Danaos Corporation Reports Third Quarter and Nine Months Ended September 30, 2023

Danaos Corporation (“Danaos”) (NYSE: DAC), one of the world’s largest independent owners of containerships, today reported unaudited results for the period ended September 30, 2023.

Highlights for the Third Quarter and Nine Months Ended September 30, 2023:

Adjusted net income1 of $143.0 million, or $7.26 per share, for the three months ended September 30, 2023 compared to $176.9 million, or $8.71 per share, for the three months ended September 30, 2022, a decrease of $33.9 million or $1.45 per share. Adjusted net income for the three months ended September 30, 2022 had included a non-recurring $23.2 million dividend from ZIM Integrated Shipping Services Ltd. (“ZIM”) that accounted for $1.14 per share.
Adjusted net income of $431.6 million, or $21.54 per share, for the nine months ended September 30, 2023 compared to $569.3 million, or $27.67 per share, for the nine months ended September 30, 2022, a decrease of $137.7 million or $6.13 per share. Adjusted net income for the nine months ended September 30, 2022 had included a non-recurring $147.1 million dividend from ZIM that accounted for $7.15 per share.
Net income of $133.2 million, or $6.76 per share, for the three months ended September 30, 2023 compared to $66.8 million, or $3.29 per share, for the three months ended September 30, 2022, an increase of $66.4 million, or $3.47 per share. Net income of $426.4 million, or $21.28 per share, for the nine months ended September 30, 2023 compared to $406.5 million, or $19.75 per share, for the nine months ended September 30, 2022, an increase of $19.9 million, or $1.53 per share.
Adjusted EBITDA1 of $178.0 million for the three months ended September 30, 2023 compared to $213.1 million for the three months ended September 30, 2022, a decrease of $35.1 million. Adjusted EBITDA for the three months ended September 30, 2022 had included a non-recurring $23.2 million dividend from ZIM.
Adjusted EBITDA of $534.4 million for the nine months ended September 30, 2023 compared to $674.7 million for the nine months ended September 30, 2022, a decrease of $140.3 million. Adjusted EBITDA for the nine months ended September 30, 2022 had included a non-recurring $147.1 million dividend from ZIM.
Cash and cash equivalents were $306.3 million as of September 30, 2023.
As of September 30, 2023, Net Debt2 was $111.1 million, and Net Debt / LTM Adjusted EBITDA was 0.16x. Currently, 44 of our container vessels and 4 recently acquired drybulk vessels are debt-free.
Total liquidity was $655.0 million as of September 30, 2023, including undrawn available commitments under our Revolving Credit Facility.
As of the date of this release, Danaos has repurchased a total of 1,570,195 shares of its common stock in the open market for $97.4 million, under its share repurchase program of up to $100 million announced in June 2022.
Additional share repurchase program of up to $100 million was approved by our Board on November 10, 2023.
In September 2023, we reached an agreement to acquire another 2 Capesize bulk carriers built in 2009 that aggregate 351,765 DWT for a total of $36.6 million. These vessels are expected to be delivered to us between November and December 2023. This will bring the total number of Capesize bulk carriers in our fleet to 7 with an aggregate capacity of 1,231,071 DWT.
We have 10 container vessels under construction with an aggregate capacity of 74,914 TEU, with expected deliveries of seven vessels in 2024, one vessel in 2025 and two vessels in 2026. All our newbuildings are designed with the latest eco characteristics, will be methanol fuel ready, fitted with Alternative Maritime Power Units and will all be built in accordance with the latest requirements of the International Maritime Organization in relation to Tier III emission standards and Energy Efficiency Design Index (EEDI) Phase III.
During the last three months we added approximately $178 million to our contracted revenue backlog through the arrangement of new charters for six container vessels in our fleet. The new fixtures notably include additional contracted revenues of $103 million for two 13,100 TEU vessels and $68 million for two 10,100 TEU vessels that were forward fixed on new 3-year charters.
As a result, total contracted cash operating revenues, on the basis of concluded charter contracts through the date of this release, had increased to $2.5 billion as of September 30, 2023. The remaining average contracted charter duration was 3.2 years, weighted by aggregate contracted charter hire.
Contracted operating days charter coverage for our containership fleet is currently 100.0% for 2023 and 90.3% for 2024.
Danaos has declared a dividend of $0.80 per share of common stock for the third quarter of 2023, which is payable on December 6, 2023, to stockholders of record as of November 27, 2023.

Three and Nine Months Ended September 30, 2023

Financial Summary - Unaudited

(Expressed in thousands of United States dollars, except per share amounts)

Three months ended

Nine months ended

September 30,

2023

2022

2023

2022

Operating revenues

$239,215

$260,037

$724,268

$740,861

Net income

$133,156

$66,800

$426,378

$406,489

Adjusted net income1

$142,963

$176,922

$431,623

$569,329

Earnings per share, diluted

$6.76

$3.29

$21.28

$19.75

Adjusted earnings per share, diluted1

$7.26

$8.71

$21.54

$27.67

Diluted weighted average number of shares (in thousands)

19,693

20,318

20,039

20,579

Adjusted EBITDA1

$178,027

$213,106

$534,393

$674,738

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 provided below.

