DAC - Earnings call transcript Q4 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 December 31, 2020. [Operator Instructions].

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. Officer Corporation. Financial Chief Chatzis, of Danaos Evangelos Dr. Coustas and Mr. introductory then a we will session. be open and some making to Chatzis will comments, the question-and-answer call [Operator Instructions]. I over the to would Mr. conference now like to turn Chatzis. go Please ahead.

Evangelos Chatzis

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

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

John Coustas

rates as XXXX, demand in spike fourth participants a led risk strengthened, the of in was the of Market as to of drove types. the created Thank vessel in charter rates quarter a by can container across long first In of underinvestment in profitability as capacity counterparty prevalent sudden and XXXX. we the that caught container all-time you, for increase resulting I most were chronic with Evangelos. morning, This Good market, turn, a The significantly turnaround so that rapidly at almost box end resurgence surprise industry the quarter all diminished the witnessed massive coupled outstanding highs. decade-high our in everyone. the customers’ to remember. charter

market everyone on how Now focused is long. the sustainable for strength whether and is current

Fortunately, will for the being. supply time incremental remain low vessel

new demand. Although historically book Since lead next orders depends time order couple should be is the is been new on hit the supply course next will What of the environmental at a of have there low initiatives, the growth lot placed, current for regulations levels. orders for to moderate there years. water, two-year a happen and

experienced a delivery performance as is into important vessels, a we completed entered agreements As displayed contracted strong very of gains, far quarter, concerned, refinancing. rechartering Danaos all significant for realized and exceptional

adjusted This saw the be we improvement in higher at adjusted income should rates significantly start in compared quarters coming the to quarter improvement EBITDA net same an pronounced contribute the prior top quarter line. in year. to new our more even as This and charters to contracted

charters. the to operating In days. of rates XX% over were bond on We ZIM, operating We’ve XXX revenue concluded value our of the February and ZIM’s closing portion valued our Xx $XX.XX expiring we between expect on covered million Xx be of rates with facilities months which to practically shares in million our over and three XX the lease for in Xx XX least in a significant bond oversubscribed, of million doing XX together recharterings periods share of have of our XXXX sometime recently at was for concluded financing, exceeding We strategy end in provided XXX at The resulted in $XX,XXX form and a in issuer. and share our books accomplishment at the XXXX. days the an months XXXX. have will so, maturities two shares have which a of bank XX.X our of currently past used XXXX These as by of price as value basis end holdings recorded of of HMM IPO also has extraordinary ZIM not offering, of the ZIM These based refinance revenue XXXX XX.X in any both in to for increased million increase also approximately a a has performance have and most XX exceed companies, to of The a will these of XXXX. which new existing XXXX XXX $XXX XX, a million. our million XXXX. value as another value we until first-time credit the recent funds, marked-to-market million

that happy are outperformance leading our our to of peers. compared price dramatic acknowledged the share our a accomplishments, market We as to has

you We with Evangelos? are And shareholders. some I financials. call our well-positioned the to actions create and take guide to now, of over committed Evangelos turn to to for value back to continue will the

