Danaos Corporation · NYSE:DAC
Danaos — Investor Presentation (May 2022)
46 slides from Danaos's investor presentation, May 2022
Slide 1: Investor Presentation May 2022
Investor Presentation May 2022
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 50 year history in the shipping Leading Containership A Owner and Operator market One of the most efficient operators in the industry with highly competitive breakeven levels Charter backlog of $2.7
Slide 5: Danaos by the Numbers
Danaos by the Numbers $2.7bn Contracted revenue through 2028(1) 1.7x ~$2.8bn Net Debt / LTM Q1 2022 Adjusted EBITDA(2) Enterprise value(3) $682mn ~5.6x LTM Q1 2022 Adjusted EBITDA Reduction in leverage since end 2017 (1) Contracted Revenue as of March 31, 2022 on the basis of concluded charter contr
Slide 6: Summary of Contracted Revenue and Fleet
Summary of Contracted Revenue and Fleet TEU Capacity (1) Contracted Revenue and Contracted Days Coverage(2) USDm 500.0 99% 450.0 8% $1,200 100% 436.6 436.6 TEU in thousand 78% 400.0 $973 80% 403.8 $800 $777 57% 60% 350.0 $558 $400 300.0 40% 250.0 $0 20% 2020 2021 March 31, 2022 2022 2023 2024 Contra
Slide 7: First Quarter 2022 Highlights
First Quarter 2022 Highlights Summary of Results USDm Adjusted EBITDA 2021 2022 $300.0 +180% $269.5 $200.0 $100.0 $96.3 $0.0 Three Months Ended March 31 Adjusted Net Income Free Cash Flow 2021 2022 2021 2022 $300.0 $90.0 +1237% +306% $77.4 $200.0 $235.3 $60.0 $100.0 $30.0 $58.0 $0.0 $0.0 $5.8 Three
Slide 8: First Quarter 2022 Earnings
First Quarter 2022 Earnings Summary of Results USD thousands, expect per share figures Three Months LTM Ended March 31st, Ended March 31st, 2022 2021 % yoy 2022 Operating Revenue $229,901 $132,118 74% $787,288 Adjusted EBITDA $269,484 $96,282 180% $682,005 Free Cash Flow $77,436 $5,791 1237% $332,18
Slide 9: Substantial Fleet Employment and Charter Coverage
Substantial Fleet Employment and Charter Coverage(1) denotes firm charter period 1 1 denotes firm charter period 2 denotes firm charter period at prevailing market charter rate at that time denotes optional period at the option of the charterer which is currently expected to be exercised since chart
Slide 10: Substantial Fleet Employment and Charter Coverage
Substantial Fleet Employment and Charter Coverage(1) denotes firm charter period 1 1 denotes firm charter period 2 denotes firm charter period at prevailing market charter rate at that time denotes optional period at the option of the charterer which is currently expected to be exercised since chart
Slide 11: 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 12: A. Leading Containership Owner and Operator
A. Leading Containership Owner and Operator
Slide 13: Legacy of Leadership in Container Shipping
50 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 Am
Slide 14: A Diverse & High-Quality Fleet
A Diverse & High-Quality Fleet Fleet Overview(1) 11x 5x 2,200 – 2,600 TEU 13,100 TEU Average Age: 23.7 years Average Age: 9.9 years Remaining Charter Term: 2.7 years Remaining Charter Term: 2.1 years 8x 9.0% 9.0% 3,400 TEU 5x Average Age: 14.2 years 9.4% 9,600 - 10,100 TEU Remaining Charter Term: 3.
