Danaos Corporation · NYSE:DAC
Danaos — Investor Presentation (August 2021)
39 slides from Danaos's investor presentation, August 2021
Slide 1: Investor Presentation August 2021
Investor Presentation August 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 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 $1.
Slide 5: Danaos by the Numbers
Danaos by the Numbers $1.75bn $144 Contracted revenue through 2028 (1) Net Asset Value per share (2) 3.1x ~$2.5bn Net Debt / LTM Adjusted EBITDA(3) Enterprise value(4) $366mn ~4.2x LTM Adjusted EBITDA Reduction in leverage since end 2017 (1) Contracted Revenue as of June 30, 2021 on the basis of con
Slide 6: Second Quarter 2021 Earnings
Second Quarter 2021 Earnings Summary of Results (thousands $, expect per share figures) Three Months ended Six Months ended Last Twelve Months ended June 30 June 30 June 30 $ in thousands 2021 2020 % yoy 2021 2020 % yoy 2021 Operating Revenue $146,434 $116,824 25.3% $278,552 $223,020 24.9% $517,126
Slide 7: Substantial Fleet Employment and Charter Coverage
Substantial Fleet Employment and Charter Coverage (1) 5 (1) Age as of June 30, 2021.
Slide 8: Substantial Fleet Employment and Charter Coverage
Substantial Fleet Employment and Charter Coverage (1) 6 (1) Age as of June 30, 2021.
Slide 9: Net Asset Value significantly improved
Net Asset Value1 significantly improved NAV $320 $6 $83 $4,089 per share2 $3,700 ($20) $144 $2,969 ($1,120) Charter Attached Zim Equity HMM Bonds Gemini participation Other liabilities Total Value of Assets Net Debt Net Asset Value Fleet Value The charter attached fleet value as calculated in acco
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 11x Fleet Overview (1) 2,200 – 2,600 TEU Average Age: 22.9 years 8x Average Remaining Charter Term: 2.5 year 5x 3,400 TEU Average Age: 13.5 years 13,100 TEU Average Remaining Charter Term: 3.3 years Average Age: 9.2 years Average Remaining Charter Term: 2.8 years 5.8%
Slide 14: Charter Backlog to Leading Container Operators
Charter Backlog to Leading Container Operators Charter Backlog (1) (TEU-weighted remaining duration of charter backlog) Others Charter backlog of $1.75 billion through (21 years) to 2028 (1) Average charter duration of 3.4 years (weighted by aggregate contracted (16 years) charter hire) (35 years) (
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) 99% Shorter charter durations limited to vessels 81% in more liquid chartering markets 55% 33% 6% 2021 2022 2023 2024 2025+ Contracted Revenue by Year (2) 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 $552 $517 $498 $452 $459 $462 $447 $418 $404 $366 $351 $310 $318 $311 $318 2014 2015 2016 2017 2018 2019 2020 LTM 2Q 2014 2015 2016 2017 2018 2019 2020 LTM 2Q 2021 2021 Net Leverage Adjusted Net Income mn $ 7.2x 7.3x 7.0x $222 6
Slide 23: Strong Free Cash Flow Visibility & Great Conversion to OCF
Strong Free Cash Flow Visibility & Great Conversion to OCF Illustrative Walk to Last Twelve Months ended June 30, 2021 Free Cash Flow1 Drivers of LTM 2Q 2021 FCF Uses of FCF LTM 2Q 2021 Lower interest rates Return of capital to shareholders FCF excludes Contractual charter escalations Vessel
Slide 24: Focused on Maintaining Conservative Capital Structure
Focused on Maintaining Conservative Capital Structure Net Adjusted Debt and Adjusted EBITDA Multiple1 A robust deleveraging profile… 3,500 Successfully concluded a $2.2bn debt refinancing in 7.3x 2018 with support from key lender group leading to a 7.0x 3,000 3,165 7.2x reduction in net leverage o
Slide 25: C. Strong Container Vessel Demand & Supply Side Dynamics
C. Strong Container Vessel Demand & Supply Side Dynamics
Slide 26: Container Trade: Robust Growth Expected in 2021 and 2022
Container Trade: Robust Growth Expected in 2021 and 2022 World Container Trade & GDP, 2000 – 2022F 220 Mn Teu 2021(F) World Container Mn TEU % yoy Trade 275 17.5% 250 15.0% 225 12.5% 200 10.0% 7.9% 175 7.5% 150 5.0% 2021(E) Trade yoy Growth 125 2.5% 100 0.0% 75 -2.5% 231 Mn Teu 50 -5.0% 25 -7.5% 202
Slide 27: Remarkable Timecharter Market Rebound Accelerated in H1
Remarkable Timecharter Market Rebound Accelerated in H1 21 1-Year Timecharter Market Rates, January 2017 – June 2021 383% 8,500 TEU Charter Rate % $k/Day 80 Ch: Jun-21 vs. Jun-20 70 60 477% 50 6,500 TEU Charter Rate % 40 Ch: Jun-21 vs. Jun-20 30 20 683% 10 4,300 TEU Charter Rate % 0 Ch: Jun-21 vs. J
Slide 28: Supply: Orderbook and Age Dynamics Promise Limited Mid-Size Fleet Growth
Supply: Orderbook and Age Dynamics Promise Limited Mid-Size Fleet Growth Containership Orderbook, End June 2021 Age Profile of Fleet: Smaller Vessel Fleet Ageing 20.4% Mn TEU Mn TEU 4.5 100% Industry Orderbook-to-Fleet Ratio, End-Jun 21 4.0 90% 80% 3.5 Recent contracting increase concentrated 70% 6.
