ATHENS, Greece, Oct. 30, 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 September 30,
2017.
Highlights for the Third Quarter and Nine Months Ended
September 30, 2017:
- Adjusted net income1 of $30.1 million, or $0.27 per share, for the three months ended
September 30, 2017 compared to
$22.8 million, or $0.21 per share, for the three months ended
September 30, 2016, an increase of
32.0%. Adjusted net income1 of $83.7 million, or $0.76 per share, for the nine months ended
September 30, 2017 compared to
$117.7 million, or $1.07 per share, for the nine months ended
September 30, 2016, a decrease of
28.9%.
- Operating revenues of $113.6
million for the three months ended September 30, 2017 compared to $111.8 million for the three months ended
September 30, 2016, an increase of
1.6%. Operating revenues of $337.6
million for the nine months ended September 30, 2017 compared to $386.2 million for the nine months ended
September 30, 2016, a decrease of
12.6%.
- Adjusted EBITDA1 of $79.8 million for the three months ended
September 30, 2017 compared to
$75.5 million for the three months
ended September 30, 2016, an increase
of 5.7%. Adjusted EBITDA1 of $230.4 million for the nine months ended
September 30, 2017 compared to
$274.7 million for the nine months
ended September 30, 2016, a decrease
of 16.1%.
- Total contracted operating revenues were $1.8 billion as of September 30, 2017, with charters extending
through 2028 and remaining average contracted charter duration of
6.0 years, weighted by aggregate contracted charter hire.
- Charter coverage of 87% for the next 12 months based on
current operating revenues and 71% in terms of contracted operating
days.
Three and Nine
Months Ended September 30, 2017
|
Financial
Summary
|
(Expressed
in thousands of United States dollars, except per share
amounts)
|
|
|
Three months
ended
|
|
Three months
ended
|
|
Nine months
ended
|
|
Nine months
ended
|
September
30,
|
September
30,
|
September
30,
|
September
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
Operating
revenues
|
$113,588
|
|
$111,752
|
|
$337,563
|
|
$386,225
|
Net
income/(loss)
|
$22,427
|
|
$(8,397)
|
|
$61,099
|
|
$80,372
|
Adjusted net
income1
|
$30,091
|
|
$22,781
|
|
$83,650
|
|
$117,723
|
Earnings/(loss) per
share
|
$0.20
|
|
$(0.08)
|
|
$0.56
|
|
$0.73
|
Adjusted earnings per
share1
|
$0.27
|
|
$0.21
|
|
$0.76
|
|
$1.07
|
Weighted average
number of shares (in thousands)
|
109,825
|
|
109,800
|
|
109,825
|
|
109,800
|
Adjusted
EBITDA1
|
$79,753
|
|
$75,504
|
|
$230,362
|
|
$274,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 third quarter of 2017 improved markedly
when compared to the earnings of the third quarter of 2016 which
were negatively impacted in the aftermath of the Hanjin bankruptcy.
This is mainly the result of our high charter contract coverage
which remains at 87% for the next 12 months based on current
operating revenues and 71% in terms of contracted operating
days.
Adjusted net income of $30.1
million for the quarter represented an increase of
$7.3 million compared to $22.8 million for the third quarter of 2016. This
increase was attributable to a $6
million increase in the operating revenues of the vessels
that were previously chartered to Hanjin that had not recorded any
operating revenues during the third quarter of 2016, and
improved operating performance of $1.3
million.
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 for the sub 4,000 TEU vessels is relatively
stable, with charter rates slightly higher than the lows of 2016,
while the size segment between 4,000 to 5,000 TEU is facing more
pressure. For larger vessel sizes, the fourth quarter is typically
the low season of the year. We will have more clarity on the state
of that segment as we approach the peak season in the spring of
2018. We do not expect a material improvement in the market
environment next year, given the large number of vessel deliveries
scheduled for 2018. Danaos continues to have low near term exposure
to the weak spot market as a result of the aforementioned strong
charter coverage.
