ATHENS, Greece, Aug. 1, 2016 /PRNewswire/ -- Danaos Corporation
("Danaos") (NYSE: DAC), one of the world's largest independent
owners of containerships, today reported unaudited results for the
period ended June 30, 2016.
Highlights for the Second Quarter and Half Year Ended
June 30, 2016:
- Adjusted net income1 of $47.7 million, or $0.43 per share, for the three months ended
June 30, 2016 compared to
$38.0 million, or $0.35 per share, for the three months ended
June 30, 2015, an increase of 25.5%.
Adjusted net income1 of $94.9
million, or $0.86 per share,
for the six months ended June 30,
2016 compared to $68.6
million, or $0.62 per share,
for the six months ended June 30,
2015, an increase of 38.3%.
- Operating revenues of $137.0
million for the three months ended June 30, 2016 compared to $141.5 million for the three months ended
June 30, 2015, a decrease of 3.2%.
Operating revenues of $274.5 million
for the six months ended June 30,
2016 compared to $280.1
million for the six months ended June
30, 2015, a decrease of 2.0%.
- Adjusted EBITDA1 of $99.9
million for the three months ended June 30, 2016 compared to $103.1 million for the three months ended
June 30, 2015, a decrease of 3.1%.
Adjusted EBITDA1 of $199.2
million for the six months ended June
30, 2016 compared to $205.9
million for the six months ended June
30, 2015, a decrease of 3.3%.
- Total contracted operating revenues were $2.8 billion2 as of June 30, 2016, with charters extending through
2028 and remaining average contracted charter duration of 6.8
years, weighted by aggregate contracted charter hire.
- Charter coverage of 94.8%2 for the next 12 months
in terms of operating revenues and 84.7% in terms of contracted
operating days.
Three and Six
Months Ended June 30, 2016
|
Financial
Summary
|
(Expressed in
thousands of United States dollars, except per share
amounts)
|
|
|
Three months
ended
|
|
Three months
ended
|
|
Six months
ended
|
|
Six months
ended
|
June
30,
|
June
30,
|
June
30,
|
June
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Operating
revenues
|
$136,999
|
|
$141,469
|
|
$274,473
|
|
$280,074
|
Net income
|
$44,648
|
|
$38,072
|
|
$88,769
|
|
$68,414
|
Adjusted net
income1
|
$47,714
|
|
$37,984
|
|
$94,942
|
|
$68,553
|
Earnings per
share
|
$0.41
|
|
$0.35
|
|
$0.81
|
|
$0.62
|
Adjusted earnings per
share1
|
$0.43
|
|
$0.35
|
|
$0.86
|
|
$0.62
|
Weighted average
number of shares (in thousands)
|
109,800
|
|
109,785
|
|
109,800
|
|
109,785
|
Adjusted
EBITDA1
|
$99,858
|
|
$103,132
|
|
$199,209
|
|
$205,854
|
|
|
|
|
|
|
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.
2Assumes continued performance by
our charterers on existing contracted terms and reflects HMM
charter rate adjustments discussed under "Recent news".
|
Danaos' CEO Dr. John Coustas
commented:
We are pleased to report yet another strong quarter with
adjusted net income of $47.7 million,
or $0.43 per share, an increase of
$9.7 million, or 25.5%, from the
adjusted net income of $38.0 million,
or $0.35 per share, reported for the
second quarter of 2015. This increase is mainly attributable to a
reduction in net finance costs of $12.7
million resulting from the expiration of interest rate swaps
and lower debt balances and is partially offset by a $3.2 million reduction of our EBITDA for reasons
described in the discussion of our financial results. The continued
de-leveraging of our balance sheet combined with the expiration of
all the expensive legacy interest rate swaps, particularly given
the current low interest rate environment, will result in
continuously improving financing costs throughout 2016 and
beyond.
The containership market continues to be extremely challenging
but is now moving sideways, an indication that we have likely
reached the bottom. The idle fleet now stands at approximately 6%,
while global fleet utilization is hovering at around 75%. The
charter market as well as asset values have fallen to historical
lows as liner companies, in an effort to contain costs, are
releasing surplus chartered-in capacity and seeking charter
concessions and flexible hire periods from the vessel owners. We
anticipate the market environment to remain unchanged for the
remainder of the year, over which we will also start to experience
the effect of the expanded Panama Canal which will shift demand
from panamax to post-panamax vessels. We are cautiously optimistic
that market fundamentals will gradually begin to improve by the
spring of 2017. A combination of anticipated improving world GDP
growth ad declining growth in the containership fleet will
naturally begin to balance the market. Additionally, there is an
expectation that consolidation in the liner industry – through
alliances or otherwise – will create stability and encourage
freight rate discipline which will hopefully put an end to the
losses the liner companies have been reporting over the last
quarters.
