Danaos Q2 Results Surpass Street Expectations

Danaos Corporation DAC reported a second-quarter FY23 operating revenue decline of 3.8% year-over-year to $241.48 million, beating the consensus of $225.75 million.

Operating income contracted 5.9% Y/Y to $147.62 million; the margin stood at 61.1%, down 1.36 bps from the prior year.

Adjusted EPS was $7.14 (-6% Y/Y), above the consensus of $6.67.

Adjusted EBITDA declined 7.7% to $177.33 million for the quarter; the margin contracted 314 bps to 73.4%.

Danaos had an average of 68 containerships in Q2 compared to 71.0 containerships in 2Q22. Fleet utilization was 98.7% for the quarter ending June 30, 2023, compared to 99.9% last year. 

Vessel operating expenses increased by $1.3 million to $41.9 million in the quarter due to an increase in the average daily operating cost for vessels on time charter to $6,970 per vessel per day compared to $6,463 per vessel per day in 2Q22. 

During the quarter DAC acquired 1.55 million shares of Eagle Bulk Shipping Inc. EGLE for $68.2 million, representing a 16.7% shareholding stake.

Year-to-date, DAC has repurchased 1.08 million shares in the open market for $65.6 million under a share repurchase program of up to $100 million.

Danaos’s operating cash flow for six months ended June 30, 2023, totaled $280.61 million, compared to $620.49 million a year ago. Cash and cash equivalents were $293.3 million.

Net Debt stood at $131 million, and Net Debt / LTM Adjusted EBITDA was 0.18x.

Dividend: Danaos declared a dividend of $0.75 per share of common stock, payable on September 1, 2023, to stockholders of record as of August 23, 2023. 

DAC added ~$469 million to the contracted revenue backlog through the arrangement of new charters for 12 containerships in its fleet. 

Total contracted cash operating revenues, on the basis of concluded charter contracts, increased to $2.5 billion as of June 30, 2023.

The company’s contracted operating days’ charter coverage for the containership fleet is 99.4% for 2023 and 86.1% for 2024.

Price Action: DAC shares are trading higher by 0.18% at $68.25 on the last check Monday.