World-Class Shipping, Leading-Edge Expertise - Corporate Presentation | November 2020
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World-Class Shipping, Leading-Edge Expertise Corporate Presentation | November 2020
Disclaimer
Danaos by the Numbers
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 expects, projects, believes or
anticipates will or may occur in the future, including, without limitation, the outlook for fleet utilization and shipping rates, general industry conditions including
bidding activity, future operating results of the Company’s vessels, future operating revenues and cash flows, capital expenditures, vessel market values,
asset sales, expansion and growth opportunities, bank borrowings, financing activities and other such matters, are forward-looking statements. Although the
Company believes that its expectations stated in this presentation are based on reasonable assumptions, actual results may differ from those projected in the
forward-looking statements. Important factors that could cause actual results to differ materially from those discussed in the forward-looking statements
include the strength of world economies, general market conditions, including charter rates and vessel values, counterparty performance under existing
charters, changes in operating expenses, ability to obtain financing and comply with covenants in financing arrangements, including the terms of its new
credit facilities and agreements entered into in connection with the refinancing, the affects of the refinancing transactions and the Company’s ability to
achieve the benefits of the refinancing, actions taken by regulatory authorities, potential liability from litigation and international political conditions. Danaos
Corporation is listed in the New York Stock Exchange under the ticker symbol “DAC”. Before you invest, you should also read the documents Danaos
Corporation has filed with the SEC for more complete information about the company. You may get these documents for free by visiting EDGAR on the SEC
Website at www.sec.gov or via www.danaos.com
Readers of this presentation should review our Annual Report on Form 20-F filed with the SEC on February 27, 2020, including the section entitled “Key
Information – Risk Factors”, and our other filings with the SEC for a discussion of factors and circumstances that could affect our future financial results and
our ability to realize the expectations stated herein.
EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS may be included in our presentations. EBITDA, Adjusted EBITDA, Adjusted Net Income
and Adjusted EPS are presented because they are used by management and certain investors to measure a company’s financial performance and underlying
trends as they exclude certain items impacting overall comparability. EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS are “non-GAAP
financial measures” and should not be considered a substitute for net income, cash flow from operating activities and other operations or cash flow statement
data prepared in accordance with accounting principles generally accepted in the United States or as a measure of profitability or liquidity. Reconciliations to
GAAP measures are included in the Appendix to this presentation.
Certain shipping industry information, statistics and charts contained herein have been derived from industry sources. You are hereby advised that such
information, statistics and charts have not been prepared specifically for inclusion in this presentation and the Company has not undertaken any independent
investigation to confirm the accuracy or completeness of such information.
2
Business Overview k
A LEADING CONTAINERSHIP OWNER AND OPERATOR
• One of the largest publicly-listed owners of modern containerships with
✓ long track record in the shipping market
MARKET UPDATE
• One of the most efficient operators in the industry with highly
competitive breakeven levels • The charter market has improved significantly
since the initial shock at the start of the COVID-19
• Management is the largest shareholder (~46%)(1) and is aligned with
pandemic, and volumes have recovered faster
public shareholders
than expected
HEALTHY CAPITAL STRUCTURE • Consistent capacity management by liner
companies addressed the drop in volumes brought
• Adjusted Net Debt / EBITDA ratio of 4.5x and consistent reduction in on by the pandemic, alleviating pressure on our
✓ leverage through amortization schedule customers’ cash flows and stabilizing freight rates
• Going forward financial covenants in line with conservative operating • Volumes has seen consistent improvements,
expectations particularly in Transpacific eastbound, intra-Asia
and North-South trade lanes
• Repurchased 17.5% of outstanding shares in October 2020
• The portion of the global containership fleet that is
LIMIT RE-CHARTERING RISK AND POTENTIAL FOR UPSIDE sitting idle (based on TEU) has declined from a
high of 11.4% at the end of May to 3.3% as of
• Charter backlog of $1.1 billion through 2028 with world’s leading liner October 23 (5-year average is 4.0%)
✓ companies provides good cash flow visibility
• SCFI comprehensive index reached its highest
• Large, modern 13,100 TEU vessels are all on long-term charters through level since 2012 in mid-October and is up more
2024 than 80% from April lows
• Strong contract coverage of 87% for the next 12 months limits downside • Historically-low orderbook for containerships,
risk and provides potential for upside provides potential for a swift recovery when the
situation normalizes
(1) Inclusive of extended Coustas family interest. . 3
Danaos by the Numbers
$1.1bn 46%
Contracted cash flow through 2028 Ownership through founder / management
4.5x $1.6bn
Net debt to LTM Adjusted EBITDA Enterprise value
$313mn 3.0x
LTM Adjusted EBITDA 3Q 2020 Reduction in leverage over the last three years
4
40+ Year Legacy of Leadership
in Container Shipping
1987 2006 2010
Dr. John Coustas steps into NYSE IPO $200mm equity
Chief Executive role Raised $200mm raise
1972 2005 2018 to present
Founded by Dimitris Incorporation in Marshall Refinancing, share
Coustas Islands offering and growth
Market Share1, 2 Among Top Public Containership Owners Globally
By TEU, thousands
Publicly Traded Pure-Play Operators Financial / Independent Owners
1,026
504 470 457 456
404 386
244 207 268 253 247 223 211 209 194
180 181
Schulte Group
Seaspan
Costamare
Peter Dohle /
Danaos
Navios
Zeaborn
Norddeutsche R.H.
