.
(2) The charters with respect to the CMA CGM Moliere, the CMA CGM Musset,
the CMA CGM Nerval, the CMA CGM Rabelais and the CMA CGM Racine include
an option for the charterer, CMA-CGM, to purchase the vessels eight
years after the commencement of the respective charters, which will fall
in September 2017, March 2018, May 2018, July 2018 and August 2018,
respectively, each for $78.0 million.
(3) On September 14, 2014, the Niledutch Zebra was renamed to MSC Zebra at
the request of the charterer of this vessel.
(4) Danae C was renamed to Niledutch Palanca at the request of the charterer
of this vessel from March 25, 2014 to June 8, 2015.
(5) Vessels acquired by Gemini Shipholdings Corporation, in which Danaos
holds a 49% equity interest.
DANAOS CORPORATION
Condensed Statements of Income- Unaudited
(Expressed in thousands of United States dollars, except per share amounts)
Three Three Nine Nine
months months months months
ended ended ended ended
September September September September
30, 30, 30, 30,
---------- ---------- ---------- ----------
2015 2014 2015 2014
---------- ---------- ---------- ----------
OPERATING REVENUES $ 144,542 $ 139,496 $ 424,616 $ 411,422
OPERATING EXPENSES
Vessel operating expenses (28,165) (26,842) (85,058) (85,991)
Depreciation &
amortization (34,085) (35,465) (101,482) (105,697)
General & administrative (5,486) (5,211) (16,137) (15,913)
Gain on sale of vessels - - - 5,709
Other operating expenses (2,952) (3,097) (9,170) (9,617)
---------- ---------- ---------- ----------
Income From Operations 73,854 68,881 212,769 199,913
---------- ---------- ---------- ----------
OTHER INCOME/(EXPENSES)
Interest income 859 861 2,549 879
Interest expense (17,604) (19,692) (53,520) (60,951)
Other finance cost, net (4,646) (4,985) (14,181) (14,898)
Equity loss on investments (992) - (992) -
Other income, net 108 36 143 323
Realized loss on
derivatives (12,159) (31,828) (47,837) (97,150)
Unrealized gain on
derivatives 2,648 9,133 11,551 19,340
---------- ---------- ---------- ----------
Total Other Expenses, net (31,786) (46,475) (102,287) (152,457)
---------- ---------- ---------- ----------
Net Income $ 42,068 $ 22,406 $ 110,482 $ 47,456
========== ========== ========== ==========
EARNINGS PER SHARE
Basic & diluted net income
per share $ 0.38 $ 0.20 $ 1.01 $ 0.43
========== ========== ========== ==========
Basic & diluted weighted
average number of common
shares (in thousands of
shares) 109,785 109,669 109,785 109,669
Non-GAAP Measures*
Reconciliation of Net Income to Adjusted Net Income- Unaudited
Three Three Nine Nine
months months months months
ended ended ended ended
September September September September
30, 30, 30, 30,
---------- ---------- ---------- ----------
2015 2014 2015 2014
---------- ---------- ---------- ----------
Net income $ 42,068 $ 22,406 $ 110,482 $ 47,456
Unrealized gain on
derivatives (2,648) (9,133) (11,551) (19,340)
Amortization of financing
fees & finance fees accrued 4,363 4,747 13,405 14,185
Gain on sale of vessels - - - (5,709)
---------- ---------- ---------- ----------
Adjusted Net Income $ 43,783 $ 18,020 $ 112,336 $ 36,592
========== ========== ========== ==========
Adjusted Earnings Per Share $ 0.40 $ 0.16 $ 1.02 $ 0.33
========== ========== ========== ==========
Weighted average number of
shares 109,785 109,669 109,785 109,669
* The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures used in managing the business may provide users of this financial information additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain items that impact the overall comparability. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. See the Table above for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three and nine months ended September 30, 2015 and 2014. 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 Balance Sheets - Unaudited
(Expressed in thousands of United States dollars)
As of As of
September 30, December 31,
------------- -------------
2015 2014
------------- -------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 96,197 $ 57,730
Restricted cash - 2,824
Accounts receivable, net 7,852 7,904
Fair value of financial instruments 246 -
Other current assets 37,129 34,615
------------- -------------
141,424 103,073
------------- -------------
NON-CURRENT ASSETS
Fixed assets, net 3,526,514 3,624,338
Deferred charges, net 42,997 55,275
Investments in affiliates 6,358 -
Fair value of financial instruments - 664
Other non-current assets 71,067 67,842
------------- -------------
3,646,936 3,748,119
------------- -------------
TOTAL ASSETS $ 3,788,360 $ 3,851,192
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Long-term debt, current portion $ 254,286 $ 178,116
Vendor Financing, current portion 28,532 46,530
Accounts payable, accrued liabilities &
other current liabilities 46,123 52,414
Fair value of financial instruments, current
portion 11,776 51,022
------------- -------------
340,717 328,082
------------- -------------
LONG-TERM LIABILITIES
Long-term debt, net of current portion 2,577,236 2,773,004
Vendor financing, net of current portion - 17,837
Fair value of financial instruments, net of
current portion 1,546 2,398
Other long-term liabilities 38,668 41,722
------------- -------------
2,617,450 2,834,961
------------- -------------
STOCKHOLDERS' EQUITY
Common stock 1,098 1,097
Additional paid-in capital 546,734 546,735
Accumulated other comprehensive loss (108,180) (139,742)
Retained earnings 390,541 280,059
------------- -------------
830,193 688,149
