DAC - Earnings call transcript Q3 2021

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Operator

Good day and welcome to the Danaos Corporation Conference Call to discuss the financial results for the 3 months ended September 30th, 2021.

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 a we will introductory question-and-answer session. note [Operator please this being is Instructions] recorded. event I call the would to Dr. to conference now like over turn John Coustas. sir. yours is floor the Doctor,

Evangelos Chatzis

EBITDA, Reconciliations financial you where measures release to to note to measures also and Dr. Chatzis, are today. actual review earnings Coustas to Thank you, operator will projected Harbor simply obligation before our morning contain our These statements good this morning, Net want With joining continue forward-looking call business. we to provide non-GAAP thank accompanying could for Factors as and will begin, differ with those Safe broad overview EBITDA the results these And disclosures. financial refer Risk encourage and Please Factor Income to that detailed are adjusted we non-GAAP and no certain CFO. from as quarter. the management's morning made financial evaluate is undertake that results you remarks we the today everyone. the appropriate, filings adjusted to feel GAAP that who forward-looking everyone, materials. we turn in now and included that, of John in future measures Good This over materially and Evangelos of are them. our let discussed that SEC. I might remind we to statements affect update everyone may me of such

John Coustas

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

continues an negative productivity the increasing disruptions despite strength aware to global to Despite satisfy to is everyone and improving. main continue chain vessels by [Indiscernible], land-based available effects market, extremely demand, signs no other the are to efforts disruptions strength. that to levels and positive its had contributing that unabated. lack chain, which such supply participants our in supply This in certain the of of all The ports the from the that are conditions well-documented are situation, factors of effect alleviate global infrastructure. demand, there are low We

vessel lower XXXX, actually the not not least XXXX forecasted, are from XXXX, new than any difference although, there an as vessel in will term. deliveries in respite, be effect expect increased reduction effective of we the are to provided In that expected dramatic Additionally, from be the due deliveries the do supply in vessels front near expect in remains environmental tighten a will demand healthy. do new we Overall, offsetting regulations anticipated to likely supply speed. at

vessels. third the consummated quarter, of with Xmillion existing acquired resources. Gemini, all During we XXX,XXX and the acquisition TEU cash

and income. back record we of have achieved moves, the EBITDA net On these

of catalogs charter our excess in expanded also now have billion We we of and $X chartered backlog. have

as Our share usual to our $X.X is also outstanding. which ownership in Zim, will our although earnings practice, per XXXX, around adjusted for billion contribute

of year Our billion, record charters our The marketable current as to and strategy to Danaos, that Company rates and announcing close several performance our results, with continues deliver the we're cash [Indiscernible] and charters the liquidity existing terms liner securities next still in better closely companies are new years. monitoring lock the years, is X.X insured for to of which credit continued quality is for customers options strong by meantime, average results even X.X for and In $ Danaos in an positive extremely of improve. of duration and is strong for charter

I'll our year, rechartering stellar years. the should that, best our We results we'll support who next for shareholders. in hand the to will quarter. as Once ensure take back are deliver and financials through environment into the to expect to continue you the in for over for market again, will slow the favor, call term, conditions near performance dynamics persist X market With strong possible which next Evangelos, the a our

Evangelos Chatzis

Thank briefly the participants quarter give questions. the the for good will everyone. to opportunity review John. again then and I to results And you, ask call morning