Shoei Kisen
Eastern Pacific Shpg
Nissen Kaiun
BoCom Leasing
Global Ship Lease
MPC Group
Minsheng Financial
Zodiac Maritime
Offen, Claus Peter
Fredriksen Group
Hammonia
Leasing
Schuldt
Source: Clarksons Research.
(1) Includes Gemini Shipholdings Vessels (TEU), a joint venture in which Danaos owns a 49% stake: Suez Canal (5,610), Genoa (5,544), Catherine C (6,422), Leo C (6,422) and Belita (8,533) and 2 new vessel acquisitions (2 x 9,012), expected
to be delivered to us between December 2020 and January 2021.
(2) Global Ship Lease includes Pro Forma TEU for Poseidon / Technomar Acquisition which closed November 15, 2018.
5
Diverse, High-Quality Fleet
Fleet Overview(1) 8x
3,500 TEU
Average Age: 12.7 years
Remaining Charter Term: 0.5 years 11x
2,200 – 2,600 TEU
1.8% 0.7% Average Age: 22.2 years
1.0% Remaining Charter Term: 0.2 years
10x
4,300 – 5,500 TEU
Average Age: 13.0 years
Remaining Charter Term: 0.3 years
23.2%
38.5% 5x
Contracted 13,100 TEU
Revenue Average Age: 8.4 years
9x Contribution(1)
Remaining Charter Term: 3.6 years
6,400 – 6,500 TEU
Average Age: 12.2 years
Remaining Charter Term: 3.0 years
7.8%
27.1%
12x (2)
8,500 – 9,000 TEU 5x Gemini Vessels
Average Age: 11.7 years
Remaining Charter Term: 2.6 years
9,600 - 10,100 TEU
Average Age: 11.2 years
2x
Remaining Charter Term: 1.8 years 5,500 TEU
2x
6,500 TEU
1x
Note: Figures as of September 30th 2020. Please refer to appendix for additional detail. 8,500 TEU
(1) Excludes Gemini Shipholdings Vessels (TEU), a joint venture in which Danaos owns a 49% stake: Suez Canal (5,610), Genoa (5,544), Catherine C (6,422), Leo C (6,422) and Belita (8,533).
(2) Includes 2 new vessel acquisitions (2 x 9,012), expected to be delivered to us between December 2020 and January 2021.
6Balanced Counterparty
Danaos by the Numbers
Concentration
Length of Customer Relationships Noted in Italics
Overview of Customer Base
ONE • Long history chartering to most major global
liner companies
• Engaged with container alliances on
deployments across major and minor global
routes
18%
(20 years)
• Have collaborated with customers in ordering
30% 46 newbuildings in excess of 300,000 TEU over
(40+ years) our history at a cost in excess of $4 billion
5%
Close Alignment Working with Customers
7%
(15 years)
• Consistently developing operating expertise to
obtain and retain customers
8%
• Delivering on-time new ships to customers’
16% specifications
(34 years)
16% • Prioritizing reputation, customer service and
safety
(25 years)
• Maintain a strategic focus on regular
engagement with customers, particularly in
(37 years)
regards to new customer needs and
technological advancements
Note: Distributed by TEU.
7Strong Charter Coverage through
2024
Shorter charter durations limited to vessels in more liquid chartering markets
Revenue-Weighted Charter Coverage(1)
99%
81%
59%
41%
5%
2020 2021 2022 2023 2024+
Contracted Revenue by Year
mm $ by Asset Class
$455
$393
$282
$189
$119
2020 2021 2022 2023 2024+
13,000 9,500-10,000 8,500 6,400-6,500 4,300-5,500 3,500 2,200-2,600
Note: Charter Revenue assumes Gross Daily Charter Rate. Contracted Revenue and Charter Expiration Schedule exclude Gemini Shipholdings.
(1) Assumes non-contracted vessels employed at current contracted charter rates.
