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Danaos(DAC) - 2025 Q1 - Earnings Call Transcript
DACDanaos(DAC)2025-05-14 14:00

Financial Data and Key Metrics Changes - The company reported adjusted EPS of 6.04pershareforQ12025,downfrom6.04 per share for Q1 2025, down from 7.15 per share in Q1 2024, reflecting a decrease in adjusted net income from 140millionto140 million to 113.4 million, a decline of 26.6million[11]−Totaloperatingcostsincreasedby26.6 million [11] - Total operating costs increased by 19.8 million, primarily due to a rise in the average number of vessels in the fleet, while net finance costs rose by 6million[11][12]−AdjustedEBITDAdecreasedby3.16 million [11][12] - Adjusted EBITDA decreased by 3.1% or 5.5 million to 171.7millioncomparedto171.7 million compared to 177.2 million in Q1 2024 [14] Business Line Data and Key Metrics Changes - Revenues from the drybulk segment decreased by 9millionduetoasofterspotmarket,whilecontainersegmentrevenuesfellby9 million due to a softer spot market, while container segment revenues fell by 9.4 million due to lower contracted charter rates [11] - Fleet utilization decreased, contributing to a 6.4milliondropinrevenues,mainlyduetoincreaseddrydockings[11]MarketDataandKeyMetricsChanges−Thedrybulkmarkethasshownmodestrecoveryfromitslows,butameaningfulrecoveryischallengingwithoutfurthergrowthinitiativesinChina[6]−ThePacificmarkethasexperiencedadramaticdeclineduetotariffuncertaintiesandongoingarmedconflicts,particularlybetweenIndiaandPakistan[5]CompanyStrategyandDevelopmentDirection−Thecompanyisfocusingonoptimizingtheperformanceofitsexistingfleetandinvestinginenergy−savingdevicestoenhancecompetitiveness[20]−Asignificantgrowthbacklogincludes15containervesselsscheduledfordeliveryoverthenextthreeyears,allbackedbyprofitablecharterarrangements[9]−Thecompanyisholdingoffonnewvesselinvestmentsduetothecurrentenvironmentofexpensivenewbuildsandunclearfuturefueloptions[21]Management′sCommentsonOperatingEnvironmentandFutureOutlook−ManagementnotedthattheU.S.economyremainsresilient,withexpectationsofareboundintradeflowsasconsumerspendingcontinues[6]−TheproposedIMOregulationongreenhousegasemissionsisseenasinsufficienttodrivemeaningfulprogressindecarbonization,leadingtouncertaintyinfuturefueloptions[8]OtherImportantInformation−Thecompanydeclaredadividendof6.4 million drop in revenues, mainly due to increased dry dockings [11] Market Data and Key Metrics Changes - The drybulk market has shown modest recovery from its lows, but a meaningful recovery is challenging without further growth initiatives in China [6] - The Pacific market has experienced a dramatic decline due to tariff uncertainties and ongoing armed conflicts, particularly between India and Pakistan [5] Company Strategy and Development Direction - The company is focusing on optimizing the performance of its existing fleet and investing in energy-saving devices to enhance competitiveness [20] - A significant growth backlog includes 15 container vessels scheduled for delivery over the next three years, all backed by profitable charter arrangements [9] - The company is holding off on new vessel investments due to the current environment of expensive new builds and unclear future fuel options [21] Management's Comments on Operating Environment and Future Outlook - Management noted that the U.S. economy remains resilient, with expectations of a rebound in trade flows as consumer spending continues [6] - The proposed IMO regulation on greenhouse gas emissions is seen as insufficient to drive meaningful progress in decarbonization, leading to uncertainty in future fuel options [8] Other Important Information - The company declared a dividend of 0.85 per share for the quarter and has repurchased 36.9millionworthofstock,totaling36.9 million worth of stock, totaling 205.7 million in share repurchases to date [15] - As of March 31, 2025, cash stood at 480million,withtotalliquidityat480 million, with total liquidity at 825 million, providing flexibility for capital deployment opportunities [15] Q&A Session Summary Question: Focus on cash generation or investment opportunities in existing fleet? - Management confirmed a focus on investing in energy-saving devices to enhance competitiveness while also generating significant cash [20] Question: Continuation of stock buybacks? - Management indicated that there is $100 million authorized for buybacks, but no specific targets or timelines were set for execution [22] Question: Reason for increasing stake in Star Bulk? - The additional investment in Star Bulk was seen as a compelling opportunity, with no specific plans for the time being [23][24]