On July 15, 2016, in a transaction
through which existing shareholders of Hyundai Merchant Marine
("HMM") were effectively wiped out, we entered into an agreement
with HMM to reduce its charter rates by 20% for the next 3.5 years,
in exchange for $39 million in debt
notes maturing up to 2024 and 4.6 million common shares in HMM that
are expected to be freely tradable on the Stock Market Division of
the Korean Exchange. After the agreed 3.5 year period, the original
contracted rates will be restored. We believe that this agreement
has been structured in a manner that preserves the value of our
charters, and we are pleased to have reached an outcome that will
strengthen the financial profile of one of our important
counterparts. Separately, Hanjin Shipping has publicly announced
its intention to restructure its balance sheet and seek concessions
from charter owners. Discussions are ongoing, and we cannot
speculate on the timing or the nature of the resolution.
Danaos continues to have minimal near term exposure to the weak
spot market, with 95% of charter cover in terms of operating
revenues for the next 12 months. Additionally, our continued focus
on cost containment has reduced our daily operating costs to
$5,800 per day for the second
quarter. This clearly positions us as one of the most efficient
operators in the industry, which is particularly beneficial in
today's environment.
Amidst this challenging economic environment we will remain
singularly focused on preserving value, de-levering our balance
sheet, managing our fleet efficiently and capitalizing on the
resilience of our business model.
Three months ended June 30,
2016 compared to the three months ended June 30, 2015
During the three months ended June 30,
2016, Danaos had an average of 55 containerships compared to
56 containerships for the three months ended June 30, 2015. Our fleet utilization decreased to
96.9% in the three months ended June 30,
2016 compared to 99.4% in the three months ended
June 30, 2015.
Our adjusted net income amounted to $47.7
million, or $0.43 per share,
for the three months ended June 30,
2016 compared to $38.0
million, or $0.35 per share,
for the three months ended June 30,
2015. We have adjusted our net income in the three months
ended June 30, 2016 mainly for
unrealized gains on derivatives of $1.0
million, as well as a non-cash amortization charge of
$4.1 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 $9.7 million in
adjusted net income for the three months ended June 30, 2016 compared to the three months ended
June 30, 2015 is attributable to a
reduction of $12.7 million in net
finance costs mainly due to lower debt balances and interest rate
swap expirations, a $1.4 million
decrease in total operating expenses and a decrease in depreciation
and amortization of $0.3 million,
which were partially offset by a decrease of $4.5 million in operating revenues and a
$0.2 million loss on equity
investments.
On a non-adjusted basis, our net income amounted to $44.6 million, or $0.41 per share, for the three months ended
June 30, 2016 compared to net income
of $38.1 million, or $0.35 per share, for the three months ended
June 30, 2015.
Operating Revenues
Operating revenues decreased by
3.2%, or $4.5 million, to
$137.0 million in the three months
ended June 30, 2016 from $141.5 million in the three months ended
June 30, 2015.
Operating revenues for the three months ended June 30, 2016 reflect:
- $0.6 million decrease in revenues
in the three months ended June 30,
2016 compared to the three months ended June 30, 2015 due to the sale of the
Federal on January 8,
2016.
- $2.6 million decrease in revenues
in the three months ended June 30,
2016 compared to the three months ended June 30, 2015 due to the re-chartering of certain
of our vessels at lower rates.
- $1.3 million decrease in revenues
due to lower fleet utilization in the three months ended
June 30, 2016 compared to the three
months ended June 30, 2015.
Vessel Operating Expenses
Vessel operating expenses
decreased by 5.4%, or $1.6 million,
to $28.0 million in the three
months ended June 30, 2016 from
$29.6 million in the three
months ended June 30, 2015. The
decrease is attributable to a 3.6% decrease in the average daily
operating cost per vessel while the average number of vessels in
our fleet during the three months ended June
30, 2016 decreased by 1.8% compared to the three months
ended June 30, 2015.
The average daily operating cost per vessel decreased to
$5,802 per day for the three months
ended June 30, 2016 from $6,018 per day for the three months ended
June 30, 2015. 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 2.4%,
or $0.8 million, to $32.1 million in the three months ended
June 30, 2016 from $32.9 million in the three months ended
June 30, 2015, mainly due to
decreased depreciation expense for twelve vessels for which we
recorded an impairment charge on December
31, 2015 and due to the decreased average number of vessels
in our fleet in the three months ended June
30, 2016 following the sale of the Federal on
January 8, 2016.
