world-class shipping, leading-edge expertise · 2019-11-06 · danaos by the numbers $1.4bn...
TRANSCRIPT
World-Class Shipping, Leading-Edge Expertise
Danaos by the NumbersDisclaimer
This presentation contains certain statements that may be deemed to be “forward-looking statements” within the meaning of the Securities Exchange Act of
1934. All statements, other than statements of historical facts, that address activities, events or developments that the Company expects, projects, believes or
anticipates will or may occur in the future, including, without limitation, the outlook for fleet utilization and shipping rates, general industry conditions including
bidding activity, future operating results of the Company’s vessels, future operating revenues and cash flows, capital expenditures, vessel market values,
asset sales, expansion and growth opportunities, bank borrowings, financing activities and other such matters, are forward-looking statements. Although the
Company believes that its expectations stated in this presentation are based on reasonable assumptions, actual results may differ from those projected in the
forward-looking statements. Important factors that could cause actual results to differ materially from those discussed in the forward-looking statements
include the strength of world economies, general market conditions, including charter rates and vessel values, counterparty performance under existing
charters, changes in operating expenses, ability to obtain financing and comply with covenants in financing arrangements, including the terms of its new
credit facilities and agreements entered into in connection with the refinancing, the affects of the refinancing transactions and the Company’s ability to
achieve the benefits of the refinancing, actions taken by regulatory authorities, potential liability from litigation and international political conditions. Danaos
Corporation is listed in the New York Stock Exchange under the ticker symbol “DAC”. Before you invest, you should also read the documents Danaos
Corporation has filed with the SEC for more complete information about the company. You may get these documents for free by visiting EDGAR on the SEC
Website at www.sec.gov or via www.danaos.com
Readers of this presentation should review our Annual Report on Form 20-F filed with the SEC on March 5, 2019, including the section entitled “Key
Information – Risk Factors”, and our other filings with the SEC for a discussion of factors and circumstances that could affect our future financial results and
our ability to realize the expectations stated herein.
EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS may be included in our presentations. EBITDA, Adjusted EBITDA, Adjusted Net Income
and Adjusted EPS are presented because they are used by management and certain investors to measure a company’s financial performance and underlying
trends as they exclude certain items impacting overall comparability. EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS are “non-GAAP
financial measures” and should not be considered a substitute for net income, cash flow from operating activities and other operations or cash flow statement
data prepared in accordance with accounting principles generally accepted in the United States or as a measure of profitability or liquidity. Reconciliations to
GAAP measures are included in the Appendix to this presentation.
Certain shipping industry information, statistics and charts contained herein have been derived from industry sources. You are hereby advised that such
information, statistics and charts have not been prepared specifically for inclusion in this presentation and the Company has not undertaken any independent
investigation to confirm the accuracy or completeness of such information.
2
Danaos by the Numbers
A LEADING
CONTAINERSHIP
OWNER AND
OPERATOR
• One of the largest publicly-listed owners of modern containerships with long
track record in the shipping market
• One of the most efficient operators in the industry with highly competitive breakeven
levels
• Management is the largest shareholder (~34%) and is aligned with public shareholders
• Reduced debt by ~$570M1 and extended maturities to December 2023
• Significant financial commitment by founder and largest shareholder
• Going forward financial covenants in line with conservative operating expectations
• Charter backlog of $1.4 billion through 2028 with world’s leading liner companies
provides good cash flow visibility
• Large, modern 13,000 TEU vessels are all on long-term charters through 2023
• Active chartering market with more limited capacity growth, for majority of vessels on
shorter charters, limiting market downside risk
Business Overview
STRENGTHENED
CAPITAL STRUCTURE
THROUGH RECENT
REFINANCING
MARKET DYNAMICS
LIMIT RE-CHARTERING
RISK AND CREATES
UPSIDE OPTIONALITY
(1) Net of deferred finance costs and fair value adjustments. 3
Danaos by the Numbers
$1.4bnContracted cash flow through 2028
4.9xNet debt to EBITDA
~$200mnAnnual operating cash flow
33.7%Ownership through founder / management
$2.0bnEnterprise value
2xReduction in leverage from recent refinancing
4
29%
18%15%
10%
8%
7%
13%
910
478 328
207 203 183
472 442 396 338 303 253 242 238 223 219 209 206
Sea
span
Cos
tam
are
Dan
aos
Nav
ios
Glo
bal S
hip
Leas
e
MP
C G
roup
Offe
n, C
laus
Pet
er
Sho
ei K
isen
Zod
iac
Mar
itim
e
BoC
om L
easi
ng
Pet
er D
ohle
/H
amm
onia
Fre
drik
sen
Gro
up
Zea
born
Eas
tern
Pac
ific
Shp
g
Sch
ulte
Gro
up
Nor
ddeu
tsch
e R
.H.
