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Danaos enjoys most profitable
first quarter ever
Greek shipping firm enjoys record profits and busy order book
Danaos Corporation, a leading
international owner of containerships, today reported unaudited
results for the period ended March 31, 2007.
Highlights:
Reported net earnings of $100.4 million or $1.84 per share for the
first quarter of 2007
Operating Revenues of $67.6 million for the first quarter of 2007
EBITDA of $116.6 million for the first quarter of 2007
Dividend of $0.44 per common share payable on May 18, 2007 to all
shareholders of record as of May 4, 2007
During the first quarter of 2007 Danaos took delivery of one 4,300 TEU
container ship, the Norasia Integra, and sold six vessels, five
drybulk carriers and one containership, the APL England.
Orders for 14 additional large containerships representing an investment of approximately $1.2 billion.
Danaos' CEO Dr. John Coustas commented: "We are extremely pleased with
our first quarter achievements as it was the busiest in terms of new
order activity and the most profitable ever for Danaos. During this
quarter we increased our order-book by four 6,800 TEU containerships
to be built in Jiangnan -China, five 6,500 TEU containerships and five
3,500 TEU containerships to be built in Hanjin Heavy Industries -
Korea. Danaos' total orders now stand at 28 large size containerships
with a total of 147,524 TEUs equivalent to 104% of our current fleet.
Notably, we have already secured fixed rate long time charters of 10
to 15 years for eight of these newly placed orders and we are actively
pursuing further opportunities to charter in advance the rest.
Consequently we have managed to increase our contracted revenues by
approximately $1 billion to $3.9 billion. Further, consistent with our
declared dividend strategy we announced today our quarterly cash
dividend of $0.44 per share.
In this first quarter of 2007 we took delivery of the Norasia Integra,
a 4,300 TEU containership which is fixed for a 12 year charter to the
Yang Ming Group. We also delivered to their new owner all but one of
our dry bulk carriers, with the last one to be delivered during the
month of April. Through the sale of these dry bulk vessels Danaos has
become a pure containership company with charter cover of
approximately 90% up to 2010 and above 60% for the subsequent period
up to 2017.
During the first quarter of 2007 tonnage demand from the charter
market has accelerated, driving the charter rate indexes higher. The
actual rise has been much more pronounced in the larger containership
sizes above 3,000 TEUs, a market segment in which Danaos holds a
prominent position. The strong demand also resulted in the
re-chartering of three of our vessels at accretive rates for three
years".
Three months ended March 31, 2007 compared to the three months ended
March 31, 2006
During the quarter ended March 31, 2007, Danaos had an average of 31.0
containerships and 2.8 drybulk carriers in its fleet as opposed to
25.1 containerships and 7.0 drybulk carriers for the same period of
2006. We took delivery of the Norasia Integra, a 4,300 TEU
containership on March 12, 2007 and sold six vessels, five drybulk
carriers, the Alexandra I, Fivos, Dimitris C, Roberto C and Maria C on
January 8, January 10, January 30 and February 27 of 2007 for the last
two respectively and one 5,506 TEU containership, the APL England, on
March 7, 2007.
Our net income was $100.4 million or $1.841 per share for the first
quarter of 2007 compared to net income of $21.5 million or $0.481 per
share for the first quarter of 2006, an increase in net income of
367.2%. Excluding one-off gain from sale of vessels of $72.7 million
and a loss resulting from change in fair value of debt denominated in
JPY of $2.6 million, our net income for the first quarter of 2007 is
$30.3 million or $0.551 per share.
Operating Revenue
Operating revenue increased 23.9%, or $13.1 million, to $67.6 million
in the quarter ended March 31, 2007, from $54.5 million in the quarter
ended March 31, 2006. The increase was mainly a result of the addition
to our fleet of seven vessels, the MOL Confidence, a 4,651 TEU
containership on March 23, 2006, the CSCL Pusan, a 9,580 TEU
containership on September 8, 2006, the CSCL Le Havre, a 9,580 TEU
containership on November 20, 2006 and three 4,814 TEU vessels, the
Maersk Marathon, Maersk Messologi and Maersk Mytilini, on December 13,
18 and 22 of 2006 respectively, and the Norasia Integra, a 4,300 TEU
containership on March 12, 2007. These additions to our fleet
collectively contributed revenues of $14.5 million during the three
months ended March 31, 2007. In addition the Company sold seven
vessels, six drybulk carriers, the Sofia III, Alexandra I, Fivos,
Dimitris C, Roberto C and Maria C on May 11, 2006, January 8, January
10, January 30 and February 27 of 2007 for the last two respectively
and one 5,506 TEU containership the APL England on March 7, 2007,
which collectively contributed less revenue of $4.3 million during the
three months ended March 31, 2007.
