Danaos Corporation Reports First Quarter Results for the Period Ended March 31, 2022

Danaos Corporation (“Danaos”) (NYSE: DAC), one of the world’s largest independent owners of containerships, today reported unaudited results for the quarter ended March 31, 2022.

Highlights for the First Quarter Ended March 31, 2022:

• Adjusted net income¹ of $235.3 million, or $11.36 per share, for the three months ended March 31, 2022 compared to $58.0 million, or $2.83 per share, for the three months ended March 31, 2021, an increase of 305.7%.
• Net income of $331.5 million, or $16.00 per share, for the three months ended March 31, 2022 compared to $296.8 million, or $14.47 per share, for the three months ended March 31, 2021.
• Liquidity in cash and marketable securities was $708 million as of March 31, 2022.
• Operating revenues of $229.9 million for the three months ended March 31, 2022 compared to $132.1 million for the three months ended March 31, 2021, an increase of 74.0%.
• Adjusted EBITDA¹ of $269.5 million for the three months ended March 31, 2022 compared to $96.3 million for the three months ended March 31, 2021, an increase of 179.9%.
• Total contracted operating revenues were $2.7 billion as of March 31, 2022, with charters extending through 2028 and remaining average contracted charter duration of 3.8 years, weighted by aggregate contracted charter hire.
• Charter coverage of 95.5% for the next 12 months based on current operating revenues and 96.2% in terms of contracted operating days.
• Danaos has declared a dividend of $0.75 per share of common stock for the first quarter of 2022, which is payable on June 8, 2022 to stockholders of record as of May 27, 2022.
• During the second quarter of 2022 we have repaid and are committed to repay early $437 million of debt and leasing obligations as a result of which 13 vessels in our fleet will become unencumbered.

Three Months Ended March 31, 2022
Financial Summary - Unaudited
(Expressed in thousands of United States dollars, except per share amounts)

	Three months ended				Three months ended
	March 31,				March 31,
	2022				2021
Operating revenues	$	229,901			$	132,118
Net income	$	331,465			$	296,780
Adjusted net income1	$	235,297			$	58,011
Earnings per share, diluted	$	16.00			$	14.47
Adjusted earnings per share, diluted1	$	11.36			$	2.83
Diluted weighted average number of shares (in thousands)		20,717				20,513
Adjusted EBITDA1	$	269,484			$	96,282

¹ Adjusted net income, adjusted earnings per share and adjusted EBITDA are non-GAAP measures. Refer to the reconciliation of net income to adjusted net income and net income to adjusted EBITDA.

Danaos’ CEO Dr. John Coustas commented:

"The first quarter of 2022 was another exceptional one for Danaos. Having already seeded the future with $2.7 billion of contracted revenue, we are operating from a position of strength and confidence. This allowed us to invest in the future by ordering six vessels in the 7,000 - 8,000 TEU range, to be delivered between March and September 2024, that are ready to be converted to run on green methanol when such fuel is widely available. Our position in ZIM continues to generate solid returns, including $110 million in net dividends declared in the first quarter.

The broader market has been affected by geopolitical events, high energy prices, inflation, the interest rate outlook, and China's "Zero-Covid" policy. Although box freight rates and charter rates have not been significantly affected, sentiment has changed, and market participants have adopted a more conservative short-term attitude. On the other hand, supply chain inefficiencies continue unabated and there is little likelihood that conditions improve this year. This has led to record profits for the liner companies and, most importantly, higher contract levels. Also, fuel oil prices are reaching levels not seen for more than a decade at the same time as supply chain disruptions have resulted in an increase in average sailing speed. Over time, the global container network will normalize as new vessels are delivered and sailing speeds are reduced to enable the industry to comply with decarbonization timelines.

In the midst of an uncertain backdrop, Danaos is well positioned to continue to execute our strategy. We are simultaneously pursuing fleet growth, returning value to shareholders, and further enhancing our balance sheet. Most recently, we have accelerated de-leveraging to minimize the impact of rising interest rates. During the second quarter of 2022 we have already repaid early $364 million in debt and lease obligations while another $73 million, for which we have issued early repayment notices, will also be repaid early through the end of the second quarter. As a result of this overall leverage reduction of $437 million, 13 vessels in our fleet will become unencumbered.

