DAC - Earnings call transcript Q3 2020

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Operator

Good day and welcome to the Danaos Corporation Conference Call to discuss the Financial Results for the Three Months Ended September 30, 2020.

As a reminder, today’s call is being recorded. Hosting the call today is Dr. John Coustas, Chief Executive Officer of Danaos Corporation; and Mr. Evangelos Chatzis, Chief Financial Officer of Danaos Corporation. Dr. Mr. and Coustas making open be comments, then, and Chatzis call some to will the question-and-answer we will introductory session.

Evangelos Chatzis

Thank you, joining for thank and operator. Good us morning, today. everyone, you

you Safe measures continue affect remarks adjusted earnings to Before to evaluate and adjusted today, and included the statements and results as net disclosures. we in factor obligation These results review future from financial no measures, everyone we refer forward-looking quickly encourage materially our we actual that may in are to want our appropriate, EBITDA we and business. our feel differ to Factors projected financial begin, that these EBITDA, certain to Harbor undertake and I where that as that to note management’s discussed non-GAAP also update detailed of materials. GAAP income those to risk of will with this could release forward-looking statements measures morning contain made might Reconciliations we remind financial are non-GAAP them. filings today. Please such and are accompanying SEC,

overview let Coustas, who broad to me over quarter. of Dr. the turn the provide Now, will the call

Dr. John Coustas

call our thank and all Thank Good you, XXXX. Evangelos. morning results third for to joining quarter you the today’s discuss for

when multiyear has onset pleased pandemic, vessel volumes idle. in the The manage Volumes profitability, highs counterparty significantly our rates customers’ charter customers volumes increased across companies the mitigates capacity have drop time Notably, stabilized strong We of our risk. expected. freight market addressed and stood all our have multiyear than trade on in recovery the Danaos rates which improved particularly as North-South ability the a have at to eastbound, staged profitability at are global the sizes. of most liner leverage recovered in greatest of larger is XX.X% contracted increase market Container performance cash All close and in the Transpacific the consistently types. lanes, vessel has to reported pressure faster smaller quarter. the charters. sizes, to to consistently has which intra-Asia or remarkable short-term May, and alleviated of vessel of have as flows vessels the swift report the the during charter are in the improved, all has this vessels our this Company’s From Time fleet since in end rates. the that trade been on amount dynamic. been market time segment chartering quite perspective, of for pronounced

uncertainty revised recently significant global spread many remains, Although its swiftly, cases, GDP increasing COVID-XX rebounded countries estimates and market has XXXX of see IMF GDP as particularly upwards. has

equals or GDP the concentrated goods X.X% XXXX, growth to levels. effectively X.X%, IMF thus compared rather XXXX, The forecasts which which pre-pandemic services, of For benefited been containerized recovery primarily in has trade. than has growth global of far

and volatility period. XX flows the XX% high of execute our days provides to of XX% revenues terms of charter significant our during we into strategy months. this well in coverage We in due near-term over continue from insulated to cash This our visibility next operating are and terms operating

smaller vessels. also through leverage presently some market We the have strong to our

in world a We with credit first are both, as growth in deteriorate. to maintain purchase built two digits major charters also XXXX, the medium-term to X,XXX TEU which in percentage conditions supply a Consistent company. are expected to time and momentum will with recovery with environmental of December in cautiously is a in we be and vessels and the vessels a liner optimistic on reduction speeds XXXX the the healthy. agreed anticipated side or new us be combination initiatives, are XX an funded due help cash between single fleet with The if currently is Combined strategy, to market XXXX, delivered about help will facilities. container our various to bring for January outlook swift about have supply Tighter to two-year years. market the outlook. the These contracted orderbook of