Sch
uldt
Min
shen
g F
inan
cial
Leas
ing
Nis
sen
Kai
un
Diverse, High-Quality Fleet Serving Blue-Chip Customers
5x13,100 TEU
9x8,500 – 9,600 TEU
3x10,100 TEU
9x6,400 – 6,500 TEU
10x4,300 – 5,500 TEU
8x3,400 TEU
11x2,200 – 2,600 TEU
Source: Clarksons Research.
(1) Excludes Gemini Shipholdings Vessels (TEU), a joint venture in which Danaos owns a 49% stake: Suez Canal (5,610), Genoa (5,544), Catherine C (6,422), Leo C (6,422) and Belita (8,533).
(2) Global Ship Lease includes Pro Forma TEU for Poseidon / Technomar Acquisition which closed November 15, 2018
Publicly Traded Pure-Play Operators Financial / Independent Owners
Market Share1, 2 Among Top Public Containership Owners GloballyBy TEU, thousands
Balanced Counterparty ConcentrationBy TEU
Others
Fleet Overview1
5
Recent Refinancing Highly Beneficial
Key Provisions of Refinancing Agreements
• Successfully concluded $2.2bn consensual debt refinancing with
support from key lender group
• Extension of significant maturities through December 2023
• Management contributed $10mm in capital with no increase in equity
ownership
• Agreements provide for raising of additional equity within 18 months
of closing
• Go-forward financial covenants in line with conservative operating
expectations
2.0xReduction in Net Leverage
~$570mmReduction in Total Debt1
Significant Improvement of Financial Profile
Timeline of Key Recent Events
201820172016
August 2016:
Hanjin declares bankruptcy,
cancels charters for 8 Danaos vessels and
$560 mm (20%) of contracted revenue
September 2016:
3Q 2016 Revenue and EBITDA decrease of
23% and 44% respectively relative to prior
quarter trailing lost Hanjin Charters
December 2016:
Recorded impairment charge of $415mm on 25
vessels, of which $205mm was related to vessels
formerly chartered to Hanjin
August 2018:
Closing of comprehensive debt refinancing; Reduced
debt by ~$570mm, extended maturities to December
2023 and issued new shares (47.5% of market cap) to
debtholders. Danaos also committed to sell 2 vessels
September 2017:
No remaining borrowing ability under the current credit
facilities. Company obtained temporary waivers on
breach of financial covenants
(1) Based on total adjusted debt, net of deferred finance costs and fair value adjustments, as of September 30th 2018. Includes repayment of Kexim-ABN Amro facility on the Closing Date. 6
3,165 3,042
2,892 2,703
2,454 2,274
1,615 1,530
7.3x 7.0x
7.2x 6.5x
7.0x 7.3x
5.1x 4.9x
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2012 2013 2014 2015 2016 2017 2018 3Q 2019 LTM
Net Debt Adj. EBITDA Multiple
Recent Refinancing Highly Beneficial
(1) Based on total adjusted debt, net of deferred finance costs and fair value adjustments, as of September 30th 2019. Includes repayment of Kexim-ABN Amro facility on the Closing Date.
Significant reduction in leverage
Net Debt and Adjusted EBITDA Multiple(1)
7
Strong Charter Coverage through 2023
Note: Charter Revenue assumes Gross Daily Charter Rate. Contracted Revenue and Charter Expiration Schedule exclude Gemini Shipholdings.
(1) Assumes non-contracted vessels employed at current contracted charter rates.
