Danaos corporation reports second quarter and half year results for the period ended june 30, 2022
Athens, greece--(business wire)--danaos corporation (“danaos”) (nyse: dac), one of the world’s largest independent owners of containerships, today reported unaudited results for the period ended june 30, 2022. highlights for the second quarter and half year ended june 30, 2022: adjusted net income1 of $157.1 million, or $7.59 per share, for the three months ended june 30, 2022 compared to $68.9 million, or $3.34 per share, for the three months ended june 30, 2021, an increase of 128.0%. adjusted net income1 of $392.4 million, or $18.95 per share, for the six months ended june 30, 2022 compared to $126.9 million, or $6.17 per share, for the six months ended june 30, 2021, an increase of 209.2%. liquidity in cash and marketable securities was $588.2 million as of june 30, 2022. operating revenues of $250.9 million for the three months ended june 30, 2022 compared to $146.4 million for the three months ended june 30, 2021, an increase of 71.4%. operating revenues of $480.8 million for the six months ended june 30, 2022 compared to $278.5 million for the six months ended june 30, 2021, an increase of 72.6%. adjusted ebitda1 of $192.1 million for the three months ended june 30, 2022 compared to $103.7 million for the three months ended june 30, 2021, an increase of 85.2%. adjusted ebitda1 of $461.6 million for the six months ended june 30, 2022 compared to $200.0 million for the six months ended june 30, 2021, an increase of 130.8%. total contracted cash operating revenues were $2.3 billion as of june 30, 2022 and remaining average contracted charter duration was 3.6 years, weighted by aggregate contracted charter hire. contracted operating days charter coverage currently stands at 99.3% for 2022 and 79.6% for 2023 while for the next 12 months, charter coverage stands at 91.7%. during the three months ended june 30, 2022, we made early prepayment of $434.1 million of debt and lease indebtedness and realized a $22.9 million gain associated with this debt extinguishment. as a result, as of june 30, 2022, net debt was $679.7 million, net debt / ltm adjusted ebitda was 0.9x, while 15 of the company’s vessels are debt-free currently. as of the end of july 2022, we had repurchased 409,200 shares of our common stock in the open market for $25.1 million, under our share repurchase program of up to $100 million announced in june 2022. danaos has declared a dividend of $0.75 per share of common stock for the second quarter of 2022, which is payable on august 29, 2022 to stockholders of record as of august 17, 2022. three and six months ended june 30, 2022 financial summary – unaudited (expressed in thousands of united states dollars, except per share amounts) three months three months six months six months ended june 30, ended june 30, ended june 30, ended june 30, 2022 2021 2022 2021 operating revenues $250,923 $146,434 $480,824 $278,552 net income $8,224 $372,837 $339,689 $669,617 adjusted net income1 $157,110 $68,860 $392,407 $126,871 earnings per share, diluted $0.40 $18.10 $16.40 $32.57 adjusted earnings per share, diluted1 $7.59 $3.34 $18.95 $6.17 diluted weighted average number of shares (in thousands) 20,708 20,599 20,712 20,557 adjusted ebitda1 $192,148 $103,736 $461,632 $200,018 1 adjusted net income, adjusted earnings per share and adjusted ebitda are non-gaap measures. refer to the reconciliation of net income to adjusted net income and net income to adjusted ebitda. danaos’ ceo dr. john coustas commented: “danaos business model continued to generate strong results in the second quarter, more than doubling our adjusted net income compared with a year ago. given our fixed charter coverage over the next 12 months, we expect these metrics to improve further. at the same time, however, we are closely following macroeconomic conditions and the potential impacts to our industry. a confluence of factors, including high energy prices, inflation, and the effects of the war in ukraine, will likely result in slowing economic growth and negatively impact trade volumes. on the other hand, persistent inefficiencies on the shore side of the supply chain and covid resurgence in china are keeping the vessel utilization high with increased waiting times in port. additionally, the increase in fuel cost will likely prompt liner companies to reduce vessel sailing speeds as soon as vessels are available, however we do not expect this to happen until the 2nd quarter of 2023 and onwards. environmental regulations, particularly the cii compliance, is leading liner companies to redesign their operating loops with lower speeds to ensure that they do not breach requirements and to also assure their customers that they are actively reducing co2 emissions. these mitigating factors point to a weakening, rather than a collapse, of the market that we expect will result in rates much higher than pre-pandemic levels. for the time being charter rates are holding firm as the available tonnage is very scarce. the company is very well positioned with a strong liquidity position and a balance sheet that can sustain a severe deterioration of economic conditions. this is reflected in the upgrades by both s&p and moody’s to the highest level among public shipping companies, validating our efforts to create a leader in our sector. we are also insulated from rising interest rates as we have reduced our floating rate debt to a level nearly equal to our cash and marketable securities. we will continue to use our balance sheet opportunistically, with a continued focus on state-of-the-art newbuildings with environmental profiles desired by our liner customers which also gives us great confidence about the future of our already ordered six methanol-ready green newbuildings. we are also continuing to return value to our shareholders through our dividend and our share buyback program, which