world-class shipping, leading-edge expertise...2024 • strong contract coverage of 95% for 2020...

World-Class Shipping, Leading-Edge Expertise

Corporate Presentation | August 2020

Danaos by the NumbersDisclaimer

This presentation contains certain statements that may be deemed to be “forward-looking statements” within the meaning of the Securities Exchange Act of

1934. All statements, other than statements of historical facts, that address activities, events or developments that the Company expects, projects, believes or

anticipates will or may occur in the future, including, without limitation, the outlook for fleet utilization and shipping rates, general industry conditions including

bidding activity, future operating results of the Company’s vessels, future operating revenues and cash flows, capital expenditures, vessel market values,

asset sales, expansion and growth opportunities, bank borrowings, financing activities and other such matters, are forward-looking statements. Although the

Company believes that its expectations stated in this presentation are based on reasonable assumptions, actual results may differ from those projected in the

forward-looking statements. Important factors that could cause actual results to differ materially from those discussed in the forward-looking statements

include the strength of world economies, general market conditions, including charter rates and vessel values, counterparty performance under existing

charters, changes in operating expenses, ability to obtain financing and comply with covenants in financing arrangements, including the terms of its new

credit facilities and agreements entered into in connection with the refinancing, the affects of the refinancing transactions and the Company’s ability to

achieve the benefits of the refinancing, actions taken by regulatory authorities, potential liability from litigation and international political conditions. Danaos

Corporation is listed in the New York Stock Exchange under the ticker symbol “DAC”. Before you invest, you should also read the documents Danaos

Corporation has filed with the SEC for more complete information about the company. You may get these documents for free by visiting EDGAR on the SEC

Website at www.sec.gov or via www.danaos.com

Readers of this presentation should review our Annual Report on Form 20-F filed with the SEC on February 27, 2020, including the section entitled “Key

Information – Risk Factors”, and our other filings with the SEC for a discussion of factors and circumstances that could affect our future financial results and

our ability to realize the expectations stated herein.

EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS may be included in our presentations. EBITDA, Adjusted EBITDA, Adjusted Net Income

and Adjusted EPS are presented because they are used by management and certain investors to measure a company’s financial performance and underlying

trends as they exclude certain items impacting overall comparability. EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS are “non-GAAP

financial measures” and should not be considered a substitute for net income, cash flow from operating activities and other operations or cash flow statement

data prepared in accordance with accounting principles generally accepted in the United States or as a measure of profitability or liquidity. Reconciliations to

GAAP measures are included in the Appendix to this presentation.

Certain shipping industry information, statistics and charts contained herein have been derived from industry sources. You are hereby advised that such

information, statistics and charts have not been prepared specifically for inclusion in this presentation and the Company has not undertaken any independent

investigation to confirm the accuracy or completeness of such information.

2

kBusiness Overview

3

• One of the largest publicly-listed owners of modern containerships with

long track record in the shipping market

• One of the most efficient operators in the industry with highly

competitive breakeven levels

• Management is the largest shareholder (~37.3%)(1) and is aligned with

public shareholders

✓

A LEADING CONTAINERSHIP OWNER AND OPERATOR

• Adjusted Net Debt / EBITDA ratio of 4.7x and consistent reduction in

leverage through amortization schedule

• Going forward financial covenants in line with conservative operating

expectations

• Significant financial commitment by founder and largest shareholder

✓

HEALTHY CAPITAL STRUCTURE

LIMIT RE-CHARTERING RISK AND POTENTIAL FOR UPSIDE

✓

• Charter backlog of $1.2 billion through 2028 with world’s leading liner

companies provides good cash flow visibility

• Large, modern 13,100 TEU vessels are all on long-term charters through

2024

• Strong contract coverage of 95% for 2020 limits downside risk and

provides potential for upside from 2021 onwards

(1) Inclusive of extended Coustas family interest. .

