world-class shipping, leading-edge expertise · anticipates will or may occur in the future,...

World-Class Shipping, Leading-Edge Expertise

Corporate Presentation | February 2020

Danaos by the NumbersDisclaimer

This presentation contains certain statements that may be deemed to be “forward-looking statements” within the meaning of the Securities Exchange Act of

1934. All statements, other than statements of historical facts, that address activities, events or developments that the Company expects, projects, believes or

anticipates will or may occur in the future, including, without limitation, the outlook for fleet utilization and shipping rates, general industry conditions including

bidding activity, future operating results of the Company’s vessels, future operating revenues and cash flows, capital expenditures, vessel market values,

asset sales, expansion and growth opportunities, bank borrowings, financing activities and other such matters, are forward-looking statements. Although the

Company believes that its expectations stated in this presentation are based on reasonable assumptions, actual results may differ from those projected in the

forward-looking statements. Important factors that could cause actual results to differ materially from those discussed in the forward-looking statements

include the strength of world economies, general market conditions, including charter rates and vessel values, counterparty performance under existing

charters, changes in operating expenses, ability to obtain financing and comply with covenants in financing arrangements, including the terms of its new

credit facilities and agreements entered into in connection with the refinancing, the affects of the refinancing transactions and the Company’s ability to

achieve the benefits of the refinancing, actions taken by regulatory authorities, potential liability from litigation and international political conditions. Danaos

Corporation is listed in the New York Stock Exchange under the ticker symbol “DAC”. Before you invest, you should also read the documents Danaos

Corporation has filed with the SEC for more complete information about the company. You may get these documents for free by visiting EDGAR on the SEC

Website at www.sec.gov or via www.danaos.com

Readers of this presentation should review our Annual Report on Form 20-F filed with the SEC on March 5, 2019, including the section entitled “Key

Information – Risk Factors”, and our other filings with the SEC for a discussion of factors and circumstances that could affect our future financial results and

our ability to realize the expectations stated herein.

EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS may be included in our presentations. EBITDA, Adjusted EBITDA, Adjusted Net Income

and Adjusted EPS are presented because they are used by management and certain investors to measure a company’s financial performance and underlying

trends as they exclude certain items impacting overall comparability. EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS are “non-GAAP

financial measures” and should not be considered a substitute for net income, cash flow from operating activities and other operations or cash flow statement

data prepared in accordance with accounting principles generally accepted in the United States or as a measure of profitability or liquidity. Reconciliations to

GAAP measures are included in the Appendix to this presentation.

Certain shipping industry information, statistics and charts contained herein have been derived from industry sources. You are hereby advised that such

information, statistics and charts have not been prepared specifically for inclusion in this presentation and the Company has not undertaken any independent

investigation to confirm the accuracy or completeness of such information.

2

kBusiness Overview

3

• One of the largest publicly-listed owners of modern containerships with long

track record in the shipping market

• One of the most efficient operators in the industry with highly competitive breakeven levels

• Management is the largest shareholder (~37.3%)(1) and is aligned with public shareholders

✓

A LEADING CONTAINERSHIP OWNER AND OPERATOR

• Adjusted Net Debt / EBITDA ratio of 4.6x and consistent reduction in leverage through amortization schedule

• Going forward financial covenants in line with conservative operating expectations

• Significant financial commitment by founder and largest shareholder

✓

HEALTHY CAPITAL STRUCTURE

✓

LIMIT RE-CHARTERING RISK AND POTENTIAL FOR UPSIDE

• Charter backlog of $1.34 billion through 2028 with world’s leading liner companies provides good cash flow visibility

• Large, modern 13,000 TEU vessels are all on long-term charters through 2024

• Active chartering market with more limited capacity growth, for majority of vessels on shorter charters, limiting market downside risk

(1) Inclusive of extended Coustas family interest. .

✓

FAVORABLE INDUSTRY BACKDROP

• Historically-low orderbook for containerships, concentrated in larger vessels, and idle fleet capacity of 3.2%, including ships being retro-

fitted for scrubbers

• No reduction in utilization despite global trade war headwinds over the past year

Danaos by the Numbers

$1.34bnContracted cash flow through 2028

4.6xNet debt to Adjusted EBITDA

$311mnAdjusted EBITDA 2019

37.3%Ownership through founder / management

$2.1bnEnterprise value

2.7xReduction in leverage over the last two years

4

910

472 369

230 207 183

474 459 410 343 253 253 248 226 223 200 200 195

Sea

span

Cos

tam

are

Dan

aos

Glo

bal S

hip

Leas

e

Nav

ios

MP

C G

roup

Offe

n, C

laus

Pet

er

Sho

ei K

isen

Zod

iac

Mar

itim

e

BoC

om L

easi

ng

Fre

drik

sen

Gro

up

Eas

tern

Pac

ific

Shp

g

Pet

er D

ohle

/H

amm

onia

Zea

born

Sch

ulte

Gro

up

Nis

sen

Kai

un

Min

shen

g F

inan

cial

Leas

ing

Nor

ddeu

tsch

e R

.H.