we have used to reduce our number of outstanding shares by approximately two percent.” three months ended june 30, 2022 compared to the three months ended june 30, 2021 during the three months ended june 30, 2022, danaos had an average of 71.0 containerships compared to 60.0 containerships during the three months ended june 30, 2021. our fleet utilization for the three months ended june 30, 2022 was 99.9% compared to 99.1% for the three months ended june 30, 2021. our adjusted net income amounted to $157.1 million, or $7.59 per share, for the three months ended june 30, 2022 compared to $68.9 million, or $3.34 per share, for the three months ended june 30, 2021. we have adjusted our net income in the three months ended june 30, 2022 for the change in fair value of our investment in zim integrated shipping services ltd. (“zim”) of $168.6 million, gain on debt extinguishment of $22.9 million and a non-cash fees amortization of $3.2 million. please refer to the adjusted net income reconciliation table, which appears later in this earnings release. the $88.2 million increase in adjusted net income for the three months ended june 30, 2022 compared to the three months ended june 30, 2021 is attributable mainly to a $104.5 million increase in operating revenues and recognition of $13.9 million in dividends from zim (net of withholding taxes), which were partially offset by a $20.2 million increase in total operating expenses, a $7.8 million increase in net finance expenses and a $2.2 million decrease in our equity income from our investment in gemini shipholdings corporation (“gemini”) following our acquisition and full consolidation of gemini since july 1, 2021. on a non-adjusted basis, our net income amounted to $8.2 million, or $0.40 earnings per diluted share, for the three months ended june 30, 2022 compared to net income of $372.8 million, or $18.10 earnings per diluted share, for the three months ended june 30, 2021. our net income for the three months ended june 30, 2022 includes a total loss on our investment in zim of $154.7 million (net of withholding taxes on dividend) and a gain on debt extinguishment of $22.9 million. operating revenues operating revenues increased by 71.4%, or $104.5 million, to $250.9 million in the three months ended june 30, 2022 from $146.4 million in the three months ended june 30, 2021. operating revenues for the three months ended june 30, 2022 reflect: a $62.0 million increase in revenues in the three months ended june 30, 2022 compared to the three months ended june 30, 2021 mainly as a result of higher charter rates; a $23.9 million increase in revenues in the three months ended june 30, 2022 compared to the three months ended june 30, 2021 due to the incremental revenue generated by newly acquired vessels; a $2.9 million increase in revenue in the three months ended june 30, 2022 compared to the three months ended june 30, 2021 due to higher non-cash revenue recognition in accordance with us gaap; and a $15.7 million increase in revenues in the three months ended june 30, 2022 compared to the three months ended june 30, 2021 due to amortization of assumed time charters. vessel operating expenses vessel operating expenses increased by $7.7 million to $40.6 million in the three months ended june 30, 2022 from $32.9 million in the three months ended june 30, 2021, primarily as a result of the increase in the average number of vessels in our fleet and an increase in the average daily operating cost for vessels on time charter to $6,463 per vessel per day for the three months ended june 30, 2022 compared to $6,241 per vessel per day for the three months ended june 30, 2021. the average daily operating cost increased mainly due to the covid-19 related increase in crew remuneration and increased insurance premiums between the three months ended june 30, 2022, compared to the three months ended june 30, 2021. management believes that our daily operating costs remain among the most competitive in the industry. depreciation & amortization depreciation & amortization includes depreciation and amortization of deferred dry-docking and special survey costs. depreciation depreciation expense increased by 29.5%, or $7.7 million, to $33.8 million in the three months ended june 30, 2022 from $26.1 million in the three months ended june 30, 2021 due to recent acquisitions of 11 vessels. amortization of deferred dry-docking and special survey costs amortization of deferred dry-docking and special survey costs increased by $0.7 million to $3.2 million in the three months ended june 30, 2022 from $2.5 million in the three months ended june 30, 2021. general and administrative expenses general and administrative expenses remained stable at $7.1 million in each of the three months ended june 30, 2022 and june 30, 2021. other operating expenses other operating expenses include voyage expenses. voyage expenses voyage expenses increased by $4.4 million to $9.4 million in the three months ended june 30, 2022 from $5.0 million in the three months ended june 30, 2021 primarily as a result of the increase in commissions due to the increase in revenue per vessel and the increase in the average number of vessels in our fleet. interest expense and interest income interest expense decreased by 11.5%, or $2.1 million, to $16.1 million in the three months ended june 30, 2022 from $18.2 million in the three months ended june 30, 2021. the decrease in interest expense is a combined result of: a $2.2 million decrease in interest expense due to a decrease in our average indebtedness by $311.1 million between the two periods (average indebtedness of $1,154.2 million in the three months ended june 30, 2022, compared to average indebtedness of $1,465.3 million in the three months ended june 30, 2021), which was partially offset by an increase in our debt service cost by 0.44%, mainly as a result of increased libor rates; a $0.7 