Net Debt is defined as total debt gross of deferred finance costs less cash and cash equivalents.

Danaos’ CEO Dr. John Coustas commented:

“The macroeconomic environment continued to deteriorate during the third quarter of 2023, and container transport stagnated in most areas due to continued inventory destocking and weak retail sales. As a result, the profitability of liner companies has dramatically decreased, and the major operators have announced sweeping cost cutting measures. The chartering market continued to remain under pressure, particularly in the market for vessels smaller than 3,000 TEU, where charter rates returned to pre-pandemic levels.

In larger vessel segments, charter rates have remained relatively stable given the scarcity of open tonnage for next year, a factor that has enabled us to forward fix all our vessels above 10,000 TEU on three year charters at profitable levels that will commence after expiry of existing charter contracts in 2024. As a result, our charter cover for 2024 has increased to 90%.

Separately, through the date of this release we have taken delivery of the first four capesize bulk carriers and we have achieved rates well ahead of our expectations. While we do not expect a sustained upwards momentum in charter rates in the near term, we will closely monitor the dry bulk market and opportunistically pursue opportunities to expand our presence in this market.

The resilience of our business model has been confirmed by the continuation of our solid results despite the significant fall in the charter market. Our strategy of delevering has also been effective and well timed as we have not been impacted by higher interest rates. Our charter backlog of $2.5 billion in contracted revenue also provides us with significant cash flow visibility and allows us to maintain flexibility in our capital allocation policy.

In this regard, we decided to increase our quarterly dividend to $0.80 and also to authorize an additional $100 million in share buybacks as our initial $100 million authorization has been almost exhausted. Due to the prudent execution of our strategy, we have been able to return over $200 million to our shareholders over the last eighteen months and simultaneously grow our fleet in the container segment by placing 10 newbuilding orders and create exposure to the dry bulk segment through investments in companies and vessels.

We will strive to continue to create value for all our shareholders while ensuring the long-term prosperity of Danaos.”

Three months ended September 30, 2023 compared to the three months ended September 30, 2022

During the three months ended September 30, 2023, Danaos had an average of 68.0 container vessels compared to 71.0 container vessels during the three months ended September 30, 2022. Our containership fleet utilization for the three months ended September 30, 2023 was 97.7% compared to 97.1% for the three months ended September 30, 2022.

Our adjusted net income amounted to $143.0 million, or $7.26 per share, for the three months ended September 30, 2023 compared to $176.9 million, or $8.71 per share, for the three months ended September 30, 2022. We have adjusted our net income in the three months ended September 30, 2023 for a $9.3 million change in fair value of investments and a $0.5 million non-cash finance fees amortization. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.

The $33.9 million decrease in adjusted net income for the three months ended September 30, 2023 compared to the three months ended September 30, 2022 is primarily attributable to a $22.3 million decrease in dividends received. We also incurred a $0.5 million equity loss on investments in the three months ended September 30, 2023, a $20.8 million decrease in operating revenues and a $0.3 million increase in total operating expenses, which were partially offset by a $10.0 million decrease in net finance expenses.

On a non-adjusted basis, net income amounted to $133.2 million, or $6.76 earnings per diluted share, for the three months ended September 30, 2023 compared to net income of $66.8 million, or $3.29 earnings per diluted share, for the three months ended September 30, 2022. Our net income for the three months ended September 30, 2022 included a $84.0 million total loss on our investment in ZIM, net of withholding taxes on dividends, compared to a $8.4 million total loss on our EGLE investments for the three months ended September 30, 2023.

Operating Revenues Operating revenues decreased by 8.0%, or $20.8 million, to $239.2 million in the three months ended September 30, 2023 from $260.0 million in the three months ended September 30, 2022.

Operating revenues for the three months ended September 30, 2023 reflected:

a $9.5 million decrease in revenues in the three months ended September 30, 2023 compared to the three months ended September 30, 2022 due to decreased amortization of assumed time charters,
a $5.5 million decrease in revenues in the three months ended September 30, 2023 compared to the three months ended September 30, 2022 due to vessel disposals;
a $3.1 million decrease in revenues in the three months ended September 30, 2023 compared to the three months ended September 30, 2022 due to lower non-cash revenue recognition in accordance with US GAAP; and
a $2.7 million decrease in revenues in the three months ended September 30, 2023 compared to the three months ended September 30, 2022 mainly as a result of lower charter rates;

Vessel Operating Expenses Vessel operating expenses increased by $0.3 million to $39.5 million in the three months ended September 30, 2023 from $39.2 million in the three months ended September 30, 2022, primarily as a result of an increase in the average daily operating cost for vessels on time charter to $6,499 per vessel per day for the three months ended September 30, 2023 compared to $6,173 per vessel per day for the three months ended September 30, 2022, which was partially offset by a decrease in the average number of vessels in our fleet. The average daily operating cost increased mainly due to increased repair and maintenance expenses. Management believes that our daily operating costs remain among the most competitive in the industry.

Depreciation & Amortization Depreciation & Amortization includes Depreciation and Amortization of Deferred Drydocking and Special Survey Costs.

