Danaos Corporation Reports Results for the Fourth Quarter and Year Ended December 31, 2021

Rhea-AI Summary

Danaos Corporation (NYSE: DAC) reported robust financial results for the fourth quarter and full year ending December 31, 2021. Adjusted net income surged 163.2% year-over-year to $125.8 million, or $6.10 per share, while full-year adjusted net income rose 112% to $362.3 million, or $17.60 per share. Operating revenues increased by 79.8% to $215 million for Q4 and 49.4% to $689.5 million for the year. The company declared a quarterly dividend of $0.75 per share, reflecting its strong cash flow generated from $2.85 billion in contracted revenues. Danaos forecasts continued growth and cash flow stability in 2022.

Positive

• Adjusted net income increased by 163.2% in Q4 2021 to $125.8 million.
• Full-year adjusted net income rose 112% to $362.3 million.
• Operating revenues grew 79.8% in Q4 to $215 million, 49.4% for the year to $689.5 million.
• Quarterly dividend declared at $0.75 per share, a 50% increase.
• Total contracted operating revenues of $2.85 billion with charters extending through 2028.

Negative

• Operating expenses increased by $23.9 million in Q4 2021.

ATHENS, Greece--(BUSINESS WIRE)-- Danaos Corporation (“Danaos”) (NYSE: DAC), one of the world’s largest independent owners of containerships, today reported unaudited results for the fourth quarter and the year ended December 31, 2021.

Highlights for the Fourth Quarter and Year Ended December 31, 2021:

• Adjusted net income¹ of $125.8 million, or $6.10 per share, for the three months ended December 31, 2021 compared to $47.8 million, or $2.29 per share, for the three months ended December 31, 2020, an increase of 163.2%. Adjusted net income¹ of $362.3 million, or $17.60 per share, for the year ended December 31, 2021 compared to $170.9 million, or $7.18 per share, for the year ended December 31, 2020, an increase of 112.0%.
• Reported net income of $1.05 billion, or $51.15 per share, for the year ended December 31, 2021 compared to $153.6 million, or $6.45 per share, for the year ended December 31, 2020.
• Operating revenues of $215.0 million for the three months ended December 31, 2021 compared to $119.6 million for the three months ended December 31, 2020, an increase of 79.8%. Operating revenues of $689.5 million for the year ended December 31, 2021 compared to $461.6 million for the year ended December 31, 2020, an increase of 49.4%.
• Adjusted EBITDA¹ of $159.2 million for the three months ended December 31, 2021 compared to $83.0 million for the three months ended December 31, 2020, an increase of 91.8%. Adjusted EBITDA¹ of $508.8 million for the year ended December 31, 2021 compared to $318.3 million for the year ended December 31, 2020, an increase of 59.8%.
• Total contracted operating revenues were $2.85 billion as of December 31, 2021, with charters extending through 2028 and remaining average contracted charter duration of 4.0 years, weighted by aggregate contracted charter hire.
• Charter coverage of 96.6% for the next 12 months based on current operating revenues and 95.5% in terms of contracted operating days.
• Danaos has declared a dividend of $0.75 per share of common stock for the fourth quarter of 2021, which is payable on February 28, 2022 to stockholders of record as of February 17, 2022.

Three Months and Year Ended December 31, 2021
Financial Summary - Unaudited
(Expressed in thousands of United States dollars, except per share amounts)
		Three months ended		Three months ended		Year ended		Year ended
		December 31,		December 31,		December 31,		December 31,
		2021		2020		2021		2020
Operating revenues		$215,038		$119,642		$689,505		$461,594
Net income		$165,997		$43,179		$1,052,841		$153,550
Adjusted net income1		$125,839		$47,810		$362,257		$170,888
Earnings per share, diluted		$8.05		$2.07		$51.15		$6.45
Adjusted earnings per share, diluted1		$6.10		$2.29		$17.60		$7.18
Diluted weighted average number of shares (in thousands)		20,623		20,874		20,584		23,805
Adjusted EBITDA1		$159,164		$83,009		$508,803		$318,331

1

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.

Danaos’ CEO Dr. John Coustas commented:

"The amount of media and analyst coverage about the positive dynamics in the container market speak for themselves and echo our market view. We foresaw the ongoing disruption in the supply chains and tightening of the container market through 2022 many quarters ago. Our outlook directed our growth and chartering strategy, both of which have maximized our returns. On the other hand, our investment in Zim shares has surpassed all reasonable expectations and led to Danaos posting in excess of 1 billion USD in reported net income for 2021. As a result of these factors, our share price quadrupled in 2021, bringing the company's market capitalization close to 2 billion USD.

What is equally important is that our chartering policy will generate even better cash flows in 2022, and overall, our 2.8 billion USD contracted revenue with average charter duration of 4 years provides certainty about the future. As a result of our significant earnings visibility, we have decided to increase our quarterly dividend by 50% to 0.75 cents per share. The company's significant cash flows support the increased dividend and also provide us flexibility to pursue accretive growth opportunities, continue to reduce leverage and also begin to consider a share buyback.

There have also been significant environmental initiatives that advanced in 2021, and already the path to the future decarbonization of the industry is becoming clearer. There is growing consensus that significant investments need to be made to reduce the carbon footprint of existing vessels. These investments will accompany reductions in speed, which will further support the ongoing market strength. Green fuels are a long way of becoming widely available, which means that the industry will have to adapt to continue using fossil fuels. Further the EU commission rightly proposed in the latest EU Fit for 55 climate initiative to place the burden of absorbing carbon cost on vessel operators who are responsible for fuel procurement and speed determination rather than the vessel owners.