Sch

uldt

40+ Year Legacy of Leadership in Container Shipping

Source: Clarksons Research.

(1) Includes Gemini Shipholdings Vessels (TEU), a joint venture in which Danaos owns a 49% stake: Suez Canal (5,610), Genoa (5,544), Lodestar (6,422), Leo C (6,422) and Bellta (8,533).

(2) Global Ship Lease includes Pro Forma TEU for Poseidon / Technomar Acquisition which closed November 15, 2018

Publicly Traded Pure-Play Operators Financial / Independent Owners

Market Share1, 2 Among Top Public Containership Owners GloballyBy TEU, thousands

5

1972

Founded by Dimitris

Coustas

1987

Dr. John Coustas steps into

Chief Executive role

2005

Incorporation in Marshall

Islands

2006

NYSE IPO

Raised $200mm

2018 to present

Refinancing, share

offering and growth

2010

$200mm equity

raise

37%

9%

26%

24%

2%1% 1%

Diverse, High-Quality Fleet

2x5,500 TEU

2x 6,500 TEU

1x 8,500 TEU

9x 6,400 – 6,500 TEU

Average Age: 11.4 years

Remaining Charter Term: 3.7 years

10x4,300 – 5,500 TEU



8x3,500 TEU


Remaining Charter Term: 0.5 years 11x 2,200 – 2,600 TEU



Note: Figures as of December 31st 2019. Please refer to appendix for additional detail on pages 28 and 29.

(1) Excludes Gemini Shipholdings Vessels (TEU), a joint venture in which Danaos owns a 49% stake: Suez Canal (5,610), Genoa (5,544), Lodestar (6,422), Leo C (6,422) and Bellta (8,533).

Fleet Overview(1)

5x 13,100 TEU



8x8,500 TEU



5x9,600 - 10,100 TEU



Gemini Vessels

Contracted

Revenue

Contribution(1)

6

Danaos by the NumbersBalanced Counterparty Concentration

Note: Distributed by TEU.

29%

18%

15%

9%

8%

7%

14%

(20 years)

(25 years)

(37 years)

(15 years)

(34 years)

(40+ years)

Overview of Customer Base

• Long history chartering to most major global

liner companies

• Engaged with container alliances on

deployments across major and minor global

routes

• Have collaborated with customers in ordering

46 newbuildings in excess of 300,000 TEU over

our history at a cost in excess of $4 billion

Close Alignment Working with Customers

• Consistently developing operating expertise to

obtain and retain customers

• Delivering on-time new ships to customers’

specifications

• Prioritizing reputation, customer service and

safety

• Maintain a strategic focus on regular

engagement with customers, particularly in

regards to new customer needs and

technological advancements

Other

Length of Customer Relationships Noted in Italics

7

Strong Charter Coverage through 2024

Note: Charter Revenue assumes Gross Daily Charter Rate. Contracted Revenue and Charter Expiration Schedule exclude Gemini Shipholdings.

(1) Assumes non-contracted vessels employed at current contracted charter rates.

Shorter charter durations limited to vessels in more liquid chartering markets

86% 74%

59%

42%

5%

2020 2021 2022 2023 2024+

$399 $357

$278

$188 $119

2020 2021 2022 2023 2024+

13,000 9,500-10,000 8,500 6,400-6,500 4,300-5,500 3,500 2,200-2,600

Contracted Revenue by Year mm $ by Asset Class

Revenue-Weighted Charter Coverage(1)

8

$311

$185

$60

($81) ($2)

($28) ($9)

($7)

($124)

2019EBITDA

Net Cash Interest JV Earnings Revenue Recognition(Non-Cash)

Other Dry Docking Operating Cash Flow Debt Amortization 2019 FCF

Good Free Cash Flow Visibility

Source: Company filings as of 12/31/19.

Note: Recurring Free Cash Flow calculated excluding non-recurring items such as Vessels Addition Capital Expenditures and Financing Costs.

(1) Non-GAAP measure. See appendix for definitions and reconciliations to the nearest GAAP measure.

