Danaos Corporation 2Q and 1H 2014 Results

By Joseph R. Fonseca
Monday, July 28, 2014
Danaos Corporation

 

Danaos Corporation ("Danaos") (NYSE: DAC), a leading international owner of containerships, today reported unaudited results for the period ended June 30, 2014.

Highlights for the Second Quarter and Half Year Ended June 30, 2014:

*Operating revenues of $136.4 million for the three months ended June 30, 2014 compared to $146.6 million for the three months ended June 30, 2013, a decrease of 7.0%. Operating revenues of $271.9 million for the six months ended June 30, 2014 compared to $292.7 million for the six months ended June 30, 2013, a decrease of 7.1%.

*Adjusted EBITDA1 of $99.0 million for the three months ended June 30, 2014 compared to $107.4 million for the three months ended June 30, 2013, a decrease of 7.8%. Adjusted EBITDA1 of $195.4 million for the six months ended June 30, 2014 compared to $216.0 million for the six months ended June 30, 2013, a decrease of 9.5%.

*Adjusted net income of $11.6 million, or $0.11 per share, for the three months ended June 30, 2014 compared to $11.8 million, or $0.11 per share, for the three months ended June 30, 2013. Adjusted net income1 of $18.6 million, or $0.17 per share, for the six months ended June 30, 2014 compared to $25.7 million, or $0.23 per share, for the six months ended June 30, 2013.

*The remaining average charter duration of our fleet was 8.5 years as of June 30, 2014 (weighted by aggregate contracted charter hire).

*Total contracted operating revenues were $4.0 billion as of June 30, 2014, through 2028.

*Charter coverage of 92% for the next 12 months in terms of contracted operating days and 98% in terms of operating revenues.
 

Danaos' CEO Dr. John Coustas commented, "Danaos is reporting a solid second quarter with adjusted net income of $11.6 million, or 11 cents per share, which is equivalent to the $11.8 million, or 11 cents per share of adjusted net income for the 2nd quarter of 2013. We maintained the Company's profitability between the 2 quarters through a $7.9 million improvement in financing costs together with a $2.1 million improvement in operating costs, despite a decrease in operating revenues. The decline in operating revenues between the 2 quarters mainly reflects $3 million related to softer charter market conditions and $6.1 million attributable to the reduced charter hire on six of our vessels following the previously announced restructuring of Zim, formalized on July 16, 2014.

The reduction in finance costs is expected to continue in the coming quarters as we reduce leverage and benefit from the expiration of expensive interest rate swaps. We project debt repayments in 2014 exceeding $220 million and swap expirations exceeding $1 billion in notional terms.

During the 2nd quarter signs of improvement in container market fundamentals have manifested themselves through a reduction of laid up tonnage and improved utilization rates in main trade lanes, although this has not yet translated into an improvement in charter rates. The main industry event for the quarter was the dismissal of the proposed P3 alliance by the regulatory authorities in China. We do not however believe that this is likely to affect the necessary rationalization of tonnage deployment in the industry. Tonnage deployment rationalization, together with continued cost optimization and recovery on the demand side should result in a healthier industry going forward.

Despite the soft charter market, with 98% charter coverage for the next 12 months in terms of operating revenues we are substantially insulated from market volatility and the timing of any recovery. Additionally, our $5,957 daily operating cost clearly positions us as one of the most efficient operators in the industry.

We will continue our efforts to de-lever our balance sheet, manage our fleet efficiently and capitalize on the resilience of our business model towards creating value for our shareholders.

Three months ended June 30, 2014 compared to the three months ended June 30, 2013

During the three months ended June 30, 2014, Danaos had an average of 55.8 containerships compared to 60.9 containerships for the three months ended June 30, 2013. Our fleet utilization increased to 97.3% in the three months ended June 30, 2014 compared to 94.1% in the three months ended June 30, 2013. During the three months ended June 30, 2014, our fleet utilization for the fleet under employment was 98.2% (which excludes the vessels on lay up). During the three months ended June 30, 2014, we sold four vessels, the Commodore, the Duka, the Mytilini and the Messologi, for an aggregate amount of $44.1 million, which represents the gross sale proceeds less commissions.

Our adjusted net income was $11.6 million, or $0.11 per share, for the three months ended June 30, 2014 compared to $11.8 million, or $0.11 per share, for the three months ended June 30, 2013. We have adjusted our net income in the three months ended June 30, 2014 for unrealized gains on derivatives of $4.5 million, as well as a non-cash expense of $4.7 million for fees related to our comprehensive financing plan (comprised of non-cash, amortizing and accrued finance fees) and a gain on sale of vessels of $5.2 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.

The decrease of 1.7%, or $0.2 million, in adjusted net income for the three months ended June 30, 2014 compared to the three months ended June 30, 2013, was attributed to a $6.1 million decrease in operating revenues as a result of reduced rates for six 4,253 TEU vessels on charter to Zim following the Zim restructuring, as well as a $4.1 million net decrease in operating revenues mainly attributed to lower re-chartering rates for certain of our vessels as a result of the continuing soft charter market and vessels sold that were generating revenue in the three months ended June 30, 2013, partially offset by vessels acquired that were generating revenue in the three months ended June 30, 2014. This decrease in operating revenues was also partially offset by a $2.1 million reduction in total fleet operating costs and a $7.9 million reduction in net finance costs mainly due to lower debt balances and interest rate swap expirations.

