Danaos Corporation · NYSE:DAC
Danaos — Investor Presentation (February 2021)
40 slides from Danaos's investor presentation, February 2021
Slide 1: Investor Presentation
Investor Presentation February 2021 Strictly Private and Confidential
Slide 2: Disclaimer
Disclaimer 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 that the Company expect
Slide 3: Business Highlights
Business Highlights Business Model Provides Strong & ✓ Stable Cash Flow Profile Leading Diverse & High ✓ Containership Owner ✓ Quality Fleet & Operator Strong Container Pioneers in Vessel Demand & Digitalisation & ✓ Supply Side ✓ Champion of ESG Dynamics Robust Capital Principles Structure & ✓ Conse
Slide 4: Key Business Highlights
Key Business Highlights • One of the largest publicly-listed owners of modern containerships with 40+ year history in the Leading Containership shipping market A Owner and Operator • One of the most efficient operators in the industry with highly competitive breakeven levels • Management aligned thr
Slide 5: Danaos by the Numbers
Danaos by the Numbers $1.2bn 46% Contracted revenue through 2028 (1) Ownership through founder / management 4.5x ~$2.2bn Net Debt / 2020 Adjusted EBITDA(2) Enterprise value(3) $318mn ~2.8x 2020 Adjusted EBITDA Reduction in leverage over the last three years (1) Contracted Revenue as of December 31,
Slide 6: Fourth Quarter 2020 Earnings
Fourth Quarter 2020 Earnings Summary of Results (thousands $, expect per share figures) Three Months ended December 31 Year ended December 31 $ in thousands 2020 2019 % yoy 2020 2019 % yoy Operating Revenue $119,642 $110,204 8.6% $461,594 $447,244 3.2% Adjusted EBITDA $83,009 $78,118 6.3% $318,331 $
Slide 7: 27 vessels re-chartered over last 3 months at improved market rates
27 vessels re-chartered over last 3 months at improved market rates Previous charters New Charters Charter Charter 2021 2022 2023 Charterer 1 Age Vessel Rate Expiry Rate Expiry2 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 16.7 Derby D $8,750 Mar 2021 $25,000 Jan 2
Slide 8: Significant Contracted Revenue Upside in 2021
Significant Contracted Revenue Upside in 20211 Operating Revenues Sensitivity 2020 2021 > $100 mil revenue upside $565 mil $23 mil Re-chartering Significant revenue upside in 2021 of more than $100 revenues, assuming million on the working assumption that the 19 19 vessels opening up vessels with ch
Slide 9: Net Asset Value significantly improved
Net Asset Value1 significantly improved (in million US$) $2,496 $42 $19 $11 $205 $44 $2,175 NAV per share 2 $51.6 $1,055 ($1,440) Charter Attached Zim Equity Zim Bonds Gemini HMM Bonds Working Capital Total Value of Net Debt Net Asset Value Fleet Value participation Assets valued at NAV • The charte
Slide 10: Experienced Senior Management
Experience 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 • Over 40 years of experience in the the shipping industry shipping industry • Vice Chairman of the boar
Slide 11: A. Leading Containership Owner and Operator
A. Leading Containership Owner and Operator
Slide 12: 40+ Year Legacy of Leadership in Container Shipping
40+ Year Legacy of Leadership in Container Shipping 1987 2006 2010 2019 Dr. John Coustas steps NYSE IPO $200mn equity $56mn public into Chief Executive role Raised $200mn raise offering 1972 2005 2018 to present Founded by Dimitris Coustas Incorporation in Marshall Refinancing Islands Market Share 1
Slide 13: A Diverse & High-Quality Fleet
A Diverse & High-Quality Fleet Fleet Overview (1) 8x 3,400 TEU Average Age: 13.0 years Average Remaining Charter Term: 0.9 years 11x 2,200 – 2,600 TEU 10x 8.3% 3.6% 3.9% Average Age: 22.4 years Average Remaining Charter Term: 1 year 4,300 – 5,500 TEU Average Age: 13.2 years Average Remaining Charter
Slide 14: Charter Backlog to Leading Container Operators
Charter Backlog to Leading Container Operators Charter Backlog (1) (TEU-weighted remaining duration of charter backlog) Charter backlog of $1.2 billion through to 2028 (1) Average charter duration of 3.1 years (weighted by aggregate contracted charter hire) Adjusted fleet utilization for 2020 97.2%(