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 September 30,
2017 compared to the three months ended September 30, 2016
During the three months ended September
30, 2017 and September 30,
2016, Danaos had an average of 55 containerships. Our fleet
utilization for the third quarter of 2017 was 97.0% compared to
98.3% in the three months ended September
30, 2016, when excluding the off charter days of the vessels
that were previously chartered to Hanjin Shipping ("Hanjin").
Our adjusted net income amounted to $30.1
million, or $0.27 per share,
for the three months ended September 30,
2017 compared to $22.8
million, or $0.21 per share,
for the three months ended September 30,
2016. We have adjusted our net income in the three months
ended September 30, 2017 for one-off
refinancing professional fees of $4.1
million and a non-cash amortization charge of $3.5 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 increase of $7.3 million in
adjusted net income for the three months ended September 30, 2017 compared to the three months
ended September 30, 2016 is
attributable to a $1.8 million
increase in operating revenues, a $4.6
million decrease in total operating expenses, a $1.3 million decrease in realized loss on
derivatives and a $1.0 million
improvement in the operating performance of our equity investment
in Gemini Shipholdings Corporation ("Gemini"), which were partially
offset by a $1.4 million increase in
interest expense.
On a non-adjusted basis, our net income amounted to $22.4 million, or $0.20 per share, for the three months ended
September 30, 2017 compared to a loss
of $8.4 million, or $0.08 loss per share, for the three months ended
September 30, 2016.
Operating Revenues
Operating revenues increased by
1.6%, or $1.8 million, to
$113.6 million in the three months
ended September 30, 2017 from
$111.8 million in the three months
ended September 30, 2016.
Operating revenues for the three months ended September 30, 2017 reflect:
- $6.0 million increase in revenues
in the three months ended September 30,
2017 compared to the three months ended September 30, 2016 due to the recorded charter
income of eight of our vessels previously chartered to Hanjin
Shipping ("Hanjin") that had not recorded any operating revenues
during the third quarter of 2016.
- $3.1 million decrease in revenues
in the three months ended September 30,
2017 compared to the three months ended September 30, 2016 due to the re-chartering of
certain of our vessels at lower rates.
- $1.1 million decrease in revenues
due to lower fleet utilization in the three months ended
September 30, 2017 compared to the
three months ended September 30,
2016.
Vessel Operating Expenses
Vessel operating expenses
decreased by 1.9%, or $0.5 million,
to $26.1 million in the three
months ended September 30, 2017 from
$26.6 million in the three months
ended September 30, 2016. The average
daily operating cost per vessel for vessels on time charter was
$5,569 per day for the three months
ended September 30, 2017 compared to
$5,462 per day for the three months
ended September 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 10.2%,
or $3.3 million, to $29.2 million in the three months ended
September 30, 2017 from $32.5 million in the three months ended
September 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 $0.1
million, to $1.6 million in
the three months ended September 30,
2017 from $1.5 million in the
three months ended September 30,
2016.
General and Administrative Expenses
General and
administrative expenses decreased by $0.1
million to $5.4 million in the
three months ended September 30,
2017, from $5.5 million in the
three months ended September 30,
2016.
Other Operating Expenses
Other Operating Expenses
include Voyage Expenses.
Voyage Expenses
Voyage expenses decreased by
$0.7 million to $2.6 million in the three months ended
September 30, 2017 compared to
$3.3 million in the three months
ended September 30, 2016. The
decrease is mainly due to decreased bunkering expenses.
Interest Expense and Interest Income
Interest expense
increased by 4.8%, or $1.0 million,
to $22.0 million in the three
months ended September 30, 2017 from
$21.0 million in the three months
ended September 30, 2016. The
increase in interest expense was mainly due to the increase in
average cost of debt due to the increase in US$ Libor by about 50
bps between the two periods, which was partially offset by a
decrease in our average debt by $246.2
million, to $2,385.8 million
in the three months ended September 30,
2017, from $2,632.0 million in
the three months ended September 30,
2016 and a $0.4 million
decrease in the amortization of deferred finance costs.