Depreciation Depreciation expense decreased by 5.3%, or $1.8 million, to $32.3 million in the three months ended September 30, 2023 from $34.1 million in the three months ended September 30, 2022 mainly due to our recent sale of three vessels.

Amortization of Deferred Drydocking and Special Survey Costs Amortization of deferred drydocking and special survey costs increased by $1.7 million to $4.8 million in the three months ended September 30, 2023 from $3.1 million in the three months ended September 30, 2022.

General and Administrative Expenses General and administrative expenses decreased by $0.1 million to $7.1 million in the three months ended September 30, 2023, from $7.2 million in the three months ended September 30, 2022.

Other Operating Expenses Other Operating Expenses include Voyage Expenses.

Voyage Expenses Voyage expenses decreased by $1.3 million to $9.0 million in the three months ended September 30, 2023 from $10.3 million in the three months ended September 30, 2022 primarily as a result of a decrease in the commissions and average number of vessels in our fleet.

Interest Expense and Interest Income Interest expense decreased by 73.1%, or $11.7 million, to $4.3 million in the three months ended September 30, 2023 from $16.0 million in the three months ended September 30, 2022. The decrease in interest expense is a result of:

a $5.8 million decrease in interest expense due to a decrease in our average indebtedness by $549.2 million between the two periods. Average indebtedness was $422.1 million in the three months ended September 30, 2023, compared to average indebtedness of $971.3 million in the three months ended September 30, 2022. This decrease was partially offset by an increase in our debt service cost by approximately 2.2% as a result of higher interest rates;
a $3.5 million decrease in interest expense due to an increase in capitalized interest expense on our vessels under construction in the three months ended September 30, 2023; and
a $2.4 million decrease in the amortization of deferred finance costs and debt discount.

As of September 30, 2023, outstanding debt, gross of deferred finance costs, was $417.4 million, which included $262.8 million principal amount of our Senior Notes. These balances compare to debt of $868.1 million, which included $300.0 million principal amount of our Senior Notes, and a leaseback obligation of $79.6 million, gross of deferred finance costs, as of September 30, 2022.

Interest income increased by $1.8 million to $3.1 million in the three months ended September 30, 2023 compared to $1.3 million in the three months ended September 30, 2022 mainly as a result of increased interest rates and average amount of time deposits in the three months ended September 30, 2023.

Loss on investments We recognized a $8.4 million loss on marketable securities, which consisted of the change in fair value of $9.3 million and dividends of $0.9 million in the three months ended September 30, 2023 on our shareholding interest in Eagle Bulk (“EGLE”) of 1,552,865 shares of common stock. This loss compares to a loss on investments of $80.3 million in the three months ended September 30, 2022, which consisted of the change in fair value of our shareholding interest in ZIM of $107.3 million and dividends recognized on ZIM ordinary shares of $27.0 million. In September 2022, we sold all of our remaining ordinary shares of ZIM for net proceeds of $161.3 million.

Equity loss on investments Equity loss on investments amounting to $0.5 million in the three months ended September 30, 2023 relates to our share of initial expenses of a newly established company, Carbon Termination Technologies Corporation (“CTTC”), currently engaged in the research and development of decarbonization technologies for the shipping industry.

Other finance expenses Other finance expenses increased by $1.0 million to $1.2 million in the three months ended September 30, 2023 compared to $0.2 million in the three months ended September 30, 2022 mainly due to commitment fees for our recently established revolving credit facility.

Loss on derivatives Amortization of deferred realized losses on interest rate swaps remained stable at $0.9 million in each of the three months ended September 30, 2023 and September 30, 2022.

Other income/(expenses), net Other expenses, net were $1.1 million in the three months ended September 30, 2023 compared to other income, net of $0.4 million in the three months ended September 30, 2022.

Income taxes Income taxes of $3.8 million in the three months ended September 30, 2022, related to the taxes withheld on dividend income earned on ZIM ordinary shares compared to no income tax in the three months ended September 30, 2023.

Adjusted EBITDA Adjusted EBITDA decreased by 16.5%, or $35.1 million, to $178.0 million in the three months ended September 30, 2023 from $213.1 million in the three months ended September 30, 2022. As outlined above, the decrease is primarily attributable to a $22.3 million decrease in dividends received. We also incurred a $11.3 million decrease in operating revenues, a $1.0 million increase in total operating expenses and a $0.5 million equity loss on investments in the three months ended September 30, 2023. Adjusted EBITDA for the three months ended September 30, 2023 is adjusted for a $9.3 million change in fair value of investments. Tables reconciling Net Income to Adjusted EBITDA can be found at the end of this earnings release.

Nine months ended September 30, 2023 compared to the nine months ended September 30, 2022

During the nine months ended September 30, 2023, Danaos had an average of 68.1 container vessels compared to 71.0 container vessels during the nine months ended September 30, 2022. Our containership fleet utilization for the nine months ended September 30, 2023 was 97.7% compared to 98.1% for the nine months ended September 30, 2022.

