Danaos Corporation · NYSE:DAC
Danaos — Investor Presentation (February 2022)
44 slides from Danaos's investor presentation, February 2022
Slide 1: Investor Presentation February 2022
Investor Presentation February 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 40+ 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.
Slide 5: Danaos by the Numbers
Danaos by the Numbers $2.8bn Contracted revenue through 2028(1) 2.5x ~$3.2bn Net Debt / 2021 Adjusted EBITDA(2) Enterprise value(3) $509mn ~4.8x FY 2021 Adjusted EBITDA Reduction in leverage since end 2017 (1) Contracted Revenue as of December 31, 2021 on the basis of concluded charter contracts thr
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 $1,000 95% 100% 450.0 8% 436.6 $873 TEU in thousand 12% $800 77% 80% 400.0 $750 403.8 57% $600 $551 60% 350.0 360.1 $400 300.0 40% $200 250.0 $0 20% 2019 2020 2021 2022 2023 2024 C
Slide 7: FY 2021 and Fourth Quarter 2021 Highlights
FY 2021 and Fourth Quarter 2021 Highlights Summary of Results USDm Operating Revenue Adjusted EBITDA 2020 2021 2020 2021 $800.0 $600.0 +49% +60% $600.0 $689.5 $450.0 $508.8 $400.0 $461.6 $300.0 $318.3 +80% +92% $200.0 $150.0 $215.0 $159.2 $119.6 $83.0 $0.0 $0.0 Three Months Ended December 31 Twelve
Slide 8: Fourth Quarter 2021 Earnings
Fourth Quarter 2021 Earnings Summary of Results USD thousands, expect per share figures Three Months Ended December 31st, Year ended 2021 2020 % yoy 2021 2020 % yoy Operating Revenue $215,038 $119,642 79.7% $689,505 $461,594 49.4% Adjusted EBITDA $159,164 $83,009 91.7% $508,803 $318,331 59.8% Free C
Slide 9: Substantial Fleet Employment and Charter Coverage
Substantial Fleet Employment and Charter Coverage(1) Current charter Next Charter Charter Charter 2022 2023 2024 2025 2026 2027 2028 Vessel TEU Age Charterer 1 Rate Expiry Rate Expiry Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 Q3 2
Slide 10: Substantial Fleet Employment and Charter Coverage
Substantial Fleet Employment and Charter Coverage(1) Current charter Next Charter Charter Charter 2022 2023 2024 2025 2026 2027 2028 Vessel TEU Age Charterer 1 Rate Expiry Rate Expiry Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 Q3 2
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: 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 A
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: 23.4 years Average Age: 9.7 years Remaining Charter Term: 2.9 years Remaining Charter Term: 2.3 years 8x 9.4% 9.7% 3,400 TEU 5x Average Age: 14.0 years 8.8% 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 13% $2.8 billion through 22% to 2028(1) 4% 5% Average charter 5% duration of 4.0 years (weighted by aggregate contracted 5% 15% charter hire) 6% 7% 15% Fleet util
Slide 16: Strong Charter Coverage Profile
Strong Charter Coverage Profile… …with the flexibility for further upside Charter Coverage based on Days (1) 100% 100% 95% Shorter charter durations limited to vessels in more liquid chartering markets 77% 75% 57% 50% 25% 15% 0% 2021 2022 2023 2024 2025+ Contracted Revenue by Year(1) USDm $1,000 $87
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 once leverage targets are met could be used for acquisition of young and
Slide 23: Historical Financial Highlights
Historical Financial Highlights Revenues Net Income and Adjusted Net Income USDm USDm $800 $690 $600 $1,200 $452 $459 $447 $462 $1,053 $400 $1,000 $200 $800 $0 2017 2018 2019 2020 2021 $600 Adjusted EBITDA USDm $400 $362 $600 $200 $154 $171 $509 $131 $131 $149 $115 $84 $400 $0 $310 $318 $311 $318 $3
Slide 24: Historical Financial Highlights
Historical Financial Highlights Liquid Assets(1) USDm Net Leverage $800 8.0x 7.3x $600 $552 6.0x 5.1x 4.6x 4.5x $400 4.0x 2.5x $200 $139 2.0x $70 $77 $66 $0 0.0x 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Source: Company Filings, Year Ended December 31, 2020 and data as of December 31, 2021.
