Danaos Corporation · NYSE:DAC
Danaos — Investor Presentation (May 2023)
43 slides from Danaos's investor presentation, May 2023
Slide 1: Investor Presentation May 2023
Investor Presentation May 2023
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 $360mn Cash Contracted revenue through 2028(1) Cash and Cash Equivalents as of Q1 2023 0.2x $371mn Net Debt / LTM Q1 2023 Adjusted EBITDA(2) Undrawn Credit Commitment as of Q1 2023 $761mn ~$1.3bn LTM Q1 2023 Adjusted EBITDA Enterprise value(3) (1) Cash Contracted Revenue
Slide 6: Fleet Summary & Strong Charter Coverage Profile
Fleet Summary & Strong Charter Coverage Profile Contracted Revenue and Contracted Days Coverage(2) TEU Capacity (1) USDm Cash Contracted Revenue Non-cash Component of Contracted Revenue(3) Contracted days coverage Existing Fleet New Buildings 500.0 97% $1,000 100% 450.0 46.4 58.4 $69 TEU in thousand
Slide 7: First Quarter 2023 Highlights
First Quarter 2023 Highlights Summary of Results USDm Operating Revenue Adjusted EBITDA $300.0 $300.0 $269.5 Dividend, net $110.0 $243.6 ZIM $200.0 $229.9 $200.0 $179.0 $159.5 $100.0 $100.0 $0.0 $0.0 2022 2023 2022 2023 Three Months Ended March 31 Three Months Ended March 31 Adjusted Net Income Free
Slide 8: 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 6 (1) Age as of March 31, 2023. On the basis of conclud
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 7 (1) Age as of March 31, 2023. On the basis of conclud
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: Legacy of Leadership in Container Shipping
50 Year Legacy of Leadership in Container Shipping 1987 2006 2018 2020 to 2023 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 13: A Diverse & High-Quality Fleet
A Diverse & High-Quality Fleet Fleet Overview(1) 6x 5x NBs 7,100 – 8,000 TEU 13,100 TEU Remaining Charter Term : 3 years Average Age: 10.9 years Remaining Charter Term: 1.1 years 10x 2,200 – 2,600 TEU Average Age: 24.6 years 6% 12% Remaining Charter Term: 1.8 years 12% 5x 9,600 - 10,100 TEU 7% Avera
Slide 14: 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 $2.3 billion through to 2028(1) Average charter duration of 3.2 years (weighted by aggregate contracted charter hire) (1) Fleet utilization for Q1 2023 96.8% 11 (
Slide 15: 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 16: 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 17: 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 18: 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 19: B. Robust Capital Structure and Conservative Financial Strategy
B. Robust Capital Structure and Conservative Financial Strategy
Slide 20: 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 21: Historical Financial Highlights
Historical Financial Highlights Revenues Net Income and Adjusted Net Income USDm USDm $1,200 $993 $1,007 $1,000 $1,200 $800 $1,053 $690 $1,000 $600 $452 $459 $447 $462 $400 $800 $200 $711 $621 $0 2017 2018 2019 2020 2021 2022 LTM 1Q 23 $600 $559 Adjusted EBITDA USDm $374 $400 $362 $1,000 $851 $200 $
Slide 22: Historical Financial Highlights
Historical Financial Highlights Cash and Cash Equivalents and Undrawn Credit Net Leverage Commitment USDm Cash and Cash Equivalent Undrawn Credit Commitment $800 8.0x 7.3x $731 $650 $600 6.0x 5.1x $371 4.6x 4.5x $382 $400 4.0x 2.5x $200 2.0x $360 $268 0.3x $139 $129 0.2x $67 $77 $66 $0 0.0x 2017 201
Slide 23: Strong Free Cash Flow Visibility & Great Conversion to OCF
Strong Free Cash Flow Visibility & Great Conversion to OCF Illustrative Walk to LTM Q1 2023 Free Cash Flow(1) USDm Drivers of FCF Uses of FCF Higher re-chartering Early repayment of debt and leases LTM Q1 2023 Early Charterhire Prepayment Vessel acquisitions and CAPEX FCF excludes CapEx and
Slide 24: Focused on Maintaining Conservative Capital Structure
Focused on Maintaining Conservative Capital Structure Net Debt and LTM Q1 2023 Adjusted EBITDA Multiple(1) USDm A robust deleveraging profile… Early repayment of $909.1 million of debt and leaseback obligations and realized $4.4 million gain associated with the early extinguishment in 2022 Decreas
Slide 25: C. Container Vessel Demand & Supply Side Dynamics
C. Container Vessel Demand & Supply Side Dynamics
Slide 26: Container Trade: Near-Term Pressure as Inflation Trims Spending
Container Trade: Near-Term Pressure as Inflation Trims Spending 218 Mn Teu World Container Trade & GDP, 2000 – 2024F Mn TEU % yoy 2023(F) World Container Trade 275 17.5% 250 15.0% 225 12.5% 2.4% 200 10.0% 175 7.5% 2023(F) Trade yoy Growth 150 5.0% 125 2.5% 231 Mn Teu 100 0.0% 75 -2.5% 2024(F) World
Slide 27: Demand: US Import Volumes Weak, Consumer Spending Rebalances