To conclude, 2021 was phenomenal for the entire container industry and even more so for Danaos. The element of counterparty risk that dominated the previous decade has completely disappeared. Long term charters are also becoming the norm. Fortunately, liner companies are targeting their expansion in the inland/air transportation and logistics front to vertically integrate their offering. In conjunction with uncertainty about future vessel propulsion standards, this has put a lid on newbuilding ordering, which I hope can be maintained. Also, the German KG market, which was responsible for 70 percent of the ordering during the last shipbuilding boom, does not exist today.

The future is bright, and Danaos is well positioned to benefit from it and continue to reward its shareholders."

Three months ended December 31, 2021 compared to the three months ended December 31, 2020

During the three months ended December 31, 2021, Danaos had an average of 70.9 containerships compared to 58.5 containerships during the three months ended December 31, 2020. Our fleet utilization for the three months ended December 31, 2021 was 97.4% compared to 97.9% for the three months ended December 31, 2020.

Our adjusted net income amounted to $125.8 million, or $6.10 per share, for the three months ended December 31, 2021 compared to $47.8 million, or $2.29 per share, for the three months ended December 31, 2020. We have adjusted our net income in the three months ended December 31, 2021 for the change in fair value of our investment in ZIM Integrated Shipping Services Ltd. (“ZIM”) of $52.2 million, stock-based compensation of $8.6 million and a non-cash fees amortization and accrued finance fees charge of $3.5 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.

The increase of $78.0 million in adjusted net income for the three months ended December 31, 2021 compared to the three months ended December 31, 2020 is attributable mainly to a $95.4 million increase in operating revenues and recognition of a $16.2 million dividend from ZIM, which were partially offset by $23.9 million increase in total operating expenses, a $8.1 million increase in net finance expenses and a $1.6 million decrease in our equity investment in Gemini Shipholdings Corporation (“Gemini”) following our acquisition and full consolidation of Gemini since July 1, 2021.

On a non-adjusted basis, our net income amounted to $166.0 million, or $8.05 earnings per diluted share, for the three months ended December 31, 2021 compared to net income of $43.2 million, or $2.07 earnings per diluted share, for the three months ended December 31, 2020. Our net income for the three months ended December 31, 2021 includes a total gain on our investment in ZIM of $68.4 million.

Operating Revenues
Operating revenues increased by 79.8%, or $95.4 million, to $215.0 million in the three months ended December 31, 2021 from $119.6 million in the three months ended December 31, 2020.

Operating revenues for the three months ended December 31, 2021 reflect:

• a $38.3 million increase in revenues in the three months ended December 31, 2021 compared to the three months ended December 31, 2020 mainly as a result of higher charter rates;
• a $23.6 million increase in revenues in the three months ended December 31, 2021 compared to the three months ended December 31, 2020 due to the incremental revenue generated by newly acquired vessels;
• a $15.2 million increase in revenue in the three months ended December 31, 2021 compared to the three months ended December 31, 2020 due to higher non-cash revenue recognition in accordance with US GAAP; and
• a $18.3 million increase in revenues in the three months ended December 31, 2021 compared to the three months ended December 31, 2020 due to amortization of assumed time charters.

Vessel Operating Expenses
Vessel operating expenses increased by $8.5 million to $37.2 million in the three months ended December 31, 2021 from $28.7 million in the three months ended December 31, 2020, primarily as a result of the increase in the average number of vessels in our fleet and an increase in the average daily operating cost for vessels on time charter to $5,861 per vessel per day for the three months ended December 31, 2021 compared to $5,571 per vessel per day for the three months ended December 31, 2020. Management believes that our daily operating costs remains among the most competitive in the industry.

Depreciation & Amortization
Depreciation & Amortization includes Depreciation and Amortization of Deferred Dry-docking and Special Survey Costs.

Depreciation
Depreciation expense increased by 31.3%, or $8.1 million, to $34.0 million in the three months ended December 31, 2021 from $25.9 million in the three months ended December 31, 2020 mainly due to our recent acquisition of eleven vessels and installation of scrubbers on nine of our vessels in the year ended December 31, 2020.

Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs remained stable at $2.6 million in each of the three months ended December 31, 2021 and December 31, 2020.

General and Administrative Expenses
General and administrative expenses increased by $12.1 million to $18.5 million in the three months ended December 31, 2021, from $6.4 million in the three months ended December 31, 2020. The increase was mainly attributable to increased management fees due to the increased size of our fleet and increased stock-based compensation.

Other Operating Expenses
Other Operating Expenses include Voyage Expenses.

Voyage Expenses
Voyage expenses increased by $3.7 million to $7.1 million in the three months ended December 31, 2021 from $3.4 million in the three months ended December 31, 2020 primarily as a result of the increase in commissions due to the increase in revenue per vessel and the increase in the average number of vessels in our fleet.