Shorter charter durations limited to vessels in more liquid chartering markets
97% 83% 73%
59%
42%
5%
2019 2020 2021 2022 2023 2024+
$99
$377 $340
$270
$184 $119
2019 2020 2021 2022 2023 2024+
13,000 10,000 8,500-9,500 6,400-6,500 4,300-5,500 3,500 2,200-2,600
Contracted Revenue by Year mm $ by Asset Class
Revenue-Weighted Charter Coverage(1)
8
Experienced Senior Management
Dr. John Coustas, President & CEO
Dimitris Vastarouchas, Technical Director & Deputy COO
• CEO since 1987
• Over 30 years of experience in the
shipping industry
• Vice Chairman of the board of directors of
The Swedish Club; member of the board
of directors of the Union of Greek
Shipowners and the DNV Council
Evangelos Chatzis, Chief Financial Officer
• Joined Danaos in 2005
• Over 20 years of experience in corporate
finance and the shipping industry
• Formerly CFO of Globe Group of
Companies
• Danaos Technical Manager since 2005
• Has over 20 years of experience in the
shipping industry
• Formerly New Buildings Projects and Site
Manager supervising the construction of
4,250, 5,500 and 8,500 TEU containerships
Iraklis Prokopakis, Senior Vice President, Treasurer & COO
• Joined Danaos in 1998
• Over 40 years of experience in the shipping
industry
• Member of the Board of the Hellenic Chamber
of Shipping and the Owners’ Committee of the
Korean Register of Shipping
9
Industry Overview
Seaborne Containerized Trade Growth Remains Consistent
Global Container Port Throughput
Global Seaborne Container Trade
Source: Clarksons Research, IMF World Economic Outlook
(20%)
(10%)
0%
10%
20%
0
200
400
600
800
1,000
TE
U li
fts, m
m
TEU % y-o-y
(20%)
(10%)
0%
10%
20%
0
50
100
150
200
250
TE
U m
m
TEU % y-o-y
11
Containership Trade Routes
Source: Clarksons Research, CTS.
(1) Basis trades with Far East & Europe.
(2) Basis full year estimate / forecast.
• Units of 15,000+ TEU remain exclusively deployed on the
Far East-Europe trade
• Deployment of boxships sized 12-14,999 TEU continues
to broaden notably onto the Transpacific route and also
onto some non-mainlane trades
• Boxships sized 6,000-11,999 TEU offer flexible
deployment opportunities, with further reductions in
reliance on the mainlanes seen in 2018, although demand
can be sensitive to short-term shifts
• Over 35% of capacity deployed on intra-regional trade
routes is accounted for by units of 3,000+ TEU; this share
has been fairly steady for a number of years now
• Intra-regional routes, and deployment of sub-3,000 TEU
units thereon, appear ‘protected’ against significant vessel
upsizing to some degree, by infrastructure, volume and
other operational constraints
Mainlane, 30%
Non-Mainlane
East-West, 11%North-
South, 16%
Intra-Regional,
43%
201mm
TEU
Largest vessels primarily deployed on long trade routes
Container Trade by Trade Lane 2018
12
Geographic Deployment Favoring Certain Size Vessels
Largest vessels primarily deployed on long trade routes
Capacity Deployment By Routemm $ by Asset Class
Source: Clarksons Research, CTS.
0%
20%
40%
60%
80%
100%
<3k TEU 3-6k TEU 6-8k TEU 8-12k TEU 12-15k TEU 15k+ TEU
Mainlane E-W Non-Mainlane E-W North-South Intra-Regional
13
0.00
0.25
0.50
0.75
1.00
1.25
2019 2020 2021 2022
12,000+ TEU 8,000–11,999 TEU 3,000–7,999 TEU 100–2,999 TEU
10%
14%
1%
12%
0%
5%
10%
15%
Containership Orderbook %Fleet
Containership 8,000+ TEUOrderbook % Fleet
Containership 3-7,999 TEUOrderbook % Fleet
Containership <3,000 TEUOrderbook % Fleet
Supply Growth Primary in Largest Vessel Segments
Orderbook is concentrated in 8,000+ TEU vessels where Danaos has the greatest charter coverage
Containership Orderbook, as % of Fleet by SegmentTEU, mm
Source: Clarksons Research, CTS.
