DAC - Earnings call transcript Q3 2024

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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 30, 2024.

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.

You begin. may

Evangelos Chatzis

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

this could I statements begin, are These statements remind management's certain want Before from morning discussed actual those no we contain undertake results to quickly affect obligation to may our Factors that forward-looking of SEC, materially everyone them. made to that the as remarks might differ are safe review and today. harbor you we forward-looking update future and disclosures. that and results risk and in detailed encourage with filings factor today, we these projected

non-GAAP financial such adjusted accompanying note financial income, charter business. adjusted measures are day EBITDA, that, time measures and measures net in we non-GAAP EBITDA, earnings our evaluate GAAP also per revenues Reconciliations equivalent we dollars where of release charter materials. to financial our and will to time equivalent appropriate, as Please refer feel continue included to to

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

John Coustas

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

$X.X in The million to at add of which to backlog, the container over our very billion. market XXXX, remained strong stands presently $XXX quarter third allowing us contracted charter

except for are of newbuildings fixed that our X on X XX all years for are Importantly, X order fixed years. for

XXXX. as XX% XXXX vessel operating XXXX, fleet We we for covered container our for XX% days have have excellent earnings XXX% visibility of and for

throughout decrease year disruption lately, steel which in of as uncharacteristically well The dry seasonal be can soft a bulk attributed market Chinese production. as been to the patterns has

as during move bulk the dry quarter, improve XXXX. freight expecting and reasonably rates into to gradually well we're we performed Our fleet

Trump container has U.S. Danaos or the tariffs least movements certainty presidential by and the policymaking decrease effect from his global implement backdrop. charter in and segment, that its declared is trade of recent nature potential Due The openly Most backlog current notably, lanes. introduced have to about new in Container the uncertainty or to the at intention unpredictable President the insulated future election trade unstable reshuffle has our to provided the shipping market. increase

Additionally, IMO we will place initiatives it's the energy that likely extent take what a transition existing new supported at be rate, know initiatives will slower to don't and administration. by

remains Danaos fortunate enviable in a and position.

Moody's, charter Together strength. to at have company. our S&P to holds addition grade coverage, that of has we now proud the pure-play a been In acknowledged sheet who I'm by efforts efforts Danaos Danaos balance credit upgraded the assigned to highest significant have BB+, undertaken, rating BAX. the shipping our with

creditworthiness to to competitively allow to growth will capital fully opportunities. us the pursue opportunity priced creating Our raise market, U.S. to bond explore continue

strong strengthening we to continued We're quarterly and a to balance buyback accompanying $X.XX commitment made us shareholders. financial the Our our share, return increase program. our of share also dividend through line performance with our in our value enabled continuing sheet to has have to

have and million million authorized repurchase $XXX worth share $XX program. stock back under bought cumulatively now remaining have We our

our our continuing for of remaining value to long-term prosperity the risks to efforts are We benefit about of vigilant increase the geopolitical company the while ensure of the Danaos shareholders.

Evangelos? With the through to that, for the take I'll financials hand you over will back who Evangelos, call quarter. the

Evangelos Chatzis

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

Capesize result of million, XXXX. income X in $XX.X income or quarter income reporting of per a million, adjusted increase that those total adjusted operating charters costs, net million $X.XX $XX of the compares of expenses share, the of The adjusted of million costs voyage dry to offset by the net per third net in during current related bulk a or are of the share were EPS for and between recognition and partially quarter net to of for increase in a million investments. our million $XX.X finance $X.XX to We in in adjusted revenues a quarter EPS voyage and $XXX $XXX.X income net mainly million $X.X and this quarters of from fleet operating due the decrease $X.X increase is adjusted improvement

to corresponding per the of OpEx third to per a daily of in third in OpEx average vessels quarter the of $X,XXX at the this XXXX compared for from as million our in $XX.X increased million million in current by our result to the XXXX. fleet quarter the $XX.X quarter Vessel increase same quarter $XX.X day of number cost $X,XXX for time, while, increased the day

costs continue remain most operating the in to industry. competitive among Our the

costs. $X.X $XX expenses G&A in to the in quarter increased third quarter mainly by in million due the current $X.X noncash compared million to million an increase XXXX, to stock-based of

at that interest the At vessels same $X.X the financing construction. of in periods. a increased $X.X to periods service for indebtedness our to excluding offset by in the result mainly as due debt in to in third The more a is on approximately in expense offset million between million by decrease in costs was current of between periods $X.X million between average This amortization time, result increase increase combined $X.X by a million. expense came corresponding XXXX. cost interest partially income million a capitalized $XXX our expense, X X than the an a due basis to the by a interest by decrease the interest finance the are points, million $X.X under interest compared in expense margin quarter costs, in increased reduction of million in of $X.X Interest quarter increase of quarter XX the X

been by quarter third already outlined million have this or $XXX.X in $XXX current for approximately the X.X%, on XXXX reasons Adjusted earlier EBITDA quarter very million million, the $X increased that call. slightly in from to corresponding of

is as well website our you presentation event posted as updated encourage disclosures. on We subsequent also to review investor that our