Liquidity also stands very strong. As at the end of the first quarter we had $708 million in cash and marketable securities, while during the second quarter we received $239 million of charter hire prepayment related to charter contracts for 15 of our vessels, representing partial prepayment of charter hire payable during the period from May 2022 through January 2027.

As a result of our actions, Danaos has the strongest balance sheet in the industry, which will enable us to continue to pursue attractive opportunities when they arise for the benefit of our shareholders."

Three months ended March 31, 2022 compared to the three months ended March 31, 2021

During the three months ended March 31, 2022, Danaos had an average of 71.0 containerships compared to 60.0 containerships during the three months ended March 31, 2021. Our fleet utilization for the three months ended March 31, 2022 was 97.4% compared to 98.6% for the three months ended March 31, 2021.

Our adjusted net income amounted to $235.3 million, or $11.36 per share, for the three months ended March 31, 2022 compared to $58.0 million, or $2.83 per share, for the three months ended March 31, 2021. We have adjusted our net income in the three months ended March 31, 2022 for the change in fair value of our investment in ZIM Integrated Shipping Services Ltd. (“ZIM”) of $99.5 million and a non-cash fees amortization and accrued finance fees charge of $3.4 million. Please refer to the Adjusted Net Income reconciliation table, which appears later in this earnings release.

The $177.3 million increase in adjusted net income for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 is attributable mainly to a $97.8 million increase in operating revenues and recognition of a $110.0 million dividend from ZIM (net of withholding taxes), which were partially offset by a $22.9 million increase in total operating expenses, a $5.8 million increase in net finance expenses and a $1.8 million decrease in our equity income on investment in Gemini Shipholdings Corporation (“Gemini”) following our acquisition and full consolidation of Gemini since July 1, 2021.

On a non-adjusted basis, our net income amounted to $331.5 million, or $16.00 earnings per diluted share, for the three months ended March 31, 2022 compared to net income of $296.8 million, or $14.47 earnings per diluted share, for the three months ended March 31, 2021. Our net income for the three months ended March 31, 2022 includes a total gain on our investment in ZIM of $209.5 million (net of withholding taxes on dividend).

Operating Revenues

Operating revenues increased by 74.0%, or $97.8 million, to $229.9 million in the three months ended March 31, 2022 from $132.1 million in the three months ended March 31, 2021.

Operating revenues for the three months ended March 31, 2022 reflect:

• a $48.9 million increase in revenues in the three months ended March 31, 2022 compared to the three months ended March 31, 2021 mainly as a result of higher charter rates;
• a $20.8 million increase in revenues in the three months ended March 31, 2022 compared to the three months ended March 31, 2021 due to the incremental revenue generated by newly acquired vessels;
• a $11.4 million increase in revenue in the three months ended March 31, 2022 compared to the three months ended March 31, 2021 due to higher non-cash revenue recognition in accordance with US GAAP; and
• a $16.7 million increase in revenues in the three months ended March 31, 2022 compared to the three months ended March 31, 2021 due to amortization of assumed time charters.

Vessel Operating Expenses

Vessel operating expenses increased by $8.1 million to $39.2 million in the three months ended March 31, 2022 from $31.1 million in the three months ended March 31, 2021, primarily as a result of the increase in the average number of vessels in our fleet and an increase in the average daily operating cost for vessels on time charter to $6,307 per vessel per day for the three months ended March 31, 2022 compared to $5,954 per vessel per day for the three months ended March 31, 2021. The average daily operating cost increased mainly due to the COVID-19 related increase in crew remuneration and insurance expenses due to increased insured values of the vessels. Management believes that our daily operating costs remain among the most competitive in the industry.

Depreciation & Amortization

Depreciation & Amortization includes Depreciation and Amortization of Deferred Dry-docking and Special Survey Costs.

Depreciation

Depreciation expense increased by 29.5%, or $7.6 million, to $33.4 million in the three months ended March 31, 2022 from $25.8 million in the three months ended March 31, 2021 due to recent acquisitions of eleven vessels.

Amortization of Deferred Dry-docking and Special Survey Costs

Amortization of deferred dry-docking and special survey costs increased by $0.2 million to $2.7 million in the three months ended March 31, 2022 from $2.5 million in the three months ended March 31, 2021.