Interest Expense and Interest Income
Interest expense increased by 51.7%, or $6.0 million, to $17.6 million in the three months ended December 31, 2021 from $11.6 million in the three months ended December 31, 2020. The increase in interest expense is a combined result of:

• a $6.0 million reduction in the recognition through our income statement of accumulated accrued interest that had been accrued in 2018 in relation to two of our credit facilities that were refinanced on April 12, 2021. As a result of the refinancing, the recognition of such accumulated interest has decreased.
• A $1.0 million increase in interest expense due to an increase in our debt service cost by approximately 0.5%, which was partially offset by a decrease in our average indebtedness by $85.2 million between the two periods (average indebtedness of $1,397.3 million in the three months ended December 31, 2021, compared to average indebtedness of $1,482.5 million in the three months ended December 31, 2020); and
• a $1.0 million decrease in the amortization of deferred finance costs and debt discount related to our 2018 debt refinancing.

Net proceeds from the issuance of our $300 million Senior Notes in February 2021 together with the net proceeds from a new $815 million senior secured credit facility and a new $135 million leaseback arrangement, each of which was drawn down on April 12, 2021, were used to refinance a substantial majority of our then outstanding indebtedness.

As of December 31, 2021, our outstanding debt, gross of deferred finance costs, was $1,142.0 million, which includes $300 million aggregate principal amount of our Senior Notes, and our leaseback obligation was $226.5 million. These balances compare to debt of $1,368.1 million and a leaseback obligation of $123.4 million as of December 31, 2020.

Interest income decreased by $1.1 million to $0.6 million in the three months ended December 31, 2021 compared to $1.7 million in the three months ended December 31, 2020 mainly as a result of full collection of accrued interest on ZIM and HMM bonds, which were redeemed by the issuers thereof in the year 2021.

Gain on investments
The gain on investments of $68.4 million in the three months ended December 31, 2021 consists of the change in fair value of our shareholding interest in ZIM of $52.2 million and net dividends recognized on ZIM ordinary shares of $16.2 million. ZIM completed its initial public offering and listing on the New York Stock Exchange of its ordinary shares on January 27, 2021. In October 2021, we sold 1,000,000 ordinary shares of ZIM resulting in net proceeds of $44.3 million. Our remaining shareholding interest of 7,186,950 ordinary shares has been fair valued at $423.0 million as of December 31, 2021, based on the closing price of ZIM’s ordinary shares on the NYSE on that date.

Equity income on investments
Equity income on investments in Gemini decreased to nil in the three months ended December 31, 2021 compared to $1.6 million in the three months ended December 31, 2020 following our acquisition and full consolidation of Gemini since July 1, 2021.

Other finance costs, net
Other finance expenses, net decreased by $0.1 million to $0.2 million in the three months ended December 31, 2021 compared to $0.3 million in the three months ended December 31, 2020 due to the decreased finance costs on the refinanced debt.

Loss on derivatives
Amortization of deferred realized losses on interest rate swaps remained stable at $0.9 million in each of the three months ended December 31, 2021 and December 31, 2020.

Other income, net
Other income, net was $0.1 million in the three months ended December 31, 2021 compared to $0.2 million in the three months ended December 31, 2020.

Adjusted EBITDA
Adjusted EBITDA increased by 91.8%, or $76.2 million, to $159.2 million in the three months ended December 31, 2021 from $83.0 million in the three months ended December 31, 2020. As outlined above, the increase is mainly attributable to a $77.1 million increase in operating revenues (net of $18.3 million amortization of assumed time charters) and a recognition of net dividends of $16.2 million from ZIM, which were partially offset by a $15.5 million increase in total operating expenses and a $1.6 million decrease in equity investment in Gemini following our acquisition and full consolidation since July 1, 2021. Adjusted EBITDA for the three months ended December 31, 2021 is adjusted for the change in fair value of our investment in ZIM of $52.2 million and stock-based compensation of $9.2 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.

Year ended December 31, 2021 compared to the year ended December 31, 2020

During the year ended December 31, 2021, Danaos had an average of 64.2 containerships compared to 57.3 containerships during the year ended December 31, 2020. Our fleet utilization for the year ended December 31, 2021 was 98.2% compared to 96.3% for the year ended December 31, 2020. Adjusted fleet utilization, excluding the effect of 188 days of incremental off-hire due to shipyard delays related to the COVID-19 pandemic, was 97.2% in the year ended December 31, 2020.

Our adjusted net income amounted to $362.3 million, or $17.60 per share, for the year ended December 31, 2021 compared to $170.9 million, or $7.18 per share, for the year ended December 31, 2020. We have adjusted our net income in the year ended December 31, 2021 for the change in fair value of our investment in ZIM of $543.6 million, gain on debt extinguishment of $111.6 million, a $64.1 million gain on our acquisition of Gemini, a non-cash fees amortization and accrued finance fees charge of $16.1 million and stock-based compensation of $12.7 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.

The increase of $191.4 million in adjusted net income for the year ended December 31, 2021 compared to the year ended December 31, 2020 is attributable mainly to a $227.9 million increase in operating revenues, recognition of a $28.5 million dividend from ZIM, and partial collection of a common benefit claim of $3.9 million from Hanjin Shipping, which were partially offset by a $56.4 million increase in total operating expenses, a $10.2 million increase in net finance expenses and a $2.3 million decrease in our equity investment in Gemini following our acquisition and full consolidation of Gemini since July 1, 2021.