Vessel Operating Expenses
Vessel operating expenses increased 17.9%, or $2.4 million, to $16.1
million in the quarter ended March 31, 2007, from $13.7 million in the
quarter ended March 31, 2006. This increase was due to the addition to
our fleet of seven containerships, the sale of six drybulk carriers,
one containership and a general increase of operating expenses
experienced by the overall industry.
Depreciation & Amortization
Depreciation & Amortization includes Depreciation and Amortization of
Deferred Dry-docking and Special Survey Costs.
Depreciation
Depreciation expense increased 49.1%, or $3.4 million, to $10.2
million in the quarter ended March 31, 2007, from $6.8 million for the
quarter ended March 31, 2006. The increase in depreciation expense was
due to the increase in the average number of vessels in our fleet as
well as the addition of more expensive vessels as compared to those
sold during the quarter ended March 31, 2007.
Amortization of Deferred Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs
increased 34.0%, or $0.4 million, to $1.5 million in the quarter ended
March 31, 2007, from $1.1 million in the quarter ended March 31, 2006.
This was due to the costs of dry-docking and special surveys conducted
for an additional 13 of our vessels during the last year.
General and Administrative Expenses
General and administrative expenses increased 33.1%, or $0.6 million,
to $2.3 million in the quarter ended March 31, 2007 from $1.7 million
in the same quarter of 2006, reflecting public company related costs
which were not applicable in the quarter ended March 31, 2006.
Other Operating Expenses
Other Operating Expenses include Voyage Expenses
Voyage Expenses
Voyage expenses increased 39.7% or $0.7 million to, $2.5 million in
the quarter ended March 31, 2007, from $1.8 million for the quarter
ended March 31, 2006. The increase in voyage expenses was due to
commissions paid to our Manager for the vessels we acquired or sold
during the period in accordance with our management contract.
Interest Expense and Interest Income
Interest expense decreased $1.3 million, or 18.0%, to $5.8 million in
the quarter ended March 31, 2007, from $7.1 million in the quarter
ended March 31, 2006. The decrease in interest expense was primarily
due to the financing of our extensive newbuilding program which
resulted in capitalizing $2.8 million of interest for the quarter
ended March 31, 2007 as opposed to $1.7 million of capitalized
interest for the quarter ended March 31, 2006. Interest income
increased $0.1 million or 11.1% to $1.3 million for the quarter ended
March 31, 2007 from $1.2 million in the quarter ended March 31, 2006,
due to decreased bank deposits on which interest was earned which was
offset by higher interest rates.
Gain on Sale of vessels
The gain on sale of vessels of $72.7 million for the period ended
March 31, 2007 reflects the sale of the Alexandra I, Fivos, Dimitris
C, Roberto C and Maria C to a third party drybulk operator for $118.0
million resulting in a gain of $72.9 million over the depreciated book
value of these vessels at the time of their sale.
On March 7, 2007 we sold and delivered the APL England to APL
following the exercise of the call option APL had for this vessel. The
sale consideration was $44.5 million. We incurred a loss on this sale
of $0.2 million.
EBITDA
EBITDA increased 229.2%, or $81.2 million, to $116.6 million in the
quarter ended March 31, 2007, from $35.4 million in the quarter ended
March 31, 2006. Excluding one-off gain from sale of vessels of $72.7
million and a loss resulting from change in fair value of debt
denominated in JPY of $2.6 million our EBITDA for the first quarter of
2007 is $46.5 million, representing an increase of 31.3% over the
EBITDA of the same period of 2006. A table with analytical EBITDA
calculations reconciling EBITDA to net income can be found at the end
of this press release.
Dividend Payment
On January 18, 2007 we declared a dividend of $0.44 per common share
for the fourth quarter of 2006 for all shareholders on record as of
January 29, 2007 which was paid on February 14, 2007. On April 23,
2007, the Board of Directors declared a dividend of $0.44 per common
share for the first quarter of 2007. The dividend is payable on May
18, 2007 to all shareholders of record as of May 4, 2007. We currently
intend to pay quarterly dividends of $0.44 per share, or $1.76 per
share per year.
Recent News
During the first quarter of 2007 Danaos Corporation entered into new
shipbuilding contracts for 14 more large containership vessels, four
of 6,800 TEU each, five of 6,500 TEU each and a further five of 3,400
TEU of capacity, all scheduled to be delivered throughout the end of
2009 and 2010. The total amount of this new investment program is in
the region of $1.2 billion and brings the company's order-book to a
total of 28 containerships vessels, or 104% of its current fleet
capacity. Further, during the last months, APL has declared their
purchase option regarding the APL Scotland and the APL Holland
according to their existing agreement with Danaos. Danaos Corporation
now expects to sell these vessels back to APL at the end of their
respective charter on or about June 22 and July 20, 2007 respectively
for a total of $88 million.
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