Amortization of Deferred Dry-docking and Special Survey
Costs
Amortization of deferred dry-docking and special
survey costs increased by $0.5
million, to $1.4 million in
the three months ended June 30, 2016
from $0.9 million in the three months
ended June 30, 2015. The increase is
mainly due to the increased payments for dry-docking and special
survey costs related to certain vessels over the last six
months.
General and Administrative Expenses
General and
administrative expenses remained stable, amounting to $5.4 million both in the three months ended
June 30, 2016, and in three months
ended June 30, 2015.
Other Operating Expenses
Other Operating Expenses
include Voyage Expenses.
Voyage Expenses
Voyage expenses remained stable,
amounting to $3.2 million both in the
three months ended June 30, 2016 and
in the three months ended June 30,
2015.
Interest Expense and Interest Income
Interest expense
decreased by 2.8%, or $0.6 million,
to $20.6 million in the three
months ended June 30, 2016 from
$21.2 million in the three months
ended June 30, 2015 including the
amortization of deferred finance costs reclassified from other
finance expenses to interest expense of $3.2
million and $3.5 million,
respectively. The change in interest expense was mainly due to the
decrease in our average debt by $234.0
million, to $2,686.8 million
in the three months ended June 30,
2016, from $2,920.8 million in
the three months ended June 30, 2015
and due to a $0.3 million decrease in
the amortization of deferred finance costs.
The Company continues to rapidly deleverage its balance sheet.
As of June 30, 2016, the debt
outstanding gross of deferred finance costs was $2,676.9 million compared to $2,910.1 million as of June 30, 2015.
Interest income amounted to $0.9
million in the three months ended June 30, 2016 compared to $0.8 million in the three months ended
June 30, 2015.
Other finance costs, net
Other finance costs, net
decreased by $0.1 million, to
$1.1 million in the three months
ended June 30, 2016 from $1.2 million in the three months ended
June 30, 2015, following the
reclassification of the amortization of deferred finance costs from
other finance expenses to interest expense of $3.2 million and $3.5
million, respectively.
Equity loss on investments
Equity loss on investments
of $0.2 million in the three months
ended June 30, 2016 relates to the
investment in Gemini Shipholdings Corporation ("Gemini"), in which
the Company has a 49% shareholding interest. This loss is
attributed to operating losses of two out of the four vessels that
have been acquired by Gemini, one of which had not yet entered into
charter arrangements as of June 30,
2016.
Unrealized gain on derivatives
Unrealized gains on
interest rate swaps amounted to $1.0
million in the three months ended June 30, 2016 compared to an unrealized gains of
$4.5 million in the three months
ended June 30, 2015. The unrealized
gains were attributable to mark to market valuation of our swaps,
as well as reclassification of unrealized losses from Accumulated
Other Comprehensive Loss to our earnings due to the discontinuation
of hedge accounting since July 1,
2012.
Realized loss on derivatives
Realized loss on interest
rate swaps decreased by $12.4
million, to $2.1 million in
the three months ended June 30, 2016
from $14.5 million in the three
months ended June 30, 2015. This
decrease is attributable to a $586.0
million decrease in the average notional amount of swaps
during the three months ended June 30,
2016 compared to the three months ended June 30, 2015 as a result of swap
expirations.
Adjusted EBITDA
Adjusted EBITDA decreased by 3.1%, or
$3.2 million, to $99.9 million in the three months ended
June 30, 2016 from $103.1 million in the three months ended
June 30, 2015. As outlined earlier,
this decrease is mainly attributed to a $4.5
million decrease in operating revenues and a $0.2 million loss on equity investments,
partially offset by a $1.6 million
decrease in total operating expenses. Adjusted EBITDA for the three
months ended June 30, 2016 is
adjusted mainly for unrealized gain on derivatives of $1.0 million and realized losses on derivatives
of $1.1 million. Tables reconciling
Adjusted EBITDA to Net Income can be found at the end of this
earnings release.
Six months ended June 30, 2016
compared to the six months ended June 30,
2015
During the six months ended June 30,
2016, Danaos had an average of 55 containerships compared to
56 containerships for the six months ended June 30, 2015. Our fleet utilization decreased to
95.7% in the six months ended June 30,
2016 compared to 98.9% in the six months ended June 30, 2015.