expended $XX our the amortization increase revenues of by quarter, are accounting. expenses. We incremental Most Thus, the the recent for daily average quarters. attributed average increased current income quarter $XX.X revenues offset in in operating increased share, for operating quarter And between and million, net $XXX.X in of capital average a million in million the Revenue of This million the due due then of quarters. quarter of to quarter size to by third liabilities $XXX.X EPS the adjusted compared mainly increased million, revenues million million, of expenses of fleet reporting from vessels in $XX.X in $XX.X per or XXXX. million of third $X.XX by in to that from share, current to million And total $X.XX increase the remuneration. the $XX.X $XX.X XXXX, adjusted the per X the per as a XXXX was EPS finance net result and acquisitions. third the a or million our increase mainly of to adjusted to million a the $X,XXX $X.X of as of X the fleet XXXX. quarter recognition increased of vessel dividend $XX.X $X.X from $XX.X million of is of the of of quarter million mainly COVID-XX day mainly the result increase the by increase in due by increase additions while in as vessels first of result quarter also higher the operating third $XX for quarter, per compared X by current in [Indiscernible] XXXX. to And result higher quarters is to related $X,XXX the to increase $XX.X [Indiscernible] costs fleet, in the during rates million being the elaborating collected between Zim, number of day to revenues expenses million operating specifically, between two increase a our increase $XXX.X vessel million $X in and a partially This straight-line the further cap vessel revenue assumed a

facilities is in the statement increase relation However, of had quarter, increased the of offset debt our average by current such And daily reasons costs, size cost by in been income combined in costs in $XX.X by Adjusted $XX.X accrued million, the operating reduced third XXXX this quarter, still a significantly million accrued as finance decreased. XXXX of million in the the XXXX, of of to current as partially XX.X%, $XXX.X earlier most on in EBITDA increased third million increase refinanced in million to the $X in results recognition by our the G&A in a quarter call. one or fleet. of expense XXXX. interest of quarter, Interest in to our from mainly $X million a third approximately and $X.X accruals the in $X.X $X.X recognition our in increased competitive this approximately $XX and by for indebtedness quarter expense, to decrease interest the by due because credit been million interest an positive million, that a through excluding accumulated result million to remains aforementioned service such X.X%, that management between due of compared to $X.X interest of April. our quarter X two expenses $XX.X of of increased in of to million increase the the the increase the were current refinancing, has industry. accumulated fees amortization, million million outlined to the compared of $X.X The expense in periods,

been our updated website. encourage companies. on have several months, than fixed on [Indiscernible] our We the investor the of vessels uploaded higher over already at also we side review forward few current you the are: but few highlights operating significantly A past has to

charter the investor in and book our disclosure the step-ups has companies. Our analytical presentation contracted on

first As container X X,XXX and ships. of wide-beam acquisition the of that the these consolidated Gemini and fully including a July XXXX, on vessels TEU thousand the of result improved the fixtures, were of

now now the billion coverage, of backlog for ready you charter I this and year X.X-year for duration, for terms open first call. while that, days Q&A. thank would a at contract in Operator contract average with XX% at With this listening XXX% to part Our XXXX. our we're stands already to call $X.X operating of to to like is

Operator

sir. Yes,

go ahead. and will first Randy At [Operator now session. pause we question assemble from our the time, -answer will have to We Jefferies. will question this of Giveans Please begin come just [Indiscernible]. And the - momentarily we Instructions]

Randy Giveans

[Indiscernible], gentlemen. How's it going?

John Coustas

are How Randy. Hi, you?

Randy Giveans

XX% well. you of when in My get the the is, in first you exercised. question higher, options press about number's days covered stated already and XXXX, release Doing assume you likely that have

So, give you like year? for possibility? next do open some of year, X-part It and $XXX fix become can expect is million vessels question when kind how guidance in secondly, you there XXXX, And EBITDA many those? for then next a to seems

Evangelos Chatzis

obviously guidance. Yeah. formally Thank provide last from part, we you, not did EBITDA the Starting Randy.

