Please ensure Javascript is enabled for purposes of website accessibility

Danaos (DAC) Q1 2021 Earnings Call Transcript

By Motley Fool Transcribing - May 12, 2021 at 12:30AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

DAC earnings call for the period ending March 31, 2021.

Logo of jester cap with thought bubble.

Image source: The Motley Fool.

Danaos (DAC -2.11%)
Q1 2021 Earnings Call
May 11, 2021, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good day, and welcome to the Danaos Corporation conference call to discuss the financial results for the three months ended March 31, 2021. 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. [Operator instructions] I would now like to turn the call over to Mr. Evangelos Chatzis, to begin the call.

Evangelos Chatzis -- Chief Financial Officer

Thank you, operator. 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, 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. With that, let me now turn the call over to Dr.

Coustas, who will provide a broad overview for the quarter. John?

John Coustas -- Chief Executive Officer

Thank you, Evangelos. Good morning, and thank you, all, for joining today's call to discuss our results for the first quarter of 2021. The dramatic turnaround and strength of the market, which we experienced in the beginning of the year continues unabated if not stronger. The continuation of the pandemic and the ensuing slowdown in the terminal operations have exacerbated demand, and the liner sector is at the limit of its capacity.

The blockage of the Suez Canal further contributed to the disruption in the supply chain and conditions will likely not normalize before the end of the year, possibly after the peak season. Liner companies are reporting record profits, and more importantly are signing multi-year contracts at significantly higher levels, which will keep their profitability at elevated levels. On the non-operating owners' front, charter rates have skyrocketed to levels not seen for at least 10 years, and what is more important duration has been significantly increased so that vessels over 4,000 TEU can secure four-plus years of employment at very healthy levels. This euphoria due to the sharp increase in rates and confidence that the market will remain strong has led to a dramatic increase in newbuilding ordering.

As a result, the order book now stands at 17% of the existing fleet, which is higher compared to the 9% nadir at the end of 2020, but still much lower than the 50% it reached in 2008. Fortunately, the lack of shipyard capacity and the hesitance of many market participants to order vessels with conventional fuel propulsion both are inhibiting factors for new orders, and are keeping a lid on excessive ordering. In any event, the recently ordered vessels will not deliver until at least 2023, and the next two years should be lean in terms of fleet supply growth. We believe that the expected strong demand growth post-pandemic will comfortably absorb the existing order book.

As far as Danaos is concerned, we are currently in the best-ever position in reaping the benefits of the current market environment. On April 12th we completed our refinancing on very competitive terms, and also positioned the company successfully in the U.S. bond market, giving us access to a very significant pool of capital. The amortization profile of our debt is resulting in significant free cash flow for growth opportunities.

The stellar performance of the liner sector had a number of significant consequences for us. First, our shareholding in ZIM is today valued at around $400 million. Secondly, the dramatic cash flow generation of ZIM and HMM induced them to redeem early the bonds, which we were holding, so we'll have $75 million cash injection in the second quarter of 2021. Thirdly liner sector performance eliminates counterparty risk for the foreseeable future.

On the chartering front, every fixture we concluded was done at a new record level. These fixtures are beginning to take effect and we expect to see improved metrics for every single quarter for this year. Our strong financial standing and optimistic view of the future have led the board to decide to reinstate a fixed quarterly dividend of $0.50 a share. Danaos has been repositioned as a growth company and has handsomely rewarded its shareholders through a dramatic share appreciation of more than 1,000% since our November 2019 equity offering.

We believe that our new fixed dividend will both expand our shareholder base to a new group of yield-driven institutional investors, and also enhance the liquidity of the stock. All the right steps that the company has undertaken in the last couple of years have been greatly appreciated by the market and we will continue along the same path in the future. With that, I'll hand the call over back to Evangelos, who will take you through the financials for the quarter. Evangelos?

Evangelos Chatzis -- Chief Financial Officer

Thank you, John, and good morning again to everyone. I will briefly review the results for the quarter, and then we will open the call to Q&A. Today, we are reporting adjusted EPS for the first quarter of 2021 of $2.83 per share or adjusted net income of $58 million, compared to adjusted EPS of $1.34 per share or $33.3 million for the first quarter of 2020. This increase between the two quarters is mainly the result of a $25.9 million increase in operating revenues, a $2.5 million improvement in finance costs, and a $3.9 million gain from partial collection of our Hanjin claim, partially offset by higher total operating expenses, mainly due to the increase in the average size of our fleet between the two quarters.

