Danaos Corporation Stock

Good day, and welcome to the Danaos Corporation conference call to discuss the financial results for the 3 months ended June 30, 2026. 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. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Evangelos Chatzis, Chief Financial Officer. Please go ahead.

Thank you, operator. 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 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, adjusted net income, time charter equivalent revenues and time charter equivalent dollars per day 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 the 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 the second quarter of 2026. The conflicts in Ukraine and Iran continue with no clear resolution in sight, although a brief ceasefire allowed us to move our 2 vessels out of the Gulf and both our crews and vessels safe and fully operational. Uncertainty in global supply chains, the disruption in the Gulf, the restrictions in Bab el-Mandeb and the tariff measures in the United States have combined to create exceptionally tight conditions with rates across most shipping sectors at multiyear highs. Shipping remains the only industry capable of absorbing disruption on this scale and keeping the world supplied with goods, energy and raw materials.

Against this backdrop, Danaos continued to execute its long-term strategy of securing extended charter employment at attractive rates and arranging competitive long-term financing for our Newbuilding program. This quarter, we saw significant contribution from our Dry Bulk investment as Capesize rates reached multiyear highs and the segment contributed $18.8 million of adjusted EBITDA against $5.9 million a year ago. As charterers continue to compete for quality tonnage, we took the opportunity to extend charters across a broad part of the fleet, adding approximately $683 million to our contracted revenue backlog. Backlog now stands at a record $4.6 billion with 100% of our container operating days contracted for 2026, 93% for 2027, and 79% for 2028, while even for 2029 contract coverage is already above 60%.

We also continue to term out our financing, refinancing 2 further vessels through Japanese operating leases. We also added a further $236 million in JOLCO financing commitments for 3 vessels delivering in 2027 and enter into $132 million credit facility to finance our 6, 1,800 TEU Newbuildings. With 78 of our 87 operating vessels debt free, Net Leverage Ratio of 0.3x and total liquidity of approximately $1.5 billion we remain well positioned to pursue accretive opportunities, including the development of our investment in the Alaska LNG project. Together with a disciplined approach to expansion, we believe these dynamics will continue to drive improving profitability and create lasting value for our shareholders.

With that, I'll hand the call over back to Evangelos, who will take you through the financials for the quarter. Evangelos?

Thank you, John, and good morning again to everyone, and thank you for joining us. I will review the results for the quarter, and we will then open the call to Q&A. Adjusted net income for the second quarter was $133.1 million or $7.29 per share compared to $117 million or $6.36 per share in the second quarter of 2025. That is an increase of $16.1 million or approximately 15% on a per share basis. The improvement was driven principally by our Dry Bulk segment. Container vessel revenue was broadly unchanged, down $0.8 million on a base of $238.7 million. Newbuilding deliveries of containerships contributed $3.2 million of incremental revenues and higher charter rates a further $0.6 million. Offsetting this were a $3.4 million reduction in noncash revenue recognition under U.S. GAAP and the $1.2 million effect from higher off-hire charges during this period.

Dry bulk revenue, on the other hand, increased by $13 million or 57% from $22.7 million to $35.7 million, and the principal driver was the improved dry bulk market. Our Capesize time charter equivalent rate rose to $30,400 per day from approximately $18,000 per day in the comparable prior quarter, which reflects improved market conditions. During this quarter, we also operated one additional vessel that we acquired a few months ago. Segment adjusted EBITDA for the Dry Bulk segment increased to $18.8 million from $5.9 million a year ago.

Turning now to operating costs. Vessel operating expenses were stable and came in at $56.7 million in the current quarter against $56.4 million in the second quarter of 2025, notwithstanding an increase in the average number of vessels in the fleet between the 2 periods. Daily operating costs declined to $7,416 per vessel per day in the current quarter from $7,556 per vessel per day in the second quarter of 2025. Our operating costs remain among the most competitive in the industry. G&A expenses increased by $3.7 million to $14.9 million in the current quarter compared to $11.2 million in the second quarter of 2025. This increase mainly relates to $1.5 million in higher management fees, partially driven by the increase in the average number of vessels in our fleet and a $2.2 million increase in corporate G&A.

On the finance cost side, interest expense, excluding amortization of finance fees and debt discount, decreased by $1.6 million to $7.3 million in the current quarter from $8.9 million in the second quarter of 2025. Now there are 2 components to this improvement. Capitalized interest on vessels under construction rose to $9 million from $4.8 million previously as our Newbuilding program advanced thus reducing interest expense by $4.2 million. And working in the opposite direction, average indebtedness increased by $326 million to $1.1 billion, and that added $2.6 million in interest expense. The effect of the increase in average indebtedness was partially mitigated by a reduction in our average cost of debt service of approximately 1.1%, reflecting lower SOFR rates and a lower bond coupon following the refinancing of our bond in Q4 of last year.