Containership Orderbook, By Scheduled Delivery YearTEU, mm
14
Containership Charter Rate Improving from Recent Lows
4,400 TEU gls ‘Old Panamax’ Containership
6-12 Month TC Rate$/day, thousands
9,000 TEU gls Containership 3-yr TC Rate1
$/day, thousands
Source: Clarksons Research, CTS.
Note: Limited activity on longer TCs with wide spread on rate ideas.
(1) Based on ‘Neo-Panamax’ ships.
6,800 TEU Containership 3-yr TC Rate$/day, thousands
2,500 TEU grd Containership 6-12 month TC Rate$/day, thousands
0
10
20
30
40
50
Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19
0
5
10
15
20
25
30
Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19
0
10
20
30
40
Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19
0
10
20
30
40
Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19
15
Containership Asset Values Improving from Recent Lows
4,500 TEU ‘Old Panamax’ Containership 10 Year Old
Secondhand Pricemm $
8,800 TEU Containership 5 Year Old Secondhand Pricemm $
Source: Clarksons Research, CTS.
Note: Limited activity on longer TCs with wide spread on rate ideas.
(1) Based on ‘Neo-Panamax’ ships.
6,600 TEU Containership 5 Year Old Secondhand Pricemm $
2,500 TEU grd Containership 10-Year-Old
Secondhand Pricemm $
0
20
40
60
80
100
120
140
Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-190
20
40
60
80
100
120
Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19
0
10
20
30
40
50
Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19
0
10
20
Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19
16
Financial Overview
Historical Financials
Net Leverage Adjusted Net Income
Operating Revenuesmm $
Adjusted EBITDAmm $
$589 $588 $552 $568
$498 $452 $459 $453
2012 2013 2014 2015 2016 2017 2018 3Q 2019LTM
$432 $434 $404 $418
$351 $310 $318 $313
2012 2013 2014 2015 2016 2017 2018 3Q 2019LTM
7.3x 7.0x 7.2x 6.5x
7.0x 7.3x
5.1x 4.9x
2012 2013 2014 2015 2016 2017 2018 3Q 2019LTM
Source: Company filings. LTM ended September 30, 2019.
Note: 4Q 2018, 1Q 2019 and 2Q 2019 Adjusted Net Income was $36.6mm, $38.6mm and $34.2mm, respectively, giving September 30, 2019 LTM Adjusted Net Income of $147.3mm.
Adjusted Net Income reflects add-backs of various income statement items, most notably impairment charges, amortization of deferred financing costs and other one-off extraordinary items.
$60 $54 $60
$159 $141
$115 $131
$147
2012 2013 2014 2015 2016 2017 2018 3Q 2019LTM
18
Summary Results
Third Quarter 2019 Earnings
Nine months ended September 30 L 12
2019 2018 % yoy Months
Operating Revenue $337,040 $343,101 -1.8% $452,671
Adjusted EBITDA1 $232,447 $237,677 -2.2% $312,618
Adjusted Net Income $110,706 $94,581 17.0% $147,311
Adjusted Earnings per Share, diluted2 $7.23 $10.30 -29.8% $9.63
Summary of Resultsthousands $, expect per share figures
Third Quarter Highlights
• Fleet utilization for three months ended September 30, 2019 was 98.7%, an increase of ~130 bps versus the prior year
• $0.4 million increase in adjusted net income in the three months ended September 30, 2019 compared to prior year
due to decrease in total operating expenses and net finance expenses, partially offset by decrease in operating revenues
• Charter contract coverage of 89% in terms of operating revenues and 75% in terms of operating days over the next 12
months
(1) Adjusted EBITDA represents net income before interest income and expense, depreciation, amortization of deferred drydocking & special survey costs
and deferred finance costs, amortization of deferred realized losses on interest rate swaps, loss on sale of securities, gain on debt extinguishment, stock based compensation and refinancing professional fees.
