Danaos Corporation

Welcome to the Denauss Corporation conference call to discuss the financial results for the three months ended June 30, 2022. As a reminder, today's call is being recorded. Hosting the call today is Dr. John Kustas, Chief Executive Officer of Denauss Corporation, and Mr. Evangelos Hatzis, Chief Financial Officer of Denao's Corporation. Dr. Kustas and Mr. Hatzis will be making some introductory comments, and then we'll open the call to a question and answer session. I would now like to turn the conference over to Mr. Evangelos Hatzis, Chief Financial Officer. Please go ahead.

Thank you, Operator, and good morning, 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. John Kustas, who will provide the broad overview of the quarter.

Thank you, Evangelos. Good morning, and thank you all for joining today's call to discuss our results for second quarter 2022. The announced 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 charge of coverage over the next 12 months, we expect these metrics to improve further. At the same time, however, closely follow economic 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, consistent inefficiencies on the store side and the supply chain and COVID resurgence in China are keeping vessel utilization high with increased waiting times in port. Additionally, the increase in fuel costs will likely prompt liner companies to reduce vessel sailing speed as soon as vessels are available. However, we do not expect that to happen until second quarter 2023 and onwards. Environmental regulations, particularly the CII compliance is leading line of companies to redesign their operating groups with lower speeds to ensure 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, charger rates are holding firm as available economies very start. The company is very well positioned with a strong liquidity position and a balance sheet that can sustain severe deterioration of economic conditions. This is reflected in upgrades by both S&P and Moody's to the highest level among public shipping companies, validating 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 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 buildings with environmental profiles desired by our line of customers, which also gives us great confidence about the future of our already ordered six methanol-ready green new buildings. We're also continuing to return value to our shareholders through our dividend and our share buyback program, to reduce our number of outstanding shares by approximately 2% in the course of about one month. With that, I will hand the call over back to Evangelos, who will take you through the financials for the quarter.