Danaos Corporation Αρχεία - Σελίδα 2 από 2

Danaos Corporation Reports 74% Increase of First Quarter Net Income, as the Container Market Rallies

Danaos Corporation, one of the world’s largest independent owners of containerships, reported unaudited results for the quarter ended March 31, 2021.
Highlights for the First Quarter Ended March 31, 2021:
– Adjusted net income of $58.0 million, or $2.83 per share, for the three months ended March 31, 2021 compared to $33.3 million, or $1.34 per share, for the three months ended March 31, 2020, an increase of 74.2%.- Operating revenues of $132.1 million for the three months ended March 31, 2021 compared to $106.2 million for the three months ended March 31, 2020, an increase of 24.4%.- Adjusted EBITDA1 of $96.3 million for the three months ended March 31, 2021 compared to $71.9 million for the three months ended March 31, 2020, an increase of 33.9%.- Total contracted operating revenues were $1.2 billion as of March 31, 2021, with charters extending through 2028 and remaining average contracted charter duration of 2.9 years, weighted by aggregate contracted charter hire.- Charter coverage of 91% for the next 12 months based on current operating revenues and 88% in terms of contracted operating days.- Initiated a regular quarterly dividend with a dividend of $0.50 per share of common stock for the first quarter of 2021. The dividend is payable on June 9, 2021 to stockholders of record as of May 27, 2021.
Danaos’ CEO Dr. John Coustas commented:
“The dramatic turnaround and strength of the market which we experienced in the beginning of the year continues unabated, if not stronger. The continuation of the pandemic and the ensuing slowdown in the terminal operations have exacerbated demand and the liner sector is at the limit of its capacity. The blockage of the Suez Canal further contributed to the disruption in the supply chain and conditions will likely not normalize before the end of the year, possibly after the peak season.
Liner companies are reporting record profits and, more importantly, are signing multi-year contracts at significantly higher levels which will keep their profitability at elevated levels. On the non-operating owners front, charter rates have skyrocketed to levels not seen for at least 10 years and what is more important duration has been significantly increased so that vessels over 4,000 TEU can secure 4+ years employment at very healthy levels.
This euphoria due to the sharp increase in rates and confidence that the market will remain strong has led to a dramatic increase in newbuilding ordering. As a result, the orderbook now stands at 17% of the existing fleet which is higher compared to the 9% nadir at the end of 2020 but still much lower than the 50% it reached in 2008.
Fortunately, the lack of shipyard capacity and the hesitance of many market participants to order vessels with conventional fuel propulsion both are inhibiting factors for new orders and are keeping a lid on excessive ordering. In any event, the recently ordered vessels will not deliver until at least 2023, and the next two years should be lean in terms of fleet supply growth. We believe that the expected strong demand growth post pandemic will comfortably absorb the existing orderbook.
As far as Danaos is concerned we are currently in the best ever position and reaping the benefits of the current market environment. On April 12th we completed our refinancing on very competitive terms and also positioned the company successfully in the US bond market, giving us access to a very significant pool of capital. The amortization profile of our debt is resulting in significant free cash flow for growth opportunities.
The stellar performance of the liner sector had a number of significant consequences for us. First, our shareholding in ZIM is today valued at around $400 million. Secondly, the dramatic cash flow generation of Zim and HMM induced them to redeem early the bonds which we were holding so we will have a $75 million cash injection in the second quarter of 2021. Thirdly, the liner sector performance also eliminates counterparty risk for the foreseeable future.
On the chartering front every fixture we concluded was done at a new record level. These fixtures are beginning to take effect and we expect to see improved metrics for every single quarter for this year.
Our strong financial standing and optimistic view for the future has led the Board to decide to reinstate a fixed quarterly dividend of $0.50 per share. Danaos has been repositioned as a growth company and has handsomely rewarded its shareholders through a dramatic share appreciation of greater than 1,000% since our November 2019 equity offering. We believe that our new fixed dividend will both expand our shareholder base to a new group of yield driven institutional investors and also enhance liquidity of the stock.
All the right steps that the company has undertaken in the last couple of years have been greatly appreciated by the market and we will continue along the same path in the future.”
Three months ended March 31, 2021 compared to the three months ended March 31, 2020
During the three months ended March 31, 2021, Danaos had an average of 60.0 containerships compared to 55.7 containerships during the three months ended March 31, 2020. Our fleet utilization for the three months ended March 31, 2021 was 98.6% compared to 91.3% for the three months ended March 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 95% in the three months ended March 31, 2020.
Our adjusted net income amounted to $58.0 million, or $2.83 per share, for the three months ended March 31, 2021 compared to $33.3 million, or $1.34 per share, for the three months ended March 31, 2020. We have adjusted our net income in the three months ended March 31, 2021 for the change in fair value of our investment in ZIM of $247.9 million, a non-cash fees amortization and accrued finance fees charge of $5.0 million and stock-based compensation of $4.1 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.
The increase of $24.7 million in adjusted net income for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 is attributable mainly to a $25.9 million increase in operating revenues, a partial collection of common benefit claim of $3.9 million from Hanjin Shipping, a $2.5 million decrease in net finance expenses and a $0.3 million increase in the operating performance of our equity investment in Gemini Shipholdings Corporation (“Gemini”), which were partially offset by a $7.9 million increase in total operating expenses.
On a non-adjusted basis, our net income amounted to $296.8 million, or $14.47 earnings per diluted share, for the three months ended March 31, 2021 compared to net income of $29.1 million, or $1.17 earnings per diluted share, for the three months ended March 31, 2020.
Operating RevenuesOperating revenues increased by 24.4%, or $25.9 million, to $132.1 million in the three months ended March 31, 2021 from $106.2 million in the three months ended March 31, 2020.
Operating revenues for the three months ended March 31, 2021 reflect:
a $10.5 million increase in revenues in the three months ended March 31, 2021 compared to the three months ended March 31, 2020 due to the incremental revenue generated by the newly-acquired vessels; anda $15.4 million increase in revenues in the three months ended March 31, 2021 compared to the three months ended March 31, 2020 mainly as a result of higher charter rates and improved fleet utilization.Vessel Operating ExpensesVessel operating expenses increased by $5.1 million to $31.1 million in the three months ended March 31, 2021 from $26.0 million in the three months ended March 31, 2020, primarily as a result of the increase in the average number of vessels in our fleet and by an increase in the average daily operating cost of $5,954 per vessel per day for vessels on time charter for the three months ended March 31, 2021 compared to $5,522 per vessel per day for the three months ended March 31, 2020. The average daily operating cost increased mainly due to the COVID-19 related increase in crew remuneration in the three months ended March 31, 2021. Management believes that our daily operating cost remains among the most competitive in the industry.
Depreciation & AmortizationDepreciation & Amortization includes Depreciation and Amortization of Deferred Dry-docking and Special Survey Costs.
DepreciationDepreciation expense increased by 4.9%, or $1.2 million, to $25.8 million in the three months ended March 31, 2021 from $24.6 million in the three months ended March 31, 2020 mainly due to the acquisition of five 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 CostsAmortization of deferred dry-docking and special survey costs increased by $0.2 million to $2.5 million in the three months ended March 31, 2021 from $2.3 million in the three months ended March 31, 2020.
General and Administrative ExpensesGeneral and administrative expenses increased by $5.1 million to $10.9 million in the three months ended March 31, 2021, from $5.8 million in the three months ended March 31, 2020. The increase was mainly due to a $4.6 million increase in stock-based compensation and increased management fees due to the increased size of our fleet.
Other Operating ExpensesOther Operating Expenses include Voyage Expenses.
Voyage ExpensesVoyage expenses increased by $0.2 million to $4.2 million in the three months ended March 31, 2021 from $4.0 million in the three months ended March 31, 2020 primarily as a result of the increase in the average number of vessels in our fleet.
Interest Expense and Interest IncomeInterest expense decreased by 7.4%, or $1.2 million, to $15.1 million in the three months ended March 31, 2021 from $16.3 million in the three months ended March 31, 2020. The decrease in interest expense is attributable to:
(i) a $2.0 million decrease in interest expense due to a decrease in average cost of debt service by approximately 1.5%, which was partially offset by a $70.3 million increase in our average debt (including leaseback obligations), to $1,614.5 million in the three months ended March 31, 2021, compared to $1,544.2 million in the three months ended March 31, 2020; and
(ii) a $0.8 million increase in the amortization of deferred finance costs and debt discount related to our debt.
Our total outstanding debt as of March 31, 2021, reflects an additional amount of $300 million relating to our Senior Notes issued in February 2021, with net proceeds of $294.4 million placed in an escrow account. These net proceeds were used, together with the net proceeds from a new $815 million senior secured credit facility and a new $135 million leaseback arrangement, each drawn in April 2021, to refinance a substantial majority of our outstanding senior secured indebtedness on April 12, 2021. See “Recent Developments”.
As of March 31, 2021, our outstanding debt, net of $294.4 million escrowed net cash proceeds from the Senior Notes and gross of deferred finance costs, was $1,306.8 million and our leaseback obligation was $117.5 million compared to our outstanding debt of $1,396.3 million and our leaseback obligation of $134.3 million as of March 31, 2020.
Interest income increased by $0.3 million to $2.0 million in the three months ended March 31, 2021 compared to $1.7 million in the three months ended March 31, 2020.
Change in fair value of investmentsThe change in fair value of investments of $247.875 million relates to the change in fair value of our shareholding interest in ZIM, which completed its initial public offering and listing on the New York Stock Exchange of its ordinary shares on January 27, 2021. We currently own 10,186,950 ordinary shares of ZIM, which were valued at $247.95 million as of March 31, 2021 compared to the book value of these shares of $75 thousand as of December 31, 2020.
Other finance costs, netOther finance costs, net decreased by $0.2 million to $0.4 million in the three months ended March 31, 2021 compared to $0.6 million in the three months ended March 31, 2020.
Equity income on investmentsEquity income/(loss) on investments increased by $0.3 million to $1.8 million of income on investments in the three months ended March 31, 2021 compared to a $1.5 million income on investments in the three months ended March 31, 2020 due to the improved operating performance of Gemini, in which the Company has a 49% shareholding interest.
Loss on derivativesAmortization of deferred realized losses on interest rate swaps remained stable at $0.9 million in each of the three months ended March 31, 2021 and March 31, 2020.
Other income, netOther income, net was $4.0 million in income in the three months ended March 31, 2021 compared to $0.2 million in the three months ended March 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 EBITDAAdjusted EBITDA increased by 33.9%, or $24.4 million, to $96.3 million in the three months ended March 31, 2021 from $71.9 million in the three months ended March 31, 2020. As outlined above, the increase is mainly attributable to a $25.9 million increase in operating revenues, a partial collection of common benefit claim of $3.9 million from Hanjin Shipping and a $0.3 million increase in the operating performance of our equity investees, which were partially offset by a $5.7 million increase in total operating expenses. Adjusted EBITDA for the three months ended March 31, 2021 is adjusted for change in fair value of investments of $247.9 million and stock based compensation of $4.9 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.
Dividend Payment
On May 10, 2021 we declared a dividend of $0.50 per share of common stock for the first quarter of 2021, which is payable on June 9, 2021 to stockholders of record as of May 27, 2021. We intend to pay regular quarterly dividends on our common stock. Payments of dividends are subject to the discretion of our board of directors, provisions of Marshall Islands law affecting the payment of distributions to stockholders and the terms of our credit facilities, which permit the payment of dividends so long as there has been no event of default thereunder nor would occur as a result of such dividend payment, and will be subject to conditions in the container shipping industry, our financial performance and us having sufficient available excess cash and distributable reserves.
Recent Developments
On April 12, 2021, the Company refinanced a substantial majority of its outstanding senior secured indebtedness with the proceeds from a $815 million senior secured credit facility with Citibank N.A. and National Westminster Bank plc, a $135 million sale leaseback agreement with Oriental Fleet International Company Limited, an affiliate of COSCO Shipping Lease Co., Ltd., with respect to five vessels, and the net proceeds of the Company’s February 2021 offering of $300 million of 8.500% Senior Notes due 2028.

