ATHENS, Greece, July 31, 2017 /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,
2017.
Highlights for the Second Quarter and Half Year Ended
June 30, 2017:
- Adjusted net income1 of $29.0 million, or $0.26 per share, for the three months ended
June 30, 2017 compared to
$47.7 million, or $0.43 per share, for the three months ended
June 30, 2016, a decrease of 39.1%.
Adjusted net income1 of $53.6
million, or $0.49 per share,
for the six months ended June 30,
2017 compared to $94.9
million, or $0.86 per share,
for the six months ended June 30,
2016, a decrease of 43.6%.
- Operating revenues of $113.9
million for the three months ended June 30, 2017 compared to $137.0 million for the three months ended
June 30, 2016, a decrease of 16.9%.
Operating revenues of $224.0 million
for the six months ended June 30,
2017 compared to $274.5
million for the six months ended June
30, 2016, a decrease of 18.4%.
- Adjusted EBITDA1 of $78.1 million for the three months ended
June 30, 2017 compared to
$99.9 million for the three months
ended June 30, 2016, a decrease of
21.8%. Adjusted EBITDA1 of $150.6
million for the six months ended June
30, 2017 compared to $199.2
million for the six months ended June
30, 2016, a decrease of 24.4%.
- Total contracted operating revenues were $1.9 billion as of June
30, 2017, with charters extending through 2028 and remaining
average contracted charter duration of 6.2 years, weighted by
aggregate contracted charter hire.
- Charter coverage of 87% for the next 12 months based on
current operating revenues and 66% in terms of contracted operating
days.
|
Three and Six
Months Ended June 30, 2017
|
|
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,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
$113,888
|
|
$136,999
|
|
$223,975
|
|
$274,473
|
|
Net income
|
$20,229
|
|
$44,648
|
|
$38,672
|
|
$88,769
|
|
Adjusted net
income1
|
$29,037
|
|
$47,714
|
|
$53,559
|
|
$94,942
|
|
Earnings per
share
|
$0.18
|
|
$0.41
|
|
$0.35
|
|
$0.81
|
|
Adjusted earnings per
share1
|
$0.26
|
|
$0.43
|
|
$0.49
|
|
$0.86
|
|
Weighted average
number of shares
(in thousands)
|
109,825
|
|
109,800
|
|
109,825
|
|
109,800
|
|
Adjusted
EBITDA1
|
$78,063
|
|
$99,858
|
|
$150,609
|
|
$199,209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
Danaos' CEO Dr. John Coustas
commented:
"Our earnings for the second quarter of 2017 continue to reflect
the effect of the Hanjin bankruptcy on the Company's financial
performance. Adjusted net income came in at $29 million for this quarter compared to
$47.7 million for the second quarter
of 2016, a decrease of $18.7 million.
This decrease was attributable to a $19.3
million decrease in the operating revenues of the vessels
that were previously chartered to Hanjin, and was partially
offset by marginally improved operating performance by
$0.6 million. Fleet utilization
increased to 97.9% this quarter compared to 96.9% in the
second quarter of 2016.
As previously reported, the Company is in breach of certain
financial covenants as a result of the Hanjin bankruptcy. We are
currently engaged in discussions with our lenders regarding
refinancing substantially all of our debt maturing in 2018.
These discussions encompass potential amendments to the associated
financial covenants that have been breached. In the meantime, we
continue to generate positive cash flows from our operations and
currently are in a position to service all our operational
obligations as well as all scheduled principal amortization and
interest payments under the original terms of our debt
agreements.
The charter market is moving sideways at levels slightly above
the lows of 2016 but we have not yet seen a meaningful improvement
to signal a market recovery. Box rates have improved as a
result of improved capacity
deployment through the alliances and the
recent industry consolidation activity has reduced our
counterparty risks. On the other hand, consolidation in the liner
industry combined with legacy newbuilding orders for
large vessels still to be delivered is anticipated to maintain
pressure on charter rates for a considerable amount of time. Danaos
continues to have low near term exposure to the weak spot market
with charter coverage of 87% for the next 12 months based on
current operating revenues and 66% in terms of contracted operating
days.
Our commitment to provide best in class service to our customers
is now being reinforced by the utilization of our in-house
developed IT tool for online acquisition and analysis of big data
for online performance monitoring of our vessels, a unique feature
for efficient ship management in the industry.
During this extended period of market weakness which has
presented many challenges, we remain focused on taking necessary
actions to preserve the value of our company by managing our fleet
efficiently and taking prudent measures to manage and ultimately
deleverage our balance sheet."
