Danaos (DAC) Q1 2025 earnings summary

Executive summary

• Q1 2025 operating revenues were $253.3 million, nearly flat year-over-year, with adjusted net income of $113.4 million ($6.04 per diluted share), down from $140.0 million ($7.15 per share) in Q1 2024.

• Charter backlog stands at $3.7 billion through 2033, with 99% contract coverage for 2025 and 85% for 2026, providing strong cash flow visibility.

• The company focuses on optimizing its diversified fleet, investing in energy-saving upgrades, and has no new vessel orders until regulatory clarity emerges.

• Share repurchase program increased to $300 million, with $205.7 million spent to date; $0.85 per share dividend declared for Q1 2025.

• Robust capital structure, strong liquidity of $825 million at quarter-end, and a conservative financial strategy underpin resilience.

Financial highlights

• Adjusted EBITDA for Q1 2025 was $171.7 million, down 3.1% from $177.2 million in Q1 2024.

• Operating costs rose by $19.8 million, mainly due to a larger fleet and higher depreciation; daily operating cost just above $7,000 per vessel.

• Interest expense increased to $10.0 million from $3.1 million, reflecting higher indebtedness.

• Free cash flow for LTM Q1 2025 was $572.4 million; cash and cash equivalents at quarter-end were $480.5 million.

• Net debt to adjusted EBITDA was 0.42x at March 31, 2025.

Outlook and guidance

• Strong charter market with rates above historical averages for up to 5 years; 85% contract coverage for 2026.

• Orderbook includes 15 newbuilding container vessels (128,220 TEU) for delivery through 2028, all with multi-year charters averaging 5.3 years.

• Management is holding off on new vessel investments, focusing on fleet optimization amid regulatory uncertainty.

• Trade flows expected to rebound as U.S. consumer demand recovers and inventories are replenished.

• Dry bulk market recovery is modest; improvement depends on further growth in China and is supported by bauxite and vessel diversions.