a report. you we tell it math, be going and of points The is $XXX go [Indiscernible] the our of this you certainty financial And it's XXX. to obvious have say, do next that. quarters EBITDA, That's However, I current, people revenue over kick north -- this degree current year can annualized million. it's have Actual, the great -- margins to given that's in, And number which and is the new disclosed how great, with QX when the quarter's EBITDA let's to relates the that for next that EBITDA. can to up. contracted that going

other this because have quarter, that we earnings The in dividend is that, this Zim. from thing part a is of

ships exact contract yes, re year. year. your have calculate ships. chartering, point, higher " for dividends, XX not XX but But next days, minimum also item, the it would it's as also and for although the a with our -- open, will be I one have consideration taken stated question earnings have It's exercised year. let's - we out of we these ships There to be remain durations. that. the that will and maybe number year point, the of and But to but our But be ought Zim which Next number that gradually we slightly our your on will of if market. out, numbers. you this on don't this ships X the investors review further EBITDA on analytical our this, earnings would for below looking the up it's back themselves. in it's or And we that options a, for from make showing because In into expect are this wish, such they earnings when of all than charters full a open the all that benefit out or is " X very XX% something within contract pointed charter like presentation, are there non-operating say, to pay on ships and assessment part of arrangements the for at or publicly you several cover as cannot taping will options. analysts because want when is X-K, anticipated

on be can their themselves or people they So, may what not up may believe minds exercised. make

Randy Giveans

worth That's $XXX you still the X.X about Balance Sheet side, plus it looks now, Zim, shares like fair. million have then, million. on of And

now. have that, with know the coming in on of And your to What you use other side any so. here weeks do the that you clearly of are on those? liquidity to So, it's And a, with guess, timing cash last term, or I a in war the that, I few excess million you of the trimmed then, growing. here updates sale likely quarters? chest of

Evangelos Chatzis

-- million net John the out the I'd $XX plus for new on cash around X like question outflow the to Gemini million strategy already that $XXX spent Zim, answers in in we have the point Before ships. QX was acquisition

the up call to wouldn't it built was invested been cash we [Indiscernible], [Indiscernible] I'd say. have put but very our have a effectively, cash I bundles So, use that and

have it Of appropriately But Zim going take question. John again, build And far. are will course, we where up forward. capital believe the I'll we we so utilized today, let

John Coustas

actually Zim We Yes. that are the shares believe undervalued.

shares. like, wanted would to shares exit, the if let's need sell building We Zim Okay? to we assist of we say, some to eventually because liquidity

I think, for the time done being, our with are we sales.

stock. EBITDA. also, to very which to We It's are is But giving, going see have a cheaper obviously when, the to market Zim XXXX practically, they results. wait equivalent guidance cap, are which you from

in Evangelos not significant hurry. we've At already appreciation that we're of investments. this a stock, said, believe as there's So, done significant the moment, and we

to like if first that. course, are to increase visible, there of any we debt to let's moment, At invest. opportunities are all, exceptional -- continue this of we We are our monitoring, going to say, the will definitely so Nothing dividend. optimize

believe We are dividend. we path ready to both Company I so and that that to for will committed a solid plan the the growth cautious,

Randy Giveans

Yes, that's fair.

still Zim going that to to cheap hear I cheap. Clearly analysis dividend think and just reiterate, good is though is be to the increased. the

we'll be So, much so for that. and great the up Thanks watching keep work.

John Coustas

Randy. Thank you. Thanks,

Operator

The from Wetherbee Chris Instructions] we Citi. [Operator next come of will question have

Eli Winski

call. is Eli is Congrats Wetherbee. on more taking sitting this Winski for a one. and for first on you Chris of conceptual Hi, thanks quarter, guys the for the My one

newbuilds? is it's in the might new-builds we in have what congestion find like more holding upward the what on Given clearance congestion future? your that the rate putting some off on on higher visibility we looking broadly, until environment we're be the of a environment. seeing Do terms that are the pressure

John Coustas

Well, And the exactly and in that congestion a buildings. going is in environment more be to we seen, is pause solved have general, why ships. by not new just

is a demand-supply but XXXX, up, lots hold, there know of has but XXXX a because we're one have really ships being, of time because building will in the of deliveries new for course, also what the everybody be. prices gone the to no late a talking pipeline, both bit Of when about exactly balance kind going are push,

provide fossil but that. be important, what's delivered today. that But really COPXX shipping say, other going clarity new XXXX, limit more to into let's -- everybody carbon understands XXXX, XXXX, have about front, the been going propulsion. on Whether governments which order who they will are because well also, last buildings ships, probably LNG X is to committed that both And by are, is following need what fuel the and from we you've beyond. that these much or this to shipping for On these fuel you creates the conventional into a are going are

decision every plus not a chart for deglobalization today, So, horizon. it's a definitely