Interest income doubled to $7.4 million compared to $3.7 million a year ago on the back of higher cash balances. Therefore, net interest expense decreased by $5.3 million between the 2 periods. Adjusted EBITDA increased by 6.1% or $10.8 million to $186.8 million this quarter compared to $176 million in the second quarter of 2025 for reasons that have already been outlined earlier on this call. We would also encourage you to review our updated investor presentation and the subsequent event disclosures, both of which are available on our website.

We would like to turn to some of the highlights. Since the date of our last earnings release, we have added $683 million to our contracted revenue backlog. As a result, our backlog stands at $4.6 billion, with a 4.7 average charter duration, while contract coverage is already at 100% for this year, 93% for 2027, 79% for 2028 and 61% for 2029. Our investor presentation has analytical disclosure on our contracted charter book. As of June 30, net debt stood at $224.5 million, equivalent to 0.3x last 12 months EBITDA. And out of our 87 vessels, 78 carried no debt. That is 66 are unencumbered and a further 12 secure our revolving credit facility, which remains undrawn.

Finally, as of the end of the second quarter of 2026, cash stood at $1 billion. Total liquidity that includes cash availability under our RCF and value of marketable securities stood at approximately $1.5 billion, while in addition to that, we also hold committed undrawn facilities in support of our Newbuilding program. This gives us ample flexibility to pursue accretive capital deployment opportunities. In summary, strong contract coverage for the next 4 years, a record contracted revenue backlog, net leverage of 3/10 of a turn and the fully financed construction program. With that, I would like to thank you all for listening to this first part of our call.

Operator, we are now ready to open the call to Q&A.

[Operator Instructions] Our first question comes from Omar Nokta of Clarksons Securities.

I just wanted to ask a bit about the business obviously is thriving as we see it. You've added a good amount of backlog here these past few months as you were highlighting, and that's going to give you a nice continued stream of revenue visibility and obviously, a really good amount of free cash flow. My question is, how do you envision using this free cash flow in the coming quarters? Do you look to pay down some of the debt you've taken on here recently? Do you look for more investment opportunities? And I guess, with regards to, say, those investments, how would you rank looking at container ships, looking at Dry Bulk or maybe looking outside of those 2 segments?

Well, the actual, let's say, risk of new investments at elevated prices is becoming higher. And of course, growing is extremely easy. Growing accretively is much more difficult. So for the time being, we are, let's say, using these extraordinary times in order to make an even better balance -- fortress balance sheet to make our financing towards, let's say, longer duration with JOLCOs. And we will just try to be there when the opportunities arise. I mean the situation is extremely volatile. We see that new buildings overall are increasing by the day. And we are very clearly looking at all this. We have executed our growth at times where prices were more reasonable and availability of long-term charters was at much more accretive rates. I mean, nowadays, we are very careful. We have positioned ourselves where we wanted, and we'll take it as it goes.

Yes. No, makes sense. Definitely understood on that part. And I guess perhaps then given just how much cash you've been generating, you've been returning capital to shareholders, both via the dividends and the buyback, although you paused that recently. But I guess as we think about the dividend here moving ahead, last month, you declared the $0.90, which is the fourth one at that level since you raised it from, I think it was $0.85 the prior 4 quarters. As we think about what the next dividend looks like, should we anticipate it being another moderate rise as we've seen in the past? Or would it be something more sizable, you think?

Well, we have kind of a pattern until now. It's up to the Board to decide really, at what pace we're going to increase it. In general, we have not been there for spectacular dividend rises. However, this is something to discuss for the next quarter.

Yeah, got it. We look forward to that. Thank you John and thanks Evangelos, and congrats on the sizable backlog additions here.

The next question comes from Climent Molins of Value Investors Edge.

Omer has already covered a lot of ground, but I wanted to ask about the relative performance on the Capesize side, which improved nicely quarter-over-quarter. Are most vessels employed on spot? Or do you have any fixed time charter cover?

The vessels are in general spot. We have a couple of vessels on index, which practically is, let's say, spot again, and only one vessel on fixed rate until year-end or whatever. So more or less, yes, we are playing the market.

That's helpful. And my other question was on the Alaska LNG project. Could you talk a bit about how the project is progressing? And as you think about the LNG industry, is it fair to expect you to only place orders if they are backed by long-term contracts for the Alaska LNG project, I believe that's the case. But would you be willing to take speculative orders for other projects?

No. I think if we wanted to take speculative orders, we would have done it. We want to tie up the orders together with the LNG production out of Alaska. The project is progressing. There are some kind of legislative arrangements that need to be performed before FID is given and the project is running full steam, which we expect sometime in September.

It appears we have no further questions at this time. I would like to turn the call back over to Dr. Coustas for any further comments or closing remarks.

Thank you all for joining this conference call and your continued interest in our story. Look forward to hosting you on our next earnings call. Have a nice day.

Thank you. This concludes today's teleconference. We would like to thank everyone for their participation. Have a wonderful afternoon.

Good day, and welcome to Danaos Corporation conference call to discuss the financial results for the 3 months ended March 31, 2026.

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 we will open the call for a question-and-answer session.