Three months ended June 30,
2017 compared to the three months ended June 30, 2016
During the three months ended June 30,
2017 and June 30, 2016, Danaos
had an average of 55 containerships. Our fleet utilization for the
second quarter of 2017 was 97.9%, while fleet utilization for the
vessels under employment, excluding the off charter days of the
vessels that were previously chartered to Hanjin Shipping
("Hanjin"), increased to 98.8% in the three months ended
June 30, 2017 compared to 96.9% in
the three months ended June 30,
2016.
Our adjusted net income amounted to $29.0
million, or $0.26 per share,
for the three months ended June 30,
2017 compared to $47.7
million, or $0.43 per share,
for the three months ended June 30,
2016. We have adjusted our net income in the three months
ended June 30, 2017 for one-off
refinancing professional fees of $5.2
million and a non-cash amortization charge of $3.6 million for fees related to our 2011
comprehensive financing plan (comprised of non-cash, amortizing and
accrued finance fees). Please refer to the Adjusted Net Income
reconciliation table, which appears later in this earnings
release.
The decrease of $18.7 million in
adjusted net income for the three months ended June 30, 2017 compared to the three months ended
June 30, 2016 is attributable to a
$19.3 million decrease in operating
revenues as a result of the Hanjin bankruptcy and a further decline
in operating revenues of $4.3 million
as a result of weaker charter market conditions, which were
partially offset by a $0.5 million
increase in operating revenues due to higher fleet utilization, a
$3.5 million decrease in total
operating expenses, a $0.5 million
decrease in net finance costs mainly due to interest rate swap
expirations, and a $0.4 million
improvement in the operating performance of our equity investment
in Gemini Shipholdings Corporation ("Gemini").
On a non-adjusted basis, our net income amounted to $20.2 million, or $0.18 per share, for the three months ended
June 30, 2017 compared to net income
of $44.6 million, or $0.41 per share, for the three months ended
June 30, 2016.
Operating Revenues
Operating revenues decreased by
16.9%, or $23.1 million, to
$113.9 million in the three months
ended June 30, 2017 from $137.0 million in the three months ended
June 30, 2016.
Operating revenues for the three months ended June 30, 2017 reflect:
- $19.3 million decrease in
revenues in the three months ended June 30,
2017 compared to the three months ended June 30, 2016 due to loss of revenue from
cancelled charters with Hanjin for eight of our vessels due to
Hanjin's bankruptcy. These vessels were re-chartered at lower rates
and in some cases experienced off hire time in the 2017
period.
- $4.3 million decrease in revenues
in the three months ended June 30,
2017 compared to the three months ended June 30, 2016 due to the re-chartering of certain
of our vessels at lower rates.
- $0.5 million increase in revenues
due to higher fleet utilization in the three months ended
June 30, 2017 compared to the three
months ended June 30, 2016.
Vessel Operating Expenses
Vessel operating expenses
decreased by 2.9%, or $0.8 million,
to $27.2 million in the three
months ended June 30, 2017 from
$28.0 million in the three
months ended June 30, 2016. The
decrease is mainly attributable to a 1.2% decrease in the average
daily operating cost per vessel during the three months ended
June 30, 2017 compared to the three
months ended June 30, 2016 to
$5,734 per day for the three months
ended June 30, 2017 from $5,802 per day for the three months ended
June 30, 2016. 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 9.0%,
or $2.9 million, to $29.2 million in the three months ended
June 30, 2017 from $32.1 million in the three months ended
June 30, 2016, mainly due to
decreased depreciation expense for twenty-five vessels for which we
recorded an impairment charge on December
31, 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 $1.7 million in
the three months ended June 30, 2017
from $1.4 million in the three months
ended June 30, 2016. The increase was
mainly due to the increased payments for dry-docking and special
survey costs related to certain vessels over the last year.
General and Administrative Expenses
General and
administrative expenses decreased by $0.1
million to $5.3 million in the
three months ended June 30, 2017,
from $5.4 million in the three months
ended June 30, 2016.
Other Operating Expenses
Other Operating Expenses
include Voyage Expenses.
Voyage Expenses
Voyage expenses remained stable,
amounting to $3.2 million in the
three months ended June 30, 2017 and
in the three months ended June 30,
2016.
Interest Expense and Interest Income
Interest expense
increased by 3.9%, or $0.8 million,
to $21.4 million in the three
months ended June 30, 2017 from
$20.6 million in the three months
ended June 30, 2016. The increase in
interest expense was mainly due to the increase in average cost of
debt due to the increase in US$ Libor by almost 50 bps between the
two periods, which was partially offset by a decrease in our
average debt by $259.2 million, to
$2,427.6 million in the three months
ended June 30, 2017, from
$2,686.8 million in the three months
ended June 30, 2016 and a
$0.4 million decrease in the
amortization of deferred finance costs.