As of September 30, 2017, the debt
outstanding gross of deferred finance costs was $2,381.7 million compared to $2,615.4 million as of September 30, 2016.
Interest income remained stable, amounting to $1.4 million in the three months ended
September 30, 2017 and in the three
months ended September 30, 2016.
Other finance costs, net
Other finance costs, net
decreased by $0.1 million, to
$1.0 million in the three months
ended September 30, 2017 from
$1.1 million in the three months
ended September 30, 2016.
Equity income/(loss) on investments
Equity income on
investments amounted to $0.3 million
in the three months ended September 30,
2017 compared to the equity loss on investments of
$0.7 million in the three months
ended September 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
September 30, 2017 compared to a gain
of $1.6 million in the three months
ended September 30, 2016. The
unrealized gains in the three months ended September 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 September 30,
2017 from a loss of $2.2
million in the three months ended September 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 expenses, net
amounted to $3.9 million and related
mainly to the professional fees of $4.1
million due to refinancing discussions with our lenders in
the three months ended September 30,
2017 compared to other expenses, net of $12.8 million incurred mainly due to a loss on
sale of HMM equity securities recognized in the three months ended
September 30, 2016.
Adjusted EBITDA
Adjusted EBITDA increased by 5.7%, or
$4.3 million, to $79.8 million in the three months ended
September 30, 2017 from $75.5 million in the three months ended
September 30, 2016. As outlined
earlier, this increase is attributable to a $1.8 million increase in operating revenues, by a
$1.5 million decrease in operating
expenses and a $1.0 million operating
performance improvement on equity investments. Adjusted EBITDA for
the three months ended September 30,
2017 is adjusted for one-off refinancing professional fees
of $4.1 million. Tables reconciling
Adjusted EBITDA to Net Income can be found at the end of this
earnings release.
Nine months ended September 30,
2017 compared to the nine months ended September 30, 2016
During the nine months ended September
30, 2017 and September 30,
2016, Danaos had an average of 55 containerships. Our fleet
utilization in the nine months ended September 30, 2017 was 95.9%, while fleet
utilization for the vessels under employment, excluding the off
charter days of the vessels that were previously chartered to
Hanjin, increased to 98.0% in the nine months ended September 30, 2017 compared to 96.6% in the nine
months ended September 30, 2016.
Our adjusted net income amounted to $83.7
million, or $0.76 per share,
for the nine months ended September 30,
2017 compared to $117.7
million, or $1.07 per share,
for the nine months ended September 30,
2016. We have adjusted our net income in the nine months
ended September 30, 2017 for one-off
refinancing professional fees of $9.3
million, a non-cash amortization charge of $10.9 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 $34.0 million in
adjusted net income for the nine months ended September 30, 2017 compared to the nine months
ended September 30, 2016 is
attributable to a $41.3 million
decrease in operating revenues during the 1st half of
the year as a result of the Hanjin bankruptcy partially offset by
$6 million of operating revenues
earned by the ex Hanjin vessels during the current quarter that had
not recognized operating revenues during the 3rd quarter
of 2016, a decline in operating revenues of $12.8 million as a result of weaker charter
market conditions, a $0.6 million
decrease in operating revenues due to lower fleet utilization and a
$0.3 million decrease in other
income, which were partially offset by a $10.7 million decrease in total operating
expenses, a $2.0 million decrease in
net finance costs mainly due to interest rate swap expirations and
increased interest income, and a $2.2
million improvement in the operating performance of our
equity investment in Gemini.
On a non-adjusted basis, our net income amounted to $61.1 million, or $0.56 per share, for the nine months ended
September 30, 2017 compared to net
income of $80.4 million, or
$0.73 per share, for the nine months
ended September 30, 2016.
Operating Revenues
Operating revenues decreased by
12.6%, or $48.6 million, to
$337.6 million in the nine months
ended September 30, 2017 from
$386.2 million in the nine months
ended September 30, 2016.
Operating revenues for the nine months ended September 30, 2017 reflect:
- $41.3 decrease in revenues during
the 1st half of the year 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.
