Danaos Corporation · NYSE:DAC
Danaos — Investor Presentation (August 2023)
44 slides from Danaos's investor presentation, August 2023
Slide 1: Investor Presentation August 2023
Investor Presentation August 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 $2.5
Slide 5: Danaos by the Numbers
Danaos by the Numbers $2.5bn $293mn Cash Contracted revenue through 2028(1) Cash and Cash Equivalents as of June 30, 2023 0.2x $360mn Net Debt / LTM Q2 2023 Adjusted EBITDA(2) Undrawn Credit Commitment as of June 30, 2023 $746mn ~$1.5bn LTM Q2 2023 Adjusted EBITDA Enterprise value(3) (1) Cash Contra
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 550.0 99% 500.0 $1,000 100% $85 86% TEU in thousand 74.9 $
Slide 7: Second Quarter and Six Months 2023 Highlights
Second Quarter and Six Months 2023 Highlights Summary of Results USDm Operating Revenue Adjusted EBITDA 2022 2023 2022 2023 $600.0 $600.0 $461.6 ZIM Dividend, $480.8 $485.1 $400.0 net $400.0 $356.4 $337.7 $192.1 $200.0 $250.9 $241.5 $200.0 $178.2 $177.3 $0.0 $0.0 Three Months Ended June 30 Six Month
Slide 8: Substantial Fleet Employment and Charter Coverage
Substantial Fleet Employment and Charter Coverage(1) Current charter Next Charter Charter Charter 2023 2024 2025 2026 2027 2028 Vessel TEU Age(2) Charterer Rate Expiry Rate Expiry Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 Q4 2026 Q1 2027
Slide 9: Substantial Fleet Employment and Charter Coverage
Substantial Fleet Employment and Charter Coverage(1) Current charter Next Charter Charter Charter 2023 2024 2025 2026 2027 2028 Vessel TEU Age(2) Charterer Rate Expiry Rate Expiry Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 Q4 2026 Q1 2027
Slide 10: Substantial Fleet Employment and Charter Coverage
Substantial Fleet Employment and Charter Coverage(1) Current charter Next Charter Charter Charter 2023 2024 2025 2026 2027 2028 Vessel TEU Age(2) Charterer Rate Expiry Rate Expiry Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 Q4 2026 Q1 2027
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 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 14: A Diverse & High-Quality Fleet
A Diverse & High-Quality Fleet Fleet Overview(1) 10x 5x NBs 6,000 – 8,200 TEU 13,100 TEU Remaining Charter Term : 3 years Average Age: 11.2 years 10x Remaining Charter Term: 3.3 years 2,200 – 2,600 TEU Average Age: 24.9 years Remaining Charter Term: 1.5 years 10% 11% 5x 5% 9,600 - 10,100 TEU 10% Ave
Slide 15: 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 18% 20% $2.5 billion through to 2028(1) 4% 4% Average charter duration of 3.3 years 5% 18% (weighted by aggregate contracted 5% charter hire) (1) 6% 8% 13% 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 Revenues Net Income and Adjusted Net Income USDm USDm $1,200 $993 $998 $1,000 $1,200 $800 $1,053 $690 $1,000 $600 $452 $459 $447 $462 $400 $800 $200 $711 $0 $607 2017 2018 2019 2020 2021 2022 LTM 2Q 23 $600 $559 $513 Adjusted EBITDA USDm $400 $362 $1,000 $851 $200 $15
Slide 23: 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 $650 $653 $600 6.0x 5.1x 4.6x 4.5x $382 $360 $400 4.0x 2.5x $200 2.0x $268 $293 0.3x $139 $129 0.2x $67 $77 $66 $0 0.0x 2017 201
Slide 24: Strong Free Cash Flow Visibility & Great Conversion to OCF
Strong Free Cash Flow Visibility & Great Conversion to OCF Illustrative Walk to LTM Q2 2023 Free Cash Flow(1) USDm Drivers of FCF Uses of FCF Higher re-chartering Early repayment of debt and leases LTM Q2 2023 Dividend income Capex and Investments FCF excludes CapEx and Dividends one-time
Slide 25: Focused on Maintaining Conservative Capital Structure
Focused on Maintaining Conservative Capital Structure Net Debt and LTM Q2 2023 Adjusted EBITDA Multiple(1) USDm A robust deleveraging profile… • Early repayment of $972.2 million of debt and leaseback obligations since 2022 Decrease in Net Debt by • leading to 7.1x reduction in net leverage since en
Slide 26: C. Container Vessel Demand & Supply Side Dynamics
C. Container Vessel Demand & Supply Side Dynamics
Slide 27: Container Trade: Overall Slow Growth, but Recent Signs of Improvement
Container Trade: Overall Slow Growth, but Recent Signs of Improvement 215 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% 1.6% 200 10.0% 175 7.5% 2023(F) Trade yoy Growth 150 5.0% 125 2.5% 227 Mn Teu 100 0.0% 75 -2.5% 2024(F)
Slide 28: Demand: US Import Volumes Weak, Consumer Spending Rebalances
