DAC - Earnings call transcript Q1 2022

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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 March 31, 2022.

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.

Evangelos Chatzis

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

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

John Coustas

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

and X,XXX delivered to March billion is allowed already from widely contracted to operating ordering XXXX, to and between to The TEU confidence. the converted first available. methanol by revenue, range quarter of €X.X strength in X,XXX six exceptional us position Danaos. was fuel XXXX to the of This of be such vessels invest a green exceeded September for ready in another future on when with one run Having the future we're be

declared dividends in prices, and zero quarter. broader returns, inflation, generate by in market including interest The $XXX affected and Our has energy net ZIM solid outlook to continues high in been China’s the rate position million first events, policy. COVID geopolitical

not more rates Although, changed a attitude. charter box significantly conservative adopted and rates affected, has short-term participants market been have freight sentiment and have

network supply inefficiencies likelihood hand, decade, conditions chain improve and oil there led is not the the at and average has the seen resulted On speed. an more to reduced continue positioned in most chain as the speeds record fuel new execute are time year. importantly, enable the sailing This levels. an other time, contract well disruptions have backdrop, of global unabated midst profits Over supply that Danaos higher liner as In little than sailing prices the vessels this to is increase companies a Also, uncertain with comply to delivered our decarbonization to timelines. reaching to are in container strategy. for will continue are levels for industry normalize, same and

rising our interest recently, fleet pursuing sheet. accelerated deleveraging of minimize the we value growth, shareholders to have simultaneously rates. balance enhancing are further and We Most impact to returning

the debt During notices prepayment we issued obligations, also the million $XXX XXXX, another repaid second will while already quarter be million have early which in second and of early early we repaid of for have $XX through the quarter. lease end

fleet we very and reduction quarter, first of end of strong. also will marketable $XXX vessels a the become of million, $XXX As million At overall XX stands unencumbered. leverage securities. this our in result Liquidity had in cash the

from of through during million hire we received quarter, May vessels, the charter payable a January second charter XX representing repayment related our $XXX the period during of for XX While prepayment contracts to charter of partial hire XX.

opportunities attractive enable the of you Evangelos? actions, us industry, over sheet will the for hand when shareholders. in call which I'll strongest will result arise, through balance Evangelos, the back benefit of to quarter. to analysis for the the a the who our to take they that, With our pursue As the continue financials

Evangelos Chatzis

everyone, I for morning the for Thank Q&A. will thank joining again the you, then call us results today. review and to briefly quarter the you open and good to and

adjusted $XX.X This are ZIM or increase is net the the per we $XX.XX EPS per share reporting equity million in of increase adjusted of $XXX income due in relation This EPS mainly total of specifically, size million between first revenues attributed was quarter, by $X.X $XXX.X adjusted to the $XXX.X booked million current compared partially offset million million increase increase operating adjusted the of of decrease quarter of increase quarter increased XXXX. income million, $X.XX in by between for of XX our with net the million increased our of $XX.X acquisitions. line million compared accounting holdings, a million a average of the a $XXX.X to due higher in million a between operating crude as operating expenses $XXX.X from increased of higher $XX.X XXXX. insurance to fully to $X.X expenses first straight quarter X,XXX current is the revenues increased consolidated a finance mainly average last in or fleet the share the quarter million number and result $XX.X $X.X net result $XX.X the for to due to expenses quarters COVID-XX that by operating million increase to million quarter million million the This two from increases charter vessel being of in net vessel further dividend in More first by and in and Revenues to day daily million year, $XX.X $XX.X additions in result increased in of last quarter higher quarters, the the the and two fleet per vessel year. first vessels vessels for also the result in in expenses third a in our Gemini that current quarter recognition of the in vessels and $XX $XX.X income while to the further to rates assumed the from in million of a fleet, our as a per operating the related revenues average values of revenue two of the quarter of Vessel XXXX in quarters. amortization as a $XX.X day of to insured came remuneration revenues fleet. the cost increase to our of due liabilities million $X,XXX charter recent