8Good Free Cash Flow Visibility
Illustrative Walk to LTM Q3 2020 Free Cash Flow(1)
LTM Q3 2020 FCF
Drivers of LTM Q3 2020 FCF Uses of FCF excludes CapEx
✓ Lower interest rates and one-time /
✓ Further debt amortization
extraordinary
$313 ✓ Contractual charter escalations ✓ Return of capital to shareholders items
✓ Vessel acquisitions ✓ Vessel acquisitions
($62) ($6)
$209
($12) ($9)
($15)
$66
($143)
LTM Q3 2020 Net Cash Interest JV Earnings Revenue Recognition Other Dry Docking Operating Cash Flow Debt Amortization LTM Q3 2020 FCF (1)
EBITDA (1) (Non-Cash)
Source: Company filings as of 09/30/2020.
Note: Recurring Free Cash Flow calculated excluding non-recurring items such as Vessels Addition Capital Expenditures and Financing Costs.
(1) Non-GAAP measure. See appendix for definitions and reconciliations to the nearest GAAP measure.
9Focused on Maintaining
Conservative Capital Structure
Capitalization Net Adjusted Debt and Adjusted EBITDA Multiple(1)
$ in millions 9/30/2020
Cash $106 $3,500
Bank Debt: 1,369 7.3x
129 7.0x
Long-term Leaseback Obligation 3,165
3,000 7.2x
Exit Fee 23 3,042
2,892 6.5x
Deferred Finance Costs (31)
(16) 2,703 7.0x
Debt Fair Value Adjustment 2,500 7.3x
Total Debt $1,475 2,454
adjusted for 2,274
Deferred Finance Costs 31 2,000
Debt Fair Value Adjustment 16 5.1x
Total Debt $1,521 4.6x
Net Debt 1,415 1,500 1,615 4.5x
1,443 1,415
Book Value of Equity 1000
Total Capitalization $2,521
1,000
Credit Statistics:
LTM Adj. EBITDA(2) $313 500
Debt / LTM Adj. EBITDA(2) 4.9x
Net Debt / LTM Adj. EBITDA(2) 4.5x
Net Debt / Book Equity(2) 1.4x 0
2012 2013 2014 2015 2016 2017 2018 2019 LTM 3Q
'20
Net Adjusted Debt
(1) Based on total adjusted debt, net of deferred finance costs and fair value adjustments, as of September 30 th 2020.
(2) Non-GAAP measure. See appendix for definitions and reconciliations to the nearest GAAP measure.
10Experienced 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 the • Over 40 years of experience in the shipping
shipping industry industry
• Vice Chairman of the board of directors of • Member of the Board of the Hellenic Chamber
The Swedish Club; member of the board of Shipping and the Owners’ Committee of the
of directors of the Union of Greek Korean Register of Shipping
Shipowners and the DNV Council
Evangelos Chatzis, Chief Financial Officer Dimitris Vastarouchas, Technical Director & Deputy COO
• Joined Danaos in 2005 • Danaos Technical Manager since 2005
• Over 25 years of experience in corporate • Has over 20 years of experience in the
finance and the shipping industry shipping industry
• Formerly CFO of Globe Group of • Formerly New Buildings Projects and Site
Companies Manager supervising the construction of
4,250, 5,500 and 8,500 TEU containerships
11Longstanding Champion of ESG
Principles
Danaos Management is keenly focused on maintaining a strong ESG framework for company operations
Environmental Social Governance
✓ Advanced solutions to ✓ Code of ethics and ✓ Independent Board
reduce emissions through compliance policies
fuel efficiency optimization published for Directors / Clear reporting of
✓ transactions with Danaos
Officers
✓ Scrubber installation on Shipping (Manager)
select vessels − Amounts approved by
independent board
Low-sulfur fuel oil Accredited by Global members
✓ to be procured ✓
Reporting Initiative (GRI)
Ballast water
for sustainability best ✓ Arms length cost
✓ practices and socially arrangements, which
system compliance are amongst lowest
responsible management
in industry and fixed
Partnership with founders
✓ of Poseidon Principles through 2024
12Pioneers in Digitalization
Waves Fleet Performance
… Riding the Wave of Innovation!
Data Analytics/Algorithmic Analysis (Operator-defined) of Fused Data across Monitoring Systems
HINDSIGHT:
• ‘Reflect and learn from past data’ through statistical processing and trend analysis
• Detection of hidden correlations among seemingly un-related data
INSIGHT: ‘Interpret data and respond efficiently to the present’
• KPls real-time monitoring (operational efficiency, safety performance, etc.)
• Vessel’s benchmarking against: theoretical curves, specifications, tests and trials, sister and competitor vessel monitoring
• Timely anomaly detection and alerting for abnormal behavior or deviation from predefined thresholds
FORESIGHT: ‘Predict and get ready for the future’ through scenario testing, system risk assessments and observational
maintenance
As well as Routines System Data monitoring …
• BCS, pMatrix, Power Mgmt, Steam Mgmt, ODA …
• Tanks Mgmt. Bunker Analysis, Bunker Surveys, Bunkering Monitoring ...
• Performance, Propulsion, Emissions ...