Illustrative Walk to 2019 Free Cash Flow(1)

2019 FCF

excludes CapEx

and one-time /

unusual items

(1)

(1)

Drivers of 2020 – 2021 FCF

✓ Lower interest rates

✓ Charter escalations

✓ Fleet acquisitions

Uses of FCF

✓ Further debt amortization

✓ Return of capital to shareholders

✓ Fleet acquisitions

9

Focused on Maintaining Conservative Capital Structure

Net Adjusted Debt and Adjusted EBITDA Multiple(1)Capitalization

3,165 3,042

2,892

2,703

2,454

2,274

1,615

1,443

7.3x 7.0x

7.2x

6.5x

7.0x 7.3x

5.1x

4.6x

0

500

1,000

1,500

2,000

2,500

3,000

$3,500

2012 2013 2014 2015 2016 2017 2018 2019

(1) Based on total adjusted debt, net of deferred finance costs and fair value adjustments, as of December 31st 2019.

(2) Non-GAAP measure. See appendix for definitions and reconciliations to the nearest GAAP measure.

Net Adjusted Debt

12/31/2019$ in millions

Cash $139

Bank Debt: 1,422

Long-term Leaseback Obligation 138

Exit Fee 22

Deferred Finance Costs (33)

Debt Fair Value Adjustment (20)

Total Debt $1,529

adjusted for

Deferred Finance Costs 33

Debt Fair Value Adjustment 20

Total Debt $1,582

Net Debt 1,443

Book Value of Equity 882

Total Capitalization $2,464

Credit Statistics:

Adj. EBITDA(2) $311

Debt / Adj. EBITDA(2) 5.1x

Net Debt / Adj. EBITDA(2) 4.6x

Net Debt / Book Equity(2) 1.6x

10

Experienced Senior Management

Dr. John Coustas, President & CEO

Dimitris Vastarouchas, Technical Director & Deputy COO

• CEO since 1987

• Over 30 years of experience in the

shipping industry

• Vice Chairman of the board of directors of

The Swedish Club; member of the board

of directors of the Union of Greek

Shipowners and the DNV Council

Evangelos Chatzis, Chief Financial Officer

• Joined Danaos in 2005

• Over 25 years of experience in corporate

finance and the shipping industry

• Formerly CFO of Globe Group of

Companies

• Danaos Technical Manager since 2005

• Has over 20 years of experience in the

shipping industry

• Formerly New Buildings Projects and Site

Manager supervising the construction of

4,250, 5,500 and 8,500 TEU containerships

Iraklis Prokopakis, Senior Vice President, Treasurer & COO

• Joined Danaos in 1998

• Over 40 years of experience in the shipping

industry

• Member of the Board of the Hellenic Chamber

of Shipping and the Owners’ Committee of the

Korean Register of Shipping

11

Governance

Independent Board

Clear reporting of

transactions with Danaos

Shipping (Manager)

− Amounts approved by

independent board

members

Arms length cost

arrangements, which

are amongst lowest

in industry and fixed

through 2024

✓

✓

✓

Social

Code of ethics and

compliance policies

published for Directors /

Officers

Accredited by Global

Reporting Initiative (GRI)

for sustainability best

practices and socially

responsible management

✓

✓

Environmental

Advanced solutions to

reduce emissions through

fuel efficiency optimization

Scrubber installation on

select vessels

Low-sulfur fuel oil

to be procured

Ballast water

system compliance

Partnership with founders

of Poseidon Principles

✓

✓

✓

✓

✓

Longstanding Champion of ESG Principles

Danaos Management is keenly focused on maintaining a strong ESG framework for company operations

12

HINDSIGHT:

• ‘Reflect and learn from past data’ through statistical processing and trend analysis

• Detection of hidden correlations among seemingly un-related data

INSIGHT: ‘Interpret data and respond efficiently to the present’

• KPls real-time monitoring (operational efficiency, safety performance, etc.)

• Vessel’s benchmarking against: theoretical curves, specifications, tests and trials, sister and competitor vessel monitoring

• Timely anomaly detection and alerting for abnormal behavior or deviation from predefined thresholds

FORESIGHT: ‘Predict and get ready for the future’ through scenario testing, system risk assessments and observational

maintenance

As well as Routines System Data monitoring …

• BCS, pMatrix, Power Mgmt, Steam Mgmt, ODA …

• Tanks Mgmt. Bunker Analysis, Bunker Surveys, Bunkering Monitoring ...

• Performance, Propulsion, Emissions ...

Data Analytics/Algorithmic Analysis (Operator-defined) of Fused Data across Monitoring Systems

Workflow Management

Operator-defined workflows for timely and effective response to alarm events: what actions must take place, who from the

crew should be involved, and what actions must be logged / other systems triggered

Waves Fleet Performance

… Riding the Wave of Innovation!