$X.X overall that current $XX.X compensation quarter to non-cash $X.X of our as fleet. competitive of was Interest due the mainly XXXX, million $XXX because indebtedness between million, the in increased the of stock-based combined most fees to XXXX. in one a first $XX.X first However, decrease compared debt finance in million by average in in partially the compared decreased amortization our interest cost in million $X.X quarter points. service the the expenses offset result management are approximately $X.X two quarter billion industry. current cost debt two million million in an remains to expense increased This the to by XX excluding accruals $X.X of $XX.X G&A to increase our due operating is in in increase the of G&A of daily decreased and the by cost of by increased included by quarters quarters, expense million and that partially million quarter between to size service offset of basis by the decrease in cost

certain interest earlier $XXX.X almost accumulated through positive to also current increased $XXX.X and in a the quarter income million have reduced Adjusted in accrued refinancing, of in facilities $XX.X credit refinanced accrued XXXX been as recognition had of the or relation were for the our first reasons recognition to last of of interest result in statement fallen. of that million the million XXX% this that We $X.X on year such accumulated from has call. quarter million EBITDA by outlined the XXXX

our a during as our subsequent the well We highlights debt quarter, reduced ratio the have below that on included place was website presentation of disclosures leverage posted the of are; debt updated $XXX is quarter, to we review we to in encourage we course of net substantially that it early earlier, with and also second few and by repayments as investor facility mentioned as expect and event $XXX debt-to-EBITDA are lease X. second million combined the scheduled corporate million, normal within which credit new the expected repayment reduce you to

at these will lease a a the end repayments, XX As result XX will increase which second after scheduled vessels to unencumbered the will QX. of during happen repayments quarter, of pool that vessels of have we

a at X.X-year the of quarter, first As backlog billion, end charter our of $X.X remaining duration. average with stood contracted the revenue

for XX% already year, contract XX%. we is at almost even this for XXX% for While while XXXX, are coverage XXXX,

contracted to this call Q&A. like has I Operator, presentation listening Our book. open With first of to our ready to investor our call. are on now part the that, charter analytical to for thank we disclosures you would

Operator

Chris will begin question [Operator with We from Instructions] the Wetherbee now come Our question-and-answer will Citigroup. first session.

go now ahead. may You

Chris Wetherbee

to -- Yes. right your charterers what it. renew more question, short-term could are that? potential the has Hey, What what's to thanks has talking of stands to I on comment sense it. of sort by for Maybe little think you seeing with customers? get I sort your -- in is a of terms from now? there we a market attitude Appreciate you new a your bit sense speaking, of that Is generally a want ability you the taking conservative the guess, or guys. longer? to something that mean start exactly I sign drag in to made

John Coustas

the bit Well, for charterers, of mean, in discuss. example, re-chartering, Chris, say, December, for all somewhere year moment around at the we're what they I far have, happening is reluctant that And in maybe world, it's at last last the which that just mid-XXXX. -- for going start might that be beginning ship to let's it's earlier the with are there this to or us, today, ahead, they really discussions to a the earliest

are seen in to because be rates, significant let's say, any fixed. reduction big We ships before charter -- haven't especially there no

seen, the the for the still not of, getting talking three ones, smaller day get, let's and charter we say, kind of period, we're rate -- some of weakening, have of of ships very could rates. you about example, are $XX,XXX say, let's let's for years. much say, good TEU they but below, rates, when Some so X,XXX where and Maybe

may for two. get Now only you it

type that the are that's sensing. of, we So, say, let's

Chris Wetherbee

earlier. when XXXX, to ability you -- to helpful. bit you guess you do of sort the That's think willing Do engage. capacity you Do charterers need a year? end that think be of your to I of the backlog the up some into start it's have Okay. at think And about do you would when tying little

a you'll get to sense begin to open that move of want think when able Just on you capacity. to be

John Coustas

Yes. no that, mean I how COVID -- I summer this is really moment I And with China into see going now there urgency situation. develop are at mean, believe from the kind also to going is we to waiting their is everybody yes, anyone. of

something more but that's it's that side. situation kind these we also I of, say, the discussions Ukraine about, trading next pretty general so let's -- charters. in practically, from from should in say, start think the and probably relaxed let's see, already say, both that And But owner the looking I you're ahead, of positions, from discussing and is terms in feels from various than into year I important quarter. believe patterns. the let's with war the already mean, wait one everyone charter We're when side a some

Chris Wetherbee

Okay.

sense. makes That Okay.