General and Administrative Expenses

General and administrative expenses decreased by $3.5 million to $7.4 million in the three months ended March 31, 2022, from $10.9 million in the three months ended March 31, 2021. The decrease was mainly attributable to decreased stock-based compensation expenses.

Other Operating Expenses

Other Operating Expenses include Voyage Expenses.

Voyage Expenses

Voyage expenses increased by $3.0 million to $7.2 million in the three months ended March 31, 2022 from $4.2 million in the three months ended March 31, 2021 primarily as a result of the increase in commissions due to the increase in revenue per vessel and the increase in the average number of vessels in our fleet.

Interest Expense and Interest Income

Interest expense increased by 13.2%, or $2.0 million, to $17.1 million in the three months ended March 31, 2022 from $15.1 million in the three months ended March 31, 2021. The increase in interest expense is a combined result of:

• a $5.6 million reduction in the recognition through our income statement of accumulated accrued interest that had been accrued in 2018 in relation to two of our credit facilities that were refinanced on April 12, 2021. As a result of the refinancing, the recognition of such accumulated interest has decreased;
• a $2.1 million decrease in interest expense due to a decrease in our average indebtedness by $257.8 million between the two periods (average indebtedness of $1,356.7 million in the three months ended March 31, 2022, compared to average indebtedness of $1,614.5 million in the three months ended March 31, 2021), which was partially offset by an increase in our debt service cost by approximately 0.2%; and
• a $1.5 million decrease in the amortization of deferred finance costs and debt discount related to our 2018 debt refinancing.

As of March 31, 2022, our outstanding debt, gross of deferred finance costs, was $1,118.6 million, which includes $300 million aggregate principal amount of our Senior Notes, and our leaseback obligation was $210.2 million. These balances compare to debt of $1,306.8 million and a leaseback obligation of $117.5 million as of March 31, 2021. See “Recent Developments” below.

Interest income decreased by $2.0 million to nil in the three months ended March 31, 2022 compared to $2.0 million in the three months ended March 31, 2021 mainly as a result of full collection of accrued interest on ZIM and HMM bonds, which were redeemed by the issuers thereof in the year 2021.

Gain on investments

The gain on investments of $221.7 million in the three months ended March 31, 2022 consists of the change in fair value of our shareholding interest in ZIM of $99.5 million and dividends recognized on ZIM ordinary shares of $122.2 million. Our remaining shareholding interest of 7,186,950 ordinary shares of ZIM has been fair valued at $522.6 million as of March 31, 2022, based on the closing price of ZIM’s ordinary shares on the NYSE on that date. Subsequently, in April 2022, we sold 1,500,000 of these ZIM ordinary shares resulting in proceeds to us of $85.3 million.

Equity income on investments

Equity income on investments in Gemini decreased to nil in the three months ended March 31, 2022 compared to $1.8 million in the three months ended March 31, 2021 following our acquisition and full consolidation of Gemini since July 1, 2021.

Other finance expenses, net

Other finance expenses, net increased by $0.1 million to $0.6 million in the three months ended March 31, 2022 compared to $0.5 million in the three months ended March 31, 2021.

Loss on derivatives

Amortization of deferred realized losses on interest rate swaps remained stable at $0.9 million in each of the three months ended March 31, 2022 and March 31, 2021.

Other income, net

Other income, net was $0.5 million in the three months ended March 31, 2022 compared to $4.0 million in the three months ended March 31, 2021. The decrease was mainly due to the collection from Hanjin Shipping of $3.9 million as a partial payment of common benefit claim and interest in the three months ended March 31, 2021.

Income taxes

Income taxes were $12.2 million in the three months ended March 31, 2022, related to the taxes withheld on dividend income earned on ZIM ordinary shares and compared to no income tax in the three months ended March 31, 2021.

Adjusted EBITDA

Adjusted EBITDA increased by 179.9%, or $173.2 million, to $269.5 million in the three months ended March 31, 2022 from $96.3 million in the three months ended March 31, 2021. As outlined above, the increase is mainly attributable to a $81.1 million increase in operating revenues (net of $16.7 million amortization of assumed time charters) and recognition of a $110.0 million dividend from ZIM (net of withholding taxes) in the three months ended March 31, 2022, which were partially offset by a $16.1 million increase in total operating expenses and a $1.8 million decrease in equity investment in Gemini following our acquisition and full consolidation since July 1, 2021. Adjusted EBITDA for the three months ended March 31, 2022 is adjusted for a $111.8 million change in fair value of the investment in ZIM and dividend withholding taxes and stock-based compensation of $0.1 million. Tables reconciling Adjusted EBITDA to Net Income can be found at the end of this earnings release.

