Danaos Navigates Rough Waters: Q1 Earnings Fall Short Despite Revenue Growth And Strategic Expansions

Zinger Key Points
  • Danaos Q1 FY24 revenue increased by 4% to $253.4 million, but adjusted EPS of $7.15 missed the consensus of $7.74.
  • Vessel operating expenses rose and adjusted EBITDA declined.

Danaos Corporation DAC shares are trading lower after it reported first-quarter FY24 results.

Operating revenues increased by 4.0% Y/Y to $253.4 million, missing the consensus of $256.0 million.

Vessel operating expenses increased by $2.5 million to $43.1 million in the quarter due to an increase in the average number of vessels in the fleet due to recent dry bulk vessels acquisitions.

Adjusted EBITDA declined to $177.2 million from $179.0 million a year ago. Adjusted EPS of $7.15 missed the consensus of $7.74.

In the quarter, Danaos had an average of 68.0 container vessels and 7.0 Capesize drybulk vessels. 

As of March-end, the container vessels utilization stood at 97.3%, higher than 96.8% a year ago quarter, led by decreased days of scheduled dry-docking of the vessels.

In the quarter, the company secured multi-year chartering agreements for all of its 14 newbuildings and added around $423 million to its contracted revenue backlog, which currently stands at $2.5 billion with an average charter duration of 2.9 years.

Dividend: Danaos declared a dividend per share of $0.80 for the first quarter of 2024, payable on June 20 to stockholders of record as of June 11.

Buyback: As of the date of this release, Danaos repurchased shares worth $104.4 million under its share repurchase program of up to $200 million announced in June 2022, as amended on November 10, 2023.

The company’s contracted operating days’ charter coverage for the containership fleet is 99% for 2024 and 69% for 2025.

As of March-end, Danaos’s cash and equivalents were $324.3 million.

John Coustas, CEO, said, “The container market continued to strengthen in the first quarter of 2024, a trend that has continued into the second quarter. Both charter and box rates are gaining momentum, and we have completed all necessary rechartering activity in excess of our internal forecasts.”

“The renewed optimism in the market extends to the longer term view of the charterers, who are making charter commitments on newbuilding vessels with deliveries scheduled from 2025 through the end of 2027.”

Price Action: DAC shares are down 1.93% at $88.84 at the last check Tuesday.

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