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    DAC
    Earnings call· Jun 2026(Q2 FY26)

    Danaos Q2 FY26 earnings call DAC

    Aug 4, 2026 Source

    Executive summary

    Danaos Q2 FY26 — Record Backlog and Strong Liquidity

    Danaos reported a strong Q2 FY26, driven by record contracted revenue backlog and significant contribution from its Dry Bulk segment amidst exceptionally tight shipping market conditions. The company maintains a fortress balance sheet with high liquidity and low leverage, positioning it for disciplined growth and accretive opportunities while navigating global supply chain disruptions. Management is cautious about new investments at current elevated prices.

    Highlights

    5

    • Contracted revenue backlog reached a record $4.6 billion, adding approximately $683 million in the quarter.

    • Dry Bulk segment adjusted EBITDA contributed $18.8 million, a significant increase from $5.9 million a year ago.

    • Container operating days are 100% contracted for 2026, 93% for 2027, 79% for 2028, and over 60% for 2029.

    • Net Leverage Ratio stands at 0.3x with total liquidity of approximately $1.5 billion.

    • Daily operating costs declined to $7,416 per vessel per day from $7,556 per vessel per day in Q2 2025.

    Concerns

    2

    • G&A expenses increased by $3.7 million to $14.9 million, mainly due to higher management fees and corporate G&A.

    • The risk of new investments at elevated prices is becoming higher, making accretive growth more challenging.

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Container
    Container vessel revenue was broadly unchanged, with incremental revenues from newbuilding deliveries and higher charter rates offset by noncash revenue recognition and higher off-hire charges.
    Newbuilding deliveries contributed $3.2 million of incremental revenuesHigher charter rates contributed $0.6 millionNoncash revenue recognition reduced by $3.4 millionHigher off-hire charges reduced revenue by $1.2 million
    		$238.7 milliondown $0.8 million——
    Dry Bulk
    Dry Bulk revenue and adjusted EBITDA significantly increased due to improved market conditions and a higher Capesize time charter equivalent rate.
    Capesize time charter equivalent rate rose to $30,400 per day from approximately $18,000 per dayOperated one additional vessel
    		$35.7 millionincreased by $13 million or 57% from $22.7 million—$18.8 million

    Operational metrics

    15
    Adjusted Net Income
    $133.1 millioncompared to $117 million in Q2 FY25
    Q2 FY26

    Increase of $16.1 million.

    Adjusted Net Income per share
    $7.29compared to $6.36 per share in Q2 FY25
    Q2 FY26

    Increase of approximately 15% on a per share basis.

    Vessel operating expenses
    $56.7 millionagainst $56.4 million in Q2 FY25
    Q2 FY26

    Stable, notwithstanding an increase in average number of vessels.

    Daily operating costs
    $7,416declined from $7,556 per vessel per day in Q2 FY25
    Q2 FY26

    Operating costs remain among the most competitive in the industry.

    G&A expenses
    $14.9 millioncompared to $11.2 million in Q2 FY25
    Q2 FY26

    Increased by $3.7 million.

    Interest expense (excluding amortization)
    $7.3 milliondecreased by $1.6 million to $7.3 million from $8.9 million in Q2 FY25
    Q2 FY26

    Improvement driven by higher capitalized interest and lower cost of debt service, partially offset by increased indebtedness.

    Interest income
    $7.4 milliondoubled compared to $3.7 million a year ago
    Q2 FY26

    Driven by higher cash balances.

    Net interest expense
    decreased by $5.3 million
    Q2 FY26

    Decrease between the two periods.

    Adjusted EBITDA
    $186.8 millionincreased by 6.1% or $10.8 million to $186.8 million compared to $176 million in Q2 FY25
    Q2 FY26

    Driven by reasons outlined earlier in the call, principally Dry Bulk segment performance.

    Net debt
    $224.5 million
    Q2 FY26

    Net debt stood at $224.5 million.

    Debt-free vessels
    78
    Q2 FY26

    78 out of 87 operating vessels carried no debt.

    Unencumbered vessels
    66
    Q2 FY26

    66 vessels are unencumbered.

    Cash balance
    $1 billion
    Q2 FY26

    Cash stood at $1 billion.

    Total liquidity
    $1.5 billion
    Q2 FY26

    Total liquidity stood at approximately $1.5 billion.

    Dividend
    $0.90
    last month

    Declared last month.

    Industry KPIs

    5
    MetricValueDetails
    Fleet87vessels
    Tce rate$30,400per day
    Balance sheet0.3xx
    Charter coverage100%%
    Daily vessel OPEX$7,416per vessel per day

    Orderbook & backlog

    1
    Contracted revenue backlog$4.6 billionQ2 FY26

    added $683 million

    4.7 average charter duration

    Deals & partnerships

    3
    Japanese operating leasesRefinancing of 2 vessels

    Refinanced 2 further vessels through Japanese operating leases.