Dividend Payment

Danaos has declared a dividend of $0.75 per share of common stock for the first quarter of 2022, which is payable on June 8, 2022 to stockholders of record as of May 27, 2022.

Recent Developments

In March 2022, we entered into an agreement to build two 7,100 TEU container vessels in Dalian Shipbuilding in China for a contracted price of $156 million and in April 2022, we entered into an agreement to build four 8,000 TEU container vessels in Daehan Shipbuilding in South Korea for a contracted price of $372.7 million. All these fuel-efficient vessels are expected to be delivered to us in 2024.

In April 2022, we sold 1,500,000 ordinary shares of ZIM resulting in proceeds of $85.3 million.

On May 12, 2022, we early extinguished our leasing obligation amounting to $97.4 million as of March 31, 2022 related to the vessels CMA CGM Melisande, CMA CGM Attila, CMA CGM Tancredi, CMA CGM Bianca and CMA CGM Samson and we also early extinguished $270.0 million of the outstanding Natwest loan principal of the Citibank/Natwest $815 mil. Facility, which reduced the future quarterly installments of the remaining facility to $12.9 million and the balloon payment at maturity was reduced to $309.0 million. Additionally, on May 12, 2022, we sent notice of early full repayment to our lenders related to (i) $43 million loan outstanding with the Macquarie Bank to be fully repaid on June 30, 2022, (ii) $20.55 million loan outstanding with Eurobank to be fully repaid on May 25, 2022 and (iii) $9.8 million loan outstanding with SinoPac to be fully repaid on July 1, 2022.

In April 2022, we entered into a preliminary term sheet agreement for a $130.0 million loan facility with major financial institutions, subject to final documentation, which will be secured by our six 5,466 TEU sister vessels acquired in 2021. This facility is expected to be drawn down in the 2^nd quarter of 2022.

Conference Call and Webcast

On Tuesday, May 16, 2022 at 9:00 A.M. ET, the Company's management will host a conference call to discuss the results.

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 844 802 2437 (US Toll Free Dial In), 0800 279 9489 (UK Toll Free Dial In) or [phone] (Standard International Dial In). Please indicate to the operator that you wish to join the Danaos Corporation earnings call.

A telephonic replay of the conference call will be available until May 24, 2021 by dialing 1 877 344 7529 (US Toll Free Dial In) or 1-412-317-0088 (Standard International Dial In) and using 2700349# as the access code.

Audio Webcast

There will also be a live and then archived webcast of the conference call on the Danaos website (www.danaos.com). Participants of the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

Slide Presentation

A slide presentation regarding the Company and the containership industry will also be available on the Danaos website (www.danaos.com).

About Danaos Corporation

Danaos Corporation is one of the largest independent owners of modern, large-size containerships. Our current fleet of 71 containerships aggregating 436,589 TEUs and 6 under construction containerships aggregating 46,200 TEUs ranks Danaos among the largest containership charter owners in the world based on total TEU capacity. Our fleet is chartered to many of the world's largest liner companies on fixed-rate charters. Our long track record of success is predicated on our efficient and rigorous operational standards and environmental controls. Danaos Corporation's shares trade on the New York Stock Exchange under the symbol "DAC".

Forward-Looking Statements

Matters discussed in this release may constitute forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements reflect our current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The forward-looking statements in this release are based upon various assumptions. Although Danaos Corporation believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, Danaos Corporation cannot assure you that it will achieve or accomplish these expectations, beliefs or projections. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the impact of the COVID-19 pandemic and efforts throughout the world to contain its spread, including effects on global economic activity, demand for seaborne transportation of containerized cargo, the ability and willingness of charterers to perform their obligations to us, charter rates for containerships, shipyards performing scrubber installations, drydocking and repairs, changing vessel crews and availability of financing; Danaos’ ability to achieve the expected benefits of the 2021 debt refinancing and comply with the terms of its new credit facilities and other financing agreements; the strength of world economies and currencies, general market conditions, including changes in charter hire rates and vessel values, charter counterparty performance, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled dry-docking, changes in Danaos Corporation's operating expenses, including bunker prices, dry-docking and insurance costs, ability to obtain financing and comply with covenants in our financing arrangements, actions taken by regulatory authorities, potential liability from pending or future litigation, domestic and international political conditions, including the conflict in Ukraine and related sanctions, potential disruption of shipping routes due to accidents and political events or acts by terrorists.