(2) Based on weighted average diluted shares outstanding, except LTM. LTM diluted EPS is based on average shares diluted outstanding for the twelve months ended September 30, 2019.19
Charter-Adjusted Total Asset Value Net Debt Net Working Capital & Other Net Asset Value
Charter Adjusted Net Asset Value
Note: Asset value does not include vessels acquired after September 30, 2019, including Conti Champion. Refer to appendix for additional details regarding calculation of Net Asset Value.
(1) Net debt includes (1) $1,471.4 million of long-term debt, including current portion, which adds back deferred finance costs of $36.1 million and debt fair value adjustment of $21.4 million, and (2) $141.4 million of long-term leaseback obligations,
including current portion, less (3) cash and cash equivalents of $82.8 million. Please refer to Appendix. Does not include accumulated accrued interest of $201.8 million as of September 30, 2019.
(2) Includes carrying value of investments in Gemini JV of $7.8 million and ZIM and HMM notes of $29.85 million, as well as net working capital and other assets and liabilities. Excludes assets and liabili ties relating to accruals for certain non-cash
items relating to straight-line revenue recognition and unearned revenue with respect to ZIM and HMM notes. Please refer to Appendix for further details.
(3) Based on 15.371mm shares outstanding as of September 30, 2019.
(in US$ millions)
(2)(1)
NAV / Share: $23.57(3)
As of September 30, 2019
• As calculated in accordance with the financial covenants contained in the Company’s credit facilities as of September 30, 2019, market value
of the Company’s existing fleet of 55 containerships on a charter-inclusive basis was approximately $1.84 billion. Including $16 million carrying
value in advances for installation of vessel scrubbers, which are not yet fully installed, this charter-inclusive value increases to $1.86 billion
− Broker appraisals for charter-free asset value are as of June 30, 2019; charter-adjustments are as of September 30, 2019
• Adjustments to calculate net asset value include:
− Net debt, which is adjusted to include non-cash fair value adjustments and deferred finance costs
− Net working capital & other, which includes DAC’s equity stake in the Gemini joint venture at carrying value
$1,855 ($1,530)
$37
$362
20
Danaos Capital Structure as of September 30, 2019
Note: Danaos refinanced $2.2bn of debt due December 31, 2018 to reduce its total debt and extend maturities to December 2023.
LTM Adj. EBITDA of $313mm. Please refer to Adjusted EBITDA disclosure .
Commentary
• 7.1 mm new shares
(47.5%) issued to certain
lenders in the refinancing,
0.3 mm new RSUs issued
to management
21
Actual June 30,
2018
Refinancing
Adjustments
Pro-forma for
refinancing
Actual Sept. 30,
2019Cash $75 $10 $85 $83
Bank Debt:
Royal Bank of Scotland $655 (179) $476 $462
Promontoria, Davidson Kempner, Aegean Baltic Bank 634 (251) 383 376
Citi $120 mil. facility (ex ABN Amro Club facility) 204 (84) 120 103
Club Facility 214 (7) 206 146
Credit Suisse Facility 172 - 172 119
Citi $114.1 mil. facility 114 - 114 77
Citi $123.9 mil. facility (ex Deutsche Bank facility) 153 (29) 124 90
Citi - Eurobank facility 38 - 38 29
Sinosure facility (China Exim, Citi, ABN Amro) 71 - 71 47
Korea Exim Bank, ABN Amro facility 17 (17) - -
Long-term Leaseback Obligation - - - 141
Exit Fee 23 (1) 21 22
Deferred Finance Costs (6) (45) (51) (36)
