×

Danaos Corporation Reports Third Quarter and Nine Months Results for the Period Ended September 30, 2017

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.

View original content:http://www.prnewswire.com/news-releases/danaos-corporation-reports-third-quarter-and-nine-months-results-for-the-period-ended-september-30-2017-300545826.html

SOURCE Danaos Corporation