Danaos Corporation Announces Additions of $616 million to its Contracted Revenue Backlog and the Addition of Five Containership Vessels to its Newbuildings Orderbook

Rhea-AI Summary

Danaos , a leading independent owner of containerships, announced significant updates to its contracted revenue backlog and vessel orders. The company has added $616 million to its contracted revenue backlog, comprising $203 million from two-year charter fixtures for nine existing vessels and $413 million from charter fixtures for five newbuilding orders. The new vessels, costing $509 million, include one 8,258 TEU vessel and four 9,200 TEU vessels, set for delivery between 2027 and 2028 from Chinese shipyards. These ships will feature advanced eco-designs and comply with the latest IMO standards. Danaos' total contracted cash operating revenues now stand at $2.9 billion, with an average charter duration of 3.1 years. The company's fleet's contracted operating days are covered 99% for 2024 and 80% for 2025.

Positive

• $616 million added to contracted revenue backlog.
• $2.9 billion in total contracted cash operating revenues.
• Five new vessels with advanced eco-features, enhancing fleet modernization.
• High charter coverage: 99% for 2024 and 80% for 2025.

Negative

• $509 million in capital expenditure for new vessels.

Insights

Financial Analyst

Danaos Corporation has significantly boosted its revenue outlook by adding $616 million to its contracted revenue backlog. This move primarily stems from securing forward two-year charter fixtures for nine existing vessels and long-term charters for five new containerships. The financial implications are noteworthy as these deals will enhance cash flow visibility and stability, which are important for investor confidence. The company now has a total contracted cash operating revenue of $2.9 billion, with good coverage for 2024 and 2025.

Looking at the short-term, investors can expect improved cash flows and potential dividend increases, as higher revenue backlog typically translates to stronger financial performance. In the long-term, the new eco-friendly vessels equipped with the latest technology will help Danaos to stay competitive in a market increasingly focused on environmental regulations and fuel efficiency. This strategic fleet modernization is likely to reduce operating costs and increase operational efficiency, benefiting shareholders in the long run.

However, investors should remain cautious about the high capex involved in these newbuilds, amounting to $509 million. The costs will be spread over multiple years, but it still represents a substantial investment that needs careful financing and risk management.

Shipping Industry Expert

The recent additions to Danaos Corporation's orderbook, especially the five new eco-friendly containerships, are a strategic response to evolving industry standards. These vessels are set to meet IMO Tier III emission standards and EEDI Phase III requirements, which mandate reduced greenhouse gas emissions and improved energy efficiency. By integrating methanol fuel readiness, open loop scrubbers and Alternative Maritime Power (AMP) units, Danaos positions itself as a forward-thinking player in a highly competitive market.

This commitment to environmental standards is likely to attract more clients who are increasingly conscious of sustainability and regulatory compliance. This can lead to more charter opportunities and possibly better charter rates, reinforcing Danaos's market position. Furthermore, the newbuilds’ scheduled deliveries from 2027 through 2028 provide a clear growth trajectory and operational expansion plan, which will be reassuring for long-term investors.

The downside is that the delivery timeline is extended, so the benefits of these technological advancements won't be immediate. Investors will need to be patient, understanding that the payoff from these investments aligns more with long-term growth and sustainability goals rather than short-term gains.

ATHENS, Greece--(BUSINESS WIRE)-- Danaos Corporation (NYSE: DAC), one of the world’s largest independent owners of containerships, announced today that (i) it has added $616 million to its contracted revenue backlog and (ii) has added an extra five newbuilding containerships to its orderbook.

The contract revenue backlog additions include (i) approximately $203 million of forward two-year charter fixtures for nine of its existing vessels and (ii) approximately $413 million of charter fixtures for the new five newbuilding orders with an average charter duration of 4.8 years weighted by aggregate contracted charter hire.

