Danaos (NYSE:DAC) reported higher first-quarter adjusted earnings and EBITDA, as improved dry bulk market conditions, lower vessel operating expenses and stronger interest income helped offset weaker containership charter revenue.
Chief Executive Officer John Coustas said the quarter was shaped by “unprecedented events in the Gulf” and the closure of the Strait of Hormuz, which he said primarily benefited tanker markets. In containers, the disruption helped stabilize and lift certain box rates, but did not have a significant impact on Danaos’ earnings, Coustas said. Two Danaos vessels remain in the Gulf, but both are on charter and the situation is not affecting earnings, he added.
Dry Bulk Strength Offsets Container Revenue Pressure
Chatzis said the $9.1 million increase in adjusted net income was driven by a modest increase in operating revenues, lower total operating expenses, improved net finance expenses and higher dividend income, partly offset by a slightly larger loss on equity investments.
Operating revenue from the containership fleet declined by $6.6 million. Chatzis attributed the decrease to $6.9 million in lower contracted charter rates and a $7.2 million reduction tied to non-cash U.S. GAAP revenue recognition accounting. Those declines were partly offset by $3.9 million of revenue from newbuilding containership additions and $3.6 million from improved container fleet utilization.
Dry bulk revenue increased by $7 million, reflecting what Chatzis described as a significant improvement in time charter equivalent earnings. The dry bulk fleet, which is deployed in the spot market, earned an average of $24,825 per day in the quarter, compared with approximately $10,500 per day in the first quarter of 2025.
Vessel operating expenses fell to $50 million from $51.7 million a year earlier, despite an increase in the average number of vessels in the fleet. Chatzis said the reduction was mainly due to lower repairs and maintenance costs. Daily operating costs declined to $6,680 per vessel per day from $7,028 per vessel per day in the prior-year quarter.
General and administrative expenses rose to $14.6 million from $12.2 million, largely due to higher management fees related to fleet growth and increased corporate G&A costs.
Order Book Expands in Containers and Dry Bulk
Coustas said Danaos has expanded its dry bulk order book to four Newcastlemax vessels for 2028 delivery, citing management’s optimistic outlook for that market. The company also ordered two 5,000 TEU containerships for 2027 delivery, both backed by three-year charters.
Including existing charter arrangements, Coustas said these additions position Danaos with a pro forma fleet of 104 containerships and 15 Capesize and Newcastlemax vessels. The company reported a contracted revenue backlog of $4.1 billion and liquidity of $1.3 billion.
Chatzis said Danaos added $120 million to its contracted revenue backlog since its prior earnings release. The containership fleet backlog stands at $4.1 billion, with an average charter duration of 4.2 years. Contract coverage is 100% for the remainder of 2026, 88% for 2027 and 65% for 2028.
Balance Sheet Remains Lightly Levered
As of March 31, Danaos had net debt of $170 million, equal to 0.2 times adjusted EBITDA, according to Chatzis. He said 67 of the company’s 86 vessels were unencumbered and debt-free, with another 12 unencumbered vessels securing the company’s revolving credit facility also debt-free.
Cash stood at $0.9 billion at quarter-end, while total liquidity, including availability under the revolving credit facility and marketable securities, was $1.3 billion. Chatzis said that liquidity provides “ample flexibility” to pursue accretive capital deployment opportunities.
Interest expense, excluding finance costs and debt finance cost amortization, rose to $10.9 million from $9.2 million a year earlier. Chatzis said the increase reflected higher average indebtedness, partly offset by a roughly 50-basis-point reduction in the cost of debt service, mainly from lower SOFR rates, and higher capitalized interest on vessels under construction. Interest income increased to $7.6 million from $3.6 million, primarily because of higher average cash balances.
Danaos declared a quarterly dividend of $0.09 per share. The company also has $65 million remaining under its $300 million share repurchase program.
Management Discusses LNG Interest and Buybacks
During the question-and-answer session, Omar Nokta of Clarksons asked about Danaos’ recent investments in LNG, including a stake in Yoda and an investment in the Alaska LNG project. Coustas said the energy sector is the company’s “next point of focus,” adding that Danaos is monitoring geopolitical changes and looking at opportunities in both transportation and LNG production.
Nokta also asked about liner interest in additional charter coverage, noting that the backlog was down from the previous quarter. Coustas said nearly all of 2026 and 2027 are already fixed and that discussions about 2028 charters for secondhand vessels may be premature. He described the level of recent fixtures as circumstantial rather than indicative of a broader change.
On the share repurchase program, Coustas said Danaos still views its stock as “deeply undervalued” but is more cautious about continuing buybacks during a period when the shares have risen sharply and are near all-time highs.
In response to a question from Climent Molins of Value Investor, Chatzis said scheduled offhire in the Capesize fleet during the quarter was attributable to two drydockings. He said he did not believe there were additional scheduled drydockings for the dry bulk fleet for the remainder of the year.
About Danaos (NYSE:DAC)
Danaos Corporation is a leading independent owner and manager of containerships, specializing in long-term charters of modern vessels to major liner companies worldwide. The company’s core services include vessel acquisition and sale, technical and crew management, and commercial chartering, all aimed at supporting global containerized trade. Danaos leverages its in-house expertise in operations, maintenance and regulatory compliance to ensure reliable and efficient fleet performance.
Founded in 1972 by Dr.