Danaos Corporation Announces Senior Notes Offering

Danaos Corporation (the “Company”) (NYSE: DAC) announced yesterday that it plans to commence an offering of up to $300 million of senior unsecured notes due 2028, subject to market conditions and other factors. The notes are to be offered and sold in a private offering exempt from the registration requirements under the U.S. Securities Act of 1933, as amended (the “Securities Act”). The Company intends to use the net proceeds from the offering, together with a new $815 million senior secured credit facility and a new $135 million sale leaseback arrangement, to implement a $1.25 billion refinancing of a substantial majority of its outstanding senior secured indebtedness.
This announcement is not an offer for sale or a recommendation or solicitation to buy or sell any securities, nor shall there be any offer, solicitation, or sale of any securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful. The notes will not be registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements of the Securities Act and applicable state securities laws.

Danaos Corporation: Σε αναπτυξιακή πορεία και το 2021

Ιδιαίτερα θετικό έτος υπήρξε το 2020 για την Danaos Corporation με τον μεγαλύτερο μέτοχό της, δρ Ιωάννη Κούστα, με ποσοστό περίπου 46%, να αναδεικνύεται σε έναν από τους σημαντικότερους πρωταγωνιστές της παγκόσμιας ναυτιλιακής βιομηχανίας.
Δυναμικά συνεχίζει και το 2021 για την εταιρεία, καθώς ετοιμάζεται να επωφεληθεί από την εισαγωγή στη Wall Street μίας άλλης εταιρείας με στόλο από πλοία μεταφοράς εμπορευματοκιβωτίων. Πρόκειται για την ισραηλινών συμφερόντων ΖΙΜ Intergrated Shipping στην οποία η Danaos είναι ο τρίτος μεγαλύτερος μέτοχος με ποσοστό 10,2%.
Η εισαγωγή της ΖΙΜ στο αμερικανικό χρηματιστήριο αναμένεται με μεγάλο ενδιαφέρον, αφού θα είναι η πρώτη ΙΡΟ (αρχική δημόσια προσφορά) ναυτιλιακής εταιρείας στις ΗΠΑ μετά το 2018. Οι αναλυτές εκτιμούν ότι η αξία της μπορεί να διαμορφωθεί και στο 1,5 δισ. δολάρια.
Η Danaos είναι μία από τις μεγαλύτερες εισηγμένες εταιρείες μεταφοράς εμπορευματοκιβωτίων με σημαντική πορεία στη ναυτιλιακή αγορά.
Όλα τα πλοία του στόλου της είναι ναυλωμένα σε μακροπρόθεσμες ναυλώσεις, ενώ οι εισπράξεις από τα ναυλοσύμφωνα που έχει υπογράψει με τις μεγαλύτερες liner εταιρείες έως το 2028, φτάνουν το ποσό του 1,1 δισ. δολαρίων.
Η Danaos τους τελευταίους μήνες του 2020 ήρθε σε συμφωνία με την Offen Group, για την απόκτηση δύο πλοίων μεταφοράς εμπορευματοκιβωτίων, των «CPO Bremen» και «CPO Hamburg», κατασκευής 2009 και χωρητικότητας 9.012 TEUs, έναντι 31 εκατ. έκαστο, τα οποία είναι ναυλωμένα για δύο χρόνια σε μεγάλη liner εταιρεία. Με αυτά τα πλοία, η χωρητικότητα του στόλου της θα ξεπερνάει για πρώτη φορά τα 400.000 TEUs.