million decrease in the amortization of deferred finance costs and debt discount; a $0.7 million decrease in interest expense due to capitalized interest on our vessels under construction in the three months ended june 30, 2022 compared to none in the three months ended june 30, 2021; and a $1.5 million reduction in the recognition through our income statement of accumulated accrued interest that had been accrued in 2018 in relation to two of our credit facilities that were refinanced on april 12, 2021. as a result of the refinancing, the recognition of such accumulated interest has decreased. in may 2022, we fully repaid the facility related to the 2018 accumulated accrued interest. the remaining accumulated accrued interest of $26.9 million was recognized in gain on debt extinguishment on the repayment date. during the three months ended june 30, 2022, we reduced debt and lease indebtedness by $467.8 million mainly as a result of $434.1 million of early debt and lease repayments and recognized a $22.9 million gain related to this early debt extinguishment. on the other hand, our indebtedness increased by $130 million following consummation of the loan agreement to finance our six 5,466 teu vessels that were acquired in 2021. as of june 30, 2022, our outstanding debt, gross of deferred finance costs, was $885.1 million, which includes $300 million aggregate principal amount of our senior notes, and our leaseback obligation was $105.8 million. these balances compare to debt of $1,165.9 million and a leaseback obligation of $237.2 million, gross of deferred finance costs, as of june 30, 2021. interest income decreased by $9.4 million to $0.1 million in the three months ended june 30, 2022 compared to $9.5 million in the three months ended june 30, 2021 mainly as a result of full collection of accrued interest on zim and hmm bonds, which were redeemed by the issuers thereof, in the year 2021. gain/(loss) on investments the loss on investments of $152.4 million in the three months ended june 30, 2022 consists of the loss in fair value of our shareholding interest in zim of $168.6 million, which was offset in part by the dividends recognized on zim ordinary shares of $16.2 million. in april 2022, we sold 1,500,000 of these zim ordinary shares resulting in proceeds to us of $85.3 million. our remaining shareholding interest of 5,686,950 ordinary shares of zim has been fair valued at $268.6 million as of june 30, 2022, based on the closing price of zim’s ordinary shares on the nyse on that date. gain on debt extinguishment the gain on debt extinguishment of $22.9 million in the three months ended june 30, 2022, which related to our early extinguishment of debt, decreased compared to $111.6 million in the three months ended june 30, 2021, which resulted from our debt refinancing on april 12, 2021. equity income on investments equity income on investments in gemini decreased to nil in the three months ended june 30, 2022 compared to $2.2 million in the three months ended june 30, 2021 following our acquisition and full consolidation of gemini since july 1, 2021. other finance expenses other finance expenses decreased by $0.3 million to $0.3 million in the three months ended june 30, 2022 compared to $0.6 million in the three months ended june 30, 2021. loss on derivatives amortization of deferred realized losses on interest rate swaps remained stable at $0.9 million in each of the three months ended june 30, 2022 and june 30, 2021. other income, net other income, net was $0.4 million in the three months ended june 30, 2022 compared to $0.2 million in the three months ended june 30, 2021. income taxes income taxes were $2.3 million in the three months ended june 30, 2022, related to the taxes withheld on dividend income earned on zim ordinary shares compared to no income tax in the three months ended june 30, 2021. adjusted ebitda adjusted ebitda increased by 85.2%, or $88.4 million, to $192.1 million in the three months ended june 30, 2022 from $103.7 million in the three months ended june 30, 2021. as outlined above, the increase is mainly attributable to a $88.8 million increase in operating revenues (net of $15.7 million amortization of assumed time charters) and recognition of a $13.9 million dividend from zim (net of withholding taxes) in the three months ended june 30, 2022, which were partially offset by a $12.1 million increase in total operating expenses and a $2.2 million decrease in our equity income from our investment in gemini following our acquisition and full consolidation of gemini since july 1, 2021. adjusted ebitda for the three months ended june 30, 2022 is adjusted for a $166.4 million change in fair value of the investment in zim and dividend withholding taxes, a gain on debt extinguishment of $22.9 million and stock-based compensation of $0.1 million. tables reconciling adjusted ebitda to net income can be found at the end of this earnings release. six months ended june 30, 2022 compared to the six months ended june 30, 2021 during the six months ended june 30, 2022, danaos had an average of 71.0 containerships compared to 60.0 containerships during the six months ended june 30, 2021. our fleet utilization for the six months ended june 30, 2022 was 98.7% compared to 98.9% for the six months ended june 30, 2021. our adjusted net income amounted to $392.4 million, or $18.95 per share, for the six months ended june 30, 2022 compared to $126.9 million, or $6.17 per share, for the six months ended june 30, 2021. we have adjusted our net income in the six months ended june 30, 2022 for the change in fair value of our investment in zim of $69.1 million, gain on debt extinguishment of $22.9 million and a non-cash fees amortization of $6.6 million. please refer to the adjusted net income reconciliation table, which appears later in this earnings release. the $265.5 million increase in adjusted net income for the six months