Danaos Corporation Reports Results for the Fourth Quarter and Year Ended December 31, 2024

Danaos Corporation ("Danaos") (NYSE: DAC), one of the world's largest independent owners of container vessels and drybulk vessels, reported unaudited results for the period ended December 31, 2024.

Highlights for the Fourth Quarter and Year Ended December 31, 2024:

For management purposes, the Company is organized based on operating revenues generated from container vessels and dry-bulk vessels and has two reporting segments: (1) a container vessels segment and (2) a dry-bulk vessels segment. The Company measures segment performance based on net income. Items included in the applicable segment's net income are directly allocated to the extent that the items are directly or indirectly attributable to the segments. With regards to the items that are allocated by indirect calculations, their allocation is commensurate to the utilization of key resources. The Other column includes components that are not allocated to any of the Company's reportable segments and includes investments in an affiliate accounted for using the equity method of accounting and investments in marketable securities.

• In December 2024, we added two 9,200 TEU newbuilding containerships to our orderbook, which have expected deliveries in 2027. We took delivery of 6 newbuilding containerships in 2024 and 1 in January 2025.
• In February 2025, we entered into a syndicated loan facility agreement for an amount of up to $850 million, to finance all of our remaining newbuilding container vessels, including the two additional recent orders, with deliveries from 2026 through 2028.
• Our remaining orderbook currently consists of a further 15 newbuilding containership vessels with an aggregate capacity of 128,220 TEU with expected deliveries of one vessel in 2025, three vessels in 2026, nine vessels in 2027 and two vessels in 2028. All the vessels in our orderbook are designed with the latest eco characteristics, will be methanol fuel ready, fitted with open loop scrubbers and Alternative Maritime Power (AMP) units and will be built in accordance with the latest requirements of the International Maritime Organization (IMO) in relation to Tier III emission standards and Energy Efficiency Design Index (EEDI) Phase III.
• We have secured multi-year charter arrangements for 13 of the remaining 15 newbuilding vessels orderbook, with an average charter duration of approximately 5.1 years weighted by aggregate contracted charter hire.
• Over the past three months, we added approximately $336 million to our contracted revenue backlog through a combination of new charters and charter extensions for 11 of our container vessels and container vessels newbuildings.
• As a result, total contracted cash operating revenues, on the basis of concluded charter contracts through the date of this release, currently stand at $3.4 billion, including newbuildings. The remaining average contracted charter duration for our containership fleet is 3.7 years, weighted by aggregate contracted charter hire.
• Contracted operating days charter coverage for our container vessel fleet is currently 97% for 2025 and 79% for 2026. This includes newbuildings based on their scheduled delivery dates.
• We took delivery of all of our contracted capesize drybulk carriers by taking delivery of two vessels in the second quarter of 2024 and one vessel in July 2024. As a result, our capesize drybulk fleet currently stands at 10 vessels with an aggregate capacity of approximately 1.8 million DWT.
• As of the date of this release, Danaos has repurchased a total of 2,458,024 shares of its common stock in the open market for $168.8 million under its $200 million authorized share repurchase program that was originally introduced in June 2022 and was upsized in November 2023.
• Danaos has declared a dividend of $0.85 per share of common stock for the fourth quarter of 2024. The dividend is payable on March 5, 2025, to stockholders of record as of February 24, 2025.

Danaos' CEO Dr. John Coustas commented:

"The world is entering uncharted territory and any near-term predictions about the direction of shipping markets are inherently unreliable. The tariff war is bound to generate disruptions, which have historically benefited shipping. However, an economic slowdown might negate these benefits.

The dry bulk market continues to suffer from ongoing malaise due to the pace of the recovery of the Chinese economy, which has not shown signs of accelerating. The delivery of new tonnage starting this year will add to this weakness, particularly in the panamax and smaller segments, where the orderbook is concentrated. The capesize segment, where our fleet is concentrated, continues to have an orderbook that remains at historically low levels.

The container charter market remains healthy, albeit liners are exhibiting more caution, particularly with respect to more forward dates. While box rates are weakening, they are still much higher than pre-pandemic levels. We will have to wait until after Chinese New Year to gauge the effect of the front-loading of exports that occurred in anticipation of tariffs and the demand pattern in the new trade environment.