Danaos Corporation: Coustas Hails “Remarkable” Container Segment Recovery

Danaos Corporation, one of the world’s largest independent owners of containerships, today reported unaudited results for the period ended September 30, 2020
Highlights for the Third Quarter and Nine Months Ended September 30, 2020:
Adjusted net income of $47.3 million, or $1.91 per share, for the three months ended September 30, 2020 compared to $37.9 million, or $2.46 per share, for the three months ended September 30, 2019, an increase of 24.8%. Adjusted net income1 of $123.1 million, or $4.97 per share, for the nine months ended September 30, 2020 compared to $110.7 million, or $7.23 per share, for the nine months ended September 30, 2019, an increase of 11.2%.
Operating revenues of $118.9 million for the three months ended September 30, 2020 compared to $111.8 million for the three months ended September 30, 2019, an increase of 6.4%. Operating revenues of $341.9 million for the nine months ended September 30, 2020 compared to $337.0 million for the nine months ended September 30, 2019, an increase of 1.5%.
Adjusted EBITDA 1 of $83.3 million for the three months ended September 30, 2020 compared to $79.3 million for the three months ended September 30, 2019, an increase of 5.0%. Adjusted EBITDA 1 of $235.3 million for the nine months ended September 30, 2020 compared to $232.4 million for the nine months ended September 30, 2019, an increase of 1.2%.
Total contracted operating revenues were $1.1 billion as of September 30, 2020, with charters extending through 2028 and remaining average contracted charter duration of 3.5 years, weighted by aggregate contracted charter hire.
Charter coverage of 87% for the next 12 months based on current operating revenues and 64% in terms of contracted operating days.On October 12, 2020, we announced the repurchase of 4,339,271 shares of our common stock for an aggregate purchase price of $31.1 million in privately negotiated transactions, including 2,517,013 shares from the Royal Bank of Scotland and 1,822,258 shares from Sphinx Investment Corp. These transactions resulted in the Company’s previously announced share repurchase program being terminated.
Danaos’ CEO Dr. John Coustas commented:
“We are pleased to report improved performance in the Company’s profitability during this quarter. Container trade has staged a remarkable recovery since the end of May, when 11.4% of the vessels in the global fleet stood idle. Time charter rates have increased across all vessel sizes, and the time charter market is at or close to multi-year highs for all vessel sizes. The ability of the liner companies to consistently manage capacity addressed the swift drop in volumes at the onset of the pandemic, which alleviated pressure on our customers’ cash flows and stabilized freight rates. All our customers have reported strong profitability which significantly mitigates our counterparty risk.
Volumes have consistently improved, particularly in Transpacific eastbound, intra-Asia and North-South trade lanes, as volumes have recovered faster than expected. Notably, the increase in rates has been most pronounced in smaller vessel types. Danaos has the greatest amount of leverage to this segment of the market as our larger vessels are contracted on multi-year time charters. From that perspective, the short-term chartering market has been quite dynamic.
Although significant market uncertainty remains, particularly as many countries see increasing spread of COVID-19 cases, global GDP has rebounded swiftly, and IMF has recently revised its 2020 GDP estimates upwards. For 2021, the IMF forecasts global GDP growth of 5.2%, which effectively equals growth of 0.6% compared to 2019, or pre-pandemic levels. The recovery has thus far been primarily concentrated in goods rather than services, which has benefited containerized trade.
We continue to execute our strategy and we are well insulated from near-term volatility due to our high charter coverage of 87% in terms of operating revenues and 64% in terms of operating days over the next 12 months. This provides significant visibility into our cash flows during this period. We also have some leverage to the presently strong market through our smaller vessels. We are also cautiously optimistic about the medium-term market outlook. The orderbook is currently in single digits as a percentage of the world fleet for the first time in 20 years. Combined with an anticipated reduction in speeds due to the various environmental initiatives, the supply side outlook is healthy. Tighter supply will help to maintain momentum in the container market or help to bring about a swift recovery if conditions deteriorate.
Consistent with our growth strategy we have agreed to purchase two 9,000 TEU vessels built in 2009 which are both contracted on two year charters with a major liner company. These vessels are expected to be delivered to us between December 2020 and January 2021 and will be funded with a combination of cash and new credit facilities. With these new deliveries our fleet will for the first time exceed the 400,000 TEU mark.
In the meantime, we are generating strong cash flows from our $1.1 billion charter backlog and have a healthy liquidity position. This enabled us to opportunistically repurchase 4,339,271 shares, or 17.5% of the Company’s outstanding shares, for an aggregate price of $31.1 million in privately negotiated transactions practically tripling our $10 million original buyback program. Given the holding nature of the prior owners of these shares, these repurchases increase our per share results and valuation metrics without impacting trading liquidity.
In light of the continued uncertainty about the duration of the coronavirus pandemic and the ensuing economic recovery, we remain focused on maintaining a conservative financial profile and making thoughtful capital allocation decisions that align with our strategy and market expectations and deliver value to our shareholders.”
Three months ended September 30, 2020 compared to the three months ended September 30, 2019
During the three months ended September 30, 2020, Danaos had an average of 58.0 containerships compared to 55.0 containerships during the three months ended September 30, 2019. Our fleet utilization was 98.7% in each of the three months ended September 30, 2020 and September 30, 2019.
Our adjusted net income amounted to $47.3 million, or $1.91 per share, for the three months ended September 30, 2020 compared to $37.9 million, or $2.46 per share, for the three months ended September 30, 2019. We have adjusted our net income in the three months ended September 30, 2020 for amortization of non-cash fees and accrued finance fees charge of $4.5 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.
The increase of $9.4 million in adjusted net income for the three months ended September 30, 2020 compared to the three months ended September 30, 2019 is attributable mainly to a $7.1 million increase in operating revenues, a $6.8 million decrease in net finance expenses and a $0.9 million increase in the operating performance of our equity investment in Gemini Shipholdings Corporation (“Gemini”), which were partially offset by a $5.4 million increase in total operating expenses.
On a non-adjusted basis, our net income amounted to $42.8 million, or $1.73 earnings per diluted share, for the three months ended September 30, 2020 compared to net income of $33.9 million, or $2.20 earnings per diluted share, for the three months ended September 30, 2019.
Operating Revenues
Operating revenues increased by 6.4%, or $7.1 million, to $118.9 million in the three months ended September 30, 2020 from $111.8 million in the three months ended September 30, 2019.
Operating revenues for the three months ended September 30, 2020 reflect:

a $11.5 million increase in revenues in the three months ended September 30, 2020 compared to the three months ended September 30, 2019 as a result of contractual increases in charter rates of vessels under long-term charters;
a $5.5 million increase in revenues in the three months ended September 30, 2020 compared to the three months ended September 30, 2019 due to the acquisition of new vessels;
a $5.6 million decrease in revenues in the three months ended September 30, 2020 compared to the three months ended September 30, 2019 due to lower non-cash revenue recognition in accordance with US GAAP;
a $5.1 million decrease in revenues in the three months ended September 30, 2020 compared to the three months ended September 30, 2019 as a result of lower re-chartering rates for certain of our vessels. This decrease is partially due to a $3.9 million decrease in revenues due to the re-chartering of four vessels in our fleet that concluded long-term charters over the last twelve months and were re-deployed at the prevailing lower spot rates at the time these vessels were re-chartered; and
a $0.8 million increase in revenues due to higher fleet utilization of our vessels in the three months ended September 30, 2020 compared to the three months ended September 30, 2019.