COVID-19 MARKET UPDATE

• The charter market has softened significantly due

to the COVID-19 pandemic, and rates have

declined by 25% - 40%, depending on vessel size

• Liner companies have addressed the drop in

volumes brought on by the pandemic by cancelling

sailings and idling capacity

• Despite the drop in volumes, liner companies have

significantly alleviated pressure on their cash flows

through prudent capacity management which has

led to stable freight rates and have also taken the

benefit of reduced bunker prices and falling

interest rates

• Several initiatives have been undertaken by

governments in Europe and Asia to support the

liner industry during this difficult period, which is a

very encouraging sign

• Historically-low orderbook for containerships,

provides potential for a swift recovery when the

situation normalizes

Danaos by the Numbers

$1.2bnContracted cash flow through 2028

4.7xNet debt to LTM Adjusted EBITDA

$309mnLTM Adjusted EBITDA 2Q 2020

37.3%Ownership through founder / management

$2.0bnEnterprise value

2.6xReduction in leverage over the last two and a half

years

4

1,026

472 386

244 207 181

457 456 455 357

268 253 247 223 221 210 195 181

Sea

span

Cos

tam

are

Dan

aos

Glo

bal S

hip

Leas

e

Nav

ios

MP

C G

roup

Sho

ei K

isen

Offe

n, C

laus

Pet

er

Zod

iac

Mar

itim

e

BoC

om L

easi

ng

Eas

tern

Pac

ific

Shp

g

Fre

drik

sen

Gro

up

Pet

er D

ohle

/H

amm

onia

Sch

ulte

Gro

up

Zea

born

Nis

sen

Kai

un

Nor

ddeu

tsch

e R

.H.

Sch

uldt

Min

shen

g F

inan

cial

Leas

ing

40+ Year Legacy of Leadership in Container Shipping

Source: Clarksons Research.

(1) Includes Gemini Shipholdings Vessels (TEU), a joint venture in which Danaos owns a 49% stake: Suez Canal (5,610), Genoa (5,544), Lodestar (6,422), Leo C (6,422) and Belita (8,533).

(2) Global Ship Lease includes Pro Forma TEU for Poseidon / Technomar Acquisition which closed November 15, 2018

Publicly Traded Pure-Play Operators Financial / Independent Owners

Market Share1, 2 Among Top Public Containership Owners GloballyBy TEU, thousands

5

1972

Founded by Dimitris

Coustas

1987

Dr. John Coustas steps into

Chief Executive role

2005

Incorporation in Marshall

Islands

2006

NYSE IPO

Raised $200mm

2018 to present

Refinancing, share

offering and growth

2010

$200mm equity

raise

38.5%

8.3%26.9%

23.6%

1.4%0.6% 0.6%

Diverse, High-Quality Fleet

2x5,500 TEU

2x 6,500 TEU

1x 8,500 TEU

9x 6,400 – 6,500 TEU

Average Age: 11.9 years

Remaining Charter Term: 3.2 years

10x4,300 – 5,500 TEU



8x3,500 TEU


Remaining Charter Term: 0.3 years 11x 2,200 – 2,600 TEU



Note: Figures as of June 30th 2020. Please refer to appendix for additional detail.

(1) Excludes Gemini Shipholdings Vessels (TEU), a joint venture in which Danaos owns a 49% stake: Suez Canal (5,610), Genoa (5,544), Lodestar (6,422), Leo C (6,422) and Belita (8,533).

Fleet Overview(1)

5x 13,100 TEU



10x8,500 TEU



5x9,600 - 10,100 TEU



Gemini Vessels

Contracted

Revenue

Contribution(1)

6

Danaos by the NumbersBalanced Counterparty Concentration

Note: Distributed by TEU.

31%

17%

13%

8%

7%

6%

18%

(20 years)

(25 years)

(37 years)

(15 years)

(34 years)

(40+ years)

Overview of Customer Base

• Long history chartering to most major global

liner companies

• Engaged with container alliances on

deployments across major and minor global

routes

• Have collaborated with customers in ordering

46 newbuildings in excess of 300,000 TEU over

our history at a cost in excess of $4 billion

Close Alignment Working with Customers

• Consistently developing operating expertise to

obtain and retain customers

• Delivering on-time new ships to customers’

specifications

• Prioritizing reputation, customer service and

safety

• Maintain a strategic focus on regular

engagement with customers, particularly in

regards to new customer needs and

technological advancements

Other

Length of Customer Relationships Noted in Italics

7

Strong Charter Coverage through 2024

Note: Charter Revenue assumes Gross Daily Charter Rate. Contracted Revenue and Charter Expiration Schedule exclude Gemini Shipholdings.

(1) Assumes non-contracted vessels employed at current contracted charter rates.

Shorter charter durations limited to vessels in more liquid chartering markets

Contracted Revenue by Year mm $ by Asset Class

Revenue-Weighted Charter Coverage(1)

8

95% 78%

61% 42%

5%

2020 2021 2022 2023 2024+

$438

$366

$282

$189

$119

2020 2021 2022 2023 2024+

13,000 9,500-10,000 8,500 6,400-6,500 4,300-5,500 3,500 2,200-2,600

$309

$192

$61

($73) ($5)

($17) ($3) ($19)

($131)

LTM Q2 2020EBITDA

Net Cash Interest JV Earnings Revenue Recognition(Non-Cash)

Other Dry Docking Operating Cash Flow Debt Amortization LTM Q2 2020 FCF

Good Free Cash Flow Visibility

Source: Company filings as of 06/30/2020.

Note: Recurring Free Cash Flow calculated excluding non-recurring items such as Vessels Addition Capital Expenditures and Financing Costs.

