Danaos Corporation · NYSE:DAC
Danaos — Investor Presentation (November 2020)
36 slides from Danaos's investor presentation, November 2020
Slide 1: World-Class Shipping, Leading-Edge Expertise
World-Class Shipping, Leading-Edge Expertise Corporate Presentation | November 2020
Slide 2: Disclaimer
Disclaimer Danaos by the Numbers This presentation contains certain statements that may be deemed to be “forward-looking statements” within the meaning of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, that address activities, events or developments t
Slide 3: Business Overview
Business Overview k A LEADING CONTAINERSHIP OWNER AND OPERATOR • One of the largest publicly-listed owners of modern containerships with ✓ long track record in the shipping market MARKET UPDATE • One of the most efficient operators in the industry with highly competitive breakeven levels • The chart
Slide 4: Danaos by the Numbers
Danaos by the Numbers $1.1bn 46% Contracted cash flow through 2028 Ownership through founder / management 4.5x $1.6bn Net debt to LTM Adjusted EBITDA Enterprise value $313mn 3.0x LTM Adjusted EBITDA 3Q 2020 Reduction in leverage over the last three years 4
Slide 5: 40+ Year Legacy of Leadership in Container Shipping
40+ Year Legacy of Leadership in Container Shipping 1987 2006 2010 Dr. John Coustas steps into NYSE IPO $200mm equity Chief Executive role Raised $200mm raise 1972 2005 2018 to present Founded by Dimitris Incorporation in Marshall Refinancing, share Coustas Islands offering and growth Market Share1,
Slide 6: Diverse, High-Quality Fleet
Diverse, High-Quality Fleet Fleet Overview(1) 8x 3,500 TEU Average Age: 12.7 years Remaining Charter Term: 0.5 years 11x 2,200 – 2,600 TEU 1.8% 0.7% Average Age: 22.2 years 1.0% Remaining Charter Term: 0.2 years 10x 4,300 – 5,500 TEU Average Age: 13.0 years Remaining Charter Term: 0.3 years 23.2% 38
Slide 7: Balanced Counterparty Concentration
Balanced Counterparty Danaos by the Numbers Concentration Length of Customer Relationships Noted in Italics Overview of Customer Base ONE • Long history chartering to most major global liner companies • Engaged with container alliances on deployments across major and minor global routes 18% (20 year
Slide 8: Strong Charter Coverage through 2024
Strong Charter Coverage through 2024 Shorter charter durations limited to vessels in more liquid chartering markets Revenue-Weighted Charter Coverage(1) 99% 81% 59% 41% 5% 2020 2021 2022 2023 2024+ Contracted Revenue by Year mm $ by Asset Class $455 $393 $282 $189 $119 2020 2021 2022 2023 2024+ 13,0
Slide 9: Good Free Cash Flow Visibility
Good Free Cash Flow Visibility Illustrative Walk to LTM Q3 2020 Free Cash Flow(1) LTM Q3 2020 FCF Drivers of LTM Q3 2020 FCF Uses of FCF excludes CapEx ✓ Lower interest rates and one-time / ✓ Further debt amortization extraordinary $313 ✓ Contractual charter escalations ✓ Return of capital to shareh
Slide 10: Focused on Maintaining Conservative Capital Structure
Focused on Maintaining Conservative Capital Structure Capitalization Net Adjusted Debt and Adjusted EBITDA Multiple(1) $ in millions 9/30/2020 Cash $106 $3,500 Bank Debt: 1,369 7.3x 129 7.0x Long-term Leaseback Obligation 3,165 3,000 7.2x Exit Fee 23 3,042 2,892 6.5x Deferred Finance Costs (31) (16)
Slide 11: Experienced Senior Management
Experienced Senior Management Dr. John Coustas, President & CEO Iraklis Prokopakis, Senior Vice President, Treasurer & COO • CEO since 1987 • Joined Danaos in 1998 • Over 30 years of experience in the • Over 40 years of experience in the shipping shipping industry industry • Vice Chairman of the boa