As of June 30, 2017, the debt
outstanding gross of deferred finance costs was $2,425.3 million compared to $2,676.9 million as of June 30, 2016. As a result principally of the
cancellation of eight charters with Hanjin, we expect the rate at
which we reduce our leverage to decline.
Interest income increased by $0.4
million to $1.3 million in the
three months ended June 30, 2017
compared to $0.9 million in the three
months ended June 30, 2016. The
increase was mainly attributed to the interest income recognized on
HMM notes receivable.
Other finance costs, net
Other finance costs, net
decreased by $0.1 million, to
$1.0 million in the three months
ended June 30, 2017 from $1.1 million in the three months ended
June 30, 2016.
Equity income/(loss) on investments
Equity income on
investments amounted to $0.2 million
in the three months ended June 30,
2017 compared to the equity loss on investments of
$0.2 million in the three months
ended June 30, 2016 and relates to
the improved operating performance of Gemini, in which the Company
has a 49% shareholding interest.
Unrealized gain on derivatives
Unrealized gain on
interest rate swaps amounted to nil in the three months ended
June 30, 2017 compared to a gain of
$1.0 million in the three months
ended June 30, 2016. The unrealized
gains in the three months ended June 30,
2016 were attributable to mark to market valuation of our
swaps, which all expired by December 31,
2016.
Realized loss on derivatives
Realized loss on interest
rate swaps decreased to $0.9 million
in the three months ended June 30,
2017 from a loss of $2.1
million in the three months ended June 30, 2016. This decrease is attributable to
swap expirations. As of December 31,
2016, all of our interest rate swaps have expired.
Other income/(expenses), net
Other income/(expenses),
net was $5.1 million in expenses in
the three months ended June 30, 2017
compared to nil in the three months ended June 30, 2016 due to the increased professional
fees related to the refinancing discussions with our lenders.
Adjusted EBITDA
Adjusted EBITDA decreased by 21.8%, or
$21.8 million, to $78.1 million in the three months ended
June 30, 2017 from $99.9 million in the three months ended
June 30, 2016. As outlined earlier,
this decrease is attributed to a $23.1
million decrease in operating revenues, which was partially
offset by a $0.9 million decrease in
operating expenses and a $0.4 million
operating performance improvement on equity investments. Adjusted
EBITDA for the three months ended June 30,
2017 is adjusted for one-off refinancing professional fees
of $5.2 million. Tables reconciling
Adjusted EBITDA to Net Income can be found at the end of this
earnings release.
Six months ended June 30, 2017
compared to the six months ended June 30,
2016
During the six months ended June 30,
2017 and June 30, 2016, Danaos
had an average of 55 containerships. Our fleet utilization in the
six months ended June 30, 2017 was
95.3%, while fleet utilization for the vessels under employment,
excluding the off charter days of the vessels that were previously
chartered to Hanjin Shipping ("Hanjin"), increased to 98.5% in the
six months ended June 30, 2017
compared to 95.7% in the six months ended June 30, 2016.
Our adjusted net income amounted to $53.6
million, or $0.49 per share,
for the six months ended June 30,
2017 compared to $94.9
million, or $0.86 per share,
for the six months ended June 30,
2016. We have adjusted our net income in the six months
ended June 30, 2017 for one-off
refinancing professional fees of $5.2
million, a non-cash amortization charge of $7.3 million for fees related to our 2011
comprehensive financing plan (comprised of non-cash, amortizing and
accrued finance fees) and a loss on sale of Hyundai Merchant Marine
("HMM") securities of $2.4 million.
Please refer to the Adjusted Net Income reconciliation table, which
appears later in this earnings release.
The decrease of $41.3 million in
adjusted net income for the six months ended June 30, 2017 compared to the six months ended
June 30, 2016 is attributable to a
$41.3 million decrease in operating
revenues as a result of the Hanjin bankruptcy, a further decline in
operating revenues of $9.7 million as
a result of weaker charter market conditions and a $0.4 million decrease in other income, which were
partially offset by a $0.5 million
increase in operating revenues due to higher fleet utilization, a
$6.2 million decrease in total
operating expenses, a $2.1 million
decrease in net finance costs mainly due to interest rate swap
expirations and increased interest income, and a $1.3 million improvement in the operating
performance of our equity investment in Gemini Shipholdings
Corporation ("Gemini").
On a non-adjusted basis, our net income amounted to $38.7 million, or $0.35 per share, for the six months ended
June 30, 2017 compared to net income
of $88.8 million, or $0.81 per share, for the six months ended
June 30, 2016.
