Danaos(DAC) - 2025 Q1 - Quarterly Report

Operating and Financial Review and Prospects This section analyzes Danaos Corporation's financial performance, liquidity, capital resources, investments, market risks, and fleet operations Results of Operations (Three Months Ended March 31, 2025 vs. 2024) Danaos Corporation's overall operating revenues remained stable, decreasing slightly by $0.1 million to $253.3 million in Q1 2025 compared to Q1 2024. This stability masks divergent trends: container vessel revenues increased due to newbuilding additions, while drybulk vessel revenues decreased due to lower charter rates and utilization. Operating expenses generally increased, driven by fleet expansion and higher daily operating costs, leading to a decrease in net income Operating Revenues Overall operating revenues remained stable, with container vessel revenues increasing and drybulk revenues decreasing due to market factors - Container vessel operating revenues increased by $24.0 million due to newbuilding additions, partially offset by decreases from lower charter rates ($9.4 million), lower fleet utilization ($6.2 million), disposal of one containership ($0.2 million), and lower non-cash revenue recognition ($5.4 million)[4][10] - Drybulk vessel operating revenues decreased by $9.0 million due to lower charter rates and utilization, partially offset by a $6.1 million increase from dry bulk vessel acquisitions[5][6] Operating Expenses Operating expenses increased across categories, driven by fleet expansion and higher daily operating costs, particularly for repairs and maintenance Expense Category | Expense Category | Q1 2025 (Millions USD) | Q1 2024 (Millions USD) | Change (Millions USD) | Change (%) | | :------------------------------- | :--------------------- | :--------------------- | :-------------------- | :--------- | | Voyage Expenses | 18.1 | 20.3 | (2.2) | (10.8%)| | Vessel Operating Expenses | 51.7 | 43.1 | 8.6 | 19.9% | | Depreciation | 40.0 | 33.9 | 6.1 | 18.0% | | Amortization of Drydocking Costs | 11.0 | 5.5 | 5.5 | 100.0% | | General & Administrative Expenses| 12.2 | 10.2 | 2.0 | 19.6% | - Vessel operating expenses increased due to more vessels in the fleet and higher average daily operating costs ($7,028/vessel/day in Q1 2025 vs. $6,493/vessel/day in Q1 2024), mainly from increased repairs & maintenance[11] Other Income (Expenses) Other income and expenses saw a significant rise in interest expense due to higher indebtedness, while investment gains decreased Metric | Metric | Q1 2025 (Millions USD) | Q1 2024 (Millions USD) | Change (Millions USD) | | :----------------------- | :--------------------- | :--------------------- | :-------------------- | | Interest Expense | 10.0 | 3.1 | 6.9 | | Interest Income | 3.6 | 2.9 | 0.7 | | Gain on Investments | 2.5 | 11.0 | (8.5) | | Dividend Income | 0.3 | 0.9 | (0.6) | | Equity Loss on Investments | 0.2 | 0.1 | 0.1 | - Interest expense increased significantly due to a $363.9 million increase in average indebtedness, partially offset by lower SOFR rates. Outstanding debt (gross) was $779.7 million as of March 31, 2025, up from $458.6 million as of March 31, 2024[15][19] - Gain on investments decreased substantially, primarily due to a lower fair value change in Star Bulk Carriers Corp. shares ($2.5 million gain) compared to Eagle Bulk Shipping shares ($11.0 million gain) in the prior year[17] Metric | Metric | Q1 2025 (Millions USD) | Q1 2024 (Millions USD) | Change (Millions USD) | Change (%) | | :-------------------------------- | :--------------------- | :--------------------- | :-------------------- | :--------- | | Operating Revenues (Total) | 253.3 | 253.4 | (0.1) | (0.04%)| | Container Vessels Operating Rev. | 236.2 | 233.4 | 2.8 | 1.2% | | Drybulk Vessels Operating Rev. | 17.1 | 20.0 | (2.9) | (14.5%)| - Average fleet size increased in Q1 2025: container vessels from 68.0 to 73.7, and drybulk vessels from 7.0 to 10.0. Vessel utilization slightly decreased for both segments[3] Liquidity and Capital Resources Danaos primarily funds operations and fleet expansion through operating cash flows, bank borrowings, and equity/debt issuances. The company maintains significant contracted cash revenues and available credit facilities, which are expected to meet both short-term and long-term liquidity needs, including substantial commitments for newbuilding vessels. Shareholder returns are managed through regular dividends and an expanded