Danaos Corporation | MARCH 2016 World-Class Shipping, Leading-Edge - - PowerPoint PPT Presentation

World-Class Shipping, Leading-Edge Expertise

Danaos Corporation | MARCH 2016

Disclosures

This presentation contains certain statements that may be deemed to be “forward-looking statements” within the meaning of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, that address activities, events or developments that the Company expects, projects, believes or anticipates will or may occur in the future, including, without limitation, the outlook for fleet utilization and shipping rates, general industry conditions including bidding activity, future operating results of the Company’s vessels, future operating revenues and cash flows, capital expenditures, asset sales, expansion and growth opportunities, bank borrowings, financing activities and other such matters, are forward-looking statements. Although the Company believes that its expectations stated in this presentation are based on reasonable assumptions, actual results may differ from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies, general market conditions, including charter rates and vessel values, the ability of counterparties to perform under existing charters, changes in

• perating expenses, ability to obtain financing and comply with covenants in financing arrangements, actions taken by regulatory authorities,

potential liability from litigation and international political conditions. Danaos Corporation is listed in the New York Stock Exchange under the ticker symbol “DAC”. Before you invest, you should also read the documents Danaos Corporation has filed with the SEC for more complete information about the company. You may get these documents for free by visiting EDGAR on the SEC Website at www.sec.gov or via www.danaos.com Readers of this presentation should review our Annual Report on Form 20-F filed with the SEC on March 10, 2015, including the section entitled “Key Information – Risk Factors”, and our other filings with the SEC for a discussion of factors and circumstances that could affect our future financial results and our ability to realize the expectations stated herein. EBITDA and Adjusted EBITDA may be included in our presentations. Adjusted EBITDA represents net income plus interest and finance costs, depreciation, amortization and income taxes, if any, plus stock-based compensation expense and other non-cash or one-off items. EBITDA and Adjusted EBITDA are presented because they are used by certain investors to measure a company’s financial performance. EBITDA and Adjusted EBITDA are “non-GAAP financial measure” and should not be considered a substitute for net income, cash flow from operating activities and

• ther operations or cash flow statement data prepared in accordance with accounting principles generally accepted in the United States or as a

measure of profitability or liquidity. In certain instances data derived from Marsoft reports is utilized in this presentation. Marsoft collects market data from a number of sources and exercises its judgment in preparing its estimates and analysis. Marsoft’s estimates may not match information from other sources. Actual future developments may deviate from the scenarios shown here. Marsoft is in no way liable for direct, indirect, consequential, or general damages arising from the use or misuse of the information and analysis presented here.

Business Overview

1 DISCIPLINED BUSINESS MODEL

• One of the largest independent owners of modern containerships
• Long-term charters and relationships with the world’s leading liner companies
• High charter coverage protects significant free cash flow generation and limits market risk
• Steady deleveraging to return value to shareholders
• Well-positioned to pursue accretive opportunities through Gemini Shipholdings Corporation, a

newly-established JV EXPERIENCED AND INVESTED MANAGEMENT TEAM

• Long track record of success with highly experienced owner-management team
• Company founded in 1972 and has continuously operated through multiple shipping cycles
• Management is majority shareholder and is aligned with public shareholders

OPERATIONAL EXCELLENCE AND TECHNOLOGY LEADERSHIP

• One of the most efficient operators in the industry
• Rigorous operational standards and environmental controls
• Steadfast commitment to safety and environmental protection

Recent Operational and Financial Highlights

2 FLEET DEVELOPMENT

• Newbuilding program successfully completed in 2012
• Fleet age reduced by 13% in the last five years
• Average fleet age of 7.4 years (TEU-weighted)
• Opportunistically acquired four 5,500-6,500 TEU vessels through newly-formed JV

FINANCIAL HIGHLIGHTS

• Contracted revenue of $3.2 billion through long-term time charters with diverse

portfolio of charters

• Significant free cash flow per share in excess of $3 per share under Marsoft base case

in 2016, 2017, and 2018

• Expiration of interest rate swaps benefits net income and free cash flow
• Rapidly deleveraging through aggressive debt payments
• De-risked capital structure with no refinancing risk through 2018

Fleet Profile

3

7 X 8,500 TEU 2 X 9,600 TEU 3 X 10,100 TEU 5 X 13,100 TEU

59* Container Vessels ranging from 2,200 TEU to 13,100 TEU

2 X 5,500 TEU 4 X 6,400 TEU 7 X 6,500 TEU 2 X 2,500 TEU 8 X 2,200 TEU 1 X 2,600 TEU 6 X 3,400 TEU

(*) Including four vessels acquired by Gemini Shipholdings Corporation, in which the Company holds a 49% equity interest.