Slide 25: Strong Free Cash Flow Visibility & Great Conversion to OCF
Strong Free Cash Flow Visibility & Great Conversion to OCF Illustrative Walk to FY 2021 Free Cash Flow(1) USDm Drivers of FY 2021 FCF Uses of FCF Improving charter market Vessel acquisitions and CAPEX FY 2021 FCF Vessel acquisitions Dividends excludes CapEx Lower interest rates and one-tim
Slide 26: Focused on Maintaining Conservative Capital Structure
Focused on Maintaining Conservative Capital Structure Net Adjusted 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 $4,000 8.0x 7.3x reduction in net leverage of 4.8x si
Slide 27: C. Strong Container Vessel Demand & Supply Side Dynamics
C. Strong Container Vessel Demand & Supply Side Dynamics
Slide 28: Container Trade: Robust Growth Expected in 2022
Container Trade: Robust Growth Expected in 2022 218 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% 7.1% 200 10.0% 175 7.5% 2021(E) Trade yoy Growth 150 5.0% 125 2.5% 227 Mn Teu 100 0.0% 75 -2.5% 2022(F) World Container Trade
Slide 29: Container Trade: Inventory Rebuilding has Further to Run
Container Trade: Inventory Rebuilding has Further to Run US Retailer Sales and Inventories(1), Seasonally Adjusted, Jan-18 to Nov-21 Despite increase in US retailer inventories over US Retailer USD Bn Sales and Inventories, Seasonally Adjusted, Jan-18 Inventory-to-Sales to Nov-22 Ratio 2021, the sto
Slide 30: Timecharter Markets at Record Levels
Timecharter Markets at Record Levels, as Tonnage Availability Shrinks 275% 1-Year Timecharter Market Rates, January 2017 – January 2022 8,500 TEU Charter Rate % Ch: $k/Day Jan-22 vs. Jan-21 180 160 239% 140 120 6,500 TEU Charter Rate % Ch: Jan-22 vs. Jan-21 100 80 60 297% 40 4,300 TEU Charter Rate %
Slide 31: Orderbook and Age Dynamics Promise Limited Mid-Size Fleet Growth
Orderbook and Age Dynamics Promise Limited Mid-Size Fleet Growth 23.6% Containership Orderbook, End of December 2021 Age Profile of Fleet: Smaller Vessel Fleet Ageing Industry Orderbook-to-Fleet Ratio, End-Dec 21 Mn TEU Mn TEU 4.5 100% 9.5% 4.0 Recent contracting increase concentrated in 90% 80% Ord
Slide 32: Idle Capacity: 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 0.5% 2016 71% NOO(1) Jan-Dec 2021 15% NOO (1) 60% Idle Fleet at End-Jan 22 2.0
Slide 33: 2,200-13,200 TEU Fleet: Workhorses of Long-Distance Container Trades
2,200-13,200 TEU Fleet: Workhorses of Long-Distance Container Trades 10.2% Danaos Fleet Segment Share of Long-Distance Trade Deployment Orderbook-to-Fleet Ratio in Danaos Fleet Segment Danaos fleet segments provide 86% of capacity Transpacific(1) 63% of long-haul container trade volumes Transatlanti
Slide 34: Consolidated Liner Landscape Provides Stable Counterparties
Consolidated Liner Landscape Provides Stable Counterparties Recent wave of Liner Company Alliance Members, End December 2021 consolidation between liner operators Consolidation between liner 6.0 Mn TEU 1 companies provides more stable set of counterparties 9 5.0 Orderbook(1) Global Liner Companies,
Slide 35: 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 seen either stability (in the case of North-South trades) or renewed increases (in the case of Mainlane and Intra-Asia trades) since the end of 2021. Rates softened in the final week of
Slide 36: 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, 2020-21 Rates continue to climb as annual contracts are renegotiated $/TEU % 3000 60% Average Liner Company EBIT 50% Margin (RH Axis) 98%
Slide 37: Port Congestion: Modest Improvements since Q3 21
Port Congestion: Modest Improvements since Q3 21, but Omicron risks further disruption 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
Slide 38: D. Appendix
D. Appendix <i a EI Fa
Slide 39: Adjusted Net Income
Adjusted Net Income Reconciliation of Adjusted Net Income USD thousands Three Months Ended December 31, Year Ended December 31, Reconciliation of Net Income / (Loss) to Adjusted Net Income 2021 2020 2021 2020 2019 2018 2017 in thousands of U.S. dollars Net Income $165,997 $43,179 $1,052,841 $153,550
Slide 40: Adjusted EBITDA
Adjusted EBITDA Reconciliation of Net Income to EBITDA and Adjusted EBITDA USD thousands Three Months Ended December 31, Year Ended December 31, Reconciliation of Net Income / (Loss) to EBITDA and Adjusted EBITDA 2021 2020 2021 2020 2019 2018 2017 in thousands of U.S. dollars Net Income $165,997 $43
Slide 41: Free Cash Flow
Free Cash Flow Reconciliation of Free Cash Flow to Net Increase / (Decrease) in Cash, cash equivalents and restricted cash USD thousands Three Months Ended December 31, Year Ended December 31, Reconciliation of Free Cash Flow 2021 2020 2021 2020 2019 Adjusted EBITDA $159,164 $83,009 $508,803 $318,33
Slide 42: Financial Debt Maturity Profile
Financial Debt Maturity Profile Well-balanced repayment profile(1),(2) USDm Financial debt maturity profile as of December 31, 2021 Credit position $600.0 $567.7 $5.4 • BB- (Positive) and B1 (Positive), upgrade from B+ and B2, credit ratings from S&P and Moody’s, respectively $500.0 • Liquid financi
Slide 43: Stock Performance – Danaos vs. Peers
Stock Performance – Danaos vs. Peers Since July 1, 2020 2546% 3000% 2500% 2000% Stockholders' Return 1 1500% 1000% 500% 0% -500% Jul 2020 Oct 2020 Jan 2021 Apr 2021 Jul 2021 Oct 2021 Jan 2022 Danaos Atlas Costamare GSL Source: NASDAQ 37 (1) Stockholders’ return is a rate of return over the period fr
Slide 44: Thank You
Thank You