Thank you, operator. 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 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, adjusted net income, time charter equivalent revenues and time charter equivalent dollars per day 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 over the call to Dr. John 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 results for the first quarter of 2026. This quarter was shaped by the unprecedented events in the Gulf and the closure of the Strait of Hormuz, a situation that is still unfolding, but which we hope will be resolved in the coming weeks.

The disruption has primarily benefited the tanker sector where rates spiked sharply before quickly normalizing. In the container sector, the disruption helped stabilize and lift certain box rates. However, it did not have a significant effect.

Two of our vessels currently remain in the Gulf, but this does not affect our earnings as both vessels continue to be on charter. The dry bulk market has improved considerably and continues to strengthen. Our optimistic outlook for this market prompted us to expand our order book to 4 Newcastlemaxes for 2028 delivery. We also ordered 2 5,000 TEU container ships for 2027 delivery, both of which are backed by 3-year charters.

Together with charter arrangements for our existing fleet, these additions position us with a pro forma fleet of 104 container ships and 15 Capesize and Newcastlemax vessels with a $4.1 billion contracted revenue backlog.

Combined with $1.3 billion of liquidity, this positions us to continue pursuing accretive opportunities as they arise. Resolution of the conflicts in the Gulf and Ukraine should bring meaningful stability for years to come, absent new initiatives by the major global powers.

Last year's developments demonstrated that globalization remains resilient and that protection is likely to be the exception rather than the rule going forward. Trade is becoming increasingly multilateral, which benefits the midsized containership segment in which we are actively investing.

Together with a disciplined expansion strategy, we believe these dynamics will continue to drive improved profitability and create value for our shareholders. With that, I hand over the call back to Evangelos, who will take you through the financials for the quarter. Evangelos?

Thank you, John, and good morning again to everyone. I will briefly review the results for the quarter and then open the call to Q&A.

We are reporting adjusted EPS for this quarter of $6.72 per share or adjusted net income of $122.5 million compared to adjusted EPS of $6.04 per share or adjusted net income of $113.4 million for the corresponding first quarter of 2025.

This $9.1 million increase in adjusted net income between the 2 quarters is the combined result of a $0.4 million increase in operating revenues, a $4.4 million improvement in total operating expenses, a $2.4 million improvement in net finance expenses, combined with a $2 million increase in dividend income, partially offset by a $0.1 million increase in loss on equity investments.

Operating revenues of our containership fleet decreased by $6.6 million, as a result of a $6.9 million decrease in revenues due to lower contracted charter rates and a $7.2 million decrease due to lower noncash U.S. GAAP revenue recognition accounting. And these were partially offset by a $3.9 million increase in revenues as a result of newbuilding containership vessel additions and $3.6 million of incremental revenues as a result of improved container fleet utilization between the 2 quarters.

Operating revenues of our dry bulk fleet that is deployed in the spot market increased by $7 million, primarily due to a significant improvement in time charter equivalent earnings that averaged $24,825 per day during this quarter compared to $10,500 approximately per day for the first quarter of 2025.

Vessel operating expenses dropped by $1.7 million to $50 million in the current quarter from $51.7 million in the first quarter of 2025 despite the increase in the average number of vessels in our fleet.

This improvement was mainly driven by lower repairs and maintenance expenses with our daily operating cost declining to $6,680 per vessel per day for this quarter compared to $7,028 per vessel per day in the first quarter of 2025. Our operating costs continue to remain among the most competitive in the industry.

G&A expenses increased by $2.4 million to $14.6 million in the current quarter compared to $12.2 million in the corresponding first quarter of 2025. This is mainly attributable to $1.3 million in higher management fees driven by the increase in the average number of vessels in our fleet as well as a $1.1 million increase in corporate G&A.

Interest expense, excluding finance costs and debt finance cost amortization increased by $1.7 million to $10.9 million in the current quarter compared to $9.2 million in the first quarter of last year. This increase is a combined result of a $4.5 million increase in interest expense due to higher average indebtedness between the 2 periods by $330 million, and that was partially offset by a reduction in the cost of debt service by approximately 50 basis points, mainly as a result of reduced SOFR rates.

We also had $2.8 million reduction in interest expense due to higher capitalized interest on vessels under construction between the 2 periods. At the same time, interest income came in at $7.6 million versus $3.6 million in the corresponding first quarter of 2025, mainly due to higher average cash balances.

Adjusted EBITDA increased by 5.2% or by $8.9 million to $180.6 million in the current quarter from $171.7 million in the first quarter of 2025 for the reasons that have already been outlined earlier on this call. We also encourage you to review our updated investor presentation that is posted on our website as well as all subsequent events disclosures.

Since the date of our last earnings release, we have added $120 million to our contracted revenue backlog. As a result, our contract revenue backlog for our containership fleet now stands at $4.1 billion with a 4.2-year average charter duration.

Contract coverage stands at 100% for this year -- for the remainder of this year, 88% for 2027 and 65% for 2028. Our investor presentation has analytical disclosure on our contracted charter book. As of March 31, 2026, our net debt stood at $170 million that translates to a net debt to adjusted EBITDA ratio of 0.2x, while 67 out of our 86 vessels are unencumbered and debt-free, while an extra 12 unencumbered vessels that secure our revolving credit facility are also debt-free.