Danaos is highly insulated from near-term market uncertainty, with 97% coverage for 2025 and 79% for 2026 at healthy rates, shielding us from market volatility. Our charter backlog of $3.4 billion provides us with a certainty of income and firepower to explore accretive investments. We have chartered 13 out of our 15 newbuildings for five years and have arranged a new $850 million facility from a bank syndicate to fully cover the financing of all vessels on order.

Our profitability remains consistent, and we are using our strong balance sheet to increase dividends, continue our share buyback program, and source opportunities to grow our company for the benefit of our shareholders.

Our strategic focus remains on maintaining a robust financial position, securing long-term contracts for vessels coming off charter, and investing in modern, fuel-efficient container vessels to enhance our competitive position in the market. We are committed to delivering value to our shareholders through prudent financial management and strategic growth initiatives."

Three months ended December 31, 2024 compared to the three months ended December 31, 2023

During the three months ended December 31, 2024, Danaos had an average of 72.9 container vessels and 10.0 drybulk vessels compared to 68.0 container vessels and 4.5 drybulk vessels during the three months ended December 31, 2023. Our container vessels utilization for the three months ended December 31, 2024 was 96.4% compared to 97.7% in the three months ended December 31, 2023. Our drybulk vessels utilization for the three months ended December 31, 2024 was 84.2% compared to 81.8% in the three months ended December 31, 2023.

Our adjusted net income amounted to $133.3 million, or $6.93 per diluted share, for the three months ended December 31, 2024 compared to $136.0 million, or $6.99 per diluted share, for the three months ended December 31, 2023. We have adjusted our net income in the three months ended December 31, 2024 for a $35.6 million change in fair value of investments, a $8.2 million of stock based compensation expense, a $0.8 million of non-cash finance fees amortization and a $1.7 million gain on vessel disposal.

Adjusted net income of our container vessels segment amounted to $128.7 million for the three months ended December 31, 2024 compared to $137.6 million for the three months ended December 31, 2023. We adjusted net income of container vessels segment in the three months ended December 31, 2024 for a $7.6 million of stock based compensation expense, a $0.8 million of non-cash finance fees amortization and a $1.7 million gain on vessel disposal.

Adjusted net income of our drybulk vessels segment amounted to $2.3 million for the three months ended December 31, 2024 compared to $1.6 million adjusted net loss for the three months ended December 31, 2023. We adjusted net income of drybulk vessels segment in the three months ended December 31, 2024 for a $0.6 million of stock based compensation expense.

The $2.7 million decrease in adjusted net income for the three months ended December 31, 2024 compared to the three months ended December 31, 2023 is primarily attributable to a $11.0 million increase in total operating expenses, a $4.9 million increase in net finance expenses and a $0.1 million increase in equity loss on investments, which were partially offset by a $8.9 million increase in operating revenues, a $2.3 million increase in dividends received and a $2.1 million cash collection of common benefit claim from the bankruptcy trustee of Hanjin Shipping.

Please refer to the Adjusted Net Income reconciliation tables, which appear later in this earnings release.

On a non-adjusted basis, our net income amounted to $90.4 million, or $4.70 earnings per diluted share, for the three months ended December 31, 2024 compared to net income of $149.9 million, or $7.70 earnings per diluted share, for the three months ended December 31, 2023. Our net income for the three months ended December 31, 2024 includes $35.6 million loss on marketable securities compared to a $20.8 million gain on marketable securities in the three months ended December 31, 2023. On a non-adjusted basis, the net income of our container vessels segment amounted to $122.0 million for the three months ended December 31, 2024 compared to $131.0 million for the three months ended December 31, 2023. On a non-adjusted basis, the net income of our drybulk vessels segment amounted to $1.7 million for the three months ended December 31, 2024 compared to a $1.9 million net loss for the three months ended December 31, 2023.

Operating Revenues

Operating revenues increased by 3.6%, or $8.9 million, to $258.2 million in the three months ended December 31, 2024 from $249.3 million in the three months ended December 31, 2023.