    Not specifiedCredit facility for newbuildings$132 million

    Entered into $132 million credit facility to finance 6, 1,800 TEU Newbuildings.

    Not specifiedJOLCO financing commitments for newbuildings$236 million

    Added a further $236 million in JOLCO financing commitments for 3 vessels delivering in 2027.

    Capital programs

    2
    JOLCO financing for 2027-delivery vesselscommitted$236 million
    Funding: JOLCO financing commitments

    Benefit: 3 vessels

    Added a further $236 million in JOLCO financing commitments for 3 vessels delivering in 2027.

    Credit facility for 1,800 TEU Newbuildingsentered into$132 million
    Funding: credit facility

    Benefit: 6, 1,800 TEU Newbuildings

    Entered into $132 million credit facility to finance our 6, 1,800 TEU Newbuildings.

    Risks & headwinds

    2
    Geopolitical conflicts and supply chain disruptionsongoing

    exceptionally tight conditions with rates across most shipping sectors at multiyear highs

    Mitigation: Shipping industry's capability to absorb disruption and keep global supply chains supplied; Danaos moved 2 vessels out of the Gulf safely.

    Elevated prices for new investmentscurrent market

    risk of new investments at elevated prices is becoming higher

    Mitigation: Disciplined approach to expansion, focusing on strengthening the balance sheet and waiting for more reasonable prices and accretive rates.

    What to watch in Q3 FY26

    3

    Alaska LNG Project FID

    sometime in September
    CurrentProject progressing, legislative arrangements needed before FID
    TargetFID given

    Why it matters

    Determines the future potential for Danaos to place LNG vessel orders backed by long-term contracts, aligning with its disciplined growth strategy.

    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.

    Q&A highlights

    4

    How does Danaos plan to use its significant free cash flow in coming quarters, considering debt paydown, new investments, and ranking investment types (container, dry bulk, or other segments)?

    Management stated that growing accretively is challenging at current elevated prices. The focus is on strengthening the balance sheet and securing long-term financing. They will wait for opportunities when prices are more reasonable, having already executed growth when conditions were more favorable.

    “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.”

    asked by Omar Nokta · answered by John Coustas

    2 min read6 chapters

    Detailed Narrative

    01

    Market Conditions and Geopolitical Impact

    The company highlighted ongoing conflicts in Ukraine and Iran, disruptions in the Gulf, restrictions in Bab el-Mandeb, and US tariff measures as factors creating exceptionally tight conditions and multi-year high rates across most shipping sectors. Danaos successfully moved its two vessels out of the Gulf, ensuring the safety and operational status of its crews and fleet. Management emphasized shipping's unique ability to absorb such large-scale disruptions and maintain global supply chains.

    02

    Strategic Execution and Backlog Growth

    Danaos continued its long-term strategy of securing extended charter employment at attractive rates and arranging competitive long-term financing for its newbuilding program. The company added approximately $683 million to its contracted revenue backlog during the quarter, bringing the total backlog to a record $4.6 billion. Contract coverage for container operating days is robust, reaching 100% for 2026, 93% for 2027, 79% for 2028, and over 60% for 2029.

    03

    Financing and Liquidity

    The company refinanced two additional vessels through Japanese operating leases and secured a further $236 million in JOLCO financing commitments for three vessels delivering in 2027. Additionally, Danaos entered into a $132 million credit facility to finance six 1,800 TEU newbuildings. With 78 of its 87 operating vessels debt-free, a net leverage ratio of 0.3x, and total liquidity of approximately $1.5 billion, Danaos is well-positioned to pursue accretive opportunities.

    04

    Dry Bulk Performance

    The Dry Bulk investment saw significant contribution, with Capesize rates reaching multi-year highs. The segment contributed $18.8 million in adjusted EBITDA, a substantial increase from $5.9 million in the prior year. This improvement was primarily driven by an increase in the Capesize time charter equivalent rate to $30,400 per day from approximately $18,000 per day, reflecting improved market conditions and the operation of one additional vessel.

    05

    Capital Allocation Philosophy

    Management articulated a disciplined approach to capital allocation, emphasizing the difficulty of growing accretively at current elevated prices. The focus is on strengthening the balance sheet, extending financing duration with instruments like JOLCOs, and waiting for opportunities to arise when prices are more reasonable. The company aims to create lasting value for shareholders through a combination of disciplined expansion and a strong financial position.

    06

    Alaska LNG Project Update

    The Alaska LNG project is progressing, with legislative arrangements needing to be completed before the Final Investment Decision (FID). FID is expected sometime in September. Danaos intends to tie any LNG vessel orders to the production from the Alaska LNG project, indicating a preference for contract-backed orders rather than speculative ones in this segment.

    AI-generated summary of the company’s earnings call. Not investment advice.