Company’s generating fleet With have our $XX we shares, mark. in flows or first million these position. million backlog and the shares, billion for the new us In of opportunistically practically to aggregate tripling negotiated buyback deliveries, from a program. time This enabled liquidity our our will original the meantime, an for $X.X exceed the XXX,XXX outstanding charter XX.X% TEU X,XXX,XXX cash are $XX.X repurchase healthy of strong privately price transactions,

holding the to decisions per expectations about will shares, on market the share these value our without making call and results with With of for trading strategy you increase that these back maintaining the and of who align of the a the uncertainty our hand of ensuing liquidity. economic metrics financials valuation our Given through In Evangelos, quarter. repurchases nature the shareholders. continued and that the financial light prior coronavirus to I’ll focused we allocation take impacting and conservative owners remain pandemic thoughtful to duration deliver capital the profile over Evangelos? recovery,

Evangelos Chatzis

today. million to everyone the review the million to quarter quarter income and of you call net Thank to $XX.X net Adjusted third higher quarter for briefly thank income results Q&A. good and when for $XX.X the $X.X will compared the of us by for XXXX. million, the adjusted is you, of I and morning for current open then again joining

before third the for to recognition million Most installation million current outstanding million in increase of quarter in increase revenues XXXX, $XXX.X quarter to between the in scrubbers, debt step-ups $XX.X to the by by $X.X million addition mainly this to decrease as also cost, X, on million accounting. increased three in of million an million million would quarter from This XXXX. $X.X in by Interest million previously contractual of million. fees This our offset of count attributed of $X.X from to decrease one Adjusted $XX.X like and the the million increased decreased decrease lower amortization million XX.XX of of two that buyback the million have revenues, note share the compared income accruals and $X.X million improvement while $X.X in U.S. the offset $XX.X outlined share $X.X in of to $X.X deferred operating a been consummated the expenses current earlier The $X.X decreased and to average million a following has and a and current was the quarter by cost number our expenses. still remains the per reasons $X.X quarter, certain following October total our forma million equity in quarter quarter. XX.X the adjusted in $XX service reduced million $X.XX shares, to third performance $XX.X Vessel a X.X% quarter concluded share attributed in charter to due in million With net in of non-cash in We XXXX, million our periods. revenue over of XXXX. by $X.X in the decrease to past our as million in compensation. as revenues expenses basis. million that $XXX.X million stock operating in announced Gemini, in We operating pro approximately to of vessels to revenues fleet, by months $X partially I to XX by net million day the Pro share is on in to the and X% in million to finance quarter call. $XX.X of third average long-term the this third $X that to you operating current a decreased to ready adjusted XXXX. revenues to indebtedness for GAAP fleet, quarters increased this vessels industry. operating as most a of are for $X,XXX rates, between lower million our a Operator, result compared of amortizations on increase like EBITDA result third daily attributed call of increased the earnings compared expenses, we a noncash first by specifically, share by quarter forma to of increase reported increase quarter that would $XX.X quarter, would current vessel per per based is increase chapter average our result in the or under operating investment increase current buybacks, current in million the partially the $X.X re-chartering Q&A. excluding $X.XX the of thank for expense, from per of XXXX, $X,XXX XXXX reduction the is our the the part two recognition in due third G&A the competitive quarter the quarter the $X.X to for listening quarter increase now $X.X the in finance this a of this day finance to in $X.XX, of to open cost

Operator

[Operator from first question Jefferies. you. with Thank And Instructions] comes Yes. Giveans the Randy

Randy Giveans

Yes.

That’s the million way congrats foremost, and first we share like obviously, So, XX on it. repurchase. the

either token any would be on are than further multiple that? eventual So, timing your then, what side, And clearly, is for repurchases of about from That what dividend on said, other maybe this dividend, larger years. thoughts share [indiscernible]? the

Dr. John Coustas

that Exactly, of a a as with our purchase, kind we value to mean, we of share maybe delivered for shareholders years. you have of number said, I have lot

the As always value time I this I back moment. course is say, it’s the no restating share we’ve about created far of repurchases, through thought our not there really, as the at said, the It’s -- dividend is think, concerned, as minds being specific, dividend. way that in let’s of for

always been our it strategy. has However,

growth We are doing kind shareholders. value moment. the believe we thing at going our we’re important to deliver to that conservative. through to well this And be And is pretty of