More specifically, operating revenues increased by $25.9 million to $132.1 million in the current quarter compared to $106.2 million in the first quarter of 2020. This increase is attributed to a $15.4 million increase in revenues as a result of higher charter rates and improved fleet utilization and $10.5 million of incremental revenues as a result of the vessel additions in our fleet between the two quarters. Vessel operating expenses increased by $5.1 million to $31.1 million in the current quarter from $26 million in the first quarter of 2020, as a result of the increase in the average number of vessels in our fleet, while the average daily vessel operating cost increased to $5,954 per day for the current quarter from $5,522 per day in the first quarter of 2020, and this increase is mainly attributed to COVID-19 related increase in crew remuneration. However, our daily OPEX cost still remains as one of the most competitive in the industry.

G&A expenses increased by $5.1 million to $10.9 million in the current quarter, compared to $5.8 million in the first quarter of 2020 mainly due to $4.6 million recognition of non-cash stock-based compensation, and increased management fees, due to the increased size of our fleet. Interest expense excluding finance cost, amortization, and accruals, decreased by $2 million to $10.2 million in the current quarter compared to $12.2 million in the first quarter of 2020. This improvement is mainly attributed to a reduction of our debt service cost by approximately 1.5% between the two periods. Adjusted EBITDA increased by 33.9%, or $24.4 million to $96.3 million in the current quarter from $71.9 million in the first quarter of 2020 for the reasons outlined earlier on this call.

We would like to note additionally that results for the first quarter of 2021 that are reported today, although improved across the board versus the first quarter of 2020, do not fully capture the significant improvement in the market fundamentals that were outlined by our CEO earlier on this call. This is all analytically laid out in the Investor Presentation that has already been posted on our website, which we encourage you to review. A few of the highlights are: asset values have improved with the charter-attached value of our fleet today at $2.68 billion on the basis of Q1, 2021 vessel valuations provided by independent brokers, and include charter premium wherever applicable in accordance with our finance agreements. Our ZIM equity position is valued today at around $400 million, while at the same time the valuation of the ZIM and HMM bonds has also improved, and we expect most of it to convert into cash within the second quarter of 2021.

We have been notified to this effect by both HMM and ZIM that they will proceed with early redemptions ahead of the 2023 and 2024 maturities of these notes, and we expect the cash inflow of $76.2 million due to come in over the next couple of months and within the second quarter of the year. On the back of the stronger asset values, the net asset value of Gemini currently stands at $154.6 million, which translates to a value of our 49% participation of $75.8 million. On the basis of all the above, we currently calculate our net asset value at $1.87 billion or $90.9 per share. On the operating side over the past six months, we have fixed 33 vessels at significantly higher rates than previously.

And within our Investor Presentation, we analytically laid out the improved charter arrangements for all 33 vessels, some of which have already come into effect while some others will gradually start coming into effect within the second and the third quarter of this year. As a result of these improved fixtures, our contract backlog stands at $1.2 billion, and our contracted revenues for 2021 alone currently stand at $575 million, already a $113 million or 25% higher than total operating revenues of 2020, which were $462 million. We still only have 3.7% of our operating days open for this year, and we expect the overall improvement in revenues to exceed the $122 million in 2021 versus 2020 on the back of the contracts. Additionally, since there is no marginal cost associated with this increase in our top line, such improvement should be expected to also settle down to our EBITDA.

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.

Questions & Answers:


Operator

Thank you. [Operator instructions] The first question today will come from Randy Giveans with Jefferies. Please go ahead.

Randy Giveans -- Jefferies -- Analyst

Howdy, John and Evangelos. How's it going?

John Coustas -- Chief Executive Officer

Hi, Randy. How are you?

Evangelos Chatzis -- Chief Financial Officer

Hi, Randy.

Randy Giveans -- Jefferies -- Analyst

Doing well. Doing well. Yes. First, congrats on the dividend announcement.

I know that's been a goal for a while now, something we haven't seen since 2008. So good to see the dividend back. With that, can you provide some more color on maybe how you decided on that $0.50 per share or $2 per year? And do you plan on growing it in the coming quarters or years?