Our adjusted net income amounted to $431.6 million, or $21.54 per share, for the nine months ended September 30, 2023 compared to $569.3 million, or $27.67 per share, for the nine months ended September 30, 2022. We have adjusted our net income in the nine months ended September 30, 2023 for a $2.9 million change in fair value of investments, a $2.3 million loss on debt extinguishment, a $1.6 million gain on sale of vessel and a $1.7 million non-cash fees amortization. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.

The $137.7 million decrease in adjusted net income for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 is primarily attributable to a $146.2 million decrease in dividends received. We also incurred a $3.9 million equity loss on investments in the nine months ended September 30, 2023, a $16.6 million decrease in operating revenues and a $1.3 million increase in total operating expenses, which were partially offset by a $30.3 million decrease in net finance expenses.

On a non-adjusted basis, our net income amounted to $426.4 million, or $21.28 earnings per diluted share, for the nine months ended September 30, 2023 compared to net income of $406.5 million, or $19.75 earnings per diluted share, for the nine months ended September 30, 2022. Our net income for the nine months ended September 30, 2022 included a total loss on our investment in ZIM of $29.2 million, net of withholding taxes on dividends and a gain on debt extinguishment of $22.9 million compared to a $2.0 million total loss on our EGLE investment and a $2.3 million loss on debt extinguishment for the nine months ended September 30, 2023.

Operating Revenues Operating revenues decreased by 2.2%, or $16.6 million, to $724.3 million in the nine months ended September 30, 2023 from $740.9 million in the nine months ended September 30, 2022.

Operating revenues for the nine months ended September 30, 2023 reflect:

a $33.2 million increase in revenues in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 mainly as a result of higher charter rates;
a $29.5 million decrease in revenues in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 due to decreased amortization of assumed time charters;
a $14.2 million decrease in revenues in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 due to vessel disposals; and
a $6.1 million decrease in revenues in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 due to lower non-cash revenue recognition in accordance with US GAAP.

Vessel Operating Expenses Vessel operating expenses increased by $3.1 million to $122.0 million in the nine months ended September 30, 2023 from $118.9 million in the nine months ended September 30, 2022, primarily as a result of an increase in the average daily operating cost for vessels on time charter to $6,758 per vessel per day for the nine months ended September 30, 2023 compared to $6,314 per vessel per day for the nine months ended September 30, 2022, which was partially offset by a decrease in the average number of vessels in our fleet. The average daily operating cost increased mainly due to increased repair and maintenance expenses. Management believes that our daily operating costs remain among the most competitive in the industry.

Depreciation & Amortization Depreciation & Amortization includes Depreciation and Amortization of Deferred Drydocking and Special Survey Costs.

Depreciation Depreciation expense decreased by 5.4%, or $5.5 million, to $95.8 million in the nine months ended September 30, 2023 from $101.3 million in the nine months ended September 30, 2022 due to our recent sale of three vessels.

Amortization of Deferred Drydocking and Special Survey Costs Amortization of deferred drydocking and special survey costs increased by $4.1 million to $13.1 million in the nine months ended September 30, 2023 from $9.0 million in the nine months ended September 30, 2022.

General and Administrative Expenses General and administrative expenses decreased by $0.6 million to $21.1 million in the nine months ended September 30, 2023, from $21.7 million in the nine months ended September 30, 2022. The decrease was primarily attributable to decreased management fees due to the recent sale of three vessels.

Other Operating Expenses Other Operating Expenses include Voyage Expenses.

Voyage Expenses Voyage expenses decreased by $1.7 million to $25.2 million in the nine months ended September 30, 2023 from $26.9 million in the nine months ended September 30, 2022 primarily as a result of a decrease in commissions and the average number of vessels in our fleet.

Gain on Sale of Vessels In January 2023, we completed the sale of the Amalia C for net proceeds of $4.9 million resulting in a gain of $1.6 million.

Interest Expense and Interest Income Interest expense decreased by 65.6%, or $32.3 million, to $16.9 million in the nine months ended September 30, 2023 from $49.2 million in the nine months ended September 30, 2022. The decrease in interest expense is a result of:

a $16.7 million decrease in interest expense due to a decrease in our average indebtedness by $696.4 million between the two periods. Average indebtedness was $462.9 million in the nine months ended September 30, 2023, compared to average indebtedness of $1,159.3 million in the nine months ended September 30, 2022. This decrease was partially offset by an increase in our debt service cost by approximately 2.7% as a result of higher interest rates;
a $10.0 million decrease in interest expense due to an increase in capitalized interest expense on our vessels under construction in the nine months ended September 30, 2023;
a $7.7 million decrease in the amortization of deferred finance costs and debt discount; and
a $2.1 million reduction of accumulated accrued interest that had been accrued in 2018 in relation to two of our credit facilities that were fully repaid in May 2022.

Interest income increased by $8.0 million to $9.4 million in the nine months ended September 30, 2023 compared to $1.4 million in the nine months ended September 30, 2022 mainly as a result of increased interest rates and average amount of time deposits in the nine months ended September 30, 2023.