On a non-adjusted basis, our net income amounted to $1,052.8 million, or $51.15 earnings per diluted share, for the year ended December 31, 2021 compared to net income of $153.6 million, or $6.45 earnings per diluted share, for the year ended December 31, 2020. Our net income for the year ended December 31, 2021 includes a total gain on our investment in ZIM of $572.1 million, a $64.1 million non-cash gain on our acquisition of Gemini and a $111.6 million gain on debt extinguishment.

Operating Revenues
Operating revenues increased by 49.4%, or $227.9 million, to $689.5 million in the year ended December 31, 2021 from $461.6 million in the year ended December 31, 2020.

Operating revenues for the year ended December 31, 2021 reflect:

• a $107.9 million increase in revenues in the year ended December 31, 2021 compared to the year ended December 31, 2020 mainly as a result of higher charter rates and improved fleet utilization;
• a $55.7 million increase in revenues in the year ended December 31, 2021 compared to the year ended December 31, 2020 due to the incremental revenue generated by newly acquired vessels;
• a $36.7 million increase in revenues in the year ended December 31, 2021 compared to the year ended December 31, 2020 due to higher non-cash revenue recognition in accordance with US GAAP; and
• a $27.6 million increase in revenues in the year ended December 31, 2021 compared to the year ended December 31, 2020 due to amortization of assumed time charters.

Vessel Operating Expenses
Vessel operating expenses increased by $25.0 million to $135.9 million in the year ended December 31, 2021 from $110.9 million in the year ended December 31, 2020, primarily as a result of the increase in the average number of vessels in our fleet and an increase in the average daily operating cost for vessels on time charters to $5,986 per vessel per day for the year ended December 31, 2021 compared to $5,586 per vessel per day for the year ended December 31, 2020. The average daily operating cost increased mainly due to the COVID-19 related increase in crew remuneration in the year ended December 31, 2021. Management believes that our daily operating cost remains among the most competitive in the industry.

Depreciation & Amortization
Depreciation & Amortization includes Depreciation and Amortization of Deferred Dry-docking and Special Survey Costs.

Depreciation
Depreciation expense increased by 15.2%, or $15.4 million, to $116.9 million in the year ended December 31, 2021 from $101.5 million in the year ended December 31, 2020 mainly due to our recent acquisition of sixteen vessels and installation of scrubbers on nine of our vessels in the year ended December 31, 2020.

Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs decreased by $0.8 million to $10.2 million in the year ended December 31, 2021 from $11.0 million in the year ended December 31, 2020.

General and Administrative Expenses
General and administrative expenses increased by $19.6 million to $43.9 million in the year ended December 31, 2021, from $24.3 million in the year ended December 31, 2020. The increase was mainly attributable to increased management fees due to the increased size of our fleet and increased stock-based compensation.

Other Operating Expenses
Other Operating Expenses include Voyage Expenses.

Voyage Expenses
Voyage expenses increased by $10.0 million to $24.3 million in the year ended December 31, 2021 from $14.3 million in the year ended December 31, 2020 primarily as a result of the increase in commissions due to the increase in revenue per vessel and the increase in the average number of vessels in our fleet.

Interest Expense and Interest Income
Interest expense increased by 29.0%, or $15.5 million, to $69.0 million in the year ended December 31, 2021 from $53.5 million in the year ended December 31, 2020. The increase in interest expense is a combined result of:

• a $5.9 million decrease in interest expense due to a decrease in our debt service cost by approximately 0.25%, while our average indebtedness also decreased by $41.8 million between the two periods (average indebtedness of $1,478.1 million in the year ended December 31, 2021, compared to average indebtedness of $1,519.9 million in the year ended December 31, 2020);
• a $22.3 million reduction in the recognition through our income statement of accumulated accrued interest that had been accrued in 2018 in relation to two of our credit facilities that were refinanced on April 12, 2021. As a result of the refinancing, the recognition of such accumulated interest has been decreased; and
• a $0.9 million decrease in the amortization of deferred finance costs and debt discount related to our debt.

Net proceeds from the issuance of our $300 million Senior Notes in February 2021 together with the net proceeds from a new $815 million senior secured credit facility and a new $135 million leaseback arrangement, each of which was drawn down on April 12, 2021, were used to refinance a substantial majority of our then outstanding indebtedness.

As of December 31, 2021, our outstanding debt, gross of deferred finance costs, was $1,142.0 million, which includes $300 million aggregate principal amount of our Senior Notes, and our leaseback obligation was $226.5 million. These balances compare to debt of $1,368.1 million and a leaseback obligation of $123.4 million as of December 31, 2020.

Interest income increased by $5.6 million to $12.2 million in the year ended December 31, 2021 compared to $6.6 million in the year ended December 31, 2020, mainly as a result of full collection of accrued interest on ZIM and HMM bonds, which were redeemed by the issuers thereof in 2021.

Gain on investments
The gain on investments of $572.1 million in the year ended December 31, 2021 consists of the change in fair value of our shareholding interest in ZIM of $543.6 million and net dividends recognized on ZIM ordinary shares of $28.5 million. ZIM completed its initial public offering and listing on the New York Stock Exchange of its ordinary shares on January 27, 2021. In 2021, we sold 3,000,000 ordinary shares of ZIM resulting in net proceeds of $120.7 million. For the year ended December 31, 2021, the unrealized gain related to the ZIM ordinary shares still held on December 31, 2021 amounted to $422.97 million. Our remaining shareholding interest of 7,186,950 ordinary shares has been fair valued at $423.02 million as of December 31, 2021, based on the closing price of ZIM’s ordinary shares on the NYSE on that date compared to the book value of these shares of $75 thousand as of December 31, 2020.

