ATHENS, GREECE
-- (Marketwired)
-- 02/10/14
Danaos Corporation ("Danaos") (NYSE: DAC), a leading international owner of containerships, today reported unaudited results for the quarter and full year ended December 31, 2013.
Highlights for the Fourth Quarter and Full Year Ended December 31, 2013:
- Operating revenues of $147.0 million for the three months ended December 31, 2013 compared to $151.8 million for the three months ended December 31, 2012, a decrease of 3.2%. Operating revenues of $588.1 million for the year ended December 31, 2013 compared to $589.0 million for the year ended December 31, 2012, a decrease of 0.2%.
- Adjusted EBITDA(1)of $108.8 million for the three months ended December 31, 2013 compared to $112.4 million for the three months ended December 31, 2012, a decrease of 3.2%. Adjusted EBITDA(1)of $434.3 million for the year ended December 31, 2013 compared to $431.7 million for the year ended December 31, 2012, an increase of 0.6%.
- Adjusted net income(1)of $15.0 million, or $0.14 per share, for the three months ended December 31, 2013 compared to $11.7 million, or $0.11 per share, for the three months ended December 31, 2012. Adjusted net income(1)of $54.0 million, or $0.49 per share, for the year ended December 31, 2013 compared to $60.5 million, or $0.55 per share, for the year ended December 31, 2012.
- The remaining average charter duration of our fleet was 8.9 years as of December 31, 2013 (weighted by aggregate contracted charter hire).
- Total contracted operating revenues were $4.2 billion as of December 31, 2013, through 2028.
- Charter coverage of 86% for the next 12 months in terms of contracted operating days and 93% in terms of operating revenues.
Three and Twelve Months Ended December 31, 2013 and 2012
Financial Summary
(Expressed in thousands of United States dollars, except per share amounts)
Three Three Twelve Twelve
months months months months
ended ended ended ended
December December December December
31, 31, 31, 31,
---------- ---------- ---------- ----------
2013 2012 2013 2012
---------- ---------- ---------- ----------
(unaudited)
Operating revenues $ 147,001 $ 151,826 $ 588,117 $ 589,009
Net (loss)/income $ (4,236) $ (116,478) $ 37,523 $ (105,204)
Adjusted net income(1) $ 14,966 $ 11,699 $ 54,049 $ 60,453
(Losses)/Earnings per share $ (0.04) $ (1.06) $ 0.34 $ (0.96)
Adjusted earnings per
share(1) $ 0.14 $ 0.11 $ 0.49 $ 0.55
Weighted average number of
shares (in thousands) 109,657 109,622 109,654 109,613
Adjusted EBITDA(1) $ 108,807 $ 112,368 $ 434,266 $ 431,690
(1) Adjusted net income, adjusted earnings per share and adjusted EBITDA
are non-GAAP measures. Refer to the reconciliation of net income to
adjusted net income and net income to adjusted EBITDA.
Danaos' CEO Dr. John Coustas commented:
Danaos is reporting a solid fourth quarter with adjusted net income of $15 million, or 14 cents per share, which is $3.3 million higher than the $11.7 million adjusted net income for the fourth quarter of 2012. This improvement is mainly a result of reduced financing costs due to the rapid deleveraging of the Company's balance sheet. During 2013 we utilized 90% of our free cash flow generation to reduce indebtedness by $171 million, while we will reduce debt further by at least a further $200 million in 2014.
Executing on our fleet renewal program, during the 4th quarter we sold four vessels, the Hope, the Kalamata, the Lotus and the Komodo, while we acquired two 2001 built geared containerships, the 2,524 TEU Danae C, and the 3,430 TEU Dimitris C.
In January 2014, our charterer Zim reached an in principle agreement with its creditors, including Danaos Corporation, to restructure its balance sheet, which is currently in the process of documentation. This agreement, which includes an equity capital injection of $200 million by Zim's parent, Israel Corporation, resolves Zim's long standing capital structure problems. As a result of this, restructuring we recorded in this quarter an impairment loss of $19.0 million on the receivable we had accumulated on our balance sheet related to credit previously provided to Zim.
The containership market remains challenging but there are indications of recovery. Mainlane trade volumes in 2013 expanded by 2.8% on average compared to 1% in 2012, while the Asia - Europe trade grew by almost 3.5%, an improvement when considering the 4.9% contraction of 2012. On the supply side, the containership fleet grew by almost 7% in 2013 outpacing demand growth that came in at around 4.8%. This imbalance is anticipated to subside during 2014 with demand growth forecasts at around 6% and supply growth estimated at around 5%. Increased scrapping activity is an additional factor anticipated to mitigate the supply demand imbalance going forward.
Amidst a soft charter market, we maintain our strong 93% contract coverage, limiting further downside from a prolonged weak spot charter market.
We continue to be one of the most cost competitive operators in the industry with our daily vessel operating expenses averaging at $5,987 per day for the full year of 2013.
With a resilient business model both from an operating and financial standpoint, we will continue to manage our fleet efficiently, while in 2014 we will focus on further de-leveraging the company and creating value for our shareholders.
Three months ended December 31, 2013 compared to the three months ended December 31, 2012
During the three months ended December 31, 2013, Danaos had an average of 59.0 containerships compared to 64.0 containerships for the three months ended December 31, 2012. Our fleet utilization increased to 95.2% in the three months ended December 31, 2013 compared to 90.4% in the three months ended December 31, 2012, while the effective utilization for the fleet under employment, excluding two vessels on lay up, was 98.6%. During the three months ended December 31, 2013, we sold four vessels, the Hope, the Kalamata, the Lotus and the Komodo (on October 3, 2013, October 22, 2013, October 25, 2013 and November 12, 2013, respectively). Furthermore, on November 13, 2013, we acquired a 2,524 TEU containership, the Danae C, built in 2001 and on November 21, 2013, we acquired a 3,430 TEU containership, the Dimitris C, built in 2001.