Let's talk about a little leverage. bit

a bringing You've leverage great the down. done job

forward? now. leverage the times right two guys What's going level for sub You're you

John Coustas

companies, on at on do say, fleet. of is let's context has EBITDA on a static to to right going because leverage age the lot of say, with the assumptions in kind let's of bottom -- leverage It the the are It -- the you seen do what all something, Well, the the cycle. is cycles. not has and quite also be to depends the -- of

the why to the are today mean, cycle, I is what And are of three also have bottom that seems, committed X% of what even we at does below. new for of, account cycle, when be came we into course, be heading to and company the had want something maintain. really to And same who we really able it's to company the along. or So That required have significant to will that for agencies participate close like we into is the need with be leverage the tonnage the thing let's at, in to really in was happened enter to rating will between of considerably be at let's four. and where sure the engine sale that anyone eco-friendly investments is future we that going we let's say, low. And decarbonization. a But typically, course, terms take to where industry's and to that's going going what looking boats area, this not say, steam that we tonnage say, because make

Chris Wetherbee

a that. it. I It's appreciate that's analogy. great Yes,

Okay.

to to maybe So you question, it in one like Maybe go in just leverage expect down to does be level work right a year? more That's us QX that for quick might sound just to give there. there's EBITDA getting a more sense what drydocking. context, where QX, close last you but of cycle, Can done the on helpful. of detail

John Coustas

the have I of you paid remainder mean, think, in dry CapEx, pay going The of this CapEx offline. QX, significant. $XX it's year. around we ships another in we can $XX four the million have We've on the guidance through and or but to not already the do nothing year. think we more I of I or to new have, give too $XX payments It's three – I end have only yeah, we're But we year, the buildings million for dock progress placed specific For order. million terms –

for total new the So buildings. – around in we close million we the QX, next the with will year progress that's $XXX payments and a for will have So right? QX of

So more dry here item the old significant that's and docking much that there.

Chris Wetherbee

for the That's I helpful. much Thanks appreciate time. so Okay. really it.

John Coustas

Chris. Thanks,

Evangelos Chatzis

Chris. you, Thank

Operator

come Our from will question with next Chris Jefferies. Robertson

may now You go ahead.

John Coustas

Chris. Hi,

Operator

no there Chris from his your coming is that, me, Robertson, Pardon line. muted. line appears maybe It audio

that, Please if we line. question. Robertson, you for the So to are again. moving queue be next the still will on Mr. on join the

Value Edge. Our will next question with Mintzmyer be Investor's Jay

Jay Mintzmyer

a gentlemen. good fantastic morning, Hey, Congrats quarter. operational on

John Coustas

Thank you, Jay.

Evangelos Chatzis

Thank you, Jay.

Jay Mintzmyer

also flow with on the Yeah. wanted it note. I on of indication a up. few It's at market had I shooting sort CGM look exciting XXX,XXX start the to see extension of are coming should the that ship, noticed noticed, now, a where next investors the up day. positive those free on sort couple very to CMA at? cash I've the months. in you ad most rates benchmark more a Any right was what

John Coustas

to to say, high charter. a liner as that charters, month the you In they when rate. extension can, for general, rate, let's a the longer Well, period kind to vessel is that they understand, lower they short companies especially of short-term let's on prefer X avoid, was a take XX at try such say, and

be same ships be paying let's are – these So another more for when are going whatever exception. same, market, which is that to going was which going an have that's, believe brokers the let's enter is the Whatever a – around say, we it's the period. bit six less And discussions, or market say, with they arrangement or to is the if fall. three which the us of rate we're months. the for charter we CMA, for to And the that six that, month rate the under

Jay Mintzmyer

that's -- Even just are That's I six Yes. though months, those for unbelievable. mean fantastic. it's rates

you those the charter employ point? you're at the So timeframe to Is set that all I you understanding build have strategy. to you course, attached to of get deleveraging growth. of about leverage wanted those a what's ask you are Right looking that, you're where now, mentioned target the there is and mentioned this my on because looking your a vessels? new charter the And future for ships.