ended june 30, 2022 compared to the six months ended june 30, 2021 is attributable mainly to a $202.3 million increase in operating revenues and recognition of $123.9 million in dividends from zim (net of withholding taxes), which were partially offset by a $39.2 million increase in total operating expenses, a $13.6 million increase in net finance expenses, a $4.0 million decrease in our equity income from our investment in gemini following our acquisition and full consolidation of gemini since july 1, 2021 and a partial collection of common benefit claim of $3.9 million from hanjin shipping in the six months ended june 30, 2021. on a non-adjusted basis, our net income amounted to $339.7 million, or $16.40 earnings per diluted share, for the six months ended june 30, 2022 compared to net income of $669.6 million, or $32.57 earnings per diluted share, for the six months ended june 30, 2021. our net income for the six months ended june 30, 2022 includes a total gain on our investment in zim of $54.8 million (net of withholding taxes on dividend) and a gain on debt extinguishment of $22.9 million. operating revenues operating revenues increased by 72.6%, or $202.3 million, to $480.8 million in the six months ended june 30, 2022 from $278.5 million in the six months ended june 30, 2021. operating revenues for the six months ended june 30, 2022 reflect: a $110.9 million increase in revenues in the six months ended june 30, 2022 compared to the six months ended june 30, 2021 mainly as a result of higher charter rates; a $44.7 million increase in revenues in the six months ended june 30, 2022 compared to the six months ended june 30, 2021 due to the incremental revenue generated by newly acquired vessels; a $14.3 million increase in revenue in the six months ended june 30, 2022 compared to the six months ended june 30, 2021 due to higher non-cash revenue recognition in accordance with us gaap; and a $32.4 million increase in revenues in the six months ended june 30, 2022 compared to the six months ended june 30, 2021 due to amortization of assumed time charters. vessel operating expenses vessel operating expenses increased by $15.7 million to $79.7 million in the six months ended june 30, 2022 from $64.0 million in the six months ended june 30, 2021, primarily as a result of the increase in the average number of vessels in our fleet and an increase in the average daily operating cost for vessels on time charter to $6,385 per vessel per day for the six months ended june 30, 2022 compared to $6,098 per vessel per day for the six months ended june 30, 2021. the average daily operating cost increased mainly due to the covid-19 related increase in crew remuneration and increased insurance premiums between the six months ended june 30, 2022, compared to the six months ended june 30, 2021. management believes that our daily operating costs remain among the most competitive in the industry. depreciation & amortization depreciation & amortization includes depreciation and amortization of deferred dry-docking and special survey costs. depreciation depreciation expense increased by 29.3%, or $15.2 million, to $67.1 million in the six months ended june 30, 2022 from $51.9 million in the six months ended june 30, 2021 due to recent acquisitions of 11 vessels. amortization of deferred dry-docking and special survey costs amortization of deferred dry-docking and special survey costs increased by $0.9 million to $5.9 million in the six months ended june 30, 2022 from $5.0 million in the six months ended june 30, 2021. general and administrative expenses general and administrative expenses decreased by $3.5 million to $14.5 million in the six months ended june 30, 2022, from $18.0 million in the six months ended june 30, 2021. the decrease was mainly attributable to decreased stock-based compensation. other operating expenses other operating expenses include voyage expenses. voyage expenses voyage expenses increased by $7.4 million to $16.6 million in the six months ended june 30, 2022 from $9.2 million in the six months ended june 30, 2021 primarily as a result of the increase in commissions due to the increase in revenue per vessel and the increase in the average number of vessels in our fleet. interest expense and interest income interest expense decreased by 0.3%, or $0.1 million, to $33.2 million in the six months ended june 30, 2022 from $33.3 million in the six months ended june 30, 2021. the decrease in interest expense is a combined result of: a $4.3 million decrease in interest expense due to a decrease in our average indebtedness by $284.6 million between the two periods (average indebtedness of $1,254.9 million in the six months ended june 30, 2022, compared to average indebtedness of $1,539.5 million in the six months ended june 30, 2021), which was partially offset by an increase in our debt service cost by 0.31%, mainly as a result of increased libor rates; a $2.3 million decrease in the amortization of deferred finance costs and debt discount; a $0.7 million decrease in interest expense due to capitalized interest on our vessels under construction in the six months ended june 30, 2022 compared to none in the six months ended june 30, 2021; and a $7.2 million reduction in the recognition through our income statement of accumulated accrued interest that had been accrued in 2018 in relation to two of our credit facilities that were refinanced on april 12, 2021. as a result of the refinancing, the recognition of such accumulated interest has decreased. in may 2022, we fully repaid the facility related to the 2018 accumulated accrued interest. the remaining accumulated accrued interest of $26.9 million was recognized in gain on debt extinguishment on the repayment date. during the six months ended june 30, 2022, we reduced debt and lease indebtedness by $507.6 million mainly as a result of $434.1 million of early debt and lease repayments and