12 X 4,300 TEU

K 100K 200K 300K 400K 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Mar. 2016 CAPACITY (TEUS) Capacity Additions Fleet Capacity by Year*

9.7 9.8 9.7 8.9 8.0 7.2

2010 2011 2012 2013 2014 2015

Long-term Charters with Staggered Expirations

4

Average charter length in years (weighted by aggregate contracted charter hire) Charter expiration schedule

3 6 2 4 1 1 4 4 2 1 1 4 2 5 2 3 5 1 2 3 4 5 6 7 8 9 2016 2017 2018 2019 2020 2021 2022 2023 2024 # of vessels Vessels TEU 2,200 - 3,400 Vessels TEU 4,300 - 5,600 Vessels TEU 6,500 Vessels TEU 8,500 Vessels TEU 9,600 - 13,100

Leading Position with 59* Vessel Fleet

5 A market leader among the large charter owners KG market retraction benefits independent charter owners like Danaos

Independent Owners KGS

200,000 400,000 600,000 800,000 Seaspan ShoeiKisen Costamare ZodiacM'time Danaos Corp. Technomar PeterDohle C-POffen E.R. Schiffahrt Rickmers Norddeutsche NSBN'elbe Eastern Pacific Shpg SchulteGrp N.S. Lemos HansaT'hand MPC Capital NSCSchiff. CAPACITY (TEU MILLIONS)

Current Capacity Capacity on Order

Diverse Charters with Strong Counterparties

6

28%

26%

17%

8%

13%

6%

$3.2 billion contracted revenue from long-term fixed rate diversified charters Last 12 Months | Revenues per Charterer

2% Other

Experienced Senior Management and Board

7 Management

• Dr. John Coustas

Chairman & Chief Executive Officer – Director Iraklis Prokopakis Senior Vice President & Chief Operating Officer - Director Evangelos Chatzis Chief Financial Officer Dimitris Vastarouchas Deputy Chief Operating Officer

Non-Executive Board Members

Myles Itkin Chairman of the Audit Committee - Chairman of the Nominating and Governance Committee - Director Miklós Konkoly-Thege Chairman of the Compensation Committee – Director William Repko Director George Economou Director

Industry Overview

8

Demand / Supply Fundamentals

Source: Alphaliner

12.4% 5.8% (8.5%) 14.2% 8.4% 4.8% 3.8% 5.4% 1.7% 3.3% 4.1% 13.8% 13.2% 5.5% 9.1% 7.9% 6.0% 5.8% 6.3% 8.5% 4.6% 5.6% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F 2017F ANNUAL GROWTH Global Throughput Growth Global Capacity Growth

9

Healthy Orderbook

Source: Clarkson Research Services 0% 10% 20% 30% 40% 50% 60% 70% 0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 D-00 D-01 D-02 D-03 D-04 D-05 D-06 D-07 D-08 D-09 D-10 D-11 D-12 D-13 D-14 D-15

Fleet & Orderbook (TEU Millions) Fleet Orderbook Orderbook-to-Fleet Ratio

Financial Overview

$205 $259 $299 $320 $360 $468 $589 $588 $552 $568 $0 $100 $200 $300 $400 $500 $600 $700 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Operating Revenues from Continuing Operations (1)

Marsoft High Case Marsoft Base Case Marsoft Low Case

10

$527 $491 $445

(1) All projections on Operating Revenues are internally generated based on assumptions, including continued counterparty performance under existing charters, that are outlined in the Appendix of this presentation, except for re-chartering assumptions that are indicatively based on data derived from Marsoft’s latest research reports using the ‘High’, ‘Base’ and ‘Low’ Case scenarios. Such data is solely being used as input to the Company’s financial model to project Operating Revenues. Marsoft has not performed any work and has not provided any guidance in relation to these projections. Please refer to the Appendix of this presentation for further guidance on the calculation of future revenues, off-hire days etc.