Demand: US Import Volumes Weak, Consumer Spending Rebalances - 28% US Containerised Imports from Far East, 2018-Q1 23 US Inflation-Adjusted Consumer Spending by Type US Far East TEU Imports, Q1 23 vs Q1 22 Mn TEU 2018 2019 2020 2021 2022 2023 Index, 100 = Jan-18 Durable Goods Non-Durable Goods Servi
Slide 28: 1-Year Time Charter Rates Correct, But Remain Above Historical Averages
1-Year Time Charter Rates Corrects, But Remain Above Historical Averages 74% 1-Year Timecharter Market Rates, January 2017 – April 2023 8,500 TEU Charter Rate % Ch: $k/Day Apr-23 vs. Avg 2010-19 200 180 160 91% 140 6,500 TEU Charter Rate % Ch: 120 Apr-23 vs. Avg 2010-19 100 80 114% 60 4,300 TEU Char
Slide 29: Orderbook Stable at 30% of Fleet
Orderbook Stable at 30% of Fleet, Continued Interest in 7-8k TEU Vessels 30.1% Containership Orderbook, End of April 2023 Age Profile of Fleet: Smaller Vessel Fleet Ageing Industry Orderbook-to-Fleet Ratio, End-Apr 23 Mn TEU % Share 6.0 100% 13.7% 5.0 80% Orderbook-to-Fleet Ratio: 4.0 Sub-12,000 TEU
Slide 30: Supply: Smaller Segment Orderbooks Smaller Than 20+ Year Old Fleets
Supply : For Smaller Segments, Orderbooks Smaller Than 20+ Year Old Fleets 358 k TEU Containership Deliveries vs. Scrapping, 2014-23 20+ Year-Old Fleets vs. Segment Orderbooks Containership Deliveries, Q1 23 30+ Year Fleet k TEU Containership Demolitions k TEU 25-29 Year Fleet % 600 1000 20-24 Year
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-Q1 23 orders of conventionally- fueled vessels % Share by TEU Volume 100% 90% 86% 80% Share of Vessel Orders with Fuel 70% Oil Propulsion, 2020 60% 50% 40% 68
Slide 32: Idle Capacity: Increase in Idling in Q1 23
Idle Capacity: Increase in Idling in Q1 23, Driven by Liner Blanked Sailings The volume of Idle Containership Capacity: Liner Company Owned vs Tonnage Provider Owned idle capacity remains at historical lows Mn TEU 3.0 80% 2.3% 2.5 2016 70% Idle Fleet at End-Apr 23 71% NOO(1) 60% vs. Peak of 12% in J
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 16.0% Danaos Fleet Segment Share of Long-Distance Trade Development Orderbook-to-Fleet Ratio in Danaos Fleet Segment Transpacific Danaos fleet segments provide 80% of capacity 61% of long-haul container trade volumes 80% Transatlan
Slide 34: Industry to Remain Consolidated as Alliance Patterns Face Shake-Up in 2025
Industry to Remain Consolidated as Alliance Patterns Face Shake-Up in 2025 Recent wave of Liner Company Alliance Members, End-January 2023 consolidation between liner operators Mn TEU Consolidation between liner 8.0 1 companies provides more stable set of counterparties 9 7.0 6.0 Orderbook Global Li
Slide 35: Signs That Spot Rates Have Troughed
Signs That Spot Rates Have Troughed, Average Contract Rates Remain Healthy Spot freight rates have stabilized in the past quarter across the majority of tradelanes, with rates on the Far East-US 9% West Coast reportedly increasing towards the end of April 2023. For the time being the average freig
Slide 36: Environmental Regulations: Sailing Speeds Fell Sharply in H2 22
Environmental Regulations: Sailing Speeds Fell Sharply in H2 22 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% 110 8+ k TEU 3-
Slide 37: D. Appendix
D. Appendix
Slide 38: Adjusted Net Income
Adjusted Net Income Reconciliation of Net Income to Adjusted Net Income USD thousands LTM Three Months Ended Mar. 31, Ended Mar. 31, Year Ended December 31, Reconciliation of Net Income / (Loss) to Adjusted Net Income 2023 2022 2023 2022 2022 2021 2020 2019 2018 2017 in thousands of U.S. dollars Net
Slide 39: Adjusted EBITDA
Adjusted EBITDA Reconciliation of Net Income to EBITDA and Adjusted EBITDA USD thousands LTM Three Months Ended Mar. 31, Ended Mar. 31, Year Ended December 31, Reconciliation of Net Income / (Loss) to EBITDA and Adjusted EBITDA 2023 2022 2023 2022 2022 2021 2020 2019 2018 2017 in thousands of U.S. d
Slide 40: 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 Mar. 31, Ended Mar. 31, Year Ended December 31, Reconciliation of Free Cash Flow 2023 2022 2023 2022 2022 2021 2020 2019 in thousands of U.S
Slide 41: Financial Debt Maturity Profile
Financial Debt Maturity Profile Well-balanced repayment profile(1) USDm Financial debt maturity profile as of March 31, 2023 Credit position $500.0 • CFR rating - BB (Positive) and Ba3 (Positive) and Senior $400.0 unsecured debt rating - BB and B1, by S&P and Moody’s, respectively $300.0 $262.8 $200
Slide 42: Stock Performance – Danaos vs. Peers
Stock Performance – Danaos vs. Peers 1594% Since July 1, 2020 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 Apr 2022 Jul 2022 Oct 2022 Jan 2023 Apr 2023 Danaos Costamare GSL Source: NASDAQ 36 (1) Stockholders’ return
Slide 43: Thank You
Thank You