Danaos Corporation (“Danaos”), one of the world’s largest independent owners of containerships, reported unaudited results for the quarter ended March 31, 2019.
Highlights for the First Quarter Ended March 31, 2019:
- Adjusted net income1 of $38.6 million, or $2.53 per share2, for the three months ended March 31, 2019 compared to $28.0 million, or $3.56 per share2, for the three months ended March 31, 2018, an increase of 37.9%.
- Operating revenues of $112.9 million for the three months ended March 31, 2019 compared to $111.9 million for the three months ended March 31, 2018, an increase of 0.9%.
- Adjusted EBITDA1 of $77.5 million for the three months ended March 31, 2019 compared to $76.6 million for the three months ended March 31, 2018, an increase of 1.2%.
- Total contracted operating revenues were $1.5 billion as of March 31, 2019, with charters extending through 2028 and remaining average contracted charter duration of 4.7 years, weighted by aggregate contracted charter hire.
- Charter coverage of 86% for the next 12 months based on current operating revenues and 71% in terms of contracted operating days.
- Effected 1:14 reverse stock split on May 2, 2019, which the Company believes will cure the previously announced NYSE deficiency caused by Danaos stock trading below $1.
- Concluded sale and leaseback transactions for two 13,100 TEU containerships on April 12, 2019, resulting in net proceeds of $144.8 million, which were used to repay credit facilities secured by mortgages on the vessels.
Three Months Ended March 31, 2019
Financial Summary – Unaudited
( Expressed in thousands of United States dollars, except per share amounts )
Adjusted net income1
Earnings per share, diluted2
Adjusted earnings per share, diluted1,2
Diluted weighted average number of shares (in thousands)2
Adjusted net income, adjusted earnings per share and adjusted EBITDA are non-GAAP measures. Refer to the reconciliation of net income to adjusted net income and net income to adjusted EBITDA.
Earnings per share and weighted average number of shares give retroactive effect to the reverse stock split of 1-for-14 implemented on May 2, 2019, for both periods presented.
Danaos’ CEO Dr. John Coustas commented:
“Danaos Corporation’s adjusted net income of $38.6 million, or $2.53 per share, for the first quarter of 2019 increased by $10.6 million, or 37.9%, when compared to the first quarter of 2018. This improvement was primarily the result of a $7.6 million decrease in net finance expenses and a $2 million decrease in total operating costs, combined with a $1 million increase in operating revenues due to improved fleet utilization. Adjusted EBITDA for the first quarter of 2019 was $77.5 million, $0.9 million higher than the first quarter of 2018.
“Effective May 2, 2019, following approval of our shareholders and our Board, we effected a 1:14 reverse stock split, which we believe will cure the previously announced NYSE deficiency caused by our stock trading below $1.
“At the beginning of April we concluded a $150 million sale and leaseback transaction for two 13,100 TEU vessels, fulfilling a requirement from the re-financing we concluded last August. The net proceeds of the transaction were used to prepay certain credit facilities that had financed the vessels. Under the terms of the transaction, the Company will re-acquire the vessels at the end of their five-year lease periods.
“The charter market for vessels over 5,500 TEU has seen significant improvement when compared to the recent lows of the fourth quarter of 2018. In general, the charter market for larger vessels has improved considerably, which is notable as more than 70% of our fleet in terms of capacity, is comprised of such vessels. Vessels below 5,500 TEU have also improved slightly since last November’s downturn.
“On the investment side, we have recently concluded our first scrubber installation on a vessel owned by Gemini Shipholdings Corporation, an entity in which Danaos has a 49% shareholding interest, and will proceed with installing scrubbers on a further nine vessels wholly-owned by Danaos and one additional vessel owned by Gemini over the next few months.
“Our total contracted revenues as of March 31, 2019 were $1.5 billion, and we maintain our high charter contract coverage of 86% in terms of operating revenues and 71% in terms of operating days over the next 12 months. This insulates us from near-term market weakness.
“Danaos continues to be a leader in the container shipping industry on the back of a solid track record of operational excellence and technological innovation that allows us to continually deliver high quality service to our customers. At the same time, the recently concluded refinancing transaction further enhances our ability to pursue growth opportunities and our goal of delivering value to our shareholders.”
Read the full report here.