Athens, Greece - February 16, 2021
Danaos Corporation (“Danaos”) (NYSE: DAC), one of the world’s largest independent owners of containerships, today reported unaudited results for the fourth quarter and the year ended December 31, 2020.
Highlights for the Fourth Quarter and Year Ended December 31, 2020:
• Adjusted net income1 of $47.8 million, or $2.29 per share, for the three months ended December 31, 2020 compared to $38.0 million, or $2.01 per share, for the three months ended December 31, 2019, an increase of 25.8%. Adjusted net income1 of $170.9 million, or $7.18 per share, for the year ended December 31, 2020 compared to $148.7 million, or $9.17 per share, for the year ended December 31, 2019, an increase of 14.9%.
• Operating revenues of $119.6 million for the three months ended December 31, 2020 compared to $110.2 million for the three months ended December 31, 2019, an increase of 8.5%. Operating revenues of $461.6 million for the year ended December 31, 2020 compared to $447.2 million for the year ended December 31, 2019, an increase of 3.2%.
• Adjusted EBITDA 1 of $83.0 million for the three months ended December 31, 2020 compared to $78.1 million for the three months ended December 31, 2019, an increase of 6.3%. Adjusted EBITDA 1 of $318.3 million for the year ended December 31, 2020 compared to $310.6 million for the year ended December 31, 2019, an increase of 2.5%.
• Total contracted operating revenues were $1.2 billion 2 as of December 31, 2020, with charters extending through 2028 and remaining average contracted charter duration of 3.1 years, weighted by aggregate contracted charter hire.
• Charter coverage of 94% for the next 12 months based on current operating revenues and 91% in terms of contracted operating days.
Three Months and Year Ended December 31, 2020
Financial Summary - Unaudited
(Expressed in thousands of United States dollars, except per share amounts)
1. Adjusted net income, adjusted earnings per share and adjusted EBITDA are non-GAAP measures. Please refer to the reconciliation of net income to adjusted net income and net income to adjusted EBITDA.
2. Contracted revenue as of December 31, 2020 on the basis of concluded charter contracts through February 15, 2021.
Danaos’ CEO Dr. John Coustas commented:
"In the fourth quarter of 2020, we witnessed the most outstanding turnaround in the container industry for as long as I can remember. Market participants were caught by surprise as the chronic underinvestment in capacity coupled with a sudden resurgence of demand created a spike that drove container box rates to all-time highs. This led to a massive increase in our customers’ profitability and significantly diminished the counterparty risk that was so prevalent at the end of the first quarter of 2020. The charter market, in turn, rapidly strengthened, resulting in decade-high charter rates across almost all vessel types.
Now everyone is focused on whether the current market strength is sustainable and for how long. Fortunately, incremental vessel supply will remain low for the time being. Although there have been new orders placed, the current orderbook is at historically low levels. Since there is a two-year lead time for new orders to hit the water, supply growth should be moderate for the next couple of years. What will happen next depends a lot on the environmental initiatives, regulations and of course demand.
As far as Danaos is concerned we experienced a strong quarter, completed delivery of all contracted vessels, realized significant gains, displayed exceptional rechartering performance and entered into agreements for a very important refinancing.
This quarter we saw an improvement in Adjusted EBITDA and Adjusted Net Income compared to the same quarter in the prior year. This improvement should be even more pronounced in the coming quarters as new contracted charters at significantly higher rates start to contribute to our top line.
We have concluded 27 recharterings over the past three months for periods of 12-24 months at rates between two and three times the rates of the expiring charters. In doing so, we have practically covered 91% of our 2021 operating days and a significant portion of our 2022 operating days. We currently expect revenue in 2021 to exceed 2020 revenue by at least $100 million.
The recent performance of both ZIM and HMM has resulted in a $23.8 million increase in the recorded value of our bond holdings in these two companies, which increased in value to approximately $63 million as of the end of 2020. The ZIM IPO has also provided a marked-to-market value for our 10.2mn shares in ZIM, which have a value exceeding $200 million based on Zim’s closing share price of $20.12 per share on February 12, 2021. These shares were valued at $75,000 as of the end of 2020.
We have also recently concluded a $300 million bond offering, which was over three times oversubscribed, an extraordinary accomplishment for a first-time issuer. These funds, together with another $950 million of bank and lease financing, will be used to refinance most of our existing credit facilities and form the basis of our new strategy as we will not have any maturities until 2025.
We are happy that the market has acknowledged our accomplishments, leading to a dramatic outperformance of our share price as compared to our peers. We are well-positioned and committed to continue to take actions to create value for our shareholders."
Three months ended December 31, 2020 compared to the three months ended December 31, 2019
During the three months ended December 31, 2020, Danaos had an average of 58.5 containerships compared to 55.0 containerships during the three months ended December 31, 2019. Our fleet utilization for the three months ended December 31, 2020 was 97.9% compared to 97.0% for the three months ended December 31, 2019.
Our adjusted net income amounted to $47.8 million, or $2.29 per share, for the three months ended December 31, 2020 compared to $38.0 million, or $2.01 per share, for the three months ended December 31, 2019. We have adjusted our net income in the three months ended December 31, 2020 for amortization of non-cash fees and accrued finance fees charges of $4.6 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.
The increase of $9.8 million in adjusted net income for the three months ended December 31, 2020 compared to the three months ended December 31, 2019 is attributable mainly to a $9.4 million increase in operating revenues, a $6.0 million decrease in net finance expenses and a $0.5 million increase in the operating performance of our equity investment in Gemini Shipholdings Corporation (“Gemini”), which were partially offset by a $6.1 million increase in total operating expenses.
On a non-adjusted basis, our net income amounted to $43.2 million, or $2.07 earnings per diluted share, for the three months ended December 31, 2020 compared to net income of $33.8 million, or $1.79 earnings per diluted share, for the three months ended December 31, 2019.
About Danaos Corporation
Danaos Corporation is one of the largest independent owners of modern, large-size containerships. Our current fleet of 65 containerships aggregating 403,793 TEUs, including five 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".
Danaos Corporation press release