Evangelos Chatzis

outlined reduction fourth due of million Q&A. X.X us $X.XX fourth X.X the million X two XX.X in X.X of X costs the million the stock-based expenses operating compared two in by Interest between due or on compared compared the in good review XX.X our investment This periods. competitive non-cash X.X% due to quarters still mainly adjusted morning were share I average and to operating of results the reasons to current the acquisitions. income fleet will XXXX finance a the XX.X current the million costs charter to current recognition the million XX across result the Web in we XX.X in adjusted result X.X $X,XXX debt of revenues partially posted two a a the the of already CEO in between net to excluding in in to outlined our of This on the Adjusted laid adjusted significant or review and to operating almost current to year in this X.X at to John, although revenue recent of the to like offset the fourth for values is the in of it. per million increase the equity quarter of utilization decreased specifically, open as addition attributed million and million EPS increased remains A expenses in improved million of XXXX, in quarter of This ahead out increased the the to year highlights $XX we non-cash decrease result one Gemini, vessel fourth finance for all you, fourth in reported this expense, our with the market results are; and the or revenues improvement million our XXXX. million brokers and a revenues in from vessels rates the the XXXX, XXXX the today versus daily quarter from offset valuations premium, earlier XXX.X quarter by U.S. X.X million do encourage million result number full fleet fourth to average expenses, XXX.X X.X that current of to our board More in to briefly reported to performance million you few of We most value operating is increase $X.XX average our accounting. wherever total with higher fourth million from by of the by quarter to the revenues under million agreements. GAAP fundamentals in for in charter-attached increased This over of per the XX.X of been million quarter quarter as the per as mainly quarter the in not for vessels was XX the to higher XX.X for to X.X XXXX, call. what by XXXX. operating by is share to and increase of provided asset by call. million XXXX, is the the quarter charter the a quarters investment by our of fleet X.X of of decreased two a industry. four of the basis note G&A end quarter and a quarter again would compensation. accordance analytically in that in XXXX, EPS quarter fourth of million increase of by a a capture improvement $X,XXX our day In has increase increased and fully charter fourth fleet, quarter in between XXXX. of higher in quarter of of X.X indebtedness the four lower amortization today, quarter while accruals, EBITDA the Vessel in that vessels day the fleet XX.X and applicable, per cost cost, quarter in mainly our by while improved in X the improvement attributed to call million have quarters million improvement the for million on earlier X% service our by recognition in site, Thank will calculation current revenue operating and to fourth everyone. X.X million then a million billion average our decrease the of million decreased increase finance is on presentation free size as due independent compared

shares it the Stock our now New ZIM, shareholding and at of was The the ZIM valued time improved. of also also same HMM We shareholding million, are bonds Exchange. visibility today the in value on now as York is before trading at since the have mentioned the XXX ZIM while have valuation on

to net XX% of of at of value translates On the asset XX.X the stands back asset Gemini million, XX.X which our values, value of million. stronger participation a currently

all or asset calculate basis $X,XXX the share. On our of at million per we the $XX.XX net currently above, value

laid over significantly of arrangements within three vessels On for rates the charter each we than higher improved one we analytically the XX side, have months, the And out at operating investment past them. our presentation, fixed previously.

and in our currently our our As XXXX revenues XXXX. open which overall total X% a at of revenues of billion we contract still at listening for versus expected is for I X.X stands exceed XXX to alone to backlog supply. improvement this marginal for revenues say, also million improved part with to increase and improvement call. have this stands XXX like higher these XX we [ph] call Such it expect days Q&A. to is now fixtures, already result thank We operating million, than XXXX. would of today contract XXXX typically you With Operator, ready our in associated are there Needless the take is to to that, cost no to million down. first our XXXX, of in open

Operator

will Chris question-and-answer Citigroup. the We And first the now [Operator session. Instructions]. Please Wetherbee question with comes ahead. from go begin

James Monigan

for James guys. on morning, Chris. Good Hi.

your be Chinese market, if are you What little that helpful? Just wanted I provide could rate indication a to color the market, get chartering seeing will the any view the New you what Year. in Panamax more Also, post that you're indications Thanks. seeing it also in would on think on environment soften?

John Coustas

is is slowed strong time the definitely looks doing that what match. let’s at is for happen now there down. today even tell I what's in, is has the to I I’m tell previous time the every of but levels market Practically are spring There and strong whole because still entering vessels new onwards than Chris, you you only also market are this continue for supposed the in it going also can like being no will be demand strengthening. optimistic. higher the but fixture a to say, year, be very to cannot really we kind industry we personally that the The thing are one. the year's to period

James Monigan

to that it's it. that are, capital? given And centrally think XXXX, attractive vessel opportunity you essentially think a be of market you or and might S&P an of in that active do where in the values where Got something different still is use

