Danaos Corporation · NYSE:DAC
Danaos — Investor Presentation (November 2021)
42 slides from Danaos's investor presentation, November 2021
Slide 1: Investor Presentation November 2021
Investor Presentation November 2021
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 $2.
Slide 5: Danaos by the Numbers
Danaos by the Numbers $2.1bn Contracted revenue through 2028 (1) 3.1x ~$2.8bn Net Debt / LTM Adjusted EBITDA(2) Enterprise value(3) $433mn ~4.2x LTM Adjusted EBITDA Reduction in leverage since end 2017 (1) Contracted Revenue as of September 30, 2021 on the basis of concluded charter contracts throug
Slide 6: Summary of Contracted Revenue and Fleet
Summary of Contracted Revenue and Fleet TEU Capacity (1) Contracted Revenue and Contracted Days Coverage (2) USDm 500.0 100% $800 100% 450.0 8% 90% 436.6 $722 TEU in thousand 12% 400.0 $600 80% 61% 403.8 $554 350.0 $400 60% 360.1 300.0 $200 40% $197 250.0 $0 20% 2019 2020 Sept 30, 2021 Q4 2021 2022
Slide 7: Third Quarter 2021 Highlights
Third Quarter 2021 Highlights Summary of Results USDm Operating Revenue Adjusted EBITDA 2020 2021 2020 2021 $500.0 +39% $400.0 +49% $474.5 $400.0 $349.6 $300.0 $300.0 $342.0 +65% $200.0 $235.3 +80% $200.0 $195.9 $149.6 $100.0 $100.0 $118.9 $83.3 $0.0 $0.0 Three Months Ended September 30 Nine Months
Slide 8: Third Quarter 2021 Earnings
Third Quarter 2021 Earnings Summary of Results (thousands $, expect per share figures) Three Months Nine Months LTM Ended September 30th, Ended September 30th, Ended September 30th, 2021 2020 % yoy 2021 2020 % yoy 2021 Operating Revenue $195,915 $118,932 64.7% $474,467 $341,952 38.8% $594,109 Adjust
Slide 9: Substantial Fleet Employment and Charter Coverage
Substantial Fleet Employment and Charter Coverage Current charter Next Charter Charter Charter 2021 2022 2023 2024 2025 2026 2027 2028 Vessel TEU Age Charterer 1 Rate Expiry Rate Expiry Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2
Slide 10: Substantial Fleet Employment and Charter Coverage
Substantial Fleet Employment and Charter Coverage Current charter Next Charter Charter Charter 2021 2022 2023 2024 2025 2026 2027 2028 Vessel TEU Age Charterer 1 Rate Expiry Rate Expiry Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2
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: 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 14: A Diverse & High-Quality Fleet
A Diverse & High-Quality Fleet Fleet Overview(1) 11x 2,200 – 2,600 TEU Average Age: 23.2 years Remaining Charter Term: 3.1 years 5x 13,100 TEU Average Age: 9.4 years Remaining Charter Term: 2.6 years 12.0% 14.5% 1.8% 5x 8x 15.9% 9,600 - 10,100 TEU Average Age: 12.2 years 3,400 TEU Average Age: 13.7
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 13% $2.1 billion through 22% to 2028 (1) 5% 5% Average charter 5% duration of 3.3 years (weighted by aggregate contracted 15% 6% charter hire) 6% 6% 15% Fleet ut
Slide 16: Strong Charter Coverage Profile
Strong Charter Coverage Profile… …with the flexibility for further upside Charter Coverage based on Days (1) 100% 100% Shorter charter durations limited to vessels 90% in more liquid chartering markets 75% 61% 50% 41% 25% 6% 0% 2021 2022 2023 2024 2025+ Contracted Revenue by Year(1) USDm $800 $722 $
Slide 17: 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 18: 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 19: 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 20: 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 75.8% decrease in the use of ✓ reduce emissions
Slide 21: B. Robust Capital Structure and Conservative Financial Strategy
B. Robust Capital Structure and Conservative Financial Strategy
Slide 22: 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 23: Historical Financial Highlights
Historical Financial Highlights Revenues Net Income and Adjusted Net Income USDm USDm $800 $594 $600 $552 $568 $1,200 $498 $452 $459 $447 $462 $1,000 $400 $930 $800 $200 $600 $0 2014 2015 2016 2017 2018 2019 2020 LTM 3Q 2021 $400 $284 Adjusted EBITDA USDm $200 $159 $141 $131 $131 $149 $154 $171 $117
Slide 24: Historical Financial Highlights
Historical Financial Highlights Liquid Assets(1) USDm Net Leverage $800 8.0x 7.2x 7.3x 7.0x 6.5x $600 6.0x $509 5.1x 4.6x 4.5x $400 4.0x 3.1x $200 $139 2.0x $61 $75 $77 $70 $77 $66 $0 0.0x 2014 2015 2016 2017 2018 2019 2020 3Q 2021 2014 2015 2016 2017 2018 2019 2020 LTM 3Q 2021 Source: Company Filin
Slide 25: 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 September 30, 2021 Free Cash Flow(1) Drivers of LTM 3Q 2021 FCF Uses of FCF Improving charter market Return of capital to shareholders LTM 3Q 2021 Vessel acquisitions Vessel acquisitions
Slide 26: Focused on Maintaining Conservative Capital Structure
Focused on Maintaining Conservative Capital Structure Net Adjusted Debt and Adjusted EBITDA Multiple(1) USD 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 4.2x sin