Slide 15: 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 $2.7 billion through to 2028(1) Average charter duration of 3.7 years (weighted by aggregate contracted charter hire) (1) Fleet utilization for Q1 2022 97.4% 12 (
Slide 16: Strong Charter Coverage Profile
Strong Charter Coverage Profile… …with the flexibility for further upside Charter Coverage based on Days(1) 99% 100% Shorter charter durations limited to vessels 78% in more liquid chartering markets 75% 57% 50% 25% 15% 0% 2022 2023 2024 2025+ Contracted Revenue by Year(1) USDm $1,200 $973 $777 $800
Slide 17: 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 18: 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 19: 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 20: 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 75.8% decrease in the use of reduce emissions
Slide 21: B. Robust Capital Structure and Conservative Financial Strategy
B. Robust Capital Structure and Conservative Financial Strategy
Slide 22: 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 can be used for reducing leverage, for acquisition of young and Prudent
Slide 23: Historical Financial Highlights
Historical Financial Highlights Revenues Net Income and Adjusted Net Income USDm USDm $1,000 $787 $800 $690 $1,200 $600 $1,088 $452 $459 $447 $462 $1,053 $400 $1,000 $200 $800 $0 2017 2018 2019 2020 2021 LTM 1Q 22 $600 $540 Adjusted EBITDA USDm $400 $362 $800 $682 $200 $154 $171 $131 $131 $149 $115
Slide 24: Historical Financial Highlights
Historical Financial Highlights Liquid Assets(1) USDm Net Leverage $800 8.0x $708 7.3x $600 $552 6.0x 5.1x 4.6x 4.5x $400 4.0x 2.5x $200 2.0x 1.7x $139 $70 $77 $66 $0 0.0x 2017 2018 2019 2020 2021 Q1 2022 2017 2018 2019 2020 2021 LTM 1Q 22 Source: Company Filings, Year Ended December 31, 2021 and da
Slide 25: Strong Free Cash Flow Visibility & Great Conversion to OCF
Strong Free Cash Flow Visibility & Great Conversion to OCF Illustrative Walk to LTM Q1 2022 Free Cash Flow(1) USDm Drivers of LTM Q1 2022 FCF Uses of FCF Improving charter market Vessel acquisitions and CAPEX LTM Q1 2022 Vessel acquisitions Dividends FCF excludes CapEx and Dividend income
Slide 26: Focused on Maintaining Conservative Capital Structure
Focused on Maintaining Conservative Capital Structure Net Debt and Adjusted EBITDA Multiple(1) USDm A robust deleveraging profile… Successfully concluded a $2.2bn debt refinancing in 2018 with support from key lender group leading to a reduction in net leverage as of March 31, 2022 of 5.6x $4,000
Slide 27: C. Strong Container Vessel Demand & Supply Side Dynamics
C. Strong Container Vessel Demand & Supply Side Dynamics
Slide 28: Container Trade: Growth Expected in 2022
Container Trade: Growth Expected in 2022, , but Risks Increasing Post-Ukraine 216 Mn Teu World Container Trade & GDP, 2000 – 2023F 2021(E) World Container Trade Mn TEU % yoy 275 17.5% 250 15.0% 225 12.5% 5.9% 200 10.0% 175 7.5% 2021(E) Trade yoy Growth 150 5.0% 125 2.5% 224 Mn Teu 100 0.0% 75 -2.5%
Slide 29: Container Trade: Near-Term Drop in Chinese Exports Expected
Container Trade: Near-Term Drop in Chinese Exports Expected China New Export Orders Purchasing Managers’ Index (PMI), 2005-22 Lockdowns in China will drive a near-term fall in PMI Chinese TEU exports 70 China New Export Orders PMI 60 50 28.7 40 China New Export Orders PMI, COVID-19 Feb-20 30 Lockdow
Slide 30: Container Trade: Progress in Inventory Rebuilding
Container Trade: Progress in Inventory Rebuilding, but Stock Levels Remain Low Despite increase in US US Retailer Sales and Inventories(1), Seasonally Adjusted, Jan-18 to Feb-22 retailer inventories over 2021, the stock level USD Bn Inventory-to-Sales Ratio remain low relative to 600 1.4 sales 1.35
Slide 31: Timecharter Markets at Record Levels
Timecharter Markets at Record Levels, as Tonnage Availability Shrinks 219% 1-Year Timecharter Market Rates, January 2017 – April 2022 8,500 TEU Charter Rate % Ch: Apr-22 vs. Apr-21 $k/Day 200 180 175% 160 140 6,500 TEU Charter Rate % Ch: Apr-22 vs. Apr-21 120 100 80 185% 60 4,300 TEU Charter Rate %
Slide 32: Orderbook and Age Dynamics Promise Limited Mid-Size Fleet Growth
Orderbook and Age Dynamics Promise Limited Mid-Size Fleet Growth 27.9% Containership Orderbook, End of March 2022 Age Profile of Fleet: Smaller Vessel Fleet Ageing Industry Orderbook-to-Fleet Ratio, End-March 22 Mn TEU Mn TEU 6.0 100% 11.5% 5.0 Recent contracting increase concentrated in 90% 80% 12+