recognized a $22.9 million gain related to this early debt extinguishment. on the other hand, our indebtedness increased by $130 million following consummation of the loan agreement to finance our six 5,466 teu vessels that were acquired in 2021. as of june 30, 2022, our outstanding bank debt, gross of deferred finance costs, was $885.1 million, which includes $300 million aggregate principal amount of our senior notes, and our leaseback obligation was $105.8 million. these balances compare to bank debt of $1,165.9 million and a leaseback obligation of $237.2 million, gross of deferred finance costs, as of june 30, 2021. interest income decreased by $11.4 million to $0.1 million in the six months ended june 30, 2022 compared to $11.5 million in the six months ended june 30, 2021, mainly as a result of full collection of accrued interest on zim and hmm bonds, which were redeemed by the issuers thereof, in the year 2021. gain/(loss) on investments the gain on investments of $69.3 million in the six months ended june 30, 2022 consists of the change in fair value of our shareholding interest in zim of $69.1 million and dividends recognized on zim ordinary shares of $138.4 million. in april 2022, we sold 1,500,000 of these zim ordinary shares resulting in proceeds to us of $85.3 million. our remaining shareholding interest of 5,686,950 ordinary shares of zim has been fair valued at $268.6 million as of june 30, 2022, based on the closing price of zim’s ordinary shares on the nyse on that date. gain on debt extinguishment the gain on debt extinguishment of $22.9 million in the six months ended june 30, 2022, which related to our early extinguishment of debt, decreased compared to $111.6 million in the six months ended june 30, 2021, which resulted from our debt refinancing on april 12, 2021. equity income on investments equity income on investments in gemini decreased to nil in the six months ended june 30, 2022 compared to $4.0 million in the six months ended june 30, 2021 following our acquisition and full consolidation of gemini since july 1, 2021. other finance expenses other finance expenses decreased by $0.1 million to $0.9 million in the six months ended june 30, 2022 compared to $1.0 million in the six months ended june 30, 2021. loss on derivatives amortization of deferred realized losses on interest rate swaps remained stable at $1.8 million in each of the six months ended june 30, 2022 and june 30, 2021. other income, net other income, net was $0.9 million in the six months ended june 30, 2022 compared to $4.1 million in the six months ended june 30, 2021. the decrease was mainly due to the collection from hanjin shipping of $3.9 million as a partial payment of common benefit claim and interest in the six months ended june 30, 2021. income taxes income taxes were $14.5 million in the six months ended june 30, 2022, related to the taxes withheld on dividend income earned on zim ordinary shares and compared to no income tax in the six months ended june 30, 2021. adjusted ebitda adjusted ebitda increased by 130.8%, or $261.6 million, to $461.6 million in the six months ended june 30, 2022 from $200.0 million in the six months ended june 30, 2021. as outlined above, the increase is mainly attributable to a $169.9 million increase in operating revenues (net of $32.4 million amortization of assumed time charters) and a recognition of a $123.9 million dividend from zim (net of withholding taxes) in the six months ended june 30, 2022, which were partially offset by a $24.3 million increase in total operating expenses, a $4.0 million decrease in our equity income from our investment in gemini following our acquisition and full consolidation of gemini since july 1, 2021 and a partial collection of common benefit claim of $3.9 million from hanjin shipping in the six months ended june 30, 2021. adjusted ebitda for the six months ended june 30, 2022 is adjusted for a $54.6 million change in fair value of the investment in zim and dividend withholding taxes, a gain on debt extinguishment of $22.9 million and stock based compensation of $0.2 million. tables reconciling adjusted ebitda to net income can be found at the end of this earnings release. dividend payment danaos has declared a dividend of $0.75 per share of common stock for the second quarter of 2022, which is payable on august 29, 2022 to stockholders of record as of august 17, 2022. recent developments as of the end of july 2022, we had repurchased 409,200 shares of our common stock in the open market for $25.1 million, under our share repurchase program of up to $100 million announced in june 2022. subsequent to june 30, 2022 we terminated, as planned, the finance lease liability related to our vessels suez canal and kota lima and assumed full ownership of these vessels. as a result, 15 of our vessels are currently debt-free. conference call and webcast on tuesday, august 2, 2022 at 9:00 a.m. et, the company's management will host a conference call to discuss the results. participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 844 802 2437 (us toll free dial in), 0800 279 9489 (uk toll free dial in) or +44 (0) 2075 441 375 (standard international dial in). please indicate to the operator that you wish to join the danaos corporation earnings call. a telephonic replay of the conference call will be available until august 9, 2022 by dialing 1 877 344 7529 (us toll free dial in) or 1-412-317-0088 (standard international dial in) and using 2538355# as the access code. audio webcast there will also be a live and then archived webcast of the conference call on the danaos website (www.danaos.com). participants of the live webcast should register on the website approximately 10 minutes prior to the start of the webcast. slide presentation a slide presentation regarding the company and the containership industry will also be available on the danaos website (www.danaos.com). about