Danaos Corporation · NYSE:DAC
Danaos — Investor Presentation (May 2021)
41 slides from Danaos's investor presentation, May 2021
Slide 1: Investor Presentation May 2021
Investor Presentation May 2021 Strictly Private and Confidential
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 Strong Container Pioneers in Vessel Demand & Digitalisation & Supply Side Champion of ESG Dynamics Robust Capital Principles Structure & Conse
Slide 4: Key Business Highlights
Key Business Highlights One of the largest publicly-listed owners of modern containerships with 40+ 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 $1.
Slide 5: Danaos by the Numbers
Danaos by the Numbers $1.2bn $90.9 Contracted revenue through 2028 (1) Net Asset Value per share (2) 4.0x ~$2.7bn Net Debt / LTM Adjusted EBITDA(3) Enterprise value(4) $343mn ~3.3x LTM Adjusted EBITDA Reduction in leverage since 2017 (1) Contracted Revenue as of March 31, 2021 on the basis of conclu
Slide 6: First Quarter 2021 Earnings
First Quarter 2021 Earnings Summary of Results (thousands $, expect per share figures) Three Months ended March 31 Last Twelve Months ended March 31 $ in thousands 2021 2020 % yoy 2021 Operating Revenue $132,118 $106,196 24.4% $487,516 Adjusted EBITDA $96,282 $71,918 33.9% $342,695 Free Cash Flow $8
Slide 7: 33 vessels re-chartered over last 6 months at improved market rates
33 vessels re-chartered over last 6 months at improved market rates 1. Charterers under new charters 5 2. Minimum charter expiry date
Slide 8: Significant Contracted Revenue Upside in 2021
Significant Contracted Revenue Upside in 20211 Operating Revenues Sensitivity 2020 2021 > $122 mil revenue upside $584 mil $9 mil Significant revenue upside in 2021 of more than $122 Re-chartering million on the working assumption that the 13 revenues, assuming vessels with charters expiring in 2021
Slide 9: Net Asset Value significantly improved
Net Asset Value1 significantly improved $29 $76 $4 $3,241 $403 $53 NAV $2,676 per share2 $90.9 $1,872 ($1,369) Charter Attached Zim Equity Zim Bonds HMM Bonds Gemini Working Capital Total Value of Net Debt Net Asset Value Fleet Value participation Assets valued at NAV The charter attached fleet va
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: 40+ Year Legacy of Leadership in Container Shipping
40+ Year Legacy of Leadership in Container Shipping 1987 2006 2010 2019 Dr. John Coustas steps NYSE IPO $200mn equity $56mn public into Chief Executive role Raised $200mn raise offering 1972 2005 2018 to present Founded by Dimitris Coustas Incorporation in Marshall Refinancing Islands Market Share 1
Slide 13: A Diverse & High-Quality Fleet
A Diverse & High-Quality Fleet Fleet Overview (1) 8x 3,400 TEU Average Age: 13.2 years Average Remaining Charter Term: 1.2 years 11x 4.9% 2,200 – 2,600 TEU 10x 4.3% Average Age: 22.7 years Average Remaining Charter Term: 1.1 year 4,300 – 5,500 TEU 12.4% Average Age: 13.5 years Average Remaining Char
Slide 14: Charter Backlog to Leading Container Operators
Charter Backlog to Leading Container Operators Charter Backlog (1) (TEU-weighted remaining duration of charter backlog) Others Charter backlog of $1.2 billion through (21 years) to 2028 (1) Average charter duration of 2.9 years (16 years) (weighted by aggregate contracted charter hire) (35 years) (3
Slide 15: Strong Charter Coverage Profile
Strong Charter Coverage Profile… …with the flexibility for further upside in todays robust charter market Revenue-Weighted Charter Coverage(1) 97% Shorter charter durations limited to vessels in more liquid chartering markets 63% 36% 12% 3% 2021 2022 2023 2024 2025+ Contracted Revenue by Year (2) mn
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 2 Years Progress Advanced solutions to Code of ethics and Independent Board 15.9% decrease in the use of reduce emissions
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 once leverage targets are met could be used for fleet expansion, Prudent
Slide 22: Historical Financial Highlights
Historical Financial Highlights Revenues Adjusted EBITDA mn $ mn $ $552 $568 $498 $488 $452 $459 $447 $462 $404 $418 $351 $343 $310 $318 $311 $318 2014 2015 2016 2017 2018 2019 2020 LTM 1Q 2014 2015 2016 2017 2018 2019 2020 LTM 1Q 2021 2021 Net Leverage Adjusted Net Income mn $ 7.3x $196 7.2x 7.0x $
Slide 23: Strong Free Cash Flow Visibility & Great Conversion to OCF
Strong Free Cash Flow Visibility & Great Conversion to OCF Illustrative Walk to Last Twelve Months ended March 31, 2021 Free Cash Flow1 Drivers of LTM 1Q 2021 FCF Uses of FCF LTM 1Q 2021 Lower interest rates Return of capital to shareholders FCF excludes Contractual charter escalations Vesse
Slide 24: Focused on Maintaining Conservative Capital Structure
Focused on Maintaining Conservative Capital Structure Net Adjusted Debt and Adjusted EBITDA Multiple1 A robust deleveraging profile… Successfully concluded a $2.2bn debt refinancing in 3,500 2018 with support from key lender group leading to a 7.3x 7.0x reduction in net leverage of 3.3x since 2017