Our adjusted net income amounted to $94.9
million, or $0.86 per share,
for the six months ended June 30,
2016 compared to $68.6
million, or $0.62 per share,
for the six months ended June 30,
2015. We have adjusted our net income in the six months
ended June 30, 2016 mainly for
unrealized gains on derivatives of $2.1
million, as well as a non-cash amortization charge of
$8.3 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 $26.3 million in
adjusted net income for the six months ended June 30, 2016 compared to the six months ended
June 30, 2015 is mainly attributable
to a reduction of $32.1 million in
net finance costs mainly due to lower debt balances and interest
rate swap expirations, a decrease in depreciation and amortization
of $0.8 million and an increase in
other income of $0.4 million, which
were partially offset by a decrease of $5.6
million in operating revenues, a $0.5
million increase in total operating expenses and a
$0.9 million loss on equity
investments.
On a non-adjusted basis, our net income amounted to $88.8 million, or $0.81 per share, for the six months ended
June 30, 2016 compared to net income
of $68.4 million, or $0.62 per share, for the six months ended
June 30, 2015.
Operating Revenues
Operating revenues decreased by
2.0%, or $5.6 million, to
$274.5 million in the six months
ended June 30, 2016 from $280.1 million in the six months ended
June 30, 2015.
Operating revenues for the six months ended June 30, 2016 reflect:
- $1.2 million decrease in revenues
in the six months ended June 30, 2016
compared to the six months ended June 30,
2015 due to the sale of the Federal on January 8, 2016.
- $2.6 million decrease in revenues
in the six months ended June 30, 2016
compared to the six months ended June 30,
2015 due to the re-chartering of certain of our vessels at
lower rates.
- $1.8 million decrease in revenues
due to lower fleet utilization in the six months ended June 30, 2016 compared to the six months ended
June 30, 2015.
Vessel Operating Expenses
Vessel operating expenses
remained stable, amounting to $56.9 million both in the six months ended
June 30, 2016 and in the six months
ended June 30, 2015. The decrease in
the average number of vessels in our fleet by 1.8%, was offset by
an 1.2% increase in the average daily operating cost per vessel
during the six months ended June 30,
2016 compared to the six months ended June 30, 2015.
The average daily operating cost per vessel increased to
$5,893 per day for the six months
ended June 30, 2016 from $5,821 per day for the six months ended
June 30, 2015. 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 1.8%,
or $1.2 million, to $64.1 million in the six months ended
June 30, 2016 from $65.3 million in the six months ended
June 30, 2015, mainly due to
decreased depreciation expense for twelve vessels for which we
recorded an impairment charge on December
31, 2015 and due to the decreased average number of vessels
in our fleet in the six months ended June
30, 2016 following the sale of the Federal on
January 8, 2016.
Amortization of Deferred Dry-docking and Special Survey
Costs
Amortization of deferred dry-docking and special
survey costs increased by $0.3
million, to $2.4 million in
the six months ended June 30, 2016
from $2.1 million in the six months
ended June 30, 2015. The increase is
mainly due to the increased payments for dry-docking and special
survey costs related to certain vessels over the last six
months.
General and Administrative Expenses
General and
administrative expenses remained stable, amounting to $10.7 million both in the six months ended
June 30, 2016 and in six months ended
June 30, 2015.
Other Operating Expenses
Other Operating Expenses
include Voyage Expenses.
Voyage Expenses
Voyage expenses increased by
$0.5 million, to $6.7 million in the six months ended June 30, 2016 from $6.2
million in the six months ended June
30, 2015. The increase is mainly due to increased bunkering
expenses.
Interest Expense and Interest Income
Interest expense
decreased by 5.3%, or $2.3 million,
to $40.8 million in the six
months ended June 30, 2016 from
$43.1 million in the six months ended
June 30, 2015 including the
amortization of deferred finance costs reclassified from other
finance expenses to interest expense of $6.5
million and $7.2 million,
respectively. The change in interest expense was mainly due to the
decrease in our average debt by $239.3
million, to $2,712.6 million
in the six months ended June 30,
2016, from $2,951.9 million in
the six months ended June 30, 2015
and due to a $0.7 million decrease in
the amortization of deferred finance costs.
The Company continues to rapidly deleverage its balance sheet.
As of June 30, 2016, the debt
outstanding gross of deferred finance costs was $2,676.9 million compared to $2,910.1 million as of June 30, 2015.
Interest income amounted to $1.8
million in the six months ended June
30, 2016 compared to $1.7
million in the six months ended June
30, 2015.
Other finance costs, net
Other finance costs, net
decreased by $0.1 million, to
$2.2 million in the six months ended
June 30, 2016 from $2.3 million in the six months ended June 30, 2015, following the reclassification of
the amortization of deferred finance costs from other finance
expenses to interest expense of $6.5
million and $7.2 million,
respectively.