Operating revenues of our container vessels segment decreased by 0.6%, or $1.4 million, to $237.5 million in the three months ended December 31, 2024 from $238.9 million in the three months ended December 31, 2023, analyzed as follows:

• a $21.6 million increase in revenues in the three months ended December 31, 2024 compared to the three months ended December 31, 2023 as a result of newbuilding vessel additions;
• a $3.7 million increase in revenues in the three months ended December 31, 2024 compared to the three months ended December 31, 2023 due to higher non-cash revenue recognition in accordance with US GAAP;
• a $19.9 million decrease in revenues in the three months ended December 31, 2024 compared to the three months ended December 31, 2023 as a result of lower charter rates and decreased vessel utilization;
• a $2.4 million decrease in revenues in the three months ended December 31, 2024 compared to the three months ended December 31, 2023 due to vessel disposals; and
• a $4.4 million decrease in revenues in the three months ended December 31, 2024 compared to the three months ended December 31, 2023 due to decreased amortization of assumed time charters.

Operating revenues of our drybulk vessels segment added an incremental $10.3 million of revenues in the three months ended December 31, 2024 compared to the three months ended December 31, 2023, mainly as a result of additions of dry bulk vessels to our fleet.

Vessel Operating Expenses

Vessel operating expenses increased by $5.5 million to $45.6 million in the three months ended December 31, 2024 from $40.1 million in the three months ended December 31, 2023, primarily as a result of the increase in the average number of vessels in our fleet due to recent container vessel newbuilds deliveries and drybulk vessels acquisitions, which was partially offset by the decrease in average daily operating cost of our vessels to $6,135 per vessel per day for the three months ended December 31, 2024 compared to $6,188 per vessel per day for the three months ended December 31, 2023. 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 Dry-docking and Special Survey Costs.

Depreciation

Depreciation expense increased by 20.6%, or $6.9 million, to $40.4 million in the three months ended December 31, 2024 from $33.5 million in the three months ended December 31, 2023 mainly due to depreciation expense related to 10 recently acquired Capesize drybulk vessels and 6 recently delivered container newbuilds.

Amortization of Deferred Dry-docking and Special Survey Costs

Amortization of deferred dry-docking and special survey costs increased by $3.7 million to $9.3 million in the three months ended December 31, 2024 from $5.6 million in the three months ended December 31, 2023.

General and Administrative Expenses
General and administrative expenses decreased by $0.7 million, to $21.7 million in the three months ended December 31, 2024 from $22.4 million in the three months ended December 31, 2023. The decrease was mainly attributable to decreased stock based compensation expense, which was partially offset by increased management fees.

Other Operating Expenses

Other Operating Expenses include Voyage Expenses.

Voyage Expenses

Voyage expenses decreased by $1.7 million to $14.1 million in the three months ended December 31, 2024 from $15.8 million in the three months ended December 31, 2023 primarily as a result of a $1.0 million decrease in voyage expenses related to our drybulk vessels and a $0.7 million decrease in voyage expenses related to our container vessels.

Voyage expenses of container vessels segment decreased by $0.7 million to $8.0 million in the three months ended December 31, 2024 from $8.7 million in the three months ended December 31, 2023 mainly due to decreased other voyage expenses.

Voyage expenses of drybulk vessels segment decreased by $1.0 million to $6.1 million in the three months ended December 31, 2024 compared to $7.1 million voyage expenses in the three months ended December 31, 2023. Total voyage expenses of drybulk vessels comprised $1.1 million commissions and $5.0 million other voyage expenses, mainly bunkers consumption and port expenses, in the three months ended December 31, 2024.

Net gain on disposal/sale of vessels

In March 2024, we sold for scrap the vessel Stride, which had been off-hire since January 8, 2024 due to damage from a fire in the engine room that was subsequently contained. In the three months ended December 31, 2024, we recognized an additional $1.7 million gain on disposal of this vessel, relating to an additional $1.7 million of net insurance proceeds for the constructive total loss of this vessel.