- $6.0 million increase in revenues
during the third quarter of 2017 due to the recorded charter income
of the eight ex Hanjin vessels that had not recorded any operating
revenues during the third quarter of 2016.
- $12.8 million decrease in
revenues in the nine months ended September
30, 2017 compared to the nine months ended September 30, 2016 due to the re-chartering of
certain of our vessels at lower rates.
- $0.6 million decrease in revenues
due to lower fleet utilization in the nine months ended
September 30, 2017 compared to the
nine months ended September 30,
2016.
Vessel Operating Expenses
Vessel operating expenses
decreased by 3.2%, or $2.7 million,
to $80.8 million in the nine
months ended September 30, 2017 from
$83.5 million in the nine months
ended September 30, 2016. The average
daily operating cost per vessel for vessels on time charter was
$5,687 per day for the nine months
ended September 30, 2017 compared to
$5,749 per day for the nine months
ended September 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 9.6%,
or $9.3 million, to $87.3 million in the nine months ended
September 30, 2017 from $96.6 million in the nine months ended
September 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 $5.0 million in
the nine months ended September 30,
2017 from $4.0 million in the
nine months ended September 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 $16.9 million in
the nine months ended September 30,
2017, from $16.1 million in
the nine months ended September 30,
2016.
Other Operating Expenses
Other Operating Expenses
include Voyage Expenses.
Voyage Expenses
Voyage expenses decreased by
$0.4 million to $9.6 million in the nine months ended
September 30, 2017 compared to
$10.0 million in the nine months
ended September 30, 2016. The
decrease is mainly due to decreased commissions.
Interest Expense and Interest Income
Interest expense
increased by 4.0%, or $2.5 million,
to $64.3 million in the nine
months ended September 30, 2017 from
$61.8 million in the nine months
ended September 30, 2016. The
increase in interest expense was mainly due to the increase in
average cost of debt due to the increase in US$ Libor by about 50
bps between the two periods, which was partially offset by a
decrease in our average debt by $253.4
million, to $2,432.1 million
in the nine months ended September 30,
2017, from $2,685.5 million in
the nine months ended September 30,
2016 and a $1.2 million
decrease in the amortization of deferred finance costs.
As of September 30, 2017, the debt
outstanding gross of deferred finance costs was $2,381.7 million compared to $2,615.4 million as of September 30, 2016.
Interest income increased by $1.0
million to $4.2 million in the
nine months ended September 30, 2017
compared to $3.2 million in the nine
months ended September 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 $0.2 million, to
$3.1 million in the nine months ended
September 30, 2017 from $3.3 million in the nine months ended
September 30, 2016.
Equity income/(loss) on investments
Equity income on
investments amounted to $0.6 million
in the nine months ended September 30,
2017 compared to the equity loss on investments of
$1.6 million in the nine months ended
September 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 nine months ended
September 30, 2017 compared to a gain
of $3.7 million in the nine months
ended September 30, 2016. The
unrealized gains in the nine months ended September 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 $2.8 million
in the nine months ended September 30,
2017 from a loss of $7.5
million in the nine months ended September 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 expenses, net
amounted to $11.5 million related
mainly to a $9.3 million increase in
professional fees due to the refinancing discussions with our
lenders and a $2.4 million realized
loss on sale of HMM securities in the nine months ended
September 30, 2017 compared to other
expenses, net of $12.4 million mainly
due to a loss on sale of HMM equity securities recognized in the
nine months ended September 30,
2016.