Our adjusted net income was $15.0 million, or $0.14 per share, for the three months ended December 31, 2013 compared to $11.7 million, or $0.11 per share, for the three months ended December 31, 2012. We have adjusted our net income in the three months ended December 31, 2013 for an impairment loss of $19.0 million in relation to an agreement in principle we have reached with ZIM, for a restructuring of its obligations with us, as well as unrealized gains on derivatives of $5.2 million, a non-cash expense of $4.8 million for fees related to our comprehensive financing plan (comprised of non-cash, amortizing and accrued finance fees) and a loss on sale of vessels of $0.6 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.
The increase of 28.2%, or $3.3 million, in adjusted net income for the three months ended December 31, 2013 compared to the three months ended December 31, 2012, was mainly the result of reduced financing costs driven by our rapid deleveraging mode. As of December 31, 2013, we had 2 vessels on cold lay-up.
On a non-adjusted basis our net loss was $4.2 million, or $0.04 per share, for the three months ended December 31, 2013, compared to net loss of $116.5 million, or $1.06 per share, for the three months ended December 31, 2012, which is mainly attributable to the impairment losses we incurred in the three months ended December 31, 2013 and 2012, respectively.
On March 27, 2013, we entered into an agreement with the lenders under the HSH Nordbank AG-Aegean Baltic Bank-Piraeus Bank credit facility. The agreement provided us the option to sell, for cash, up to 9 mortgaged vessels (the Henry, the Pride, the Independence, the Honour, the Elbe, the Hope, the Lotus, the Kalamata and the Komodo) with the sale proceeds less sale commissions from such vessels' sales to be deposited in a restricted cash account and used to finance the acquisition of new containership vessels no later than December 31, 2013. Any funds remaining in this restricted cash account after that date will be applied towards prepayment of the respective credit facility. As of December 31, 2013, we concluded the sales of all vessels under the agreement. Furthermore, we acquired a 2,452 TEU containership, the Amalia C, built in 1998, a 2,602 TEU containership, the Niledutch Zebra, built in 2001, a 2,524 TEU containership, the Danae C, built in 2001 and a 3,430 TEU containership, the Dimitris C, built in 2001. As of December 31, 2013, an amount of $11.4 million was recorded as current restricted cash, which will be applied towards prepayment of the respective credit facility within 2014.
Operating Revenues
Operating revenues decreased 3.2%, or $4.8 million, to $147.0 million in the three months ended December 31, 2013, from $151.8 million in the three months ended December 31, 2012.
Operating revenues for the three months ended December 31, 2013 reflect:
- $1.9 million of additional revenues in the three months ended December 31, 2013 compared to the three months ended December 31, 2012, related to the Amalia C, the Niledutch Zebra, the Danae C and the Dimitris C, which were added to our fleet on May 14, 2013, June 25, 2013, November 13, 2013 and November 21, 2013, respectively.
- $3.6 million decrease in revenues in the three months ended December 31, 2013 compared to the three months ended December 31, 2012, related to the Honour, the Elbe, the Hope, the Lotus, the Kalamata and the Komodo, which were generating revenues in the three months ended December 31, 2012 and were sold in 2013.
- $3.1 million decrease in revenues in the three months ended December 31, 2013 compared to the three months ended December 31, 2012. This was mainly attributable to the softening of the charter market between the two periods.
Vessel Operating Expenses
Vessel operating expenses were $30.5 million in each of the three months ended December 31, 2013 and 2012, respectively, reflecting higher average daily operating cost per vessel offset by lower average number of vessels in our fleet in the 2013 period.
The average daily operating cost per vessel increased to $6,019 per day for the three months ended December 31, 2013, from $5,857 per day for the three months ended December 31, 2012.
Depreciation & Amortization
Depreciation & Amortization includes Depreciation and Amortization of Deferred Dry-docking and Special Survey Costs.
Depreciation
Depreciation expense decreased 10.1%, or $3.9 million, to $34.6 million in the three months ended December 31, 2013, from $38.5 million in the three months ended December 31, 2012. The decrease in depreciation expense was due to the decreased average number of vessels in our fleet during the three months ended December 31, 2013 compared to the three months ended December 31, 2012, as well as the reduced cost base of certain vessels for which we recognized impairment charges as of December 31, 2012.
Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs decreased by $0.9 million, to $1.0 million in the three months ended December 31, 2013, from $1.9 million in the three months ended December 31, 2012. The decrease reflects decreased dry-docking and special survey costs incurred within the year and amortized during the three months ended December 31, 2013 compared to the three months ended December 31, 2012.
General and Administrative Expenses
General and administrative expenses decreased 5.8%, or $0.3 million, to $4.9 million in the three months ended December 31, 2013, from $5.2 million in the three months ended December 31, 2012. The decrease was mainly the result of reduced fees paid to our Manager in the three months ended December 31, 2013 compared to the three months ended December 31, 2012, due to the decrease in the average number of vessels in our fleet.
Other Operating Expenses
Other Operating Expenses includes Voyage Expenses
Voyage Expenses
Voyage expenses decreased by $0.7 million, to $2.8 million in the three months ended December 31, 2013, from $3.5 million in the three months ended December 31, 2012. The decrease was mainly the result of the decrease in the average number of vessels in our fleet in the three months ended December 31, 2013 compared to the three months ended December 31, 2012.
