Danaos Corporation

Good day, and welcome to the Donaus Corporation conference call to discuss the financial results for the three months ended December 31st, 2020. Should you need assistance during today's call, please signal a conference specialist by pressing the star key followed by zero. As a reminder, today's call is being recorded. Hosting the call today is Dr. John Kustis, Chief Executive Officer of Donaus Corporation, and Mr. Evangelos Hatzis, Chief Financial Officer of Danos Corporation. Dr. Koustas and Mr. Hatzis will be making some introductory comments and then we will open the call to a question and answer session. To ask a question, you may press star then one on your touchtone phone. To withdraw the question, please press star and then two. I would now like to turn the conference over to Mr. Hatzis. Please go ahead.

Thank you, operator, and good morning to everyone, and thank you for joining us today. Before we begin, I quickly want to remind everyone that management's remarks this morning may contain certain forward-looking statements and that actual results could differ materially from those projected today. These forward-looking statements are made as of today, and we undertake no obligation to update them. Factors that might affect future results are discussed in our filings with the SEC, and we encourage you to review these detailed safe harbor and risk factor disclosures. Please also note that where we feel appropriate, we will continue to refer to non-GAAP financial measures such as EBITDA, adjusted EBITDA, and adjusted net income to evaluate our business. Reconciliations of non-GAAP financial measures to GAAP financial measures are included in our earnings release and accompanying materials. With that, let me now turn the call over to Dr. Kustas, who will provide the broad overview of the quarter. John?

Thank you, Vangelos. Good morning, everyone. In the fourth quarter of 2020, we witnessed the most outstanding turnaround in the container industry for as long as I can remember. Market participants were caught by surprise as the chronic underinvestment in capacity coupled with a sudden resurgence of demand, created a spike that drove container box rates to all-time highs. This led to a massive increase in our customers' profitability and significantly diminished counterparty risk that was so prevalent at the end of the first quarter of 2020. The charter market, in turn, rapidly strengthened resulting in decayed high charter rates across almost all vessel types. Now everyone is focused on whether the current market strength is sustainable and for how long. Fortunately, incremental vessel supply will remain low for the time being. Although there have been new orders placed, current order book is at historically low levels. Since there is a two-year lead time for new orders to hit the water, Supply growth should be moderate for the next couple of years. What will happen next depends a lot on the environmental initiatives, regulations, and, of course, demand. As far as the analysis is concerned, we experienced a strong quarter, completed delivery of all contracted vessels, realized significant gains, displayed exceptional rechartering performance, and entered into agreements for very important refinancing. This quarter, we saw an improvement in adjusted EBITDA and adjusted net income compared to the same quarter in the prior year. This improvement should be even more pronounced in the coming quarters as new contracted charters at significantly higher rates start to contribute to our top line. We have concluded 27 recharterings over the past three months for a period of 12 to 24 months, trades between two and three times the rates of the expiring charters. In doing so, we've practically covered 91% of our 2021 operating days and a significant portion of our 2022 operating days. We currently expect revenue in 2021 to exceed 2020 revenue by at least $100 million. The recent performance of both Zing and HMM has resulted in a $23.8 million increase in the recorded value of our bond holdings in these two companies, which increased in value to approximately $63 million as of the end of 2020. Zim IPO has also provided a mark-to-market value of our 10.2 million shares in Zim, which have a value now exceeding $200 million based on Zim's closing share price of $20.12 a share on February 12, 2021. These shares were valued at $75,000 in our books as of the end of 2020. We've also recently concluded a $300 million bond offering, which was over three times oversubscribed, an extraordinary accomplishment for a first-time issuer. These funds, together with another $950 million of bank and lease financing, will be used to refinance most of our existing credit facilities and form the basis of our new strategy, and we will not have any maturities until sometime in 2025. We are happy that the market has acknowledged our accomplishments, leading to a dramatic outperformance of our share price as compared to our peers. We are well positioned and committed to continue to take actions to create value for our shareholders. And now I will turn the call over back to Evangelos to guide you through some of the financials. Evangelos.