Vessel Operating Expenses
Vessel operating expenses increased by $2.8 million to $27.7 million in the three months ended September 30, 2020 from $24.9 million in the three months ended September 30, 2019, primarily as a result of the increase in the average number of vessels in our fleet and an overall increase in the average daily operating cost to $5,467 per vessel per day for vessels on time charter for the three months ended September 30, 2020 compared to $5,298 per vessel per day for the three months ended September 30, 2019. Management believes that our daily operating cost are 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 6.2%, or $1.5 million, to $25.8 million in the three months ended September 30, 2020 from $24.3 million in the three months ended September 30, 2019 mainly due to the installation of scrubbers on nine of our vessels and the acquisition of the vessels Niledutch Lion, Phoebe and SM Charleston in the nine months ended September 30, 2020.
Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs increased by $0.9 million to $3.2 million in the three months ended September 30, 2020 from $2.3 million in the three months ended September 30, 2019.
General and Administrative Expenses
General and administrative expenses decreased by $0.4 million to $6.0 million in the three months ended September 30, 2020, from $6.4 million in the three months ended September 30, 2019. The decrease was mainly due to decreased non-cash recognition of share-based compensation.
Other Operating Expenses
Other Operating Expenses include Voyage Expenses.
Voyage Expenses
Voyage expenses increased by $0.8 million to $3.6 million in the three months ended September 30, 2020 from $2.8 million in the three months ended September 30, 2019 primarily as a result of the increase in the average number of vessels in our fleet.
Interest Expense and Interest Income
Interest expense decreased by 34.6%, or $6.3 million, to $11.9 million in the three months ended September 30, 2020 from $18.2 million in the three months ended September 30, 2019. The decrease in interest expense is attributable to:

a $6.8 million decrease in interest expense due to a decrease in debt service cost of approximately 2.3% and a $84.6 million decrease in our average debt (including leaseback obligations), to $1,518.5 million in the three months ended September 30, 2020, compared to $1,603.1 million in the three months ended September 30, 2019; and
a $0.5 million increase in the amortization of deferred finance costs and debt discount related to our 2018 debt refinancing.As of September 30, 2020, our outstanding bank debt, gross of deferred finance costs, was $1,376.2 million and our leaseback obligation was $129.4 million compared to bank debt of $1,450.0 million and our leaseback obligation of $141.4 million as of September 30, 2019.

Interest income increased to $1.7 million in the three months ended September 30, 2020 compared to $1.6 million in the three months ended September 30, 2019.
Other finance costs, net
Other finance costs, net remained stable at $0.3 million in each of the three months ended September 30, 2020 and September 30, 2019.
Equity income on investments
Equity income on investments increased by $0.9 million to $1.5 million of income on investments in the three months ended September 30, 2020 compared to $0.6 million in the three months ended September 30, 2019 due to the improved operating performance of Gemini, in which the Company has a 49% shareholding interest.
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 September 30, 2020 and September 30, 2019.
Other income, net
Other income, net was $0.1 million in the three months ended September 30, 2020 compared to nil in the three months ended September 30, 2019.
Adjusted EBITDA
Adjusted EBITDA increased by 5.0%, or $4.0 million, to $83.3 million in the three months ended September 30, 2020 from $79.3 million in the three months ended September 30, 2019. As outlined above, the increase is mainly attributable to a $7.1 million increase in operating revenues and a $0.9 million increase in the operating performance of our equity investees, which were partially offset by a $4.0 million increase in operating expenses. Adjusted EBITDA for the three months ended September 30, 2020 is adjusted for stock based compensation of $0.3 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.
Nine months ended September 30, 2020 compared to the nine months ended September 30, 2019
During the nine months ended September 30, 2020, Danaos had an average of 56.9 containerships compared to 55.0 containerships during the nine months ended September 30, 2019. Our fleet utilization for the nine months ended September 30, 2020 was 95.8% compared to 98.8% for the nine months ended September 30, 2019. Adjusted fleet utilization, excluding the effect of 188 days of incremental off-hire due to shipyard delays related to the COVID-19 pandemic, was 97.0% in the nine months ended September 30, 2020.
Our adjusted net income amounted to $123.1 million, or $4.97 per share, for the nine months ended September 30, 2020 compared to $110.7 million, or $7.23 per share, for the nine months ended September 30, 2019. We have adjusted our net income in the nine months ended September 30, 2020 for amortization of non-cash fees and accrued finance fees charge of $12.7 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.
The increase of $12.4 million in adjusted net income for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 is attributable mainly to a $13.1 million decrease in net finance expenses, a $4.9 million increase in operating revenues and a $4.2 million increase in the operating performance of our equity investment in Gemini, which were partially offset by a $9.8 million increase in total operating expenses.
On a non-adjusted basis, our net income amounted to $110.4 million, or $4.45 earnings per diluted share, for the nine months ended September 30, 2020 compared to net income of $97.4 million, or $6.36 earnings per diluted share, for the nine months ended September 30, 2019.
Operating Revenues
Operating revenues increased by 1.5%, or $4.9 million, to $341.9 million in the nine months ended September 30, 2020 from $337.0 million in the nine months ended September 30, 2019.
Operating revenues for the nine months ended September 30, 2020 reflect:

a $26.2 million increase in revenues in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 as a result of contractual increases in charter rates of vessels under long-term charters;
a $10.0 million increase in revenues in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 due to the acquisition of new vessels;
a $6.2 million decrease in revenues due to lower fleet utilization of our vessels in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 mainly due to the scheduled installation of scrubbers and dry-dockings of our vessels, of which $3.2 million relates to incremental delays in the Chinese shipyards where these activities were being performed due to the COVID-19 pandemic;
a $9.3 million decrease in revenues in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 as a result of lower re-chartering rates for certain of our vessels. This decrease is due to a $12.5 million decrease in revenues due to the re-chartering of six vessels in our fleet that concluded long-term charters over the last twelve months and were re-deployed at the prevailing lower spot rates at the time these vessels were re-chartered, partially offset by a $3.2 million improvement from the re-chartering of other vessels in the fleet; and
a $15.8 million decrease in revenues in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 due to lower non-cash revenue recognition in accordance with US GAAP.

Vessel Operating Expenses
Vessel operating expenses increased by $4.2 million to $82.2 million in the nine months ended September 30, 2020 from $78.0 million in the nine months ended September 30, 2019, primarily as a result of the increase in the average number of vessels in our fleet, partially offset by an overall decrease in the average daily operating cost to $5,592 per vessel per day for vessels on time charter for the nine months ended September 30, 2020 compared to $5,605 per vessel per day for the nine months ended September 30, 2019. Management believes that our daily operating cost are 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 4.9%, or $3.5 million, to $75.6 million in the nine months ended September 30, 2020 from $72.1 million in the nine months ended September 30, 2019 mainly due to the installation of scrubbers on nine of our vessels and the acquisition of the vessels Niledutch Lion, Phoebe and SM Charleston in the nine months ended September 30, 2020.
Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs increased by $1.9 million to $8.4 million in the nine months ended September 30, 2020 from $6.5 million in the nine months ended September 30, 2019.
General and Administrative Expenses
General and administrative expenses decreased by $1.9 million to $17.9 million in the nine months ended September 30, 2020, from $19.8 million in the nine months ended September 30, 2019. The decrease was mainly due to decreased non-cash recognition of share-based compensation.
Other Operating Expenses
Other Operating Expenses include Voyage Expenses.
Voyage Expenses
Voyage expenses increased by $2.1 million to $10.9 million in the nine months ended September 30, 2020 from $8.8 million in the nine months ended September 30, 2019 primarily as a result of the increase in the average number of vessels in our fleet.
Interest Expense and Interest Income
Interest expense decreased by 23.7%, or $13.0 million, to $41.9 million in the nine months ended September 30, 2020 from $54.9 million in the nine months ended September 30, 2019. The decrease in interest expense is attributable to:

a $12.5 million decrease in interest expense due to a decrease in debt service cost by approximately 1.3% and a $97.3 million decrease in our average debt (including leaseback obligations), to $1,532.5 million in the nine months ended September 30, 2020, compared to $1,629.8 million in the nine months ended September 30, 2019; and
a $0.5 million decrease in the amortization of deferred finance costs and debt discount related to our 2018 debt refinancing.As of September 30, 2020, our outstanding bank debt, gross of deferred finance costs, was $1,376.2 million and our leaseback obligation was $129.4 million compared to bank debt of $1,450.0 million and our leaseback obligation of $141.4 million as of September 30, 2019.