Loss on investments We recognized a $2.0 million loss on marketable securities, which consisted of the change in fair value of $2.9 million and dividends of $0.9 million in the nine months ended September 30, 2023 on our shareholding interest in EGLE of 1,552,865 shares of common stock. This loss compares to a loss on investments of $11.0 million in the nine months ended September 30, 2022, which consisted of the change in fair value of our shareholding interest in ZIM of $176.4 million and dividends recognized on ZIM ordinary shares of $165.4 million. In the nine months ended September 30, 2022, we sold all of our remaining ordinary shares of ZIM for net proceeds of $246.6 million.

Gain/(loss) on debt extinguishment A $2.3 million loss on early extinguishment of our leaseback obligations in the nine months ended September 30, 2023 compares to a $22.9 million gain related to our early extinguishment of debt in the nine months ended September 30, 2022.

Equity loss on investments Equity loss on investments amounting to $3.9 million in the nine months ended September 30, 2023 relates to our share of initial expenses of a newly established company, CTTC, currently engaged in the research and development of decarbonization technologies for the shipping industry.

Other finance expenses Other finance expenses increased by $2.3 million to $3.4 million in the nine months ended September 30, 2023 compared to $1.1 million in the nine months ended September 30, 2022 mainly due to commitment fees for our recently established revolving credit facility.

Loss on derivatives Amortization of deferred realized losses on interest rate swaps remained stable at $2.7 million in each of the nine months ended September 30, 2023 and September 30, 2022.

Other income/(expenses), net Other expenses, net were $0.6 million in the nine months ended September 30, 2023 compared to other income, net of $1.3 million in the nine months ended September 30, 2022.

Income taxes Income taxes of $18.3 million, in the nine months ended September 30, 2022, related to the taxes withheld on dividend income earned on ZIM ordinary shares and compared to no income tax in the nine months ended September 30, 2023.

Adjusted EBITDA Adjusted EBITDA decreased by 20.8%, or $140.3 million, to $534.4 million in the nine months ended September 30, 2023 from $674.7 million in the nine months ended September 30, 2022. As outlined above, the decrease is mainly attributable to a $146.2 million decrease in dividends received. We also incurred a $3.1 million increase in total operating expenses and a $3.9 million equity loss on investments in the nine months ended September 30, 2023, which were partially offset by a $12.9 million increase in operating revenues. Adjusted EBITDA for the nine months ended September 30, 2023 is adjusted for a $2.9 million change in fair value of investments, a $2.3 million loss on debt extinguishment and a $1.6 million gain on sale of vessel. Tables reconciling Net Income to Adjusted EBITDA can be found at the end of this earnings release.

Dividend Payment

Danaos has declared a dividend of $0.80 per share of common stock for the third quarter of 2023, which is payable on December 6, 2023 to stockholders of record as of November 27, 2023.

Recent Developments

As of the date of this release, we have repurchased a total of 1,570,195 shares of our common stock in the open market for $97.4 million, under our share repurchase program of up to $100 million announced in June 2022. Additional share repurchase program of up to $100 million was approved by our Board on November 10, 2023.

In September 2023, we entered into agreements to acquire 2 additional Capesize bulk carriers built in 2009 that aggregate to 351,765 DWT for a total of $36.6 million. These vessels are expected to be delivered to us between November and December 2023.

Executive Officers

On November 10, 2023, Iraklis Prokopakis’s previously announced retirement from his executive role as Senior Vice President and Chief Operating Officer of the Company became effective. Mr. Prokopakis will remain a member of the Company’s Board of Directors, on which he will serve as Vice Chairman.

On November 10, 2023, Dimitris Vastarouchas, who had been serving as the Company’s Deputy Chief Operating Officer was appointed the Company’s Chief Operating Officer, and Filippos Prokopakis, who had been serving as Commercial Director of our manager, Danaos Shipping, was appointed Chief Commercial Officer of the Company.

Management Agreement

In November 2023, we agreed to extend the term of our Management Agreement with Danaos Shipping from December 31, 2024 to December 31, 2025 and to modify the fees and commissions payable by us thereunder.

Conference Call and Webcast

On Tuesday, November 14, 2023 at 9:00 A.M. ET, 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: 1 844 802 2437 (US Toll Free Dial In), 0800 279 9489 (UK Toll Free Dial In) or +44 (0) 2075 441 375 (Standard International Dial In). Please indicate to the operator that you wish to join the Danaos Corporation earnings call.

A telephonic replay of the conference call will be available until November 21, 2023 by dialing 1 877 344 7529 (US Toll Free Dial In) or 1-412-317-0088 (Standard International Dial In) and using 5709620# as the access code.

Audio Webcast There will also be a live and then archived webcast of the conference call on the Danaos website (www.danaos.com). Participants of the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

Slide Presentation A slide presentation regarding the Company and the containership industry will also be available on the Danaos website (www.danaos.com).