Demand: US Import Volumes Weak, Consumer Spending Rebalances - 17% US Containerised Imports from Far East, 2018-Q2 23 US Inflation-Adjusted Consumer Spending by Type US Far East TEU Imports, Q2 23 vs Q2 22 Mn TEU Index, 100 = Jan-18 + 8% 2.0 180 US Far East TEU Imports, 1.8 160 Q2 23 vs Q2 2019 1.6
Slide 29: 1-Year Time Charter Rates Stabilise, Remain Above Historical Averages
1-Year Time Charter Rates Stabilise, Remain Above Historical Averages 83% 1-Year Timecharter Market Rates, January 2017 – June 2023 8,500 TEU Charter Rate % Ch: $k/Day Jun-23 vs. Avg 2010-19 200 180 95% 160 140 6,500 TEU Charter Rate % Ch: Jun-23 vs. Avg 2010-19 120 100 80 145% 60 4,300 TEU Charter
Slide 30: Orderbook Stable at 30% of Fleet
Orderbook Stable at 30% of Fleet, Continued Interest in 7-8k TEU Vessels 29.0% Containership Orderbook, End of June 2023 Age Profile of Fleet: Smaller Vessel Fleet Ageing Industry Orderbook-to-Fleet Ratio, End-June 23 % Share Mn TEU 6.0 100% 13.7% 5.0 80% 4.0 Orderbook-to-Fleet Ratio: 60% Sub-12,000
Slide 31: Supply: For Smaller Segments, Orderbooks Smaller Than 20+ Year Old Fleets
Supply : For Smaller Segments, Orderbooks Smaller Than 20+ Year Old Fleets 593 k TEU Containership Deliveries vs. Scrapping, 2014-23 20+ Year-Old Fleets vs. Segment Orderbooks Containership Deliveries, Q2 23 k TEU k TEU 30+ Yr Fleet 25-29 Yr Fleet % 20-24 Yr Fleet OB vs 20+ Yr Fleet (RH Axis) 750 12
Slide 32: Decarbonization: Orderbook Share of Alternative Fuels Increases
Decarbonization: Orderbook Share of Alternative Fuels Increases Significant slowdown in New Containership Orders by Propulsion Type, Q1 20-Q2 23 orders for 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 V
Slide 33: Idle Capacity: Fall in Idling in Q2 23
Idle Capacity: Fall in Idling in Q2 23, Idle Feet Almost Entirely Liner-Owned The volume of Idle Containership Capacity: Liner Company Owned vs Tonnage Provider Owned idle capacity remains at historical lows Mn TEU 3.0 90% 1.1% 2.5 75% 2016 Idle Fleet at End-Jun 23 2.0 60% vs. Peak of 12% in Jun 20
Slide 34: 2,200-13,200 TEU Fleet: Workhorses of Long-Distance Container Trades
2,200-13,200 TEU Fleet: Workhorses of Long-Distance Container Trades 16.1% 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 63% of long-haul container trade volumes 80% Transatlan
Slide 35: 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-June 2023 consolidation between liner operators Mn TEU Orderbook Consolidation between liner 8.0 Fleet 1 companies provides more stable 7.0 set of counterparties 9 6.0 Global
Slide 36: Signs That Spot Rates Have Troughed, Average Contract Rates Remain Healthy
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 - 2% West Coast trade and North-South routes reportedly increasing over the course of July 2023. Overal
Slide 37: Environmental Regulations: Sailing Speeds Fell Sharply in H2 22
Environmental Regulations: Sailing Speeds Fell Sharply in H2 22 CII: Estimated 2022 Performance vs. 2023 40% Benchmarks Containership Average Sailing Speeds Estimated Share of D-E CII Grades, Total Fleet 2022 % A-Grade B-Grade C-Grade D-Grade E-Grade Index, 100=Average 2013-19 100% 110 8+ k TEU 3-8
Slide 38: D. Appendix
D. Appendix <i a EI Fa
Slide 39: Adjusted Net Income
Adjusted Net Income Reconciliation of Net Income to Adjusted Net Income USD thousands 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 2023 2022 2023 2022 2023 2022 2022 2021 2020 2019 2018 2
Slide 40: Adjusted EBITDA
Adjusted EBITDA Reconciliation of Net Income to EBITDA and Adjusted EBITDA USD thousands 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 2023 2022 2023 2022 2023 2022 2022 2021 2020 2
Slide 41: 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 Six Months Ended June 30, Ended June 30, Ended June 30, Year Ended December 31, Reconciliation of Free Cash Flow 2023 2022 2023 2022 2023 2022 202
Slide 42: Financial Debt Maturity Profile
Financial Debt Maturity Profile Well-balanced repayment profile(1) USDm Financial debt maturity profile as of June 30, 2023 Credit position $500.0 • CFR rating : BB+ (Stable) 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 43: Stock Performance – Danaos vs. Peers
Stock Performance – Danaos vs. Peers Since July 1, 2020 3000% 1956% 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 Jul 2023 Danaos Costamare GSL Source: NASDAQ 37 (1) Stockholder
Slide 44: Thank You
Thank You