Interest Expense and Interest Income

Interest expense increased by $6.3 million, to $9.9 million in the three months ended December 31, 2024 from $3.6 million in the three months ended December 31, 2023. The increase in interest expense is a result of:

• a $5.3 million increase in interest expense due to an increase in our average indebtedness by $332.1 million between the two periods, which was partially offset by a decrease in our debt service cost by approximately 0.78%, mainly as a result of a reduction in SOFR rates between the two periods. Average indebtedness was $747.2 million in the three months ended December 31, 2024, compared to average indebtedness of $415.1 million in the three months ended December 31, 2023;
• a $0.3 million increase in the amortization of deferred finance costs; and
• a $0.7 million increase in interest expense due to a decrease in the amount of interest expense capitalized on our vessels under construction in the three months ended December 31, 2024.

As of December 31, 2024, our outstanding debt, gross of deferred finance costs, was $744.5 million, which included $262.8 million principal amount of our Senior Notes. These balances compare to debt of $410.5 million, which included $262.8 million principal amount of our Senior Notes, as of December 31, 2023. The increase in our outstanding debt is mainly due to loans drawn down within 2024 to partially finance our container vessel newbuildings.

Interest income increased to $3.9 million in the three months ended December 31, 2024 compared to $2.7 million in the three months ended December 31, 2023 mainly as a result of an increase in the average amount of time deposits between the two periods.

Gain/(loss) on investments

Following the all-stock merger of Eagle Bulk Shipping Inc. ("EGLE") with Star Bulk Carriers Corp. ("SBLK") completed on April 9, 2024, we currently own 4,070,214 shares of common stock of SBLK. The $33.1 million loss on investments in the three months ended December 31, 2024 consisted of the $35.6 million fair value loss on these marketable securities, which was partially offset by the dividends recognized on these shares of $2.5 million. This compares to a $20.9 million gain on marketable securities in the three months ended December 31, 2023.

Equity loss on investments

Equity loss on investments amounting to $0.2 million and $0.1 million in the three months December 31, 2024 and December 31, 2023, respectively, relates to our share of initial expenses of 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 remained stable at $0.9 million in each of the three months ended December 31, 2024 and December 31, 2023.

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 December 31, 2024 and December 31, 2023.

Other income/(expenses), net

Other income, net amounted to $2.8 million in the three months ended December 31, 2024 compared to $0.2 million other expenses, net in the three months ended December 31, 2023. The other income, net in the three months ended December 31, 2024 mainly consists of $2.1 million in cash collected from the bankruptcy trustee of Hanjin Shipping as a partial payment of our claim under the Hanjin bankruptcy proceedings.

Adjusted EBITDA

Adjusted EBITDA increased by 9.9%, or $17.1 million, to $189.7 million in the three months ended December 31, 2024 from $172.6 million in the three months ended December 31, 2023. As outlined above, the increase is mainly attributable to a $13.3 million increase in operating revenues, a $2.3 million increase in dividends received and a $2.1 million cash collection of common benefit claim from the bankruptcy trustee of Hanjin Shipping, which were partially offset by a $0.5 million increase in total operating expenses and a $0.1 million increase in equity loss on investments. Adjusted EBITDA for the three months ended December 31, 2024 is adjusted for a $35.6 million change in fair value of investments, stock based compensation of $8.2 million and a $1.7 million gain on disposal of vessel. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.

Adjusted EBITDA of container vessels segment increased by 4.4%, or $7.6 million, to $180.7 million in the three months ended December 31, 2024 from $173.1 million in the three months ended December 31, 2023.

Adjusted EBITDA of drybulk vessels segment increased by $7.3 million to $6.8 million in the three months ended December 31, 2024 from ($0.5) million in the three months ended December 31, 2023.

Year ended December 31, 2024 compared to the year ended December 31, 2023

During the year ended December 31, 2024, Danaos had an average of 70.2 container vessels and 8.6 drybulk vessels compared to 68.1 container vessels and 1.1 drybulk vessels during the year ended December 31, 2023. Our container vessels utilization for the year ended December 31, 2024 was 97.2% compared to 97.7% for the year ended December 31, 2023. Our drybulk vessels utilization for the year ended December 31, 2024 was 87.0% compared to 80.8% in the year ended December 31, 2023.

