Danaos Corporation · NYSE:DAC
Danaos — Investor Presentation (February 2020)
36 slides from Danaos's investor presentation, February 2020
Slide 1: World-Class Shipping, Leading-Edge Expertise
World-Class Shipping, Leading-Edge Expertise Corporate Presentation | February 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 ✓ • One of the most efficient operators in the industry with highly competitive breakeven levels • Management is the large
Slide 4: Danaos by the Numbers
Danaos by the Numbers $1.34bn 37.3% Contracted cash flow through 2028 Ownership through founder / management 4.6x $2.1bn Net debt to Adjusted EBITDA Enterprise value $311mn 2.7x Adjusted EBITDA 2019 Reduction in leverage over the last two 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: 12.0 years Remaining Charter Term: 0.5 years 11x 2,200 – 2,600 TEU 1% 1% Average Age: 21.4 years 2% Remaining Charter Term: 0.3 years 10x 4,300 – 5,500 TEU Average Age: 12.2 years Remaining Charter Term: 0.6 years 24% 37% 5x Con
Slide 7: Balanced Counterparty Concentration
Balanced Counterparty Danaos by the Numbers Concentration Length of Customer Relationships Noted in Italics Overview of Customer Base Other • Long history chartering to most major global liner companies • Engaged with container alliances on deployments across major and minor global 14% routes (20 ye
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) 86% 74% 59% 42% 5% 2020 2021 2022 2023 2024+ Contracted Revenue by Year mm $ by Asset Class $399 $357 $278 $188 $119 2020 2021 2022 2023 2024+ 13,0
Slide 9: Good Free Cash Flow Visibility
Good Free Cash Flow Visibility Illustrative Walk to 2019 Free Cash Flow(1) Drivers of 2020 – 2021 FCF Uses of FCF 2019 FCF excludes CapEx ✓ Lower interest rates ✓ Further debt amortization and one-time / $311 ✓ Charter escalations ✓ Return of capital to shareholders unusual items ✓ Fleet acquisition
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 12/31/2019 Cash $139 $3,500 Bank Debt: 1,422 7.3x Long-term Leaseback Obligation 138 7.0x 3,165 Exit Fee 22 3,000 3,042 7.2x (33) 2,892 6.5x Deferred Finance Costs Deb
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 Growth Remains Consistent
Seaborne Containerized Trade Growth Remains Consistent Global Seaborne Container Trade 250 2000% 200 1000% 150 TEU mm 0% 100 50 (1000%) 0 (2000%) TEU % y-o-y Global Container Port Throughput 1,000 20% 800 10% TEU lifts, mm 600 0% 400 200 (10%) 0 (20%) TEU % y-o-y Source: Clarksons Research, IMF Worl
Slide 16: Containership Trade Routes
Containership Trade Routes Largest vessels primarily deployed on long trade routes • Units of 15,000+ TEU remain exclusively deployed on the Container Trade by Trade Lane 2019 Far East-Europe trade • Deployment of boxships sized 12-14,999 TEU continues Mainlane, to broaden notably onto the Transpaci
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: Containership Charter Rate Improving from Recent Lows
Containership Charter Rate Improving from Recent Lows 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 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-
Slide 20: Containership Asset Values Improving from Recent Lows
Containership Asset Values Improving from Recent Lows 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 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-13 Jan-14 Jan-15 Jan-16
Slide 21: Financial Overview
Financial Overview
Slide 22: Historical Financials
