Danaos Corporation · NYSE:DAC
Danaos — Investor Presentation (November 2022)
45 slides from Danaos's investor presentation, November 2022
Slide 1: Investor Presentation November 2022
Investor Presentation November 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 Pioneers in Demand & Supply Digitalisation & ✓ Side Dynamics ✓ Champion of ESG Robust Capital Principles Structure & ✓ Conservative Financial Strate
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 $2.3
Slide 5: Danaos by the Numbers
Danaos by the Numbers $2.3bn $556mn Cash Contracted revenue through 2028(1) Cash and Cash Equivalents as of Q3 2022 0.5x ~$1.6bn Net Debt / LTM Q3 2022 Adjusted EBITDA(2) Enterprise value(3) $834mn ~6.8x LTM Q3 2022 Adjusted EBITDA Reduction in leverage since end 2017 (1) Cash Contracted Revenue as
Slide 6: Fleet Summary & Strong Charter Coverage Profile
Fleet Summary & Strong Charter Coverage Profile TEU Capacity(1) Contracted Revenue and Contracted Days Coverage(2) USDm Existing Fleet New Buildings Cash Contracted Revenue Non-cash Component of Contracted Revenue(3) Contracted days coverage 500.0 100% $1,200 88% 100% 450.0 $1,000 $1,080 TEU in thou
Slide 7: Third Quarter 2022 Highlights
Third Quarter 2022 Highlights Summary of Results USDm Operating Revenue Adjusted EBITDA 2021 2022 2021 2022 $800.0 +56% $800.0 +93% $740.9 $600.0 $674.7 $600.0 $400.0 $474.5 $400.0 +33% $349.6 +42% $200.0 $260.0 $200.0 $213.1 $195.9 $149.6 $0.0 $0.0 Three Months Ended September 30 Nine Months Ended
Slide 8: Third Quarter 2022 Earnings
Third Quarter 2022 Earnings Summary of Results USD thousands, expect per share figures Three Months Nine Months LTM Ended September 30th, Ended September 30th, Ended September 30th, 2022 2021 % yoy 2022 2021 % yoy 2022 Operating Revenue $260,037 $195,915 33% $740,861 $474,467 56% $955,899 Adjusted E
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 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 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 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 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: Legacy of Leadership in Container Shipping
50 Year Legacy of Leadership in Container Shipping 1987 2006 2018 2020 to 2022 Dr. John Coustas steps NYSE IPO Refinancing Strong Free Cash Flow into Chief Executive role Raised $200mn generation and Deleveraging 1972 2005 2010 2019 Founded by Dimitris Coustas Incorporation in Marshall $200mn equity
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: 24.2 years Average Age: 10.4 years Remaining Charter Term: 2.2 years Remaining Charter Term: 1.6 years 8x 8.8% 8.0% 3,300 - 3,400 TEU 5x Average Age: 14.7 years 8.0% 10.1% 9,600 - 10,100 TEU Remaining C
Slide 15: Charter Backlog to Leading Container Operators
Charter Backlog to Leading Container Operators Charter Backlog(1) (TEU-weighted remaining duration of charter backlog) 13% Charter backlog of 22% $2.3 billion through to 2028(1) 5% 5% Average charter 5% duration of 3.5 years 15% (weighted by aggregate contracted 5% charter hire) (1) 6% 7% 15% Fleet
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 3 Years Progress Advanced solutions to Code of ethics and ✓ Independent Board 72% decrease in the use of ✓ reduce emissions th
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 can be used for reducing leverage, for acquisition of young and modern f
Slide 22: Historical Financial Highlights
Historical Financial Highlights Net Income and Adjusted Net Income Revenues USDm USDm $1,000 $956 $800 $690 $1,200 $600 $452 $459 $447 $462 $1,053 $400 $1,000 $200 $800 $0 $695 2017 2018 2019 2020 2021 LTM Q3 22 Adjusted EBITDA $600 $572 USDm $400 $362 $1,000 $834 $800 $200 $154 $171 $131 $131 $149