Eli Winski

try able I more, current have of a eco just the given the investments other towards higher peers expect you additional lean now, propensity as sense. hold capitalize fleet the bit a of rate going to. environment age to makes That in you. possible feel long off the maybe some to try marketplace Thank to Or you right off on more the current into making might do little the might to more quicker just do -focused as that fleet -category. a on that mean, be you the with of of fleet and than just eco

John Coustas

to thing shares are also to an makes our it the let's various decisions. extend of As hand, is, been technological the ship X, that if that Zim in order said, an we their peers. new practically have X and in XX we the ships research The the next, a have to I water rushing and appropriate from significant want existing the these I suffer life proceed on want, definitely zero-carbon program. amortize becoming order these to new than we order, and I definitely XX -- amongst will We you the mean, with to other why been ships largest really, more obsoletions it's issue are resources, building the don't we conferences assuming careful another we XX, we for much to all towards extremely just recognized view, overall, but the cost. within that XX environmental into years, on to sense them rather timeline into years today, dispose sure And to new will not say, are unless the point is years lately, buildings next give have for vessels order more for of available, that need

Eli Winski

sense. years. to be out Thank this will in you. interesting coming it be see how plays That will -- makes the It

and think do of the see visibility to one’s I fixtures, of you, front-load lower those quick any contracts for longer-term? in customers longer I you three the given improving terms in have asking

John Coustas

of customers tax from who this people and the a has lower better that rate to their 'XX couple income see purely to is going just they a 'XX, have, -- let's lot, are to a forward point It's There this asked then considerations. of so a XXXX, when prefer would their They are own we're them year TEU normalization But the of view. probably say, not front load mainly from rates. -- and expect for rate that. have high very who during going

Eli Winski

here you. any little provide it, dry-docks then forward. days, off-hire crystal due bit see a to of to off-hire color broader labor Any information maybe you ask scheduled it And was just a days forward. how can ball but about we think moving helpful can that be Thank shortage? on you on would and the to there don't on just I color moving XXX that just

John Coustas

we And mean, ships, We days. we account years. operate would run unforeseen the say year X have which of out that's ships XXX dry average days days typically Evangelos. small way in the and a for Those very take our on are typically also off-hires, I into that's average blended XXX the -- let's dockings. XX - the

So, pretty it's reliable a number.

have course Now, you of of hires. unforeseen

have incident. may an You

be may those may be failure, whatever with cannot of and machine course predicted. that You have engine failure,

at not coming Or which the our in coming don't an quarters. actually this QX, the We the least it's we that is for of we replicated for of did such full incident replicated hire expect quarter. have So, in quarters. was hope with one ships,

basis, that run with. rate is yeah, can one XXX days normalized So work something on

Eli Winski

much. very all you Thank sense. makes That

John Coustas

Thank you.

Operator

Edge. Mintzmyer Value Next, Investor's of J we have

J Mintzmyer

quarter. a Congrats fantastic Good on results. morning, Excellent gentlemen.

Evangelos Chatzis

Hi, J.