Historical Financials Summary Results Operating Revenues Adjusted EBITDA mm $ mm $ $589 $588 $552 $568 $498 $452 $459 $447 $432 $434 $418 $404 $351 $310 $318 $311 2012 2013 2014 2015 2016 2017 2018 2019 2012 2013 2014 2015 2016 2017 2018 2019 Net Leverage Adjusted Net Income 7.3x 7.0x 7.2x 7.0x 7.3x
Slide 23: Fourth Quarter 2019 Earnings
Fourth Quarter 2019 Earnings Summary of Results thousands $, expect per share figures Year ended December 31 Year ended December 31 2019 2018 % yoy 2019 2018 % yoy Operating Revenue $447,244 $458,732 -2.5% $110,204 $115,631 -4.7% Adjusted EBITDA1 $310,565 $317,848 -2.3% $78,118 $80,171 -2.6% Adjuste
Slide 24: Charter Adjusted Net Asset Value
Charter Adjusted Net Asset Value (in US$ millions) $1,901 ($1,443) NAV / Share: $20.2(3) As of December 31, 2019 $44 $502 (1) (2) Charter-Adjusted Total Asset Value Net Debt Net Working Capital & Other Net Asset Value • As calculated in accordance with the financial covenants contained in the Compan
Slide 25: Summary
Summary
Slide 26: Financial Strategy Positioning Danaos for Success
Financial Strategy Positioning Danaos for Success k 36% reduction in leverage between 2014 and today(2) 7.2x Continued de-levering from strong contracted cash flows 5.1x 4.6x ✓ - Minimum debt amortization of $300mm(1) through end 2021 2014 2018 2019 Balanced chartering strategy to ensure cash flow v
Slide 27: Appendix
Appendix
Slide 28: Substantial Fleet Employment and Coverage
Substantial Fleet Employment and Coverage Total Charter Revenue Charterer Age1 Vessel Contribution 7.9 Hyundai Honour 37% 7.8 Hyundai Respect 7.7 Maersk Enping 5x 7.6 Maersk Exeter 13,100 TEU 7.5 MSC Ambition 9% 8.8 Express Athens 8.7 Express Rome 8.7 Express Berlin 3x 13.1 Le Havre 10,100 TEU 13.3
Slide 29: Substantial Fleet Employment and Coverage
Substantial Fleet Employment and Coverage Total Charter Revenue Charterer Age1 Vessel Contribution 15.8 ANL Tongala 15.7 Derby D 2% 12.3 Seattle C YM Vancouver 10x 12.1 Zim Rio Grande 4,300 – 5,500 TEU 11.5 11.3 Zim Sao Paolo 11.2 Zim Kingston 11.0 Zim Monaco 10.8 Zim Dalian 10.5 Zim Luanda 18.8 Dim
Slide 30: Adjusted EBITDA
Adjusted EBITDA Reconciliation of Net Income / (Loss) to EBITDA and Adjusted EBITDA December 31, 2019 Three Months Three Months Year Year ended ended ended ended ($ In thousands) Dec. 31, 2019 Dec. 31, 2018 Dec. 31, 2019 Dec. 31, 2018 Net income / (Loss) from Continuing Operations (unadjusted) $33,8
Slide 31: Historical Adjusted EBITDA
Historical Adjusted EBITDA Historical Reconciliation of Net Income to EBITDA and Adjusted EBITDA Years ended 2012 - 2019 Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31,
Slide 32: Adjusted Net Income
Adjusted Net Income Reconciliation of Net Income to Adjusted Net Income and Adjusted Earnings per Share December 31, 2019 Three Months Three Months Year Year ended ended ended ended ($ In thousands, except per share items) Dec. 31, 2019 Dec. 31, 2018 Dec. 31, 2019 Dec. 31, 2018 Net income / (Loss) f
Slide 33: Historical Adjusted Net Income
Historical Adjusted Net Income Reconciliation of Adjusted Net Income Years ended December 2012 – December 2019 Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 3
Slide 34: 2019 Free Cash Flow
2019 Free Cash Flow Reconciliation of Free Cash Flow Three months Ended Three months Ended Year Ended ($ in thousands) Dec. 31, 2019 Dec. 31, 2018 Dec. 31, 2019 Net Income $33,817 $(180,983) $131,253 Adjustments Depreciation 24,364 27,005 96,505 Amortization of deferred drydocking & special survey c
Slide 35: Appendix: Danaos Net Asset Value
Appendix: Danaos Net Asset Value(1) (in US$ 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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