Slide 23: Historical Financial Highlights
Historical Financial Highlights Cash and Cash Equivalents Net Leverage USDm 8.0x $800 7.3x 6.0x $600 $556 5.1x 4.6x 4.5x $400 4.0x 2.5x $200 2.0x $139 $129 $67 $77 $66 0.5x $0 0.0x 2017 2018 2019 2020 2021 September 30, 2017 2018 2019 2020 2021 LTM Q3 22 2022 Source: Company Filings, Year Ended Dece
Slide 24: Strong Free Cash Flow Visibility & Great Conversion to OCF
Strong Free Cash Flow Visibility & Great Conversion to OCF Illustrative Walk to LTM Q3 2022 Free Cash Flow(1) USDm Drivers of LTM Q3 2022 FCF Uses of FCF Higher re-chartering Vessel acquisitions and CAPEX LTM Q3 2022 Vessel acquisitions Early repayment of debt and leases FCF excludes CapEx a
Slide 25: Focused on Maintaining Conservative Capital Structure
Focused on Maintaining Conservative Capital Structure Net Debt and LTM Adjusted EBITDA Multiple(1) USDm A robust deleveraging profile… • Early repayment of $434.1 million of debt and leaseback obligations and realized $22.9 million gain associated with this early extinguishment in Q2 2022 Decrease i
Slide 26: C. Container Vessel Demand & Supply Side Dynamics
C. Container Vessel Demand & Supply Side Dynamics
Slide 27: Container Trade: Near-Term Pressure as Inflation Trims Spending
Container Trade: Near-Term Pressure as Inflation Trims Spending 215 Mn Teu World Container Trade & GDP, 2000 – 2023F 2022(F) World Container Trade Mn TEU % yoy 275 17.5% 250 15.0% 225 12.5% -0.6% 200 10.0% 175 7.5% 2022(F) Trade yoy Growth 150 5.0% 125 2.5% 221 Mn Teu 100 0.0% 75 -2.5% 2023(F) World
Slide 28: Demand: US Import Volumes Weaken, But Healthy by Historic Standards
Demand: US Import Volumes Weaken, But Healthy by Historic Standards - 2% US Containerised Imports from Far East, 2018-22 US Inflation-Adjusted Consumer Spending by Type US Far East TEU Imports, Sep- 22 vs Sep-21 Mn TEU 2018 2019 2020 2021 2022 Index, 100 = Jan-18 2.2 160 + 6% 2.0 150 Durable Goods N
Slide 29: 1-Year Time Charter Rates Correct, But Remain Above Historical Averages
1- Year Time Charter Rates Corrects, But Remain Above Historical Averages 400% 1-Year Timecharter Market Rates, January 2017 – September 2022 8,500 TEU Charter Rate % Ch: Sep-22 vs. Avg 2010-19 $k/Day 200 180 460% 160 140 6,500 TEU Charter Rate % Ch: Sep-22 vs. Avg 2010-19 120 100 80 537% 60 4,300 T
Slide 30: Orderbook Stands at 30% of Fleet, Greater Interest in 7-8k TEU Vessels
Orderbook Stands at 30% of Fleet, Greater Interest in 7-8k TEU Vessels 29.9% Containership Orderbook, End of June 2022 Age Profile of Fleet: Smaller Vessel Fleet Ageing Industry Orderbook-to-Fleet Ratio, End-Sep 22 Mn TEU Mn TEU 6.0 100% 14.4% 5.0 90% 80% Orderbook-to-Fleet Ratio: 70% Sub-12,000 TEU
Slide 31: Decarbonization: Orderbook Share of Alternative Fuels Increases
Decarbonization: Orderbook Share of Alternative Fuels Increases Significant slowdown in NB New Containership Orders by Propulsion Type, Q1 20-Q3 22 orders of conventionally- fueled vessels % Share 100% 90% 86% 80% 70% Share of Vessel Orders with Fuel Oil Propulsion, 2020 60% 50% 40% 68% 30% Share of
Slide 32: 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 % Share 3.0 80% 70% 1.0% 2.5 2016 Jan-Sep 2022 60% 71% NOO(1) 14% NOO (1) Idle Fleet at End-Se
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 15.9% Danaos Fleet Segment Share of Long-Distance Trade Deployment Orderbook-to-Fleet Ratio in Danaos Fleet Segment Danaos fleet segments provide 84% of capacity Transpacific 63% of long-haul container trade volumes Transatlantic F