John Coustas

like for last ships the the don't almost the and up. in the in bought pretty price hard we've now we to so. It's or honest, pay be market To market the year double chasing that go

to But for So, think course, move. will reserves your be looking, keep be any opportunities. period we of more ready of next of to for on a time off-market beef this I honest, up and the interesting is to cash

James Monigan

the of to and the wanted capital also I touch it. structure million in XXX issuance Got on unsecured.

you're of Just balancing the are kind one thinking understand in move sort about on you and how thoughts get if the you just and how moving to the to wanted wanted bank are capital forward about structure structure from away that with and thinking other, to towards long-term bonds capital debt, your issuance? more going of

John Coustas

more bond we that amount preparing of down, What and to find. to the harder are only if more really market a recover. existing clients have also with -- reliable have one is end have conservative the capital then bank is the that, could harder due seen is Yes. until that going is one for each because And to getting getting We actual but facilities shipping. source, And our wants were really bond XXXX. banks not and the are [indiscernible]

this order well leeway. lot a make move had we've positioned. But in to we be decided to So of

think to will and significantly our we don't wish advantage all think going forward. not course, our one. deals in for competitive we costs our performance to it the of with strength be in kind us which it and of really capital – on lower But do I the market, this And bond be markets, the that of there can structure. will borrowing able large be only to the really banking I will give always the as part depend

James Monigan

it. Got

amount a essentially you'll you maturities capital we fairly more of of saying are your issued expect So or portion to that be sort a to of time? and sort that bonds kind way targeting unsecured of where maturity about that of should a of bonds think with over smoother routine to less Is be expect structure think sort greater schedule? you're and the sort of moving

John Coustas

do right. whatever cost capital, will We to to have the we of do optimize

successful we bond time issuers, a -- was very first As this issuance.

market and better, time going sort the issuer down. we of the by goes knowing starts become and expect As a start them we seasoned to cost

us of relates most with will mix said is be and our is sort expect get before, this of these will flow opportunities. optimizing profile what to performance, debt And decisions made a place. We better profiled have and how free competitively because to all contracted, also priced. will deploy it be unsecured, and But there debt again, costs very because always basis your I cash secured we available will because which secured between of it, you be And is on the is gradually growth as that, a important, upgraded. of to pursue

James Monigan

Got it.

cost there And all the buybacks that for of the And just the about you're a given dividend is so given sort how just that that gradual improvement wondered dividend? debt versus side, understand me. thinking and of to balancing also you're on be will how

John Coustas

expect consummated Board as first far we April. in soon So is dividend which the this as the as is that we thing will as have concerned, financial discuss transaction, the

we refinancing and would So ahead. will call where a have the a path our on the completed by have we will earnings about next clear be very decision Board dividend our

James Monigan

you. Thank it. Got

John Coustas

Chris. Thank you, Okay.

Operator

comes with Please The question Jefferies. Randy Giveans ahead. next go from

Randy Giveans

it gentlemen. going? How’s Hi,

John Coustas

Randy. Hi, you? How are

Evangelos Chatzis

Hi, Randy.

Randy Giveans

snowed Houston, but in little all doing A here Good. I'm in right.

a quite turnaround first since share overhauling pretty your been time year, being a sheet, smart but this prudent there. decisions, obviously, the congrats lot of here last year doing on driven, So, a obviously, the to so chartering, lot that management balance pretty has repurchases, also market remarkable stellar

questions. Now kind of couple ahead, a of looking

balance substantial than the I over you sheet 'XX in package million stronger and more With in refinancing XXX optionality, revenue mentioned comprehensive flow, think cash and the 'XX.

right? competitor was much on is LNG either from smaller Why grow of of kind on of or older not? looking larger, why transactions? kind focusing focusing Obviously, those new So, you do where Danaos at powered one tonnage is here? where newbuildings, another much So

John Coustas

returns. both Well, we have large at transactions. looked the from ships of very equity produce these The transactions small extremely