(1) Non-GAAP measure. See appendix for definitions and reconciliations to the nearest GAAP measure.

Illustrative Walk to LTM Q2 2020 Free Cash Flow(1)

LTM Q2 2020 FCF

excludes CapEx

and one-time /

extraordinary

items

(1)

(1)

Drivers of LTM Q2 2020 FCF

✓ Lower interest rates

✓ Contractual charter escalations

✓ Vessel acquisitions

Uses of FCF

✓ Further debt amortization

✓ Return of capital to shareholders

✓ Vessel acquisitions

9

Focused on Maintaining Conservative Capital Structure

Net Adjusted Debt and Adjusted EBITDA Multiple(1)Capitalization

3,165 3,042

2,892

2,703

2,454

2,274

1,615

1,443 1,460

7.3x 7.0x

7.2x

6.5x

7.0x 7.3x

5.1x 4.6x 4.7x

0

500

1,000

1,500

2,000

2,500

3,000

$3,500

2012 2013 2014 2015 2016 2017 2018 2019 LTM 2Q'20

(1) Based on total adjusted debt, net of deferred finance costs and fair value adjustments, as of June 30th 2020.

(2) Non-GAAP measure. See appendix for definitions and reconciliations to the nearest GAAP measure.

Net Adjusted Debt

6/30/2020$ in millions

Cash $85

Bank Debt: 1,387

Long-term Leaseback Obligation 135

Exit Fee 22

Deferred Finance Costs (33)

Debt Fair Value Adjustment (17)

Total Debt $1,495

adjusted for

Deferred Finance Costs 33

Debt Fair Value Adjustment 17

Total Debt $1,545

Net Debt 1,460

Book Value of Equity 950

Total Capitalization $2,495

Credit Statistics:

LTM Adj. EBITDA(2) $309

Debt / LTM Adj. EBITDA(2) 5.0x

Net Debt / LTM Adj. EBITDA(2) 4.7x

Net Debt / Book Equity(2) 1.5x

10

Experienced Senior Management

Dr. John Coustas, President & CEO

Dimitris Vastarouchas, Technical Director & Deputy COO

• CEO since 1987

• Over 30 years of experience in the

shipping industry

• Vice Chairman of the board of directors of

The Swedish Club; member of the board

of directors of the Union of Greek

Shipowners and the DNV Council

Evangelos Chatzis, Chief Financial Officer

• Joined Danaos in 2005

• Over 25 years of experience in corporate

finance and the shipping industry

• Formerly CFO of Globe Group of

Companies

• Danaos Technical Manager since 2005

• Has over 20 years of experience in the

shipping industry

• Formerly New Buildings Projects and Site

Manager supervising the construction of

4,250, 5,500 and 8,500 TEU containerships

Iraklis Prokopakis, Senior Vice President, Treasurer & COO

• Joined Danaos in 1998

• Over 40 years of experience in the shipping

industry

• Member of the Board of the Hellenic Chamber

of Shipping and the Owners’ Committee of the

Korean Register of Shipping

11

Governance

Independent Board

Clear reporting of

transactions with Danaos

Shipping (Manager)

− Amounts approved by

independent board

members

Arms length cost

arrangements, which

are amongst lowest

in industry and fixed

through 2024

✓

✓

✓

Social

Code of ethics and

compliance policies

published for Directors /

Officers

Accredited by Global

Reporting Initiative (GRI)

for sustainability best

practices and socially

responsible management

✓

✓

Environmental

Advanced solutions to

reduce emissions through

fuel efficiency optimization

Scrubber installation on

select vessels

Low-sulfur fuel oil

to be procured

Ballast water

system compliance

Partnership with founders

of Poseidon Principles

✓

✓

✓

✓

✓

Longstanding Champion of ESG Principles

Danaos Management is keenly focused on maintaining a strong ESG framework for company operations

12

HINDSIGHT:

• ‘Reflect and learn from past data’ through statistical processing and trend analysis

• Detection of hidden correlations among seemingly un-related data

INSIGHT: ‘Interpret data and respond efficiently to the present’

• KPls real-time monitoring (operational efficiency, safety performance, etc.)

• Vessel’s benchmarking against: theoretical curves, specifications, tests and trials, sister and competitor vessel monitoring

• Timely anomaly detection and alerting for abnormal behavior or deviation from predefined thresholds

FORESIGHT: ‘Predict and get ready for the future’ through scenario testing, system risk assessments and observational

maintenance

As well as Routines System Data monitoring …

• BCS, pMatrix, Power Mgmt, Steam Mgmt, ODA …

• Tanks Mgmt. Bunker Analysis, Bunker Surveys, Bunkering Monitoring ...

• Performance, Propulsion, Emissions ...