We have declared a dividend of $0.90 per share for this quarter, and we currently have $65 million remaining authority to repurchase stock under our $300 million share repurchase program.

Finally, as of the end of the first quarter of 2026, Cash stood at $0.9 billion, while total liquidity, including availability under our revolving credit facility and marketable securities stood at $1.3 billion, giving us ample flexibility to pursue accretive capital deployment opportunities. With that, I would like to thank you for listening to this first part of our call. Operator, we are now ready to open the call to Q&A.

[Operator Instructions] Our first question comes from Omar Nokta with Clarksons.

Just a couple of things on my side. Just wanted to ask about investments from here. Your last couple of investments outside of your core focus seem to be in LNG, both in the stake in Yoda.

You also invested in the Alaska LNG project earlier this year. Is this a concerted effort on your part to get a bit deeper into LNG? Should we be expecting more of this type of investment going forward?

Yes. I think the -- in general, the energy sector is, let's say, our next point of focus. And as we see geopolitically, there are a lot of changes in that area.

So we are following it very closely, and we try to address it from every angle, both from the angle of transportation and also from the angle of LNG production itself, which is going to give us an access to the transportation as well.

Okay. Got it. That's helpful. And then just maybe in terms of what we're seeing in the container shipping market, your revenue backlog is at $4.1 billion, which is obviously very strong historically. It is a little bit down from where you were last quarter, which I think was $4.3 billion.

In general, it looks like backlog additions maybe have been a bit leaner these past couple of months, even though we are seeing indexes for the time charter indexes being at all-time highs or near all-time highs. What are you seeing kind of at the moment in terms of liner interest for more charter coverage from here?

From what you see from the profile, practically all '26 and '27 are almost fixed. We have very, very little going forward. Now also for liner companies to start discussing from now about 2028, let's say, ships might be a bit premature, especially for secondhand.

So I don't think really it signifies anything else apart from that, we have been really fixing quite a lot in this period of time. And it's just circumstantial.

Okay. That certainly makes sense. Just nothing is available to be booked in the next several quarters. Okay. And maybe just one final one. Thoughts on the share buyback. You've obviously historically been quite active on that front. You bought a bit during the first quarter, not at the same pace we've seen at least in the fourth quarter.

And I guess that sort of makes sense given the shares have really been hitting 52-week highs seemingly every week. How are you thinking about the buyback from here? I guess, in the context of maybe 2 things.

One, the shares are obviously at their highs. How do you think about the buyback from that perspective, but then also from the perspective of asset value on an NAV basis, it's discounted and then perhaps on a free cash flow yield, the yield is quite high. So how are you thinking about those 2 things with respect to the buyback?

Well, we still have the authority for another $65 million. We are keeping closely. I mean, the stock has done a terrific run in the last few months. We are at kind of all-time high. And so although we still believe that it's -- the stock is deeply undervalued. We are kind of more cautious into continuing during this hype to continue the buyback.

Our next question comes from Climent Molins with Value Investor.

Omar has already covered a lot of ground, but I wanted to ask about the utilization on the Capesize side of the fleet. Could you talk a bit about the drivers behind the significant scheduled off-hire for the quarter? Was it mostly dry dockings? And secondly, could you remind us about the dry-docking schedule on this side of the fleet for the remainder of the year?

Yes, it was 2 vessels that went to dry dock in Q1. And I don't have it offhand, but I don't think we have any more scheduled vessels on the dry side to the shipyard for the remainder of this year.

Okay. That's helpful. And all the off-hire days were attributable to these 2 vessels?

Sorry, say again?

I was asking if all the off-hire days in Q1 were attributable to the dry docking you conducted.

Yes. Correct.

It appears we have no further questions at this time. I would like to turn the call back over to Dr. Coustas for any further comments or closing remarks.

Thank you all for joining this conference call and your continued interest in our story. Look forward to hosting you on our next earnings call. Have a nice day.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to the Danaos Corporation Conference Call to discuss the financial results for the 3 months ended December 31, 2025. As a reminder, today's call is being recorded. Hosting the call today is Dr. John Koustas, Chief Executive Officer of Danaos Corporation; and Mr. Evangelos Chatzis, Chief Financial Officer of Danaos Corporation. Dr. Koustas and Mr. Chatzis will be making some introductory comments, and then we will open the call to a question-and-answer session.

Thank you, operator, and good morning to 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 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, adjusted net income, time charter equivalent revenues and time charter equivalent dollars per day 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 Koustas, 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 results for the fourth quarter of 2025. In this quarter, it became evident that the business community continues to adapt quickly to geopolitical disruptions. Despite concerns that tariff and geopolitical uncertainty would cause a U.S. slowdown, it has not materialized.