Slide 27: C. Strong Container Vessel Demand & Supply Side Dynamics
C. Strong Container Vessel Demand & Supply Side Dynamics
Slide 28: Container Trade: Robust Growth Expected in 2021 and 2022
Container Trade: Robust Growth Expected in 2021 and 2022 221 Mn Teu World Container Trade & GDP, 2000 – 2023F Mn TEU % yoy 2021(F) World Container Trade 275 17.5% 250 15.0% 225 12.5% 8.2% 200 10.0% 175 7.5% 2021(E) Trade yoy Growth 150 5.0% 125 2.5% 230 Mn Teu 100 0.0% 75 -2.5% 2022(F) World Contain
Slide 29: Time Charter Market Reached Unprecedented Heights in Q3 2021
Time charter Market Reached Unprecedented Heights in Q3 2021 464% 1-Year Timecharter Market Rates, January 2017 – October 2021 8,500 TEU Charter Rate % Ch: Oct 21 vs. Oct 20 $k/Day 180 160 415% 140 6,500 TEU Charter Rate % Ch: 120 Oct 21 vs. Oct 20 100 80 60 506% 40 20 4,300 TEU Charter Rate % Ch: O
Slide 30: Orderbook and Age Dynamics Promise Limited Mid-Size Fleet Growth
Orderbook and Age Dynamics Promise Limited Mid-Size Fleet Growth 23.5% Containership Orderbook, End October 2021 Age Profile of Fleet: Smaller Vessel Fleet Ageing Industry Orderbook-to-Fleet Ratio, End-Oct 21 Mn TEU Mn TEU 4.5 8.6% 100% 4.0 Recent contracting 90% increase concentrated Orderbook-to-F
Slide 31: Idle Capacity: Strong Markets Mean All Available Tonnage Is Employed
Idle Capacity: Strong Markets Mean All Available Tonnage Is Employed The volume of Idle Containership Capacity: Liner Company Owned vs Tonnage Provider Owned idle capacity remains at historical lows Mn TEU % Share 3.0 80% 70% 2.5 0.6% 2016 71% NOO(1) Jan-Sep 2021 15% NOO (1) 60% Idle Fleet at End-Oc
Slide 32: Workhorses of Long-Distance Container Trades
2,200-13,200 TEU Fleet: Workhorses of Long-Distance Container Trades 9.9% Danaos Fleet Segment Share of Long-Distance Trade Deployment Orderbook-to-Fleet Ratio in Danaos Fleet Segment Danaos fleet segments provide 85% of capacity Transpacific* 60% of long-haul container trade volumes Transatlantic F
Slide 33: Consolidated Liner Landscape Provides Stable Counterparties
Consolidated Liner Landscape Provides Stable Counterparties Recent wave of Liner Company Alliance Members, End October 2021 consolidation between liner operators Consolidation between liner 1 companies provides more stable set of counterparties 6.0 Mn TEU 9 5.0 Orderbook Global Liner Companies, 2021
Slide 34: The Freight Rate Environment Remains Supportive for our Liner Clients
The Freight Rate Environment Remains Supportive for our Liner Clients ▪ Freight rates on mainlane and north-south trades continued to climb throughout Q3 21. A combination of healthy peak season Freight rates continued demand volumes, extensive port congestion, equipment imbalances and shippers faci
Slide 35: Port Congestion: Over 5% of Containership Fleet Tied Up in Ports
Port Congestion: Over 5% of Containership Fleet Tied Up in Ports Port Congestion Container Port Congestion: Containership Idle at Port Anchorages, Relative to 2016-19 Average Level Reduces Mn TEU Available Fleet 1.2 Other Latin America North America 1.0 Europe SE Asia NE Asia 0.8 China 9.0% 0.6 Prop
Slide 36: D. Appendix
D. Appendix <i a EI Fa
Slide 37: Adjusted Net Income
Adjusted Net Income Reconciliation of Adjusted Net Income USD thousands LTM Three Months Nine Months Ended September 30, Ended September 30, Ended September 30, Year Ended December 31, Reconciliation of Net Income / (Loss) to Adjusted Net Income / (Loss) 2021 2021 2020 2021 2020 2020 2019 2018 2017
Slide 38: Adjusted EBITDA
Adjusted EBITDA Reconciliation of Net Income to EBITDA and Adjusted EBITDA USD thousands LTM Three Months Nine Months Ended September 30, Ended September 30, Ended September 30, Year Ended December 31, Reconciliation of Net Income / (Loss) to EBITDA and Adjusted EBITDA 2021 2021 2020 2021 2020 2020
Slide 39: 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 Nine Months Year Ended Ended September 30, Ended September 30, Ended September 30, December 31, Reconciliation of Free Cash Flow 2021 2021 2020 20
Slide 40: Financial Debt Maturity Profile
Financial Debt Maturity Profile Well-balanced repayment profile1, 2 USDm Financial debt maturity profile as of September 30, 2021 Credit position $600.0 $567.7 $5.4 • BB- (Positive) and B1 (Positive), upgrade from B+ and B2, $500.0 credit ratings from S&P and Moody’s, respectively $400.0 • Liquid fi
Slide 41: Stock Performance – Danaos vs. Peers
Stock Performance – Danaos vs. Peers Since July 1, 2020 2400% 1868% 2200% 2000% 1800% 1600% Stockholders' Return 1 1400% 1200% 1000% 800% 600% 400% 200% 0% -200% Jul 2020 Oct 2020 Jan 2021 Apr 2021 Jul 2021 Oct 2021 Danaos Atlas Costamare GSL Source: NASDAQ 35 (1) Stockholders’ return is a rate of r
Slide 42: Thank You
Thank You