We we have competitive, even company’s tender. and themselves, company the And in decided do end, although huge more participated margins. also to major felt another [indiscernible] it really the liner they because had liner

let's years -- XX are -- practically We between, be it to start On the they're on the much. buying, vessels have do all it's it's when have the let’s them. to old, that say, going strategy with like vessels vessels, old practically maturity prefer XX, XX, to we done whatever vessels too with be, say to say, after bit of bought gamble let's have as the XX bought options years going to we the a other we that we younger want gambling to somewhere maximum when

said, cyclical no a balance I beef the doesn't our is to sheet. is continue is. cycle At this to are industry. matter As up make we It shipping moment concentrating where sense investing

free As same let’s facilities year time could books, in going we to of through well cash the and all bonds, we XXX at the know, of in say generate like liquid are and this million by from new assets we in we with end. have be shares assets flow the excess our that with apart that kind the very sitting

see to what is back prefer we So, and happening. sit

We and on the we are environmental and where lot are a head. doing to going of research work issues

going sure, for the keep buying yes, we're cycle. So to just on vessels not market through

Randy Giveans

it. Got

will are of your out some and the HMM the and Okay. notes, what available your were signaling plans the kind ZIM kind cash notes of When viewing are of ZIM kind you I’ve to you next you there ZIM value liquidity how on have extracting here, on the around the assets alluding and notes, shares a collect now, of right? got other short-term question you shares? what

John Coustas

sell bench liquidity. a within also very we bonds as have with concerned, at If bonds wanted Well, bunch. I require ZIM we this discount, these a most they at could wanted we liquidity we the if small have year. they as I HMM, said, first that think of present, far all, the are massive as probably the really

the as consider far we options are shares the lockup after period. As will our concerned,

We XXXX. presumed shares are in And companies' given holders during natural not shares. were us of these liner restructuring to

think the to decisions it options. say we time. have until taken. some partner We'll at in and period projects are we will cash, [ph] share, ends lockup then So, will reevaluate about for no we If realize need we our and we or let’s need that the there wait

Randy Giveans

All on dollars sense. following timing announcement some percent mentioned it that of like Sure, call guess you would And an of terms Is in of last or How we question, May. likely makes dividend right. either XQ maybe there results, in should XQ kind floating? the targeting time? be about are you return at that? think kind or that amount fixed yield I

John Coustas

general, the In going dividend. to are we to definitely strategy -- fixed to The decide. above will levels, something going that be have Yes. is which is has need Board stock the been the

as On other real you in play. hand, not we the are have seen,

in a there proven that our do for [indiscernible] demote play. are will but whatever hold have we and of that we And, And to dividend certain our course, not have shareholders, the We possible institutions dividends. are equities with of increase number also will it a reward shareholders extent, that growth pay the done. because

what think decide level, Board going to the I above it's the So, will be.

Randy Giveans

Got The it. X That's to know fair. from gone there. XX. And nitpicky questions some I stock’s

doing, good keep you're whatever work. So up the

John Coustas

you much. Thank very Thank you.

Operator

Omar Please question Clarksons next comes go with The Instructions]. [Operator Securities. Nokta from ahead.

Omar Nokta

comments. also I Congratulations in moving you. turnaround a and real Randy's right the direction. on company echo the such Thank

with up the Q&A. obviously cash also balance you've collecting more? to the evaluating just recently you moment? direction, worked come you of know low there expand touched Are moment. and in and basis into? out. free a that a your bit or just say a going stay in talked then whenever the I Is that see sheet, and see opening for that going market the buildings long the the you that back S&P Danaos’ there's at You having opportunities? want nice April. done you that potentially guys nimble way the and you've see do equity you're new dividend returns you forms that direction the quite a your to too leaning did about on ask, I bit contracted beefing at sticking refinancing You strategy, comments you're bided to Do coming mentioned being then yourself in things on there time it's maybe new mentioned of the your more prefer you to opportunities Do patiently being company I'd “roots” term? Can

