Danaos Corp (DAC) Q3 2024 Earnings Call Highlights: Navigating Challenges with Strategic Growth ...

GuruFocus.com11-13

Adjusted EPS: $6.5 per share for Q3 2024, compared to $7.26 per share for Q3 2023. Adjusted Net Income: $126.8 million for Q3 2024, down from $143 million in Q3 2023. Total Operating Expenses: ...

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GuruFocus has detected 11 Warning Signs with SBS.\n\nRelease Date: November 12, 2024\nFor the complete transcript of the earnings call, please refer to the full earnings call transcript.\n Positive Points \n\nDanaos Corp (NYSE:DAC) added over $300 million to its contracted charter backlog, which now stands at $3.3 billion.\nThe company has secured long-term contracts for its new buildings, providing excellent earnings visibility with 100% fleet coverage for 2024, 94% for 2025, and 73% for 2026.\nDanaos Corp (NYSE:DAC) received a credit rating upgrade from Moody's to B1 and S&P to B+, the highest grade for a pure play shipping company.\nThe company increased its quarterly dividend to $0.85 per share, demonstrating a commitment to returning value to shareholders.\nDanaos Corp (NYSE:DAC) has a strong balance sheet with $384 million in cash and total liquidity of $785 million, providing flexibility for capital deployment opportunities.\n\n Negative Points \n\nAdjusted net income decreased by $16.2 million compared to the third quarter of 2023, primarily due to increased operating expenses.\nOperating expenses rose by $31.1 million, driven by higher voyage costs and an increase in the average number of vessels.\nInterest expenses increased by $3.6 million due to higher average indebtedness, despite a reduction in the cost of debt service.\nThe dry bulk market has been soft, attributed to disruptions in seasonal patterns and decreased Chinese steel production.\nUncertainty in the shipping market due to potential policy changes from the new US administration, including trade tariffs and energy transition initiatives.\n\n Q & A Highlights \nQ: How does Danaos Corp view the current new building market, and are there plans to order more ships? A: John Coustas, Chairman and CEO, stated that while Danaos has increased its contracted revenues, they are cautious about new building orders due to uncertainties in future environmental legislation and high new building prices. They prefer to wait for prices to retract before making further orders, aiming for better returns on equity.\nQ: What is Danaos Corp's strategy regarding its dry bulk investments given the current market conditions? A: John Coustas explained that Danaos is in an experience-building phase with its dry bulk fleet, focusing on understanding operational efficiencies. The company is monitoring the market closely and is open to acquiring more assets if opportunities arise, especially given the market's liquidity.\nQ: How does the new US administration impact Danaos Corp's strategic decisions, particularly regarding environmental regulations? A: John Coustas noted that the new administration's stance on environmental policies, such as carbon taxes, could significantly influence the decarbonization path and Danaos's strategic decisions. The company is waiting to see how these policies develop before making further commitments.\nQ: What are the financial highlights for Danaos Corp in the third quarter of 2024? A: Evangelos Chatzis, CFO, reported an adjusted EPS of $6.5 per share and a net income of $126.8 million. The company added $308 million to its contracted revenue backlog, which now stands at $3.3 billion. Danaos maintains a strong balance sheet with a net debt to EBITDA ratio of 0.4 times.\nQ: What is Danaos Corp's approach to capital deployment given its current liquidity position? A: Evangelos Chatzis highlighted that Danaos has significant liquidity, with $384 million in cash and total liquidity of $785 million. This financial strength provides flexibility to pursue capital deployment opportunities, including share buybacks and potential growth investments.\nFor the complete transcript of the earnings call, please refer to the full earnings call transcript.This article first appeared on \nGuruFocus.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.4","shortVersion":"4.29.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2483102394"}