Pioneers in Digitalization

13

Industry Overview

Seaborne Containerized Trade Growth Remains Consistent

Global Container Port Throughput

Global Seaborne Container Trade

Source: Clarksons Research, IMF World Economic Outlook

(20%)

(10%)

0%

10%

20%

0

200

400

600

800

1,000

TE

U li

fts, m

m

TEU % y-o-y

(2000%)

(1000%)

0%

1000%

2000%

0

50

100

150

200

250

TE

U m

m

TEU % y-o-y

15

Containership Trade Routes

Source: Clarksons Research

(1) Basis trades with Far East & Europe.

(2) Basis full year estimate / forecast.

• Units of 15,000+ TEU remain exclusively deployed on the

Far East-Europe trade

• Deployment of boxships sized 12-14,999 TEU continues

to broaden notably onto the Transpacific route and also

onto some non-mainlane trades

• Boxships sized 6,000-11,999 TEU offer flexible

deployment opportunities, with further reductions in

reliance on the mainlanes seen in 2019, although demand

can be sensitive to short-term shifts

• Approximately 30% of capacity deployed on intra-regional

trade routes is accounted for by units of 3,000+ TEU; this

share has been fairly steady for a number of years now

• Intra-regional routes, and deployment of sub-3,000 TEU

units thereon, appear ‘protected’ against significant vessel

upsizing to some degree, by infrastructure, volume and

other operational constraints

Mainlane, 30%

Non-Mainlane

East-West, 11%North-

South, 16%

Intra-Regional,

43%

201mm

TEU

Largest vessels primarily deployed on long trade routes

Container Trade by Trade Lane 2019

16

Geographic Deployment Favoring Certain Size Vessels

Largest vessels primarily deployed on long trade routes

Capacity Deployment By Routemm $ by Asset Class


0%

20%

40%

60%

80%

100%

<3k TEU 3-6k TEU 6-8k TEU 8-12k TEU 12-15k TEU 15k+ TEU

Mainlane E-W Non-Mainlane E-W North-South Intra-Regional

17

0.00

0.25

0.50

0.75

1.00

1.25

2020 2021 2022

12,000+ TEU 8,000–11,999 TEU 3,000–7,999 TEU 100–2,999 TEU

10%

14%

1%

12%

0%

5%

10%

15%

Containership Orderbook %Fleet

Containership 8,000+ TEUOrderbook % Fleet

Containership 3-7,999 TEUOrderbook % Fleet

Containership <3,000 TEUOrderbook % Fleet

Supply Growth Primary in Largest Vessel Segments

Orderbook is concentrated in 8,000+ TEU vessels where Danaos has the greatest charter coverage

Containership Orderbook, as % of Fleet by SegmentTEU, mm


Containership Orderbook, By Scheduled Delivery YearTEU, mm

18

Containership Charter Rate Improving from Recent Lows

4,400 TEU gls ‘Old Panamax’ Containership

6-12 Month TC Rate$/day, thousands

9,000 TEU gls Containership 3-yr TC Rate1

$/day, thousands


Note: Limited activity on longer TCs with wide spread on rate ideas.

(1) Based on ‘Neo-Panamax’ ships.

6,800 TEU Containership 3-yr TC Rate$/day, thousands

2,500 TEU grd Containership 6-12 month TC Rate$/day, thousands

19

0

10

20

30

40

50

Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20

0

5

10

15

20

25

30


0

10

20

30

40


0

10

20

30

40


Containership Asset Values Improving from Recent Lows

4,500 TEU ‘Old Panamax’ Containership 10 Year Old

Secondhand Pricemm $

8,800 TEU Containership 5 Year Old Secondhand Pricemm $


Note: Limited activity on longer TCs with wide spread on rate ideas.

(1) Based on ‘Neo-Panamax’ ships.

6,600 TEU Containership 5 Year Old Secondhand Pricemm $

2,500 TEU grd Containership 10-Year-Old

Secondhand Pricemm $

20

0

20

40

60

80

100

120

140


0

20

40

60

80

100

120


0

10

20

30

40

50


0

10

20


Financial Overview

Historical Financials

Net Leverage Adjusted Net Income

Operating Revenuesmm $

Adjusted EBITDAmm $

$589 $588 $552 $568

$498 $452 $459 $447

2012 2013 2014 2015 2016 2017 2018 2019

$432 $434 $404 $418

$351 $310 $318 $311

2012 2013 2014 2015 2016 2017 2018 2019

7.3x 7.0x 7.2x

6.5x 7.0x

7.3x

5.1x 4.6x

2012 2013 2014 2015 2016 2017 2018 2019

Source: Company filings.