John Coustas

J. Hi,

J Mintzmyer

to that you're $XX, lockup Zim's cheap. The in million think at Randy of on a is, to one then that and are done have that thing now, you for started I shares And $XX, the but I September. $XX, And the question addressing start share wanted because little sale on, all the ended it, had dial selling you Zim. X I'm curious in September. you mentioned The or sold they until timing had to it October, was and very bottom you seems of it there? now sell Was some dropped X plan million shares, bad to drop at like didn't What sort after higher. the that wanted $XX? they're a not X or sell It million if happened you ended? Because $XX. them luck after at the quarter into why sell just

John Coustas

We didn't time and have would we $XX more, the cautious let's much say, It we we're sale. have that's of do been to admit, we're to when that do to much going better why it properly at that. way to going be yes, kind [Indiscernible] that said

nobody shares As a know just shares. when sale going of disposing proactive you has rest be of kind ball. the the to of crystal we with hope more And luckier we're and

J Mintzmyer

unlucky. a you I that, rumors to fair. that's just you hindsight. lot rates like sounds saw it is swirling sell, I fair around of lot but timing to reason you say? sale and of of Is mean, that a you was there's ask Zim -planned you there's it a got panicked or pre anymore Yes, in and The kind decided dropping didn't like or

Evangelos Chatzis

banks. we delayed. lockup. is them to started wanted contest see And say, when best. do had these which between institute, to planned shares, we million that a approaches -- beauty stock The let's to one And about X had actually, to gave $X.X and shares, wanted process bit dropped. the let's each had already say, X million we these we a -- process exactly it's Well, a about got -- we going for sell then investment We to

was just important what's shares. rather end we time it works -- was us So, how it try it, top to than the process that the of this the started for to in we decided more just see once

J Mintzmyer

bad Yes, shares [Indiscernible] of it some in too earlier. little certainly sense. bit a and it's timing, makes There's -- the your luck bad

Evangelos Chatzis

because period this strong inside, So, the the capital a concerned. not right? not of position. yes, overall were time, compared did the the we chunk a we market again, unfortunate J, in big were But from -- of the was see -- how And was definitely not equity but concern that markets is matter market, are a a we was the timing. have we panic market we of to during It bit shares

be I we're think, we average, better. our when will hopeful So, much, that complete much disposal, the

J Mintzmyer

makes that think I sense.

communicated to bit -- I very eventually position. little your going think clearly of you're trim that everybody a you

million just your were sell expected think price, X they sense. but million the little X everybody or shares, a think makes I I to surprised you explanation when they see

want The to other repurchases. at I looking question ask is

of $XXX seen share. it have you a Your net debatable, analysts how couple other similar I've discount charter $XXX, have asset value, a it's of numbers on depends attach. a around much around that I

calculation question just does X the back is, have to in used internal have would to share? get question I willing point value At that what And have too Do huge that not You to slide disconnect that's any get a show that number the have does noticed repurchases? go now, what at in huge? disconnect X of of to -- -- you part calculation you sort point this so your do is, your you you're presentation.

John Coustas

for which mentioned. figures -- all were create expectations very some XX%. was absolute were all calculation situation not of, because say, of to charters you an the able decided to the of doing which market, figures although the you sale rather we kind done assuming and to of than kind the want which you that practically prices, normal When it, all think XX%, numbers, than that more basis did Well, of actually, having this a really in of, the we basis considerably of on the of a spot be basis a at we higher continuing adjust where actually let's And are relatively XXX%, NAV that report we can discontinue market, used on moment. vessels to been objectivity appreciation was as that you on It's a let's the say, have XX%, you confusion which objective where XX% to producing get was there's see, the had things we of are. -- I in fluctuations more difficult because

J Mintzmyer

It's moving definitely clear, is attach. a less moving. or It's discount quickly value can't you what enterprise price, significant right? clearly entire depends metric, Yeah. fast on your value, it there's when stock your a But charter you than EBITDA value.