Data Analytics/Algorithmic Analysis (Operator-defined) of Fused Data across Monitoring Systems

Workflow Management

Operator-defined workflows for timely and effective response to alarm events: what actions must take place, who from the

crew should be involved, and what actions must be logged / other systems triggered

Waves Fleet Performance

… Riding the Wave of Innovation!

Pioneers in Digitalization

13

Industry Overview

Seaborne Containerized Trade Forecast to Rebound Quickly

Global Seaborne Container Trade

Source: Clarksons Research

15

-15%

-10%

-5%

0%

5%

10%

15%

0

50

100

150

200

250

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020f 2021f

TE

U m

m

World Seaborne Container Trade Y-o-Y Growth

Containership Trade Routes


(1) Basis trades with Far East & Europe.

(2) Basis full year estimate / forecast.

• Units of 15,000+ TEU remain exclusively deployed on the

Far East-Europe trade

• Deployment of boxships sized 12-14,999 TEU continues

to broaden notably onto the Transpacific route and also

onto some non-mainlane trades

• Boxships sized 6,000-11,999 TEU offer flexible

deployment opportunities, with further reductions in

reliance on the mainlanes seen in 2019, although demand

can be sensitive to short-term shifts

• Approximately 30% of capacity deployed on intra-regional

trade routes is accounted for by units of 3,000+ TEU; this

share has been fairly steady for a number of years now

• Intra-regional routes, and deployment of sub-3,000 TEU

units thereon, appear ‘protected’ against significant vessel

upsizing to some degree, by infrastructure, volume and

other operational constraints

Mainlane, 30%

Non-Mainlane

East-West, 10%

North-South, 16%

Intra-Regional,

44%

201mm

TEU

Largest vessels primarily deployed on long trade routes

Container Trade by Trade Lane 2019

16

Geographic Deployment Favoring Certain Size Vessels

Largest vessels primarily deployed on long trade routes

Capacity Deployment By Routemm $ by Asset Class


0%

20%

40%

60%

80%

100%

<3k TEU 3-6k TEU 6-8k TEU 8-12k TEU 12-15k TEU 15k+ TEU

Mainlane E-W Non-Mainlane E-W North-South Intra-Regional

17

0.00

0.25

0.50

0.75

1.00

1.25

2020 2021 2022

12,000+ TEU 8,000–11,999 TEU 3,000–7,999 TEU 100–2,999 TEU

Supply Growth Primary in Largest Vessel Segments

Orderbook is concentrated in 8,000+ TEU vessels where Danaos has the greatest charter coverage

Containership Orderbook, as % of Fleet by SegmentTEU, mm


Containership Orderbook, By Scheduled Delivery YearTEU, mm

18

9%

14%

1%

9%

0%

5%

10%

15%

Containership Orderbook %Fleet

Containership 8,000+ TEUOrderbook % Fleet

Containership 3-7,999 TEUOrderbook % Fleet

Containership <3,000 TEUOrderbook % Fleet

Charter Rates Negatively Impacted by COVID-19

4,400 TEU gls ‘Old Panamax’ Containership

6-12 Month TC Rate$/day, thousands

9,000 TEU gls Containership 3-yr TC Rate1

$/day, thousands


Note: Limited activity on longer TCs with wide spread on rate ideas.

(1) Based on ‘Neo-Panamax’ ships.

6,800 TEU Containership 3-yr TC Rate$/day, thousands

2,500 TEU grd Containership 6-12 month TC Rate$/day, thousands

19

0

10

20

30

40

50

Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20

0

5

10

15

20

25

30


0

10

20

30

40


0

10

20

30

40


Asset Values Steady, but Few Recent Transactions

4,500 TEU ‘Old Panamax’ Containership 10 Year Old

Secondhand Pricemm $

8,800 TEU Containership 5 Year Old Secondhand Pricemm $


Note: Limited activity on longer TCs with wide spread on rate ideas.

(1) Based on ‘Neo-Panamax’ ships.

6,600 TEU Containership 5 Year Old Secondhand Pricemm $

2,500 TEU grd Containership 10-Year-Old

Secondhand Pricemm $

20

0

20

40

60

80

Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Jul-18 Jul-19 Jul-200

10

20

30

40

50

60


0

10

20


0

10

20


Financial Overview

Historical Financials

Net Leverage Adjusted Net Income

Operating Revenuesmm $

Adjusted EBITDAmm $

$589 $588 $552 $568

$498 $452 $459 $447 $445

2012 2013 2014 2015 2016 2017 2018 2019 LTM2Q '20

$432 $434 $404 $418

$351 $310 $318 $311 $309

2012 2013 2014 2015 2016 2017 2018 2019 LTM2Q '20

Source: Company filings.

Note: Adjusted Net Income reflects add-backs of various income statement items, most notably impairment charges, amortization of deferred financing costs and other one-off extraordinary items.