Workflow Management
Operator-defined workflows for timely and effective response to alarm events: what actions must take place, who from the
crew should be involved, and what actions must be logged / other systems triggered
13Industry Overview
Seaborne Containerized Trade
Forecast to Rebound Quickly
Global Seaborne Container Trade
250 15%
10%
200
5%
150
TEU mm
0%
100
-5%
50
-10%
0 -15%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
World Seaborne Container Trade Y-o-Y Growth
Source: Clarksons Research
15Containership Trade Routes
Largest vessels primarily deployed on long trade routes
• Units of 15,000+ TEU are almost exclusively deployed on
Container Trade by Trade Lane 2020f the Far East-Europe trade
• Deployment of boxships sized 12-14,999 TEU continues
Mainlane, to broaden notably onto the Transpacific route and also
28.7% onto some non-mainlane trades
Intra-
Regional, • Boxships sized 6,000-11,999 TEU offer flexible
44.5% deployment opportunities, with further reductions in
201mm reliance on the mainlanes over the years, although
TEU demand can be sensitive to short-term shifts
• Approximately 39% of capacity deployed on intra-regional
Non- trade routes is accounted for by units of 3,000+ TEU; this
Mainlane share has been fairly steady for the last 18 months
East-West,
10.4% • Intra-regional routes, and deployment of sub-3,000 TEU
North-South, units thereon, appear ‘protected’ against significant vessel
16.5% upsizing to some degree, by infrastructure, volume and
other operational constraints
Source: Clarksons Research
(1) Basis trades with Far East & Europe.
(2) Basis full year estimate / forecast.
16Geographic Deployment
Favoring Certain Size Vessels
Largest vessels primarily deployed on long trade routes
Capacity Deployment By Route
mm $ by Asset Class
100%
80%
60%
40%
20%
0%Supply Growth Primary in
Largest Vessel Segments
Orderbook is concentrated in 8,000+ TEU vessels where Danaos has the greatest charter coverage
Containership Orderbook, By Scheduled Delivery Year
TEU, mm
1.25
1.00
0.75
0.50
0.25
0.00
2020 2021 2022
12,000+ TEU 8,000–11,999 TEU 3,000–7,999 TEU 100–2,999 TEU
Containership Orderbook, as % of Fleet by Segment
TEU, mm
15%
11.7%
10% 8.0% 8.3%
5%
0.5%
0%
Containership Orderbook % Containership 8,000+ TEU Containership 3-7,999 TEU ContainershipCharter Rates Near Multi-Year
Highs
9,000 TEU gls Containership 3-yr TC Rate1 6,800 TEU Containership 3-yr TC Rate
$/day, thousands $/day, thousands
50
40
40
30
30
20 20
10 10
0 0
Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20
4,400 TEU gls ‘Old Panamax’ Containership
6-12 Month TC Rate 2,500 TEU grd Containership 6-12 month TC Rate
$/day, thousands $/day, thousands
40 30
25
30
20
20 15
10
10
5
0 0
Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20
Source: Clarksons Research
Note: Limited activity on longer TCs with wide spread on rate ideas.
(1) Based on ‘Neo-Panamax’ ships.
19Asset Values Steady, and
Transactions have Increased
8,800 TEU Containership 5 Year Old Secondhand Price 6,600 TEU Containership 5 Year Old Secondhand Price
mm $ mm $
140 120
120 100
100
80
80
60
60
40 40
20 20
0 0
Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20
4,500 TEU ‘Old Panamax’ Containership 10 Year Old 2,500 TEU grd Containership 10-Year-Old
Secondhand Price Secondhand Price
mm $ mm $
50 20
40
30
10
20
10
0 0
Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20
Source: Clarksons Research
Note: Limited activity on longer TCs with wide spread on rate ideas.
(1) Based on ‘Neo-Panamax’ ships.
20Financial Overview
Historical Financials
Summary Results
Operating Revenues Adjusted EBITDA
mm $ mm $
$589 $588 $568
$552
$498
$452 $459 $447 $452 $432 $434 $418
$404
$351
$310 $318 $311 $313
2012 2013 2014 2015 2016 2017 2018 2019 LTM 2012 2013 2014 2015 2016 2017 2018 2019 LTM
3Q '20 3Q '20
Net Leverage Adjusted Net Income
mm $
7.3x 7.0x 7.2x 7.0x 7.3x
6.5x $159 $161
$141 $149
5.1x
$131
4.6x 4.5x
$115
$60 $54 $60
2012 2013 2014 2015 2016 2017 2018 2019 LTM 2012 2013 2014 2015 2016 2017 2018 2019 LTM
3Q '20 3Q '20
Source: Company filings.
Note: Adjusted Net Income reflects add-backs of various income statement items, most notably impairment charges, amortization of deferred financing costs and other one-off extraordinary items.