Slide 12: Longstanding Champion of ESG Principles
Longstanding Champion of ESG Principles Danaos Management is keenly focused on maintaining a strong ESG framework for company operations Environmental Social Governance ✓ Advanced solutions to ✓ Code of ethics and ✓ Independent Board reduce emissions through compliance policies fuel efficiency optim
Slide 13: Pioneers in Digitalization
Pioneers in Digitalization Waves Fleet Performance … Riding the Wave of Innovation! Data Analytics/Algorithmic Analysis (Operator-defined) of Fused Data across Monitoring Systems HINDSIGHT: • ‘Reflect and learn from past data’ through statistical processing and trend analysis • Detection of hidden c
Slide 14: Industry Overview
Industry Overview
Slide 15: Seaborne Containerized Trade Forecast to Rebound Quickly
Seaborne Containerized Trade Forecast to Rebound Quickly Global Seaborne Container Trade 250 15% 10% 200 5% 150 TEU mm 0% 100 -5% 50 -10% 0 -15% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 World Seaborne Container Trade Y-o-Y Growth S
Slide 16: Containership Trade Routes
Containership Trade Routes Largest vessels primarily deployed on long trade routes • Units of 15,000+ TEU are almost exclusively deployed on Container Trade by Trade Lane 2020f the Far East-Europe trade • Deployment of boxships sized 12-14,999 TEU continues Mainlane, to broaden notably onto the Tran
Slide 17: Geographic Deployment Favoring Certain Size Vessels
Geographic Deployment Favoring Certain Size Vessels Largest vessels primarily deployed on long trade routes Capacity Deployment By Route mm $ by Asset Class 100% 80% 60% 40% 20% 0% <3k TEU 3-6k TEU 6-8k TEU 8-12k TEU 12-15k TEU 15k+ TEU Mainlane E-W Non-Mainlane E-W North-South Intra-Regional Source
Slide 18: Supply Growth Primary in Largest Vessel Segments
Supply Growth Primary in Largest Vessel Segments Orderbook is concentrated in 8,000+ TEU vessels where Danaos has the greatest charter coverage Containership Orderbook, By Scheduled Delivery Year TEU, mm 1.25 1.00 0.75 0.50 0.25 0.00 2020 2021 2022 12,000+ TEU 8,000–11,999 TEU 3,000–7,999 TEU 100–2,
Slide 19: Charter Rates Near Multi-Year Highs
Charter Rates Near Multi-Year Highs 9,000 TEU gls Containership 3-yr TC Rate1 6,800 TEU Containership 3-yr TC Rate $/day, thousands $/day, thousands 50 40 40 30 30 20 20 10 10 0 0 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 4,400 TE
Slide 20: Asset Values Steady, and Transactions have Increased
Asset Values Steady, and Transactions have Increased 8,800 TEU Containership 5 Year Old Secondhand Price 6,600 TEU Containership 5 Year Old Secondhand Price mm $ mm $ 140 120 120 100 100 80 80 60 60 40 40 20 20 0 0 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-13 Sep-14 Sep-15 Sep-16 S
Slide 21: Financial Overview
Financial Overview
Slide 22: Historical Financials
Historical Financials Summary Results Operating Revenues Adjusted EBITDA mm $ mm $ $589 $588 $568 $552 $498 $452 $459 $447 $452 $432 $434 $418 $404 $351 $310 $318 $311 $313 2012 2013 2014 2015 2016 2017 2018 2019 LTM 2012 2013 2014 2015 2016 2017 2018 2019 LTM 3Q '20 3Q '20 Net Leverage Adjusted Net
Slide 23: Third Quarter 2020 Earnings
Third Quarter 2020 Earnings Summary of Results thousands $, expect per share figures Three Months ended Sept. 30 Nine Months ended Sept. 30 Last Twelve 2020 2019 % yoy 2020 2019 % yoy Months Operating Revenue $118,932 $111,830 6.4% $341,952 $337,040 1.5% $452,156 Adjusted EBITDA1 $83,331 $79,328 5.0