Slide 34: Consolidated Liner Landscape Provides Stable Counterparties
Consolidated Liner Landscape Provides Stable Counterparties Recent wave of Liner Company Alliance Members, End-September 2022 consolidation between liner operators Mn TEU 7.0 Consolidation between liner 1 companies provides more stable 6.0 set of counterparties 9 5.0 Orderbook Fleet Global Liner Com
Slide 35: Spot Freight Rates Have Weakened, Average Contract Rate Remain Healthy
Spot Freight Rates Have Weakened, Average Contract Rate Remain Healthy ▪ Spot freight rates have continued the downward trend as global inflationary pressures on consumer demand and supply-chain bottleneck unwind. The average freight rates received by liner operators remain healthy, however, reflect
Slide 36: Higher Long-term Freight Rate Contracts to Sustain Liner Operator Profitability
Higher Long-term Freight Rate Contracts to Sustain Liner Operator Profitability Average $/TEU Freight Liner Company Average $/TEU Revenues and Profit Margins, 2012-22 Rates remain elevated following earlier contract renewals $/TEU % 3000 75% Average Liner Company EBIT Margin (RH Axis) Average $/TEU
Slide 37: Port Congestion: Gradual Improvement, Still Above Historical Averages
Port Congestion: Gradual Improvement, Still Above Historical Averages Port Container Port Congestion: Containership Idle at Port Anchorages, Relative to 2016-19 Average Level Congestion Reduces Available Fleet Mn TEU 1.2 Other Latin America 1.0 North America Europe SE Asia NE Asia 0.8 China 8.4% 0.6
Slide 38: Environmental Regulations: Containerships May Slow to Comply with CII
Environmental Regulations: Containerships May Slow to Comply with CII CII: Estimated 2021 Performance vs. 2023 54% Benchmarks Containership Average Sailing Speeds Estimated Share of D-E CII Grades, Total Fleet 2021 Index, 100 = % A-grade B-grade C-grade D-grade E-grade Average 2013-19 100% 105 1-3 k
Slide 39: D. Appendix
D. Appendix <i a EI Fa
Slide 40: Adjusted Net Income
Adjusted Net Income Reconciliation of Net Income to Adjusted Net Income USD thousands LTM Three Months Nine Months Ended Sept. 30, Ended Sept. 30, Ended Sept. 30, Year Ended December 31, Reconciliation of Net Income / (Loss) to Adjusted Net Income 2022 2022 2021 2022 2021 2021 2020 2019 2018 2017 in
Slide 41: Adjusted EBITDA
Adjusted EBITDA Reconciliation of Net Income to EBITDA and Adjusted EBITDA USD thousands LTM Three Months Nine Months Ended Sept. 30, Ended Sept. 30, Ended Sept. 30, Year Ended December 31, Reconciliation of Net Income / (Loss) to EBITDA and Adjusted EBITDA 2022 2022 2021 2022 2021 2021 2020 2019 20
Slide 42: 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 Nine Months Ended Sept. 30, Ended Sept. 30, Ended Sept. 30, Year Ended December 31, Reconciliation of Free Cash Flow 2022 2022 2021 2022 2021 2021
Slide 43: Financial Debt Maturity Profile
Financial Debt Maturity Profile Well-balanced repayment profile(1) USDm Financial Debt Maturity Profile as of September 30, 2022 ($995 million) - Credit position Status Quo(1) vs. Refinanced Q4 2022(2) $700 • CFR rating - BB (Positive) and Ba3 (Stable) and Senior $598.8 unsecured debt rating - BB an
Slide 44: Stock Performance – Danaos vs. Peers
Stock Performance – Danaos vs. Peers Since July 1, 2020 3000% 1668% 2500% 2000% Stockholders' Return 1 1500% 1000% 500% 0% -500% Jul 2020 Oct 2020 Jan 2021 Apr 2021 Jul 2021 Oct 2021 Jan 2022 Apr 2022 Jul 2022 Oct 2022 Danaos Atlas Costamare GSL Source: NASDAQ 38 (1) Stockholders’ return is a rate o
Slide 45: Thank You
Thank You