About Danaos Corporation Danaos Corporation is one of the largest independent owners of modern, large-size containerships. Our current fleet of 68 containerships aggregating 421,293 TEUs and 10 under construction containerships aggregating 74,914 TEUs ranks Danaos among the largest containership charter owners in the world based on total TEU capacity. Our containerships fleet is chartered to many of the world's largest liner companies on fixed-rate charters. In addition to our containership fleet, we have recently entered into agreements to acquire 7 Capesize bulk carriers aggregating 1,231,071 DWT, out of which 4 have been delivered to us already. Our long track record of success is predicated on our efficient and rigorous operational standards and environmental controls. Danaos Corporation'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 safe harbor 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. 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 any resurgence of the COVID-19 pandemic, 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, drydocking and insurance costs, our ability to operate profitably in the drybulk sector, 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, including the conflict in Ukraine and related sanctions, the conflict in Israel and the Gaza Strip, 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 22 unscheduled off-hire days in the three months ended September 30, 2023. The following table summarizes containership fleet utilization and the impact of the off-hire days on the Company’s revenue.

Vessel Utilization (No. of Days)

First Quarter

Second Quarter

Third Quarter

2023

Total

Ownership Days

6,150

6,188

6,256

18,594

Less Off-hire Days:

Scheduled Off-hire Days

(150)

(80)

(119)

(349)

Other Off-hire Days

(44)

(2)

(22)

(68)

Operating Days

5,956

6,106

6,115

18,177

Vessel Utilization

96.8%

98.7%

97.7%

Operating Revenues (in '000s of US Dollars)

$243,574

$241,479

$239,215

$724,268

Average Gross Daily Charter Rate

$40,896

$39,548

$39,119

$39,845

Vessel Utilization (No. of Days)

First Quarter

Second Quarter

Third Quarter

2022

Total

Ownership Days

6,390

6,461

6,532

19,383

Less Off-hire Days:

Scheduled Off-hire Days

(148)

(169)

(317)

Other Off-hire Days

(16)

(8)

(21)

(45)

Operating Days

6,226

6,453

6,342

19,021

Vessel Utilization

97.4%

99.9%

97.1%

98.1%

Operating Revenues (in '000s of US Dollars)

$229,901

$250,923

$260,037

$740,861

Average Gross Daily Charter Rate

$36,926

$38,885

$41,002

$38,950

Fleet List The following table describes in detail our fleet deployment profile of our containerships as of November 10, 2023:

Vessel Name

Vessel Size

(TEU)

Year Built

Expiration of Charter(1)

Hyundai Ambition

13,100

2012

April 2027

Hyundai Speed

13,100

2012

April 2027

Hyundai Smart

13,100

2012

June 2027

Hyundai Respect

13,100

2012

April 2027

Hyundai Honour

13,100

2012

March 2027

Express Rome

10,100

2011

April 2027

Express Berlin

10,100

2011

August 2026

Express Athens

10,100

2011

April 2027

Le Havre

9,580

2006

June 2028

Pusan C

9,580

2006

May 2028

Bremen

9,012

2009

January 2028

C Hamburg

9,012

2009

January 2028

Niledutch Lion

8,626

2008

May 2026

Kota Manzanillo

8,533

2005

February 2026

Belita

8,533

2006

July 2026

CMA CGM Melisande

8,530

2012

January 2028

CMA CGM Attila

8,530

2011

May 2027

CMA CGM Tancredi

8,530

2011

July 2027

CMA CGM Bianca

8,530

2011

September 2027

CMA CGM Samson

8,530

2011

November 2027

America

8,468

2004

April 2028

Europe

8,468

2004

May 2028

Kota Santos

8,463

2005

August 2026

CMA CGM Moliere

6,500

2009

March 2027

CMA CGM Musset

6,500

2010

September 2025

CMA CGM Nerval

6,500

2010

November 2025

CMA CGM Rabelais

6,500

2010

January 2026

Racine (ex CMA CGM Racine)

6,500

2010

April 2026

YM Mandate

6,500

2010

January 2028

YM Maturity

6,500

2010

April 2028

Zim Savannah

6,402

2002

May 2024

Dimitra C

6,402

2002

January 2024

Suez Canal

5,610

2002

April 2026

Kota Lima

5,544

2002

November 2024

Wide Alpha

5,466

2014

March 2024

Stephanie C

5,466

2014

June 2025

Maersk Euphrates

5,466

2014

April 2024

Wide Hotel

5,466

2015

May 2024

Wide India

5,466

2015

November 2025

Wide Juliet

5,466

2015

September 2025

Seattle C

4,253

2007

October 2024

Vancouver

4,253

2007

November 2024

Derby D

4,253

2004

January 2027

Tongala

4,253

2004

November 2024

Rio Grande

4,253

2008

November 2024

Merve A (ex ZIM Sao Paolo)

4,253

2008

September 2025

Kingston (ex ZIM Kingston)

4,253

2008

June 2025

ZIM Monaco

4,253

2009

October 2024

Dalian

4,253

2009

March 2026

ZIM Luanda

4,253

2009

August 2025

Dimitris C

3,430

2001

November 2025

Express Black Sea

3,400

2011

January 2025

Express Spain

3,400

2011

January 2025

Express Argentina

3,400

2010

September 2024

Express Brazil

3,400

2010

June 2025

Express France

3,400

2010

September 2025

Singapore

3,314

2004

May 2024

Colombo

3,314

2004

January 2025

Zebra

2,602

2001

November 2024

Artotina

2,524

2001

May 2025

Advance

2,200

1997

January 2025

Future

2,200

1997

December 2024

Sprinter

2,200

1997

December 2024

Stride

2,200

1997

January 2025

Progress C

2,200

1998

November 2024

Bridge

2,200

1998

December 2024

Highway

2,200

1998

February 2024

Phoenix D

2,200

1997

March 2025

(1)

Earliest date charters could expire. Some charters include options for the charterer to extend their terms.