Slide 33: Decarbonization: Orderbook Share of Alternative Fuels Increases
Decarbonization: Orderbook Share of Alternative Fuels Increases The share of vessels New Containership Orders by Propulsion Type, Q1 20-Q1 22 ordered with lower-carbon propulsion technology has increased % Share 100% 90% 80% 86% 70% Share of Vessel Orders with Fuel Oil Propulsion, 2020 60% 50% 40% 6
Slide 34: Idle Capacity: Strong Markets Mean All Available Tonnage Is Employed
Idle Capacity: Strong Markets Mean All Available Tonnage Is Employed The volume of Idle Containership Capacity: Liner Company Owned vs Tonnage Provider Owned idle capacity remains at historical lows Mn TEU 3.0 80% 70% 2.5 0.8% 2016 Jan-Mar 2022 60% 71% NOO(1) 15% NOO (1) Idle Fleet at End-Mar 22 2.0
Slide 35: 2,200-13,200 TEU Fleet: Workhorses of Long-Distance Container Trades
2,200-13,200 TEU Fleet: Workhorses of Long-Distance Container Trades 13.7% Danaos Fleet Segment Share of Long-Distance Trade Deployment Orderbook-to-Fleet Ratio in Danaos Fleet Segment Transpacific Danaos fleet segments provide 85% of capacity 63% of long-haul container trade volumes Transatlantic F
Slide 36: Consolidated Liner Landscape Provides Stable Counterparties
Consolidated Liner Landscape Provides Stable Counterparties Recent wave of Liner Company Alliance Members, End March 2022 consolidation between liner operators Mn TEU Consolidation between liner 6.0 1 companies provides more stable set of counterparties 9 5.0 Orderbook 4.0 Fleet Global Liner Compani
Slide 37: The Freight Rate Environment Remains Supportive for our Liner Clients
The Freight Rate Environment Remains Supportive for our Liner Clients Spot container freight rates ex-China have softened since January 2022, reflecting a combination of regular seasonal weakness, and cargo volumes disrupted by the Lunar New Year and lockdown measures in China. A backlog of cargoe
Slide 38: Higher Long-term Freight Rate Contracts Sustain Liner Profitability
Higher Long-term Freight Rate(1) Contracts to Sustain Liner Operator Profitability Average $/TEU Freight Liner Company Average $/TEU Revenues and Profit Margins, 2012-22 Rates continue to climb as annual contracts are renegotiated $/TEU % 3500 70% Average Liner Company EBIT 110% 3000 Margin (RH Axis
Slide 39: Port Congestion: Europe Worsens, Shanghai Lockdown Impact Emerging
Port Congestion: Europe Worsens, while Shanghai Lockdown Impact Still Emerging Port Congestion Container Port Congestion: Containership Idle at Port Anchorages, Relative to 2016-19 Average Level Reduces Available Fleet Mn TEU 1.2 Other Latin America North America 1.0 Europe SE Asia NE Asia 0.8 China
Slide 40: D. Appendix
D. Appendix
Slide 41: Adjusted Net Income
Adjusted Net Income Reconciliation of Net Income to Adjusted Net Income USD thousands LTM Three Months Ended March 31, Ended March 31, Year Ended December 31, Reconciliation of Net Income / (Loss) to Adjusted Net Income 2022 2022 2021 2021 2020 2019 2018 2017 in thousands of U.S. dollars Net Income
Slide 42: Adjusted EBITDA
Adjusted EBITDA Reconciliation of Net Income to EBITDA and Adjusted EBITDA USD thousands LTM Three Months Ended March 31, Ended March 31, Year Ended December 31, Reconciliation of Net Income / (Loss) to EBITDA and Adjusted EBITDA 2022 2022 2021 2021 2020 2019 2018 2017 in thousands of U.S. dollars N
Slide 43: Free Cash Flow
Free Cash Flow Reconciliation of Free Cash Flow to Net Increase / (Decrease) in Cash, cash equivalents and restricted cash USD thousands LTM Three Months Ended March 31, Ended March 31, Year Ended December 31, Reconciliation of Free Cash Flow 2022 2022 2021 2021 2020 2019 Adjusted EBITDA $682,005 $2
Slide 44: Financial Debt Maturity Profile
Financial Debt Maturity Profile Well-balanced repayment profile(1),(2) USDm Financial Debt Maturity Profile - As of March 31, 2022 ($1,338 mil) vs. As of May 12, 2022 ($974 mil) $600 $567.7 Credit position $500 • BB- (Positive) and B1 (Positive), upgrade from B+ and B2, credit ratings from S&P and M
Slide 45: Stock Performance – Danaos vs. Peers
Stock Performance – Danaos vs. Peers Since July 1, 2020 3000% 2148% 2500% 2000% Stockholders' Return1 1500% 1000% 500% 0% -500% Jul 2020 Oct 2020 Jan 2021 Apr 2021 Jul 2021 Oct 2021 Jan 2022 Apr 2022 Danaos Atlas Costamare GSL Source: NASDAQ 39 (1) Stockholders’ return is a rate of return over the p
Slide 46: Thank You
Thank You