Adjusted EBITDA
Adjusted EBITDA decreased by 16.1%, or
$44.3 million, to $230.4 million in the nine months ended
September 30, 2017 from $274.7 million in the nine months ended
September 30, 2016. As outlined
earlier, this decrease is mainly attributed to a $48.6 million decrease in operating revenues and
a $0.3 million decrease in other
income, which were partially offset by a $2.4 million decrease in operating expenses and a
$2.2 million operating performance
improvement on equity investments. Adjusted EBITDA for the nine
months ended September 30, 2017 is
adjusted for one-off refinancing professional fees of $9.3 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 September 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, October 31, 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 November 7, 2017 by dialing 1
877 344 7529 (US Toll Free Dial In) or +44 (0) 2036 088 021
(Standard International Dial In) and using 10113996# 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
351,614 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 139 unscheduled off-hire days in the three months
ended September 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
|
|
Third
Quarter
|
|
|
2017
|
2017
|
|
2017
|
|
Total
|
Ownership
Days
|
4,950
|
|
5,005
|
|
5,060
|
|
15,015
|
Less Off-hire
Days:
|
|
|
|
|
|
|
|
Scheduled Off-hire
Days
|
(15)
|
|
(6)
|
|
(15)
|
|
(36)
|
Other Off-hire
Days
|
(347)
|
|
(99)
|
|
(139)
|
|
(585)
|
Operating
Days
|
4,588
|
|
4,900
|
|
4,906
|
|
14,394
|
Vessel
Utilization
|
92.7%
|
|
97.9%
|
|
97.0%
|
|
95.9%
|
|
|
|
|
|
|
|
|
Operating Revenues
(in '000s of US Dollars)
|
$110,087
|
|
$113,888
|
|
$113,588
|
|
$337,563
|
Average Gross
Daily Charter Rate
|
$23,995
|
|
$23,242
|
|
$23,153
|
|
$23,452
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessel Utilization
(No. of Days)
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
|
2016
|
2016
|
|
2016
|
|
Total
|
Ownership
Days
|
5,013
|
|
5,005
|
|
5,060
|
|
15,078
|
Less Off-hire
Days:
|
|
|
|
|
|
|
|
Scheduled Off-hire
Days
|
(31)
|
|
(45)
|
|
-
|
|
(76)
|
Other Off-hire
Days
|
(242)
|
|
(110)
|
|
(169)
|
|
(521)
|
Operating
Days
|
4,740
|
|
4,850
|
|
4,891
|
|
14,481
|
Vessel
Utilization
|
94.6%
|
|
96.9%
|
|
96.7%
|
|
96.0%
|
|
|
|
|
|
|
|
|
Operating Revenues
(in '000s of US Dollars)
|
$137,474
|
|
$136,999
|
|
$111,752
|
|
$386,225
|
Average Gross
Daily Charter Rate
|
$29,003
|
|
$28,248
|
|
$22,848
|
|
$26,672
|
Fleet List
The following table describes in detail our fleet deployment
profile as of October 30, 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
|
|
January
2018
|
|
Express
Berlin
|
10,100
|
|
2011
|
|
November
2017
|
|
Express
Athens
|
10,100
|
|
2011
|
|
December
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
|
|
December
2017
|
|
Europe
|
8,468
|
|
2004
|
|
December
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
|
|
March 2018
|
|
YM
Seattle
|
4,253
|
|
2007
|
|
July 2019
|
|
YM
Vancouver
|
4,253
|
|
2007
|
|
September
2019
|
|
Derby
D
|
4,253
|
|
2004
|
|
November
2017
|
|
Deva
|
4,253
|
|
2004
|
|
November