Equity income on investments
Equity income on investments increased by $61.7 million to $68.0 million in the year ended December 31, 2021 compared to $6.3 million in the year ended December 31, 2020 mainly due to the non-cash gain of $64.1 million recognized on our acquisition of the remaining 51% equity interest in Gemini on July 1, 2021.

Gain on debt extinguishment
The gain on debt extinguishment of $111.6 million in the year ended December 31, 2021 related to our debt refinancing on April 12, 2021.

Other finance costs, net
Other finance costs, net decreased by $1.0 million to $1.3 million in the year ended December 31, 2021 compared to $2.3 million in the year ended December 31, 2020 due to the decreased finance costs on the refinanced debt.

Loss on derivatives
Amortization of deferred realized losses on interest rate swaps remained stable at $3.6 million in each of the years ended December 31, 2021 and December 31, 2020.

Other income, net
Other income, net was $4.5 million in the year ended December 31, 2021 compared to $0.6 million of income in the year ended December 31, 2020. The increase was mainly due to the collection from Hanjin Shipping of $3.9 million as a partial payment of common benefit claim and interest.

Adjusted EBITDA
Adjusted EBITDA increased by 59.8%, or $190.5 million, to $508.8 million in the year ended December 31, 2021 from $318.3 million in the year ended December 31, 2020. As outlined above, the increase is mainly attributable to a $200.3 million increase in operating revenues (net of $27.6 million amortization of assumed time charters), recognition of net dividends of $28.5 million from ZIM and partial collection of a common benefit claim of $3.9 million from Hanjin Shipping in 2021, which were partially offset by a $39.9 million increase in total operating expenses and a $2.3 million decrease in equity income on investment in Gemini following our acquisition and full consolidation of Gemini since July 1, 2021. Adjusted EBITDA for the year ended December 31, 2021 is adjusted for the change in fair value of our investment in ZIM of $543.6 million, gain on debt extinguishment of $111.6 million, a $64.1 million gain on the acquisition of Gemini and stock based compensation of $15.3 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.

Dividend Payment

Danaos has declared a dividend of $0.75 per share of common stock for the fourth quarter of 2021, which is payable on February 28, 2022 to stockholders of record as of February 17, 2022.

Recent Developments

On January 17, 2022, we entered into an agreement to sell two 20 years old 6,422 TEU vessels for gross consideration of $130 million. The vessels are expected to be delivered to the buyer in November 2022.

Conference Call and Webcast

On Tuesday, February 8, 2022 at 9:00 A.M. ET, the Company's management will host a conference call to discuss the results.

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 844 802 2437 (US Toll Free Dial In), 0800 279 9489 (UK Toll Free Dial In) or +44 (0) 2075 441 375 (Standard International Dial In). Please indicate to the operator that you wish to join the Danaos Corporation earnings call.

A telephonic replay of the conference call will be available until February 15, 2021 by dialing 1 877 344 7529 (US Toll Free Dial In) or 1-412-317-0088 (Standard International Dial In) and using 4531754# as the access code.

Audio Webcast
There will also be a live and then archived webcast of the conference call on the Danaos website (www.danaos.com). Participants of the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

Slide Presentation
A slide presentation regarding the Company and the containership industry will also be available on the Danaos website (www.danaos.com).

About Danaos Corporation

Danaos Corporation is one of the largest independent owners of modern, large-size containerships. Our current fleet of 71 containerships aggregating 436,589 TEUs ranks Danaos among the largest containership charter owners in the world based on total TEU capacity. 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".

Forward-Looking Statements

Matters discussed in this release may constitute forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements reflect our current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The forward-looking statements in this release are based upon various assumptions. Although Danaos Corporation believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, Danaos Corporation cannot assure you that it will achieve or accomplish these expectations, beliefs or projections. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the impact of the COVID-19 pandemic and efforts throughout the world to contain its spread, including effects on global economic activity, demand for seaborne transportation of containerized cargo, the ability and willingness of charterers to perform their obligations to us, charter rates for containerships, shipyards performing scrubber installations, drydocking and repairs, changing vessel crews and availability of financing; Danaos’ ability to achieve the expected benefits of the 2021 debt refinancing and comply with the terms of its new credit facilities and other financing agreements; the strength of world economies and currencies, general market conditions, including changes in charter hire rates and vessel values, charter counterparty performance, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled dry-docking, changes in Danaos Corporation's operating expenses, including bunker prices, dry-docking and insurance costs, ability to obtain financing and comply with covenants in our financing arrangements, actions taken by regulatory authorities, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists.

Risks and uncertainties are further described in reports filed by Danaos Corporation with the U.S. Securities and Exchange Commission.

Visit our website at www.danaos.com

Appendix

Fleet Utilization

Danaos had 89 unscheduled off-hire days in the three months ended December 31, 2021. The following table summarizes vessel utilization and the impact of the off-hire days on the Company’s revenue.