John Coustas -- Chief Executive Officer

We did not really had any kind of, let's say, specific yield target. We looked at more or less to what is currently, let's say the dividend on our peers. And we just formulated the board decided on this kind of a number, which as I said, we don't want to position Danaos as a yield company because what we have delivered to our shareholders was really growth. And growth in profits it doesn't necessarily always growth have to be growth by adding assets.

It's very good to have growth in profits without adding assets by exploiting the assets best. And this is, let's say it's a significant part, the strategy that we have been following.

Randy Giveans -- Jefferies -- Analyst

And, yes, it's certainly still a very small component right of your annual EBITDA, we're talking $40 million or so on annual EBITDA of $400 million to $500 million. Right? So I guess is there plans for growth in the coming quarters and years? Is this kind of a let's just stick it at $2, have a base dividend, and then use the rest for other return of capital or acquisitions?

John Coustas -- Chief Executive Officer

Definitely, our, let's say, strategy relies on growth of the company. And we believe that there are going to be significant investment that will be done in the future. What we are doing at this moment is really building a war chest in order really to whatever growth we are going to have, it's going to be pretty secured with significant let's say, equity component and not just loading up in debt.

Randy Giveans -- Jefferies -- Analyst

And then I guess with that segueing, you've monetized the ZIM and HMM bonds already, refinanced your debt, clearly substantial cash flow with all these contracts that you've been signing? You've also reduced your leverage, pretty dramatically here over last quarters and years. So I guess, what are your plans for that excess cash going forward? Do you have a target net debt or a leverage goal or is additional growth via second-hand acquisitions the top priority?

John Coustas -- Chief Executive Officer

I think as I said, at this moment, we are really in a position that we are making a lot of money. The market is overheated. There is no point in spending, let's say the money today on very expensive vessels because then we wouldn't have done anything. We are going as I said, to evaluate the situation.

We are going to have much more clarity on the actual environmental direction of shipping toward the end of the year. And this is going really to drive the investments that we're going to do. Until then as I said, we will be building a war chest.

Randy Giveans -- Jefferies -- Analyst

And then I guess lastly on the chartering front. You still have a few vessels coming available in the next few months, how you balance that in terms of maybe maximizing the one-year rate versus kind of getting some more duration for two years, three years, four years, what are you seeing in kind of a normal duration for some of these charters on the vessels coming available?

John Coustas -- Chief Executive Officer

Well, the only thing I can tell you is that, from the vessels that we are currently discussing and negotiating above 4,000 TEU, we are discussing a four-year plus durations. The smaller ones will go between, let's say, probably two to three years. We're not looking really to just maximize the next 12 months. We wanted to have, let's say, greater visibility in our earnings although as I said, actually 2022, it's going to be a very lean year in terms of deliveries actually considerably less than 2021.

And then of course 2023 it's picking up. So let's say the shortage in the charter market is going to continue for some time.

Randy Giveans -- Jefferies -- Analyst

Yes. We tend to agree. Thanks so much. Congrats again.

John Coustas -- Chief Executive Officer

Thank you. Thank you.

Operator

And the next question today will come from Chris Wetherbee with Citigroup. Please go ahead.

James Monigan -- Citi -- Analyst

Hey. Good morning, guys. James on for Chris. I just wanted to touch on the comment you had made.

Good morning. Yes. Just wanted to touch on the comment you had made about growth and sort of preparing war chest. In the context of basically the dividend and growing it, and just wanted to understand how you were sort of balancing that versus deleveraging across it? And if it was really sort of when you're thinking about preparing the war chest as it were, if you think about deleveraging or sort of building up the cash position, just trying to understand more specifically what you had meant about that specific comment?

John Coustas -- Chief Executive Officer

Yes. At present, I don't think there is any, let's say, deleveraging pressure because I think that our leverage is pretty low. And it's continuously let's say being reduced because of the amortization, which we're going to have. The war chest I was describing is practically, we will be looking.

Let's say to monetize on our non-operating assets. One of those were the bonds, which they are getting, let's say redeemed. The other one is the ZIM shareholding, I mean, at some stage that will form part of our war chest.

Evangelos Chatzis -- Chief Financial Officer

And if I may add, as we continue to monetize, as John mentioned in the non-operating assets, and the cash starts building up, we already have a dividend in place. So, that capital allocation decision has been made for the time being. We will have to face capital allocation decisions going forward. The priority is going to be growth on assets that are at the forefront of the environmental new vessels of the future.