Interest income increased by $0.2 million to $5.0 million in the nine months ended September 30, 2020 compared to $4.8 million in the nine months ended September 30, 2019.
Other finance costs, net
Other finance costs, net decreased by $0.4 million to $2.0 million in the nine months ended September 30, 2020 compared to $2.4 million in the nine months ended September 30, 2019 mainly due to the decrease in finance costs related to the leaseback obligations, partially offset by lease termination fees in the nine months ended September 30, 2020.
Equity income on investments
Equity income on investments increased by $4.2 million to $4.7 million of income on investments in the nine months ended September 30, 2020 compared to $0.5 million in the nine months ended September 30, 2019 due to the improved operating performance of Gemini, in which the Company has a 49% shareholding interest.
Loss on derivatives
Amortization of deferred realized losses on interest rate swaps remained stable at $2.7 million in each of the nine months ended September 30, 2020 and September 30, 2019.
Other income, net
Other income, net was $0.3 million in the nine months ended September 30, 2020 compared to $0.4 million in income in the nine months ended September 30, 2019.
Adjusted EBITDA
Adjusted EBITDA increased by 1.2%, or $2.9 million, to $235.3 million in the nine months ended September 30, 2020 from $232.4 million in the nine months ended September 30, 2019. As outlined above, the increase is mainly attributable to a $4.9 million increase in operating revenues, a $4.2 million increase in the operating performance of our equity investees and a $0.4 million decrease in other finance expenses, which were partially offset by a $6.6 million increase in operating expenses. Adjusted EBITDA for the nine months ended September 30, 2020 is adjusted for stock based compensation of $0.9 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.
Recent Developments
On October 12, 2020, we announced the repurchase of 4,339,271 shares of our common stock for an aggregate purchase price of $31.1 million in privately negotiated transactions, including 2,517,013 shares from the Royal Bank of Scotland and 1,822,258 shares from Sphinx Investment Corp. These transactions resulted in the Company’s previously announced share repurchase program being terminated.
On October 16, 2020, we entered into agreements to acquire two 9,000 TEU container vessels built in 2009 for a gross aggregate purchase price of $62.0 million. These vessels are expected to be delivered to us by the end of January 2021.

Danaos Corporation Reports Second Quarter and Half Year Results for the Period Ended June 30, 2020