Vessel Utilization (No. of Days)	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
	2021		2021		2021		2021		Total
Ownership Days	5,400		5,460		6,043		6,527		23,430
Less Off-hire Days:
Scheduled Off-hire Days	(22)		(33)		-		(79)		(134)
Other Off-hire Days	(51)		(15)		(137)		(89)		(292)
Operating Days	5,327		5,412		5,906		6,359		23,004
Vessel Utilization	98.6%		99.1%		97.7%		97.4%		98.2%
Operating Revenues (in '000s of US Dollars)	$132,118		$146,434		$195,915		$215,038		$689,505
Average Gross Daily Charter Rate	$24,802		$27,057		$33,172		$33,816		$29,973
Vessel Utilization (No. of Days)	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
	2020		2020		2020		2020		Total
Ownership Days	5,073		5,193		5,336		5,380		20,982
Less Off-hire Days:
Scheduled Off-hire Days	(336)		(60)		(10)		(81)		(487)
Other Off-hire Days	(104)		(92)		(60)		(30)		(286)
Operating Days	4,633		5,041		5,266		5,269		20,209
Vessel Utilization	91.3%		97.1%		98.7%		97.9%		96.3%
Operating Revenues (in '000s of US Dollars)	$106,196		$116,824		$118,932		$119,642		$461,594
Average Gross Daily Charter Rate	$22,922		$23,175		$22,585		$22,707		$22,841

Fleet List

The following table describes in detail our fleet deployment profile as of February 4, 2022:

Vessel Name	Vessel Size (TEU)		Year Built		Expiration of Charter(1)
Hyundai Ambition	13,100		2012		June 2024
Hyundai Speed	13,100		2012		June 2024
Hyundai Smart	13,100		2012		May 2024
Hyundai Respect	13,100		2012		March 2024
Hyundai Honour	13,100		2012		February 2024
Express Rome	10,100		2011		February 2022
Express Berlin	10,100		2011		June 2023
Express Athens	10,100		2011		February 2022
Le Havre	9,580		2006		June 2028
Pusan C	9,580		2006		May 2028
Bremen	9,012		2009		January 2028
C Hamburg	9,012		2009		January 2028
Niledutch Lion	8,626		2008		May 2026
Charleston	8,533		2005		February 2026
CMA CGM Melisande	8,530		2012		May 2024
CMA CGM Attila	8,530		2011		October 2023
CMA CGM Tancredi	8,530		2011		November 2023
CMA CGM Bianca	8,530		2011		January 2024
CMA CGM Samson	8,530		2011		March 2024
America	8,468		2004		April 2028
Europe	8,468		2004		May 2028
Phoebe	8,463		2005		August 2026
CMA CGM Moliere	6,500		2009		March 2027
CMA CGM Musset	6,500		2010		October 2022
CMA CGM Nerval	6,500		2010		December 2022
CMA CGM Rabelais	6,500		2010		February 2023
CMA CGM Racine	6,500		2010		March 2023
YM Mandate	6,500		2010		January 2028
YM Maturity	6,500		2010		April 2028
Zim Savannah (ex Performance)	6,402		2002		May 2024
Dimitra C	6,402		2002		January 2023
Seattle C	4,253		2007		November 2024
Vancouver	4,253		2007		November 2024
Derby D	4,253		2004		January 2027
Tongala (ex ANL Tongala)	4,253		2004		January 2023
Rio Grande	4,253		2008		November 2024
ZIM Sao Paolo	4,253		2008		February 2023
ZIM Kingston	4,253		2008		April 2023
ZIM Monaco	4,253		2009		July 2022
Dalian (ex ZIM Dalian)	4,253		2009		November 2022
ZIM Luanda	4,253		2009		August 2025
Dimitris C	3,430		2001		November 2025
Express Black Sea	3,400		2011		January 2025
Express Spain	3,400		2011		January 2025
Express Argentina	3,400		2010		May 2023
Express Brazil	3,400		2010		June 2025
Express France	3,400		2010		September 2025
Singapore	3,314		2004		May 2024
Colombo	3,314		2004		January 2025
Zebra	2,602		2001		November 2024
Amalia C	2,452		1998		January 2023
Artotina (ex Danae C)	2,524		2001		April 2025
Advance	2,200		1997		December 2024
Future	2,200		1997		December 2024
Sprinter	2,200		1997		December 2024
Stride	2,200		1997		January 2025
Progress C	2,200		1998		November 2024
Bridge	2,200		1998		December 2024
Highway	2,200		1998		August 2022
Vladivostok	2,200		1997		March 2025
Belita (2)	8,533		2006		July 2026
Catherine C (2)	6,422		2001		November 2022
Leo C (2)	6,422		2002		August 2022
Suez Canal(2)	5,610		2002		March 2023
Kota Lima (ex Genoa)(2)	5,544		2002		November 2024
Wide Alpha (3)	5,466		2014		March 2024
Wide Bravo(3)	5,466		2014		June 2025
Maersk Euphrates (3)	5,466		2014		April 2024
Wide Hotel(3)	5,466		2015		May 2024
Wide India (3)	5,466		2015		September 2025
Wide Juliet(3)	5,466		2015		June 2023

(1)		Earliest date charters could expire. Some charters include options for the charterer to extend their terms.
(2)		Vessels previously owned by Gemini Shipholdings Corporation, in which we held a 49% equity interest through the end of the second quarter of 2021. On July 1, 2021, we exercised our option to acquire the remaining 51% equity interests in Gemini Shipholdings Corporation and now hold 100%.
(3)		We entered into an agreement on July 7, 2021, to purchase these vessels. We took delivery of: (i) ‘Maersk Euphrates’ on August 25, 2021, (ii) ‘Wide India’ on September 20, 2021, (iii) ‘Wide Bravo’ on September 23, 2021, (iv) ‘Wide Juliet’ on September 27, 2021, (v) ‘Wide Alpha’ on September 28, 2021, and (vi) ‘Wide Hotel’ on October 6, 2021.