Operating Revenues
Operating revenues decreased by
18.4%, or $50.5 million, to
$224.0 million in the six months
ended June 30, 2017 from $274.5 million in the six months ended
June 30, 2016.
Operating revenues for the six months ended June 30, 2017 reflect:
- $41.3 million decrease in
revenues in the six months ended June 30,
2017 compared to the six months ended June 30, 2016 due to loss of revenue from
cancelled charters with Hanjin for eight of our vessels due to
Hanjin's bankruptcy. These vessels were re-chartered at lower rates
and in some cases experienced off hire time in the 2017
period.
- $9.7 million decrease in revenues
in the six months ended June 30, 2017
compared to the six months ended June 30,
2016 due to the re-chartering of certain of our vessels at
lower rates.
- $0.5 million increase in revenues
due to higher fleet utilization in the six months ended
June 30, 2017 compared to the six
months ended June 30, 2016.
Vessel Operating Expenses
Vessel operating expenses
decreased by 3.9%, or $2.2 million,
to $54.7 million in the six
months ended June 30, 2017 from
$56.9 million in the six months
ended June 30, 2016. The decrease is
attributable to a 2.5% decrease in the average daily operating cost
per vessel during the six months ended June
30, 2017 compared to the six months ended June 30, 2016 to $5,745 per day for the six months ended
June 30, 2017 from $5,893 per day for the six months ended
June 30, 2016. 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 9.5%,
or $6.1 million, to $58.0 million in the six months ended
June 30, 2017 from $64.1 million in the six months ended
June 30, 2016, mainly due to
decreased depreciation expense for twenty-five vessels for which we
recorded an impairment charge on December
31, 2016.
Amortization of Deferred Dry-docking and Special Survey
Costs
Amortization of deferred dry-docking and special
survey costs increased by $1.0
million, to $3.4 million in
the six months ended June 30, 2017
from $2.4 million in the six months
ended June 30, 2016. The increase was
mainly due to the increased payments for dry-docking and special
survey costs related to certain vessels over the last year.
General and Administrative Expenses
General and
administrative expenses increased by $0.8
million, to $11.5 million in
the six months ended June 30, 2017,
from $10.7 million in the six months
ended June 30, 2016.
Other Operating Expenses
Other Operating Expenses
include Voyage Expenses.
Voyage Expenses
Voyage expenses increased by
$0.4 million, to $7.1 million in the six months ended June 30, 2017 from $6.7
million in the six months ended June
30, 2016.
Interest Expense and Interest Income
Interest expense
increased by 3.7%, or $1.5 million,
to $42.3 million in the six
months ended June 30, 2017 from
$40.8 million in the six months ended
June 30, 2016. The increase in
interest expense was mainly due to the increase in average cost of
debt due to the increase in US$ Libor by almost 50 bps between the
two periods, which was partially offset by a decrease in our
average debt by $257.0 million, to
$2,455.6 million in the six months
ended June 30, 2017, from
$2,712.6 million in the six months
ended June 30, 2016 and a
$0.8 million decrease in the
amortization of deferred finance costs.
As of June 30, 2017, the debt
outstanding gross of deferred finance costs was $2,425.3 million compared to $2,676.9 million as of June 30, 2016. As a result principally of the
cancellation of eight charters with Hanjin, we expect the rate at
which we reduce our leverage to decline.
Interest income increased by $1.0
million to $2.8 million in the
six months ended June 30, 2017
compared to $1.8 million in the six
months ended June 30, 2016. The
increase was mainly attributed to the interest income recognized on
HMM notes receivable.
Other finance costs, net
Other finance costs, net
decreased by $0.1 million, to
$2.1 million in the six months ended
June 30, 2017 from $2.2 million in the six months ended June 30, 2016.
Equity income/(loss) on investments
Equity income on
investments amounted to $0.4 million
in the six months ended June 30, 2017
compared to the equity loss on investments of $0.9 million in the six months ended June 30, 2016 and relates to the improved
operating performance of Gemini, in which the Company has a 49%
shareholding interest.
Unrealized gain on derivatives
Unrealized gain on
interest rate swaps amounted to nil in the six months ended
June 30, 2017 compared to a gain of
$2.1 million in the six months ended
June 30, 2016. The unrealized gains
in the six months ended June 30, 2016
were attributable to mark to market valuation of our swaps, which
all expired by December 31, 2016.
Realized loss on derivatives
Realized loss on interest
rate swaps decreased to $1.8 million
in the six months ended June 30, 2017
from a loss of $5.3 million in the
six months ended June 30, 2016. This
decrease is attributable to swap expirations. As of December 31, 2016, all of our interest rate swaps
have expired.