At the same time, the hype around AI-related investment has increased optimism. China's export continued to set new records and consequently, container volumes have reached record highs. With the Suez Canal still largely avoided by major liners and trade patterns increasingly transforming to multipolar, demand for midsized vessel has remained very strong. Against this background, we continued our strategy of securing long-term employment for our existing vessels through forward fixtures by either extending existing charters or by new charters even for late '27 deliveries.

We also continue to invest in modern container vessels. We ordered six 1,800 TEU vessels, four 5,300 TEU vessels and two 211,000 deadweight Newcastlemax dry bulk vessels for deliveries in 2028 and 2029. We have secured 10-year charters for 4 of these vessels, and the company's total contract revenue increased to $4.3 billion as of the end of the quarter, giving us great earnings visibility into the future from which we derive comfort on our ability to manage any eventual future market developments.

On the financing front, we completed a 7-year $500 million unsecured bond offering at 6.875% coupon, one of the most competitively priced deals ever achieved in the shipping industry for an unsecured bond of such tenor, further diversifying the capital structure and reaffirming our access to the deep and liquid international debt capital markets. Our liquidity at year-end reached $1.4 billion. Backed by a strong financial profile, we have begun exploring selective investments in the energy sector to broaden revenue sources and expand the LNG business. In this context, Danaos became a strategic investor in the Alaska LNG project, providing access to LNG transportation opportunities associated with a facility planned to produce 20 million tons per annum. The company remains focused on positioning itself at the forefront of shipping and energy growth areas for the benefit of our shareholders. With that, I'll hand the call over back to Evangelos, who will take you through the financials for the quarter.

Thank you, John, and good morning again. I will briefly review the results for the quarter and then open up the call to Q&A. We are reporting adjusted EPS for the fourth quarter of 2025 of $7.14 per share or adjusted net income of $131.2 million compared to adjusted EPS of $6.93 per share or adjusted net income of $133.3 million for the fourth quarter of 2024. This $2.1 million decrease in adjusted net income between the 2 quarters is the combined result of a $6.6 million increase in total operating costs, mainly due to the increase in the average number of vessels in our fleet, a $2.1 million legacy claim receipt that was booked in the fourth quarter of last year with no such booking in the current quarter. A $1.8 million decrease in dividend income, together with a $0.1 million increase in equity loss on investments, all of those partially offset by an increase of $8.1 million in operating revenues and a $0.4 million decrease in net finance expenses.

The increase in our containership fleet produced $5.2 million of incremental operating revenues that were supplemented by an extra $10.5 million of incremental revenues as a result of higher fleet utilization between the 2 periods and $2.2 million in additional revenues as a result of higher charter income of our dry bulk fleet. Those were partially offset by a decrease of $7.8 million in revenues of our container segment as a result of lower contracted charter rates and $2 million lower noncash U.S. GAAP revenue recognition.

Vessel operating expenses increased by $2.8 million to $48.4 million in the current quarter from $54.6 million in the corresponding fourth quarter of 2024, mainly as a result of the increase in the average number of vessels in our fleet, while our daily operating cost increased to $6,377 per vessel per day for the current quarter compared to $6,135 per vessel per day in the fourth quarter of 2024. Our operating costs continue to remain among the most competitive in the industry. G&A expenses increased by $6.7 million to $28.4 million in the current quarter compared to $21.7 million in the fourth quarter of 2024, and this is mainly attributed to incremental stock and cash bonus awards of $6.6 million.

Interest expense, excluding finance cost amortization, increased by $4.2 million to $13.4 million in the current quarter compared to $9.2 million in the fourth quarter of 2024. This increase is the combined result of a $5.8 million increase in interest expense due to an increase in our average indebtedness of around $400 million between the 2 periods, partially offset by a reduction in the cost of debt service by approximately 50 basis points, mainly as a result of a decrease in software costs between the 2 periods. This was partially offset by a $1.6 million decrease in interest expense due to higher capitalized interest on vessels under construction between the 2 periods.

At the same time, interest income came in at $8.5 million in the current quarter versus $3.9 million of interest income for the fourth quarter of 2024 due to the increased average cash balances, partially offset by lower interest rates. Adjusted EBITDA increased by 0.2% or $0.3 million to $190 million in the current quarter from $189.7 million in the fourth quarter of 2024 for reasons that have already been outlined earlier on this call. We also encourage you to review our updated investor presentation that is posted on our website as well as subsequent event disclosures.

Let me lay out a few of the highlights. Since the date of our last earnings release, we have added $428 million to our contracted revenue backlog. As a result, our contract backlog from containerships has considerably improved and now stands at $4.3 billion with a 4.3-year average charter duration. Contract coverage is already at 100% for 2026, stands at 87% for 2027, while even for 2028, we are already 64% contracted in terms of operating days. Our investor presentation has analytical disclosure on our contracted charter book. As of December 31, 2025, our net debt stood at $141 million, and this translates to a ratio of net debt to adjusted EBITDA of 0.2x while 61 out of our 85 vessel fleet are unencumbered and debt-free with an extra 16 vessels that are encumbered as being secured into our revolving credit facility, but are also debt-free since we haven't made any drawdowns under this facility.