(amounts in million US$) Contracted Revenue

Operating Revenues Projections

$140 $174 $189 $204 $244 $319 $432 $434 $404 $418 $0 $100 $200 $300 $400 $500 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Adjusted EBITDA from Continuing Operations (1)

Marsoft High Case Marsoft Base Case Marsoft Low Case

11

EBITDA Projections

(amounts in million US$)

(1) Adjusted EBITDA is defined as Earnings before interest, taxes, depreciation, amortization, other non-cash and one-off items. Please refer to the Appendix of this presentation for further guidance on the underlying assumptions used to derive Adjusted EBITDA, and a reconciliation to Net Cash provided by Operating Activities. All projections of Adjusted EBITDA are internally generated based on assumptions, including continued counterparty performance under existing charters, that are

• utlined in the Appendix of this presentation, except for re-chartering assumptions that are indicatively based on data derived from Marsoft’s latest research reports

using the ‘High’, ‘Base’ and ‘Low’ Case scenarios. Such data is solely being used as input to the Company’s financial model to project Adjusted EBITDA. Marsoft has not performed any work and has not provided any guidance in relation to these projections. Please refer to the Appendix of this presentation for further guidance on the calculation of future revenues, off-hire days, operating expenses etc.

$398 $384 $355 Contracted Revenue

0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% $0 $50 $100 $150 $200 $250 2014 2015 2016 2017 2018

Libor Rate

Net Finance Costs (amounts in million US$)

Under Base Case Marsoft Scenario

Net Interest Expense Swaps Expense Libor Curve as of February 16, 2016

12

$198 $119 $72 $60 $55

Expiring Swaps Benefit Net Income and Free Cash Flow

$3.0 $3.3 $3.2 $1.8 $2.5 $3.0 $3.1 $3.0 $2.9 $2.9 $2.7 2014 2015 2016 2017 2018

Free Cash Flow per Share (1)

Marsoft High Case Marsoft Base Case Marsoft Low Case

13

Significant Free Cash Flow per Share

(1) Defined as Net Cash generated for the period before Net Vessel Acquisitions / Disposals, Payments for Drydockings, Debt Drawdowns and Debt Amortization. Based on current share count of 109.8 million shares. All projections of Free Cash Flow are internally generated based on assumptions, including continued counterparty performance under existing charters, that are outlined in the Appendix of this presentation, except for re-chartering assumptions that are indicatively based on data derived from Marsoft’s latest research reports using the ‘High’, ‘Base’ and ‘Low’ Case scenarios. Such data is solely being used as input to the Company’s financial model to project Free Cash Flow. Marsoft has not performed any work and has not provided any guidance in relation to these projections. Please refer to the Appendix of this presentation for further guidance on the calculation of future revenues, off-hire days, operating expenses etc.

7.3x $2,945 6.4x $2,687 6.0x $2,382 5.2x $2,068 4.5x $1,783 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 2014 2015 2016 2017 2018

Net Debt and Adjusted EBITDA Multiple (1)

(Amounts in million of US$)

Net Debt 7.3x $2,945 6.4x $2,687 5.9x $2,377 4.8x $2,040 4.1x $1,730 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 2014 2015 2016 2017 2018

Net Debt and Adjusted EBITDA Multiple (1)

(Amounts in million of US$)

Net Debt

14

Rapid De-leveraging

(1) Net Debt at period end over 1 year Adjusted EBITDA under the Base and Low Case Marsoft scenarios. Please refer to the Appendix for the underlying assumptions

• n Adjusted EBITDA which have been produced through the Company’s financial model, indicatively using re-chartering assumptions derived from Marsoft’s latest

research reports. Such data is solely being used as input to the Company’s financial model. Marsoft has not performed any work and has not provided any guidance in relation to the above projections.

Base Case Low Case Smooth amortization schedule without any re-financing requirement through 2018

15

Investment Highlights

CLEAR PATH TO UNLOCKING VALUE

• Cash flow and earnings per share visibility through 2018
• Rapid deleveraging schedule will have a positive effect on multiples
• Impact of expiring swaps is very material and is not fully appreciated
• Danaos is continually evaluating accretive opportunities

GROWTH OPPORTUNITIES BEYONG EXISTING FLEET

• Significant free cash flow generation supports growth opportunities
• Deep industry relationships gives us access to the highest quality deal flow
• Newly-established joint venture provides growth vehicle

MANAGEMENT TEAM IS ALIGNED WITH PUBLIC SHAREHOLDERS

• Management is majority shareholder
• A strategy of “growth for growth’s sake” will not be pursued
• Dilution will not occur for “growth’s sake”

Investor Relations

EVANGELOS CHATZIS Chief Financial Officer Danaos Corporation Athens, Greece Tel: +30 210 419 6404 E-Mail: cfo@danaos.com

Company Contacts

IRAKLIS PROKOPAKIS Senior VP & Chief Operating Officer Danaos Corporation Athens, Greece Tel: +30 210 419 6400 E-Mail: coo@danaos.com ROSE & COMPANY 130 West 57th Street, Suite 6C New York, NY 10019 United States Tel: +1-212-359-2228 E-Mail: danaos@rosecoglobal.com