Impairment loss
Israel Corporation Ltd., the parent company of ZIM Integrated Shipping Services Ltd. ("ZIM"), has announced that ZIM has reached an agreement in principle with its creditors, including us, for a restructuring of its obligations. This agreement includes a significant reduction in the charter rates payable by ZIM for the remaining life of its time charters, expiring in 2020 or 2021, for six of our vessels and our receipt of unsecured, interest bearing ZIM notes maturing in nine years and ZIM shares in exchange for such reductions and cancellation of ZIM's other obligations to us. Based on these anticipated terms, we have written down the value of our long-term receivables from ZIM as of December 31, 2013 and recognized a $19.0 million impairment charge with respect thereto. This agreement in principle remains subject to various approvals, including from each of the relevant creditor parties and ZIM's audit committee, board of directors and shareholders, as well as negotiation and execution of definitive documentation. As of December 31, 2012, we recorded vessels impairment losses of $129.6 million for thirteen of our older vessels, which were either laid up, or on short-term charters.
(Loss)/gain on sale of vessels
(Loss)/gain on sale of vessels, was a loss of $0.6 million in the three months ended December 31, 2013 compared to nil in the three months ended December 31, 2012. During the three months ended December 31, 2013, we sold the Hope, the Kalamata, the Lotus and the Komodo (on October 3, 2013, October 22, 2013, October 25, 2013 and November 12, 2013, respectively) and we realized a net loss on these sales of $0.6 million in aggregate. No vessels were sold during the 2012 period.
Interest Expense and Interest Income
Interest expense decreased by 5.2%, or $1.2 million, to $22.1 million in the three months ended December 31, 2013, from $23.3 million in the three months ended December 31, 2012. The change in interest expense was mainly due to the decrease in our average debt by $152.0 million, to $3,250.8 million in the three months ended December 31, 2013, from $3,402.8 million in the three months ended December 31, 2012, as well as the marginal decrease in the cost of debt servicing in the three months ended December 31, 2013 compared to the three months ended December 31, 2012, mainly driven by the lower average LIBOR.
It has to be noted that we are in a rapid deleveraging mode. As of December 31, 2013, the debt outstanding was $3,224.2 million compared to $3,395.2 million as of December 31, 2012.
Interest income was $0.6 million in the three months ended December 31, 2013 compared to $0.5 million in the three months ended December 31, 2012.
Other finance costs, net
Other finance costs, net, decreased by $0.1 million, to $5.0 million in the three months ended December 31, 2013, from $5.1 million in the three months ended December 31, 2012.
Unrealized gain/(loss) on derivatives
Unrealized gain/(loss) on interest rate swap hedges was a gain of $5.2 million in the three months ended December 31, 2013 compared to a gain of $7.6 million in the three months ended December 31, 2012. The unrealized gain is attributable to mark to market valuation of our swaps, as well as reclassification of unrealized losses from Accumulated Other Comprehensive Loss to our earnings (due to the discontinuation of hedge accounting).
Realized (loss)/gain on derivatives
Realized loss on interest rate swap hedges, decreased by $2.0 million, to $36.7 million in the three months ended December 31, 2013, from $38.7 million in the three months ended December 31, 2012. This decrease is mainly attributable to the lower average notional amount of swaps during the three months ended December 31, 2013 compared to the three months ended December 31, 2012.
Adjusted EBITDA
Adjusted EBITDA decreased 3.2%, or $3.6 million, to $108.8 million in the three months ended December 31, 2013, from $112.4 million in the three months ended December 31, 2012. Adjusted EBITDA for the three months ended December 31, 2013, is adjusted for an impairment loss of $19.0 million in relation to an agreement in principle we have reached with ZIM, for a restructuring of its obligations with us, as well as unrealized gain on derivatives of $5.2 million, realized losses on derivatives of $35.7 million and a loss on sale of vessels of $0.6 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.
Twelve months ended December 31, 2013 compared to the twelve months ended December 31, 2012
During the twelve months ended December 31, 2013, Danaos had an average of 61.0 containerships compared to 62.6 containerships for the twelve months ended December 31, 2012. Our fleet utilization increased to 93.4% in the twelve months ended December 31, 2013 compared to 93.0% in the twelve months ended December 31, 2012, while the effective utilization for the fleet under employment, excluding vessels on lay up, was 98.4%. During the twelve months ended December 31, 2013, we sold 9 of our older vessels, the Henry, the Pride, the Independence, the Honour, the Elbe, the Hope, the Lotus, the Kalamata and the Komodo and we acquired four secondhand geared containerships, a 2,452 TEU containership, the Amalia C, built in 1998, a 2,602 TEU containership, the Niledutch Zebra, built in 2001, a 2,524 TEU containership, the Danae C, built in 2001 and a 3,430 TEU containership, the Dimitris C, built in 2001.
Our adjusted net income was $54.0 million, or $0.49 per share, for the twelve months ended December 31, 2013 compared to $60.5 million, or $0.55 per share, for the twelve months ended December 31, 2012. We have adjusted our net income in the twelve months ended December 31, 2013 for an impairment loss of $19.0 million in relation to an agreement in principle we have reached with ZIM, for a restructuring of its obligations with us, as well as unrealized gains on derivatives of $22.1 million, a non-cash expense of $19.2 million for fees related to our comprehensive financing plan (comprised of non-cash, amortizing and accrued finance fees) and a loss on sale of vessels of $0.4 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.
The decrease of 10.7%, or $6.5 million, in adjusted net income for the twelve months ended December 31, 2013 compared to the twelve months ended December 31, 2012, was mainly the result of the softening of the charter market during the last year that led to the cold lay-up of certain vessels, the re-chartering of certain vessels at lower rates, as well as the sale of 9 vessels during the twelve months ended December 31, 2013. The above was partially offset by the new vessel additions to our fleet over the course of the last year that were accretive to our operating income.
On a non-adjusted basis our net income was $37.5 million, or $0.34 per share, for the twelve months ended December 31, 2013, compared to net loss of $105.2 million, or $0.96 per share, for the twelve months ended December 31, 2012.