Randy Giveans

or remaining authorization to repurchase that is now? Is down share there zero a

Dr. John Coustas

mean present, I are purchases. not No, we further any at contemplating

at way we that of Since where I did further any being, buyback. the the we still calculating, the pretty almost out buyback. we price XX% which time share despite And purchases the up for from say, let’s the is think, we’re the share price have levels. I fact course from, NAV, that, good share we’re temporized did mean

Randy Giveans

[multiple And you some us we $XX million is meaningful… it. Got mile asked then, for a gave speakers] the pretty but

Evangelos Chatzis

that. add to Just to

is investing the event. right? acquisition which two I business, TEU containerships, of in the now we X,XXX significant We’re pretty mean, have

Randy Giveans

going I Yes. next. was to ask that

delivery the announcement, of color do can made following you these both? that add to acquire your are more in kind keep from them you How vessels, there, why around going an January? And to some fleet so combination you are more, view If option, attractive? ones the were of sales looking you then, or

Dr. John Coustas

If be there any we in might out the further are opportunities, market.

believe ships there are They available are are now vessels news, we ship pretty because in we up. prices -- the the substantial. by ships. we of And first these strategic the However, major all, very TEU this for flows of longer involved picking of that confirms are in X,XXX belief kind type from -- of Post sector. our value there really the cash as big and as also MSC these prior the few saw bought kind the ships really already similar for most one that both of liners of one went available and and between sale, generated X,XXX TEU size in the the has all intermediate the out, which kind ships Panamaxes tonnage also liners class, And the

Randy Giveans

more for just strong. obviously guess And market, question one I the at then, right, looking me, very

the of container fixed So, for operating rates? rates is in you to how rates fixed this secure or the I able time days, next three maybe XX% see that rates? strength time periods operating have -- containership months. some over days charter six-month of XX time, has record-setting to been higher Have only over charter seen impacted you extended

year-end? into materially increase this will So,

Dr. John Coustas

rates getting, which that have rates reporting these market And the is Definitely, we are are are phenomenal. today in that charter seen since pretty the not optimistic. we XXXX,

XX In terms months. see mainly of duration, committing we really for liners

most we new So, these to going that which levels. we the doing that all for with months, in now, practically XX -- most and are some discussed at very we’re which XX are XXXX are charters for means charters, of are going look to months healthy of

Randy Giveans

and here months lot know in of much a expect usually next some weeks the normally even fix near-term or one of these vessels? advance those a into how I those few right you And you fixtures, ‘XX. early Do and have of to expiration lot expiries prior fix you to do in

Dr. John Coustas

pretty QX worked maturity the vessels are -- some to up of has QX in that until means charter rising that maximum vessels the really they delivery which good in well. why in earlier we kind we mean, kind will realized Well, think in going that mean probably the I rates, window are we closer are an And had the go market, fix charter of today that order are done, of not waited. were in at and That’s lower to the Charters their exactly keeping strategy now if under head we as of we because had which this of ships more the them. advance I to I much parties, is fixtures going to waiting XXXX. are because head as

have So, then. we’re until going activity of to a lot

charted seven for or We ships a year about already have more.

Evangelos Chatzis

Randy, it’s being $XX,XXX ships plus here, important range call in in are things. note $XX,XXX day, the and $XX,XXX of charted between to coming charter, to on all that a these range And are and let’s they’re day, the depending these a size and it $X,XXX off

we’re about improvement material recharterings. talking in So,

Operator

with And Chris question the Wetherbee next comes from Citigroup.