Danaos Corporation (“Danaos”) (NYSE: DAC), one of the world’s largest independent owners of containerships, reported unaudited results for the period ended June 30, 2020.
Highlights for the Second Quarter and Half Year Ended June 30, 2020:
• Adjusted net income1 of $42.5 million, or $1.71 per share, for the three months ended June 30, 2020 compared to $34.3 million, or $2.24 per share, for the three months ended June 30, 2019, an increase of 23.9%. Adjusted net income1 of $75.8 million, or $3.06 per share, for the six months ended June 30, 2020 compared to $72.8 million, or $4.77 per share, for the six months ended June 30, 2019, an increase of 4.1%.• Operating revenues of $116.8 million for the three months ended June 30, 2020 compared to $112.3 million for the three months ended June 30, 2019, an increase of 4.0%. Operating revenues of $223.0 million for the six months ended June 30, 2020 compared to $225.2 million for the six months ended June 30, 2019, a decrease of 1.0%.• Adjusted EBITDA 1 of $80.1 million for the three months ended June 30, 2020 compared to $75.6 million for the three months ended June 30, 2019, an increase of 6.0%. Adjusted EBITDA 1 of $152.0 million for the six months ended June 30, 2020 compared to $153.1 million for the six months ended June 30, 2019, a decrease of 0.7%.• Total contracted operating revenues were $1.2 billion as of June 30, 2020, with charters extending through 2028 and remaining average contracted charter duration of 3.7 years, weighted by aggregate contracted charter hire.• Charter coverage of 85% for the next 12 months based on current operating revenues and 62% in terms of contracted operating days.• Common stock repurchase program of up to $10 million approved.
Danaos’ CEO Dr. John Coustas commented:
“We are pleased to report improved adjusted earnings for both the second quarter of 2020 and the first six months of the year. The Company’s adjusted net income of $42.5 million for the second quarter of 2020 increased by $8.2 million, or 23.9% when compared to adjusted net income of $34.3 million for the second quarter of 2019. Adjusted EBITDA also improved by $4.5 million, or 6%, to $80.1 million for the second quarter of 2020 compared to $75.6 million for the second quarter of 2019.
Although economic activity has been subdued since the start of the coronavirus pandemic, we have seen increasing signs of confidence with liner companies in recent weeks as a number of previously blanked sailings have been reinstated, implying that demand is gradually improving. This has also translated into improving charter rates for vessels greater than 4,000 TEU in size. Recently reported financial results of the liner companies have also been encouraging since, as we had anticipated, prudent capacity management, reduced bunker prices and falling interest rates have more than compensated for the drop in volumes caused by the pandemic.
We are also cautiously optimistic about the medium-term market outlook. The orderbook is currently in single digits as a percentage of the world fleet for the first time in 20 years. Combined with an anticipated reduction in speeds due to the various environmental initiatives, the supply side outlook is healthy. Tighter supply will help to accelerate the recovery in the container market.
We continue to execute our strategy and we are well insulated from near-term volatility due to our high charter coverage of 85% in terms of operating revenues and 62% in terms of operating days over the next 12 months. This provides significant visibility into our cash flows during this period. We have now concluded all the scrubber installation investments and took delivery of two 8,500 TEU vessels during the second quarter. Finally, we have ample liquidity and a $1.2 billion charter backlog, which provides us with flexibility to both manage our business and react to growth opportunities that may present themselves. Given continued uncertainty about the duration of the coronavirus pandemic and the ensuing economic recovery, we are focused on maintaining a conservative financial profile and making thoughtful capital allocation decisions that align with our strategy and market expectations.
We also remain committed to operational excellence and technological innovation, which allows us to continually deliver a high quality service to our customers. Our commitment has enabled us to maintain our leadership position in the container shipping industry throughout multiple market cycles and during the current challenging environment. We believe that our focus and strategy will ultimately enhance shareholder value far and above the steel value of our fleet.”
Three months ended June 30, 2020 compared to the three months ended June 30, 2019
During the three months ended June 30, 2020, Danaos had an average of 57.1 containerships compared to 55.0 containerships during the three months ended June 30, 2019. Our fleet utilization for the three months ended June 30, 2020 was 97.1% compared to 99.4% for the three months ended June 30, 2019.
Our adjusted net income amounted to $42.5 million, or $1.71 per share, for the three months ended June 30, 2020 compared to $34.3 million, or $2.24 per share, for the three months ended June 30, 2019. We have adjusted our net income in the three months ended June 30, 2020 for amortization of non-cash fees and accrued finance fees charge of $4.0 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.
The increase of $8.2 million in adjusted net income for the three months ended June 30, 2020 compared to the three months ended June 30, 2019 is attributable mainly to a $5.8 million decrease in net finance expenses, a $4.5 million increase in operating revenues and a $1.7 million increase in the operating performance of our equity investment in Gemini Shipholdings Corporation (“Gemini”), which were partially offset by a $3.8 million increase in total operating expenses.
On a non-adjusted basis, our net income amounted to $38.5 million, or $1.55 earnings per diluted share, for the three months ended June 30, 2020 compared to net income of $30.1 million, or $1.97 earnings per diluted share, for the three months ended June 30, 2019.
Operating Revenues
Operating revenues increased by 4.0%, or $4.5 million, to $116.8 million in the three months ended June 30, 2020 from $112.3 million in the three months ended June 30, 2019.
Operating revenues for the three months ended June 30, 2020 reflect:
• a $9.6 million increase in revenues in the three months ended June 30, 2020 compared to the three months ended June 30, 2019 as a result of contractual increases in charter rates of vessels under long-term charters;• a $3.6 million increase in revenues in the three months ended June 30, 2020 compared to the three months ended June 30, 2019 due to the acquisition of new vessels;• a $5.3 million decrease in revenues in the three months ended June 30, 2020 compared to the three months ended June 30, 2019 due to lower non-cash revenue recognition in accordance with US GAAP;• a $2.5 million decrease in revenues in the three months ended June 30, 2020 compared to the three months ended June 30, 2019 as a result of lower re-chartering rates for certain of our vessels. This decrease is due to a $4.1 million decrease in revenues due to the re-chartering of four vessels in our fleet that concluded long-term charters over the last twelve months and were re-deployed at the prevailing lower spot rates in the three months ended June 30, 2020, partially offset by a $1.7 million improvement from the re-chartering of other vessels in the fleet; and• a $0.9 million decrease in revenues due to lower fleet utilization of our vessels in the three months ended June 30, 2020 compared to the three months ended June 30, 2019.
Vessel Operating Expenses
Vessel operating expenses increased by $1.3 million to $28.6 million in the three months ended June 30, 2020 from $27.3 million in the three months ended June 30, 2019, primarily as a result of the increase in the average number of vessels in our fleet, partially offset by an overall decrease in the average daily operating cost to $5,787 per vessel per day for vessels on time charter for the three months ended June 30, 2020 compared to $5,884 per vessel per day for the three months ended June 30, 2019. Management believes that our daily operating cost are 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 5.4%, or $1.3 million, to $25.3 million in the three months ended June 30, 2020 from $24.0 million in the three months ended June 30, 2019 mainly due to the installation of scrubbers on nine of our vessels and the acquisition of the vessels Niledutch Lion, Phoebe and SM Charleston in the six months ended June 30, 2020.
Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs increased by $0.8 million to $2.9 million in the three months ended June 30, 2020 from $2.1 million in the three months ended June 30, 2019.
General and Administrative Expenses
General and administrative expenses decreased by $0.5 million to $6.0 million in the three months ended June 30, 2020, from $6.5 million in the three months ended June 30, 2019. The decrease was mainly due to decreased non-cash recognition of share based compensation.
Other Operating Expenses
Other Operating Expenses include Voyage Expenses.
Voyage Expenses
Voyage expenses increased by $0.6 million to $3.3 million in the three months ended June 30, 2020 from $2.7 million in the three months ended June 30, 2019 primarily as a result of the increase in the average number of vessels in our fleet.
Interest Expense and Interest Income
Interest expense decreased by 27.7%, or $5.2 million, to $13.6 million in the three months ended June 30, 2020 from $18.8 million in the three months ended June 30, 2019. The decrease in interest expense is attributable to:
• a $5.1 million decrease in interest expense due to a decrease in debt service cost of approximately 1.56% and a $95.8 million decrease in our average debt (including leaseback obligations), to $1,534.9 million in the three months ended June 30, 2020, compared to $1,630.7 million in the three months ended June 30, 2019; and• a $0.1 million decrease in the amortization of deferred finance costs and debt discount related to our 2018 debt refinancing.
As of June 30, 2020, our outstanding bank debt, gross of deferred finance costs, was $1,392.6 million and our leaseback obligation was $135.2 million compared to bank debt of $1,470.6 million and our leaseback obligation of $144.4 million as of June 30, 2019.
