Danaos Corp. Q1 FY2025 earnings call

• Global disruption continues with armed conflicts and tariff uncertainties impacting markets. - Dry bulk market recovered from lows but sustained recovery challenging without China growth. - Charter backlog for 2025 and 2026 largely secured, with contracted revenue backlog at $3.7 billion. - IMO greenhouse gas emission regulation falls short of industry ambitions, limiting decarbonization progress. - Focus on optimizing existing fleet performance, with 15 container vessels scheduled for delivery over 3 years with solid charters. - Entered $850 million syndicated loan facility, financing remaining newbuilding container vessels. - Share repurchase program upsized to $300 million, with $205.7 million repurchased to date.

For the first quarter of 2025, adjusted net income was $113.4 million compared to $140 million in the first quarter of 2024, a decrease of $26.6 million. The dry bulk segment had a $9 million decrease in revenues due to a softer spot market in Q1. The container segment had a $9.4 million decrease in revenues from lower contracted charter rates. Vessel operating expenses increased to $51.7 million from $43.1 million, with daily operating cost per vessel per day rising to just above $7,000 from $6,500.

• Contracted revenue backlog grew to $3.7 billion with 3.9-year average charter duration, 99% coverage for 2025 and 85% for 2026. - Net debt stood at $299 million at March 31, 2025, with net debt to adjusted EBITDA ratio at 0.4x. - Share repurchase program upsized to $300 million, with ongoing repurchases.

• Armed conflicts and tariff uncertainties impacting market conditions. - IMO greenhouse gas regulation not driving meaningful decarbonization, leaving fuel future unclear. - Interest rate environment and potential impact on debt costs.

Q: John, when you say you're holding off on new vessel investments and focusing on optimizing existing fleet, does that mean focusing on harvesting cash or investing in upgrades for future earnings?

A: Definitely the second one, investing in energy saving devices for vessels to make them more competitive, like upgrading dry bulk fleet and using bulbous bow, propeller, and low-friction paints on container vessels.

Q: The stock has done well recently, do you see buybacks continuing at a decent clip?

A: We don't set target levels for buybacks, but we have another $100 million authorized for buybacks, and when to execute is to be seen.

Q: You increased your stake in Star Bulk by another 2 million shares, what drove that investment?

A: It's an investment we believe makes sense, was a compelling price post-Liberation Day, reduced our average cost, and we'll evaluate market performance with no specific plans for now