James Monigan

Hey, Chris. on previously. follow acquisition, TEU the just vessels the you’ve X,XXX you guys. I wanted James on to mentioned two for -- up

comment Just deeper into want a kind vessel dive little bit prices. to your about

reached trying se? outlook understanding a for or tightening, transactions sort your is is to sort of necessarily Just -- sort of is attractive? market wouldn’t this per want be market see get any that additional where deals, the to And really where transactions market point do opportunities the you more additional is and the for of

Dr. John Coustas

considerably thing exactly has from expectation, that going it the because sales grown said, not only the up, up, actually expectations Well, as proved have price and continuously rates I going the up, market. but is vessels are

we by like ships are XX%, chase really XX%, we something follow, And, XX%. So, prepared see prices to up going to easily not upwards.

way We existing to the have fleet. will money substantial We forward. want from already make of recharterings And in the and our concentrate we vessels. a conservative some be just

James Monigan

And also multiyear brought with wanted occur? are another for sort point the point of re-charterings rechartering gotten touch or Got coming where charterers And point sounds up. that like where was about we haven’t on balancing is to gotten really When what of go through it, But or makes to do tender, rate the you of pushing sense. charterers it period like, -- on that’ll you to then, to we sort the are as think and you rate? think open charters. term -- sort upcoming focusing re-chartering have

Dr. John Coustas

up. leave and is no service he all offer go respect, will And and all, keep keep course, unable happening first their client, is all their moment, they what of because are else. clients to going you if maintain to one to at want want them business, quite a knows they to really space, somewhere Well, this unexpected. this demand was of In how charterers, this

a services. to how they trying let’s and they of lower So, that’s lot go some offer so to decide, that’s running in kind means going will to build, of market, are major It’s charter say the that a which is it mean, kind are at will to at out. the why long-term, is, of if balance of of going and vessels that multiyear spot that course, rates procedure shortages genuine, try is tonnage. as vessels. can And of course, I why moment that’s many to or the up, there charterers secure either keep paying charters it’s stage, rates the justify work they on At they and it a that exactly rates acquire involves money, market

James Monigan

or catch understanding then, sense. up Makes we third of last just any the in that sort that the And expect of -- sort a reoccur happened of one, fourth to in amount real there quarter was quarter, disruptions was that shouldn’t OpEx quarter? quick the

Dr. John Coustas

anything. really wasn’t There

cost the Of example, of is for have provided have and increase salary that the the an unable because, incentive, that in make kind exceed move is XX% any were terms anything them that really their generating we Otherwise, we it working difference. crews due will from people problems and ships. to COVID not normally. some for But, things moving course, significant to significant increase in around, of are

Operator

you. Edge. Thank from next And the comes question Investor’s [indiscernible] Value

Unidentified Analyst

What looking you My question comment regarding the follow-up financing you Congratulations you vessel of or first for do the at, acquisitions. provide kind quarter you’re the get? repurchases. share those? expect expect get and a very loan-to-value to some you the for solid Could to is

Dr. John Coustas

in to typically. price, purchase of ships XX% These finance general XX%

Unidentified Analyst

second sell low. you’d was And question, I my to are values if I midsized wondering, assets? those mean, for containers willing rise, And of asset couple currently be to were very

Dr. John Coustas

I money market. vessels all container we overall, of an is, the so And the assets. more not the business, course, And like prices to be for replace hand, we of have in make think these thing able vessel will that is The can not risen. opportunistic much cetera. on by example, running the et industry bulkers, other high

secure the companies. are get and and Here, and our charters, our multiyear position, also have to we we because premium liner we from service customers able charters

shipping play. never asset been has container an So,

Operator

turn the or comments And question-and-answer does call closing Dr. Coustas I any like session. that the conclude remarks. back would to for further over

Dr. John Coustas

a look joining next hosting for and We earnings forward Thank Have in you you your conference all on interest continued nice call. to our call this our story. day.

Operator

to would for participation. everyone today’s Thank teleconference. their Have like afternoon. wonderful a concludes thank you. This We

Danaos (DAC) 6 Nov 202020 Q3 Earnings call transcript