Slide 29: Idle Capacity: Strong Markets Mean All Available Tonnage Is Employed
Idle Capacity: Strong Markets Mean All Available Tonnage Is Employed The volume of idle capacity Idle Containership Capacity: Liner Company Owned vs Tonnage Provider Owned remains at historical lows Mn TEU 2016 H1 2021 % 3.0 80% 71% NOO Owned 30% NOO Owned 70% 2.5 60% 0.9% 2.0 50% Idle Fleet at End-
Slide 30: 2,200-13,200 TEU Fleet: Workhorses of Long-Distance Container Trades
2,200-13,200 TEU Fleet: Workhorses of Long-Distance Container Trades 7.5% Danaos Fleet Segment Share of Long-Distance Trade Deployment Orderbook-to-Fleet Ratio in Danaos Fleet Segment Danaos fleet segments provide 86% of capacity 60% of long-haul container trade volumes 85% Share of Capacity on Key
Slide 31: Consolidated Liner Landscape Provides Stable Counterparties
Consolidated Liner Landscape Provides Stable Counterparties Liner Company Alliance Members, End June 2021 Recent wave of Mn TEU consolidation 6.0 between liner Consolidation between liner operators 1 companies provides more stable 5.0 Orderbook set of counterparties Fleet 4.0 9 Greater stability, fe
Slide 32: The Freight Rate Environment Remains Supportive for our Liner Clients
The Freight Rate Environment Remains Supportive for our Liner Clients Freight rates surged over late 2020 and into early 2021. This was driven by the strong rebound in containerised trade volumes in conjunction with equipment shortages, inefficiencies and bottlenecks across the containerised suppl
Slide 33: Record Timecharter Rates Are Supported By Freight Rates and Liner Profitability
Record Timecharter Rates Are Supported By Freight Rates and Liner Profitability Record freight rates cover higher Liner Company Revenues and Costs for Round-Trip Asia-North Europe Sailing Using 8,500 TEU Vessel timecharter costs Freight markets continue to strengthen Vessel owners can secure either
Slide 34: D. Appendix
D. Appendix
Slide 35: Adjusted Net Income
Adjusted Net Income Reconciliation of Adjusted Net Income In thousands of U.S. Dollars LTM Three Months Six Months Ended June 30, Ended June 30, Ended June 30, Year Ended December 31, Reconciliation of Net Income / (Loss) to Adjusted Net Income / (Loss) 2021 2021 2020 2021 2020 2020 2019 2018 2017 2
Slide 36: Adjusted EBITDA
Adjusted EBITDA Reconciliation of Net Income to EBITDA and Adjusted EBITDA In thousands of U.S. Dollars LTM Three Months Six Months Ended June 30, Ended June 30, Ended June 30, Year Ended December 31, Reconciliation of Net Income / (Loss) to EBITDA and Adjusted EBITDA 2021 2021 2020 2021 2020 2020 2
Slide 37: Free Cash Flow
Free Cash Flow Reconciliation of Free Cash Flow to Net Increase / (Decrease) in Cash, cash equivalents and restricted cash In thousands of U.S. Dollars LTM Three Months Six Months Year Ended Ended June 30, Ended June 30, Ended June 30, December 31, Reconciliation of Free Cash Flow 2021 2021 2020 202
Slide 38: 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 June 30, 2021, unless otherwise stated within the releva
Slide 39: Thank You
Thank You