danaos corporation danaos corporation is one of the largest independent owners of modern, large-size containerships. our current fleet of 71 containerships aggregating 436,589 teus and 6 under construction containerships aggregating 46,200 teus ranks danaos among the largest containership charter owners in the world based on total teu capacity. our fleet is chartered to many of the world's largest liner companies on fixed-rate charters. our long track record of success is predicated on our efficient and rigorous operational standards and environmental controls. danaos corporation's shares trade on the new york stock exchange under the symbol "dac". forward-looking statements matters discussed in this release may constitute forward-looking statements within the meaning of the safe harbor provisions of section 27a of the securities act of 1933 and section 21e of the securities exchange act of 1934. forward-looking statements reflect our current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. the forward-looking statements in this release are based upon various assumptions. although danaos corporation believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, danaos corporation cannot assure you that it will achieve or accomplish these expectations, beliefs or projections. important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the impact of the covid-19 pandemic and efforts throughout the world to contain its spread, including effects on global economic activity, demand for seaborne transportation of containerized cargo, the ability and willingness of charterers to perform their obligations to us, charter rates for containerships, shipyards constructing our contracted newbuilding vessels, performing scrubber installations, drydocking and repairs, changing vessel crews and availability of financing, danaos’ ability to achieve the expected benefits of the 2021 debt refinancing and comply with the terms of its new credit facilities and other financing agreements; the strength of world economies and currencies, general market conditions, including changes in charter hire rates and vessel values, charter counterparty performance, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled dry-docking, changes in danaos corporation's operating expenses, including bunker prices, dry-docking and insurance costs, ability to obtain financing and comply with covenants in our financing arrangements, actions taken by regulatory authorities, potential liability from pending or future litigation, domestic and international political conditions, including the conflict in ukraine and related sanctions, potential disruption of shipping routes due to accidents and political events or acts by terrorists. risks and uncertainties are further described in reports filed by danaos corporation with the u.s. securities and exchange commission. visit our website at www.danaos.com appendix fleet utilization danaos had 8 unscheduled off-hire days in the three months ended june 30, 2022. the following table summarizes vessel utilization and the impact of the off-hire days on the company’s revenue. vessel utilization (no. of days) first quarter second quarter 2022 2022 total ownership days 6,390 6,461 12,851 less off-hire days: scheduled off-hire days (148) - (148) other off-hire days (16) (8) (24) operating days 6,226 6,453 12,679 vessel utilization 97.4% 99.9% 98.7% operating revenues (in '000s of us dollars) $229,901 $250,923 $480,824 average gross daily charter rate $36,926 $38,885 $37,923 vessel utilization (no. of days) first quarter second quarter 2021 2021 total ownership days 5,400 5,460 10,860 less off-hire days: scheduled off-hire days (22) (33) (55) other off-hire days (51) (15) (66) operating days 5,327 5,412 10,739 vessel utilization 98.6% 99.1% 98.9% operating revenues (in '000s of us dollars) $132,118 $146,434 $278,552 average gross daily charter rate $24,802 $27,057 $25,938 fleet list the following table describes in detail our fleet deployment profile as of july 31, 2022: vessel name vessel size (teu) year built expiration of charter(1) hyundai ambition 13,100 2012 june 2024 hyundai speed 13,100 2012 june 2024 hyundai smart 13,100 2012 may 2024 hyundai respect 13,100 2012 march 2024 hyundai honour 13,100 2012 february 2024 express rome 10,100 2011 march 2023 express berlin 10,100 2011 june 2023 express athens 10,100 2011 march 2023 le havre 9,580 2006 june 2028 pusan c 9,580 2006 may 2028 bremen 9,012 2009 january 2028 c hamburg 9,012 2009 january 2028 niledutch lion 8,626 2008 may 2026 kota manzanillo (ex charleston) 8,533 2005 february 2026 belita 8,533 2006 july 2026 cma cgm melisande 8,530 2012 june 2024 cma cgm attila 8,530 2011 october 2023 cma cgm tancredi 8,530 2011 november 2023 cma cgm bianca 8,530 2011 january 2024 cma cgm samson 8,530 2011 march 2024 america 8,468 2004 april 2028 europe 8,468 2004 may 2028 phoebe 8,463 2005 august 2026 cma cgm moliere 6,500 2009 march 2027 cma cgm musset 6,500 2010 september 2025 cma cgm nerval 6,500 2010 december 2022 cma cgm rabelais 6,500 2010 february 2023 cma cgm racine 6,500 2010 march 2023 ym mandate 6,500 2010 january 2028 ym maturity 6,500 2010 april 2028 catherine c 6,422 2001 november 2022 leo c 6,422 2002 november 2022 zim savannah 6,402 2002 may 2024 dimitra c 6,402 2002 january 2023 suez canal 5,610 2002 march 2023 kota lima 5,544 2002 november 2024 wide alpha 5,466 2014 march 2024 stephanie c (ex wide bravo) 5,466 2014 june 2025 maersk euphrates 5,466 2014 april 2024 wide hotel 5,466 2015 may 2024 wide india 5,466 2015 september 2025 wide juliet 5,466 2015 june 2023 seattle c 4,253 2007 october 2024 vancouver 4,253 2007 november 2024 derby d 4,253 2004 january 2027 tongala 4,253 2004 january 2023 rio grande 4,253 2008 november 2024 zim sao paolo 4,253 2008 february 2023 zim kingston 4,253 2008 april 2023 zim monaco 4,253 2009 february 2023 dalian 4,253 2009 november 2022 zim