DANAOS CORPORATION
Condensed Consolidated Statements of Income - Unaudited
(Expressed in thousands of United States dollars, except per share amounts)
	Three months ended		Three months ended		Year ended		Year ended
	December 31,		December 31,		December 31,		December 31,
	2021		2020		2021		2020
OPERATING REVENUES	$215,038		$119,642		$689,505		$461,594
OPERATING EXPENSES
Vessel operating expenses	(37,180)		(28,714)		(135,872)		(110,946)
Depreciation & amortization	(36,562)		(28,534)		(127,098)		(112,563)
General & administrative	(18,584)		(6,440)		(43,951)		(24,341)
Other operating expenses	(7,076)		(3,377)		(24,325)		(14,264)
Income From Operations	115,636		52,577		358,259		199,480
OTHER INCOME/(EXPENSES)
Interest income	569		1,686		12,230		6,638
Interest expense	(17,583)		(11,637)		(68,991)		(53,502)
Gain on investments	68,420		-		572,104		-
Equity income on investments	-		1,579		68,028		6,308
Gain on debt extinguishment	-		-		111,616		-
Other finance expenses	(193)		(345)		(1,326)		(2,335)
Other income, net	61		232		4,543		593
Realized loss on derivatives	(913)		(913)		(3,622)		(3,632)
Total Other Income/(Expenses), net	50,361		(9,398)		694,582		(45,930)
Net Income	$165,997		$43,179		$1,052,841		$153,550
EARNINGS PER SHARE
Basic earnings per share	$8.15		$2.09		$51.75		$6.51
Diluted earnings per share	$8.05		$2.07		$51.15		$6.45
Basic weighted average number of common shares (in thousands of shares)	20,380		20,658		20,345		23,589
Diluted weighted average number of common shares (in thousands of shares)	20,623		20,874		20,584		23,805

Non-GAAP Measures1
Reconciliation of Net Income to Adjusted Net Income – Unaudited
	Three months ended		Three months ended		Year ended		Year ended
	December 31,		December 31,		December 31,		December 31,
	2021		2020		2021		2020
Net income	$165,997		$43,179		$1,052,841		$153,550
Gain on investments	(52,249)		-		(543,653)		-
Equity income on investments	-		-		(64,063)		-
Gain on debt extinguishment	-		-		(111,616)		-
Amortization of financing fees, debt discount & finance fees accrued	3,483		4,631		16,062		17,338
Stock based compensation	8,608		-		12,686		-
Adjusted Net Income	$125,839		$47,810		$362,257		$170,888
Adjusted Earnings Per Share, diluted	$6.10		$2.29		$17.60		$7.18
Diluted weighted average number of shares (in thousands)	20,623		20,874		20,584		23,805

1 The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures used in managing the business may provide users of this financial information additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain items that impact the overall comparability. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. See the Table above for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three months and year ended December 31, 2021 and 2020. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP.

DANAOS CORPORATION
Condensed Consolidated Balance Sheets - Unaudited
(Expressed in thousands of United States dollars)
		As of		As of
		December 31,		December 31,
		2021		2020
ASSETS
CURRENT ASSETS
Cash, cash equivalents and restricted cash		$129,756		$65,663
Accounts receivable, net		7,118		7,556
Other current assets		495,618		45,229
		632,492		118,448
NON-CURRENT ASSETS
Fixed assets, net		2,941,093		2,479,937
Deferred charges, net		11,801		17,339
Investments in affiliates		-		15,273
Other non-current assets		41,739		83,383
		2,994,633		2,595,932
TOTAL ASSETS		$3,627,125		$2,714,380
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Long-term debt, current portion		$95,750		$155,662
Accumulated accrued interest, current portion		6,146		18,036
Long-term leaseback obligations, current portion		85,815		24,515
Accounts payable, accrued liabilities & other current liabilities		131,596		41,472
		319,307		239,685
LONG-TERM LIABILITIES
Long-term debt, net		1,017,916		1,187,345
Accumulated accrued interest, net of current portion		24,155		136,433
Long-term leaseback obligations, net		136,513		95,585
Other long-term liabilities		41,211		19,755
		1,219,795		1,439,118
STOCKHOLDERS’ EQUITY
Common stock		207		204
Additional paid-in capital		770,676		755,390
Accumulated other comprehensive loss		(71,455)		(86,669)
Retained earnings		1,388,595		366,652
		2,088,023		1,035,577
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$3,627,125		$2,714,380