We have declared a dividend of $0.90 per share for this quarter. We continue to execute under our share repurchase program, and we currently have $65 million remaining authority to repurchase stock under our $300 million share repurchase program. Finally, as of the end of the fourth quarter of 2025, cash stood at $1 billion, while total liquidity, and that includes availability under our revolving credit facility and marketable securities stood at $1.4 billion, giving us ample flexibility to pursue accretive capital deployment opportunities. With that, I would like to thank you for listening to this first part of our call. Operator, we are now ready to open the call to Q&A.

[Operator Instructions]. The first question comes from Omar Nokta with Clarksons Platou Securities.

Another solid update continues to...

Hi Omar, welcome back.

Thank you, thank you.

Congratulations on your -- the continuation of your career.

Yes. So I just wanted to just ask about the business is obviously on solid footing. And with the backlog expanding, continuing to have plenty of flexibility. And just wanted to ask maybe if you could just touch a little bit more on the Alaska LNG project. As we understand it, they now will be the provider of choice of ships for the project. What do you expect in terms of project timing of when a decision is made, the number of ships that you'd be able to bring to the project? And then maybe a sense of duration of the charters if those come about?

Well the current time line is for completion of the projects in 2030. In terms of number of ships, there's going to be between 6 and 10 ships required for these volumes. It depends a bit also on the exact routing where these ships are going to be employed, but it's going to be definitely from Alaska to the Far East. But of course, it's different if it's, let's say, North in Korea or a bit more south towards Thailand area. So all that will play out a bit later.

And we'll need to start really placing orders practically in about a couple of years' time. In terms of duration, this project is -- really it's a very long-term project. We're talking about employment 10, 20 years, something like...

Okay. That's helpful. So we'll see how things develop on that front. And then just a second question, and I'll pass it back. The Newcastlemax orders are interesting, and they come here after 2 or 3 years of you having invested in the existing Cape fleet. How should we think about further orders from here? Should we expect a series to come? And then how are you thinking about those vessels as they join your fleet? Are they additive to what you have currently? Or are you kind of thinking about them being replacement?

Well, replacement, the fleet that we have now is, let's say, average, whatever the Capesize fleet around 14 years old. So okay, these ships, they can trade easily until 20 years and in some trades, even longer. On the other hand, we wanted to expand in this segment and secondhand prices have gone dramatically up. And we decided really to move into the new buildings because we believe it's a much better value proposition.

The next question comes from Climent Molins with Value Investor's.

I wanted to start by following up on Omar's question on the Newcastlemax orders. Delivery is still a few years away, but should we initially expect those vessels to trade on spot -- because there has reportedly been some interest in recent weeks for long-term contracts on the Newcastlemax side. Would there be any interest to fix these 2 vessels on those contracts?

Well, for the time being, no. I mean, these vessels will be chartered -- I mean, there are plenty of takers, but mainly charter them on index. And because of their characteristics, they're going to have a pretty high kind of index, which makes this investment attractive.

Makes sense. And following up on this, regarding your on the water cape sizes, time charter rates have gone quite well in recent months. And I was wondering, is there any appetite to fix some vessels on medium-term contracts? Or do you prefer to continue employing them on spot?

I think that we will employ them mainly spot. If we find, let's say, some kind of extraordinary spike that we believe it's worth securing that, we can always secure it through FFAs or the vessels that we have on index, we can convert them on the same kind of basis. But overall, we want really to ride the spot market on these ships.

It appears we have no further questions at this time. I would like to turn the call back over to Dr. Koustas for any further comments or closing remarks.

Thank you for joining this conference call and for your continued interest in our story. Look forward to hosting you on our next earnings call.

Thank you. This concludes today's teleconference. We would like to thank you, everyone, for their participation. Have a wonderful afternoon.

Good day, and welcome to the Danaos Corporation conference call to discuss the financial results for the 3 months ended September 30, 2025. As a reminder, today's call is being recorded. Hosting the call today is Dr. John Koustas, Chief Executive Officer of Danaos Corporation; and Dr. Evangelos Chatzis, Chief Financial Officer of Danaos Corporation. Dr. Koustas 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, sir.

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, adjusted net income, time charter equivalent revenues and time charter equivalent dollars per day 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 Koustas, who will provide the broad overview of the quarter.

Thank you, Evangelos. Good morning, and thank you all for joining today's call to discuss our results for the third quarter of 2025. As we enter the final months of the year, the drilling conditions remain broadly unchanged. The war in Ukraine continues with no end in sight. And while the conflict in the Middle East is in the process of resolution, transit through the Red Sea has not yet resumed and liners are waiting for more permanent signs of ability to restart the transit.

The recent escalation in trade and tariff tensions between the United States and China enable trade to resume unhindered while the redirection of Chinese exports to the EU and other countries kept trading a container traffic at an all-time high during the third quarter of the year. The charter market remains robust and the idle fleet remains at all-time low. Demand for midsized and larger vessels continues unabated, and we have secured new charters for vessels opening as far out as the beginning of 2028.