Operating Revenues
Operating revenues decreased 0.2%, or $0.9 million, to $588.1 million in the twelve months ended December 31, 2013, from $589.0 million in the twelve months ended December 31, 2012.
Operating revenues for the twelve months ended December 31, 2013 reflect:
- $37.2 million of incremental revenues in the twelve months ended December 31, 2013 compared to the twelve months ended December 31, 2012, related to five 13,100 TEU containerships (the Hyundai Together, the Hyundai Tenacity, the Hyundai Smart, the Hyundai Speed and the Hyundai Ambition, which were added to our fleet on February 16, 2012, March 8, 2012, May 3, 2012, June 7, 2012 and June 29, 2012, respectively) and one 8,530 TEU containership (the CMA CGM Melisande, which was added to our fleet on February 28, 2012).
- $3.0 million additional revenues in the twelve months ended December 31, 2013 compared to the twelve months ended December 31, 2012, related to the Amalia C, the Niledutch Zebra, the Danae C and the Dimitris C, which were added to our fleet on May 14, 2013, June 25, 2013, November 13, 2013 and November 21, 2013, respectively.
- $20.7 million decrease in revenues in the twelve months ended December 31, 2013 compared to the twelve months ended December 31, 2012, related to the Montreal, which was sold on April 27, 2012, as well as the Henry, the Pride, the Honour, the Elbe, the Hope, the Lotus, the Kalamata and the Komodo, which were generating revenues in the twelve months ended December 31, 2012 and were sold during the twelve months ended December 31, 2013.
- $5.8 million decrease in revenues in the twelve months ended December 31, 2013 compared to the twelve months ended December 31, 2012, related to the Duka, which was laid up in the twelve months ended December 31, 2013 and was generating revenues in the the twelve months ended December 31, 2012.
- $14.6 million decrease in revenues in the twelve months ended December 31, 2013 compared to the twelve months ended December 31, 2012, which was mainly attributable to the softening of the charter market between the two periods.
Vessel Operating Expenses
Vessel operating expenses decreased 1.1%, or $1.3 million, to $122.1 million in the twelve months ended December 31, 2013, from $123.4 million in the twelve months ended December 31, 2012. The reduction is mainly attributable to the decrease in the average number of vessels in our fleet during the twelve months ended December 31, 2013 compared to the twelve months ended December 31, 2012.
The average daily operating cost per vessel increased to $5,987 per day for the twelve months ended December 31, 2013, from $5,907 per day for the twelve months ended December 31, 2012.
Depreciation & Amortization
Depreciation & Amortization includes Depreciation and Amortization of Deferred Dry-docking and Special Survey Costs.
Depreciation
Depreciation expense decreased 4.5%, or $6.5 million, to $137.4 million in the twelve months ended December 31, 2013, from $143.9 million in the twelve months ended December 31, 2012. The decrease in depreciation expense was due to the decreased average number of vessels in our fleet during the twelve months ended December 31, 2013 compared to the twelve months ended December 31, 2012, as well as the reduced cost base of certain vessels for which we recognized impairment charges as of December 31, 2012.
Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs decreased 9.8%, or $0.6 million, to $5.5 million in the twelve months ended December 31, 2013, from $6.1 million in the twelve months ended December 31, 2012. The decrease reflects decreased dry-docking and special survey costs incurred within the year and amortized during the twelve months ended December 31, 2013 compared to the twelve months ended December 31, 2012.
General and Administrative Expenses
General and administrative expenses decreased 4.4%, or $0.9 million, to $19.5 million in the twelve months ended December 31, 2013, from $20.4 million in the twelve months ended December 31, 2012. The decrease was mainly the result of the decrease in the fees paid to our Manager in the twelve months ended December 31, 2013 compared to the twelve months ended December 31, 2012, due to the decrease in the average number of vessels in our fleet.
(Loss)/gain on sale of vessels
(Loss)/gain on sale of vessels, was a loss of $0.4 million in the twelve months ended December 31, 2013 compared to a gain of $0.8 million in the twelve months ended December 31, 2012. During the twelve months ended December 31, 2013, we sold the Independence, the Henry, the Pride, the Honour, the Elbe, the Hope, the Kalamata, the Lotus and the Komodo (on February 13, 2013, February 28, 2013, March 25, 2013, May 14, 2013, June 13, 2013, October 3, 2013, October 22, 2013, October 25, 2013 and November 12, 2013, respectively) and we realized a net loss on these sales of $0.4 million in aggregate. During the twelve months ended December 31, 2012, we sold the Montreal (on April 27, 2012) and we realized a net gain on this sale of $0.8 million.
Other Operating Expenses
Other Operating Expenses includes Voyage Expenses
Voyage Expenses
Voyage expenses decreased by $1.7 million, to $11.8 million in the twelve months ended December 31, 2013, from $13.5 million in the twelve months ended December 31, 2012. The decrease was mainly the result of the decrease in the average number of vessels in our fleet.
Interest Expense and Interest Income
Interest expense increased by 4.5%, or $3.9 million, to $91.2 million in the twelve months ended December 31, 2013, from $87.3 million in the twelve months ended December 31, 2012. The change in interest expense was mainly due to the increase in our average debt by $13.6 million, to $3,321.9 million in the twelve months ended December 31, 2013, from $3,308.3 million in the twelve months ended December 31, 2012, which was partially offset by the decrease in the cost of servicing our credit facilities in the twelve months ended December 31, 2013 compared to the twelve months ended December 31, 2012 (mainly due to the decrease in the average Libor). Furthermore, the financing of our newbuilding program resulted in $3.7 million of interest being capitalized, rather than such interest being recognized as an expense, for the twelve months ended December 31, 2012 compared to nil interest being capitalized for the twelve months ended December 31, 2013, following the completion of our newbuilding program in June 2012.
Interest income was $2.2 million in the twelve months ended December 31, 2013 compared to $1.6 million in the twelve months ended December 31, 2012.