And at some point, it will have to be -- we will continuously evaluate capital allocation. And if we consider that certain of the cash can go toward deleveraging to further lighten up the debt load, it may be a decision we're going to take then. But we cannot say at this point, exactly what the strategy is going to be unless we see how the growth spectrum develops.

James Monigan -- Citi -- Analyst

Got it. So I think one of the things that sort of embedded in that comment is more sort of thinking about newer vessels and sort of newer technology around propulsion versus second hand. Is that a fair assessment based on your view about where you would sort of put that war chest around where the assessment?

John Coustas -- Chief Executive Officer

As I said, at the moment there is no clarity as to what exactly the environmental regulations will look like. We have two fronts. One is the IMO, where we have all this, the excise discussion that this discussion which all will lead to a reduction in ship speed, so the existing fleet to a greater or smaller extent will need to slow down to achieve these targets, which is a plus of course for the actually effective supply. And on the other hand, we have the European community, I mean, wanted to impose the EPS on shipping, and we have yet no clue as to how this is going to look like, and how it is going to affect, let's say the old versus new vessel and what are the technologies going to practically to try to push toward.

We have seen for example that the LNG has been, I mean, in the European Union, LNG is not considered as a kind of a transitory fuel in more and that's why the EU has stopped funding of LNG kind of related projects. On the other hand, the World Bank really said that it doesn't make sense to go to make all the infrastructure to go to LNG, which is a carbon-based fuel and we should try to concentrate on other fully de-carbonized solutions. So it's really there is -- as I said, there is no clarity. And when there is no clarity, the best strategy is really to make a war chest and be ready to fight and face whatever situation arises.

James Monigan -- Citi -- Analyst

And so not to belabor the point, but just to be clear, it does seem like there is. And as you pointed out, cash flow is improving and you will be building up a fair amount of cash, but it doesn't necessarily seem like, you have the, I guess a definitive plan for deploying it until you actually see an opportunity, which I guess may leave essentially more substantial dividend increase or substantial to buy there something else on the table, it's just a matter of like, what opportunity presents itself and being opportunistic as it were.

John Coustas -- Chief Executive Officer

Yes. Exactly. I mean, today the company is having and will continue to have significant growth in terms of, let's say, income purely by exploiting the market and the vessels in the best possible manner. When the time is right, we will try and exploit also new technology in order to put the company really in the growth era on the basis of a de-carbonized future, which is really what everyone is seeking today.

James Monigan -- Citi -- Analyst

Got it. And so, I guess, more near-term question. OPEX per day was a bit higher than we thought. You'd called out some one-time items around COVID crews, and just probably some vessel mix in the quarter as well.

But how should we think about essentially your OPEX per day on a per-day basis for the ship per your fleet on a more normalized basis? Any sort of color or context you could provide will be great. Thank you.

John Coustas -- Chief Executive Officer

Yes. I mean -- yes, go ahead, Evangelos. Yes.

Evangelos Chatzis -- Chief Financial Officer

Yes. Let me just give you some context. There is two issues around the OPEX increase. One is the granting of bonuses to our crews in relation to the COVID-19 saga that they've had to endure, having to spend way more time than they usually do on the ships and with great difficulties in changing crews and so on and so forth.

And to the extent that this situation continues to be difficult, this is going to be an additional cost item on the OPEX. And we also have something else, which is typical for every Q1, let's say of most normal years. There is a lot of bulk ordering in the first quarter, which inflates if you wish for OPEX and this then normalizes throughout the remaining quarters of the year. So as a ballpark figure at this point, I would say that $5,800 a day as a fleet average for the year is sort of our target and our budget.

James Monigan -- Citi -- Analyst

Got it. All right. Well, thank you.

Operator

And the next question will come from Omar Nokta with Clarksons Platou Securities. Please go ahead.

Omar Nokta -- Clarksons Platou Securities -- Analyst

Thank you. Hi, John and Evangelos. Good afternoon.

John Coustas -- Chief Executive Officer

How are you?Good. Good. Well, nice to see things shaping up so nicely for Danaos, and you guys have plenty of different sources of incoming cash. And you made it pretty clear you're building up a war chest.

And wanted to just maybe ask, I know, not to belabor the point too much. But you have the $75 million cash coming in the second quarter from the redemption of those two bonds. And then potentially the monetizing of ZIM. When you think about the war chest, is there any possibility that maybe some of that cash is set aside for a special dividend?

