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Danaos Corporation ("Danaos") (NYSE: DAC), one of the world's largest independent owners of containerships, today reported unaudited results for the fourth quarter and the year ended December 31, 2017.
Highlights for the Fourth Quarter and Year Ended December 31, 2017:
Adjusted net income1 of $31.2 million, or $0.28 per share, for the three months ended December 31, 2017 compared to $23.2 million, or $0.21 per share, for the three months ended December 31, 2016, an increase of 34.5%. Adjusted net income1 of $114.9 million, or $1.05 per share, for the year ended December 31, 2017 compared to $140.9 million, or $1.28 per share, for the year ended December 31, 2016, a decrease of 18.5%.
Operating revenues of $114.2 million for the three months ended December 31, 2017 compared to $112.1 million for the three months ended December 31, 2016, an increase of 1.9%. Operating revenues of $451.7 million for the year ended December 31, 2017 compared to $498.3 million for the year ended December 31, 2016, a decrease of 9.4%.
Adjusted EBITDA1 of $80.0 million for the three months ended December 31, 2017 compared to $75.9 million for the three months ended December 31, 2016, an increase of 5.4%. Adjusted EBITDA1 of $310.4 million for the year ended December 31, 2017 compared to $350.6 million for the year ended December 31, 2016, a decrease of 11.5%.
Total contracted operating revenues were $1.7 billion as of December 31, 2017, with charters extending through 2028 and remaining average contracted charter duration of 5.7 years, weighted by aggregate contracted charter hire.
Charter coverage of 86% for the next 12 months based on current operating revenues and 69% in terms of contracted operating days.
Danaos' CEO Dr. John Coustas commented:
Our earnings for the fourth quarter of 2017 improved markedly when compared to the earnings of the fourth quarter of 2016 which had been negatively impacted in the aftermath of the Hanjin bankruptcy. This is mainly the result of our high charter contract coverage which remains at 86% for the next 12 months based on current operating revenues and 69% in terms of contracted operating days.
Adjusted net income of $31.2 million for the quarter represented an increase of $8.0 million, or 34.5%, compared to $23.2 million for the fourth quarter of 2016. This increase was attributable to a $5.2 million increase in the operating revenues of the vessels that were previously chartered to Hanjin compared to the fourth quarter of 2016, and improved operating performance of $2.8 million.
As previously reported, the Company is in breach of certain financial covenants as a result of the Hanjin bankruptcy. We are currently engaged in discussions with our lenders regarding restructuring our debt, substantially all of which matures on December 31, 2018. In the meantime, we continue to generate positive cash flows from our operations and currently have sufficient liquidity to service all our operational obligations as well as all scheduled principal amortization and interest payments under the original terms of our debt agreements leading up to the December 2018 maturity date.
The charter market in general has stabilized at slightly better levels compared to the lows of 2016. However, although the size segment above 10,000 TEU has recently seen some improvement, the size segment between 5,000 to 10,000 TEU has retracted from the charter rate levels achieved within 2017. For panamax vessels between 4,000 to 5,000 TEU the market is stagnant however comfortably above operating costs. For the smaller feeder sector there is a firming market however the lack of long term fixtures shows that there is no faith in the sustainability. We do not expect a material improvement in the market environment within 2018, given the large number of scheduled vessel deliveries. Danaos continues to have low near term exposure to the weak spot market as a result of the aforementioned charter coverage.
During this extended period of market weakness which has presented many challenges, we remain focused on taking necessary actions to preserve the value of our company.