Interest income remained stable at $1.6 million in each of the three months ended June 30, 2020 and June 30, 2019.
Other finance costs, net
Other finance costs, net decreased by $0.8 million to $1.0 million in the three months ended June 30, 2020 compared to $1.8 million in the three months ended June 30, 2019 mainly due to the decrease in finance costs related to the leaseback obligations, partially offset by lease termination fees in the three months ended June 30, 2020.
Equity income/(loss) on investments
Equity income/(loss) on investments increased by $1.7 million to $1.7 million of income on investments in the three months ended June 30, 2020 compared to nil in the three months ended June 30, 2019 due to the improved operating performance of Gemini, in which the Company has a 49% shareholding interest.
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 June 30, 2020 and June 30, 2019.
Other income, net
Other income, net was nil in the three months ended June 30, 2020 compared to $0.4 million in income in the three months ended June 30, 2019.
Adjusted EBITDA
Adjusted EBITDA increased by 6.0%, or $4.5 million, to $80.1 million in the three months ended June 30, 2020 from $75.6 million in the three months ended June 30, 2019. As outlined above, the increase is mainly attributable to a $4.5 million increase in operating revenues, a $1.7 million increase in the operating performance of our equity investees and a $0.7 million decrease in other finance expenses, which were partially offset by a $2.4 million increase in operating expenses. Adjusted EBITDA for the three months ended June 30, 2020 is adjusted for stock based compensation of $0.3 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.
Six months ended June 30, 2020 compared to the six months ended June 30, 2019
During the six months ended June 30, 2020, Danaos had an average of 56.4 containerships compared to 55.0 containerships during the six months ended June 30, 2019. Our fleet utilization for the six months ended June 30, 2020 was 94.2% compared to 98.8% for the six months ended June 30, 2019. Adjusted fleet utilization, excluding the effect of 188 days of incremental off-hire due to shipyard delays related to the COVID-19 pandemic, was 96.1% in the six months ended June 30, 2020.
Our adjusted net income amounted to $75.8 million, or $3.06 per share, for the six months ended June 30, 2020 compared to $72.8 million, or $4.77 per share, for the six months ended June 30, 2019. We have adjusted our net income in the six months ended June 30, 2020 for amortization of non-cash fees and accrued finance fees charge of $8.2 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.
The increase of $3.0 million in adjusted net income for the six months ended June 30, 2020 compared to the six months ended June 30, 2019 is attributable mainly to a $6.3 million decrease in net finance expenses and a $3.3 million increase in the operating performance of our equity investment in Gemini, which were partially offset by a $4.4 million increase in total operating expenses and a $2.2 million decrease in operating revenues, of which $3.2 million relates to incremental off-hire due to shipyard delays related to the COVID-19 pandemic in the first quarter of 2020.
On a non-adjusted basis, our net income amounted to $67.6 million, or $2.73 earnings per diluted share, for the six months ended June 30, 2020 compared to net income of $63.6 million, or $4.16 earnings per diluted share, for the six months ended June 30, 2019.
Operating Revenues
Operating revenues decreased by 1.0%, or $2.2 million, to $223.0 million in the six months ended June 30, 2020 from $225.2 million in the six months ended June 30, 2019.
Operating revenues for the six months ended June 30, 2020 reflect:
• a $14.7 million increase in revenues in the six months ended June 30, 2020 compared to the six months ended June 30, 2019 as a result of contractual increases in charter rates of vessels under long-term charters;• a $4.5 million increase in revenues in the six months ended June 30, 2020 compared to the six months ended June 30, 2019 due to the acquisition of new vessels;• a $7.0 million decrease in revenues due to lower fleet utilization of our vessels in the six months ended June 30, 2020 compared to the six months ended June 30, 2019 mainly due to the scheduled installation of scrubbers and dry-dockings of our vessels, of which $3.2 million relates to incremental delays in the Chinese shipyards where these activities were being performed due to the COVID-19 pandemic;• a $4.2 million decrease in revenues in the six months ended June 30, 2020 compared to the six months ended June 30, 2019 as a result of lower re-chartering rates for certain of our vessels. This decrease is due to a $8.6 million decrease in revenues due to the re-chartering of four vessels in our fleet that concluded long-term charters over the last twelve months and were re-deployed at the prevailing lower spot rates in the six months ended June 30, 2020, partially offset by a $4.5 million improvement from the re-chartering of other vessels in the fleet; and• a $10.2 million decrease in revenues in the six months ended June 30, 2020 compared to the six months ended June 30, 2019 due to lower non-cash revenue recognition in accordance with US GAAP.
Vessel Operating Expenses
Vessel operating expenses increased by $1.4 million to $54.6 million in the six months ended June 30, 2020 from $53.2 million in the six months ended June 30, 2019, primarily as a result of the increase in the average number of vessels in our fleet, partially offset by an overall decrease in the average daily operating cost to $5,657 per vessel per day for vessels on time charter for the six months ended June 30, 2020 compared to $5,761 per vessel per day for the six months ended June 30, 2019. Management believes that our daily operating cost are 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 4.2%, or $2.0 million, to $49.8 million in the six months ended June 30, 2020 from $47.8 million in the six months ended June 30, 2019 mainly due to the installation of scrubbers on nine of our vessels and the acquisition of the vessels Niledutch Lion, Phoebe and SM Charleston in the six months ended June 30, 2020.
Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs increased by $1.0 million to $5.3 million in the six months ended June 30, 2020 from $4.3 million in the six months ended June 30, 2019.
General and Administrative Expenses
General and administrative expenses decreased by $1.5 million to $11.9 million in the six months ended June 30, 2020, from $13.4 million in the six months ended June 30, 2019. The decrease was mainly due to decreased non-cash recognition of share based compensation.
Other Operating Expenses
Other Operating Expenses include Voyage Expenses.
Voyage Expenses
Voyage expenses increased by $1.3 million to $7.3 million in the six months ended June 30, 2020 from $6.0 million in the six months ended June 30, 2019 primarily as a result of the increase in the average number of vessels in our fleet.
Interest Expense and Interest IncomeInterest expense decreased by 18.5%, or $6.8 million, to $29.9 million in the six months ended June 30, 2020 from $36.7 million in the six months ended June 30, 2019. The decrease in interest expense is attributable to:
• a $5.8 million decrease in interest expense due to a decrease in debt service cost by approximately 0.8% and a $103.9 million decrease in our average debt (including leaseback obligations), to $1,539.5 million in the six months ended June 30, 2020, compared to $1,643.4 million in the six months ended June 30, 2019; and• a $1.0 million decrease in the amortization of deferred finance costs and debt discount related to our 2018 debt refinancing.
As of June 30, 2020, our outstanding bank debt, gross of deferred finance costs, was $1,392.6 million and our leaseback obligation was $135.2 million compared to bank debt of $1,470.6 million and our leaseback obligation of $144.4 million as of June 30, 2019.
Interest income increased by $0.1 million to $3.3 million in the six months ended June 30, 2020 compared to $3.2 million in the six months ended June 30, 2019.
Other finance costs, net
Other finance costs, net decreased by $0.4 million to $1.7 million in the six months ended June 30, 2020 compared to $2.1 million in the six months ended June 30, 2019 mainly due to the decrease in finance costs related to the leaseback obligations, partially offset by lease termination fees in the six months ended June 30, 2020.
Equity income/(loss) on investments
Equity income/(loss) on investments increased by $3.3 million to $3.3 million of income on investments in the six months ended June 30, 2020 compared to nil in the six months ended June 30, 2019 due to the improved operating performance of Gemini, in which the Company has a 49% shareholding interest.
Loss on derivatives
Amortization of deferred realized losses on interest rate swaps remained stable at $1.8 million in each of the six months ended June 30, 2020 and June 30, 2019.
Other income, net
Other income, net was $0.3 million in income in the six months ended June 30, 2020 compared to $0.4 million in income in the six months ended June 30, 2019.
Adjusted EBITDA
Adjusted EBITDA decreased by 0.7%, or $1.1 million, to $152.0 million in the six months ended June 30, 2020 from $153.1 million in the six months ended June 30, 2019. As outlined above, the decrease is mainly attributable to a $2.2 million decrease in operating revenues, of which $3.2 million relates to the impact of the COVID-19 pandemic described above and a $2.6 million increase in operating expenses, which were partially offset by a $3.3 million increase in the operating performance of our equity investees and a $0.4 million decrease in other finance expenses. Adjusted EBITDA for the six months ended June 30, 2020 is adjusted for stock based compensation of $0.6 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.
Common Stock Repurchase Program
The Company’s Board of Directors has approved a share repurchase program and authorized the officers of the Company to repurchase, from time to time, up to $10 million of the Company’s common stock. Shares may be purchased in open market or privately negotiated transactions, at times and prices that are considered to be appropriate by the Company, and the program may be suspended or discontinued at any time.
Recent Developments
On July 2, 2020, we drew down a loan of $13.3 million with SinoPac, which was used to partially finance the acquisition costs of the newly acquired vessel SM Charleston.