Equity loss on investments
Equity loss on investments
of $0.9 million in the six months
ended June 30, 2016 relates to the
investment in Gemini Shipholdings Corporation ("Gemini"), in which
the Company has a 49% shareholding interest. This loss is
attributed to operating losses of two out of the four vessels that
have been acquired by Gemini, one of which had not yet entered into
charter arrangements as of June 30,
2016.
Unrealized gain on derivatives
Unrealized gains on
interest rate swaps amounted to $2.1
million in the six months ended June
30, 2016 compared to an unrealized gains of $8.9 million in the six months ended June 30, 2015. The unrealized gains were
attributable to mark to market valuation of our swaps, as well as
reclassification of unrealized losses from Accumulated Other
Comprehensive Loss to our earnings due to the discontinuation of
hedge accounting since July 1,
2012.
Realized loss on derivatives
Realized loss on interest
rate swaps decreased by $30.4
million, to $5.3 million in
the six months ended June 30, 2016
from $35.7 million in the six months
ended June 30, 2015. This decrease is
attributable to a $828.8 million
decrease in the average notional amount of swaps during the six
months ended June 30, 2016 compared
to the six months ended June 30, 2015
as a result of swap expirations.
Adjusted EBITDA
Adjusted EBITDA decreased by 3.3%, or
$6.7 million, to $199.2 million in the six months ended
June 30, 2016 from $205.9 million in the six months ended
June 30, 2015. As outlined earlier,
this decrease is mainly attributed to a $5.6
million decrease in operating revenues, a $0.5 million increase in total operating expenses
and a $0.9 million loss on equity
investments. Adjusted EBITDA for the six months ended June 30, 2016 is adjusted mainly for unrealized
gain on derivatives of $2.1 million
and realized losses on derivatives of $3.3
million. Tables reconciling Adjusted EBITDA to Net Income
can be found at the end of this earnings release.
Recent news
HMM
On July 15, 2016, we
entered into a charter restructuring agreement with HMM as part of
the agreements it reached with its creditors and owners of its
chartered-in fleet in connection with the restructuring of its
obligations. The charter restructuring agreement provides for
a 20% reduction, for the period until December 31, 2019 (or earlier charter expiration
in the case of eight vessels), in the charter hire rates payable
for thirteen of our vessels currently employed with HMM. In
exchange, under the charter restructuring agreement we received (i)
$6.2 million principal amount of
senior, unsecured, non-amortizing loan notes, which accrue interest
at 3% per annum payable on maturity in December 2022, (ii) $32.8
million principal amount of senior, unsecured loan notes,
amortizing subject to available cash flows, which accrue interest
at 3% per annum payable on maturity in July
2024 and (iii) 4,637,558 HMM shares issued on July 23, 2016, which will be freely tradable
on the Stock Market Division of the Korean Exchange from
August 5, 2016 onwards.
AGM Results
On July 29, 2016, at our annual
meeting of stockholders, Mr. William
Repko and Mr. Miklόs Konkoly-Thege were re-elected as
Class III directors, each for a three-year term expiring at
the annual meeting of our stockholders in 2019. Our stockholders
also ratified the appointment of PricewaterhouseCoopers S.A. as our
independent auditors.
Conference Call and Webcast
On Tuesday, August 2, 2016 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 August 9, 2016 by dialing 1 877
344 7529 (US Toll Free Dial In) or +44 (0) 2036 088 021 (Standard
International Dial In) and using 10090137# as the access code.
Audio Webcast
There will also be a live and then
archived webcast of the conference call through the Danaos website
(www.danaos.com). Participants of the live webcast should register
on the website approximately 10 minutes prior to the start of the
webcast.