Slide 15: Strong Charter Coverage Profile
Strong Charter Coverage Profile… …with the flexibility for further upside in todays robust charter market Revenue-Weighted Charter Coverage(1) Shorter charter durations limited to vessels 100% 94% in more liquid chartering markets 57% 33% 4% 2020 2021 2022 2023 2024+ Contracted Revenue by Year mn $
Slide 16: Track Record of Operational Excellence
Track Record of Operational Excellence Danaos' Management Practice Performance(1) Relative to Peers As part of a benchmarking exercise conducted by a global management consulting firm, Management Practice Performance and Safety & Quality Performance was assessed across a number of metrics and benchm
Slide 17: Pioneers in Digitization Supporting Operational Excellence
Pioneers in Digitization Supporting Danaos’ Class Leading Operational Excellence Early innovator in utilising technology in optimising operations: 1995 2004 2015 International Safety Management Lloyd’s List Technical Innovation Award Lloyd’s List Intelligence Big Data Award Certification of its cont
Slide 18: Leading Digitization Performance
Leading Digitization Performance Danaos utilises its leading management software capability, aiding in the optimal management of its fleet System Description Danaos Software Capability Manages maintenance jobs, schedules counter-based and condition- Planned based tasks, and automatically updates sto
Slide 19: 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 Last 2 Years Progress Advanced solutions to Code of ethics and ✓ Independent Board 15.9% decrease in the use of ✓ reduce emissions
Slide 20: B. Robust Capital Structure and Conservative Financial Strategy
B. Robust Capital Structure and Conservative Financial Strategy
Slide 21: Financial Strategy
Financial Strategy Balanced Chartering Strategy • Continue to deploy assets on long-term charters to ensure cash flow visibility Supported by Continued Operational Excellence • Maintain high fleet utilization • Excess cash flow once leverage targets are met could be used for fleet expansion, Prudent
Slide 22: Historical Financial Highlights
Historical Financial Highlights Revenues Adjusted EBITDA mn $ mn $ $568 $418 $552 $404 $498 $351 $459 $462 $310 $318 $311 $318 $452 $447 2014 2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 2018 2019 2020 Net Leverage Adjusted Net Income 7.2x 7.3x mn $ $171 7.0x $159 6.5x $149 $141 $131 5.1x $115
Slide 23: Strong Free Cash Flow Visibility & Great Conversion to OCF
Strong Free Cash Flow Visibility & Great Conversion to OCF Illustrative Walk to FY 2020 Free Cash Flow1 $350 Drivers of FY 2020 FCF Uses of FCF Lower interest rates Further debt amortization FY 2020 FCF excludes CapEx Contractual charter escalations Return of capital to shareholders and one-
Slide 24: Focused on Maintaining Conservative Capital Structure
Focused on Maintaining Conservative Capital Structure Net Adjusted Debt and Adjusted EBITDA Multiple1 $3,500 7.3x 7.0x A robust deleveraging profile… 3,165 $3,000 3,042 7.2x • Successfully concluded a $2.2bn debt refinancing in 2,892 6.5x 2018 with support from key lender group leading to a 2,703 re
Slide 25: C. Strong Container Vessel Demand & Supply Side Dynamics
C. Strong Container Vessel Demand & Supply Side Dynamics
Slide 26: Container Trade: A Swift Recovery in H2 Set To Continue into 2021
Container Trade: A Swift Recovery in H2 20 Set To Continue into 2021 World Container Trade & GDP, 2000 – 2021F 201 Mn Teu -3.0% 216 Mn Teu 7.1% 2020(F) world container trade 2020(F) trade yoy growth 2021(F) world container trade 2021(F) trade yoy growth Source: MSI, January 2021. 21 Note (1): Foreca
Slide 27: Remarkable Timecharter Market Rebound in Q4 20