luanda 4,253 2009 august 2025 dimitris c 3,430 2001 november 2025 express black sea 3,400 2011 january 2025 express spain 3,400 2011 january 2025 express argentina 3,400 2010 may 2023 express brazil 3,400 2010 june 2025 express france 3,400 2010 september 2025 singapore 3,314 2004 may 2024 colombo 3,314 2004 january 2025 zebra 2,602 2001 november 2024 amalia c 2,452 1998 january 2023 artotina 2,524 2001 may 2025 advance 2,200 1997 january 2025 future 2,200 1997 december 2024 sprinter 2,200 1997 december 2024 stride 2,200 1997 january 2025 progress c 2,200 1998 november 2024 bridge 2,200 1998 december 2024 highway 2,200 1998 august 2022 vladivostok 2,200 1997 march 2025 vessels under construction hull no. c7100-7 7,100 2024 hull no. c7100-8 7,100 2024 hull no. hn4009 8,000 2024 hull no. hn4010 8,000 2024 hull no. hn4011 8,000 2024 hull no. hn4012 8,000 2024 (1) earliest date charters could expire. some charters include options for the charterer to extend their terms. condensed consolidated statements of income - unaudited (expressed in thousands of united states dollars, except per share amounts) three months ended three months ended six months ended six months ended june 30, june 30, june 30, june 30, 2022 2021 2022 2021 operating revenues $250,923 $146,434 $480,824 $278,552 operating expenses vessel operating expenses (40,579) (32,940) (79,743) (64,018) depreciation & amortization (36,955) (28,644) (73,034) (56,952) general & administrative (7,136) (7,130) (14,527) (18,025) other operating expenses (9,443) (4,966) (16,632) (9,194) income from operations 156,810 72,754 296,888 130,363 other income/(expenses) interest income 120 9,531 121 11,509 interest expense (16,079) (18,204) (33,193) (33,315) gain/(loss) on investments (152,427) 196,290 69,290 444,165 gain on debt extinguishment 22,939 111,616 22,939 111,616 other finance expenses (336) (582) (941) (1,034) equity income on investments - 2,162 - 3,965 other income, net 362 173 861 4,144 realized loss on derivatives (903) (903) (1,796) (1,796) total other income/(expenses), net (146,324) 300,083 57,281 539,254 income before income taxes 10,486 372,837 354,169 669,617 income taxes (2,262) - (14,480) - net income $8,224 $372,837 $339,689 $669,617 earnings per share basic earnings per share $0.40 $18.32 $16.42 $32.95 diluted earnings per share $0.40 $18.10 $16.40 $32.57 basic weighted average number of common shares (in thousands of shares) 20,689 20,354 20,693 20,323 diluted weighted average number of common shares (in thousands of shares) 20,708 20,599 20,712 20,557 non-gaap measures1 reconciliation of net income to adjusted net income – unaudited three months ended three months ended six months ended six months ended june 30, june 30, june 30, june 30, 2022 2021 2022 2021 net income $8,224 $372,837 $339,689 $669,617 change in fair value of investments 168,635 (196,290) 69,096 (444,165) gain on debt extinguishment (22,939) (111,616) (22,939) (111,616) amortization of financing fees, debt discount & finance fees accrued 3,190 3,929 6,561 8,957 stock based compensation - - - 4,078 adjusted net income $157,110 $68,860 $392,407 $126,871 adjusted earnings per share, diluted $7.59 $3.34 $18.95 $6.17 diluted weighted average number of shares (in thousands of shares) 20,708 20,599 20,712 20,557 1 the company reports its financial results in accordance with u.s. generally accepted accounting principles (gaap). however, management believes that certain non-gaap financial measures used in managing the business may provide users of this financial information additional meaningful comparisons between current results and results in prior operating periods. management believes that these non-gaap financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain items that impact the overall comparability. management also uses these non-gaap financial measures in making financial, operating and planning decisions and in evaluating the company's performance. see the table above for supplemental financial data and corresponding reconciliations to gaap financial measures for the three and six months ended june 30, 2022 and 2021. non-gaap financial measures should be viewed in addition to, and not as an alternative for, the company’s reported results prepared in accordance with gaap. danaos corporation condensed consolidated balance sheets - unaudited (expressed in thousands of united states dollars) as of as of june 30, december 31, 2022 2021 assets current assets cash, cash equivalents and restricted cash $332,573 $129,756 accounts receivable, net 5,540 7,118 other current assets 363,680 495,618 701,793 632,492 non-current assets fixed assets, net 2,876,866 2,941,093 advances for vessels under construction 81,162 - deferred charges, net 15,605 11,801 other non-current assets 62,677 41,739 3,036,310 2,994,633 total assets $3,738,103 $3,627,125 liabilities and stockholders' equity current liabilities long-term debt, current portion $71,500 $95,750 accumulated accrued interest, current portion - 6,146 long-term leaseback obligations, current portion 46,285 85,815 accounts payable, accrued liabilities & other current liabilities 218,291 131,596 336,076 319,307 long-term liabilities long-term debt, net 790,270 1,017,916 accumulated accrued interest, net of current portion - 24,155 long-term leaseback obligations, net 58,093 136,513 other long-term liabilities 166,186 41,211 1,014,549 1,219,795 stockholders’ equity common stock 205 207 additional paid-in capital 759,723 770,676 accumulated other comprehensive loss (69,659) (71,455) retained earnings 1,697,209 1,388,595 2,387,478 2,088,023 total liabilities and stockholders' equity $3,738,103 $3,627,125 danaos corporation condensed consolidated statements of cash flows - unaudited (expressed in thousands of united states dollars) three months ended three months ended six months ended six months ended june 30, june 30, june 30, june 30, 2022 2021 2022 2021 