(1) Adjusted net income, adjusted earnings per share and adjusted EBITDA are non-GAAP measures. Refer to the reconciliation of net income/(loss) to adjusted net income and net income to adjusted EBITDA.
Danaos' CEO Dr. John Coustas commented:
The company's performance for the first 9 months of 2012 is a testament to the resilience of our business model during a challenging period for the container market. Adjusted Net Income stands at $48.8 million or $0.44 per share for the nine months ended September 30, 2012, compared to $45.0 million or $0.41 per share for the same period one year ago. Adjusted EBITDA has reached $319.3 million for the nine months ended September 30, 2012 compared to $229.8 million for the same period one year ago as a result of our fleet expansion program concluded in the previous quarter.
In terms of macro-economic fundamentals, the European financial crisis has been at the forefront of a global economic slowdown this year, with the expectation being that European GDP will marginally contract in 2012. This has also impacted economic growth in the United States which has been sluggish but still expected to do better than 2011, while it is now clear that the pace of growth in China will be moderated. This global slowdown has adversely affected container trade growth and it is clear that the industry is currently facing a demand supply imbalance.
On the bright side, liner companies have demonstrated the ability to manage capacity prudently. Freight rates have been restored and maintained at healthy levels through gradual General Rate Increases over the last 2 quarters. The positive results of this strategy for the liner companies have already been evident in their 2nd and 3rd quarter financial results while if discipline is maintained this trend can be sustainable.
On the charter market, as the big ships are being delivered and absorbed in the main trade lanes, cascading has placed considerable pressure on the mid-size vessels. This pressure is not expected to ease before the 2nd half of 2013 when the drought of new ordering of the last 18 months will start to show and hopefully Europe will have sorted out its issues.
We also want to point out that our focus on controlling costs has paid off as we have managed to bring down daily vessel operating expenses by approximately 5% year-on-year, to $5,924 per day for the nine months ended September 30, 2012 compared to $6,220 per day for the same period last year.
Our model largely insulates us from the weak market as from the current revenue stream, 95% of revenues are contracted over the next 12 months with only 5% at stake through re-chartering. Effectively, from where we stand today, an improvement in market fundamentals is a one way option to further improving our financial results.
We will continue our efforts to manage the fleet efficiently and focus on rapidly de-leveraging the company and creating value for our shareholders.
Three months ended September 30, 2012 compared to the three months ended September 30, 2011
During the three months ended September 30, 2012, Danaos had an average of 64.0 containerships compared to 56.4 containerships for the same period in 2011. Our fleet utilization declined to 92.6% in the three months ended September 30, 2012 compared to 99.4% in the same period of 2011, mainly due to the 342 days for which four of our vessels were off-charter and laid-up in the third quarter of 2012 compared to 17 days for which one of our vessels was off-charter and laid-up in the third quarter of 2011. During the three months ended September 30, 2012, our fleet utilization for the fleet under employment was 98.3% (excluding the vessels on lay up).
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