share repurchase program - Principal sources of funds include operating cash flows, long-term bank borrowings, equity/debt securities issuances, and funds from dividend payments/sales of marketable securities[25] - Principal uses of funds are capital expenditures for fleet growth and maintenance, compliance, working capital, and debt repayment[25] Contracted Cash Revenues (as of March 31, 2025) | Period | Amount (Millions USD) | | :--------------- | :-------------------- | | Remainder of 2025| 693.7 | | 2026 | 813.8 | | Thereafter | 2,100.0 | | Total | 3,607.5 | Key Liquidity Metrics (as of March 31, 2025) | Metric | Amount (Millions USD) | | :--------------------------- | :-------------------- | | Cash and Cash Equivalents | 480.5 | | Total Contracted Cash Rev. | 3,600.0 | | Outstanding Indebtedness (gross)| 779.7 | | Remaining Borrowing Availability | | | - Citibank Revolving Credit | 281.25 | | - Syndicated $450.0 million. | 44.0 | | - Syndicated $850.0 million. | 850.0 | Newbuilding Containership Contractual Commitments (as of March 31, 2025) | Payments due by period ended | Amount (Millions USD) | | :--------------------------- | :-------------------- | | December 31, 2025 | 107.6 | | December 31, 2026 | 407.4 | | December 31, 2027 | 570.6 | | December 31, 2028 | 94.5 | | Total | 1,180.1 | - The company declared a dividend of $0.85 per share for Q1 2025 and Q2 2025. The share repurchase program was upsized by an additional $100 million to a total of $300 million on April 14, 2025. As of May 12, 2025, $205.7 million has been repurchased under the program[32][33] Investments Danaos holds significant investments in other shipping companies and a research and development firm. The company's investment in Eagle Bulk Shipping Inc. was converted into Star Bulk Carriers Corp. shares following a merger, and additional SBLK shares were purchased. Danaos also maintains an equity investment in Carbon Termination Technologies Corporation (CTTC) focused on decarbonization - Danaos acquired 1,552,865 shares of Eagle Bulk Shipping Inc. (EGLE) for $68.2 million in June 2023[35] - Following the SBLK-EGLE merger (completed April 9, 2024), EGLE shareholders received 2.6211 shares of SBLK for each EGLE share. Danaos purchased an additional 2,060,399 SBLK shares for $27.8 million in April-May 2025, bringing total ownership to 6,130,613 SBLK shares as of May 12, 2025[36] Marketable Securities Fair Value and Gains | Metric | March 31, 2025 (Millions USD) | December 31, 2024 (Millions USD) | Q1 2025 Gain (Millions USD) | Q1 2024 Gain (Millions USD) | | :-------------------- | :------------------------------ | :------------------------------- | :-------------------------- | :-------------------------- | | Fair Value | 63.3 | 60.9 | - | - | | Gain on Investments | 2.5 | - | 2.5 | 11.0 | | Dividend Income | 0.3 | - | 0.3 | 0.9 | - Danaos invested $4.3 million in Carbon Termination Technologies Corporation (CTTC) in March 2023 for a 49% ownership interest, focusing on shipping decarbonization technologies. Equity loss on this investment was $0.2 million in Q1 2025[21][38] Market Risks and External Factors Danaos faces ongoing challenges from elevated global inflation, which increases operating expenses, and rising interest rates, which drive up the cost of capital, particularly for floating-rate debt. The company is also exposed to significant geopolitical and trade protectionism risks, including tariffs and new port fees, which could adversely affect global trade, freight rates, and charter rates - Elevated inflation in the US, Eurozone, and other countries, exacerbated by the war in Ukraine, continues to increase energy and commodity prices, affecting operating expenses[39][72] - Rapidly increasing interest rates by central banks to curb inflation may lead to a higher cost of capital, especially as borrowings under credit facilities are at floating rates based on SOFR, and the company currently has no interest rate hedging arrangements[39][72] - Trade protectionism, including tariffs (e.g., US tariffs on Chinese imports, retaliatory tariffs), creates significant uncertainty and could materially reduce global trade, adversely affecting freight and charter rates[40][42] - New US port fees on Chinese-owned and Chinese-built vessels, commencing October 2025 and increasing through 2028, pose an unknown but potential adverse effect on Danaos's fleet and the industry[41] Segments Danaos operates in two primary