operating activities: net income $8,224 $372,837 $339,689 $669,617 adjustments to reconcile net income to net cash provided by operating activities: depreciation and amortization of right-of-use assets 33,753 26,099 67,112 51,898 amortization of deferred drydocking & special survey costs, finance cost, debt discount and other finance fees accrued 6,392 6,474 12,483 14,011 amortization of assumed time charters (15,713) - (32,364) - pik interest - 84 - 726 loss/(gain) on investments 168,635 (196,290) 69,096 (444,165) gain on debt extinguishment (22,939) (111,616) (22,939) (111,616) payments for drydocking/special survey (471) (248) (9,726) (1,155) amortization of deferred realized losses on cash flow interest rate swaps 903 903 1,796 1,796 equity income on investments - (2,162) - (3,965) stock based compensation 124 570 248 5,479 accounts receivable 1,593 231 1,578 444 other assets, current and non-current 89,987 644 (43,430) 1,646 accounts payable and accrued liabilities (800) 7,068 4,841 10,346 other liabilities, current and long-term 231,326 (109) 232,094 (2,319) net cash provided by operating activities 501,014 104,485 620,478 192,743 investing activities: vessel additions and advances for vessels under construction (82,004) (575) (84,047) (1,811) advances for sale of vessels - - 13,000 - investments 85,333 143,485 85,333 145,877 net cash provided by investing activities 3,329 142,910 14,286 144,066 financing activities: proceeds from long-term debt 127,725 810,925 127,725 1,105,311 debt repayment (358,825) (1,223,176) (383,125) (1,295,025) proceeds from sale-leaseback of vessels - 135,000 - 135,000 payments of leaseback obligations (104,394) (15,259) (120,687) (21,175) dividends paid (15,535) (10,298) (31,070) (10,298) repurchase of common stock (6,325) - (6,325) - payments of accumulated accrued interest (1,938) (2,656) (3,373) (7,358) finance costs (11,142) (10,021) (15,092) (14,509) net cash used in financing activities (370,434) (315,485) (431,947) (108,054) net increase/(decrease) in cash, cash equivalents and restricted cash 133,909 (68,090) 202,817 228,755 cash, cash equivalents and restricted cash, beginning of period 198,664 362,508 129,756 65,663 cash, cash equivalents and restricted cash, end of period $332,573 $294,418 $332,573 $294,418 danaos corporation reconciliation of net income to adjusted ebitda - unaudited (expressed in thousands of united states dollars) three months ended three months ended six months ended six months ended june 30, june 30, june 30, june 30, 2022 2021 2022 2021 net income $8,224 $372,837 $339,689 $669,617 depreciation and amortization of right-of-use assets 33,753 26,099 67,112 51,898 amortization of deferred drydocking & special survey costs 3,202 2,545 5,922 5,054 amortization of assumed time charters (15,713) - (32,364) - amortization of deferred finance costs, debt discount and other finance fees accrued 3,190 3,929 6,561 8,957 amortization of deferred realized losses on interest rate swaps 903 903 1,796 1,796 interest income (120) (9,531) (121) (11,509) interest expense 12,889 14,290 26,632 24,507 income taxes 2,262 - 14,480 - (gain)/loss on investments and dividend withholding taxes 166,373 (196,290) 54,616 (444,165) gain on debt extinguishment (22,939) (111,616) (22,939) (111,616) stock based compensation 124 570 248 5,479 adjusted ebitda(1) $192,148 $103,736 $461,632 $200,018 1) adjusted ebitda represents net income before interest income and expense, taxes other than withholding taxes on dividend, depreciation, amortization of deferred drydocking & special survey costs, amortization of assumed time charters, amortization of deferred finance costs, debt discount and other finance fees accrued, amortization of deferred realized losses on interest rate swaps, gain on investments, gain on debt extinguishment and stock based compensation. however, adjusted ebitda is not a recognized measurement under u.s. generally accepted accounting principles, or “gaap.” we believe that the presentation of adjusted ebitda is useful to investors because it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. we also believe that adjusted ebitda is useful in evaluating our operating performance compared to that of other companies in our industry because the calculation of adjusted ebitda generally eliminates the effects of financings, income taxes and the accounting effects of capital expenditures and acquisitions, items which may vary for different companies for reasons unrelated to overall operating performance. in evaluating adjusted ebitda, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. our presentation of adjusted ebitda should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. note: items to consider for comparability include gains and charges. gains positively impacting net income are reflected as deductions to net income. charges negatively impacting net income are reflected as increases to net income. the company reports its financial results in accordance with u.s. generally accepted accounting principles (gaap). however, management believes that certain non-gaap financial measures used in managing the business may provide users of these financial information additional meaningful comparisons between current results and results in prior operating periods. management believes that these non-gaap financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain items that impact the overall comparability. management also uses these non-gaap financial measures in making financial, operating and planning decisions and in evaluating the company's performance. see the tables above for supplemental financial data and corresponding reconciliations to gaap financial measures for the three and six months ended june 30, 2022 and 2021. non-gaap financial measures should be viewed in addition to, and not as an alternative for, the company’s reported results prepared in accordance with gaap.