To be honest, as I said, we are giving the dividend purely because we want to enlarge our shareholder base to investors who really require dividends in order to own a certain stock. We believe that we are very well-positioned to invest this war chest, and that's why the reason we are building it. So there is no intention of just distributing, I would say, the money out. Otherwise, it's not a war chest, otherwise, we are talking about dividend distribution.

Omar Nokta -- Clarksons Platou Securities -- Analyst

Yes. That's clear. Thanks for that. I just wanted to ask it.

And then maybe just in terms then of -- you've discussed the order book, and how it's risen obviously to higher levels, and the nice thing of course is that the vast majority of these orders have come with long-term contracts to the liners. And so that speculation in -- speculative order book is very, very minimal. In the last call you mentioned, not really being that interested in ordering vessels against long-term contracts, but it sounds like may be-am I reading you right, that may be you are reassessing that, do you think that the returns make sense, or starting to make sense vis-a-vis, we take into account the environmental change in the fuel propulsion, are there opportunities you see in the newbuilding front to order vessels with the right equipment that give you long-term visibility and a good return?

John Coustas -- Chief Executive Officer

Well, today, liner companies are awash with cash. And if you're going to do a long-term deal with the liner company, it has to be more competitive from, let's say, the liner company using cash of its own. We have participated in the last, let's say, six, eight months in a couple of tenders around, which in the end resulted in the liner companies doing, let's say, the ordering directly. And to be honest, I'm not there to commit on single-digit equity returns for 10 years or so in an environment that in 10 years, if you think where we are in 2010, and where we are in -- there, in 2020, a hell of a lot of things can happen in between.

Omar Nokta -- Clarksons Platou Securities -- Analyst

Yes. No. I agree. And maybe just one final one.

As you think about the war chest that's being built. You talked about the monetizing of the non-operating assets. How do you feel about especially as you mentioned asset prices have gone much higher and it's expensive? How do you think -- how do you feel about monetizing some of your older operating assets, especially, you said the sub 3,000 TEU vessels. Can those be also a source of cash or a war chest?

John Coustas -- Chief Executive Officer

Of course, this is always something that we've examined. The problem is that today, I mean, by the value that someone is paying for these ships is less than the actual present value of the charter plus scrap of the ship on the basis of the available charter rates and durations to date. So what's the point?

Omar Nokta -- Clarksons Platou Securities -- Analyst

True. Just holding, yes. It's nice source of incoming cash, fully depreciated asset?

John Coustas -- Chief Executive Officer

Exactly. I mean, people who are doing -- who are selling are people who would like maybe to invest in other sectors, some private entities. And on the other hand, maybe there are funds who want to get out, who do not really have an operating presence, they've made the good return on their investment and they just want to get out. And they are selling, and for ourselves, it doesn't really make sense.

OK. John, that's clear. Thank you very much.

Omar Nokta -- Clarksons Platou Securities -- Analyst

Thank you.

Operator

And the next question will come from Andrei Cate with Jefferies. Please go ahead.

Unknown speaker -- Jefferies -- Analyst

Hi. Here from the credit side. I mean, first of all, yes, just chime in and say congrats on the results, clearly fantastic. And I hate to be a broken record but got a lot of questions around this war chest, and what to do and in the context of you having just issued a bond and refi the structure.

I mean I think the takeaway from bond investors at that point was that the funding mix was going to improve over time, more unsecured versus secured? You have a natural deleveraging with paying down the secured. I think I've heard you multiple times talk about that current ship valuations are way overvalued, underwriting in single-digit equity returns. So just trying to take that, and then understand the need to build this war chest against that and just have it on the balance sheet because I guess with the debt profile that you have, you have a very flexible setup where you could prepay secured debt and per se half of those excess cash proceeds? And then when the market actually turns and you see opportunities, you could then go and you can kind of releverage back rather than paying an average interest cost of X, and then having to cash it on the balance sheet. So just want to try and understand a little bit more how you think about that?

Evangelos Chatzis -- Chief Financial Officer

Andrei, if I may, John very quickly address this. We are not at this point committing to future capital allocation decisions. And obviously having a big pile of cash sitting on your balance sheet is not the most productive use of capital, if this happens for a long time, right. And all we're saying is that, in the pellet of our capital allocation decisions, growth is at the forefront, as it should be, we believe.