segments: container vessels and drybulk vessels, with performance assessed based on net income. The container segment, primarily on multi-year fixed-rate charters, remains highly profitable, while the drybulk segment, a newer expansion, reported a net loss in Q1 2025 due to market conditions. The company also reports Time Charter Equivalent (TCE) rates to compare daily net revenue performance across segments - Danaos has two reporting segments: container vessels (owning and operating container vessels, primarily on multi-year, fixed-rate time and bareboat charters) and drybulk vessels (owning and operating drybulk vessels for commodity transportation)[43][167] Net Income per Segment (Q1 2025 vs. Q1 2024) | Segment | Q1 2025 (Thousands USD) | Q1 2024 (Thousands USD) | Change (Thousands USD) | | :---------------- | :---------------------- | :---------------------- | :--------------------- | | Container Vessels | 119,045 | 138,359 | (19,314) | | Drybulk Vessels | (6,542) | 337 | (6,879) | | Total Net Income | 112,503 | 138,696 | (26,193) | Time Charter Equivalent (TCE) Rates (Q1 2025 vs. Q1 2024) | Segment | Q1 2025 (USD/day) | Q1 2024 (USD/day) | Change (USD/day) | Change (%) | | :---------------- | :---------------- | :---------------- | :--------------- | :--------- | | Container Vessels | 36,565 | 38,698 | (2,133) | (5.5%) | | Drybulk Vessels | 10,513 | 15,455 | (4,942) | (32.0%)| - Container vessel utilization was 97.2% in Q1 2025 (vs. 97.3% in Q1 2024), while drybulk vessel utilization was 92.4% (vs. 93.6% in Q1 2024)[61][63] Cash Flows Danaos experienced a decrease in net cash from operating activities in Q1 2025, primarily due to increased operating expenses, dry-docking costs, and net finance costs. However, net cash used in investing activities improved significantly due to lower payments for vessel construction and acquisitions. Financing activities shifted from an inflow to an outflow, driven by decreased debt proceeds, increased debt payments, and higher common stock repurchases Cash Flow Summary (Q1 2025 vs. Q1 2024) | Cash Flow Category | Q1 2025 (Thousands USD) | Q1 2024 (Thousands USD) | Change (Thousands USD) | | :----------------------------- | :---------------------- | :---------------------- | :--------------------- | | Net cash from operating activities | 133,860 | 153,292 | (19,432) | | Net cash used in investing activities | (84,009) | (123,411) | 39,402 | | Net cash from financing activities | (22,692) | 22,636 | (45,328) | - Decrease in operating cash flow was due to a $6.9 million increase in total operating expenses, an $11.6 million increase in dry-docking expenses, a $6.0 million increase in net finance costs, and a $0.6 million decrease in dividend income, partially offset by a $5.4 million increase in cash operating revenues[49] - Improvement in investing cash flow was driven by $20.9 million lower payments for vessels under construction and $14.6 million lower payments for vessel acquisitions[50] - Shift in financing cash flow was attributed to an $11.0 million decrease in debt proceeds, a $1.9 million increase in debt amortization, a $2.4 million increase in finance costs, a $29.6 million increase in common stock repurchases, and a $0.4 million increase in dividend payments[51] Non-GAAP Financial Measures Danaos uses non-GAAP financial measures like EBITDA and Adjusted EBITDA to provide additional insights into its core operating performance, excluding certain non-cash or non-recurring items. Both EBITDA and Adjusted EBITDA decreased in Q1 2025 compared to Q1 2024, primarily due to increased operating expenses, net finance expenses, and reduced investment gains - EBITDA and Adjusted EBITDA are used to compare performance across reporting periods by excluding items not indicative of core operating performance, such as interest, depreciation, amortization, and fair value changes in investments[53] EBITDA and Adjusted EBITDA (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 (Millions USD) | Q1 2024 (Millions USD) | Change (Millions USD) | Change (%) | | :-------------- | :--------------------- | :--------------------- | :-------------------- | :--------- | | Net Income | 115.1 | 150.5 | (35.4) | (23.5%)| | EBITDA | 174.0 | 188.2 | (14.2) | (7.5%) | | Adjusted EBITDA | 171.7 | 177.2 | (5.5) | (3.1%) | - The decrease in Adjusted EBITDA was attributed to a $7.9 million increase in total operating expenses, a $0.3 million increase in net finance expenses, a $0.6 million decrease in dividends received, and a $0.1 million increase in equity loss on investments, partially offset by a $3.4 million increase in operating revenues (excluding amortization of assumed time-charters)[56] Our Fleet Danaos's fleet consists of a diverse portfolio of container vessels and Capesize drybulk vessels. The company has a significant number of container vessels currently deployed under various charter arrangements with varying expiration dates and extension options, ensuring a stable revenue stream. Additionally, Danaos has a substantial newbuilding program for container vessels, with deliveries scheduled through 2028, and a fleet of Capesize drybulk vessels acquired in 2024 - As of May 12, 2025, Danaos operates a fleet of container vessels with TEU capacities ranging from 2,200 to 13,100, deployed under charter arrangements with expirations extending up to October 2031[79][80][81] - The company has 15 contracted container vessels under construction, with expected deliveries from Q4 2025 to Q3 2028. These newbuildings have minimum charter durations of 1.9 to 6 years and charter rates ranging from $32,500 to $50,000 per day[83] - The drybulk fleet consists of 10 Capesize vessels, built between 2009 and 2012, with capacities ranging from 175,125 to 178,043 DWT. Most of these vessels were delivered to Danaos in 2024[85] Forward-Looking Statements This section highlights that the report contains forward-looking statements based on current views and assumptions, which are subject to significant uncertainties and contingencies beyond the company's control. Key factors that could cause actual results to differ materially include global economic conditions, geopolitical events (e.g., war in Ukraine, Red Sea attacks), changes in charter rates and vessel values, operating expenses, financing availability, regulatory actions, and litigation - Forward-looking statements are based on current views and assumptions, but actual results may differ due to significant uncertainties and contingencies[88] - Important factors influencing actual results include world economies, geopolitical conditions (trade disruptions, conflicts), market conditions (charter rates, vessel values), operating expenses (bunker prices, dry-docking, insurance), financing ability, regulatory actions, and potential litigation[88] Financial Statements This section presents the condensed consolidated balance sheets, statements of income, comprehensive income, changes in equity, and cash flows Condensed Consolidated Balance Sheets The consolidated balance sheet shows an increase in total assets from $4,343.65 million at December 31, 2024, to $4,438.86 million at March 31, 2025, primarily driven by increases in fixed assets and advances for vessels under construction. Total liabilities also increased, mainly due to long-term debt, while stockholders' equity saw an increase Condensed Consolidated Balance Sheet Highlights (Thousands USD) | Metric | March 31, 2025 | December 31, 2024 | | :------------------------- | :------------- | :---------------- | | Total Current Assets | 705,829 | 670,967 | | Total Non-Current Assets | 3,733,026 | 3,672,687 | | Total Assets | 4,438,855 | 4,343,654 | | Total Current Liabilities | 162,552 | 168,954 | | Total Long-Term Liabilities| 782,574 | 749,900 | | Total Liabilities | 945,126 | 918,854 | | Total Stockholders' Equity | 3,493,729 | 3,424,800 | - Cash and cash equivalents increased from $453.38 million to $480.54 million[94] - Fixed assets (net) increased by $29.47 million, and advances for vessels acquisition and vessels under construction increased by $19.65 million[94] Condensed Consolidated Statements of Income The consolidated statements of income show a decrease in net income for the three months ended March 31, 2025, compared to the same period in 2024. This was primarily driven by higher operating expenses and a significant increase in interest expense, partially offset by stable operating revenues Condensed Consolidated Statements of Income Highlights (Thousands USD) | Metric | Q1 2025 | Q1 2024 | | :------------------------- | :------ | :------ | | Operating Revenues | 253,307| 253,449| | Operating Expenses | (133,057)| (113,015)| | Income From Operations | 120,250| 140,434| | Total Other Income/(Expenses), net | (5,103)| 10,064 | | Net Income | 115,147| 150,498| | Basic earnings per share | 6.14| 7.75| | Diluted earnings per share | 6.13| 7.68| - Operating expenses