Other finance costs, net
Other finance costs, net, increased by $2.0 million, to $20.1 million in the twelve months ended December 31, 2013, from $18.1 million in the twelve months ended December 31, 2012. This increase was mainly due to the $1.1 million increase in the amortization of finance fees (which were deferred and are amortized over the term of the respective credit facilities), as well as increased accrued finance fees of $1.0 million (which accrete in our Statement of Income over the term of the respective facilities) in the twelve months ended December 31, 2013 compared to the twelve months ended December 31, 2012.
Unrealized gain/(loss) on derivatives
Unrealized gain/(loss) on interest rate swap hedges was a gain of $22.1 million in the twelve months ended December 31, 2013 compared to a loss of $0.7 million in the twelve months ended December 31, 2012. The unrealized gain/(loss) is attributable to mark to market valuation of our swaps, as well as reclassification of unrealized losses from Accumulated Other Comprehensive Loss to our earnings (due to the discontinuation of hedge accounting).
Realized (loss)/gain on derivatives
Realized loss on interest rate swap hedges, decreased by $6.1 million, to $148.3 million in the twelve months ended December 31, 2013, from $154.4 million in the twelve months ended December 31, 2012. This decrease is mainly attributable to the lower average notional amount of swaps during the twelve months ended December 31, 2013 compared to the twelve months ended December 31, 2012, which was partially offset by $7.0 million of realized losses that had been deferred during the twelve months ended December 31, 2012 (as discussed below) and were not deferred in the twelve months ended December 31, 2013.
With all our newbuildings having been delivered no realized losses on cash flow hedges were deferred during the twelve months ended December 31, 2013. During the twelve months ended December 31, 2012, realized losses on cash flow hedges of $7.0 million were deferred in "Accumulated Other Comprehensive Loss", rather than being recognized as expenses, and are being reclassified into earnings over the depreciable lives of these vessels that were under construction and financed by loans with interest rates that were hedged by our interest rate swap contracts.
Adjusted EBITDA
Adjusted EBITDA increased 0.6%, or $2.6 million, to $434.3 million in the twelve months ended December 31, 2013, from $431.7 million in the twelve months ended December 31, 2012. Adjusted EBITDA for the twelve months ended December 31, 2013, is adjusted for an impairment loss of $19.0 million in relation to an agreement in principle we have reached with ZIM, for a restructuring of its obligations with us, as well as unrealized gain on derivatives of $22.1 million, realized losses on derivatives of $144.3 million and a loss on sale of vessels of $0.4 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.
Conference Call and Webcast
On Tuesday, February 11, 2014, at 9:00 A.M. EST, the Company's management will host a conference call to discuss the results.
Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 866 819 7111 (US Toll Free Dial In), 0800 953 0329 (UK Toll Free Dial In) or +44 (0)1452 542 301 (Standard International Dial In). Please quote "Danaos" to the operator.
A telephonic replay of the conference call will be available until February 18, 2014, by dialing 1 866 247 4222 (US Toll Free Dial In), 0800 953 1533 (UK Toll Free Dial In) or +44 (0)1452 550 000 (Standard International Dial In). Access Code: 1186615#
There will also be a live and then archived webcast of the conference call through the Danaos website (www.danaos.com). Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.
About Danaos Corporation
Danaos Corporation is an international owner of containerships, chartering its vessels to many of the world's largest liner companies. Our current fleet of 59 containerships aggregating 345,179 TEUs ranks Danaos among the largest containership charter owners in the world based on total TEU capacity. Danaos is one of the largest US listed containership companies based on fleet size. The Company's shares trade on the New York Stock Exchange under the symbol "DAC".
Forward-Looking Statements
Matters discussed in this release may constitute forward-looking statements within the meaning of the safeharbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements reflect our current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although Danaos Corporation believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, Danaos Corporation cannot assure you that it will achieve or accomplish these expectations, beliefs or projections. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including changes in charter hire rates and vessel values, charter counterparty performance, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled drydocking, changes in Danaos Corporation's operating expenses, including bunker prices, dry-docking and insurance costs, ability to obtain financing and comply with covenants in our financing arrangements, actions taken by regulatory authorities, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists.
Risks and uncertainties are further described in reports filed by Danaos Corporation with the U.S. Securities and Exchange Commission.
Visit our website at www.danaos.com
Appendix
Fleet Utilization
Danaos had 260 unscheduled off-hire days in the three months ended December 31, 2013 (including 184 days related to the Marathonas and the Duka, which have been off-charter and laid up). The following table summarizes vessel utilization and the impact of the off-hire days on the Company's revenue.
First Second Third Fourth
Vessel Utilization Quarter Quarter Quarter Quarter
(No. of Days) 2013 2013 2013 2013 Total
--------- --------- --------- --------- ---------
Ownership Days 5,677 5,541 5,612 5,427 22,257
Less Off-hire Days:
Scheduled Off-hire
Days -- (39) -- -- (39)
Other Off-hire Days (593) (287) (294) (260) (1,434)
--------- --------- --------- --------- ---------
Operating Days 5,084 5,215 5,318 5,167 20,784
========= ========= ========= ========= =========
Vessel Utilization 89.6% 94.1% 94.8% 95.2% 93.4%
Operating Revenues
(in '000s of US
Dollars) $ 146,088 $ 146,580 $ 148,448 $ 147,001 $ 588,117
Average Gross Daily
Charter Rate $ 28,735 $ 28,107 $ 27,914 $ 28,450 $ 28,297
First Second Third Fourth
Vessel Utilization Quarter Quarter Quarter Quarter
(No. of Days) 2012 2012 2012 2012 Total
--------- --------- --------- --------- ---------
Ownership Days 5,471 5,663 5,888 5,888 22,910
Less Off-hire Days:
Scheduled Off-hire
Days (49) (45) (58) (57) (209)
Other Off-hire Days (254) (266) (376) (508) (1,404)
--------- --------- --------- --------- ---------
Operating Days 5,168 5,352 5,454 5,323 21,297
========= ========= ========= ========= =========
Vessel Utilization 94.5% 94.5% 92.6% 90.4% 93.0%
Operating Revenues
(in '000s of US
Dollars) $ 134,237 $ 146,657 $ 156,289 $ 151,826 $ 589,009
Average Gross Daily
Charter Rate $ 25,975 $ 27,402 $ 28,656 $ 28,523 $ 27,657
Fleet List
The following table describes in detail our fleet deployment profile as of February 10, 2014.