Other income/(expenses), net
Other income/(expenses),
net decreased to $7.6 million in
expenses in the six months ended June 30,
2017 from $0.4 million in
income in the six months ended June 30,
2016 mainly due to a $5.2
million increase in professional fees related to the
refinancing discussions with our lenders and a $2.4 million realized loss on sale of HMM
securities in the six months ended June 30,
2017.
Adjusted EBITDA
Adjusted EBITDA decreased by 24.4%, or
$48.6 million, to $150.6 million in the six months ended
June 30, 2017 from $199.2 million in the six months ended
June 30, 2016. As outlined earlier,
this decrease is mainly attributed to a $50.5 million decrease in operating revenues and
a $0.4 million decrease in other
income, which were partially offset by a $1.0 million decrease in operating expenses and a
$1.3 million operating performance
improvement on equity investments. Adjusted EBITDA for the six
months ended June 30, 2017 is
adjusted for one-off refinancing professional fees of $5.2 million and a loss on sale of HMM securities
of $2.4 million. Tables reconciling
Adjusted EBITDA to Net Income can be found at the end of this
earnings release.
Recent Developments
As a result of a decrease in our
operating income and the charter-attached market value of certain
of our vessels caused principally by the cancellation of eight
charters with Hanjin Shipping, which is currently under bankruptcy
proceedings with the Seoul Central District Court, we were in
breach of the minimum security cover, consolidated net leverage and
consolidated net worth financial covenants contained in our Bank
Agreement and our other credit facilities as of June 30, 2017 and December
31, 2016. We had obtained waivers of the breaches of these
financial covenants until April 1,
2017 and have therefore classified our long-term debt, net
of deferred finance costs as current. We are currently in
discussions with our lenders regarding our non-compliance with
these covenants and refinancing the 2018 maturities of
substantially all of our debt. However, we continue to generate
positive cash flows from our operations and currently are in a
position to service all our operational obligations as well as all
scheduled principal amortization and interest payments under the
original terms of our debt agreements.
Conference Call and Webcast
On Tuesday, August 1, 2017 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 8, 2017 by dialing 1 877
344 7529 (US Toll Free Dial In) or +44 (0) 2036 088 021 (Standard
International Dial In) and using 10111169# 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
352,600 TEUs, including four vessels owned by Gemini Shipholdings
Corporation, a joint venture, ranks Danaos among the largest
containership charter owners in the world based on total TEU
capacity. Our fleet is chartered to many of the world's largest
liner companies on fixed-rate charters. Our long track record of
success is predicated on our efficient and rigorous operational
standards and environmental controls. Danaos Corporation's shares
trade on the New York Stock Exchange under the symbol "DAC".
Forward-Looking Statements
Matters discussed in this
release may constitute forward-looking statements within the
meaning of the 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, including to refinance our existing
debt upon maturity, 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 99 unscheduled off-hire days in the three months
ended June 30, 2017. 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
