Danaos Corporation (NYSE:DAC) Q2 2020 Earnings Conference Call - Preliminary Transcript
Aug 04, 2020 • 09:00 am ET
Good day and welcome to the Danaos Corporation Conference Call to discuss the financial results for the 3 months ended June 30, 2020. 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 question-and-answer session. Mr. Chatzis, please go ahead.
Thank you, operator, and good morning to everyone. 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.
Now, let me turn the call over to Dr. Coustas, who will provide the broad overview of the quarter. John?
Thank you, Evangelos. Good morning and thank you all for joining today's call to discuss our result for the second quarter of 2020. We are pleased to report improved adjusted earnings for both the second quarter of 2020 and the first 6 months of the year.
The company's adjusted net income of $42.5 million for the second quarter of 2020 increased by $8.2 million or 23.9% when compared to adjusted net income of $34.3 million for the second quarter of 2019.
Adjusted EBITDA also improved by $4.5 million or 6% to $80.1 million for the second quarter of 2020 compared to $75.6 million for the second quarter of 2019. Although economic activity has been subdued since the start of the coronavirus pandemic, we have seen increasing signs of confidence with liner companies in recent weeks, as a number of previously blanked sailings have been reinstated, implying the demand is gradually improving.
This is also translated into improving charter rates for vessels greater than 4,000 TEU in size. Recently reported financial results of the liner companies have also been encouraging since, as we had anticipated, prudent capacity management, reduced bunker prices and falling interest rates have more than compensated for the drop in volumes caused by the pandemic.
We are also cautiously optimistic about medium-term market outlook. The orderbook is currently in single-digits as a percentage of the world fleet for the first time in 20 years. Combined with an anticipated reduction in speeds due to the various environmental initiatives, the supply side outlook is healthy. Tighter supply will help to accelerate the recovery in the container market.