Note: LTM reflects twelve months period ending September 30, 2020
22Third Quarter 2020 Earnings
Summary of Results
thousands $, expect per share figures
Three Months ended Sept. 30 Nine Months ended Sept. 30 Last Twelve
2020 2019 % yoy 2020 2019 % yoy Months
Operating Revenue $118,932 $111,830 6.4% $341,952 $337,040 1.5% $452,156
Adjusted EBITDA1 $83,331 $79,328 5.0% $235,322 $232,447 1.2% $313,440
Adjusted Net Income $47,303 $37,882 24.9% $123,078 $110,706 11.2% $161,047
Adjusted Earnings per Share, diluted2 $1.91 $2.46 -22.6% $4.97 $7.23 -31.3% $6.91
Third Quarter Highlights
• Adjusted EBITDA increased by 5.0% when compared to Q3 2019 as operating revenues improved by 6.4% compared to
the same period due contractual increases in charter rates for vessels on long-term charters and revenues from newly-
acquired vessels
• Fleet utilization for the three months ended September 30, 2020 was 98.7% compared to 97.1% in the prior quarter
• Charter contract coverage of 87% in terms of operating revenues and 64% in terms of operating days over the next 12
months
(1) Adjusted EBITDA represents net income before interest income and expense, depreciation, amortization of deferred drydocking & special survey costs
(2)
and deferred finance costs, amortization of deferred realized losses on interest rate swaps, loss on sale of securities, gain on debt extinguishment, stock based compensation and refinancing professional fees.
Based on weighted average diluted shares outstanding.
23Charter Adjusted Net Asset Value
(in US$ millions)
$1,795 ($1,415)
(Pro-forma)
NAV / Share: $18.3(3) NAV / Share: $20.6(4)
$72 As of September 30, 2020 As of September 30, 2020
$452 $421
Charter-Adjusted Total Asset Net Debt Net Working Capital & Other (1) Net Asset Value (2) Net Asset Value
Value (Pro-forma)
• As calculated in accordance with the financial covenants contained in the Company’s credit facilities as of September 30, 2020, market value
of the Company’s existing fleet of 58 containerships on a charter-inclusive basis was approximately $1.8 billion.
− Broker appraisals for charter-free asset value and charter-adjustments are as of June 30, 2020
• Adjustments to calculate net asset value include:
− Net debt, which is adjusted to include non-cash fair value adjustments and deferred finance costs
− Net working capital & other, which includes DAC’s equity stake in the Gemini joint venture at carrying value
Note: Asset value does not include vessels acquired after September 30, 2020. Refer to appendix for additional details regarding calculation of Net Asset Value.
(1) Net debt includes (1) $1,391.9 million of long-term debt, including current portion, which adds back deferred finance costs of $26.9 million and debt fair value adjustment of $15.7 million, and (2) $129.4 million of long-term leaseback obligations,
including current portion which adds back deferred finance costs of $3.7 million, less (3) cash and cash equivalents of $106.4 million. Please refer to Appendix. Does not include accumulated accrued interest of $162.0 million as of September 30, 2020.
(2) Includes carrying value of investments in Gemini JV of $13.7 million and ZIM and HMM notes of $39 million, as well as net working capital and other assets and liabilities. Excludes assets and liabilities relating to accruals for certain non-cash items
relating to straight-line revenue recognition, unearned revenue with respect to ZIM and HMM notes and deferred Handling Fees. Please refer to Appendix for further details.
(3) Based on 24.789 mm shares outstanding as of September 30, 2020.
(4) Based on the current NAV of $452.43 mil. reduced by $31.13 mil. (cash required for the share buy back) divided by the new number of shares which is 20,450,041
24Summary
Financial Strategy Positioning
Danaos for Success k
38.4% reduction in leverage
between 2017 and today(2)
7.3x
5.1x
Continued de-levering from strong contracted cash flows 4.6x 4.5x
✓
- Minimum debt amortization of $317mm(1) in 2020 and 2021
2017 2018 2019 2020 Q3
Balanced chartering strategy to ensure cash flow visibility with 99% and 81% of 2020 and 2021
✓
revenues contracted(3)
Opportunistic vessel acquisition strategy
✓ - Acquired three vessels in last nine months, two of which have been fixed on multi-year charters
- Two additional 9,000 TEU vessels acquired and expected to be delivered at the end of 2020
The Company repurchased 17.5% of its outstanding shares in October 2020 for an aggregate
✓ purchase price of $31.1 million
Following consummation of recent equity offering the Company is permitted, under its loan
✓
agreements, to re-instate dividends
(1) Calculated as the sum of contractual principal debt repayment and lease repayments under sale leaseback structure.
(2) Net leverage is a non-GAAP measure. Calculated as Net Adjusted Debt / Adjusted EBITDA. Adjusted EBITDA is a non-GAAP measure. See appendix for definitions and reconciliations to the nearest GAAP measure.