Slide 25: C. Strong Container Vessel Demand & Supply Side Dynamics
C. Strong Container Vessel Demand & Supply Side Dynamics
Slide 26: Container Trade: Expectations of a Swift Recovery in 2021
Container Trade: Expectations of a Swift Recovery in 2021 World Container Trade & GDP, 2000 – 2022F 204 Mn Teu 2020(E) World Container Trade -1.9% 2020(E) Trade yoy Growth 218 Mn Teu 2021(F) World Container Trade 6.9% 2021(F) Trade yoy Growth Source: MSI, May 2021. Note (1): Estimates (E) for 2020 a
Slide 27: Remarkable Timecharter Market Rebound Continued into Q1
Remarkable Timecharter Market Rebound Continued into Q1 21 1-Year Timecharter Market Rates, January 2017 – March 2021 228% 8,500 TEU Charter Rate % $k/Day Ch: Mar-21 vs. Q2 20 Low 60 50 274% 40 6,500 TEU Charter Rate % 30 Ch: Mar-21 vs. Q2 20 Low 20 10 383% 0 Jan-17 Jul-17 Sep-17 Jan-18 Jul-18 Sep-1
Slide 28: Supply: Limited Orderbook to Deliver Low Future Fleet Growth
Supply: Limited Orderbook to Deliver Low Future Fleet Growth Containership Orderbook, End March 2021 Age Profile of Fleet: Smaller Vessel Fleet Ageing 15.6% Industry Orderbook-to-Fleet Ratio, End-Mar 21 Recent contracting spike concentrated in 4.3% 12+ k TEU size range Orderbook-to-Fleet Ratio: Very
Slide 29: Idle Capacity: Sustained Fall in H2 Leads to Sold-Out Market
Idle Capacity: Sustained Fall in H2 20 Leads to ‘Sold-Out’ Market Rapid Fall in Idle Capacity Idle Containership Capacity: Liner Company Owned vs Tonnage Provider Owned over H2 20 as Markets Improved 2016 71% NOO Owned 1.5% Idle Fleet at End-Mar 21 vs. Peak of 12% in Jun 20 2020 30% NOO Owned 71% Sh
Slide 30: Workhorses of Long-Distance Container Trades
2,200-13,200 TEU Fleet: Workhorses of Long-Distance Container Trades 4.1% Danaos Fleet Segment Share of Long-Distance Trade Deployment Orderbook-to-Fleet Ratio in Danaos Fleet Segment Danaos fleet segments provide 85% of capacity 60% of long-haul container trade volumes 85% Share of Capacity on Key
Slide 31: Consolidated Liner Landscape Provides Stable Counterparties
Consolidated Liner Landscape Provides Stable Counterparties Liner Company Alliance Members, End-March 2021 Recent wave of consolidation Consolidation between liner between liner operators 1 companies provides more stable set of counterparties 9 Greater stability, fewer Global Liner Companies, 2021 2
Slide 32: Freight Rate Environment Remains Supportive for our Liner Clients
The Freight Rate Environment Remains Supportive for our Liner Clients Freight rates surged over late 2020 and into early 2021. This was driven by the strong rebound in containerised trade volumes in conjunction with equipment shortages, inefficiencies and bottlenecks across the containerised suppl
Slide 33: Liner Profitability has Surged, Strengthening Customers' Balance Sheets
Liner Profitability has Surged, Strengthening our Customers’ Balance Sheets All MLOs see improved Liner Company Operating Results, FY20 vs FY 19 profitability H2 20 MLOs expect further improvement in 2021 Strong spot freight markets should translate into improved annual contract rates concluded betw
Slide 34: D. Appendix
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Slide 35: Substantial Fleet Employment and Coverage
Substantial Fleet Employment and Coverage Contacted Revenue (1) Contribution denotes firm charter period denotes firm charter period at prevailing market charter rate at that time 29 (1) Age as of March 31, 2021.
Slide 36: Substantial Fleet Employment and Coverage
Substantial Fleet Employment and Coverage Contacted Revenue (1) Contribution denotes firm charter period denotes firm charter period at prevailing market charter rate at that time 30 (1) Age as of March 31, 2021.
Slide 37: Adjusted Net Income
Adjusted Net Income Reconciliation of Adjusted Net Income In thousands of U.S. Dollars LTM Three Months Ended March 31, Ended March 31, Year Ended December 31, Reconciliation of Net Income / (Loss) to Adjusted Net Income / (Loss) 2021 2021 2020 2020 2019 2018 2017 2016 2015 2014 2013 2012 in thousan
Slide 38: Adjusted EBITDA
Adjusted EBITDA Reconciliation of Net Income to EBITDA and Adjusted EBITDA In thousands of U.S. Dollars LTM Three Months Ended March 31, Ended March 31, Year Ended December 31, Reconciliation of Net Income / (Loss) to EBITDA and Adjusted EBITDA 2021 2021 2020 2020 2019 2018 2017 2016 2015 2014 2013
Slide 39: Free Cash Flow
Free Cash Flow Reconciliation of Free Cash Flow to Net Increase / (Decrease) in Cash, cash equivalents and restricted cash In thousands of U.S. Dollars LTM Three Months Year Ended Ended March 31, Ended March 31, December 31, Reconciliation of Free Cash Flow 2021 2021 2020 2020 2019 in thousands of U
Slide 40: Danaos Net Asset Value
Danaos Net Asset Value Net Asset Value Net Asset Value, is used by management, and management believes, many investors, as a reference point in assessing valuation of fleets of ships and similar assets. The data in the following table is as of March 31, 2021, unless otherwise stated within the relev
Slide 41: Thank You
Thank You