Vessel Size
Vessel Name (TEU) Year Built Expiration of Charter(1)
------------------------ ----------- ----------- ------------------------
Containerships
------------------------
Hyundai Ambition 13,100 2012 June 2024
Hyundai Speed 13,100 2012 June 2024
Hyundai Smart 13,100 2012 May 2024
Hyundai Tenacity 13,100 2012 March 2024
Hyundai Together 13,100 2012 February 2024
Hanjin Italy 10,100 2011 April 2023
Hanjin Germany 10,100 2011 March 2023
Hanjin Greece 10,100 2011 May 2023
CSCL Le Havre 9,580 2006 September 2018
CSCL Pusan 9,580 2006 July 2018
CMA CGM Melisande 8,530 2012 November 2023
CMA CGM Attila 8,530 2011 April 2023
CMA CGM Tancredi 8,530 2011 May 2023
CMA CGM Bianca 8,530 2011 July 2023
CMA CGM Samson 8,530 2011 September 2023
CSCL America 8,468 2004 September 2016
CSCL Europe 8,468 2004 June 2016
CMA CGM Moliere (2) 6,500 2009 August 2021
CMA CGM Musset (2) 6,500 2010 February 2022
CMA CGM Nerval (2) 6,500 2010 April 2022
CMA CGM Rabelais (2) 6,500 2010 June 2022
CMA CGM Racine (2) 6,500 2010 July 2022
YM Mandate 6,500 2010 January 2028
YM Maturity 6,500 2010 April 2028
Marathonas 4,814 1991 Laid-up
Messologi 4,814 1991 March 2014
Mytilini 4,814 1991 March 2014
Commodore (3) 4,651 1992 March 2014
Duka 4,651 1992 Laid-up
Federal (4) 4,651 1994 March 2014
SNL Colombo 4,300 2004 March 2019
YM Singapore 4,300 2004 October 2019
YM Seattle 4,253 2007 July 2019
YM Vancouver 4,253 2007 September 2019
Derby D 4,253 2004 March 2014
Deva 4,253 2004 November 2014
ZIM Rio Grande 4,253 2008 May 2020
ZIM Sao Paolo 4,253 2008 August 2020
OOCL Istanbul (5) 4,253 2008 September 2020
ZIM Monaco 4,253 2009 November 2020
OOCL Novorossiysk (6) 4,253 2009 February 2021
ZIM Luanda 4,253 2009 May 2021
Dimitris C 3,430 2001 November 2014
Hanjin Constantza 3,400 2011 February 2021
Hanjin Algeciras 3,400 2011 November 2020
Hanjin Buenos Aires 3,400 2010 March 2020
Hanjin Santos 3,400 2010 May 2020
Hanjin Versailles 3,400 2010 August 2020
Niledutch Zebra 2,602 2001 June 2014
Amalia C 2,452 1998 June 2014
Danae C 2,524 2001 March 2014
Hyundai Advance 2,200 1997 June 2017
Hyundai Future 2,200 1997 August 2017
Hyundai Sprinter 2,200 1997 August 2017
Hyundai Stride 2,200 1997 July 2017
Hyundai Progress 2,200 1998 December 2017
Hyundai Bridge 2,200 1998 January 2018
Hyundai Highway 2,200 1998 January 2018
Hyundai Vladivostok 2,200 1997 May 2017
(1) Earliest date charters could expire. Some charters include options to
extend their terms.
(2) The charters with respect to the CMA CGM Moliere, the CMACGMMusset, the
CMA CGM Nerval, the CMACGMRabelais and the CMACGMRacine include an
option for the charterer, CMA-CGM, to purchase the vessels eight years
after the commencement of the respective charters, which will fall in
September 2017, March 2018, May 2018, July 2018 and August 2018,
respectively, each for $78.0 million.
(3) On February 6, 2013, the Hyundai Commodore was renamed to Commodore at
the request of the charterer of this vessel.
(4) On April 6, 2013, the Hyundai Federal was renamed to Federal at the
request of the charterer of this vessel.
(5) On September 30, 2013, the Zim Kingston was renamed to OOCL Istanbul at
the request of the charterer of this vessel.
(6) On October 28, 2013, the Zim Dalian was renamed to OOCL Novorossiysk at
the request of the charterer of this vessel.