Debt Fair Value Adjustment - (29) (29) (21)
Total Debt $2,288 ($644) $1,644 $1,555
adjusted for
Deferred Finance Costs $6 $45 $51 $36
Debt Fair Value Adjustment - $29 $29 $21
Total Debt $2,294 ($570) $1,724 $1,613
Net Debt 2,219 (580) 1,639 1,530
Book Value of Equity 574 273 847 792
Total Capitalization $2,868 ($296) $2,571 $2,405
Diluted shares outstanding 7,843 7,395 15,237 15,373
Credit Statistics:
LTM Adj. EBITDA $315 $315 $313
Debt / Adj. EBITDA 7.3x 5.5x 5.2x
Net Debt / Adj. EBITDA 7.0x 5.2x 4.9x
Net Debt / Book Equity 3.9x 1.9x 1.9x
Capitalization
mm $
Summary
Summary
Danaos is a market leader in the container shipping industry
Strong financial support from founder and largest shareholder
Refinancing significantly increases financial flexibility and reduces
interest expense
Strong cash flow visibility from large, modern vessels employed on
longest charters in backlog
Improving market conditions in mid-sized and smaller vessel
segments creates optionality as shorter duration charters roll off
23
Appendix
Substantial Fleet Employment and Coverage
(1) Age as of September 30, 2019
5x13,100 TEU
3x10,100 TEU
9x8,500 – 9,600 TEU
9x6,400 – 6,500 TEU
2018 2019 2020 2021 2022 2023 2024 2025
Hyundai Honour
Hyundai Respect
Maersk Enping
Maersk Exeter
MSC Ambition
Express Berlin
Express Rome
Express Athens
Europe
America
Pusan C
Le Havre
CMA CGM Attila
CMA CGM Tancredi
CMA CGM Bianca
CMA CGM Samson
CMA CGM Melisande
Performance
Dimitra C
CMA CGM Moliere
CMA CGM Musset
CMA CGM Nerval
YM Mandate
CMA CGM Rabelais
CMA CGM Racine
YM Maturity
2028
Charterer Age1 Vessel
7.6
7.6
7.4
7.3
7.3
8.6
8.5
8.4
15.1
14.9
13.1
12.9
8.2
8.1
7.9
7.8
7.6
17.6
17.3
10.0
9.6
9.4
9.4
9.3
9.1
9.1
Total Charter
Revenue
Contribution
38%
5%
29%
23%
25
Substantial Fleet Employment and Coverage
Charterer Age1 Vessel
Total Charter
Revenue
Contribution
10x4,300 – 5,500 TEU
8x3,400 TEU
11x2,200 – 2,600 TEU
2018 2019 2020 2021 2022 2023 2024
ANL Tongala
Derby D
YM Seattle
YM Vancouver
Zim Rio Grande
Zim Sao Paolo
Zim Kingston
Zim Monaco
Zim Dalian
Zim Luanda
Dimitris C
Colombo
Singapore
Express Argentina
Express Brazil
Express France
Express Spain
Express Black Sea
Future
Sprinter
Vladivostok
Advance
Stride
Progress C
Amalia C
Highway
Bridge
Danae C
MSC Zebra
15.6
15.4
12.1
11.8
11.2
11.0
10.9
10.7
10.5
10.3
18.8
15.6
15.0
9.4
9.2
9.0
8.7
8.5
22.5
22.3
22.2
22.1
22.1
21.6
21.6
21.6
21.5
18.3
17.8
(1) Age as of September 30, 2019
3%
1%
1%
26
Adjusted EBITDA
Source: Company filings.
Three Months Three MonthsLast Twelve
Months
ended ended ended
($ In thousands) Sept. 30, 2019 Sept. 30, 2018 Sept. 30, 2019
Net income / (Loss) from Continuing Operations (unadjusted) $33,855 $127,217 ($83,547)
Adjustments:
Depreciation 24,336 26,995 99,146
Amortization of deferred drydocking & special survey costs 2,271 2,636 8,874
Amortization of defered realized losses of cash flow interest rate swaps 913 931 3,640
Amortization of deferred finance costs 4,027 4,834 18,854
Interest income (1,586) (1,505) (6,234)
Interest expense 14,317 16,079 55,972
EBITDA $78,133 $177,187 $96,705
Impairment loss - - 210,715
Gain on debt extinguishment - (116,365) 0
Refinancing professional fees - 21,766 (154)
Accelerated amortization of accumulated other comprehensive loss - - 1,443
Stock based compensation 1,195 157 3,909
ADJUSTED EBITDA $79,328 $82,745 $312,618
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
September 30, 2019
27
Adjusted Net Income
Source: Company filings.