Remarkable Timecharter Market Rebound in Q4 20 1-Year Timecharter Market Rates, January 2017 – December 2020 214% 200% 242% 186% 8,500 TEU Charter Rate % Ch: 6,500 TEU Charter Rate % Ch: 4,400 TEU Charter Rate % Ch: 3,500 TEU Charter Rate % Ch: End Dec-20 vs. Q2 20 Low End Dec-20 vs. Q2 20 Low End D
Slide 28: Supply: Limited Orderbook to Deliver Low Future Fleet Growth
Supply: Limited Orderbook to Deliver Low Future Fleet Growth Containership Orderbook, End November 2020 Age Profile of Fleet: Smaller Vessel Fleet Ageing Very limited orderbook for mid-size fleet 9.9% 3.6% 12.5 Years 5 Years Industry Orderbook-to- Orderbook-to-Fleet Ratio: Average Age, sub-12,000 Av
Slide 29: Idle Capacity: Sustained Fall in H2 2020 Leads to Sold-Out Market
Idle Capacity: Sustained Fall in H2 2020 Leads to ‘Sold-Out’ Market Idle Containership Capacity: Liner Company Owned vs Tonnage Provider Owned 2016 71% NOO Owned 2020 30% NOO Owned Rapid Fall in Idle Capacity over H2 20 as 1.2% 71% 30% Idle Fleet at End-Dec 20 Share of Idle Capacity owned Share of I
Slide 30: Workhorses of Long-Distance Container Trades
2,200-13,200 TEU Fleet: Workhorses of Long-Distance Container Trades Danaos Fleet Segment Share of Long-Distance Trade Deployment Danaos fleet segments provide 85% of capacity 60% of long-haul container trade volumes 3.3% 85% 25% Orderbook-to-Fleet Ratio in Share of Capacity on Key Danaos Fleet Segm
Slide 31: Consolidated Liner Landscape Provides Stable Counterparties
Consolidated Liner Landscape Provides Stable Counterparties Liner Company Alliance Members, December 2020 Consolidation between liner companies provides more stable set of counterparties Greater stability, fewer incentives to undercut market Better visibility over competitor capacity and strategy, r
Slide 32: A Profitable Year for our Liner Clients
A Profitable Year for our Liner Clients Freight Rate Indices, January 2018 – December 2020 • 2020 is expected to be a profitable year for liners. This profitability has been driven by a range of factors. One key driver has been the combination of equipment shortages with rebounding trade volumes. Th
Slide 33: E. Appendix
E. Appendix <i a EI Fa
Slide 34: Substantial Fleet Employment and Coverage
Substantial Fleet Employment and Coverage Contacted Revenue 2021 2022 2023 2024 Charterer Age (1) Vessel Charter Rate Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Contribution 8.9 Hyundai Honour $64,918 8.8 Hyundai Re
Slide 35: Substantial Fleet Employment and Coverage
Substantial Fleet Employment and Coverage Contacted Revenue 2021 2022 2023 2024 Charterer Age (1) Vessel Charter Rate Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Contribution 16.8 ANL Tongala $8,750 16.7 Derby D $25,
Slide 36: Adjusted Net Income
Adjusted Net Income Reconciliation of Adjusted Net Income In thousands of U.S. Dollars Year Ended Three Months December 31, Ended December 31, Year Ended December 31, Reconciliation of Net Income / (Loss) to Adjusted Net Income / (Loss) 2020 2019 2020 2019 2018 2017 2016 2015 2014 2013 2012 Net Inco
Slide 37: Adjusted EBITDA
Adjusted EBITDA Reconciliation of Net Income to EBITDA and Adjusted EBITDA In thousands of U.S. Dollars Year Ended Three Months December 31, Ended December 31, Year Ended December 31, Reconciliation of Net Income / (Loss) to EBITDA and Adjusted EBITDA 2020 2019 2020 2019 2018 2017 2016 2015 2014 201
Slide 38: Free Cash Flow
Free Cash Flow Reconciliation of Free Cash Flow to Net Increase / (Decrease) in Cash & Cash equivalents In thousands of U.S. Dollars Year Ended Three Months Year Ended December 31, Ended December 31, December 31, Reconciliation of Free Cash Flow 2020 2019 2020 2019 2018 2017 in thousands of U.S. dol
Slide 39: Danaos Net Asset Value
Danaos Net Asset Value Net Asset Value Net Asset Value, is used by management, and management believes, many investors, as a reference point in assessing valuation of fleets of ships and similar assets. The data in the following table is as of December 31, 2020. The table below provides information
Slide 40: Thank You
Thank You