[ Trivia ] slots for 2028 deliveries are becoming scarce and newbuilding prices continue to rise. We have selectively extended our newbuilding program at below market prices, and we have already secured multiyear employment for these new orders.

Following the IMO's 1-year postponement of its net zero framework, we expect conventional fuels to remain prevalent in the medium term, even as the long-term decarbonization trajectory is unchanged. In relation to our new building program, we recently added 6 1,800 TEU vessels to our order book with scheduled deliveries between 2027 and 2029. And and have secured 10-year charters for 4 of these vessels with a contribution to our contracted revenue backlog of approximately $236 million.

On the financing front, we recently completed the $500 million secured 7-year bond offering with a 6.85% coupon. This is 1 of the most competitively priced deals ever achieved the shipping industry for an unsecured bond with such tenor and is a testament of our superior credit quality. We intend to use the proceeds to redeem our 2028 $300 million bond as well as prepay for some small secured bank credit facilities.

We have already arranged secured debt financing for the majority of our new building program and our fortress balance sheet that has been solidified with the recent bond issuance considerably enhances our capacity to pursue accretive investment opportunities that can propel the growth of Danaos into the next level.

Our solid performance has enabled us to continue to deliver strong profitable performance, enhance our contract backlog and fund investments to reduce the age of our fleet and further cement Danaos leadership position in the container charter market. We also continue to opportunistically invest in the dry bulk capesize market segment where we expect outsized returns due to supply constraints and ton mile demand increase.

Finally, I'm pleased to announce that we are increasing our quarterly dividend to $0.90 per share consistent with our policy of yearly increases while also striving to continue to build long-term value for the benefit of our shareholders.

With that, I'll hand the call over back to Evangelos, who will take you through the financials for the quarter. .

Thank you, John, and good morning again to everyone, and thanks to all of you for joining this call. I will briefly review the results for the quarter, and we will then open up the call to Q&A. We are reporting adjusted EPS for the third quarter of 2025 of $6.75 per share or adjusted net income of $124.1 million compared to adjusted EPS of $6.50 per share or adjusted net income of $126.8 million for the first quarter of 2024. This $2.7 million decrease in adjusted net income between the 2 quarters is the combined result of a $6.1 million increase in total operating costs, mainly due to the increase in the average number of vessels in our fleet and a $2.5 million decrease in dividend income, partially offset by a $4.5 million increase in operating revenues, a $1 million decrease in equity loss on investments and a $0.4 million decrease in net finance expenses.

As analyzed in our earnings release, the increase in our fleet produced $11.2 million of incremental operating revenues that was supplemented by an extra $1.8 million in higher operating revenues as a result of higher fleet utilization. Those were partially offset by a $4.3 million decrease in revenues of our Container segment as a result of lower contracted charter rates between the 2 periods and the $4.2 million lower noncash U.S. GAAP revenue recognition.

Vessel operating expenses increased by $2.4 million to $52.3 million in the current quarter from $49.9 million in the third quarter of 2024 mainly as a result of the increase in the average number of vessels in our fleet while our daily operating costs slightly increased to $6,927 per vessel per day for this quarter compared to $6,860 per vessel per day for the corresponding third quarter of 2024.

Our operating costs continue to remain among the most competitive in the industry. G&A expenses increased by $1.6 million to $12.6 million in the current quarter compared to $11 million in the third quarter of 2024. Interest expense excluding finance cost amortization, increased by $0.3 million to $7.7 million in the current quarter compared to $7.4 million in the third quarter of 2024. This increase is the combined result of a $0.9 million increase in interest expense due to an increase in our average indebtedness of $121 million between the 2 periods, and that was partially offset by a reduction in the cost of debt service by approximately 74 basis points, mainly as a result of a decrease in software costs between the 2 periods.

We also had a $0.6 million decrease in interest expense due to higher capitalized interest on vessels under construction between the 2 periods. At the same time, interest income came in at $3.8 million in the current quarter due to the increased average cash balances on our balance sheet, partially offset, of course, by declining interest rates. Adjusted EBITDA increased by 1.5% or $2.7 million to $181.6 million in the current quarter from $178.9 million in the third quarter of 2024 for reasons that have already been outlined earlier on this call.

We encourage you to review our updated investor presentation that is posted on our website as well as subsequent events disclosures. Let me provide a few of the highlights. Since the date of our last earnings release, we have added $745 million to our contracted revenue backlog. As a result, our contracted charter backlog has considerably improved and now start at $4.1 billion with a 4.3-year average charter duration while contract coverage is already at 100% for this year, 95% for 2026 and at 71% for 2027 in terms of operating days, contracted operating days.

Our investor presentation has analytical disclosure on our contracted charter book. As of September 30, 2025, our net debt stood at $165 million and this translates to a net debt to adjusted EBITDA ratio of 0.23x, while 53 out of our 84 vessels are unencumbered and debt-free. This quarter, we have declared a dividend of $0.90 per share, which is an increase of approximately 6% versus the prior dividend. And we also continue to execute under our share repurchase program, and we currently have $86.4 million remaining authority to repurchase stock under our $300 million stock buyback program.