The following table describes the details of our Capesize drybulk vessels, which did not generate any operating revenues in the three months ended September 30, 2023:

Vessel Name

Capacity

(DWT)

Year Built

Bulk Achievement (3)

175,850

2011

Bulk Genius (2)

175,580

2012

Bulk Ingenuity (2)

176,022

2011

Integrity (2)

175,996

2010

Peace

175,858

2010

West Trader (3)

175,879

2009

East Trader (3)

175,886

2009

(2)

The vessels were delivered to us in October and November 2023

(3)

The vessels are expected to be delivered to us between November and December 2023.

Containerships under construction:

Hull Number

Vessel Size (TEU)

Expected Delivery Year

Minimum Charter Duration

Hull No. C7100-7

7,165

2024

3 Years

Hull No. C7100-8

7,165

2024

3 Years

Hull No. HN4009

8,010

2024

3 Years

Hull No. HN4010

8,010

2024

3 Years

Hull No. HN4011

8,010

2024

3 Years

Hull No. HN4012

8,010

2024

3 Years

Hull No. CV5900-07

6,014

2024

Hull No. CV5900-08

6,014

2025

Hull No. YZJ2023-1556

8,258

2026

Hull No. YZJ2023-1557

8,258

2026

DANAOS CORPORATION

Condensed Consolidated Statements of Income - Unaudited

(Expressed in thousands of United States dollars, except per share amounts)

Three months ended

Nine months ended

September 30,

2023

2022

2023

2022

OPERATING REVENUES

$239,215

$260,037

$724,268

$740,861

OPERATING EXPENSES

Vessel operating expenses

(39,494)

(39,186)

(121,994)

(118,929)

Depreciation & amortization

(37,097)

(37,225)

(108,873)

(110,259)

General & administrative

(7,070)

(7,157)

(21,107)

(21,684)

Other operating expenses

(8,959)

(10,320)

(25,241)

(26,952)

Gain on sale of vessels

1,639

Income From Operations

146,595

166,149

448,692

463,037

OTHER INCOME/(EXPENSES)

Interest income

3,091

1,323

9,410

1,444

Interest expense

(4,306)

(15,968)

(16,909)

(49,161)

Loss on investments

(8,432)

(80,277)

(1,994)

(10,987)

Gain/(loss) on debt extinguishment

(2,254)

22,939

Other finance expenses

(1,236)

(155)

(3,358)

(1,096)

Equity loss on investments

(526)

(3,852)

Other income/(expenses), net

(1,117)

411

(648)

1,272

Realized loss on derivatives

(913)

(2,709)

Total Other Income/(Expenses), net

(13,439)

(95,579)

(22,314)

(38,298)

Income Before Income Taxes

133,156

70,570

426,378

424,739

Income taxes

(3,770)

(18,250)

Net Income

$133,156

$66,800

$426,378

$406,489

EARNINGS PER SHARE

Basic earnings per share

$6.76

$3.29

$21.28

$19.77

Diluted earnings per share

$6.76

$3.29

$21.28

$19.75

Basic weighted average number of common shares (in thousands of shares)

19,693

20,299

20,039

20,560

Diluted weighted average number of common shares (in thousands of shares)

19,693

20,318

20,039

20,579

Non-GAAP Measures1

Reconciliation of Net Income to Adjusted Net Income – Unaudited

Three months ended

Nine months ended

September 30,

2023

2022

2023

2022

Net income

$133,156

$66,800

$426,378

$406,489

Change in fair value of investments

9,333

107,290

2,895

176,386

Loss/(gain) on debt extinguishment

2,254

(22,939)

Gain on sale of vessels

(1,639)

Amortization of financing fees and debt discount

474

2,832

1,735

9,393

Adjusted Net Income

$142,963

$176,922

$431,623

$569,329

Adjusted Earnings Per Share, diluted

$7.26

$8.71

$21.54

$27.67

Diluted weighted average number of shares (in thousands of shares)

19,693

20,318

20,039

20,579

1 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 nine months ended September 30, 2023 and 2022. 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 Consolidated Balance Sheets - Unaudited

(Expressed in thousands of United States dollars)

As of

September 30,

December 31,

2023

2022

ASSETS

CURRENT ASSETS

Cash, cash equivalents and restricted cash

$306,290

$267,668

Accounts receivable, net

7,351

5,635

Other current assets

184,556

99,218

498,197

372,521

NON-CURRENT ASSETS

Fixed assets, net

2,652,958

2,721,494

Advances for vessels acquisition and vessels under construction

289,149

190,736

Deferred charges, net

33,998

25,554

Investments in affiliates

411

Other non-current assets

79,226

89,923

3,055,742

3,027,707

TOTAL ASSETS

$3,553,939

$3,400,228

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Long-term debt, current portion