Note: LTM reflects twelve months period ending June 30, 2020

$60 $54 $60

$159 $141

$115 $131

$149 $152

2012 2013 2014 2015 2016 2017 2018 2019 LTM2Q '20

22

Summary Results

7.3x 7.0x 7.2x 6.5x

7.0x 7.3x

5.1x 4.6x 4.7x

2012 2013 2014 2015 2016 2017 2018 2019 LTM2Q'20

Second Quarter 2020 Earnings

Three Months ended June 30 Six Months ended June 30

2020 2019 % yoy 2020 2019 % yoy

Operating Revenue $116,824 $112,319 4.0% $223,020 $225,210 -1.0%

Adjusted EBITDA1 $80,073 $75,581 5.9% $151,991 $153,119 -0.7%

Adjusted Net Income $42,494 $34,255 24.1% $75,775 $72,824 4.1%

Adjusted Earnings per Share, diluted2 $1.71 $2.24 -23.4% $3.06 $4.77 -35.9%

Summary of Resultsthousands $, expect per share figures

Second Quarter Highlights

• Fleet utilization for the three months ended June 30, 2020 was 97.1%

• Adjusted net income improved by 24.1% when compared Q2 2019 primarily due to a decrease in net finance expenses

and adjusted EBITDA improved by 5.9%

• Charter contract coverage of 85% in terms of operating revenues and 62% in terms of operating days over the next 12

months

(1) Adjusted EBITDA represents net income before interest income and expense, depreciation, amortization of deferred drydocking & special survey costs

and deferred finance costs, amortization of deferred realized losses on interest rate swaps, loss on sale of securities, gain on debt extinguishment, stock based compensation and refinancing professional fees.

(2) Based on weighted average diluted shares outstanding.23

Last Twelve

Months

$445,054

$309,437

$151,626

$7.24

Charter-Adjusted Total Asset Value Net Debt Net Working Capital & Other Net Asset Value

Charter Adjusted Net Asset Value

Note: Asset value does not include vessels acquired after June 30, 2020. Refer to appendix for additional details regarding calculation of Net Asset Value.

(1) Net debt includes (1) $1,409.7 million of long-term debt, including current portion, which adds back deferred finance costs of $29.2 million and debt fair value adjustment of $17.1 million, and (2) $135.2 million of long-term leaseback obligations,

including current portion which adds back deferred finance costs of $4.1 million, less (3) cash and cash equivalents of $85.0 million. Please refer to Appendix. Does not include accumulated accrued interest of $170.0 million as of June 30, 2020.

(2) Includes carrying value of investments in Gemini JV of $12.2 million and ZIM and HMM notes of $31.9 million, as well as net working capital and other assets and liabilities. Excludes assets and liabilities relating to accruals for certain non-cash

items relating to straight-line revenue recognition, unearned revenue with respect to ZIM and HMM notes and deferred Handling Fees. Please refer to Appendix for further details.

(3) Based on 24.789 mm shares outstanding as of June 30, 2020.

(in US$ millions)

(2)(1)

NAV / Share: $17.2(3)

As of June 30, 2020

• As calculated in accordance with the financial covenants contained in the Company’s credit facilities as of June 30, 2020, market value of the

Company’s existing fleet of 58 containerships on a charter-inclusive basis was approximately $1.8 billion.

− Broker appraisals for charter-free asset value and charter-adjustments are as of June 30, 2020

• Adjustments to calculate net asset value include:

− Net debt, which is adjusted to include non-cash fair value adjustments and deferred finance costs

− Net working capital & other, which includes DAC’s equity stake in the Gemini joint venture at carrying value

$1,843 ($1,460)

$44

$427

24

Summary

kFinancial Strategy Positioning Danaos for Success

Balanced chartering strategy to ensure cash flow visibility with 95% and 78% of 2020 and 2021 revenues contracted(3)✓

Opportunistic vessel acquisition strategy

- Acquired three vessels in last six months, two of which have been fixed on multi-year charters✓

Following consummation of recent equity offering the Company is permitted, under its loan agreements, to re-instate dividends

✓

(1) Calculated as the sum of contractual principal debt repayment and lease repayments under sale leaseback structure.

(2) Net leverage is a non-GAAP measure. Calculated as Net Adjusted Debt / Adjusted EBITDA. Adjusted EBITDA is a non-GAAP measure. See appendix for definitions and reconciliations to the nearest GAAP measure.