|
|
|
|
2017
|
2017
|
|
Total
|
|
Ownership
Days
|
4,950
|
|
5,005
|
|
9,955
|
|
Less Off-hire
Days:
|
|
|
|
|
|
|
Scheduled Off-hire
Days
|
(15)
|
|
(6)
|
|
(21)
|
|
Other Off-hire
Days
|
(347)
|
|
(99)
|
|
(446)
|
|
Operating
Days
|
4,588
|
|
4,900
|
|
9,488
|
|
Vessel
Utilization
|
92.7%
|
|
97.9%
|
|
95.3%
|
|
|
|
|
|
|
|
Operating Revenues
(in '000s of US Dollars)
|
$110,087
|
|
$113,888
|
|
$223,975
|
|
Average Gross
Daily Charter Rate
|
$23,995
|
|
$23,242
|
|
$23,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
Fleet List
The following table describes in detail our fleet deployment
profile as of July 31, 2017:
|
Vessel
Name
|
Vessel
Size
(TEU)
|
|
Year
Built
|
|
Expiration of
Charter(1)
|
|
|
Containerships
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MSC Ambition (ex
Hyundai Ambition)
|
13,100
|
|
2012
|
|
June 2024
|
|
|
Maersk Exeter (ex
Hyundai Speed)
|
13,100
|
|
2012
|
|
June 2024
|
|
|
Maersk Enping (ex
Hyundai Smart)
|
13,100
|
|
2012
|
|
May 2024
|
|
|
Hyundai Respect
(ex Hyundai Tenacity)
|
13,100
|
|
2012
|
|
March 2024
|
|
|
Hyundai Honour (ex
Hyundai Together)
|
13,100
|
|
2012
|
|
February
2024
|
|
|
Express
Rome
|
10,100
|
|
2011
|
|
August
2017
|
|
|
Express
Berlin
|
10,100
|
|
2011
|
|
August
2017
|
|
|
Express
Athens
|
10,100
|
|
2011
|
|
August
2017
|
|
|
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
|
|
August
2017
|
|
|
Europe
|
8,468
|
|
2004
|
|
August
2017
|
|
|
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
|
|
May 2018
|
|
|
Priority
|
6,402
|
|
2002
|
|
November
2017
|
|
|
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
2017
|
|
|
Deva
|
4,253
|
|
2004
|
|
August
2017
|
|
|
ZIM Rio
Grande
|
4,253
|
|
2008
|
|
May 2020
|
|
|
ZIM Sao
Paolo
|
4,253
|
|
2008
|
|
August
2020
|
|
|
ZIM Kingston (ex
OOCL Istanbul)
|
4,253
|
|
2008
|
|
September
2020
|
|
|
ZIM
Monaco
|
4,253
|
|
2009
|
|
November
2020
|
|
|
ZIM Dalian (ex
OOCL Novorossiysk)
|
4,253
|
|
2009
|
|
February 2021
|
|
|
ZIM
Luanda
|
4,253
|
|
2009
|
|
May 2021
|
|
|
Dimitris
C
|
3,430
|
|
2001
|
|
February
2018
|
|
|
Express Black
Sea
|
3,400
|
|
2011
|
|
February
2018
|
|
|
Express
Spain
|
3,400
|
|
2011
|
|
August
2017
|
|
|
Express
Argentina
|
3,400
|
|
2010
|
|
August
2017
|
|
|
Express
Brazil
|
3,400
|
|
2010
|
|
August
2017
|
|
|
Express
France
|
3,400
|
|
2010
|
|
August
2017
|
|
|
Colombo
|
3,314
|
|
2004
|
|
March 2019
|
|
|
MSC
Zebra
|
2,602
|
|
2001
|
|
October
2017
|
|
|
Amalia
C
|
2,452
|
|
1998
|
|
September
2017
|
|
|
Danae
C
|
2,524
|
|
2001
|
|
January
2020
|
|
|
Advance (ex
Hyundai Advance)
|
2,200
|
|
1997
|
|
June 2019
|
|
|
Hyundai
Future
|
2,200
|
|
1997
|
|
August
2017
|
|
|
Hyundai
Sprinter
|
2,200
|
|
1997
|
|
August
2017
|
|
|
Stride (ex Hyundai
Stride)
|
2,200
|
|
1997
|
|
February
2018
|
|
|
Hyundai
Progress
|
2,200
|
|
1998
|
|
December
2017
|
|
|
Hyundai
Bridge
|
2,200
|
|
1998
|
|
January
2018
|
|
|
Hyundai
Highway
|
2,200
|
|
1998
|
|
January
2018
|
|
|
Vladivostok (ex
Hyundai Vladivostok)
|
2,200
|
|
1997
|
|
August
2017
|
|
|
|
|
|
|
|
|
|
NYK
Lodestar(3)
|
6,422
|
|
2001
|
|
September
2017
|
|
|
NYK
Leo(3)
|
6,422
|
|
2002
|
|
February
2019
|
|
|
Suez
Canal(3)
|
5,610
|
|
2002
|
|
August
2017
|
|
|
Genoa(3)
|
5,544
|
|
2002
|
|
June 2018
|
|
|
|
|
|
|
|
|
|
|
|
(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 included 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. Each such option was
exercisable 15 months in advance of these dates. None of these
options were exercised.
