Danaos Corp's Q4 2024 Earnings Call: Unpacking Contradictions on Cash, Drydocking, and Newbuild Strategy

These are the key contradictions discussed in Danaos Corporation's latest 2024 Q4 earnings call, specifically including: Net Cash Position, Drydocking Schedule, Drybulk Strategy, and Interest in Newbuildings:



Financial Performance and Market Insights:
- Danaos Corporation reported adjusted EPS of $6.93 per share for Q4 2024, with adjusted net income of $133.3 million, a slight decrease from the previous year.
- The decrease was attributed to an increase in voyage costs and net finance costs, partially offset by an increase in net operating revenues and income from investments.
- The company remains highly insulated from market volatility with 97% coverage for 2025 and 79% for 2026 at healthy rates.

Operational Efficiency:
- Danaos reported vessel operating expenses increased by $5.5 million to $45.6 million, primarily due to an increase in the average number of vessels in the fleet.
- Daily operating costs slightly improved to $6,135 per vessel per day, maintaining a competitive position in the industry.
- The decrease in stock-based non-cash costs contributed to a slight reduction in G&A expenses.

Capital Allocation:
- Danaos entered into an $850 million syndicated loan facility to fully cover financing for all newbuilding container vessels, with deliveries scheduled between 2025 and 2028.
- The company has repurchased $45.6 million in stock since the last earnings release, with total repurchases reaching $168.8 million out of the $200 million authority provided by the board.
- Strong cash and liquidity position, with cash at $453.4 million and total liquidity at $807 million, allows for accretive capital deployment opportunities.

Market Outlook and Strategic Focus:
- The container charter market remains healthy, although liners are exhibiting caution regarding forward dates, and box rates are weakening but remain above pre-pandemic levels.
- Danaos focuses on maintaining a robust financial position, securing long-term contracts, and investing in modern fuel-efficient container vessels to enhance its competitive position in the market.
- The company is committed to delivering value to shareholders through prudent financial management and strategic growth initiatives.