About Danaos Corporation
Danaos Corporation is one of
the largest independent owners of modern, large-size
containerships. Our current fleet of 59 containerships aggregating
353,586 TEUs, including four vessels owned by Gemini Shipholdings
Corporation, a joint venture, ranks Danaos among the largest
containership charter owners in the world based on total TEU
capacity. Our fleet is 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 110 unscheduled off-hire days in the three months
ended June 30, 2016. 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
|
|
|
2016
|
2016
|
|
Total
|
Ownership
Days
|
|
5,013
|
|
5,005
|
|
10,018
|
Less Off-hire
Days:
|
|
|
|
|
|
|
Scheduled Off-hire
Days
|
|
(31)
|
|
(45)
|
|
(76)
|
Other Off-hire
Days
|
|
(242)
|
|
(110)
|
|
(352)
|
Operating
Days
|
|
4,740
|
|
4,850
|
|
9,590
|
Vessel
Utilization
|
|
94.6%
|
|
96.9%
|
|
95.7%
|
|
|
|
|
|
|
|
Operating Revenues
(in '000s of US Dollars)
|
|
$137,474
|
|
$136,999
|
|
$274,473
|
Average Gross
Daily Charter Rate
|
|
$29,003
|
|
$28,248
|
|
$28,621
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessel Utilization
(No. of Days)
|
|
First Quarter
|
|
Second Quarter
|
|
|
2015
|
2015
|
|
Total
|
Ownership
Days
|
|
5,040
|
|
5,096
|
|
10,136
|
Less Off-hire
Days:
|
|
|
|
|
|
|
Scheduled Off-hire
Days
|
|
(16)
|
|
(16)
|
|
(32)
|
Other Off-hire
Days
|
|
(64)
|
|
(17)
|
|
(81)
|
Operating
Days
|
|
4,960
|
|
5,063
|
|
10,023
|
Vessel
Utilization
|
|
98.4%
|
|
99.4%
|
|
98.9%
|
|
|
|
|
|
|
|
Operating Revenues
(in '000s of US Dollars)
|
|
$138,605
|
|
$141,469
|
|
$280,074
|
Average Gross
Daily Charter Rate
|
|
$27,945
|
|
$27,942
|
|
$27,943
|
Fleet List
The following table describes in detail our fleet deployment
profile as of August 1, 2016:
Vessel
Name
|
|
Vessel
Size
(TEU)
|
|
Year
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
|
|
August 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
2017
|
Priority
|
|
6,402
|
|
2002
|
|
October
2016
|
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
|
|
September
2016
|
Deva
|
|
4,253
|
|
2004
|
|
September
2016
|
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
|
|
September
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
|
|
2,602
|
|
2001
|
|
October
2017
|
Amalia
C
|
|
2,452
|
|
1998
|
|
October
2016
|
Danae
C
|
|
2,524
|
|
2001
|
|
August
2016
|
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(3)
|
|
6,422
|
|
2001
|
|
September
2017
|
NYK
Leo(3)
|
|
6,422
|
|
2002
|
|
February
2019
|
Suez
Canal(3)
|
|
5,610
|
|
2002
|
|
October
2016
|
Genoa(3)
|
|
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) 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 months
ended
|
|
Three months
ended
|
|
Six months
ended
|
|
Six months
ended
|
June
30,
|
June
30,
|
June
30,
|
June
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
OPERATING
REVENUES
|
$136,999
|
|
$141,469
|
|
$274,473
|
|
$280,074
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
Vessel operating
expenses
|
(27,983)
|
|
(29,570)
|
|
(56,895)
|
|
(56,893)
|
|
Depreciation &
amortization
|
(33,470)
|
|
(33,735)
|
|
(66,552)
|
|
(67,397)
|
|
General &
administrative
|
(5,446)
|
|
(5,381)
|
|
(10,662)
|
|
(10,651)
|
|
Loss on sale of
vessels
|
-
|
|
-
|
|
(36)
|
|
-
|
|
Other operating
expenses
|
(3,240)
|
|
(3,161)
|
|
(6,690)
|
|
(6,218)
|
Income From
Operations
|
66,860
|
|
69,622
|
|
133,638
|
|
138,915
|
|
|
|
|
|
|
|
|
OTHER
INCOME/(EXPENSES)
|
|
|
|
|
|
|
|
|
Interest
income
|
890
|
|
850
|
|
1,840
|
|
1,690
|
|
Interest
expense
|
(20,616)
|
|
(21,230)
|
|
(40,774)
|
|
(43,116)
|
|
Other finance
expenses
|
(1,111)
|
|
(1,162)
|
|
(2,238)
|
|
(2,335)
|
|
Equity loss on
investments
|
(211)
|
|
-
|
|
(934)
|
|
-
|
|
Other
income/(expenses), net
|
(23)
|
|
28
|
|
400
|
|
35
|
|
Realized loss on
derivatives
|
(2,161)
|
|
(14,545)
|
|
(5,301)
|
|
(35,678)
|
|
Unrealized gain on
derivatives
|
1,020
|
|
4,509
|
|
2,138
|
|
