Athens, Greece - July 31, 2017
Danaos Corporation ("Danaos") (NYSE: DAC), one of the world's largest independent owners of containerships, today reported unaudited results for the period ended June 30, 2017.
Highlights for the Second Quarter and Half Year Ended June 30, 2017:
• Adjusted net income1 of $29.0 million, or $0.26 per share, for the three months ended June 30, 2017 compared to $47.7 million, or $0.43 per share, for the three months ended June 30, 2016, a decrease of 39.1%. Adjusted net income1 of $53.6 million, or $0.49 per share, for the six months ended June 30, 2017 compared to $94.9 million, or $0.86 per share, for the six months ended June 30, 2016, a decrease of 43.6%.
• Operating revenues of $113.9 million for the three months ended June 30, 2017 compared to $137.0 million for the three months ended June 30, 2016, a decrease of 16.9%. Operating revenues of $224.0 million for the six months ended June 30, 2017 compared to $274.5 million for the six months ended June 30, 2016, a decrease of 18.4%.
• Adjusted EBITDA1 of $78.1 million for the three months ended June 30, 2017 compared to $99.9 million for the three months ended June 30, 2016, a decrease of 21.8%. Adjusted EBITDA1 of $150.6 million for the six months ended June 30, 2017 compared to $199.2 million for the six months ended June 30, 2016, a decrease of 24.4%.
• Total contracted operating revenues were $1.9 billion as of June 30, 2017, with charters extending through 2028 and remaining average contracted charter duration of 6.2 years, weighted by aggregate contracted charter hire.
• Charter coverage of 87% for the next 12 months based on current operating revenues and 66% in terms of contracted operating days.
Danaos' CEO Dr. John Coustas commented:
"Our earnings for the second quarter of 2017 continue to reflect the effect of the Hanjin bankruptcy on the Company's financial performance. Adjusted net income came in at $29 million for this quarter compared to $47.7 million for the second quarter of 2016, a decrease of $18.7 million. This decrease was attributable to a $19.3 million decrease in the operating revenues of the vessels that were previously chartered to Hanjin, and was partially offset by marginally improved operating performance by $0.6 million. Fleet utilization increased to 97.9% this quarter compared to 96.9% in the second quarter of 2016.
As previously reported, the Company is in breach of certain financial covenants as a result of the Hanjin bankruptcy. We are currently engaged in discussions with our lenders regarding refinancing substantially all of our debt maturing in 2018. These discussions encompass potential amendments to the associated financial covenants that have been breached. In the meantime, we continue to generate positive cash flows from our operations and currently are in a position to service all our operational obligations as well as all scheduled principal amortization and interest payments under the original terms of our debt agreements.
The charter market is moving sideways at levels slightly above the lows of 2016 but we have not yet seen a meaningful improvement to signal a market recovery. Box rates have improved as a result of improved capacity deployment through the alliances and the recent industry consolidation activity has reduced our counterparty risks. On the other hand, consolidation in the liner industry combined with legacy newbuilding orders for large vessels still to be delivered is anticipated to maintain pressure on charter rates for a considerable amount of time. Danaos continues to have low near term exposure to the weak spot market with charter coverage of 87% for the next 12 months based on current operating revenues and 66% in terms of contracted operating days.
Our commitment to provide best in class service to our customers is now being reinforced by the utilization of our in-house developed IT tool for online acquisition and analysis of big data for online performance monitoring of our vessels, a unique feature for efficient ship management in the industry.
During this extended period of market weakness which has presented many challenges, we remain focused on taking necessary actions to preserve the value of our company by managing our fleet efficiently and taking prudent measures to manage and ultimately deleverage our balance sheet."
Danaos Corporation press release