And then if we can use excess cash to further de-lever, improve the credit profile of the company, and the credit ratings for that matter, which will further improve our pricing on accessing the bond market, we may very well do so. We will have the options open. We have set our priorities, and deleveraging is one of them. But if we can source projects that produce returns, that meet our return threshold criteria, that at the end of the day make the company more profitable, and we enter into accretive projects.

We will do so as a matter of priority always with a focus on maintaining a low leverage as we have stated before.

Unknown speaker -- Jefferies -- Analyst

OK. That's helpful. I mean, if I may follow up on that, do you realize it's tough against growth opportunities. But if we just say cross the cycle, do you have a view, what you think is the right leverage for this business?

John Coustas -- Chief Executive Officer

I think we have set a target between three times to four times. We are at this point with our last 12-month EBITDA, we are at four times on the basis of our 2021 run-rate EBITDA, which is 95% contracted. So we know what it is. We are below 3.3 times.

And by year end, and with the war chest building up, on a net debt to EBITDA basis it is going to be way below three times. So we said that a leverage level between three to four times is within the comfort area of what we consider a safe and sound capital structure. And I think we have every ability to pursue -- in the interim, it may come down, but then once we pursue growth it may go up three or three and a half times or whatever.

Unknown speaker -- Jefferies -- Analyst

Yes. But that makes sense if you can underwrite that double-digit un-levered returns.

John Coustas -- Chief Executive Officer

OK. Thank you.

Operator

And the next question will come from George Birman with Cabot Lodge. Please go ahead.

Unknown speaker -- Jefferies -- Analyst

Kalimera, gentlemen, and congratulations to a great quarter.

John Coustas -- Chief Executive Officer

Thank you. Thank you, George.

Unknown speaker -- Jefferies -- Analyst

I'm someone new to the company recently became shareholder. Question I had on the position in ZIM shares that obviously is working out quite well for you. Have you considered or would you consider maybe spinning those shares off to your shareholders as a distribution?

John Coustas -- Chief Executive Officer

As we said, there is no let's say, special dividend out. We want let's say, all these non-operating assets of the company, in the end, to be used for the growth of the company. And eventually, investors will be rewarded by the growth of the company, not by the liquidation of the company.

Unknown speaker -- Jefferies -- Analyst

Fair enough. If you were to monetize the position, what kind of tax consequences would there be on the company, obviously you carry a huge gain?

John Coustas -- Chief Executive Officer

Yes. There are no tax consequences in the company.

Unknown speaker -- Jefferies -- Analyst

OK. Great. And I wanted to say congratulations. You are the first company in the shipping scenario in general that has stated basically publicly today on the conference call that you are not looking to buy additional ships.

I think that is a very good position to be in, especially with the changing environmental situation here that you take the wait and see attitude?

John Coustas -- Chief Executive Officer

Yes. Well, as I said, the market is overheated. Shipping is always and will always be a cyclical business. And we have made our investments in the low part of the cycle.

Now it's the time just to reap rewards.

Unknown speaker -- Jefferies -- Analyst

Yes. Do you as an owner of a large fleet of containerships, do you have any insights into when the stacking up of ships for example at the port of Los Angeles, when that is going to normalize?

John Coustas -- Chief Executive Officer

That's nothing really that we are involved in, that you should really ask the Los Angeles port authorities there.

Unknown speaker -- Jefferies -- Analyst

OK. Look forward to a further bright future for you. Thanks for taking my call today.

John Coustas -- Chief Executive Officer

Thank you.

Operator

At this time, it appears we have no further questions. And I would like to turn the conference back over to Dr. Coustas, for any further comments or closing remarks.

John Coustas -- Chief Executive Officer

Well, thank you very much for your interest in Danaos. After this kind of great quarter, we'll continue to work toward delivering improved returns for our shareholders. Thank you.

Operator

[Operator signoff]

Duration: 45 minutes

Call participants:

Evangelos Chatzis -- Chief Financial Officer

John Coustas -- Chief Executive Officer

Randy Giveans -- Jefferies -- Analyst

James Monigan -- Citi -- Analyst

Omar Nokta -- Clarksons Platou Securities -- Analyst

Unknown speaker -- Jefferies -- Analyst

More DAC analysis

All earnings call transcripts

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Danaos Corporation Stock Quote
Danaos Corporation
DAC
$76.42 (-2.11%) $-1.65

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
390%
 
S&P 500 Returns
125%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/12/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.