Danaos ((DAC)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Danaos Corporation’s recent earnings call revealed a generally positive sentiment, marked by strong fleet expansion and financial robustness. The company highlighted its successful bond offering and increased dividends, although it faced challenges with decreased net income and rising expenses. Overall, the positive developments outweighed the negatives, contributing to an optimistic outlook.
Strong Charter Market and Fleet Expansion
Danaos Corporation is capitalizing on a robust charter market with high demand for midsized and larger vessels. The company has secured new charters extending as far as 2028. In line with this, Danaos is expanding its fleet by adding six new 1,800 TEU vessels. Notably, four of these vessels have secured 10-year charters, which will contribute approximately $236 million to the company’s contracted revenue backlog.
Successful Bond Offering and Financial Strength
The company successfully completed a $500 million unsecured 7-year bond offering with a 6.85% coupon, marking one of the most competitively priced deals in the shipping industry. Danaos’ financial strength is further underscored by its net debt standing at $165 million and a net debt to adjusted EBITDA ratio of 0.23x. The company also boasts significant liquidity, amounting to $971 million.
Consistent Dividend Growth
Danaos continues to demonstrate its commitment to shareholder returns by announcing an increase in its quarterly dividend to $0.90 per share. This marks a 6% increase from the previous dividend, reflecting the company’s policy of consistent yearly dividend growth.
Decrease in Adjusted Net Income
Despite the positive developments, Danaos reported a decrease in adjusted net income by $2.7 million compared to the third quarter of 2024. This decline was primarily attributed to an increase in total operating costs and a decrease in dividend income.
Increased Operating and G&A Expenses
The company experienced a rise in vessel operating expenses by $2.4 million and an increase in general and administrative expenses by $1.6 million compared to the third quarter of 2024. These increases are reflective of the company’s expanding operations and fleet.
Forward-Looking Guidance
Looking ahead, Danaos provided significant guidance during the earnings call. The company reported an adjusted EPS of $6.75 per share and an adjusted net income of $124.1 million, slightly down from the previous year. Operating revenues increased by $4.5 million, while total operating costs rose by $6.1 million due to fleet expansion. The company’s liquidity remains strong at $971 million, and it continues to invest in fleet growth with six new vessels added to its order book.
In summary, Danaos Corporation’s earnings call reflected a positive sentiment, driven by strategic fleet expansion and robust financial health. Despite challenges with decreased net income and rising expenses, the company’s successful bond offering and consistent dividend growth underscore its resilience and commitment to long-term growth.