Some added And our have average X.X-year $XXX by of increased that, has was our as are and revenue now to contracted a a to date backlog. release, the of earlier as revenue our result, John, with billion prior duration. charter $X.X million since strong we the highlights earnings remains backlog mentioned contracted

investor has presentation analytical disclosure Our on charter contracted our book.

our interest Additionally, interest high stood at position as XX, shields the of environment, September us $XXX net current XXXX, this And debt million. from in costs. rate

X.Xx, the currently debt-to-EBITDA out at while our of and are XX ratio debt-free. company's unencumbered Additionally, XX vessels net stood

end marketable while of pursue the ample the our at including million, million availability was $XXX liquidity, at giving opportunities. us stood to at capital total Finally, deployment $XXX revolving under quarter, third accretive flexibility facility and securities, cash credit

we now With to of the ready thank you open that, for Q&A. to to are I to call would listening part call. like Operator, our first this

Operator

We with Omar begin question-and-answer Jefferies. [Operator The will now the Nokta question comes session. Instructions] from first

Omar Nokta

questions taken term. ask, outlined out quite really my very you've the wanted to I of advantage in strong as Just from the the a side. and in -- discussion, and release couple fix ships clearly, longer to of resurgent market taken this you've you presentation and container

of that contracted. are in the to some a market. Last newbuilding a new bit step looking you obviously all now you're from which back ships ordered quarter, mentioned take the past, You've

for -- continued we of really newbuildings. see part I on interest have relatively to liners the guess we elevated So remain

Danaos still wanted So ask, front? think about how the an you newbuilding the see the Are is you come sidelines, where do you on side? or opportunity back on to I to into just do ordering

John Coustas

Things are progressing.

out, will this how our the are -- release just I revenue, where increased market even that, sit. We quite to substantially. do more. where we It's that -- that say can hold. the further to Actually, and since today, contracted not more want fixing going see getting we we It's not is have --really ball believe

discussing have -- legislations. this one And of carbon because going about we the be you're is newbuildings, to this that the you what decarbonization the IMO And really is means influence call U.S. significantly the sure sure levy, it. future about that are on going enacted really And to for you influence tax, the is is when into the follow carbon is whatever doing, always what is previous which the biggest to I'm path. is what have talking kind issue is new want will environmental not to going not going that administration way take account this to what have currently we really,

and On past, because, you order, the equity this is actually of way the most other on the we're going that deals XX% really kind really the ships let's down the of the ordered, XX% a on cool of back-to-back newbuilding we And is down. the to said not prices do kind just path. we already prepared prices for are hand, important. the have with as yourself, general, in the are say returns. We're charter to I've order because, for -- more. when when And price risk in between up. are asset that average, mid-single-digit a for extremely not reason we are, to of on And go taking that purely wait And like

definitely back really the retracting, this will of be kind we temporizing. there take If So see prices we to is that advantage. again, coming reason we are

Omar Nokta

that is plus And going, market content And how rather, uncertainty that are the to going environmental Okay. and the for a and when that that to you're means give do administration, ROE. makes it better things John, know prices fairly just you'd wait. summarize yourself sense it this uncertainty, with don't container given clear. that, new that's shifts what simply, to you on opportunistically where are, forward, you high fact newbuilding order, just given the

John Coustas

exactly. Yes,

Omar Nokta

then calls before just this know separate before. we've I second And about a Okay. talked question, on

the market what Just this going you a where lows, investment, terms And it with although are a bulk another general, fundamentally? I say, are the maybe past bought there's softened you here but It strengthened like in bounce. But in it's to bit, we few into bulk dry see come sector dry relative bulk about starting sort has seeing months, in you guess think, of off at were dry terms you segment? How I over last do year. recently, the thinking of could of we previously. where bit feels Danaos the

John Coustas

XX Capesize a is we new As a as of phase. built the experience-building And an for segment fleet in are currently I ships. said, us, we've

see And do are which more that this is much exactly want is the the we will compared and out. there ships. opportunities that on qualities make it. we that where operating are to cost And we will are an closely, market. we ships really and market the see to -- they opportunity, the container jump benefits, market liquid are if see of sense We the follow We effective. There

the with new a as other China-driven, administration, will relatively very mainly you On this the the as movement, ore quite is is proportion. the the also situation U.S. market And affect where again, iron bulk on hand, big actively bulk a China, especially in makes unclear. lot said, dry dry Capesizes, also,

Omar Nokta

then just say, Right. one opportunity would both? you sorry, on just Yes. in bit to jump see you to to or and an it. that follow-up made And opportunity, just sell? press just relation on, on assets if Is Or to are further a talking, an comment you acquire maybe you

John Coustas

to No, whatever. assets more acquire or

Operator

or we It the further for this further I turn comments would at have over like closing to appears back Dr. call no time. Coustas to questions any remarks.

John Coustas

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

Operator

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

Danaos (DAC) 12 Nov 242024 Q3 Earnings call transcript