John Coustas

today they or of let’s providers, that we are they They're we say the sheets. Well, build companies [ph], own well pretty and money. cost hell a go very Omar, newbuildings, in if that in with could because strong benchmarked pretty capital, balance have them if go our are making that as I want situation we of decide then liner tonnage said, to And lot a of exactly to general is low. themselves, any

hand, say to deals, a these On reasonable to say let’s other sometimes let’s the it's be return. able do

go to amounts XX% that way. It's going need a You extreme even leverage, of different or completely to more. strategy

Evangelos Chatzis

I do, end point start may their is there's be if newbuildings, can newbuildings, in be be sheets. low hope there some will And on add, core people they book be if unlock what opportunities But some liners What balance [ph] forward. will at may And not themselves, the going higher to is leaseback Omar, assets And them right. course young order it alternatives to they so not orders of just may but on very they may and even very order right. big it's build but want to be soon, of consider ships assets saving not the the there for size it's they spectrum, ordering, and cash cash which that usually going of themselves. the we

our threshold. of message. not sake meet to that enter we is projects the do going grow provided It's return We're for growing I present transactions will So expect guess to themselves. just into we we the

charter, gets of stuck and other short-term not returns on that a to would which good the managing offers value We're end and of the then equity. a residual acquire mindful ship high mindful with value of the going impair We’re on risk. returns cash equally cash

view that's how we So growth.

John Coustas

coming are midsized And very regulations we to up these larger environment might how creaky now been transitional will other And depending have hand, these vessels in fleet. into the But be also, purely up. on a all enough from hand, cascading. other has that we future. in move, feet the we Omar, that the midsized the old on new phase have on flow regulatory And not a the

So it's very who today because going much important be required where will charters to not friendly, that willing larger fleet is midsized the are to they to direct the see vessels. environmentally so and prefer invest build to their in investment

Omar Nokta

that. for Thanks

were it what, that some So it where sounds may like if is X,XXX opportunities jumping call TEU? potentially be to to there you be midsized, in X,XXX

Evangelos Chatzis

Yes.

Omar Nokta

Good. up your All on looking also right. your And on just slides. follow

been And also forward? You at there the appetite quarter, vessels charters now. new moment fixing moment, from mentioned the just vessels get you? that those months, you At own just where a are them liners Is there's early preferring also XXXX, which then things approaching It charter interest are three on that past the over about appetizing. you? good is into you very their to vessels ships really outright. have amount for note XX the looks quite what's think When fourth you that, rechartered they those the the the simply buying of are the

John Coustas

can value each sell PV it In to is for to for we same when of of the their now when doesn't equivalent price, of that the selling have we general the And us make vessel have fix sell [ph] We sense – a today position. to money. vessels. plus an scrap the charters, have even we a higher the it’s the make more any demand can jump market we option

say someone because for with a fix generation, that the are a be just we will the that course, our where for proposition it's down to the of ships such to we that scrap. forward today now, ships we different that practically Of bring number can years let’s who will cash different needed can cash

Omar Nokta

to offered would a if say longer -- there And just charter, year the to of ship be us one that. Yes. if were that difference Can you you discount vessel a there charter put on the three-year on go what sense the question and then or today is give same term? were a final

John Coustas

I least on is [ph] vessel, talking say XX% let’s not think at depends, TEU, of have get could say a that one than XX% are think [indiscernible] ship it the If more year takeover you which if could we let’s what that price. about course, of three-year in you larger I charter for a charter.

Omar Nokta

Got it.

you. congratulations appreciate I’ll Thank it Okay. I over. again. turn and that

John Coustas

you. Thank

Evangelos Chatzis

Thank you.

Operator

to our to concludes This question-and-answer remarks. closing the any back for call would over I comments Coustas Dr. now or session. like turn

John Coustas

call. Thank you continued and shareholders. you everyone for we'll best continue our thank for our attending We your in for interest our you. our company Thank

Operator

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

Danaos (DAC) 16 Feb 212020 Q4 Earnings call transcript