Note: Adjusted Net Income reflects add-backs of various income statement items, most notably impairment charges, amortization of deferred financing costs and other one-off extraordinary items.

$60 $54 $60

$159 $141

$115

$131

$149

2012 2013 2014 2015 2016 2017 2018 2019

22

Summary Results

Fourth Quarter 2019 Earnings

Year ended December 31

2019 2018 % yoy

Operating Revenue $447,244 $458,732 -2.5%

Adjusted EBITDA1 $310,565 $317,848 -2.3%

Adjusted Net Income $148,675 $131,186 13.3%

Adjusted Earnings per Share, diluted2 $9.17 $12.35 -25.8%

Summary of Resultsthousands $, expect per share figures

Fourth Quarter Highlights

• Fleet utilization for three months ended December 31, 2019 was 97.0%

• $1.4 million increase in adjusted net income in the three months ended December 31, 2019 compared to prior year

due to decrease in total operating expenses and net finance expenses, partially offset by decrease in operating revenues

• Charter contract coverage of 86% in terms of operating revenues and 68% in terms of operating days over the next 12

months

(1) Adjusted EBITDA represents net income before interest income and expense, depreciation, amortization of deferred drydocking & special survey costs

and deferred finance costs, amortization of deferred realized losses on interest rate swaps, loss on sale of securities, gain on debt extinguishment, stock based compensation and refinancing professional fees.

(2) Based on weighted average diluted shares outstanding.23

Year ended December 31

2019 2018 % yoy

$110,204 $115,631 -4.7%

$78,118 $80,171 -2.6%

$37,969 $36,605 3.7%

$2.01 $2.45 -18.1%

Charter-Adjusted Total Asset Value Net Debt Net Working Capital & Other Net Asset Value

Charter Adjusted Net Asset Value

Note: Asset value does not include vessels acquired after December 31, 2019. Refer to appendix for additional details regarding calculation of Net Asset Value.

(1) Net debt includes (1) $1,443.8 million of long-term debt, including current portion, which adds back deferred finance costs of $33.5 million and debt fair value adjustment of $20.0 million, and (2) $138.2 million of long-term leaseback obligations,

including current portion, less (3) cash and cash equivalents of $139.2 million. Please refer to Appendix. Does not include accumulated accrued interest of $190.7 million as of December 31, 2019.

(2) Includes carrying value of investments in Gemini JV of $9.0 million and ZIM and HMM notes of $31.5 million, as well as net working capital and other assets and liabilities. Excludes assets and liabilities relating to accruals for certain non-cash items

relating to straight-line revenue recognition and unearned revenue with respect to ZIM and HMM notes. Please refer to Appendix for further details.

(3) Based on 24.789 mm shares outstanding as of December 31, 2019.

(in US$ millions)

(2)(1)

NAV / Share: $20.2(3)

As of December 31, 2019

• As calculated in accordance with the financial covenants contained in the Company’s credit facilities as of December 31, 2019, market value

of the Company’s existing fleet of 55 containerships on a charter-inclusive basis was approximately $1.88 billion. Including $19 million carrying

value in advances for installation of vessel scrubbers, which are not yet fully installed, this charter-inclusive value increases to $1.9 billion

− Broker appraisals for charter-free asset value and charter-adjustments are as of December 31, 2019

• Adjustments to calculate net asset value include:

− Net debt, which is adjusted to include non-cash fair value adjustments and deferred finance costs

− Net working capital & other, which includes DAC’s equity stake in the Gemini joint venture at carrying value

$1,901 ($1,443)

$44

$502

24

Summary

kFinancial Strategy Positioning Danaos for Success

Balanced chartering strategy to ensure cash flow visibility with 86% and 72% of 2020 and 2021 revenues contracted(3)✓

Opportunistic vessel acquisition strategy

- Acquired two vessels in last six months, both of which have been fixed on multi-year charters

- Cooperation with customers on future orders/financing and entering into sale and leaseback transactions

✓

Following consummation of recent equity offering the Company is permitted, under its loan agreements, to re-instate dividends

✓

(1) Calculated as the sum of contractual principal debt repayment and lease repayments under sale leaseback structure.

(2) Net leverage is a non-GAAP measure. Calculated as Net Adjusted Debt / Adjusted EBITDA. Adjusted EBITDA is a non-GAAP measure. See appendix for definitions and reconciliations to the nearest GAAP measure.