(3) Assumes contracted vessels operate on gross daily charter rate, accounts for revenue exclusively derived from long-term charter contracts. 26Appendix
Substantial Fleet Employment
and Coverage Total Charter
Revenue
Charterer Age1 Vessel Contribution
8.6 Hyundai Honour
Hyundai Respect 38.5%
8.6
8.4 Hyundai Smart
Hyundai Speed
5x 8.3
Hyundai Ambition
13,100 TEU 8.3
14.1 Pusan C
7.8%
13.9 Le Havre
9.6 Express Berlin
9.5 Express Rome
5x 9.4 Express Athens
9,600 – 10,100 TEU 16.1 Europe
15.9 America
ONE 15.3 Phoebe
14.8 SM Charleston 27.1%
12.3 Niledutch Lion
9.2 CMA CGM Attila
10x 9.1 CMA CGM Tancredi
8,500 – 9,000 TEU 8.9 CMA CGM Bianca
8.8 CMA CGM Samson
8.6 CMA CGM Melisande
18.6 Performance
18.3 Dimitra C 23.2%
11.0 CMA CGM Moliere
10.6 CMA CGM Musset
10.4 CMA CGM Nerval
9x 10.4 YM Mandate
6,400 – 6,500 TEU 10.3 CMA CGM Rabelais
10.1 CMA CGM Racine
10.1 YM Maturity
2018 2019 2020 2021 2022 2023 2024 2025 2028 28
(1) Age as of September 30, 2020Substantial Fleet Employment
and Coverage Total Charter
Revenue
Charterer Age1 Vessel Contribution
16.6 ANL Tongala
16.4 Derby D 1.0%
13.1 Seattle C
12.9 YM Vancouver
12.2 Rio Grande
Zim Sao Paolo
10x 12.0
11.9 Zim Kingston
4,300 – 5,500 TEU
11.8 Zim Monaco
11.5 Zim Dalian
11.3 Zim Luanda
19.6 Dimitris C
16.6 Colombo 1.8%
16.1 Singapore
10.4 Express Argentina
10.2 Express Brazil
8x 10.0 Express France
3,500 TEU Express Spain
9.7
9.5 Express Black Sea
23.5 Future
23.3 Sprinter
23.2 Vladivostok 0.7%
23.1 Advance
23.1 Stride
22.6 Progress C
11x 22.6 Amalia C
2,200 – 2,600 TEU 22.6 Highway
22.5 Bridge
19.3 Danae C
18.8 Zebra
(1) Age as of September 30, 2020 2018 2019 2020 2021 2022 2023 2024 29Adjusted EBITDA
Reconciliation of Net Income / (Loss) to EBITDA and Adjusted EBITDA
September 30, 2020
Three Months Three Months Nine Months Nine Months Twelve Months
ended ended ended ended ended
($ In thousands) Sept. 30, 2020 Sept. 30, 2019 Sept 30, 2020 Sept 30, 2019 Sept 30, 2020
Net income / (Loss) from Continuing Operations
$42,786 $33,855 $110,371 $97,436 $144,188
(unadjusted)
Adjustments:
Depreciation 25,765 24,336 75,604 72,141 99,968
Amortization of deferred drydocking & special survey
3,174 2,271 8,425 6,525 10,633
costs
Amortization of deferred realized losses of cash flow
913 913 2,719 2,709 3,632
interest rate swaps
Amortization of deferred finance costs 4,517 4,027 12,707 13,270 16,859
Interest income (1,650) (1,586) (4,952) (4,751) (6,615)
Interest expense 7,525 14,317 29,551 42,057 42,697
EBITDA $83,030 $78,133 $234,425 $229,387 $311,362
Stock based compensation 301 1,195 897 3,060 2,078
ADJUSTED EBITDA $83,331 $79,328 $235,322 $232,447 $313,440
Source: Company filings. 30Historical Adjusted EBITDA
Historical Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Years ended 2012 – LTM 3Q 2020
Twelve months
ended
($ in thousands) 2012 2013 2014 2015 2016 2017 2018 2019 Sept. 30, 2020
Net Income $(105,204) $37,523 $(3,920) $117,016 $(366,195) $83,905 $(32,936) $131,252 $144,188
Adjustments
Depreciation 143,938 137,414 137,061 131,783 129,045 115,228 107,757 96,505 99,968
Amortization of deferred drydocking & special survey costs 6,070 5,482 4,387 3,845 5,528 6,748 9,237 8,733 10,633
Amortization of deferred realized losses on cash flow interest rate swaps 3,524 4,017 4,016 4,017 4,028 3,694 3,694 3,622 3,632
Amortization of finance costs and debt discount 14,314 15,431 15,070 14,038 12,652 11,153 14,957 16,866 16,336
Finance costs accrued (Exit Fees under our Bank Agreements) 2,762 3,763 3,745 3,639 3,447 3,169 2,059 556 523
Interest Income (1,642) (2,210) (1,703) (3,419) (4,682) (5,576) (5,781) (6,414) (6,615)
Interest Expense 87,340 91,185 79,980 70,397 70,314 75,403 70,749 55,203 42,697
EBITDA 151,102 292,605 238,636 341,316 (145,863) 293,724 169,736 306,323 311,362
Adjusted for:
Impairment loss 129,630 19,004 75,776 41,080 415,118 - 210,715 - -
Gain on debt extinguishment - - - - - - (116,365) - -
Re-financing professional fees - - - - - 14,297 51,314 - -
Accelerated amortization of accumulated other comprehensive loss - - - - 7,705 - 1,443 - -
