Danaos Corporation

Good day and welcome to the Denao's Corporation conference call to discuss the financial results for the three months ended September 30th, 2022. As a reminder, today's call is being recorded. Hosting the call today is Dr. John Koustos, Chief Executive Officer of Denao's Corporation and Mr. Evangelos Hatzis, Chief Financial Officer of Denao's Corporation. Dr. Koustos 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. Please go ahead.

Thank you, Operator, and good morning to everyone, and thank you for joining us this morning. 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 to date. 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 Koustas, who will provide the broad overview of the quarter.

John? Thank you, Evangelos. Good morning, everyone. This quarter marked the retreat of the container market from unsustainable stratospheric highs to more normalized levels, albeit well above 2019 levels. The liner market has experienced a combination of supply chain normalization and demand destruction due to various factors. These include, but not limited to, rampant inflation and declining GDP growth, The uncertainty is created by the war in Ukraine and an energy crisis. This has been compounded by high inventories in warehouses and delayed collection of containers, both in direct impacts of easing of supply chain disruptions. The drop in the market of containerized freight has also significantly reduced vessel demand from opportunistic market participants who were aggressively contracting smaller vessels or extra loaders, which were used during the peak of demand last year. This has led to a significant correction in the sub-3000TU segment, as charterers are on the sidelines waiting for the market to drop before they commute a vessel. Charter periods have also been reduced to as little as six months for smaller vessels, as charterers are waiting to see how the CII requirement will impact fleet scheduling and what additional slow steaming will be needed to meet the requirements. Danaos is well insulated from the current market environment and achieved record trading profit in the third quarter of 2022. Our commercial efforts earlier this year resulted in a number of new vessel fixtures for our vessels, and we got the quarter with a multi-year backlog of 2.3 billion contracted revenue. We have also continued to strengthen our balance sheet, and we have now fully liquidated our shareholding in ZEM. As we stated, we would. In addition, we have new commitments from our bank group to extend existing bank debt facilities until 2027. This means we have no significant capital requirements on financing until then, and we have the necessary flexibility to pursue our strategy of growth, share buybacks, and acquisitions. In fact, our net debt will be very close to zero by the end of the year, which protects Danaos from the recent dramatic increase in interest rates. With a Fortress balance sheet, we are looking at the future with great optimism and evaluating the steps with which we will keep Danaos at the forefront of the industry. The Danaos management team is fully aligned with our shareholders, and we will continue working to enhance long-term value of the company. Thank you, Evangelos.