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
|
|
November
2017
|
|
Express
Argentina
|
3,400
|
|
2010
|
|
November
2017
|
|
Express
Brazil
|
3,400
|
|
2010
|
|
September
2018
|
|
Express
France
|
3,400
|
|
2010
|
|
October
2018
|
|
Singapore (ex YM
Singapore)
|
3,314
|
|
2004
|
|
October
2019
|
|
Colombo
|
3,314
|
|
2004
|
|
March 2019
|
|
MSC
Zebra
|
2,602
|
|
2001
|
|
October
2018
|
|
Amalia
C
|
2,452
|
|
1998
|
|
August
2019
|
|
Danae
C
|
2,524
|
|
2001
|
|
January
2020
|
|
Advance (ex
Hyundai Advance)
|
2,200
|
|
1997
|
|
June 2018
|
|
Future (ex Hyundai
Future)
|
2,200
|
|
1997
|
|
December
2017
|
|
Sprinter (ex
Hyundai Sprinter)
|
2,200
|
|
1997
|
|
November
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
|
|
April 2018
|
|
|
|
|
|
|
|
|
NYK
Lodestar(3)
|
6,422
|
|
2001
|
|
February
2018
|
|
NYK
Leo(3)
|
6,422
|
|
2002
|
|
February
2019
|
|
Suez
Canal(3)
|
5,610
|
|
2002
|
|
November
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 fell/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 Operations -
Unaudited (Expressed in thousands of United States
dollars, except per share amounts)
|
|
|
|
Three months
ended
|
|
Three months
ended
|
|
Nine months
ended
|
|
Nine months
ended
|
September
30,
|
September
30,
|
September
30,
|
September
30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
OPERATING
REVENUES
|
$113,588
|
|
$111,752
|
|
$337,563
|
|
$386,225
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
Vessel operating
expenses
|
(26,132)
|
|
(26,633)
|
|
(80,803)
|
|
(83,528)
|
|
Depreciation &
amortization
|
(30,855)
|
|
(34,005)
|
|
(92,304)
|
|
(100,557)
|
|
General &
administrative
|
(5,388)
|
|
(5,475)
|
|
(16,857)
|
|
(16,137)
|
|
Loss on sale of
vessels
|
-
|
|
-
|
|
-
|
|
(36)
|
|
Other operating
expenses
|
(2,570)
|
|
(19,146)
|
|
(9,625)
|
|
(25,836)
|
Income From
Operations
|
48,643
|
|
26,493
|
|
137,974
|
|
160,131
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME/(EXPENSES)
|
|
|
|
|
|
|
|
|
Interest
income
|
1,386
|
|
1,356
|
|
4,201
|
|
3,196
|
|
Interest
expense
|
(22,016)
|
|
(21,022)
|
|
(64,329)
|
|
(61,796)
|
|
Other finance
expenses
|
(1,042)
|
|
(1,109)
|
|
(3,129)
|
|
(3,347)
|
|
Equity income/(loss)
on investments
|
278
|
|
(663)
|
|
633
|
|
(1,597)
|
|
Other
income/(expenses), net
|
(3,891)
|
|
(12,824)
|
|
(11,488)
|
|
(12,424)
|
|
Realized loss on
derivatives
|
(931)
|
|
(2,209)
|
|
(2,763)
|
|
(7,510)
|
|
Unrealized gain on
derivatives
|
-
|
|
1,581
|
|
-
|
|
3,719
|
Total Other
Expenses, net
|
(26,216)
|
|
(34,890)
|
|
(76,875)
|
|
(79,759)
|
|
|
|
|
|
|
|
|
|
Net
Income/(Loss)
|
$22,427
|
|
$(8,397)
|
|
$61,099
|
|
$80,372
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE
|
|
|
|
|
|
|
|
Basic & diluted
earnings/(loss) per share
|
$0.20
|
|
$(0.08)
|
|
$0.56
|
|
$0.73
|
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/(Loss) to Adjusted
Net Income – Unaudited
|
|
|
Three months
ended
|
|
Three months
ended
|
|
Nine months
ended
|
|
Nine months
ended
|
September
30,
|
September
30,
|
September
30,
|
September
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net
income/(loss)
|
$22,427
|
|
$(8,397)
|