Risks and uncertainties are further described in reports filed by Danaos Corporation with the U.S. Securities and Exchange Commission.

Visit our website at www.danaos.com

Appendix

Fleet Utilization

Danaos had 16 unscheduled off-hire days in the three months ended March 31, 2022. The following table summarizes vessel utilization and the impact of the off-hire days on the Company’s revenue.

Vessel Utilization (No. of Days)	First Quarter		First Quarter
	2022		2021
Ownership Days	6,390		5,400
Less Off-hire Days:
Scheduled Off-hire Days	(148)		(22)
Other Off-hire Days	(16)		(51)
Operating Days	6,226		5,327
Vessel Utilization	97.4%		98.6%
Operating Revenues (in '000s of US Dollars)	$229,901		$132,118
Average Gross Daily Charter Rate	$36,926		$24,802

Fleet List

The following table describes in detail our fleet deployment profile as of May 16, 2022:

Vessel Name	Vessel Size (TEU)		Year Built		Expiration of Charter(1)
Hyundai Ambition	13,100		2012		June 2024
Hyundai Speed	13,100		2012		June 2024
Hyundai Smart	13,100		2012		May 2024
Hyundai Respect	13,100		2012		March 2024
Hyundai Honour	13,100		2012		February 2024
Express Rome	10,100		2011		March 2023
Express Berlin	10,100		2011		June 2023
Express Athens	10,100		2011		March 2023
Le Havre	9,580		2006		June 2028
Pusan C	9,580		2006		May 2028
Bremen	9,012		2009		January 2028
C Hamburg	9,012		2009		January 2028
Niledutch Lion	8,626		2008		May 2026
Kota Manzanillo (ex Charleston)	8,533		2005		February 2026
Belita	8,533		2006		July 2026
CMA CGM Melisande	8,530		2012		May 2024
CMA CGM Attila	8,530		2011		October 2023
CMA CGM Tancredi	8,530		2011		November 2023
CMA CGM Bianca	8,530		2011		January 2024
CMA CGM Samson	8,530		2011		March 2024
America	8,468		2004		April 2028
Europe	8,468		2004		May 2028
Phoebe	8,463		2005		August 2026
CMA CGM Moliere	6,500		2009		March 2027
CMA CGM Musset	6,500		2010		October 2022
CMA CGM Nerval	6,500		2010		December 2022
CMA CGM Rabelais	6,500		2010		February 2023
CMA CGM Racine	6,500		2010		March 2023
YM Mandate	6,500		2010		January 2028
YM Maturity	6,500		2010		April 2028
Catherine C	6,422		2001		November 2022
Leo C	6,422		2002		November 2022
Zim Savannah	6,402		2002		May 2024
Dimitra C	6,402		2002		January 2023
Suez Canal	5,610		2002		March 2023
Kota Lima	5,544		2002		November 2024
Wide Alpha	5,466		2014		March 2024
Wide Bravo	5,466		2014		June 2025
Maersk Euphrates	5,466		2014		April 2024
Wide Hotel	5,466		2015		May 2024
Wide India	5,466		2015		September 2025
Wide Juliet	5,466		2015		June 2023
Seattle C	4,253		2007		October 2024
Vancouver	4,253		2007		November 2024
Derby D	4,253		2004		January 2027
Tongala	4,253		2004		January 2023
Rio Grande	4,253		2008		November 2024
ZIM Sao Paolo	4,253		2008		February 2023
ZIM Kingston	4,253		2008		April 2023
ZIM Monaco	4,253		2009		February 2023
Dalian	4,253		2009		November 2022
ZIM Luanda	4,253		2009		August 2025
Dimitris C	3,430		2001		November 2025
Express Black Sea	3,400		2011		January 2025
Express Spain	3,400		2011		January 2025
Express Argentina	3,400		2010		May 2023
Express Brazil	3,400		2010		June 2025
Express France	3,400		2010		September 2025
Singapore	3,314		2004		May 2024
Colombo	3,314		2004		January 2025
Zebra	2,602		2001		November 2024
Amalia C	2,452		1998		January 2023
Artotina	2,524		2001		April 2025
Advance	2,200		1997		January 2025
Future	2,200		1997		December 2024
Sprinter	2,200		1997		December 2024
Stride	2,200		1997		January 2025
Progress C	2,200		1998		November 2024
Bridge	2,200		1998		December 2024
Highway	2,200		1998		August 2022
Vladivostok	2,200		1997		March 2025
Vessels under construction
Hull No. C7100-7	7,100		2024
Hull No. C7100-8	7,100		2024
Hull No. HN4009	8,000		2024
Hull No. HN4010	8,000		2024
Hull No. HN4011	8,000		2024
Hull No. HN4012	8,000		2024