DANAOS CORPORATION
Condensed Statements of Income - Unaudited
(Expressed in thousands of United States dollars, except per share amounts)
Three months Three months Twelve Twelve
ended ended months ended months ended
December 31, December 31, December 31, December 31,
------------ ------------ ------------ ------------
2013 2012 2013 2012
------------ ------------ ------------ ------------
OPERATING REVENUES $ 147,001 $ 151,826 $ 588,117 $ 589,009
OPERATING EXPENSES
Vessel operating
expenses (30,452) (30,525) (122,074) (123,356)
Depreciation &
amortization (35,591) (40,396) (142,896) (150,008)
Impairment loss (19,004) (129,630) (19,004) (129,630)
General &
administrative (4,861) (5,202) (19,458) (20,379)
(Loss)/gain on sale
of vessels (605) -- (449) 830
Other operating
expenses (2,783) (3,543) (11,770) (13,503)
------------ ------------ ------------ ------------
Income From
Operations 53,705 (57,470) 272,466 152,963
------------ ------------ ------------ ------------
OTHER
EARNINGS/(EXPENSES)
Interest income 638 462 2,210 1,642
Interest expense (22,123) (23,288) (91,185) (87,340)
Other finance cost,
net (4,970) (5,114) (20,120) (18,107)
Other
income/(expenses),
net 44 48 302 811
Realized
(loss)/gain on
derivatives (36,690) (38,709) (148,271) (154,434)
Unrealized
gain/(loss) on
derivatives 5,160 7,593 22,121 (739)
------------ ------------ ------------ ------------
Total Other
Income/(Expenses),
net (57,941) (59,008) (234,943) (258,167)
------------ ------------ ------------ ------------
Net (Loss)/Income $ (4,236) $ (116,478) $ 37,523 $ (105,204)
============ ============ ============ ============
EARNINGS PER SHARE
Basic & diluted net
(loss)/income per
share $ (0.04) $ (1.06) $ 0.34 $ (0.96)
============ ============ ============ ============
Basic & diluted
weighted average
number of common
shares (in thousands
of shares) 109,657 109,622 109,654 109,613
Non-GAAP Measures*
Reconciliation of Net Income to Adjusted Net Income - Unaudited
Three months Three months Twelve Twelve
ended ended months ended months ended
December 31, December 31, December 31, December 31,
------------ ------------ ------------ ------------
2013 2012 2013 2012
------------ ------------ ------------ ------------
Net (loss)/income $ (4,236) $ (116,478) $ 37,523 $ (105,204)
Unrealized
(gain)/loss on
derivatives (5,160) (7,593) (22,121) 739
Realized loss on
over-hedging portion
of derivatives -- 1,362 -- 19,042
Amortization of
financing fees &
finance fees accrued 4,753 4,778 19,194 17,076
Impairment loss 19,004 129,630 19,004 129,630
Loss/(Gain) on sale
of vessels 605 -- 449 (830)
------------ ------------ ------------ ------------
Adjusted Net Income $ 14,966 $ 11,699 $ 54,049 $ 60,453
============ ============ ============ ============
Adjusted Earnings Per
Share $ 0.14 $ 0.11 $ 0.49 $ 0.55
============ ============ ============ ============
Weighted average
number of shares 109,657 109,622 109,654 109,613
* The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures used in managing the business may provide users of this financial information additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain items that impact the overall comparability. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. See the Table above for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three and twelve months ended December 31, 2013 and 2012. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP.
DANAOS CORPORATION
Condensed Balance Sheets - Unaudited
(Expressed in thousands of United States dollars)
As of As of
December 31, December 31,
-------------- --------------
2013 2012
-------------- --------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 68,153 $ 55,628
Restricted cash 14,717 2,821
Accounts receivable, net 8,038 3,741
Other current assets 35,958 36,483
-------------- --------------
126,866 98,673
-------------- --------------
NON-CURRENT ASSETS
Fixed assets, net 3,842,617 3,986,138
Restricted cash, net of current portion -- 430
Deferred charges, net 67,949 88,821
Fair value of financial instruments 2,472 2,908
Other non-current assets 26,648 35,075
-------------- --------------
3,939,686 4,113,372
-------------- --------------
TOTAL ASSETS $ 4,066,552 $ 4,212,045
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Long-term debt, current portion $ 146,462 $ 125,076
Vendor Financing, current portion 57,388 57,388
Accounts payable, accrued liabilities &
other current liabilities 56,607 52,688
Fair value of financial instruments,
current portion 109,431 130,100
-------------- --------------
369,888 365,252
-------------- --------------
LONG-TERM LIABILITIES
Long-term debt, net of current portion 2,965,641 3,097,472
Vendor financing, net of current portion 64,367 121,754
Fair value of financial instruments, net
of current portion 59,077 176,948
Other long-term liabilities 9,103 10,315
-------------- --------------
3,098,188 3,406,489
-------------- --------------
STOCKHOLDERS' EQUITY
Common stock 1,097 1,096
Additional paid-in capital 546,097 546,023
Accumulated other comprehensive loss (232,697) (353,271)
Retained earnings 283,979 246,456
-------------- --------------
598,476 440,304
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,066,552 $ 4,212,045
============== ==============
DANAOS CORPORATION
Condensed Statements of Cash Flows - (Unaudited)
(Expressed in thousands of United States dollars)
Three months Three months Twelve Twelve
ended ended months ended months ended
December 31, December 31, December 31, December 31,
------------ ------------ ------------ ------------
2013 2012 2013 2012
------------ ------------ ------------ ------------
Operating Activities:
Net (loss)/income $ (4,236) $ (116,478) $ 37,523 $ (105,204)
Adjustments to
reconcile net
(loss)/income to
net cash provided
by operating
activities:
Depreciation 34,615 38,514 137,414 143,938
Impairment loss 19,004 129,630 19,004 129,630
Amortization of
deferred
drydocking &
special survey
costs, finance
cost and other
finance fees
accrued 5,729 6,660 24,676 23,146
Stock based
compensation 75 100 75 139
Payments for
drydocking/special
survey (14) (2,968) (283) (9,308)
Amortization of
deferred realized
losses on cash
flow interest rate
swaps 1,013 1,013 4,017 3,524
Realized loss on
cash flow interest
rate swaps
deferred in Other
Comprehensive Loss -- -- -- (7,035)
Unrealized
(gain)/loss on
derivatives (5,160) (7,593) (22,121) 739
Loss/(gain) on sale