(3) Assumes contracted vessels operate on gross daily charter rate, accounts for revenue exclusively derived from long-term charter contracts. 26

Continued de-levering from strong contracted cash flows- Minimum debt amortization of $300mm(1) through end 2021✓

36% reduction in leverage

between 2014 and today(2)

7.2x5.1x 4.6x

2014 2018 2019

Appendix

Substantial Fleet Employment and Coverage

(1) Age as of December 31, 2019

5x13,100 TEU

3x10,100 TEU

10x8,500 – 9,600 TEU

9x6,400 – 6,500 TEU

2018 2019 2020 2021 2022 2023 2024 2025

Hyundai Honour

Hyundai Respect

Maersk Enping

Maersk Exeter

MSC Ambition

Express Athens

Express Rome

Express Berlin

Le Havre

Pusan C

Europe

America

Niledutch Lion

CMA CGM Attila

CMA CGM Tancredi

CMA CGM Bianca

CMA CGM Samson

CMA CGM Melisande

Performance

Dimitra C

CMA CGM Moliere

CMA CGM Musset

CMA CGM Nerval

YM Mandate

CMA CGM Rabelais

CMA CGM Racine

YM Maturity

2028

Charterer Age1 Vessel

7.9

7.8

7.7

7.6

7.5

8.8

8.7

8.7

13.1

13.3

15.4

15.2

11.5

8.8

8.4

8.2

8.0

7.8

17.8

17.6

10.3

9.8

9.6

9.6

9.5

9.4

9.4

Total Charter

Revenue

Contribution

37%

9%

26%

24%

28

Substantial Fleet Employment and Coverage

Charterer Age1 Vessel

Total Charter

Revenue

Contribution

10x4,300 – 5,500 TEU

8x3,400 TEU

11x2,200 – 2,600 TEU

2018 2019 2020 2021 2022 2023 2024

ANL Tongala

Derby D

Seattle C

YM Vancouver

Zim Rio Grande

Zim Sao Paolo

Zim Kingston

Zim Monaco

Zim Dalian

Zim Luanda

Dimitris C

Colombo

Singapore

Express Argentina

Express Brazil

Express France

Express Spain

Express Black Sea

Future

Sprinter

Vladivostok

Advance

Stride

Progress C

Amalia C

Highway

Bridge

Danae C

MSC Zebra

15.8

15.7

12.3

12.1

11.5

11.3

11.2

11.0

10.8

10.5

18.8

15.8

15.3

9.6

9.5

9.2

8.9

8.7

22.8

22.6

22.5

22.4

22.3

21.9

21.8

21.8

21.8

18.5

18.0

(1) Age as of December 31, 2019

2%

1%

1%

29

Adjusted EBITDA


Three Months Three Months Year Year

ended ended ended ended

($ In thousands) Dec. 31, 2019 Dec. 31, 2018 Dec. 31, 2019 Dec. 31, 2018

Net income / (Loss) from Continuing Operations (unadjusted) $33,817 ($180,983) $131,253 ($32,936)

Adjustments:

Depreciation 24,364 27,005 96,505 107,757

Amortization of deferred drydocking & special survey costs 2,208 2,349 8,733 9,237

Amortization of defered realized losses of cash flow interest rate swaps 913 931 3,622 3,694

Amortization of deferred finance costs 4,152 5,584 17,422 17,016

Interest income (1,663) (1,483) (6,414) (5,781)

Interest expense 13,146 13,915 55,203 70,749

EBITDA $76,937 ($132,682) $306,324 $169,736

Impairment loss - 210,715 - 210,715

Gain on debt extinguishment - - - (116,365)

Refinancing professional fees - (154) - 51,313

Accelerated amortization of accumulated other comprehensive loss - 1,443 - 1,443

Stock based compensation 1,181 849 4,241 1,006

ADJUSTED EBITDA $78,118 $80,171 $310,565 $317,848

Reconciliation of Net Income / (Loss) to EBITDA and Adjusted EBITDA

December 31, 2019

30

Historical Adjusted EBITDA

Source: Company filings. 31

Historical Reconciliation of Net Income to EBITDA and Adjusted EBITDA

Years ended 2012 - 2019

Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended

December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31,

($ in thousands) 2012 2013 2014 2015 2016 2017 2018 2019

Net Income $(105,204) $37,523 $(3,920) $117,016 $(366,195) $83,905 $(32,936) $131,253

Adjustments

Depreciation 143,938 137,414 137,061 131,783 129,045 115,228 107,757 96,505

Amortization of deferred drydocking & special survey costs 6,070 5,482 4,387 3,845 5,528 6,748 9,237 8,733

Amortization of deferred realized losses on cash flow interest rate

swaps3,524 4,017 4,016 4,017 4,028 3,694 3,694 3,622

Amortization of finance costs and debt discount 14,314 15,431 15,070 14,038 12,652 11,153 14,957 16,866