Finally, as of the end of the third quarter of 2025, cash stood at $596 million, while total liquidity including availability under our revolving credit facility and marketable securities stood at $971 million, giving us ample flexibility to pursue accretive capital deployment opportunities.

With that, I would like to thank you for listening to this first part of our call. Operator, we are now ready to open the call to Q&A.

[Operator Instructions]

The first question comes from Omar Nokta with Jefferies.

John, Evangelos. A couple of questions from me. Just a couple of questions, 1 on kind of the industry and then on Danaos specifically. Just first, on the container shipping chartering activity we've been seeing, it's been a bit of a bumpy year in terms of lower trade and tariffs and box freight rates have gotten lower and there's kind of growing chatter perhaps at the Red Sea return even though it's still very, very early and people are still cautious. But yet despite all that, you're still seeing very high demand for charters on your existing ships, but then also despite you having said you wanted to step back from the newbuilding market, it's been kind of difficult given the contracts being awarded.

I wanted to just kind of get your sense in terms of what do you think is driving all of this kind of, I don't want to call it, say, a frenzy, but just a strong appetite on the part of liners looking for ships, whether it's what's on the water on a forward basis, perhaps, but then also looking for brand-new ships that deliver in '28 and '29, -- just kind of that high volume of activity, what do you think is driving that? And can we expect that to persist as we get into 2026?

It's difficult, let's say, to answer exactly what is happening. What we see is that there is this -- there was this let's say, problem with tariffs. But tariffs themselves have not changed the overall the world, let's say, production capacity. And China, I think during this period, didn't stop producing. It's just that the goods were directed elsewhere. And -- what is really interesting this time is that we see the dynamism in the market happening outside of the, let's say, the usual Western areas, I mean, Europe, and the U.S., the market is developing quite substantially all over the -- the rest of the world. And that is why also demand for midsized ships have been so robust because that's really where the demand increase is coming.

So yes, I cannot really say how strong 2026 is going to be. I mean, as far as we are concerned, practically, even for 2027, we are mostly fixed. It's difficult really to make any prediction. And you see we will, of course, have a better idea of where the market is heading after the canal is opening again, which -- we believe now that it will be maybe an event of the first half of '26, although in that kind of area, the disarmament of Hamas is not happening. And I think this is really the most crucial question to ensure that this conflict is over.

Yes. Definitely a lot of moving pieces, and it does sound like the trade has clearly gotten much more complex. And then maybe just kind of thinking about the now specifically the investment in the Capesize vessel, you bought -- that's your 11th ship. This 1 comes after you had bought the original 10 back in '23. What's maybe triggered this investment? And then also why this age range? And should we expect more of these types of investments going forward?

Yes. Of course, our idea was when we entered that kind of market to really grow it I mean, as a percentage, let's say, of our fleet, not in terms of, let's say, ship numbers but at least, let's say, in terms of investment in value, all this dry bulk investment is less than 5% of our overall assets. So it's still really nothing, I mean, practically. And we definitely want to increase it. For the time being, is a new building front, still these vessels do not make sense. So we're trying to expand selectively in the secondhand market. and mainly trying to identify good quality vessels.

Okay. .And then a final one, just on the share repurchase program. You have been since inception, I think, in '22 quite active with it. You're also active in the prior, say, 3 or so quarters. not much was done. I don't think you bought any stock in the last quarter. What's behind that? And what can we expect going forward? Or what do you think about the buyback from here?

We are continuing. We have not really stopped just the pace has been kind of a smaller we still believe that our stock is greatly undervalued. And we are continuing at a smaller pace, but we have not stopped. .

Yes. Omar, we resumed the share buybacks in the past few weeks, and we're still at it.

Okay. Awesome. And also, congrats on the bond issue last month. I'll turn it over.

[Operator Instructions] The next question comes from Climent Molins with Value Investor's Edge.

Following up on Omar's question on the Capesize acquisition and your commentary on maybe wanting to expand your direct exposure -- could you provide an update on how you view your investment in Star Bulk? And secondly, is there any appetite to maybe expand into other segments, such as Panamax or Supramaxes?

Well, as we said, we are happy with our investment in Star Bulk. We have actually increased that position when last spring, when we saw a dip in prices. We are continuing. We believe that there is room for appreciation. As far as the other segments -- No, we are not looking into other segments at the time being.

That's helpful. And following up on the Capesize side of the fleet, could you provide some guidance on your Q4 fixtures to date .

We do not provide guidance as to charter fixtures for the running quarter.

It appears we have no further questions at this time. I would like to turn the call back over to Dr. Koustas for any further comments or closing remarks.

Thank you all for joining this conference call and your continued interest in our story. We look forward to hosting you on our next earnings call. Have a nice day.

Thank you. This concludes today's teleconference. We would like to thank everyone for their participation. Have a wonderful afternoon.