DANAOS CORPORATION
Condensed Consolidated Statements of Cash Flows - Unaudited
(Expressed in thousands of United States dollars)
	Three months ended		Three months ended		Year ended		Year ended
	December 31,		December 31,		December 31,		December 31,
	2021		2020		2021		2020
Operating Activities:
Net income	$165,997		$43,179		$1,052,841		$153,550
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	34,008		25,927		116,917		101,531
Amortization of deferred drydocking & special survey costs, finance cost, debt discount and other finance fees accrued	6,037		7,238		26,243		28,900
Amortization of assumed time charters	(18,296)		-		(27,614)		-
PIK interest	-		675		726		2,911
Gain on investments	(52,249)		-		(543,653)		-
Equity income on investments	-		(1,579)		(68,028)		(6,308)
Gain on debt extinguishment	-		-		(111,616)		-
Payments for drydocking/special survey	(3,028)		(3,519)		(4,643)		(16,916)
Amortization of deferred realized losses on cash flow interest rate swaps	913		913		3,622		3,632
Stock based compensation	9,223		302		15,278		1,199
Accounts receivable	(93)		3,290		786		(411)
Other assets, current and non-current	(23,929)		857		(45,022)		3,199
Accounts payable and accrued liabilities	9,014		1,638		13,305		2,252
Other liabilities, current and long-term	4,374		726		(1,031)		(7,860)
Net Cash provided by Operating Activities	131,971		79,647		428,111		265,679
Investing Activities:
Vessel additions and advances	(91,642)		(64,512)		(355,720)		(170,661)
Investments	52,307		-		212,572		(75)
Net Cash used in Investing Activities	(39,335)		(64,512)		(143,148)		(170,736)
Financing Activities:
Proceeds from sale-leaseback of vessels	-		-		135,000		139,080
Proceeds from long-term debt	-		33,150		1,105,311		69,850
Payments of leaseback obligations	(16,422)		(5,962)		(53,799)		(153,904)
Debt repayment	(24,300)		(46,998)		(1,343,725)		(146,747)
Dividends paid	(10,294)		-		(30,887)		-
Payments of accumulated accrued interest	(1,471)		(4,853)		(10,361)		(25,639)
Repurchase of common stock	-		(31,127)		-		(31,127)
Finance costs	(3,950)		(50)		(22,409)		(19,963)
Net Cash used in Financing Activities	(56,437)		(55,840)		(220,870)		(168,450)
Net Increase/(Decrease) in cash, cash equivalents and restricted cash	36,199		(40,705)		64,093		(73,507)
Cash, cash equivalents and restricted cash, beginning of period	93,557		106,368		65,663		139,170
Cash, cash equivalents and restricted cash, end of period	$129,756		$65,663		$129,756		$65,663

DANAOS CORPORATION
Reconciliation of Net Income to Adjusted EBITDA - Unaudited
(Expressed in thousands of United States dollars)
	Three months ended		Three months ended		Year ended		Year ended
	December 31,		December 31,		December 31,		December 31,
	2021		2020		2021		2020
Net income	$165,997		$43,179		$1,052,841		$153,550
Depreciation	34,008		25,927		116,917		101,531
Amortization of deferred drydocking & special survey costs	2,554		2,607		10,181		11,032
Amortization of assumed time charters	(18,296)		-		(27,614)		-
Amortization of deferred finance costs, debt discount and other finance fees accrued	3,483		4,631		16,062		17,338
Amortization of deferred realized losses on interest rate swaps	913		913		3,622		3,632
Interest income	(569)		(1,686)		(12,230)		(6,638)
Interest expense	14,100		7,136		53,078		36,687
Gain on investments	(52,249)		-		(543,653)		-
Equity income on investments	-		-		(64,063)		-
Gain on debt extinguishment	-		-		(111,616)		-
Stock based compensation	9,223		302		15,278		1,199
Adjusted EBITDA(1)	$159,164		$83,009		$508,803		$318,331

1)		Adjusted EBITDA represents net income before interest income and expense, depreciation, amortization of deferred drydocking & special survey costs, amortization of assumed time charters, amortization of deferred finance costs, debt discount and other finance fees accrued, amortization of deferred realized losses on interest rate swaps, gain on investments, equity income on investments, gain on debt extinguishment and stock based compensation. However, Adjusted EBITDA is not a recognized measurement under U.S. generally accepted accounting principles, or “GAAP.” We believe that the presentation of Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. We also believe that Adjusted EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry because the calculation of Adjusted EBITDA generally eliminates the effects of financings, income taxes and the accounting effects of capital expenditures and acquisitions, items which may vary for different companies for reasons unrelated to overall operating performance. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.
		Note: Items to consider for comparability include gains and charges. Gains positively impacting net income are reflected as deductions to net income. Charges negatively impacting net income are reflected as increases to net income.
		The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures used in managing the business may provide users of these financial information additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain items that impact the overall comparability. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. See the Tables above for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three months and year ended December 31, 2021 and 2020. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220207005738/en/

Company:

Evangelos Chatzis

Chief Financial Officer

Danaos Corporation

Athens, Greece

Tel.: +30 210 419 6480

E-Mail: cfo@danaos.com

Iraklis Prokopakis

Senior Vice President and Chief Operating Officer

Danaos Corporation

Athens, Greece

Tel.: +30 210 419 6400

E-Mail: coo@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 is the adjusted net income for Danaos Corporation for Q4 2021?

Danaos Corporation reported an adjusted net income of $125.8 million for Q4 2021.

How much did Danaos Corporation earn in 2021?

Danaos Corporation's adjusted net income for the year 2021 was $362.3 million.

What was the operating revenue for Danaos Corporation in Q4 2021?

The operating revenue for Danaos Corporation in Q4 2021 was $215 million.

What dividend did Danaos Corporation declare for Q4 2021?

Danaos Corporation declared a quarterly dividend of $0.75 per share for Q4 2021.

What is the future outlook for Danaos Corporation?

Danaos Corporation expects continued growth and cash flow stability in 2022.