Finance costs accrued (Exit Fees under our Bank

Agreements)2,762 3,763 3,745 3,639 3,447 3,169 2,059 556

Interest Income (1,642) (2,210) (1,703) (3,419) (4,682) (5,576) (5,781) (6,414)

Interest Expense 87,340 91,185 79,980 70,397 70,314 75,403 70,749 55,203

EBITDA 151,102 292,605 238,636 341,316 (145,863) 293,724 169,736 306,324

Adjusted for:

Impairment loss 129,630 19,004 75,776 41,080 415,118 - 210,715 -

Gain on debt extinguishment - - - - - - (116,365) -

Re-financing professional fees - - - - - 14,297 51,313 -

Accelerated amortization of accumulated other comprehensive loss - - - - 7,705 - 1,443 -

Realized (Gain) / Loss on derivatives 150,910 144,254 119,612 52,125 5,397 - - -

Unrealized (Gain) / Loss on fair value of derivatives 739 (22,121) (24,915) (16,285) (4,648) - - -

Stock based

compensation139 75 638 88 76 - 1,006 4,241

Bad debt expense - - - - 15,834 - - -

Impairment loss component of equity loss on investments - - - - 14,642 - - -

Loss on sale of HMM securities - - - - 12,906 2,357 - -

Impairment loss on securities - - - - 29,384 - - -

(Gain) / Loss on sale of vessels (830) 449 (5,709) - 36 - - -

Adjusted EBITDA 431,690 434,266 404,038 418,324 350,587 310,378 317,848 310,565

Adjusted Net Income


Reconciliation of Net Income to Adjusted Net Income and Adjusted Earnings per Share

December 31, 2019Three Months Three Months Year Year

ended ended ended ended

($ In thousands, except per share items) Dec. 31, 2019 Dec. 31, 2018 Dec. 31, 2019 Dec. 31, 2018

Net income / (Loss) from Continuing Operations $33,817 ($180,983) $131,253 ($32,936)

Adjustments:

Impairment loss-

210,715-

210,715

Refinancing professional fees-

(154)-

51,313

Amortization of deferred finance costs 4,152 5,584 17,422 17,016

Gain on debt extinguishment-

--

(116,365)

Accelerated amortization of accumulated other comprehensive loss-

1,443-

1,443

ADJUSTED NET INCOME $37,969 $36,605 $148,675 $131,186

ADJUSTED EARNINGS PER SHARE

Diluted net income per share $2.01 $2.45 $9.17 $12.35

Diluted weighted average number of shares 18,927 14,939 16,221 10,623

32

Historical Adjusted Net Income


Reconciliation of Adjusted Net Income

Years ended December 2012 – December 2019

Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended

December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31,

($ in thousands) 2012 2013 2014 2015 2016 2017 2018 2019

Net Income $(105,204) $37,523 $(3,920) $117,016 $(366,195) $83,905 $(32,936) $131,253

Adjust for:

Impairment loss 129,630 19,004 75,776 41,080 415,118 - 210,715 -

Gain on debt extinguishment - - - - - - (116,365) -

Amortization of finance costs 14,314 15,431 15,070 14,038 12,652 11,153 11,771 10,795

Debt discount amortization - - - - - - 3,186 6,071

Finance costs accrued (Exit Fees under our Bank

Agreements)2,762 3,763 3,745 3,639 3,447 3,169 2,059 556

Re-financing professional fees - - - - - 14,297 51,313 -

Accelerated amortization of accumulated other comprehensive loss - - - - 7,705 - 1,443 -

Unrealized (Gain) / Loss on fair value of derivatives 739 (22,121) (24,915) (16,285) (4,648) - - -

Realized loss on over-hedging portion of derivatives 19,042 - - - - - - -

Bad debt expense - - - - 15,834 - - -

Impairment loss component of equity loss on investments - - - - 14,642 - - -

Loss on sale of HMM securities - - - - 12,906 2,357 - -

Impairment loss on securities - - - - 29,384 - - -

(Gain) / Loss on sale of vessels (830) 449 (5,709) - 36 - - -

Adjusted Net Income $60,453 $54,049 $60,047 $159,488 $140,881 $114,881 $131,186 $148,675

2019 Free Cash Flow


Reconciliation of Free Cash Flow

Three months Ended Three months Ended Year Ended

($ in thousands) Dec. 31, 2019 Dec. 31, 2018 Dec. 31, 2019

Net Income $33,817 $(180,983) $131,253

Adjustments

Depreciation 24,364 27,005 96,505

Amortization of deferred drydocking & special survey costs 2,208 2,349 8,733

Amortization of deferred realized losses on cash flow interest rate swaps 913 931 3,622