(1)	Earliest date charters could expire. Some charters include options for the charterer to extend their terms.

DANAOS CORPORATION
Condensed Consolidated Statements of Income - Unaudited
(Expressed in thousands of United States dollars, except per share amounts)

	Three months ended		Three months ended
	March 31,		March 31,
	2022		2021
OPERATING REVENUES	$229,901		$132,118
OPERATING EXPENSES
Vessel operating expenses	(39,164)		(31,078)
Depreciation & amortization	(36,079)		(28,308)
General & administrative	(7,391)		(10,895)
Other operating expenses	(7,189)		(4,228)
Income From Operations	140,078		57,609
OTHER INCOME/(EXPENSES)
Interest income	1		1,978
Interest expense	(17,114)		(15,111)
Gain on investments	221,717		247,875
Other finance expenses	(605)		(452)
Equity income on investments	-		1,803
Other income, net	499		3,971
Realized loss on derivatives	(893)		(893)
Total Other Income/(Expenses), net	203,605		239,171
Income Before Income Taxes	343,683		296,780
Income taxes	(12,218)		-
Net Income	$331,465		$296,780
EARNINGS PER SHARE
Basic earnings per share	$16.02		$14.62
Diluted earnings per share	$16.00		$14.47
Basic weighted average number of common shares (in thousands of shares)	20,697		20,293
Diluted weighted average number of common shares (in thousands of shares)	20,717		20,513

Non-GAAP Measures¹
Reconciliation of Net Income to Adjusted Net Income – Unaudited

	Three months ended		Three months ended
	March 31,		March 31,
	2022		2021
Net income	$331,465		$296,780
Change in fair value of investments	(99,539)		(247,875)
Amortization of financing fees, debt discount & finance fees accrued	3,371		5,028
Stock based compensation	-		4,078
Adjusted Net Income	$235,297		$58,011
Adjusted Earnings Per Share, diluted	$11.36		$2.83
Diluted weighted average number of shares (in thousands)	20,717		20,513

¹ The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures used in managing the business may provide users of this financial information additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain items that impact the overall comparability. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. See the Table above for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three months ended March 31, 2022 and 2021. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP.

DANAOS CORPORATION
Condensed Consolidated Balance Sheets - Unaudited
(Expressed in thousands of United States dollars)

		As of		As of
		March 31,		December 31,
		2022		2021
ASSETS
CURRENT ASSETS
Cash, cash equivalents and restricted cash		$198,664		$129,756
Accounts receivable, net		7,133		7,118
Other current assets		716,825		495,618
		922,622		632,492
NON-CURRENT ASSETS
Fixed assets, net		2,909,777		2,941,093
Deferred charges, net		18,336		11,801
Other non-current assets		53,486		41,739
		2,981,599		2,994,633
TOTAL ASSETS		$3,904,221		$3,627,125
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Long-term debt, current portion		$94,150		$95,750
Accumulated accrued interest, current portion		7,911		6,146
Long-term leaseback obligations, current portion		86,116		85,815
Accounts payable, accrued liabilities & other current liabilities		134,344		131,596
		322,521		319,307
LONG-TERM LIABILITIES
Long-term debt, net		998,052		1,017,916
Accumulated accrued interest, net of current portion		20,955		24,155
Long-term leaseback obligations, net		120,454		136,513
Other long-term liabilities		37,271		41,211
		1,176,732		1,219,795
STOCKHOLDERS’ EQUITY
Common stock		207		207
Additional paid-in capital		770,800		770,676
Accumulated other comprehensive loss		(70,562)		(71,455)
Retained earnings		1,704,523		1,388,595
		2,404,968		2,088,023
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$3,904,221		$3,627,125