On a non-adjusted basis our net income was $16.6 million, or $0.15 per share, for the three months ended June 30, 2014, compared to net income of $19.5 million, or $0.18 per share, for the three months ended June 30, 2013.

Six months ended June 30, 2014 compared to the six months ended June 30, 2013 During the six months ended June 30, 2014, Danaos had an average of 57.2 containerships compared to 62.0 containerships for the six months ended June 30, 2013. Our fleet utilization increased to 96.2% in the six months ended June 30, 2014 compared to 91.8% in the six months ended June 30, 2013, mainly due to the sale of our older vessels certain of which were off-charter and laid-up.

During the six months ended June 30, 2014, our fleet utilization for the fleet under employment was 98.0% (which excludes the vessels on lay up). During the six months ended June 30, 2014, we sold five of our older vessels, the Marathonas, the Commodore, the Mytilini, the Duka and the Messologi, for an aggregate amount of $55.2 million (representing the gross sale proceeds less commissions).

Our adjusted net income was $18.6 million, or $0.17 per share, for the six months ended June 30, 2014 compared to $25.7 million, or $0.23 per share, for the six months ended June 30, 2013. We have adjusted our net income in the six months ended June 30, 2014 for unrealized gains on derivatives of $10.2 million, as well as a non-cash expense of $9.4 million for fees related to our comprehensive financing plan (comprised of non-cash, amortizing and accrued finance fees) and a gain on sale of vessels of $5.7 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.

The decrease of 27.6%, or $7.1 million, in adjusted net income for the six months ended June 30, 2014 compared to the six months ended June 30, 2013, was attributed to a $12.0 million decrease in operating revenues as a result of reduced rates for six 4,253 TEU vessels on charter to Zim following the Zim restructuring as well as a $8.8 million net decrease in operating revenues mainly attributed to lower re-chartering rates for certain of our vessels as a result of the continuing soft charter market and vessels sold that were generating revenue in the six months ended June 30, 2013, partially offset by vessels acquired that were generating revenue in the six months ended June 30, 2014. This decrease in operating revenues was also partially offset by a $1.3 million reduction in total fleet operating costs and a $12.4 million reduction in net finance costs mainly due to lower debt balances and interest rate swap expirations.

On a non-adjusted basis our net income was $25.1 million, or $0.23 per share, for the six months ended June 30, 2014, compared to net income of $33.0 million, or $0.30 per share, for the six months ended June 30, 2013.

Conference Call and Webcast :
On Tuesday, July 29, 2014 at 10:00 A.M. ET, the Company's management will host a conference call to discuss the results. There will also be a live and then archived webcast of the conference call through the Danaos website (www.danaos.com).
 

Maritime Reporter May 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Finance

AAPA Applauds Senate Passage of Trade Promotion Legislation

The American Association of Port Authorities (AAPA) applauded Senate passage over the past weekend of the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (TPA-2015),

Port of Duluth Intermodal Project Underway

The U.S. Department of Transportation’s Maritime Administrator, Chip Jaenichen, today joined Senators Amy Klobuchar and Al Franken, Congressman Rick Nolan, Duluth Mayor Don Ness,

Chile Exporters Fret as Customs Strike Continues

A customs strike in Chile that began last week has started to affect exports and imports, although miners in the top copper producer said this week they have not yet been significantly impacted.

News

CMA-CGM to Call Port of Baltimore

International container shipping company CMA-CGM of France announced that it will begin service within the next couple of weeks to the Helen Delich Bentley Port of Baltimore.

Somaliland to Pick Berbera Port Partner by End of Year

Somaliland expects to choose a partner to develop and manage its Berbera port by the end of the year, with construction expected to start early next year, the breakaway

Hapag-Lloyd Expands Feeder Network in Scandinavia

Baltic Express Service (BAX) to include Oslo / Two weekly departures from Gothenburg and Helsingborg in SDX and GTE / Connection via Hamburg and Bremerhaven to

Vessels

Bahri Orders VLCC Newbuilds

Bahri ordered five newbuild very large crude carriers from Hyundai Samho Heavy Industries   The National Shipping Company of Saudi Arabia (Bahri) today signed

Construction Starts on Crowley’s 2nd LNG ConRo Ship

Construction begins on Crowley’s second Commitment Class, LNG-powered ConRo ship for use in the Puerto Rico trade   Shipbuilder VT Halter Marine, Inc. has officially

Star Clippers to Build Massive Square Rigger

Tall ship sailing specialist Star Clippers has announced that it has started building a fourth ship to add to its fleet of graceful square-riggers; its first new-build

 
 
Maritime Careers / Shipboard Positions Maritime Security Maritime Standards Naval Architecture Navigation Offshore Oil Port Authority Salvage Ship Repair Ship Simulators
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.2881 sec (3 req/sec)