(3) Assumes contracted vessels operate on gross daily charter rate, accounts for revenue exclusively derived from long-term charter contracts. 26

Continued de-levering from strong contracted cash flows- Minimum debt amortization of $300mm(1) in 2020 and 2021

✓

35% reduction in leverage

between 2014 and today(2)7.2x5.1x 4.7x

2014 2018 2020 Q2

The Company’s Board of Directors has approved a $10 million share repurchase program✓

Appendix

Substantial Fleet Employment and Coverage

(1) Age as of June 30, 2020

5x13,100 TEU

5x10,100 TEU

10x8,500 – 9,600 TEU

9x6,400 – 6,500 TEU

2018 2019 2020 2021 2022 2023 2024 2025

Hyundai Honour

Hyundai Respect

Hyundai Smart

Hyundai Speed

Hyundai Ambition

Pusan C

Le Havre

Express Berlin

Express Rome

Express Athens

Europe

America

Phoebe

SM Charleston

Niledutch Lion

CMA CGM Attila

CMA CGM Tancredi

CMA CGM Bianca

CMA CGM Samson

CMA CGM Melisande

Performance

Dimitra C

CMA CGM Moliere

CMA CGM Musset

CMA CGM Nerval

YM Mandate

CMA CGM Rabelais

CMA CGM Racine

YM Maturity

2028

Charterer Age1 Vessel

8.4

8.3

8.2

8.1

8.0

13.8

13.6

9.3

9.2

9.2

15.9

15.7

15.1

14.6

12.0

9.0

8.9

8.7

8.5

8.3

18.3

18.0

10.8

10.3

10.1

10.1

10.0

9.9

9.9

Total Charter

Revenue

Contribution

39%

8%

27%

24%

28

ONE

Substantial Fleet Employment and Coverage

Charterer Age1 Vessel

Total Charter

Revenue

Contribution

10x4,300 – 5,500 TEU

8x3,400 TEU

11x2,200 – 2,600 TEU

2018 2019 2020 2021 2022 2023 2024

ANL Tongala

Derby D

Seattle C

YM Vancouver

Rio Grande

Zim Sao Paolo

Zim Kingston

Zim Monaco

Zim Dalian

Zim Luanda

Dimitris C

Colombo

Singapore

Express Argentina

Express Brazil

Express France

Express Spain

Express Black Sea

Future

Sprinter

Vladivostok

Advance

Stride

Progress C

Amalia C

Highway

Bridge

Danae C

MSC Zebra

16.3

16.2

12.8

12.6

12.0

11.8

11.7

11.5

11.3

11.0

19.3

16.3

15.8

10.1

10.0

9.7

9.4

9.2

23.3

23.1

23.0

22.9

22.8

22.4

22.3

22.3

22.3

19.0

18.5

(1) Age as of June 30, 2020

1%

1%

1%

29

Adjusted EBITDA


Three Months Three Months Six Months Six Months Twelve Months

ended ended ended ended ended

($ In thousands) June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 June 30, 2020

Net income / (Loss) from Continuing Operations

(unadjusted)$38,496 30,138 $67,585 63,581 $135,257

Adjustments:

Depreciation 25,258 24,039 49,839 47,805 98,539

Amortization of deferred drydocking & special survey

costs2,941 2,063 5,251 4,254 9,730

Amortization of deferred realized losses of cash flow

interest rate swaps903 903 1,806 1,796 3,632

Amortization of deferred finance costs 3,998 4,117 8,190 9,243 16,369

Interest income (1,588) (1,569) (3,302) (3,165) (6,551)

Interest expense 9,767 14,855 22,026 27,740 49,489

EBITDA $79,775 $74,546 $151,395 $151,254 $306,465

Stock based compensation 298 1,035 596 1,865 2,972

ADJUSTED EBITDA $80,073 $75,581 $151,991 $153,119 $309,437

Reconciliation of Net Income / (Loss) to EBITDA and Adjusted EBITDA

June 30, 2020

30

Historical Adjusted EBITDA

Source: Company filings. 31

Historical Reconciliation of Net Income to EBITDA and Adjusted EBITDA

Years ended 2012 – LTM 2Q 2020

Twelve months

ended

($ in thousands) 2012 2013 2014 2015 2016 2017 2018 2019 June 30, 2020

Net Income $(105,204) $37,523 $(3,920) $117,016 $(366,195) $83,905 $(32,936) $131,252 $135,257

Adjustments

Depreciation 143,938 137,414 137,061 131,783 129,045 115,228 107,757 96,505 98,539

Amortization of deferred drydocking & special survey costs 6,070 5,482 4,387 3,845 5,528 6,748 9,237 8,733 9,730

Amortization of deferred realized losses on cash flow interest rate swaps 3,524 4,017 4,016 4,017 4,028 3,694 3,694 3,622 3,632

Amortization of finance costs and debt discount 14,314 15,431 15,070 14,038 12,652 11,153 14,957 16,866 15,850

Finance costs accrued (Exit Fees under our Bank Agreements) 2,762 3,763 3,745 3,639 3,447 3,169 2,059 556 518

