Danaos Corporation reported net income of $1 billion for the year ended 2021

Danaos Corporation , one of the world’s largest independent owners of containerships, today reported unaudited results for the fourth quarter and the year ended December 31, 2021.

Highlights for the Fourth Quarter and Year Ended December 31, 2021:

• Adjusted net income1 of $125.8 million, or $6.10 per share, for the three months ended December 31, 2021 compared to $47.8 million, or $2.29 per share, for the three months ended December 31, 2020, an increase of 163.2%. Adjusted net income1 of $362.3 million, or $17.60 per share, for the year ended December 31, 2021 compared to $170.9 million, or $7.18 per share, for the year ended December 31, 2020, an increase of 112.0%.
• Reported net income of $1.05 billion, or $51.15 per share, for the year ended December 31, 2021 compared to $153.6 million, or $6.45 per share, for the year ended December 31, 2020.
• Operating revenues of $215.0 million for the three months ended December 31, 2021 compared to $119.6 million for the three months ended December 31, 2020, an increase of 79.8%. Operating revenues of $689.5 million for the year ended December 31, 2021 compared to $461.6 million for the year ended December 31, 2020, an increase of 49.4%.
• Adjusted EBITDA1 of $159.2 million for the three months ended December 31, 2021 compared to $83.0 million for the three months ended December 31, 2020, an increase of 91.8%. Adjusted EBITDA1 of $508.8 million for the year ended December 31, 2021 compared to $318.3 million for the year ended December 31, 2020, an increase of 59.8%.
• Total contracted operating revenues were $2.85 billion as of December 31, 2021, with charters extending through 2028 and remaining average contracted charter duration of 4.0 years, weighted by aggregate contracted charter hire.
• Charter coverage of 96.6% for the next 12 months based on current operating revenues and 95.5% in terms of contracted operating days.
• Danaos has declared a dividend of $0.75 per share of common stock for the fourth quarter of 2021, which is payable on February 28, 2022 to stockholders of record as of February 17, 2022.Three Months and Year Ended December 31, 2021 Financial Summary – Unaudited
  (Expressed in thousands of United States dollars, except per share amounts)

1 Adjusted net income, adjusted earnings per share and adjusted EBITDA are non-GAAP measures. Refer to the reconciliation of net income to adjusted net income and net income to adjusted EBITDA.

Danaos’ CEO Dr. John Coustas commented:

“The amount of media and analyst coverage about the positive dynamics in the container market speak for themselves and echo our market view. We foresaw the ongoing disruption in the supply chains and tightening of the container market through 2022 many quarters ago. Our outlook directed our growth and chartering strategy, both of which have maximized our returns. On the other hand, our investment in Zim shares has surpassed all reasonable expectations and led to Danaos posting in excess of 1 billion USD in reported net income for 2021. As a result of these factors, our share price quadrupled in 2021, bringing the company’s market capitalization close to 2 billion USD.

What is equally important is that our chartering policy will generate even better cash flows in 2022, and overall, our 2.8 billion USD contracted revenue with average charter duration of 4 years provides certainty about the future. As a result of our significant earnings visibility, we have decided to increase our quarterly dividend by 50% to 0.75 cents per share. The company’s significant cash flows support the increased dividend and also provide us flexibility to pursue accretive growth opportunities, continue to reduce leverage and also begin to consider a share buyback.

There have also been significant environmental initiatives that advanced in 2021, and already the path to the future decarbonization of the industry is becoming clearer. There is growing consensus that significant investments need to be made to reduce the carbon footprint of existing vessels. These investments will accompany reductions in speed, which will further support the ongoing market strength. Green fuels are a long way of becoming widely available, which means that the industry will have to adapt to continue using fossil fuels. Further the EU commission rightly proposed in the latest EU Fit for 55 climate initiative to place the burden of absorbing carbon cost on vessel operators who are responsible for fuel procurement and speed determination rather than the vessel owners.

To conclude, 2021 was phenomenal for the entire container industry and even more so for Danaos. The element of counterparty risk that dominated the previous decade has completely disappeared. Long term charters are also becoming the norm. Fortunately, liner companies are targeting their expansion in the inland/air transportation and logistics front to vertically integrate their offering. In conjunction with uncertainty about future vessel propulsion standards, this has put a lid on newbuilding ordering, which I hope can be maintained. Also, the German KG market, which was responsible for 70 percent of the ordering during the last shipbuilding boom, does not exist today.

The future is bright, and Danaos is well positioned to benefit from it and continue to reward its shareholders.”