Danaos Corporation (NYSE:DAC) Q4 2019 Earnings Conference Call - Final Transcript
Feb 11, 2020 • 09:00 am ET
Good day, and welcome to the Danaos Corporation Conference Call to discuss the financial results for the three months ended December 31st, 2019. [Operator Instructions]
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. Please proceed, Mr. Chatzis.
Thank you, operator. And good morning, everyone, and thank you for joining us this morning. 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 these detailed safe harbor and risk factor disclosures. Please also note that where 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. Coustas, who will provide a broad overview of the quarter. John?
Thank you, Evangelos. Good morning, and thank you all for joining today's call to discuss our results for fourth quarter 2019. We're pleased to report improved earnings for the year ended 2019. The company's adjusted net income of $148.7 million for 2019 increased by $17.5 million or 13.3%, compared to adjusted net income of $131.2 million for 2018. This improvement was primarily the result of a $13.7 million decrease in total operating costs and a $15.1 million decrease in net finance expenses partially offset by $11.5 million decrease in operating revenues. Adjusted EBITDA for 2019 was $310.6 million, a slight decrease from $317.8 million for 2018.
The container market, particularly for vessels larger than 5,500 TEU, strengthened throughout the course of 2019, as containers volumes across main trade lanes increased. Notwithstanding any near-term headwinds related to the rapidly evolving situation in China, long-term fundamentals remain intact and the market will continue to rebalance itself through a combination of moderate trade growth, slowing fleet growth and a reduction in vessel speeds due to new and ongoing environmental initiatives.
Estimate for world GDP and trade growth are in flux due to the uncertainty around the impacts of the spread of the coronavirus in China. The current dropping demand is addressed by canceled sailings by liner companies. However, we expect this dynamic to be short term in nature and result in a demand surge when supply chains resume. In the meantime, work stoppage and slowdowns at shipyards in China will lead to delays in newbuilding deliveries, scrubber installations and dry-docking schedules.
With respect to the new IMO 2020 sulfur limits that