8,903
|
Total Other
Expenses, net
|
(22,212)
|
|
(31,550)
|
|
(44,869)
|
|
(70,501)
|
|
|
|
|
|
|
|
|
Net
Income
|
$44,648
|
|
$38,072
|
|
$88,769
|
|
$68,414
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE
|
|
|
|
|
|
|
|
Basic & diluted
earnings per share
|
$0.41
|
|
$0.35
|
|
$0.81
|
|
$0.62
|
Basic & diluted
weighted average number
of common shares (in thousands of shares)
|
109,800
|
|
109,785
|
|
109,800
|
|
109,785
|
Non-GAAP Measures*
Reconciliation of
Net Income to Adjusted Net Income – Unaudited
|
|
Three months
ended
|
|
Three months
ended
|
|
Six months
ended
|
|
Six months
ended
|
June
30,
|
June
30,
|
June
30,
|
June
30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Net income
|
$44,648
|
|
$38,072
|
|
$88,769
|
|
$68,414
|
|
Unrealized gain on
derivatives
|
(1,020)
|
|
(4,509)
|
|
(2,138)
|
|
(8,903)
|
|
Amortization of
financing fees & finance fees accrued
|
4,086
|
|
4,421
|
|
8,275
|
|
9,042
|
|
Loss on sale of
vessels
|
-
|
|
-
|
|
36
|
|
-
|
|
Adjusted Net
Income
|
$47,714
|
|
$37,984
|
|
$94,942
|
|
$68,553
|
|
Adjusted Earnings
Per Share
|
$0.43
|
|
$0.35
|
|
$0.86
|
|
$0.62
|
|
Weighted average
number of shares (in thousands of shares)
|
109,800
|
|
109,785
|
|
109,800
|
|
109,785
|
* The Company reports
its financial results in accordance with U.S. generally accepted
accounting principles (GAAP). However, management believes that
certain non-GAAP financial measures used in managing the business
may provide users of this financial information additional
meaningful comparisons between current results and results in prior
operating periods. Management believes that these non-GAAP
financial measures can provide additional meaningful reflection of
underlying trends of the business because they provide a comparison
of historical information that excludes certain items that impact
the overall comparability. Management also uses these non-GAAP
financial measures in making financial, operating and planning
decisions and in evaluating the Company's performance. See the
Table above for supplemental financial data and corresponding
reconciliations to GAAP financial measures for the three and six
months ended June 30, 2016 and 2015. 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
|
June
30,
|
December
31,
|
|
2016
|
|
2015
|
ASSETS
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
$101,060
|
|
$72,253
|
|
Restricted
cash
|
5,880
|
|
2,818
|
|
Accounts receivable,
net
|
21,359
|
|
10,652
|
|
Fair value of
financial instruments
|
24
|
|
138
|
|
Other current
assets
|
47,323
|
|
41,709
|
|
175,646
|
|
127,570
|
NON-CURRENT
ASSETS
|
|
|
|
|
Fixed assets,
net
|
3,384,191
|
|
3,446,323
|
|
Deferred charges,
net
|
8,715
|
|
4,751
|
|
Investments in
affiliates
|
15,500
|
|
11,289
|
|
Other non-current
assets
|
74,242
|
|
72,188
|
|
3,482,648
|
|
3,534,551
|
TOTAL
ASSETS
|
$3,658,294
|
|
$3,662,121
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
Long-term debt,
current portion
|
$272,408
|
|
$269,979
|
|
Accounts payable,
accrued liabilities & other current liabilities
|
38,978
|
|
37,628
|
|
Fair value of
financial instruments
|
2,395
|
|
4,538
|
|
313,781
|
|
312,145
|
LONG-TERM
LIABILITIES
|
|
|
|
|
Long-term debt,
net
|
2,376,004
|
|
2,470,417
|
|
Other long-term
liabilities
|
35,639
|
|
37,645
|
|
2,411,643
|
|
2,508,062
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
Common
stock
|
1,098
|
|
1,098
|
|
Additional paid-in
capital
|
546,822
|
|
546,822
|
|
Accumulated other
comprehensive loss
|
(100,894)
|
|
(103,081)
|
|
Retained
earnings
|
485,844
|
|
397,075
|
|
932,870
|
|
841,914
|
Total liabilities
and stockholders' equity
|
$3,658,294
|
|
$3,662,121
|
DANAOS CORPORATION
Condensed
Statements of Cash Flows - Unaudited
(Expressed in
thousands of United States
dollars)
|
Three months
ended
|
|
Three months
ended
|
|
Six months
ended
|
|
Six months
ended
|
June
30,
|
June
30,
|
June
30,
|
June