Zim Company's Your in say, right? so plus shares, those do holding onto [Indiscernible] point charters, to plus start scrap, what repurchase versus The at okay, trading to cash? valuations, this and have on you here step just we

John Coustas

mean, say of That's the moment about the revisited. in the visit that shares, let's will say We become closely Company, that. We undervalued. agree are any specific more let's a but shares to repurchasing more that will than need have of don't are problem decision discussion with more monitoring -- we you this definitely we I at board, the the these cash that our the important we grow with

Evangelos Chatzis

the that otherwise used add because we so to have do John particular excess to this on point, at hand invest cash just -- would business, we we point, reinvest said, this Yes, hand significant liquidity at what have at have. to to -- cash the not in

such more up decisions become QX will this balance -- up, Of course, the capital relevant. it cash the as allocation and more builds QX builds the within

J Mintzmyer

the forward we're right, congrats one. to All looking quarter moving target, really but the on and like fantastic a sounds next

Evangelos Chatzis

J. Thank much. you you, very Thank

Operator

next of Omar we Securities And Nokta Clarkson have

Omar Nokta

strong a of whether doing of XXX do have -- disagreement X you because of if very name tonnage. you was like X -- been vessel, outlook fleet say, to and it. it's at I re-upped with Good off also, questions in But with terms the so ask to the ships a I a day rolled if is, another it people's X Hey, wanted forget TEU, long-term vessels, XX,XXX sister just rate. chartering markets Wanted your afternoon. already and or a But to is months, as in the ask, in And ask of were available has I in clearly what liquidity of somewhat in wanted are a and lot of list, liquidity to the I for in sorry guys. looking this, looking does today today, there you contract of noticed to there's like to had there it its opportunistic and simply but your XXXX to just you of pause its pause bit this at seems the look if the addressed look lack contract? this a XXX,XXX-plus. say does market what do, that months it for roll-off, for X–X-year on very,

John Coustas

First our all, it's to like of I'd that, explain not just short-term charters. in general policy to do

be specific that these charter, for we months to ship, to sister longer of index. going But at be term. holds also another to which ships the -- that it rates, we X last an -- had prefer agreement rather lock-in that have, charter, we're actually we -- the are the about going this was lower We with X last

or practically, ships was but from don't brokers I thing the same to index of of the story there are they do the we've hand, XXXX. And took some opening a rate. I mean, is not the I years know, on demand we one chartered really other X pretty at is for kind XXXX April. rate know, made in historically, deliveries is the strong want -- charterers the gross going X have X than more [Indiscernible] is for fantastic in And commit one of to $XX,XXX phenomenal. $XX,XXX, we the behind at the in which XXXX. [Indiscernible]. eager XXXX yesterday that have index $XX,XXX with happen X,XXX and that ship -- that are don't as time I What forward, be, one these same his that's at these lower less rates. this still, years next -- don't pretty excess mean, are for commit, I also good we the or to ships, really go which especially a going because the in rates So built are for Maybe the And to sister ship opening months, general, In you just rates. TEU But chartered really know. but day.

Omar Nokta

eco for John. the acquired on Thanks, the charters. with just especially follow-up, forward -vessels And around 'XX? renewal, fixing definitely. here ones midyear of I of think, any market Any one the low those that the come on X ships, Yeah, that up updates come you

John Coustas

we -- in the of are have a parties. discussions with We number

We we're rush and vessels, new X,XXX a you specifically don't a mean, go yard you're exactly practically the to in mean, to TEU have. not for that's new because the compete going ships. what I with the if these build I pretty into these vessels older not with compete are in today, much rush build

understand we date, the to staying So, that the opening better going towards deal their we're more we're have.

So, are discussions. no But is fix to to we in hurry them. really there

Omar Nokta

pass thank Okay. I'll it on. you. Right, well,

John Coustas

Thank you.

Operator

further comments back now Dr. that appears Sir? the any questions further like turn to closing Well, time. would over no or to at we this it have I Coustas remarks. conference for call

John Coustas

in your for and you. you all continued call our earnings you, hosting Thank Thank in you joining Look Operator. next Thank to story. forward conference interest the our call.

Operator

Take Thank care At thank and we a conference you The your have day. time, today. this may is great now also, time disconnect And you, call everyone. you, your for sir, concluded. lines.

Danaos (DAC) 9 Nov 212021 Q3 Earnings call transcript