Realized (Gain) / Loss on derivatives 150,910 144,254 119,612 52,125 5,397 - - - -
Unrealized (Gain) / Loss on fair value of derivatives 739 (22,121) (24,915) (16,285) (4,648) - - - -
Stock based compensation 139 75 638 88 76 - 1,005 4,241 2,078
Bad debt expense - - - - 15,834 - - - -
Impairment loss component of equity loss on investments - - - - 14,642 - - - -
Loss on sale of HMM securities - - - - 12,906 2,357 - - -
Impairment loss on securities - - - - 29,384 - - - -
(Gain) / Loss on sale of vessels (830) 449 (5,709) - 36 - - - -
Adjusted EBITDA 431,690 434,266 404,038 418,324 350,587 310,378 317,849 310,564 313,440
Source: Company filings. 31Adjusted Net Income
Reconciliation of Net Income to Adjusted Net Income and Adjusted Earnings per Share
September 30, 2020
Three Months Three Months Nine Months Nine Months Twelve Months
ended ended ended ended ended
($ In thousands, except per share items) Sept. 30, 2020 Sept. 30, 2019 Sept. 30, 2020 Sept. 30, 2019 Sept. 30, 2020
Net income / (Loss) from Continuing Operations $42,786 $33,855 $110,371 $97,436 $144,188
Adjustments:
Amortization of deferred finance costs 4,517 4,027 12,707 13,270 16,859
ADJUSTED NET INCOME $47,303 $37,882 $123,078 $110,706 $161,047
ADJUSTED EARNINGS PER SHARE
Diluted net income per share $1.91 $2.46 $4.97 $7.23 $6.91
Diluted weighted average number of shares 24,789 15,373 24,789 15,309 23,316
Source: Company filings. 32Historical Adjusted Net Income
Reconciliation of Adjusted Net Income
Years ended December 2012 – LTM 3Q 2020
Twelve months
ended
2012 2013 2014 2015 2016 2017 2018 2019 Sept. 30, 2020
Net Income $(105,204) $37,523 $(3,920) $117,016 $(366,195) $83,905 $(32,936) $131,252 $144,188
Adjust for:
Impairment loss 129,630 19,004 75,776 41,080 415,118 - 210,715 - -
Gain on debt extinguishment - - - - - - (116,365) - -
Amortization of finance costs 14,314 15,431 15,070 14,038 12,652 11,153 11,771 10,795 10,591
Debt discount amortization - - - - - - 3,186 6,071 5,745
Finance costs accrued (Exit Fees under our Bank Agreements) 2,762 3,763 3,745 3,639 3,447 3,169 2,059 556 523
Re-financing professional fees - - - - - 14,297 51,314 - -
Accelerated amortization of accumulated other comprehensive loss - - - - 7,705 - 1,443 - -
Unrealized (Gain) / Loss on fair value of derivatives 739 (22,121) (24,915) (16,285) (4,648) - - - -
Realized loss on over-hedging portion of derivatives 19,042 - - - - - - - -
Bad debt expense - - - - 15,834 - - - -
Impairment loss component of equity loss on investments - - - - 14,642 - - - -
Loss on sale of HMM securities - - - - 12,906 2,357 - - -
Impairment loss on securities - - - - 29,384 - - - -
(Gain) / Loss on sale of vessels (830) 449 (5,709) - 36 - - - -
$60,453 $54,049 $60,047 $159,488 $140,881 $114,881 $131,188 $148,674 $161,047
Source: Company filings. 33Sept. 30, 2020 Free Cash Flow
Reconciliation of Free Cash Flow
Twelve months ended Three months ended Twelve months ended
($ in thousands)
Dec. 31, 2019 Sept. 30, 2020 Sept. 30, 2020
Net Income $131,252 $42,786 $144,188
Adjustments
Depreciation 96,505 25,765 99,968
Amortization of deferred drydocking & special survey costs 8,733 3,174 10,633
Amortization of deferred realized losses on cash flow interest rate swaps 3,622 913 3,632
Amortization of finance costs and debt discount 16,866 4,383 16,336
Finance costs accrued (Exit Fees under our Bank Agreements) 556 134 523
Interest Income (6,414) (1,650) (6,615)
Interest Expense 55,203 7,525 42,697
EBITDA 306,323 83,030 311,362
Stock based compensation 4,241 301 2,078
Adjusted EBITDA $310,564 $83,331 $313,440
Net cash interest (80,772) (10,472) (62,312)
Equity income / (loss) on investments (1,601) (1,464) (5,823)
Revenue recognition (non-cash) (27,682) (1,190) (11,883)
Other working capital (8,831) (6,307) (9,113)
Payments for dry-docking & special survey costs deferred (7,157) (17) (15,340)
Operating cash flow 184,520 63,881 208,969
Debt Amortization (124,358) (40,450) (142,954)
Free Cash Flow 60,162 23,431 66,015
Debt drawdowns - 13,300 36,700
Vessels additions & advances for vessels additions (18,853) (7,403) (35,267)