Slide 24: Charter Adjusted Net Asset Value
Charter Adjusted Net Asset Value (in US$ millions) $1,795 ($1,415) (Pro-forma) NAV / Share: $18.3(3) NAV / Share: $20.6(4) $72 As of September 30, 2020 As of September 30, 2020 $452 $421 Charter-Adjusted Total Asset Net Debt Net Working Capital & Other (1) Net Asset Value (2) Net Asset Value Value (
Slide 25: Summary
Summary
Slide 26: Financial Strategy Positioning Danaos for Success
Financial Strategy Positioning Danaos for Success k 38.4% reduction in leverage between 2017 and today(2) 7.3x 5.1x Continued de-levering from strong contracted cash flows 4.6x 4.5x ✓ - Minimum debt amortization of $317mm(1) in 2020 and 2021 2017 2018 2019 2020 Q3 Balanced chartering strategy to ens
Slide 27: Appendix
Appendix
Slide 28: Substantial Fleet Employment and Coverage
Substantial Fleet Employment and Coverage Total Charter Revenue Charterer Age1 Vessel Contribution 8.6 Hyundai Honour Hyundai Respect 38.5% 8.6 8.4 Hyundai Smart Hyundai Speed 5x 8.3 Hyundai Ambition 13,100 TEU 8.3 14.1 Pusan C 7.8% 13.9 Le Havre 9.6 Express Berlin 9.5 Express Rome 5x 9.4 Express At
Slide 29: Substantial Fleet Employment and Coverage
Substantial Fleet Employment and Coverage Total Charter Revenue Charterer Age1 Vessel Contribution 16.6 ANL Tongala 16.4 Derby D 1.0% 13.1 Seattle C 12.9 YM Vancouver 12.2 Rio Grande Zim Sao Paolo 10x 12.0 11.9 Zim Kingston 4,300 – 5,500 TEU 11.8 Zim Monaco 11.5 Zim Dalian 11.3 Zim Luanda 19.6 Dimit
Slide 30: Adjusted EBITDA
Adjusted EBITDA Reconciliation of Net Income / (Loss) to EBITDA and Adjusted EBITDA September 30, 2020 Three Months Three Months Nine Months Nine Months Twelve Months ended ended ended ended ended ($ In thousands) Sept. 30, 2020 Sept. 30, 2019 Sept 30, 2020 Sept 30, 2019 Sept 30, 2020 Net income / (
Slide 31: Historical Adjusted EBITDA
Historical Adjusted EBITDA Historical Reconciliation of Net Income to EBITDA and Adjusted EBITDA Years ended 2012 – LTM 3Q 2020 Twelve months ended ($ in thousands) 2012 2013 2014 2015 2016 2017 2018 2019 Sept. 30, 2020 Net Income $(105,204) $37,523 $(3,920) $117,016 $(366,195) $83,905 $(32,936) $13
Slide 32: Adjusted Net Income
Adjusted Net Income Reconciliation of Net Income to Adjusted Net Income and Adjusted Earnings per Share September 30, 2020 Three Months Three Months Nine Months Nine Months Twelve Months ended ended ended ended ended ($ In thousands, except per share items) Sept. 30, 2020 Sept. 30, 2019 Sept. 30, 20
Slide 33: Historical Adjusted Net Income
Historical Adjusted Net Income Reconciliation of Adjusted Net Income Years ended December 2012 – LTM 3Q 2020 Twelve months ended 2012 2013 2014 2015 2016 2017 2018 2019 Sept. 30, 2020 Net Income $(105,204) $37,523 $(3,920) $117,016 $(366,195) $83,905 $(32,936) $131,252 $144,188 Adjust for: Impairmen
Slide 34: Sept. 30, 2020 Free Cash Flow
Sept. 30, 2020 Free Cash Flow Reconciliation of Free Cash Flow Twelve months ended Three months ended Twelve months ended ($ in thousands) Dec. 31, 2019 Sept. 30, 2020 Sept. 30, 2020 Net Income $131,252 $42,786 $144,188 Adjustments Depreciation 96,505 25,765 99,968 Amortization of deferred drydockin
Slide 35: Appendix: Danaos Net Asset Value
Appendix: Danaos Net Asset Value(1) (in US$ thousands) (1) Net Asset Value (NAV) is used to assess compliance with our credit facility covenants, and management believes that many investors use NAV as a reference point in assessing valuation of fleets of ships and Charter Adjusted Asset Value simila
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