DANAOS CORPORATION
Condensed Consolidated Statements of Cash Flows - Unaudited
(Expressed in thousands of United States dollars)

	Three months ended		Three months ended
	March 31,		March 31,
	2022		2021
Operating Activities:
Net income	$331,465		$296,780
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of right-of-use assets	33,359		25,799
Amortization of deferred drydocking & special survey costs, finance cost, debt discount and other finance fees accrued	6,091		7,537
Amortization of assumed time charters	(16,651)		-
PIK interest	-		642
Gain on investments	(99,539)		(247,875)
Payments for drydocking/special survey	(9,255)		(907)
Amortization of deferred realized losses on cash flow interest rate swaps	893		893
Equity income on investments	-		(1,803)
Stock based compensation	124		4,909
Accounts receivable	(15)		213
Other assets, current and non-current	(133,417)		1,002
Accounts payable and accrued liabilities	5,641		3,278
Other liabilities, current and long-term	768		(2,210)
Net Cash provided by Operating Activities	119,464		88,258
Investing Activities:
Vessel additions and advances	(2,043)		(1,236)
Advances for sale of vessels	13,000		-
Investments	-		2,392
Net Cash provided by Investing Activities	10,957		1,156
Financing Activities:
Proceeds from long-term debt	-		294,386
Debt repayment	(24,300)		(71,849)
Payments of leaseback obligations	(16,293)		(5,916)
Dividends paid	(15,535)		-
Payments of accumulated accrued interest	(1,435)		(4,702)
Finance costs	(3,950)		(4,488)
Net Cash provided by/(used in) Financing Activities	(61,513)		207,431
Net Increase in cash, cash equivalents and restricted cash	68,908		296,845
Cash, cash equivalents and restricted cash, beginning of period	129,756		65,663
Cash, cash equivalents and restricted cash, end of period	$198,664		$362,508

DANAOS CORPORATION
Reconciliation of Net Income to Adjusted EBITDA - Unaudited
(Expressed in thousands of United States dollars)

	Three months ended		Three months ended
	March 31,		March 31,
	2022		2021
Net income	$331,465		$296,780
Depreciation and amortization of right-of-use assets	33,359		25,799
Amortization of deferred drydocking & special survey costs	2,720		2,509
Amortization of assumed time charters	(16,651)		-
Amortization of deferred finance costs, debt discount and other finance fees accrued	3,371		5,028
Amortization of deferred realized losses on interest rate swaps	893		893
Interest income	(1)		(1,978)
Interest expense	13,743		10,217
Income taxes	12,218		-
Gain on investments and dividend withholding taxes	(111,757)		(247,875)
Stock based compensation	124		4,909
Adjusted EBITDA(1)	$269,484		$96,282

(1)		Adjusted EBITDA represents net income before interest income and expense, taxes other than withholding taxes on dividend, depreciation, amortization of deferred drydocking & special survey costs, amortization of assumed time charters, amortization of deferred finance costs, debt discount and other finance fees accrued, amortization of deferred realized losses on interest rate swaps, gain on investments, equity income on investments, gain on debt extinguishment and stock based compensation. However, Adjusted EBITDA is not a recognized measurement under U.S. generally accepted accounting principles, or “GAAP.” We believe that the presentation of Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. We also believe that Adjusted EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry because the calculation of Adjusted EBITDA generally eliminates the effects of financings, income taxes and the accounting effects of capital expenditures and acquisitions, items which may vary for different companies for reasons unrelated to overall operating performance. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.
		Note: Items to consider for comparability include gains and charges. Gains positively impacting net income are reflected as deductions to net income. Charges negatively impacting net income are reflected as increases to net income.
		The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures used in managing the business may provide users of these financial information additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain items that impact the overall comparability. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. See the Tables above for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three months ended March 31, 2022 and 2021. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP.

 

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