Our adjusted net income amounted to $532.4 million, or $27.47 per diluted share, for the year ended December 31, 2024 compared to $567.6 million, or $28.52 per diluted share, for the year ended December 31, 2023. We have adjusted our net income in the year ended December 31, 2024 for a $25.2 million change in fair value of investments, a $8.3 million gain on vessel disposal, a $8.2 million of stock based compensation expense and a $2.3 million of non-cash finance fees amortization.

Adjusted net income of our container vessels segment amounted to $519.8 million for the year ended December 31, 2024 compared to $572.2 million for the year ended December 31, 2023. We adjusted net income of container vessels segment in the year ended December 31, 2024 for a $8.3 million gain on vessel disposal, a $7.6 million of stock based compensation expense and a $2.3 million non-cash finance fees amortization.

Adjusted net income of our drybulk vessels segment amounted to $5.0 million for the year ended December 31, 2024 compared to $1.7 million adjusted net loss for the year ended December 31, 2023, as we just started to be engaged in the drybulk vessels segment during that period. We adjusted net income of drybulk vessels segment in the year ended December 31, 2024 for a $0.6 million of stock based compensation expense.

The $35.2 million decrease in adjusted net income for the year ended December 31, 2024 compared to the year ended December 31, 2023 is primarily attributable to a $84.2 million increase in total operating expenses and a $4.2 million increase in net finance expenses, which were partially offset by a $40.5 million increase in operating revenues, a $8.2 million increase in dividends received, a $2.4 million decrease in equity loss on investments and a $2.1 million cash collection of common benefit claim from the bankruptcy trustee of Hanjin Shipping.

Please refer to the Adjusted Net Income reconciliation tables, which appear later in this earnings release.

On a non-adjusted basis, our net income amounted to $505.1 million, or $26.05 earnings per diluted share, for the year ended December 31, 2024 compared to net income of $576.3 million, or $28.95 earnings per diluted share, for the year ended December 31, 2023. Our net income for the year ended December 31, 2024 includes a $25.2 million loss on marketable securities compared to a $17.9 million gain on marketable securities in the year ended December 31, 2023. On a non-adjusted basis, the net income of our container vessels segment amounted to $518.1 million and the net income of our drybulk vessels segment amounted to $4.4 million for the year ended December 31, 2024. On a non-adjusted basis, the net income of our container vessels segment amounted to $563.3 million and the net loss of our drybulk vessels segment amounted to $1.9 million for the year ended December 31, 2023.

Operating Revenues

Operating revenues increased by 4.2%, or $40.5 million, to $1,014.1 million in the year ended December 31, 2024 from $973.6 million in the year ended December 31, 2023.

Operating revenues of our container vessels segment decreased by 2.7%, or $26.1 million, to $937.1 million in the year ended December 31, 2024 from $963.2 million in the year ended December 31, 2023, analyzed as follows:

• a $40.5 million increase in revenues in the year ended December 31, 2024 compared to the year ended December 31, 2023 as a result of vessel additions;
• a $40.4 million decrease in revenues in the year ended December 31, 2024 compared to the year ended December 31, 2023 mainly as a result of lower charter rates and decreased vessel utilization;
• a $9.9 million decrease in revenues in the year ended December 31, 2024 compared to the year ended December 31, 2023 due to vessel disposals;
• a $16.7 million decrease in revenues in the year ended December 31, 2024 compared to the year ended December 31, 2023 due to decreased amortization of assumed time charters; and
• a $0.4 million increase in revenues in the year ended December 31, 2024 compared to the year ended December 31, 2023 due to higher non-cash revenue recognition in accordance with US GAAP.

Operating revenues of our drybulk vessels segment added an incremental $66.6 million of revenues in the year ended December 31, 2024 compared to the year ended December 31, 2023, mainly as a result of additions of dry bulk vessels to our fleet.

Vessel Operating Expenses

Vessel operating expenses increased by $23.6 million to $185.7 million in the year ended December 31, 2024 from $162.1 million in the year ended December 31, 2023, primarily as a result of the increase in the average number of vessels in our fleet due to recent container vessel newbuilds deliveries and dry bulk vessels acquisitions, while the average daily operating cost of our vessels remained stable at $6,606 per vessel per day for the year ended December 31, 2024 compared to $6,607 per vessel per day for the year ended December 31, 2023. Management believes that our daily operating costs remain among the most competitive in the industry.

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