of vessels 605 -- 449 (830)
Accounts receivable (3,601) 6,020 (4,297) 435
Other assets,
current and non-
current (4,708) (11,641) (10,052) (11,813)
Accounts payable
and accrued
liabilities (2,568) (4,665) (2,841) (2,380)
Other liabilities,
current and non-
current 1,094 (1,069) 5,461 1,577
------------ ------------ ------------ ------------
Net Cash provided by
Operating Activities 41,848 37,523 189,025 166,558
------------ ------------ ------------ ------------
Investing Activities:
Vessel additions,
vessel
acquisitions and
vessels under
construction (28,094) (46) (46,839) (375,424)
Net proceeds from
sale of vessels 18,778 -- 52,926 5,635
------------ ------------ ------------ ------------
Net Cash (used
in)/provided by
Investing Activities (9,316) (46) 6,087 (369,789)
------------ ------------ ------------ ------------
Financing Activities:
Debt draw downs -- -- -- 266,920
Debt repayment (50,483) (16,611) (171,021) (58,981)
Deferred costs -- -- (100) (100)
Decrease/(Increase)
in restricted cash 5,610 (2,813) (11,466) (342)
------------ ------------ ------------ ------------
Net Cash (used in)/
provided by
Financing Activities (44,873) (19,424) (182,587) 207,497
------------ ------------ ------------ ------------
Net
(Decrease)/increase
in cash and cash
equivalents (12,341) 18,053 12,525 4,266
Cash and cash
equivalents,
beginning of period 80,494 37,575 55,628 51,362
------------ ------------ ------------ ------------
Cash and cash
equivalents, end of
period $ 68,153 $ 55,628 $ 68,153 $ 55,628
============ ============ ============ ============
Reconciliation of Net Income to Adjusted EBITDA
(Expressed in thousands of United States dollars)
Three months Three months Twelve Twelve
ended ended months ended months ended
December 31, December 31, December 31, December 31,
------------ ------------ ------------ ------------
2013 2012 2013 2012
------------ ------------ ------------ ------------
Net (loss)/income $ (4,236) $ (116,478) $ 37,523 $ (105,204)
Depreciation 34,615 38,514 137,414 143,938
Amortization of
deferred drydocking
& special survey
costs 976 1,882 5,482 6,070
Amortization of
deferred finance
costs and other
finance fees accrued 4,753 4,778 19,194 17,076
Amortization of
deferred realized
losses on interest
rate swaps 1,013 1,013 4,017 3,524
Interest income (638) (462) (2,210) (1,642)
Interest expense 22,123 23,288 91,185 87,340
Impairment loss 19,004 129,630 19,004 129,630
Loss/(gain) on sale
of vessels 605 -- 449 (830)
Stock based
compensation 75 100 75 139
Realized loss on
derivatives 35,677 37,696 144,254 150,910
Unrealized
(gain)/loss on
derivatives (5,160) (7,593) (22,121) 739
------------ ------------ ------------ ------------
Adjusted EBITDA(1) $ 108,807 $ 112,368 $ 434,266 $ 431,690
============ ============ ============ ============
(1) Adjusted EBITDA represents net income before interest income and
expense, depreciation, amortization of deferred drydocking & special
survey costs and deferred finance costs, unrealized (gain)/loss on
derivatives, realized gain/(loss) on derivatives, stock based
compensation, impairment loss and gain/(loss) on sale of vessels.
However, Adjusted EBITDA is not a recognized measurement under U.S.
generally accepted accounting principles, or "GAAP." We believe that
the presentation of Adjusted EBITDA is useful to investors because it
is frequently used by securities analysts, investors and other
interested parties in the evaluation of companies in our industry. We
also believe that Adjusted EBITDA is useful in evaluating our ability
to service additional debt and make capital expenditures. In addition,
we believe that Adjusted EBITDA is useful in evaluating our operating
performance and liquidity position compared to that of other companies
in our industry because the calculation of Adjusted EBITDA generally
eliminates the effects of financings, income taxes and the accounting
effects of capital expenditures and acquisitions, items which may vary
for different companies for reasons unrelated to overall operating
performance and liquidity. In evaluating Adjusted EBITDA, you should be
aware that in the future we may incur expenses that are the same as or
similar to some of the adjustments in this presentation. Our
presentation of Adjusted EBITDA should not be construed as an inference
that our future results will be unaffected by unusual or non-recurring
items.
Note: Items to consider for comparability include gains and charges.
Gains positively impacting net income are reflected as deductions to
net income. Charges negatively impacting net income are reflected as
increases to net income.
-----------------------------------------------------------------------
The Company reports its financial results in accordance with U.S.
generally accepted accounting principles (GAAP). However, management
believes that certain non-GAAP financial measures used in managing the
business may provide users of these financial information additional
meaningful comparisons between current results and results in prior
operating periods. Management believes that these non-GAAP financial
measures can provide additional meaningful reflection of underlying
trends of the business because they provide a comparison of historical
information that excludes certain items that impact the overall
comparability. Management also uses these non-GAAP financial measures
in making financial, operating and planning decisions and in evaluating
the Company's performance. See the Tables above for supplemental
financial data and corresponding reconciliations to GAAP financial
measures for the three and twelve months ended December 31, 2013 and
2012. Non-GAAP financial measures should be viewed in addition to, and
not as an alternative for, the Company's reported results prepared in
accordance with GAAP.
-----------------------------------------------------------------------
For further information please contact:
Company Contact:
Evangelos Chatzis
Chief Financial Officer
Danaos Corporation
Athens, Greece
Tel.: +30 210 419 6480
E-Mail: cfo@danaos.com
Iraklis Prokopakis
Senior Vice President and Chief Operating Officer
Danaos Corporation
Athens, Greece
Tel.: +30 210 419 6400
E-Mail: coo@danaos.com
Investor Relations and Financial Media
Nicolas Bornozis
President
Capital Link, Inc.
New York
Tel. 212-661-7566
E-Mail: danaos@capitallink.com
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