John Coustas

and sheet, to if that Yes, wait of say, it to without ships. see them And in to strategy could will not the to more, fix say, which number specific as let's of a order be we returns That's possible, are confirm strategy means because lower. And is have charter the means basic opportunity. they have And vessels vessels. say, to. considerably our them and that in We why of these LOI. it's that to any an shopping prefer, to charter let's there going we they other a one are on invested really commitment the LOI fix wanted their opportunistic, of, for give companies to know when let's because very who strategy, to really sense. as lower a say, closer in, the delivery companies project debt And this we and liner actually, considerably like you around The we take strong balance of you say, delivery is liner Our vessels one of the liner let's can to to the to exactly prefer would the need hand wait let's order that returns signing, employ are that to yard made which segment, make size. is which let's say, then companies but such for need know to these rent then the ships. course, do, going not,

considerably need let's are course, the getting. longer-term a You of, or with end the higher But that leverage same up of level. much a but on at the say, which, in basis can leverage, of equity you you even end, obtain the less the duration charter you higher returns,

Jay Mintzmyer

you share the price the high the repurchase. had possibly build. lot year. up. on on of unhappy question Yes, -- best are it think sure certainly I'd this bring a a with performance be to hopefully, not I'm can remiss with I you past makes will your at least equally those new deleverage as you the luck be to fixing sense. as I about. it, There's wish and a make over

didn't authorization. it curious use. repurchase kind you process a metric you by Your was delever, to that. do to shares behind above? I are extremely I thought But of of know all undervalued is see want on the to want any possible but just I the

John Coustas

you priority new to has as also secure to growth said, we our hand our ordered. with some the on delivering, secure ships other and Well, been have the the of that

question As is the screen. priority on say, this you. is I’ve told I the on has said, radar which that But decided let's Board share of at front moment buyback exactly the issue. the our always, always It's the

rating the what number with doing are actions growth. are make the solid more of And be conservative side us the are the as think XX%, we prefer kind for will as for by going on have want we know, AAA theme surprises. been are of And markets, we dividend and our As agencies tools I today, Danaos be, the a associated, we overall consistently kind growth results, all our the we risk, pretty environment with mindful the let's have sure that I rather But company just, have it the means you not very when no is cash. upgraded AAA that our say, spending shareholders. which recently to will And of than returns talking credit have consistency. although about one say, we there increased the the this important let's to surprises, been no also which is is our let's and company, shipping. I'm said. There say, in and about any to mean, by give be even we to more we

of fully and everybody our commitments. aware story that the is So

Jay Mintzmyer

have operationally, final know A remaining them? in stocking. But of things ZIM, you're shares just doing Certainly, and those I for about can you that's question, actually to down with appreciate and share the multi-billion results. your dollars ZIM million the out ask see you -- best been you considerable I deliver from What's which one see mean, Yeah. year-over-year, really main about is share holdings $X XX% the deleveraging your your shares? growth, price, ZIM It's those? are of your the what's the strategy to You pleased I time, still with the we've very strategy nice strip operational if backlog, frustrating for.

John Coustas

have significant to of for We really it's not long-term As I being. intention the But fantastic one deliver make said dividend time already that year. any said, this in get we out have as with said, believe a the to we is before, ZIM all the is ZIM we've not we received like And do results also -- holding. don't liner companies going other we've going that XXXX. for this line to a any

in are hold So a a position. for the time being, of we kind

Jay Mintzmyer

you, the sense. Yeah, John. Evangelos. up certainly Thank Keep great you, makes work. Thank

John Coustas

you, Jay. you. Thank Thank

Evangelos Chatzis

Thank Jay. you,

Operator

at time. I appears Instructions] closing no further any or Dr. to further [Operator for comments back turn the there would questions call remarks. are this over It to like Coustas

John Coustas

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

Operator

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

Danaos (DAC) 17 May 222022 Q1 Earnings call transcript