|
$61,099
|
|
$80,372
|
Amortization of
financing fees & finance fees accrued
|
3,538
|
|
4,019
|
|
10,882
|
|
12,294
|
One-off refinancing
professional fees
|
4,126
|
|
-
|
|
9,312
|
|
-
|
Bad debt
expense
|
-
|
|
15,834
|
|
-
|
|
15,834
|
Loss on sale of
securities
|
-
|
|
12,906
|
|
2,357
|
|
12,906
|
Unrealized gain on
derivatives
|
-
|
|
(1,581)
|
|
-
|
|
(3,719)
|
Loss on sale of
vessels
|
-
|
|
-
|
|
-
|
|
36
|
Adjusted Net
Income
|
$30,091
|
|
$22,781
|
|
$83,650
|
|
$117,723
|
Adjusted Earnings
Per Share
|
$0.27
|
|
$0.21
|
|
$0.76
|
|
$1.07
|
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 nine months ended September
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
|
September
30,
|
December
31,
|
|
|
|
2017
|
|
2016
|
ASSETS
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$66,965
|
|
$73,717
|
|
Restricted
cash
|
|
-
|
|
2,812
|
|
Accounts receivable,
net
|
|
11,113
|
|
8,028
|
|
Other current
assets
|
|
49,689
|
|
51,397
|
|
|
|
127,767
|
|
135,954
|
NON-CURRENT
ASSETS
|
|
|
|
|
|
Fixed assets,
net
|
|
2,823,716
|
|
2,906,721
|
|
Deferred charges,
net
|
|
9,570
|
|
8,199
|
|
Investments in
affiliates
|
|
5,666
|
|
5,033
|
|
Other non-current
assets
|
|
31,777
|
|
71,157
|
|
|
|
2,870,729
|
|
2,991,110
|
TOTAL
ASSETS
|
|
$2,998,496
|
|
$3,127,064
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
Long-term debt,
current portion
|
|
$2,367,884
|
|
$2,504,932
|
|
Accounts payable,
accrued liabilities & other current liabilities
|
|
53,474
|
|
61,349
|
|
|
|
2,421,358
|
|
2,566,281
|
LONG-TERM
LIABILITIES
|
|
|
|
|
|
Other long-term
liabilities
|
|
61,291
|
|
73,070
|
|
|
|
61,291
|
|
73,070
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
Common
stock
|
|
1,098
|
|
1,098
|
|
Additional paid-in
capital
|
|
546,898
|
|
546,898
|
|
Accumulated other
comprehensive loss
|
|
(124,128)
|
|
(91,163)
|
|
Retained
earnings
|
|
91,979
|
|
30,880
|
|
|
|
515,847
|
|
487,713
|
Total liabilities
and stockholders' equity
|
|
$2,998,496
|
|
$3,127,064
|
DANAOS
CORPORATION Condensed Statements of Cash Flows
- Unaudited (Expressed in thousands of United States
dollars)
|
|
|
|
Three months
ended
|
|
Three months
ended
|
|
Nine months
ended
|
|
Nine months
ended
|
September
30,
|
September
30,
|
September
30,
|
September
30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Operating
Activities:
|
|
|
|
|
|
|
|
|
Net
income/(loss)
|
$22,427
|
|
$(8,397)
|
|
$61,099
|
|
$80,372
|
|
Adjustments to
reconcile net income/(loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
29,221
|
|
32,464
|
|
87,267
|
|
96,586
|
|
Amortization of
deferred drydocking & special survey costs, finance cost and
other finance fees accrued
|
5,172
|
|
5,560
|
|
15,919
|
|
16,265
|
|
Payments for
drydocking/special survey
|
(1,892)
|
|
(2,393)
|
|
(6,408)
|
|
(8,787)
|
|
Amortization of
deferred realized losses on cash flow interest rate
swaps
|
931
|
|
1,013
|
|
2,763
|
|
3,016
|
|
Equity (income)/loss
on investments
|
(278)
|
|
663
|
|
(633)
|
|
1,597
|
|
Unrealized gain on
derivatives
|
-
|
|
(1,581)
|
|
-
|
|
(3,719)
|
|
Bad debt
expense
|
-
|
|
15,834
|
|
-
|
|
15,834