$24,400

$27,500

Long-term leaseback obligations, current portion

27,469

Accounts payable, accrued liabilities & other current liabilities

148,681

173,438

173,081

228,407

LONG-TERM LIABILITIES

Long-term debt, net

386,222

402,440

Long-term leaseback obligations, net

44,542

Other long-term liabilities

102,263

164,425

488,485

611,407

STOCKHOLDERS’ EQUITY

Common stock

195

203

Additional paid-in capital

695,593

748,109

Accumulated other comprehensive loss

(70,941)

(74,209)

Retained earnings

2,267,526

1,886,311

2,892,373

2,560,414

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$3,553,939

$3,400,228

DANAOS CORPORATION

Condensed Consolidated Statements of Cash Flows - Unaudited

(Expressed in thousands of United States dollars)

Three months

ended

Three months

ended

Nine months

ended

Nine months

ended

September 30,

2023

2022

2023

2022

Operating Activities:

Net income

$133,156

$66,800

$426,378

$406,489

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization of right-of-use assets

32,325

34,141

95,764

101,253

Amortization of deferred drydocking & special survey costs, finance cost and debt discount

5,246

5,916

14,844

18,399

Amortization of assumed time charters

(4,416)

(13,892)

(16,806)

(46,256)

Prior service cost and periodic cost

220

1,106

Loss on investments

9,333

107,290

2,895

176,386

Loss/(gain) on debt extinguishment

2,254

(22,939)

Gain on sale of vessels

(1,639)

Payments for drydocking/special survey

(6,993)

(6,433)

(21,553)

(16,159)

Equity loss on investments

526

3,852

Amortization of deferred realized losses on cash flow interest rate swaps

913

2,709

Stock based compensation

125

373

Accounts receivable

740

408

(1,716)

1,986

Other assets, current and non-current

982

(10,123)

(11,424)

(53,553)

Accounts payable and accrued liabilities

(4,654)

(5,498)

(7,805)

(657)

Other liabilities, current and long-term

(17,872)

(10,881)

(58,747)

221,213

Net Cash provided by Operating Activities

149,506

168,766

430,112

789,244

Investing Activities:

Vessels additions and advances

(98,274)

(11,087)

(128,058)

(95,134)

Proceeds and advances received from sale of vessels

3,914

13,000

Proceeds from sale of investments

161,305

246,638

Investments in affiliates/marketable securities

(74,407)

Net Cash provided by/(used in) Investing Activities

(98,274)

150,218

(198,551)

164,504

Financing Activities:

Proceeds from long-term debt

127,725

Debt repayment

(6,875)

(17,875)

(20,625)

(401,000)

Payments of leaseback obligations

(26,179)

(72,925)

(146,866)

Dividends paid

(14,802)

(15,228)

(45,163)

(46,298)

Repurchase of common stock

(16,596)

(22,228)

(52,334)

(28,553)

Payments of accumulated accrued interest

(3,373)

Finance costs

(704)

(1,892)

(15,796)

Net Cash used in Financing Activities

(38,273)

(82,214)

(192,939)

(514,161)

Net increase in cash, cash equivalents and restricted cash

12,959

236,770

38,622

439,587

Cash, cash equivalents and restricted cash, beginning of period

293,331

332,573

267,668

129,756

Cash, cash equivalents and restricted cash, end of period

$306,290

$569,343

$306,290

$569,343

DANAOS CORPORATION

Reconciliation of Net Income to Adjusted EBITDA - Unaudited

(Expressed in thousands of United States dollars)

Three months ended

Nine months ended

September 30,

2023

2022

2023

2022

Net income

$133,156

$66,800

$426,378

$406,489

Depreciation and amortization of right-of-use assets

32,325

34,141

95,764

101,253

Amortization of deferred drydocking & special survey costs

4,772

3,084

13,109

9,006

Amortization of assumed time charters

(4,416)

(13,892)

(16,806)

(46,256)

Amortization of deferred finance costs, debt discount and commitment fees

1,203

2,832

3,965

9,393

Amortization of deferred realized losses on interest rate swaps

913

2,709

Interest income

(3,091)

(1,323)

(9,410)

(1,444)

Interest expense

3,832

13,136

15,174

39,768

Income taxes

3,770

18,250

Loss on investments and dividend withholding taxes

9,333

103,520

2,895

158,136

Loss/(gain) on debt extinguishment

2,254

(22,939)

Gain on sale of vessels

(1,639)

Stock based compensation

125

373

Adjusted EBITDA(1)

$178,027

$213,106

$534,393

$674,738

Adjusted EBITDA represents net income before interest income and expense, taxes other than withholding taxes on dividend, depreciation, amortization of deferred drydocking & special survey costs, amortization of assumed time charters, amortization of deferred finance costs, debt discount and commitment fees, amortization of deferred realized losses on interest rate swaps, gain/loss on investments, gain/loss on debt extinguishment, gain on sale of vessels and stock based compensation. 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 operating performance 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. 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 nine months ended September 30, 2023 and 2022. 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231113106297/en/

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 Investor Relations and Financial Media Rose & Company New York Tel. 212-359-2228 E-Mail: danaos@rosecoglobal.com

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