Interest Income (1,642) (2,210) (1,703) (3,419) (4,682) (5,576) (5,781) (6,414) (6,551)

Interest Expense 87,340 91,185 79,980 70,397 70,314 75,403 70,749 55,203 49,490

EBITDA 151,102 292,605 238,636 341,316 (145,863) 293,724 169,736 306,323 306,465

Adjusted for:

Impairment loss 129,630 19,004 75,776 41,080 415,118 - 210,715 - -

Gain on debt extinguishment - - - - - - (116,365) - -

Re-financing professional fees - - - - - 14,297 51,314 - -

Accelerated amortization of accumulated other comprehensive loss - - - - 7,705 - 1,443 - -

Realized (Gain) / Loss on derivatives 150,910 144,254 119,612 52,125 5,397 - - - -

Unrealized (Gain) / Loss on fair value of derivatives 739 (22,121) (24,915) (16,285) (4,648) - - - -

Stock based compensation 139 75 638 88 76 - 1,005 4,241 2,972

Bad debt expense - - - - 15,834 - - - -

Impairment loss component of equity loss on investments - - - - 14,642 - - - -

Loss on sale of HMM securities - - - - 12,906 2,357 - - -

Impairment loss on securities - - - - 29,384 - - - -

(Gain) / Loss on sale of vessels (830) 449 (5,709) - 36 - - - -

Adjusted EBITDA 431,690 434,266 404,038 418,324 350,587 310,378 317,849 310,564 309,437

Three Months Three Months Six Months Six Months Twelve Months

ended ended ended ended ended

($ In thousands, except per share items) June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 June 30, 2020

Net income / (Loss) from Continuing Operations $38,496 30,138 $67,585 63,581 135,257

Adjustments:

Amortization of deferred finance costs 3,998 4,117 8,190 9,243 16,369

ADJUSTED NET INCOME $42,494 $34,255 $75,775 $72,824 $151,626

ADJUSTED EARNINGS PER SHARE

Diluted net income per share $1.71 $2.24 $3.06 $4.77 $7.24

Diluted weighted average number of shares 24,789 15,314 24,789 15,276 20,949

Adjusted Net Income


Reconciliation of Net Income to Adjusted Net Income and Adjusted Earnings per Share

June 30, 2020

32

Historical Adjusted Net Income


Reconciliation of Adjusted Net Income

Years ended December 2012 – LTM 2Q 2020

Twelve months

ended

2012 2013 2014 2015 2016 2017 2018 2019 June 30, 2020

Net Income $(105,204) $37,523 $(3,920) $117,016 $(366,195) $83,905 $(32,936) $131,252 $135,257

Adjust for:

Impairment loss 129,630 19,004 75,776 41,080 415,118 - 210,715 - -

Gain on debt extinguishment - - - - - - (116,365) - -

Amortization of finance costs 14,314 15,431 15,070 14,038 12,652 11,153 11,771 10,795 10,156

Debt discount amortization - - - - - - 3,186 6,071 5,695

Finance costs accrued (Exit Fees under our Bank Agreements) 2,762 3,763 3,745 3,639 3,447 3,169 2,059 556 518

Re-financing professional fees - - - - - 14,297 51,314 - -

Accelerated amortization of accumulated other comprehensive loss - - - - 7,705 - 1,443 - -

Unrealized (Gain) / Loss on fair value of derivatives 739 (22,121) (24,915) (16,285) (4,648) - - - -

Realized loss on over-hedging portion of derivatives 19,042 - - - - - - - -

Bad debt expense - - - - 15,834 - - - -

Impairment loss component of equity loss on investments - - - - 14,642 - - - -

Loss on sale of HMM securities - - - - 12,906 2,357 - - -

Impairment loss on securities - - - - 29,384 - - - -

(Gain) / Loss on sale of vessels (830) 449 (5,709) - 36 - - - -

$60,453 $54,049 $60,047 $159,488 $140,881 $114,881 $131,188 $148,674 $151,626

2020 Free Cash Flow


Reconciliation of Free Cash Flow

Twelve months ended Three months ended Twelve months ended

($ in thousands)Dec. 31, 2019 June 30, 2020 June 30, 2020

Net Income $131,252 $38,496 $135,257

Adjustments

Depreciation 96,505 25,258 98,540

Amortization of deferred drydocking & special survey costs 8,733 2,941 9,729

Amortization of deferred realized losses on cash flow interest rate swaps 3,622 903 3,632

Amortization of finance costs and debt discount 16,866 3,878 15,850

Finance costs accrued (Exit Fees under our Bank Agreements) 556 120 518

Interest Income (6,414) (1,588) (6,551)