Danaos Corporation Reports First Quarter Results for the Period Ended March 31, 2020

Danaos Corporation, one of the world’s largest independent owners of containerships, today reported unaudited results for the quarter ended March 31, 2020.
Highlights for the First Quarter Ended March 31, 2020:
Adjusted net income1 of $33.3 million, or $1.34 per share, for the three months ended March 31, 2020 compared to $38.6 million, or $2.53 per share, for the three months ended March 31, 2019, a decrease of 13.7%.
Operating revenues of $106.2 million for the three months ended March 31, 2020 compared to $112.9 million for the three months ended March 31, 2019, a decrease of 5.9%.
Adjusted EBITDA1 of $71.9 million for the three months ended March 31, 2020 compared to $77.5 million for the three months ended March 31, 2019, a decrease of 7.2%.
Total contracted operating revenues were $1.3 billion as of March 31, 2020, with charters extending through 2028 and remaining average contracted charter duration of 3.8 years, weighted by aggregate contracted charter hire.
Charter coverage of 85% for the next 12 months based on current operating revenues and 66% in terms of contracted operating days.
Danaos’ CEO Dr. John Coustas commented:
“Our results for the first quarter of 2020 were not impacted by the Covid-19 pandemic, except for the increase in off-hire days related to delays in scrubber installations in Chinese shipyards. The Company’s adjusted net income of $33.3 million for the first quarter of 2020 decreased by $5.3 million when compared to the first quarter of 2019. Adjusted EBITDA for the first quarter of 2020 was $71.9 million, $5.6 million lower when compared to the first quarter of 2019.
“The Covid-19 pandemic has swiftly and dramatically disrupted the container market and caused a significant drop in container volumes. There is no doubt that the pandemic will have a very negative effect on GDP, unemployment and countless other macroeconomic indicators in the near term. Although countries are gradually starting to lift restrictions and allow economic activity to resume, the speed of any potential recovery and the long-term impact of the pandemic on consumer demand and global manufacturing supply chains is unclear. There is certainly optimism about the positive impacts of sweeping fiscal and monetary initiatives being undertaken globally, but it is too early to assess any such impacts.
“Liner companies have addressed the drop in volumes brought on by the pandemic by cancelling sailings and idling capacity. As a result, short-term charter rates have dropped by between 25% and 40%, depending on vessel size. Despite lower transportation demand, prudent capacity management, reduced bunker prices and falling interest rates have significantly alleviated pressure on the cash flows of our liner company customers. Additionally, we have recently seen several initiatives by governments in Europe and Asia to support the liner industry during this difficult period, which is a very encouraging sign.
“What is most important is that we look forward and continue to execute our strategy and maintain a solid base to withstand the current market turbulence. To that end, we are successfully managing charter renewals, albeit at lower charter rates but still at rates well above operational breakeven levels.
Notwithstanding the pressure in the charter market, we are well insulated from near-term volatility due to our high charter coverage of 86% in terms of operating revenues and 66% in terms of operating days over the next 12 months. This provides significant visibility into our cash flows during this period. Also, we will not have any additional financial impact on our operating revenues related to scrubber installations.
Finally, we have ample liquidity and a $1.3 billion charter backlog, which provides us with flexibility to both manage our business and react to growth opportunities that may present themselves. During the first quarter, we took delivery of Niledutch Lion, an 8,626 TEU containership built in 2008, and in early April, we took delivery of Phoebe, an 8,463 TEU containership built in 2005. Consistent with our long-standing strategy, both vessels have been contracted on two-year time charters that will contribute an incremental $12 million of EBITDA on an annualized basis.
“The strength of our company and our strong relationships in the finance community is demonstrated by the financing arrangements executed in the midst of the pandemic. On May 12, 2020 we concluded a $139.1 million re-financing of the existing sale & leaseback transaction for two of our 13,100 TEU vessels at a significantly lower cost compared to the previous financing arrangement. This will result in approximately $7.5 million of interest cost savings on an annualized basis. Additionally, lower US$ Libor interest rates, which are currently lower by 2% when compared to 2019, will further contribute to reducing cash finance costs. For illustrative purposes, we will save approximately $28 million on an annualized basis based on $1.4 billion of bank debt outstanding at the end of the first quarter and current Libor rates. We have further arranged debt financing for the new vessels through a $24 million credit facility that we entered into at the beginning of April 2020.
“We remain committed to operational excellence and technological innovation, which allows us to continually deliver a high quality service to our customers. Our commitment has enabled us to maintain our leadership position in the container shipping industry throughout multiple market cycles. These are the attributes that will enhance shareholder value far and above the steel value of our fleet.”
Three months ended March 31, 2020 compared to the three months ended March 31, 2019
During the three months ended March 31, 2020, Danaos had an average of 55.7 containerships compared to 55 containerships during the three months ended March 31, 2019. Our fleet utilization for the three months ended March 31, 2020 was 91.3% compared to 98.2% for the three months ended March 31, 2019. Adjusted fleet utilization, excluding the effect of 188 days of incremental off-hire due to shipyard delays related to the COVID-19 pandemic, was 95% in the three months ended March 31, 2020.
Our adjusted net income amounted to $33.3 million, or $1.34 per share, for the three months ended March 31, 2020 compared to $38.6 million, or $2.53 per share, for the three months ended March 31, 2019. We have adjusted our net income in the three months ended March 31, 2020 for a non-cash fees amortization and accrued finance fees charge of $4.2 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.
The decrease of $5.3 million in adjusted net income for the three months ended March 31, 2020 compared to the three months ended March 31, 2019 is attributable mainly to a $6.7 million decrease in operating revenues, of which $3.2 million relates to incremental off-hire due to shipyard delays related to the COVID-19 pandemic, and a $0.6 million increase in operating expenses, which were partially offset by a $1.6 million increase in the operating performance of our equity investment in Gemini Shipholdings Corporation (“Gemini”) and a $0.4 million decrease in net finance expenses.
On a non-adjusted basis, our net income amounted to $29.1 million, or $1.17 earnings per diluted share, for the three months ended March 31, 2020 compared to net income of $33.4 million, or $2.19 earnings per diluted share, for the three months ended March 31, 2019.
Operating Revenues
Operating revenues decreased by 5.9%, or $6.7 million, to $106.2 million in the three months ended March 31, 2020 from $112.9 million in the three months ended March 31, 2019.
Operating revenues for the three months ended March 31, 2020 reflect:
– a $6.1 million decrease in revenues due to lower fleet utilization of our vessels in the three months ended March 31, 2020 compared to the three months ended March 31, 2019 mainly due to the scheduled installation of scrubbers and dry-dockings of our vessels, of which $3.2 million relates to incremental delays in the Chinese shipyards where these activities were being performed due to the COVID-19 pandemic.
– a $1.7 million decrease in revenues in the three months ended March 31, 2020 compared to the three months ended March 31, 2019 as a result of lower re-chartering rates for certain of our vessels. This decrease is due to a $4.5 million decrease in revenues due to the re-chartering of four vessels in our fleet that concluded long-term charters over the last twelve months and were re-deployed at the prevailing lower spot rates in the three months ended March 31, 2020, partially offset by a $2.8 million improvement from the re-chartering of other vessels in the fleet.
– a $5.1 million increase in revenues in the three months ended March 31, 2020 compared to the three months ended March 31, 2019 as a result of contractual increases in charter rates of vessels under long-term charters.
– a $4.9 million decrease in revenues in the three months ended March 31, 2020 compared to the three months ended March 31, 2019 due to lower non-cash revenue recognition in accordance with US GAAP.
– a $0.9 million increase in revenues in the three months ended March 31, 2020 compared to the three months ended March 31, 2019 due to the acquisition of a new vessel.
Vessel Operating Expenses
Vessel operating expenses increased by $0.1 million to $26.0 million in the three months ended March 31, 2020 from $25.9 million in the three months ended March 31, 2019, primarily as a result of the increase in the average number of vessels in our fleet, partially offset by an overall decrease in the average daily operating cost of $5,522 per vessel per day for vessels on time charter for the three months ended March 31, 2020 compared to $5,636 per day for the three months ended March 31, 2019. Management believes that our daily operating cost are 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 3.4%, or $0.8 million, to $24.6 million in the three months ended March 31, 2020 from $23.8 million in the three months ended March 31, 2019 mainly due to the installation of scrubbers on four of our vessels and the acquisition of the vessel Niledutch Lion in the three months ended March 31, 2020.
Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs increased by $0.1 million to $2.3 million in the three months ended March 31, 2020 from $2.2 million in the three months ended March 31, 2019.
General and Administrative Expenses
General and administrative expenses decreased by $1.1 million to $5.8 million in the three months ended March 31, 2020, from $6.9 million in the three months ended March 31, 2019. The decrease was mainly due to decreased share based compensation and professional fees.
Other Operating Expenses
Other Operating Expenses include Voyage Expenses.
Voyage Expenses
Voyage expenses increased by $0.7 million to $4.0 million in the three months ended March 31, 2020 from $3.3 million in the three months ended March 31, 2019 mainly due to increased bunkering expenses.
Interest Expense and Interest Income
Interest expense decreased by 8.4%, or $1.5 million, to $16.3 million in the three months ended March 31, 2020 from $17.8 million in the three months ended March 31, 2019. The decrease in interest expense is attributable to:
(i) a $0.6 million decrease in interest expense due to a $112.1 million decrease in our average debt (including leaseback obligations), to $1,544.2 million in the three months ended March 31, 2020, compared to $1,656.3 million in the three months ended March 31, 2019; and
(ii) a $0.9 million decrease in the amortization of deferred finance costs and debt discount related to our 2018 debt refinancing.
As of March 31, 2020, our bank debt outstanding, gross of deferred finance costs, was $1,396.3 million and our leaseback obligation was $134.3 million compared to bank debt of $1,641.7 million as of March 31, 2019.
Interest income increased by $0.1 million to $1.7 million in the three months ended March 31, 2020 compared to $1.6 million in the three months ended March 31, 2019.
Other finance costs, net
Other finance costs, net increased by $0.3 million to $0.6 million in the three months ended March 31, 2020 compared to $0.3 million in the three months ended March 31, 2019.
Equity income/(loss) on investments
Equity income/(loss) on investments increased by $1.6 million to $1.5 million of income on investments in the three months ended March 31, 2020 compared to a $0.1 million loss on investments in the three months ended March 31, 2019 due to the improved operating performance of Gemini, in which the
Company has a 49% shareholding interest.
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 March 31, 2020 and March 31, 2019.
Other income, net
Other income, net was $0.2 million in income in the three months ended March 31, 2020 compared to nil in the three months ended March 31, 2019.
Adjusted EBITDA
Adjusted EBITDA decreased by 7.2%, or $5.6 million, to $71.9 million in the three months ended March 31, 2020 from $77.5 million in the three months ended March 31, 2019. As outlined above, the decrease is mainly attributable to a $6.7 million decrease in operating revenues, of which $3.2 million relates to the impact of the COVID-19 pandemic described above, a $0.3 million increase in other finance expenses and a $0.2 million increase in operating expenses, which were partially offset by a $1.6 million increase in the operating performance of our equity investees. Adjusted EBITDA for the three months ended March 31, 2020 is adjusted for stock based compensation of $0.3 million. Tables reconciling Adjusted EBITDA to
Net Income can be found at the end of this earnings release.
Recent Developments
In 2020, we acquired one 8,463 TEU container vessel and one 8,626 TEU container vessel, both of which have been fixed on two-year charters and in the aggregate are expected to contribute approximately $12 million to EBITDA on an annualized basis. Additionally, we entered into an agreement to acquire an 8,533 TEU vessel, which is expected to be delivered to us in the second quarter of 2020.
On April 8, 2020, we entered into a loan agreement with Macquarie Bank for an amount of up to $24 million drawn down in full on April 9, 2020. The loan was used to partially finance the acquisition costs of the vessels Niledutch Lion and Phoebe.
On May 12, 2020, we refinanced the existing leaseback obligation related to the vessels Hyundai Honour and Hyundai Respect with a new sale and leaseback arrangement amounting to $139.1 million with a four-year term, at the end of which we will reacquire these vessels for an aggregate amount of $36.0 million or earlier, at our option, for a purchase price set forth in the agreement. This arrangement was recorded as a financing transaction and recognized as a financial liability.
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