Reconciliation of Net Income to Adjusted Net Income and Adjusted Earnings per Share
September 30, 2019
Three Months Three MonthsLast Twelve
Months
ended ended ended
($ In thousands, except per share items) Sept. 30, 2019 Sept. 30, 2018 Sept. 30, 2019
Net income / (Loss) from Continuing Operations $33,855 $127,217 ($83,547)
Adjustments:
Impairment loss - - 210,715
Refinancing professional fees - 21,766 (154)
Amortization of deferred finance costs 4,027 4,834 18,854
Gain on debt extinguishment - (116,365) 0
Accelerated amortization of accumulated other comprehensive loss - - 1,443
ADJUSTED NET INCOME $37,882 $37,452 $147,311
ADJUSTED EARNINGS PER SHARE
Diluted net income per share $2.46 $3.17 $9.63
Diluted weighted average number of shares 15,373 11,828 15,291
28
Appendix: Danaos Net Asset Value(1)
(1) Net Asset Value (NAV) is used to assess compliance with our credit facility covenants, and management
believes that many investors use NAV as a reference point in assessing valuation of fleets of ships and
similar assets.
(2) As calculated in accordance with the financial covenants contained in the Company’s credit facilities as of
September 30, 2019, on a charter-inclusive basis, as follows (1) for any vessel having a charter with more
than 12 months remaining duration, the present value of the “bareboat-equivalent” time charter income from
such charter (contracted revenue thereunder less forecasted operating expenses, insurances and dry-
docking costs), plus (2) the present value of the residual charter-free value of any vessel (estimated based on
June 30, 2019 broker valuations using vessel age as of the end of applicable charter, if any), each discounted
to present value using a discount rate 7.0%. See “Item 5. Operating and Financial Review and Prospects” in
the Company’s Annual Report on Form 20-F filed with the SEC on March 5, 2019. These calculations of
vessel value may not be comparable to other methods of determining vessel values or reported book value
($2.4 billion as of September 30, 2019). Vessel values are highly volatile and contracted charter revenue is
subject to counterparty performance and may not be transferable upon sale of a vessel. As such, the
Company’s estimates of market value may not be indicative of the current or future value of its vessels, or
prices that the Company could achieve if it were to sell the vessels.
(3) Represents advances for scrubber installations. Included in Other non-current assets on the Company’s
balance sheet.
(4) Consists of (i) Current portion of long term debt, net of $115.551 million and (ii) Long-term debt, net of
$1,298.271 million plus deferred finance costs, net, of $36.1 million and debt fair value adjustment of $21.4
million. Does not include accumulated accrued interest of $201.8 million.
(5) Excludes the following non-cash items included on the Company’s balance sheet, as of September 30,
2019: (i) unearned revenue liabilities totaling $45.277 million relating to an accounting charge recognized
upon the Company’s receipt of the ZIM and HMM notes in respect of charter amendments ($31.235 million
Unearned revenue, net of current portion and $14.042 million included in Unearned revenue, current portion),
(ii) Other current assets ($2.851 million) and Other non-current assets ($31.910 million) related to straight-line
revenue recognition totaling $34.761 million and (iii) liabilities related to straight-line revenue recognition
totaling $1.178 million (Other current liabilities of $0.468 million and $0.710 million included in Other long-term
liabilities).
(6) Represents investment in Gemini JV.
(7) Included in Other non-current assets on the Company’s balance sheet.
29
Charter Adjusted Asset Value
Charter Adjusted Fleet Value(2) $ 1,838,468
Advances for vessels additions(3) 16,466
Total Charter Adjusted Asset Value $ 1,854,934
Less:
Net Debt
Bank debt(4) $ 1,471,412
Long-term leaseback obligation
(including current portion)141,374
Less:
Cash and cash equivalents (82,823)
Total Net Debt $ 1,529,963
Plus:
Net Working Capital & Other(5)
Accounts receivable, net $ 7,637
Inventories 8,966
Prepaid Expenses 899
Due from related parties 20,409
Other current assets 4,003
Investments in affiliates(6) 7,871
Zim notes(7) 20,706
HMM notes(7) 9,149
Less:
Accounts payable (12,414)
Accrued liabilities (9,692)
Unearned revenue (5,375)
Other current liabilities (14,849)
Total Net Working Capital & Other $ 37,310
Net Asset Value: $ 362,281
(in US$ thousands)