Danaos Corp. Q3 FY2025 earnings call

• Operating conditions: War in Ukraine continues with no end in sight, Middle East conflict impacts Red Sea transit, but trade between US and China resumed, and container traffic was at an all-time high in Q3 2025.
• Charter market: Robust, idle fleet at all-time low, demand for midsized and larger vessels unabated; secured new charters for vessels out to early 2028.
• Newbuilding program: Added six 1,800 TEU vessels to the order book with scheduled deliveries 2027-2029, secured 10-year charters for 4 vessels contributing ~$236 million to contracted revenue backlog.
• Financing: Completed a $500 million unsecured 7-year bond offering with 6.85% coupon, used proceeds to redeem 2028 $300 million bond and prepay smaller secured bank credit facilities.
• Dividend: Increased quarterly dividend to $0.90 per share.
• Fleet and backlog: Contracted revenue backlog stands at $4.1 billion with a 4.3-year average charter duration; net debt at $165 million, net debt to adjusted EBITDA ratio 0.23x; 53 out of 84 vessels unencumbered.

Adjusted EPS for the third quarter of 2025 was $6.75 per share, resulting in adjusted net income of $124.1 million, compared to $6.5 per share and $126.8 million in the third quarter of 2024. The decrease in adjusted net income was due to a $6.1 million increase in total operating costs (mainly from the increase in the average number of vessels in the fleet) and a $2.5 million decrease in dividend income, partially offset by a $4.5 million increase in operating revenues, a $1 million decrease in equity loss on investments, and a $0.4 million decrease in net finance expenses. The Container segment experienced a $4.3 million decrease in revenues as a result of lower contracted charter rates between the periods and $4.2 million lower noncash U.S. GAAP revenue recognition. The company also invests in the Capesize dry bulk market segment, with plans to selectively expand in the secondhand market for good quality vessels.

• Secured new charters for vessels opening as early as 2028, shipyard slots for 2028 deliveries scarce, newbuilding prices rising.
• Continues to selectively extend newbuilding program at below market prices with multiyear employment.
• Intends to use bond proceeds for debt redemption and prepayment.
• Plans to continue share repurchase program with $86.4 million remaining authority.
• Dividend increased to $0.90 per share.

• War in Ukraine ongoing with no end in sight.
• Middle East conflict affecting Red Sea transit, not yet resumed.
• Trade and tariff tensions between US and China impacting trade dynamics.
• Uncertainty around resolution of conflicts affecting shipping routes and market conditions.

Q: On container shipping chartering activity and drivers, A: John Koustas mentioned demand for midsized ships is robust due to global market dynamism outside usual areas, uncertain on 2026 outlook but mostly fixed through 2027, crucial for Red Sea transit resolution.

Q: On Capesize investment, A: John Koustas said investment in Capesize is to grow, less than 5% of assets, expanding selectively in the secondhand market for good quality vessels.

Q: On share repurchase program, A: John Koustas said continuing, stock undervalued, pace smaller but not stopped; Evangelos Chatzis added resuming buybacks in past weeks.

Q: On Star Bulk investment and other segments, A: John Koustas said happy with Star Bulk investment, increased position, not looking into other segments currently.

Q: On Q4 Capesize fixtures guidance, A: Evangelos Chatzis said no guidance on charter fixtures for the running quarter.