|
|
(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,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
OPERATING
REVENUES
|
$113,888
|
|
$136,999
|
|
$223,975
|
|
$274,473
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
Vessel operating
expenses
|
(27,216)
|
|
(27,983)
|
|
(54,671)
|
|
(56,895)
|
|
Depreciation &
amortization
|
(30,857)
|
|
(33,470)
|
|
(61,449)
|
|
(66,552)
|
|
General &
administrative
|
(5,340)
|
|
(5,446)
|
|
(11,469)
|
|
(10,662)
|
|
Loss on sale of
vessels
|
-
|
|
-
|
|
-
|
|
(36)
|
|
Other operating
expenses
|
(3,216)
|
|
(3,240)
|
|
(7,055)
|
|
(6,690)
|
|
Income From
Operations
|
47,259
|
|
66,860
|
|
89,331
|
|
133,638
|
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME/(EXPENSES)
|
|
|
|
|
|
|
|
|
Interest
income
|
1,344
|
|
890
|
|
2,815
|
|
1,840
|
|
Interest
expense
|
(21,413)
|
|
(20,616)
|
|
(42,313)
|
|
(40,774)
|
|
Other finance
expenses
|
(1,040)
|
|
(1,111)
|
|
(2,087)
|
|
(2,238)
|
|
Equity income/(loss)
on investments
|
149
|
|
(211)
|
|
355
|
|
(934)
|
|
Other
income/(expenses), net
|
(5,149)
|
|
(23)
|
|
(7,597)
|
|
400
|
|
Realized loss on
derivatives
|
(921)
|
|
(2,161)
|
|
(1,832)
|
|
(5,301)
|
|
Unrealized gain on
derivatives
|
-
|
|
1,020
|
|
-
|
|
2,138
|
|
Total Other
Expenses, net
|
(27,030)
|
|
(22,212)
|
|
(50,659)
|
|
(44,869)
|
|
|
|
|
|
|
|
|
|
|
Net
Income
|
$20,229
|
|
$44,648
|
|
$38,672
|
|
$88,769
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE
|
|
|
|
|
|
|
|
|
Basic & diluted
earnings per share
|
$0.18
|
|
$0.41
|
|
$0.35
|
|
$0.81
|
|
Basic & diluted
weighted average number of common shares (in thousands of
shares)
|
109,825
|
|
109,800
|
|
109,825
|
|
109,800
|
|
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,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Net income
|
$20,229
|
|
$44,648
|
|
$38,672
|
|
$88,769
|
|
Unrealized gain on
derivatives
|
-
|
|
(1,020)
|
|
-
|
|
(2,138)
|
|
Amortization of
financing fees & finance fees accrued
|
3,622
|
|
4,086
|
|
7,344
|
|
8,275
|
|
One-off refinancing
professional fees
|
5,186
|
|
-
|
|
5,186
|
|
-
|
|
Loss on sale of
securities
|
-
|
|
-
|
|
2,357
|
|
-
|
|
Loss on sale of
vessels
|
-
|
|
-
|
|
-
|
|
36
|
|
Adjusted Net
Income
|
$29,037
|
|
$47,714
|
|
$53,559
|
|
$94,942
|
|
Adjusted Earnings
Per Share
|
$0.26
|
|
$0.43
|
|
$0.49
|
|
$0.86
|
|
Weighted average
number of shares (in thousands)
|
109,825
|
|
109,800
|
|
109,825
|
|
109,800
|
|
* 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, 2017 and 2016. 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,
|
|
|
|
2017
|
|
2016
|
|
ASSETS
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$63,820
|
|
$73,717
|
|
Restricted
cash
|
|
2,812
|
|
2,812
|
|
Accounts receivable,
net
|
|
11,844
|
|
8,028
|
|
Other current
assets
|
|
48,673
|
|
51,397
|
|
|
|
127,149
|
|
135,954
|
|
NON-CURRENT
ASSETS
|
|
|
|
|
|
Fixed assets,
net
|
|
2,851,721
|
|
2,906,721
|
|
Deferred charges,
net
|
|
9,312
|
|
8,199
|
|
Investments in
affiliates
|
|
5,388
|
|
5,033
|
|
Other non-current
assets
|
|
29,545
|
|
71,157
|
|
|
|
2,895,966
|
|
2,991,110
|
|
TOTAL
ASSETS
|
|
$3,023,115
|
|
$3,127,064
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
Long-term debt,
current portion
|
|
$2,408,704
|
|
$2,504,932
|
|
Accounts payable,
accrued liabilities & other current liabilities
|
|
55,253
|
|
61,349
|
|
|
|
2,463,957
|
|
2,566,281
|
|
LONG-TERM
LIABILITIES
|
|
|
|
|
|
Other long-term
liabilities
|
|
65,048
|
|
73,070
|
|
|
|
65,048
|
|
73,070
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
Common
stock
|
|
1,098
|
|
1,098
|
|
Additional paid-in
capital
|
|
546,898
|
|
546,898
|
|
Accumulated other
comprehensive loss
|
|
(123,438)
|
|
(91,163)
|
|
Retained
earnings
|
|
69,552
|
|
30,880
|
|
|
|
494,110
|
|
487,713
|
|