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Operating
Activities:
|
|
|
|
|
|
|
|
|
Net income
|
$44,648
|
|
$38,072
|
|
$88,769
|
|
$68,414
|
|
Adjustments to
reconcile net income to net cash
provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
32,075
|
|
32,853
|
|
64,122
|
|
65,341
|
|
Amortization of
deferred drydocking & special survey costs, finance cost and
other finance fees accrued
|
5,481
|
|
5,303
|
|
10,705
|
|
11,098
|
|
Payments for
drydocking/special survey
|
(3,276)
|
|
(828)
|
|
(6,394)
|
|
(1,217)
|
|
Amortization of
deferred realized losses on cash flow interest rate
swaps
|
1,001
|
|
1,001
|
|
2,003
|
|
1,992
|
|
Equity loss on
investments
|
211
|
|
-
|
|
934
|
|
-
|
|
Unrealized gain on
derivatives
|
(1,020)
|
|
(4,509)
|
|
(2,138)
|
|
(8,903)
|
|
Loss on sale of
vessels
|
-
|
|
-
|
|
36
|
|
-
|
|
Accounts
receivable
|
(6,081)
|
|
1,396
|
|
(10,707)
|
|
2,721
|
|
Other assets, current
and non-current
|
94
|
|
(4,510)
|
|
(14,314)
|
|
(6,896)
|
|
Accounts payable and
accrued liabilities
|
(1,388)
|
|
(4,169)
|
|
1,012
|
|
(6,739)
|
|
Other liabilities,
current and non-current
|
643
|
|
351
|
|
(236)
|
|
(1,191)
|
Net Cash provided
by Operating Activities
|
72,388
|
|
64,960
|
|
133,792
|
|
124,620
|
|
|
|
|
|
|
|
|
Investing
Activities:
|
|
|
|
|
|
|
|
|
Vessel additions and
vessel acquisitions
|
(1,613)
|
|
(377)
|
|
(1,990)
|
|
(538)
|
|
Investments in
affiliates
|
(3,675)
|
|
-
|
|
(5,145)
|
|
-
|
|
Net proceeds from
sale of vessels
|
-
|
|
-
|
|
5,178
|
|
-
|
Net Cash used in
Investing Activities
|
(5,288)
|
|
(377)
|
|
(1,957)
|
|
(538)
|
|
|
|
|
|
|
|
|
Financing
Activities:
|
|
|
|
|
|
|
|
|
Debt
repayment
|
(50,808)
|
|
(53,383)
|
|
(99,966)
|
|
(106,985)
|
|
Deferred finance
costs
|
-
|
|
-
|
|
-
|
|
(692)
|
|
Increase in
restricted cash
|
(5,873)
|
|
(2,815)
|
|
(3,062)
|
|
-
|
Net Cash used in
Financing Activities
|
(56,681)
|
|
(56,198)
|
|
(103,028)
|
|
(107,677)
|
Net Increase in cash
and cash equivalents
|
10,419
|
|
8,385
|
|
28,807
|
|
16,405
|
Cash and cash
equivalents, beginning of period
|
90,641
|
|
65,750
|
|
72,253
|
|
57,730
|
Cash and cash
equivalents, end of period
|
$101,060
|
|
$74,135
|
|
$101,060
|
|
$74,135
|
DANAOS CORPORATION
Reconciliation of
Net Income to Adjusted EBITDA
(Expressed in thousands of
United States dollars)
|
|
|
Three months
ended
|
|
Three months
ended
|
|
Six months
ended
|
|
Six months
ended
|
|
June
30,
|
June
30,
|
June
30,
|
June
30,
|
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
Net income
|
|
$44,648
|
|
$38,072
|
|
$88,769
|
|
$68,414
|
|
|
Depreciation
|
|
32,075
|
|
32,853
|
|
64,122
|
|
65,341
|
|
|
Amortization of
deferred drydocking & special survey costs
|
|
1,395
|
|
882
|
|
2,430
|
|
2,056
|
|
|
Amortization of
deferred finance costs and write-offs and other finance fees
accrued
|
|
4,086
|
|
4,421
|
|
8,275
|
|
9,042
|
|
|
Amortization of
deferred realized losses on interest rate swaps
|
|
1,001
|
|
1,001
|
|
2,003
|
|
1,992
|
|
|
Interest
income
|
|
(890)
|
|
(850)
|
|
(1,840)
|
|
(1,690)
|
|
|
Interest
expense
|
|
17,403
|
|
17,718
|
|
34,254
|
|
35,916
|
|
|
Loss on sale of
vessels
|
|
-
|
|
-
|
|
36
|
|
-
|
|
|
Realized loss on
derivatives
|
|
1,160
|
|
13,544
|
|
3,298
|
|
33,686
|
|
|
Unrealized gain on
derivatives
|
|
(1,020)
|
|
(4,509)
|
|
(2,138)
|
|
(8,903)
|
|
|
Adjusted
EBITDA(1)
|
|
$99,858
|
|
$103,132
|
|
$199,209
|
|
$205,854
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 on
derivatives, realized loss on derivatives and gain/(loss) 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 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 and six
months ended June 30, 2016 and 2015. 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.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/danaos-corporation-reports-second-quarter-and-half-year-results-for-the-period-ended-june-30-2016-300306993.html
SOURCE Danaos Corporation