|
|
Loss on sale of
securities
|
-
|
|
12,906
|
|
2,357
|
|
12,906
|
|
Loss on sale of
vessels
|
-
|
|
-
|
|
-
|
|
36
|
|
Accounts
receivable
|
731
|
|
1,473
|
|
(3,085)
|
|
(9,234)
|
|
Other assets, current
and non-current
|
(4,869)
|
|
(4,757)
|
|
(3,233)
|
|
(19,071)
|
|
Accounts payable and
accrued liabilities
|
(974)
|
|
5,397
|
|
1,644
|
|
6,409
|
|
Other liabilities,
current and long-term
|
(4,694)
|
|
32,397
|
|
(21,864)
|
|
32,161
|
Net Cash provided
by Operating Activities
|
45,775
|
|
90,579
|
|
135,826
|
|
224,371
|
|
|
|
|
|
|
|
|
|
Investing
Activities:
|
|
|
|
|
|
|
|
|
Vessel additions and
vessel acquisitions
|
(1,084)
|
|
(1,518)
|
|
(3,696)
|
|
(3,508)
|
|
Investments in
affiliates
|
-
|
|
(4,851)
|
|
-
|
|
(9,996)
|
|
Net proceeds from
sale of securities
|
-
|
|
-
|
|
6,236
|
|
-
|
|
Net proceeds from
sale of vessels
|
-
|
|
-
|
|
-
|
|
5,178
|
Net Cash provided
by/(used in) Investing Activities
|
(1,084)
|
|
(6,369)
|
|
2,540
|
|
(8,326)
|
|
|
|
|
|
|
|
|
|
Financing
Activities:
|
|
|
|
|
|
|
|
|
Debt
repayment
|
(44,358)
|
|
(62,211)
|
|
(147,930)
|
|
(162,177)
|
|
Decrease in
restricted cash
|
2,812
|
|
5,185
|
|
2,812
|
|
2,123
|
Net Cash used in
Financing Activities
|
(41,546)
|
|
(57,026)
|
|
(145,118)
|
|
(160,054)
|
Net
Increase/(Decrease) in cash and cash equivalents
|
3,145
|
|
27,184
|
|
(6,752)
|
|
55,991
|
Cash and cash
equivalents, beginning of period
|
63,820
|
|
101,060
|
|
73,717
|
|
72,253
|
Cash and cash
equivalents, end of period
|
$66,965
|
|
$128,244
|
|
$66,965
|
|
$128,244
|
DANAOS
CORPORATION Reconciliation of Net Income/(Loss) to
Adjusted EBITDA (Expressed in thousands of United States
dollars)
|
|
|
Three months
ended
|
|
Three months
ended
|
|
Nine months
ended
|
|
Nine months
ended
|
September
30,
|
September
30,
|
September
30,
|
September
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net
income/(loss)
|
$22,427
|
|
$(8,397)
|
|
$61,099
|
|
$80,372
|
Depreciation
|
29,221
|
|
32,464
|
|
87,267
|
|
96,586
|
Amortization of
deferred drydocking & special survey costs
|
1,634
|
|
1,541
|
|
5,037
|
|
3,971
|
Amortization of
deferred finance costs and write-offs and other finance fees
accrued
|
3,538
|
|
4,019
|
|
10,882
|
|
12,294
|
Amortization of
deferred realized losses on interest rate swaps
|
931
|
|
1,013
|
|
2,763
|
|
3,016
|
Interest
income
|
(1,386)
|
|
(1,356)
|
|
(4,201)
|
|
(3,196)
|
Interest
expense
|
19,262
|
|
17,865
|
|
55,846
|
|
52,119
|
One-off refinancing
professional fees
|
4,126
|
|
-
|
|
9,312
|
|
-
|
Bad debt
expense
|
-
|
|
15,834
|
|
-
|
|
15,834
|
Loss on sale of
securities
|
-
|
|
12,906
|
|
2,357
|
|
12,906
|
Loss on sale of
vessels
|
-
|
|
-
|
|
-
|
|
36
|
Realized loss on
derivatives
|
-
|
|
1,196
|
|
-
|
|
4,494
|
Unrealized gain on
derivatives
|
-
|
|
(1,581)
|
|
-
|
|
(3,719)
|
Adjusted
EBITDA(1)
|
$79,753
|
|
$75,504
|
|
$230,362
|
|
$274,713
|
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, loss on sale of
vessels and bad debt expense. 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 nine
months ended September 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