increased by $20.04 million, mainly due to higher vessel operating expenses, depreciation, and amortization of drydocking costs[96] - Interest expense increased from $3.12 million in Q1 2024 to $10.00 million in Q1 2025[96] Condensed Consolidated Statements of Comprehensive Income The condensed consolidated statements of comprehensive income show a decrease in total comprehensive income, mirroring the trend in net income. Other comprehensive income remained relatively stable, primarily driven by amortization of deferred realized losses on cash flow hedges Condensed Consolidated Statements of Comprehensive Income Highlights (Thousands USD) | Metric | Q1 2025 | Q1 2024 | | :------------------------- | :------ | :------ | | Net income for the period | 115,147| 150,498| | Total Other Comprehensive Income | 1,183 | 1,166 | | Comprehensive Income | 116,330| 151,664| - Other comprehensive income includes prior service cost of defined benefit plan and amortization of deferred realized losses on cash flow hedges[99] Condensed Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity increased from $3,424.80 million at December 31, 2024, to $3,493.73 million at March 31, 2025. This increase was primarily driven by net income, partially offset by dividends paid and significant share repurchases Condensed Consolidated Statements of Changes in Stockholders' Equity Highlights (Thousands USD) | Metric | March 31, 2025 | March 31, 2024 | | :------------------------- | :------------- | :------------- | | Balance as of Dec 31 | 3,424,800 | 3,016,317 | | Net Income | 115,147 | 150,498 | | Dividends Paid | (15,894) | (15,535) | | Repurchase of Common Stock | (33,216) | (4,132) | | Stock Based Compensation | 1,705 | 1,576 | | Net Movement in OCI | 1,183 | 1,166 | | Balance as of Mar 31 | 3,493,729 | 3,149,890 | - The company repurchased 413,455 shares of common stock for $33.2 million in Q1 2025, a significant increase from 57,901 shares for $4.1 million in Q1 2024[102] Condensed Consolidated Statements of Cash Flows The condensed consolidated statements of cash flows show a decrease in net cash provided by operating activities and a shift from cash provided to cash used in financing activities. Net cash used in investing activities decreased, indicating lower capital outlays for vessels compared to the prior year Condensed Consolidated Statements of Cash Flows Highlights (Thousands USD) | Cash Flow Category | Q1 2025 | Q1 2024 | | :----------------------------- | :------ | :------ | | Net cash from operating activities | 133,860 | 153,292 | | Net cash used in investing activities | (84,009)| (123,411)| | Net cash from financing activities | (22,692)| 22,636 | | Net Increase in cash and cash equivalents | 27,159 | 52,517 | | Cash and cash equivalents at end of period | 480,543 | 324,326 | - Cash paid for interest, net of capitalized amounts, increased from $8.16 million in Q1 2024 to $15.25 million in Q1 2025[105] Notes to the Unaudited Condensed Consolidated Financial Statements This section provides detailed notes on the basis of presentation, accounting policies, investments, fixed assets, debt, and other financial instruments Basis of Presentation and General Information The financial statements are prepared in conformity with U.S. GAAP, with the U.S. Dollar as the reporting currency. Danaos Corporation, re-domiciled in the Marshall Islands, primarily engages in the acquisition and operation of container and drybulk vessels through its subsidiaries. The condensed consolidated financial statements include all necessary adjustments and reflect the consolidation of vessel-owning companies since their incorporation dates - Danaos Corporation's principal business is the acquisition and operation of container and dry bulk vessels, managed by a related party[107] - The company's fleet includes 74 container vessels and 10 Capesize drybulk vessels as of March 31, 2025, with details on their incorporation dates, year built, and capacity[110][113] Significant Accounting Policies The company's significant accounting policies remained unchanged during the quarter, consistent with its annual report - No significant changes were made to the Company's significant accounting policies during the three months ended March 31, 2025[114] Investments in Affiliates Danaos holds an equity investment in Carbon Termination Technologies Corporation (CTTC) for decarbonization, accounted for using the equity method - Danaos invested $4.3 million in Carbon Termination Technologies Corporation (CTTC) in March 2023 for a 49% ownership, with CTTC engaged in R&D for shipping decarbonization[115] - In 2024, Danaos provided a $1.6 million loan to CTTC, bearing interest at SOFR+2.0% and maturing on December 31, 2025[115] - Equity loss on investments related to CTTC's expenses amounted to $0.2 million in Q1 2025[115] Fixed Assets, Advances for Vessels Acquisition and Vessels under Construction Danaos continues to expand its fleet through newbuilding deliveries and acquisitions. In Q1 2025, one newbuild container vessel was delivered, and the company has significant contractual commitments for 15 additional container vessels under construction, with payments scheduled through 2028. The company also capitalized supervision fees and interest expenses related to these newbuildings - In January 2025, Danaos took delivery of a 6,014 TEU newbuild container vessel, Phoebe, which immediately commenced a long-term charter[116] - In 2024, six newbuild container vessels were delivered, and three Capesize bulk carriers were acquired and delivered[117] Remaining Contractual Commitments for 15 Vessel Construction Contracts (Thousands USD) | Payments due by period ended | Amount | | :--------------------------- | :----- | | December 31, 2025 | 107,574| | December 31, 2026 | 407,440| | December 31, 2027 | 570,592| | December 31, 2028 | 94,500 | | Total | 1,180,106| - Supervision fees of $0.4 million and interest expense of $4.4 million were capitalized to vessels under construction in Q1 2025[120] Deferred Charges, net Deferred charges, net, primarily related to drydocking and special survey costs, increased to $63.58 million as of March 31, 2025. This reflects new additions for drydocking expenses, partially offset by amortization Deferred Drydocking and Special Survey Costs (Thousands USD) | Metric | Amount | | :------------------------- | :----- | | As of January 1, 2024 | 38,012 | | Additions (2024) | 50,568 | | Amortization (2024) | (29,161)| | As of December 31, 2024 | 58,759 | | Additions (Q1 2025) | 15,789 | | Amortization (Q1 2025) | (10,970)| | As of March 31, 2025 | 63,578| Other Current and Non-current Assets Other current and non-current assets include marketable securities, primarily shares in Star Bulk Carriers Corp. (SBLK), and straight-lining of revenue. The fair value of marketable securities increased in Q1 2025, and Danaos acquired additional SBLK shares post-quarter Other Current and Non-current Assets (Thousands USD) | Asset Category | March 31, 2025 | December 31, 2024 | | :------------------------- | :------------- | :---------------- | | Marketable securities | 63,333 | 60,850 | | Straight-lining of revenue (current) | 21,494 | 22,170 | | Straight-lining of revenue (non-current) | 46,142 | 47,423 | | Claims receivable | 14,687 | 14,387 | - Marketable securities, primarily SBLK shares, were fair valued at $63.3 million as of March 31, 2025, resulting in a $2.5 million gain in Q1 2025[126] - During April and May 2025, Danaos purchased an additional 2,060,399 SBLK shares for $27.8 million, increasing its total SBLK ownership to 6,130,613 SBLK shares as of May 12, 2025[125] Accrued Liabilities Accrued liabilities decreased to $17.98 million as of March 31, 2025, from $23.64 million at December 31, 2024. This reduction was primarily driven by a decrease in accrued interest Accrued Liabilities (Thousands USD) | Category | March 31, 2025 | December 31, 2024 | | :----------------- | :------------- | :---------------- | | Accrued interest | 4,594 | 10,599 | | Accrued dry-docking expenses | 4,317 | 5,334 | | Accrued expenses | 9,064 | 7,711 | | Total | 17,975 | 23,644 | Long-Term Debt, net Total long-term debt (gross) increased to $779.74 million as of March 31, 2025, from $744.55 million at December 31, 2024, primarily due to draws on syndicated loan facilities for newbuilding financing. Danaos has substantial borrowing availability under its credit facilities and was in compliance with all financial covenants Long-Term Debt (Gross, Thousands USD) | Credit Facility | March 31, 2025 | December 31, 2024 | | :------------------------------- | :------------- | :---------------- | | Senior unsecured notes | 262,766 | 262,766 | | BNP Paribas/Credit Agricole $130 million. Facility | 84,300 | 86,200 | | Alpha Bank $55.25 million. Facility | 38,375 | 40,250 | | Syndicated $450.0 million. Facility | 394,300 | 355,330 | | Citibank $382.5 million. Revolving Credit Facility | - | - | | Syndicated $850.0 million. Facility | - | - | | Total Long-Term Debt | 779,741 | 744,546 | - New syndicated loan facilities of $850 million (February 2025) and $450 million (March 2024) were put in place to finance newbuilding container vessels[128][129] - Remaining borrowing availability as of March 31, 2025: $281.25 million under Citibank Revolving Credit Facility, $44.0 million under Syndicated $450.0 million Facility, and $850.0 million under Syndicated $850.0 million Facility[134] Scheduled Debt Maturities (Thousands USD) | Period Ended | Principal Repayments | | :------------- | :------------------- | | March 31, 2026 | 37,660 | | March 31, 2027 | 37,660 | | March 31, 2028 | 377,801 | | March 31, 2029 | 22,560 | | March 31, 2030 | 304,060 | | Total | 779,741 | Financial Instruments Danaos manages interest rate risk on bank borrowings but currently has no outstanding interest rate swap agreements. The company is exposed to credit risk from cash and trade accounts receivable, which is mitigated by diversifying among high-credit-rating counterparties and major liner companies. Financial instruments are fair valued using a three-level hierarchy, with most measured at Level I or Level II - Danaos currently has no outstanding interest rate swap agreements, having previously used them to hedge floating interest rate exposure[70][142] - Credit risk is managed by placing cash with established financial institutions and selecting major liner companies as customers, diversified across geographies[139] Fair Value of Financial Instruments (Thousands USD) | Instrument | March 31, 2025 (Book Value) | March 31, 2025 (Fair Value) | December 31, 2024 (Book Value) | December 31, 2024 (Fair Value) | | :------------------------------- | :-------------------------- | :-------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | 480,543 | 480,543 | 453,384 | 453,384 | | Marketable securities | 63,333 | 63,333 | 60,850 | 60,850 | | Secured long-term debt (incl. current) | 779,741 | 779,741 | 481,780 | 481,780 | | Unsecured long-term debt | 262,766 | 247,474 | 262,766 | 259,834 | - Fair value measurements are categorized into Level I (quoted prices in active markets) and Level II (observable inputs other than Level I). No Level III inputs were used[144][145] Commitments and Contingencies The company has no material legal proceedings beyond routine litigation, with primary commitments related to vessel construction and acquisitions - No material legal proceedings or contingencies are currently known, beyond routine business litigation[148] - Outstanding commitments exist for vessel construction contracts and secondhand dry bulk vessel acquisitions[149] Stockholders' Equity Stockholders' equity is impacted by net income, dividend payments, and share repurchases. Danaos declared quarterly dividends of $0.85 per share in Q1 2025 and has significantly expanded its share repurchase program to $300 million. The company also has equity compensation plans for executives and employees, with new restricted stock grants made in late 2024 - Dividends declared: $0.85 per share in Q1 2025 ($15.8 million paid) and $0.80 per share in Q1 2024 ($15.5 million paid)[150] - The share repurchase program was upsized to $300 million on April 14, 2025. In Q1 2025, 413,455 shares were repurchased for $33.2 million[151] - In November 2024, 100,000 fully vested shares were granted to executive officers. In December 2024, 30,000 restricted shares were granted to employees, vesting over four years[155] Lease Arrangements Danaos generates operating revenues from its container vessels through time and bareboat charter agreements, with terms extending up to October 2031. The company has also contracted long-term charters for all its newbuilding container vessels. A significant charter hire prepayment received in 2022 is being recognized as revenue over the charter terms - As of March 31, 2025, Danaos's 74 container vessels are on time or bareboat charter agreements with remaining terms from less than one year to October 2031[157] - All 15 container vessels under construction have contracted 5-year and 7-year time charter agreements[157] - A $238.9 million charter hire prepayment received in May 2022 for 15 vessels is recognized as revenue through January 2027. As of March 31, 2025, $32.2 million (current) and $17.1 million (non-current) of this prepayment remained as unearned