The five newbuilding orders with an aggregate contract price of $509 million comprise of one additional 8,258 container vessel to be built at Yangzijiang shipyard in China expected to be delivered in 2027 and four 9,200 TEU container vessels to be built at Dalian shipyard in China, three of which have expected deliveries in 2027 and one vessel in 2028. All five vessels are designed with the latest eco characteristics, will be methanol fuel ready, fitted with open loop scrubbers and Alternative Maritime Power (AMP) units and will be built in accordance with the latest requirements of the International Maritime Organization (IMO) in relation to Tier III emission standards and Energy Efficiency Design Index (EEDI) Phase III.

As a result of the recent activity, total contracted cash operating revenues, on the basis of concluded charter contracts through the date of this release, currently stand at $2.9 billion. The remaining average contracted charter duration is 3.1 years, weighted by aggregate contracted charter hire.

Contracted operating days charter coverage for the container vessel fleet is currently 99% for 2024 and 80% for 2025. This includes newbuildings based on their scheduled delivery dates.

During the second quarter of 2024 we have taken delivery of the first three newbuilding vessels, namely two 8,010 TEU vessels and one 7,165 TEU vessel. As a result, as of the date of this press release, we currently have 16 container vessels under construction with an aggregate capacity of 129,819 TEU. We anticipate delivery of three newbuilding vessels in the remainder of 2024, two vessels in 2025, three vessels in 2026, seven vessels in 2027 and one vessel in 2028.

The Company’s CEO, Dr. John Coustas, commented:

“We are very pleased to announce the commissioning of a further five containerships that are at the forefront of new technology. With this new order, Danaos continues to solidify its position as one of the major players in the containership market worldwide and makes yet another solid step towards fleet modernization.

At the same time, we are also pleased to report the results of our recent chartering activity. We have now secured multi-year charters for all the vessels in our orderbook while we have also made significant additions to the contracted revenue backlog of our existing fleet and have further improved earnings and cash flow visibility.

We will continue to work to maximize our profitability and secure more accretive transactions with a focus on creating value for our shareholders.”

About Danaos Corporation

Danaos Corporation is one of the largest independent owners of modern, large-size container vessels. Our current fleet of 70 containerships aggregating 442,278 TEUs and 16 under construction container vessels aggregating 129,819 TEUs ranks Danaos among the largest container vessels charter owners in the world based on total TEU capacity. Danaos has also recently invested in the drybulk sector with the acquisition of 10 Capesize drybulk vessels aggregating 1,760,861 DWT. Our fleet is chartered to many of the world's largest liner companies on fixed-rate charters. Our long track record of success is predicated on our efficient and rigorous operational standards and environmental controls. Danaos Corporation's shares trade on the New York Stock Exchange under the symbol "DAC".

Visit our website at www.danaos.com

View source version on businesswire.com: https://www.businesswire.com/news/home/20240708599916/en/

Company:

Evangelos Chatzis

Chief Financial Officer

Danaos Corporation

Athens, Greece

Tel.: +30 210 419 6480

E-Mail: cfo@danaos.com



Investor Relations and Financial Media

Rose & Company

New York

Tel. 212-359-2228

E-Mail: danaos@rosecoglobal.com

Source: Danaos Corporation

FAQ

What recent additions did Danaos make to its contracted revenue backlog?

Danaos added $616 million to its contracted revenue backlog, including $203 million from two-year charters for nine existing vessels and $413 million from charters for five newbuilding orders.

How much will Danaos 's new containerships cost?

The five new containerships will cost an aggregate of $509 million.

What is the delivery schedule for Danaos 's new vessels?

The new vessels are scheduled for delivery between 2027 and 2028.

What are the environmental features of Danaos 's new containerships?

The new vessels will have eco-friendly designs, be methanol fuel ready, fitted with open loop scrubbers, AMP units, and comply with IMO Tier III emission standards and EEDI Phase III.

What is Danaos 's total contracted cash operating revenue as of the latest announcement?

Danaos 's total contracted cash operating revenues stand at $2.9 billion.

What is the average contracted charter duration for Danaos 's fleet?

The average contracted charter duration is 3.1 years.

What is the charter coverage for Danaos 's fleet for 2024 and 2025?

The charter coverage is 99% for 2024 and 80% for 2025.