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,788,360 $ 3,851,192
============= =============
DANAOS CORPORATION
Condensed Statements of Cash Flows - (Unaudited)
(Expressed in thousands of United States dollars)
Three Three Nine Nine
months months months months
ended ended ended ended
September September September September
30, 30, 30, 30,
---------- ---------- ---------- ----------
2015 2014 2015 2014
---------- ---------- ---------- ----------
Operating Activities:
Net income $ 42,068 $ 22,406 $ 110,482 $ 47,456
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation 33,217 34,396 98,558 102,471
Amortization of deferred
drydocking & special
survey costs, finance
cost and other finance
fees accrued 5,231 5,816 16,329 17,411
Payments for
drydocking/special survey (90) (266) (1,307) (4,055)
Amortization of deferred
realized losses on cash
flow interest rate swaps 1,012 1,012 3,004 3,004
Equity loss on investments 992 - 992 -
Unrealized gain on
derivatives (2,648) (9,133) (11,551) (19,340)
Gain on sale of vessels - - - (5,709)
Accounts receivable (2,669) 2,088 52 1,383
Other assets, current and
non-current 1,157 5,421 (5,739) 1,376
Accounts payable and
accrued liabilities (162) (1,721) (6,901) (2,833)
Other liabilities, current
and non-current (561) (570) (1,752) 1,602
---------- ---------- ---------- ----------
Net Cash provided by
Operating Activities 77,547 59,449 202,167 142,766
---------- ---------- ---------- ----------
Investing Activities:
Vessel additions and
vessel acquisitions (196) (651) (734) (1,214)
Investments in affiliates (7,350) - (7,350)
Net proceeds from sale of
vessels - - - 50,602
---------- ---------- ---------- ----------
Net Cash provided by/(used
in) Investing Activities (7,546) (651) (8,084) 49,388
---------- ---------- ---------- ----------
Financing Activities:
Debt repayment (50,763) (66,680) (157,748) (172,999)
Deferred finance costs - - (692) -
Decrease/(Increase) in
restricted cash 2,824 21,009 2,824 (22,675)
---------- ---------- ---------- ----------
Net Cash used in Financing
Activities (47,939) (45,671) (155,616) (195,674)
---------- ---------- ---------- ----------
Net (Decrease)/ Increase in
cash and cash equivalents 22,062 13,127 38,467 (3,520)
Cash and cash equivalents,
beginning of period 74,135 51,506 57,730 68,153
---------- ---------- ---------- ----------
Cash and cash equivalents,
end of period $ 96,197 $ 64,633 $ 96,197 $ 64,633
========== ========== ========== ==========
Reconciliation of Net Income to Adjusted EBITDA
(Expressed in thousands of United States dollars)
Three Three Nine Nine
months months months months
ended ended ended ended
September September September September
30, 30, 30, 30,
---------- ---------- ---------- ----------
2015 2014 2015 2014
---------- ---------- ---------- ----------
Net income $ 42,068 $ 22,406 $ 110,482 $ 47,456
Depreciation 33,217 34,396 98,558 102,471
Amortization of deferred
drydocking & special survey
costs 868 1,069 2,924 3,226
Amortization of deferred
finance costs and write-
offs and other finance fees
accrued 4,363 4,747 13,405 14,185
Amortization of deferred
realized losses on interest
rate swaps 1,012 1,012 3,004 3,004
Interest income (859) (861) (2,549) (879)
Interest expense 17,604 19,692 53,520 60,951
Gain on sale of vessels - - - (5,709)
Realized loss on derivatives 11,147 30,816 44,833 94,146
Unrealized gain on
derivatives (2,648) (9,133) (11,551) (19,340)
---------- ---------- ---------- ----------
Adjusted EBITDA(1) $ 106,772 $ 104,144 $ 312,626 $ 299,511
========== ========== ========== ==========
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, unrealized (gain)/loss on
derivatives, realized loss on derivatives and loss/(gain) on sale of
vessels. 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 ability to
service additional debt and make capital expenditures. In addition, we
believe that Adjusted EBITDA is useful in evaluating our operating
performance and liquidity position 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 and liquidity. In evaluating Adjusted EBITDA, you should be
aware that in the future we may incur expenses that are the same as or
similar to some of the adjustments in this presentation. Our
presentation of Adjusted EBITDA should not be construed as an inference
that our future results will be unaffected by unusual or non-recurring
items.
Note: Items to consider for comparability include gains and charges. Gains positively impacting net income are reflected as deductions to net income. Charges negatively impacting net income are reflected as increases to net income.
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures used in managing the business may provide users of these financial information additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain items that impact the overall comparability. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. See the Tables above for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three and nine months ended September 30, 2015 and 2014. 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.
For further information please contact: Company Contact: Evangelos Chatzis Chief Financial Officer Danaos Corporation Athens, Greece Tel.: +30 210 419 6480 E-Mail: [email protected] Iraklis Prokopakis Senior Vice President and Chief Operating Officer Danaos Corporation Athens, Greece Tel.: +30 210 419 6400 E-Mail: [email protected] Investor Relations and Financial Media Rose & Company New York Tel. 212-359-2228 E-Mail: [email protected]
Source: Danaos Corporation