Interest Expense 55,203 9,767 49,490

EBITDA 306,323 79,775 306,465

Stock based compensation 4,241 298 2,972

Adjusted EBITDA $310,564 $80,073 $309,437

Net cash interest (80,772) (14,608) (72,701)

Equity income / (loss) on investments (1,601) (1,720) (4,919)

Revenue recognition (non-cash) (27,682) (1,522) (17,495)

Other working capital (8,831) 575 (3,179)

Payments for dry-docking & special survey costs deferred (7,157) (8,530) (18,846)

Operating cash flow 184,520 54,267 192,297

Debt Amortization (124,358) (31,648) (131,145)

Free Cash Flow 60,162 22,619 61,152

Debt drawdowns 23,400 23,400

Vessels additions & advances for vessels additions (18,853) (12,287) (31,987)

Vessel acquisitions & advances for vessel acquisitions (2,507) (44,213) (77,557)

Finance costs (30,474) (1,584) (22,423)

Share issuance costs (873) (873)

Paid-in capital 54,440 54,440

Net Increase / (Decrease) in Cash and Cash Equivalents $61,895 $(12,065) $6,152

Appendix: Danaos Net Asset Value(1)

(1) Net Asset Value (NAV) is used to assess compliance with our credit facility covenants, and management

believes that many investors use NAV as a reference point in assessing valuation of fleets of ships and

similar assets.

(2) As calculated in accordance with the financial covenants contained in the Company’s credit facilities as of

June 30, 2020, on a charter-inclusive basis, as follows (1) for any vessel having a charter with more than 12

months remaining duration, the present value of the “bareboat-equivalent” time charter income from such

charter (contracted revenue thereunder less forecasted operating expenses, insurances and dry-docking

costs), plus (2) the present value of the residual charter-free value of any vessel (estimated based on June

30, 2020 broker valuations using vessel age as of the end of applicable charter, if any), each discounted to

present value using a discount rate 7.0%. See “Item 5. Operating and Financial Review and Prospects” in the

Company’s Annual Report on Form 20-F filed with the SEC on February 27, 2020. These calculations of

vessel value may not be comparable to other methods of determining vessel values or reported book value

($2.5 billion as of June 30, 2020). Vessel values are highly volatile and contracted charter revenue is subject

to counterparty performance and may not be transferable upon sale of a vessel. As such, the Company’s

estimates of market value may not be indicative of the current or future value of its vessels, or prices that the

Company could achieve if it were to sell the vessels.

(3) Consists of (i) Current portion of long term debt, net of $123.084 million and (ii) Long-term debt, net of

current portion of $1,240.252 million plus deferred finance costs, net, of $29.2 million and debt fair value

adjustment of $17.1 million. Does not include accumulated accrued interest of $170.0 million.

(4) Consists of (i) Current portion of leaseback obligation, net of $23.822 million and (ii) Long-term leaseback

obligation, net of current portion of $107.353 million plus deferred finance costs of $4.1 million

(5) Excludes the following non-cash items included on the Company’s balance sheet, as of June 30, 2020: (i)

unearned revenue liabilities totaling $34.675 million relating to an accounting charge recognized upon the

Company’s receipt of the ZIM and HMM notes in respect of charter amendments ($23.098 million Unearned

revenue, net of current portion and $11.577 million included in Unearned revenue, current portion), (ii) Other

current assets ($9.722 million) and Other non-current assets ($24.769 million) related to straight-line revenue

recognition totaling $34.491 million, (iii) other non-current assets ($0.20 million) related to deferred Handling

Fees and (iv) liabilities related to straight-line revenue recognition totaling $0.817 million (Other current

liabilities of $0.423 million and $0.394 million included in Other long-term liabilities).

(6) Represents investment in Gemini JV.

(7) Included in Other non-current assets on the Company’s balance sheet.

35

(in US$ thousands)

Charter Adjusted Asset Value

Charter Adjusted Fleet Value(2) $1,842,868

Total Charter Adjusted Asset Value $1,842,868

Less:

Net Debt

Bank debt(3) $1,409,688

Long-term leaseback obligation (including current portion)(4) 135,229

Less:

Cash and cash equivalents (84,955)

Total Net Debt $1,459,963

Plus:

Net Working Capital & Other(5)

Accounts receivable, net $12,552

Inventories 9,358

Prepaid Expenses 1,353

Due from related parties 22,376

Other current assets & non-current assets 4,497

Investments in affiliates(6) 12,230

Zim notes(7) 21,567

HMM notes(7) 10,360

Less:

Accounts payable (20,903)

Accrued liabilities (14,620)

Unearned revenue (7,347)

Other current liabilities (7,425)

Total Net Working Capital & Other $43,999

Net Asset Value: $426,904

world-class shipping, leading-edge expertise...2024 • strong contract coverage of 95% for 2020...

Documents