Danaos Corporation (NYSE:DAC) Q2 2022 Earnings Conference Call August 2, 2022 9:00 AM ET

Company Participants

John Coustas - Chief Executive Officer

Evangelos Chatzis - Chief Financial Officer

Conference Call Participants

Omar Nokta - Jefferies

Chris Wetherbee - Citigroup

Climent Molins - Value Investor's Edge

Operator

Good day, and welcome to the Danaos Corporation Conference Call to discuss the financial results for the three months ended June 30, 2022. As a reminder, today's call is being recorded. Hosting the call today is Dr. John Coustas, Chief Executive Officer of Danaos Corporation; and Mr. Evangelos Chatzis, Chief Financial Officer of Danaos Corporation. Dr. Coustas and Mr. Chatzis will be making some introductory comments, and then we will open the call to a question-and-answer session. I would now like to turn the conference over to Mr. Evangelos Chatzis, Chief Financial Officer. Please go ahead.

Evangelos Chatzis

Thank you, operator, and good morning everyone, and thank you for joining us today. Before we begin, I quickly want to remind everyone that management's remarks this morning may contain certain forward-looking statements and that actual results could differ materially from those projected today. These forward-looking statements are made as of today, and we undertake no obligation to update them. Factors that might affect future results are discussed in our filings with the SEC, and we encourage you to review the detailed safe harbor and risk factor disclosures.

Please also note that whether we feel appropriate, we will continue to refer to non-GAAP financial measures such as EBITDA, adjusted EBITDA, and adjusted net income to evaluate our business. Reconciliations of non-GAAP financial measures to GAAP financial measures are included in our earnings release and accompanying materials. With that, let me now turn the call over to Dr. John Coustas, who will provide a broad overview of the quarter.

John Coustas

Thank you, Evangelos. Good morning, and thank you all for joining today's call to discuss our results for the second quarter 2022. Danaos business model continued to generate strong results in the second quarter, more than doubling our adjusted net income compared with a year-ago. Given our fixed charter coverage over the next 12 months, we expect these metrics to improve further. At the same time, however, we're closely following economic conditions and the potential impact to our industry.

A confluence of factors including high energy prices, inflation, and the effects of the war in Ukraine will likely result in slowing economic growth and negatively impact trade volumes. On the other hand, to assist in efficiencies of the charter side and the supply chain and COVID resurgence in China are keeping vessel utilization high with increased waiting times in port. Additionally, increasing fuel costs will likely prompt liner companies to use vessel shading as soon as vessels are available. However, we do not expect that to happen until second quarter 2023 and onwards.