World-Class Shipping, Leading-Edge Expertise

Appendix

16

Underlying Assumptions

Operating Revenues

• Contracted periods run until earliest dates charters can expire, no options exercised
• Assumes full performance by all counterparties to existing charters, which depends on such charterers’ ability

to meet their obligations under these charters

• Nine of our older vessels sold in 2013, five in the six months ended June 30, 2014 and one in January 2016
• Four secondhand geared vessels acquired in 2013 and two 6,400 TEU 12 year-old vessels delivered in November

2014

• Two vessels up for re-chartering in the 1st Quarter of 2016, three vessels up for re-chartering in the 2nd Quarter
• f 2016, four vessels up for re-chartering in the 3rd Quarter of 2016 and one vessel up for re-chartering in the

4th Quarter of 2016

• All re-charterings are based on Marsoft low/base/high case scenarios. All operating assumptions related to

projections on Operating Revenues, Adjusted EBITDA and Free Cash Flow are based on internally generated projections, except for re-chartering assumptions that are indicatively based on data derived from Marsoft’s latest research reports using the ‘High’, ‘Base’ and ‘Low’ Case scenarios. Such data is solely being used as input to the Company’s financial model to project Operating Revenues, Adjusted EBITDA and Free Cash Flow. Marsoft has not performed any work and has not provided any guidance in relation to the above mentioned financial metrics

• Operating off-hire of 1.1 days per annum per vessel
• Dry-dock off-hire of 15 days every 5 years for all vessels until their 15th year of age and thereafter 15 days every

2.5 years. Assumed cost of $1 mil. for each dry-docking

• All vessels are assumed to be scrapped when 30 yrs old, at $300/ton

Operating Expenses

• Operating expenses as per company’s 2016 budget thereafter escalated at 2.5% per annum.

17

Underlying Assumptions

Under Base Case Marsoft Scenario Under Low Case Marsoft Scenario

Adjusted EBITDA (1)

• Non-GAAP measure, defined herein as Earnings before Interest, Depreciation, Amortization, non-cash and one-
• ff items
• Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA under Base and Low Case

Scenarios:

(1) Under Marsoft Base and Low Case Scenarios. All projections of Adjusted EBITDA are internally generated based on certain assumptions, including continued counterparty performance under existing charters , except for re-chartering assumptions that are indicatively based on data derived from Marsoft’s latest research

• reports. Such data is solely being used as input to the Company’s financial model to project Adjusted EBITDA. Marsoft has not performed any work and has not

provided any guidance in relation to the above projections. Reconciliation of Net Cash from Operating Activities to Adjusted EBITDA (amounts in million US$) 2014 2015 2016 2017 2018 Net Cash Provided by Operating Activities $192 $272 $309 $337 $312 Add back: Net movement in current and non-current assets & liabilities 7 27 7 12 32 Net Finance Costs (incl. interest expense and swaps) 198 119 72 60 55 Payments for dry-docking / special survey 7 2 15 9 15 Other one-off and non-cash items

• (2)

1 3 6 Adjusted EBITDA $404 $418 $404 $421 $420 Reconciliation of Net Cash from Operating Activities to Adjusted EBITDA (amounts in million US$) 2014 2015 2016 2017 2018 Net Cash Provided by Operating Activities $192 $272 $304 $314 $285 Add back: Net movement in current and non-current assets & liabilities 7 27 7 11 32 Net Finance Costs (incl. interest expense and swaps) 198 119 72 61 56 Payments for dry-docking / special survey 7 2 15 9 15 Other one-off and non-cash items

• (2)
• 1

4 Adjusted EBITDA $404 $418 $398 $396 $392

18

Underlying Assumptions

• Calculation of interest and swap cash flows are based on the following forward US$ interest rate Libor curve as

at February 16, 2016

• Interest rate hedging uses current hedging arrangements through interest rate swaps as disclosed in the 2014

Annual report on form 20-F, filed with the SEC on March 10, 2015.

• Forecast for 2016-2018 has been calculated on the basis of 109.8 mil shares*

Note: We have 15 mil. warrants outstanding with an exercise price of $7.00 per share expiring in January 2019, which are exercisable solely on a cashless basis. As a result, the number of shares of common stock issuable upon exercise will be reduced. For instance, in the event 100 warrants were exercised at an exercise price of $7.00 per share at a time when our common stock was $10.00 per share, 30 shares would be issuable rather than 100 shares.

0.43% 0.27% 0.23% 0.30% 0.70% 0.85% 1.07% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 2012 2013 2014 2015 2016 2017 2018

Libor Curve Assumption