Amortization of finance costs and debt discount 4,021 5,413 16,866

Finance costs accrued (Exit Fees under our Bank Agreements) 131 171 556

Interest Income (1,663) (1,483) (6,414)

Interest Expense 13,146 13,915 55,203

EBITDA 76,937 (132,682) 306,324

Adjusted for:

Impairment loss - 210,715 -

Gain on debt extinguishment - - -

Re-financing professional fees - (154) -

Accelerated amortization of accumulated other comprehensive loss - 1,443 -

Stock based compensation 1,181 849 4,241

Adjusted EBITDA $78,118 $80,171 $310,565

Net cash interest (19,164) (19,373) (80,772)

Equity income / (loss) on investments (1,094) (453) (1,602)

Revenue recognition (non-cash) (6,885) (6,766) (27,682)

Other working capital (5,310) (7,103) (8,831)

Payments for dry-docking & special survey costs deferred (1,943) (1,401) (7,157)

Operating cash flow 43,722 45,075 184,521

Debt Amortization (34,343) (33,883) (124,358)

Adjusted Free Cash Flow 9,379 11,192 60,163

Appendix: Danaos Net Asset Value(1)

(1) Net Asset Value (NAV) is used to assess compliance with our credit facility covenants, and management

believes that many investors use NAV as a reference point in assessing valuation of fleets of ships and

similar assets.

(2) As calculated in accordance with the financial covenants contained in the Company’s credit facilities as of

December 31, 2019, on a charter-inclusive basis, as follows (1) for any vessel having a charter with more

than 12 months remaining duration, the present value of the “bareboat-equivalent” time charter income from

such charter (contracted revenue thereunder less forecasted operating expenses, insurances and dry-

docking costs), plus (2) the present value of the residual charter-free value of any vessel (estimated based on

December 31, 2019 broker valuations using vessel age as of the end of applicable charter, if any), each

discounted to present value using a discount rate 7.0%. See “Item 5. Operating and Financial Review and

Prospects” in the Company’s Annual Report on Form 20-F filed with the SEC on March 5, 2019. These

calculations of vessel value may not be comparable to other methods of determining vessel values or

reported book value ($2.4 billion as of December 31, 2019). Vessel values are highly volatile and contracted

charter revenue is subject to counterparty performance and may not be transferable upon sale of a vessel. As

such, the Company’s estimates of market value may not be indicative of the current or future value of its

vessels, or prices that the Company could achieve if it were to sell the vessels.

(3) Represents advances for scrubber installations. Included in Other non-current assets on the Company’s

balance sheet.

(4) Consists of (i) Current portion of long term debt, net of $119.673 million and (ii) Long-term debt, net of

$1,270.663 million plus deferred finance costs, net, of $33.5 million and debt fair value adjustment of $20.0

million. Does not include accumulated accrued interest of $190.7 million.

(5) Excludes the following non-cash items included on the Company’s balance sheet, as of December 31,

2019: (i) unearned revenue liabilities totaling $41.718 million relating to an accounting charge recognized

upon the Company’s receipt of the ZIM and HMM notes in respect of charter amendments ($28.117 million

Unearned revenue, net of current portion and $13.601 million included in Unearned revenue, current portion),

(ii) Other current assets ($8.359 million) and Other non-current assets ($29.577 million) related to straight-line

revenue recognition totaling $37.936 million and (iii) liabilities related to straight-line revenue recognition

totaling $1.027 million (Other current liabilities of $0.424 million and $0.603 million included in Other long-term

liabilities).

(6) Represents investment in Gemini JV.

(7) Included in Other non-current assets on the Company’s balance sheet.

35

(in US$ thousands)

Charter Adjusted Asset Value

Charter Adjusted Fleet Value(2) $1,879,104

Advances for vessels acquisitions(3) 2,507

Advances for vessels additions(3) 18,800

Total Charter Adjusted Asset Value $1,900,411

Less:

Net Debt

Bank debt(4) $1,443,806

Long-term leaseback obligation (including current portion) 138,214

Less:

Cash and cash equivalents (139,170)

Total Net Debt $1,442,850

Plus:

Net Working Capital & Other(5)

Accounts receivable, net $7,145

Inventories 8,494

Prepaid Expenses 1,458

Due from related parties 20,512

Other current assets 5,248

Investments in affiliates(6) 8,965

Zim notes(7) 20,078

HMM notes(7) 11,377

Less:

Accounts payable (11,168)

Accrued liabilities (8,527)

Unearned revenue (4,770)

Other current liabilities (14,849)

Total Net Working Capital & Other $43,963

Net Asset Value: $501,524

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