revenue[158] Future Minimum Payments from Non-Cancellable Charters (Thousands USD) | Period | Amount | | :---------------- | :----- | | Remainder of 2025 | 693,727| | 2026 | 813,764| | 2027 | 594,713| | 2028 | 419,530| | 2029 | 327,904| | 2030 and thereafter | 714,271| | Total | 3,563,909| Earnings per Share Basic and diluted earnings per share decreased in Q1 2025 compared to Q1 2024, reflecting the lower net income for the period. The weighted average number of common shares outstanding also decreased due to share repurchases Earnings per Share (EPS) (Thousands USD, except per share amounts) | Metric | Q1 2025 | Q1 2024 | | :--------------------------------------- | :------ | :------ | | Net income | 115,147 | 150,498 | | Basic weighted average common shares | 18,750 | 19,412 | | Diluted weighted average common shares | 18,781 | 19,584 | | Basic earnings per share | 6.14| 7.75| | Diluted earnings per share | 6.13| 7.68| Related Party Transactions Danaos engages in transactions with related parties for vessel management, brokerage services, and advances, with associated fees and balances - Effective January 1, 2025, Danaos pays the Manager an annual management fee of $2.0 million plus 100,000 shares, daily vessel management fees ($475 for bareboat, $950 for time/voyage charter), $850 thousand per newbuilding for supervision, and $1 per Emission Allowance[161] - Danaos Chartering Services Inc., a newly-formed affiliate, provides commercial services for a fee of 1.25% on freight/charter hire and 1.0% on vessel purchase/sale contract prices[162] Related Party Fees (Thousands USD) | Fee Type | Q1 2025 | Q1 2024 | | :----------------------- | :------ | :------ | | Management fees | 7,700 | 6,900 | | Commissions | 3,200 | 3,000 | | Supervision fees (capitalized) | 400 | - | - Balance 'Due from related parties' was $55.6 million as of March 31, 2025, representing advances to the Manager[165] Operating Revenue Operating revenue remained stable, with time and bareboat charters contributing the majority, while voyage charters decreased Operating Revenue Breakdown (Thousands USD) | Revenue Type | Q1 2025 | Q1 2024 | | :--------------------------- | :------ | :------ | | Time charters and bareboat charters | 239,572 | 235,516 | | Voyage charters | 13,735 | 17,933 | | Total Revenue | 253,307| 253,449| - Unearned revenue from voyage charter agreements in progress as of March 31, 2025, will be recognized as performance obligations are satisfied[166] Segments Segment performance is monitored by net income, with container vessels profitable and drybulk vessels reporting a Q1 2025 net loss - The chief operating decision maker monitors segment performance based on net income, with directly attributable items allocated to each segment[168] Segment Income Statement Metrics (Thousands USD) | Metric | Container Vessels (Q1 2025) | Drybulk Vessels (Q1 2025) | Total (Q1 2025) | | :------------------------- | :-------------------------- | :------------------------ | :-------------- | | Operating revenues | 236,190 | 17,117 | 253,307 | | Net Income per segment | 119,045 | (6,542) | 112,503 | | | Container Vessels (Q1 2024) | Drybulk Vessels (Q1 2024) | Total (Q1 2024) | | Operating revenues | 233,411 | 20,038 | 253,449 | | Net Income per segment | 138,359 | 337 | 138,696 | Segment Balance Sheet Metrics (Thousands USD) | Metric | Container Vessels (Mar 31, 2025) | Drybulk Vessels (Mar 31, 2025) | Total (Mar 31, 2025) | | :------------------------- | :------------------------------- | :----------------------------- | :------------------- | | Total Assets per segment | 4,104,484 | 270,913 | 4,375,397 | | | Container Vessels (Mar 31, 2024) | Drybulk Vessels (Mar 31, 2024) | Total (Mar 31, 2024) | | Total Assets per segment | 3,531,062 | 181,520 | 3,712,582 | Subsequent Events Post-quarter, Danaos upsized its share repurchase program, declared a dividend, and made additional investments in Star Bulk Carriers Corp - On April 14, 2025, the common stock repurchase program was upsized by an additional $100 million, totaling $300 million[170] - Subsequent to March 31, 2025, 264,605 shares of common stock were repurchased for $19.4 million[170] - A dividend of $0.85 per share was declared payable on June 5, 2025[171] - During April and May 2025, an additional 2,060,399 shares of Star Bulk Carriers Corp. (SBLK) common stock were purchased for $27.8 million, bringing total ownership to 6,130,613 SBLK shares as of May 12, 2025[171]