Total liabilities
and stockholders' equity
|
|
$3,023,115
|
|
$3,127,064
|
|
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,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Operating
Activities:
|
|
|
|
|
|
|
|
|
Net income
|
$20,229
|
|
$44,648
|
|
$38,672
|
|
$88,769
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
29,195
|
|
32,075
|
|
58,046
|
|
64,122
|
|
Amortization of
deferred drydocking & special survey costs, finance cost and
other finance fees accrued
|
5,284
|
|
5,481
|
|
10,747
|
|
10,705
|
|
Payments for
drydocking/special survey
|
(422)
|
|
(3,276)
|
|
(4,516)
|
|
(6,394)
|
|
Amortization of
deferred realized losses on cash flow interest rate
swaps
|
921
|
|
1,001
|
|
1,832
|
|
2,003
|
|
Equity (income)/loss
on investments
|
(149)
|
|
211
|
|
(355)
|
|
934
|
|
Unrealized gain on
derivatives
|
-
|
|
(1,020)
|
|
-
|
|
(2,138)
|
|
Loss on sale of
securities
|
-
|
|
-
|
|
2,357
|
|
-
|
|
Loss on sale of
vessels
|
-
|
|
-
|
|
-
|
|
36
|
|
Accounts
receivable
|
(2,486)
|
|
(6,081)
|
|
(3,816)
|
|
(10,707)
|
|
Other assets, current
and non-current
|
1,426
|
|
94
|
|
1,636
|
|
(14,314)
|
|
Accounts payable and
accrued liabilities
|
576
|
|
(1,388)
|
|
2,618
|
|
1,012
|
|
Other liabilities,
current and long-term
|
(8,856)
|
|
643
|
|
(17,170)
|
|
(236)
|
|
Net Cash provided
by Operating Activities
|
45,718
|
|
72,388
|
|
90,051
|
|
133,792
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities:
|
|
|
|
|
|
|
|
|
Vessel additions and
vessel acquisitions
|
(1,085)
|
|
(1,613)
|
|
(2,612)
|
|
(1,990)
|
|
Investments in
affiliates
|
-
|
|
(3,675)
|
|
-
|
|
(5,145)
|
|
Net proceeds from
sale of securities
|
6,236
|
|
-
|
|
6,236
|
|
-
|
|
Net proceeds from
sale of vessels
|
-
|
|
-
|
|
-
|
|
5,178
|
|
Net Cash provided
by/(used in) Investing Activities
|
5,151
|
|
(5,288)
|
|
3,624
|
|
(1,957)
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities:
|
|
|
|
|
|
|
|
|
Debt
repayment
|
(49,614)
|
|
(50,808)
|
|
(103,572)
|
|
(99,966)
|
|
Increase in
restricted cash
|
(2,812)
|
|
(5,873)
|
|
-
|
|
(3,062)
|
|
Net Cash used in
Financing Activities
|
(52,426)
|
|
(56,681)
|
|
(103,572)
|
|
(103,028)
|
|
Net
Increase/(Decrease) in cash and cash equivalents
|
(1,557)
|
|
10,419
|
|
(9,897)
|
|
28,807
|
|
Cash and cash
equivalents, beginning of period
|
65,377
|
|
90,641
|
|
73,717
|
|
72,253
|
|
Cash and cash
equivalents, end of period
|
$63,820
|
|
$101,060
|
|
$63,820
|
|
$101,060
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Net income
|
$20,229
|
|
$44,648
|
|
$38,672
|
|
$88,769
|
|
Depreciation
|
29,195
|
|
32,075
|
|
58,046
|
|
64,122
|
|
Amortization of
deferred drydocking & special survey costs
|
1,662
|
|
1,395
|
|
3,403
|
|
2,430
|
|
Amortization of
deferred finance costs and write-offs and other finance fees
accrued
|
3,622
|
|
4,086
|
|
7,344
|
|
8,275
|
|
Amortization of
deferred realized losses on interest rate swaps
|
921
|
|
1,001
|
|
1,832
|
|
2,003
|
|
Interest
income
|
(1,344)
|
|
(890)
|
|
(2,815)
|
|
(1,840)
|
|
Interest
expense
|
18,592
|
|
17,403
|
|
36,584
|
|
34,254
|
|
One-off refinancing
professional fees
|
5,186
|
|
-
|
|
5,186
|
|
-
|
|
Loss on sale of
securities
|
-
|
|
-
|
|
2,357
|
|
-
|
|
Loss on sale of
vessels
|
-
|
|
-
|
|
-
|
|
36
|
|
Realized loss on
derivatives
|
-
|
|
1,160
|
|
-
|
|
3,298
|
|
Unrealized gain on
derivatives
|
-
|
|
(1,020)
|
|
-
|
|
(2,138)
|
|
Adjusted
EBITDA(1)
|
$78,063
|
|
$99,858
|
|
$150,609
|
|
$199,209
|
|
|
|
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, loss on sale of
securities, one-off refinancing professional fees and a 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, 2017 and 2016. 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.
|
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SOURCE Danaos Corporation