Vessel acquisitions & advances for vessel acquisitions (2,507) - (77,557)
Finance costs (30,474) (7,914) (19,913)
Share issuance costs (873) - (873)
Paid-in capital 54,440 - 54,440
Net Increase / (Decrease) in Cash and Cash Equivalents $61,895 $21,414 $23,545
Source: Company filings. 34Appendix: Danaos Net Asset
Value(1)
(in US$ thousands)
(1) Net Asset Value (NAV) is used to assess compliance with our credit facility covenants, and management
believes that many investors use NAV as a reference point in assessing valuation of fleets of ships and
Charter Adjusted Asset Value similar assets.
Charter Adjusted Fleet Value(2) $1,795,434
Total Charter Adjusted Asset Value $1,795,434 (2) As calculated in accordance with the financial covenants contained in the Company’s credit facilities as of
September 30, 2020, on a charter-inclusive basis, as follows (1) for any vessel having a charter with more
Less: than 12 months remaining duration, the present value of the “bareboat-equivalent” time charter income from
such charter (contracted revenue thereunder less forecasted operating expenses, insurances and dry-
Net Debt docking costs), plus (2) the present value of the residual charter-free value of any vessel (estimated based on
Bank debt(3) $1,391,921 June 30, 2020 broker valuations using vessel age as of the end of applicable charter, if any), each discounted
(4)
Long-term leaseback obligation (including current portion) 129,352
to present value using a discount rate 7.0%. See “Item 5. Operating and Financial Review and Prospects” in
the Company’s Annual Report on Form 20-F filed with the SEC on February 27, 2020. These calculations of
Less: vessel value may not be comparable to other methods of determining vessel values or reported book value
Cash and cash equivalents (106,368) ($2.4 billion as of September 30, 2020). Vessel values are highly volatile and contracted charter revenue is
Total Net Debt $1,414,905 subject to counterparty performance and may not be transferable upon sale of a vessel. As such, the
Company’s estimates of market value may not be indicative of the current or future value of its vessels, or
Plus: prices that the Company could achieve if it were to sell the vessels.
Net Working Capital & Other(5) (3) Consists of (i) Current portion of long term debt, net of $126.326 million and (ii) Long-term debt, net of
Accounts receivable, net $10,846 current portion of $1,222.971 million plus deferred finance costs, net, of $26.93 million and debt fair value
Inventories 9,021 adjustment of $15.694 million. Does not include accumulated accrued interest of $162.0 million.
Prepaid Expenses 1,653
Due from related parties 20,851 (4) Consists of (i) Current portion of leaseback obligation, net of $24.166 million and (ii) Long-term leaseback
Other current assets & non-current assets 4,485 obligation, net of current portion of $101.522 million plus deferred finance costs of $3.664 million.
Investments in affiliates(6) 13,694
Zim notes(7) 26,742 (5) Excludes the following non-cash items included on the Company’s balance sheet, as of September 30,
HMM notes(7) 12,304 2020: (i) unearned revenue liabilities totaling $30.916 million relating to an accounting charge recognized
Less: upon the Company’s receipt of the ZIM and HMM notes in respect of charter amendments ($20.934 million
Accounts payable (11,628) Unearned revenue, net of current portion and $9.982 million included in Unearned revenue, current portion),
Accrued liabilities (8,770) (ii) Other current assets ($9.472 million) and Other non-current assets ($22.344 million) related to straight-line
Unearned revenue (7,301) revenue recognition totaling $31.816 million, and (iii) liabilities related to straight-line revenue recognition
Total Net Working Capital & Other $71,896 totaling $0.710 million (Other current liabilities of $0.423 million and $0.287 million included in Other long-term
liabilities).
Net Asset Value: $452,425
(6) Represents investment in Gemini JV.
(7) Included in Other non-current assets on the Company’s balance sheet.
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