Q2 2020 Costamare Inc Earnings Call
Costamare Inc. conference call on the second quarter 2020, <unk> financial results.
With us we have Mr. Gregory's he goes chief financial officer or the company.
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I must advise you that discrete event is being recorded today Tuesday July 28 2020.
We'd like Iran. You. This conference call contains forward looking statements.
Please take a moment to reach slide number two other presentation, which contains forward looking statements.
[music] I'll pass the floor to your speakers today Mr.
He calls please go ahead sir.
Thank you were at a good morning, ladies and gentlemen, during the second quarter to quarter delivered strong results.
Well you understood Hotel Dakota, Trenton meal, and that's already announced.
The second quarter of the year would go look at our financing program, resulting in this world repayment profile with don't forget maturities until 2024.
[music] well they market side, they took a possibly have started decreasing integrating improving market conditions. The mother continues to favor the larger and medium sizes and especially on the ships about 8000 to you.
Market activity has picked up and it would have taught that he's built up 24 shapes during the quarter.
Okay. I'm also connectivity in the morning show markets has reopened and as far as appropriate to your program.
So would put demolishing to 7002 your ships, which we plan to replace with youngest daughter it.
Well, we can all of this slide presentation.
[music], most likely you're going to the highlights we do maintained a strong balance sheet with look where did you have about the credit drinking they do it.
But as of approximately 40% and no meaningful debt maturities until 2002 to four.
<unk> net income for the quarter rose by approximately 5 million to 52 million.
That's it the P.S. Ustwenty six cents, that's a 10% degrees compared to what you're doing 2019 [noise].
Net loss was 84 million during these due to one ultimate losses will close with another 10 million relating to <unk> disclosure.
[music] moving to slide four out of doesn't have to come for the first couple of the year always pay Brooks wanted to 25 million to $64 million.
Yeah, Josh MPS is 54 cents, 54% increase compared to the first couple of 2019.
<unk> for the first off over the year amounted to 58 million due to one no non cat losses or football, it's probably 10 million realizing a gain to us it's for us.
Since the beginning over here, we have raised more than 435 million debt financing.
[music].
Slide five.
We have containment, though if we simply corporation with comparative operating expenses from just over $4009 per day progression.
So basically taken to anybody apart first the 10000 Teu containership out of her she additional five she said pressures.
The ship classical magically Stingier charter, which I mean, they made it for your billings will also commenced a perspective to your charters up all that deliveries [noise].
Finally, as part of the part of fits into our broker we sold two to 23 year old sister vessels, and Thats, where the measure would like to replace them with younger Thornton [noise].
Moving to slide six.
Yeah, well that's right now what are tied to try the environment. We self taught that he talked about 24 vessels during the quarter. Although the continuous your markets has been negatively affected by the core without big no signs of improvement in charter rates and market activity over the past two months.
Yeah, I didn't see it has been decreasing why the order book has dropped to 9% and is expected to remain no.
Finally, we paid out to the ninth consecutive quarterly dividend in August inside this company participating in a deep NCCN sexual have reinvested in talked about $90 million.
[noise] well the next slide. Please this slide seven you can see the second quarter 2000 trying to get resolved during the second quarter. What gives you the company generates <unk> pad to 12 million and not drop and then think I'm also digital media.
Based on the above the second quarter adjusted EPS increased by 13% from last year to 26 cents.
Let's see it was taken to push that Asian defaulted noncash items, yeah construct that ambiguous account the gains or losses from other disposals and other non cash items.
Well, it's like Hey, two were discussing okaka structure, I would never to scope, probably below 50% net debt to 12 month trailing EBITDA ice 2.3 times and EBITDA over net interest expense is at 5.2 times when the recovery and that's how they mean and would acquire mental 2.5.
Times coverage.
[noise] on slide nine we have shown that had been contribution put out a pretty.
Well it looks from their percentage to particle Chuck discussed gossip perks, our topic is like Maersk MSC Evergreen close School York being a couple of Lloyd.
We have 2.1 to be done a contractor that big it was a day demanding time charter duration up about 3.5, yes.
[noise] on the last two slides when discussing the markets.
As shown on slide 10 charter rates are showing signs of improvement mainly for the larger basis.
Books rates companies and by 25% over the past three months.
On slide 11.
The idle fleet a screen it used to slightly below 8%. The order book has fallen to 9% a team is expected to remain at low levels as mentioned our main priorities to carve it out downsides raised right at the same time looking for opportunities yourself to one of the tight market environment.
This concludes our presentation and we can now take questions. Thank you operator, we can take question though.
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The first question comes from West whether <unk> of Citi. Please go ahead.
Hi, This is Lee in for Chris. Thank you for taking my question.
Hi, good morning, though.
I just want to start off with the charter market I don't think depend up pretty challenging there recently I just wondered if you could provide your thoughts on how looks going forward.
Also your perspective on charter duration.
Shorten the current Mark.
<unk>.
Yeah.
Over the last couple of months say without missing a chart that age speaking now.
And as I mentioned it might go modality, these especially for seeps, well 3000 to use.
And and I bought where are the supply.
And demand dynamics.
Favorable of course, we're not at the 2019 also go up or the fourth quarter of 2019 targeted levels, but that definitely.
The market has been picking up both in terms of up the way. They I was way less intensive chart that age the same applies for the bottom looks for the mainly panamax vessels that feed those ships a they have not seen a lots of upside the recently.
Leaving aside the smaller AECO basis, but they're not before the larger sizes I see that or the market has been slightly.
Improving.
Apart from like a increased a actually we did [noise].
Of course, there are definitely a extension options in childhood as favor.
However, if we have seen that pictures arranging for longer periods now compared to you know the fix or say we saw let's say in March April So I would say that generally a that up positive assigned to the charter market no.
We cannot predict the market and we never do eat a container shipping is I would say other bus and correlated to global GDP. So are there more going on they say are opening up and that people.
Likely resumed daily activities I think there, but there is gonna be for the global trade and consequently for a full container shipping.
Got it and I said with additional question we are.
Obviously, I understand that the order because that historically low levels and that you building activities in a pretty minimal lately I'm just wondering if it working in like what is driving a since its more structural in nature, such as being related to the Bible regulations. It wasn't just based on the current not going back.
[noise]. It's another thing so first of all going to say you what I like the order book today is close to 9% was probably the lowest ER.
So you're right we have experienced over the last years.
And it's a couple of things said it first of all a line those are all real or like a ship owners that don't want to go meet today, especially where there's still some [laughter] the market, especially for charter owners like us it would be difficult to go meet the without.
Especially for the larger vessels.
Without a fixed employment in place.
Secondly, the captain like is the debt Cup doesn't like as commercial bank debt, although it is dead.
It's much more scarce <unk> compared to the debt levels.
We show a in the past.
So.
And then people feel more comfortable.
Regarding whether there might be to shedding a I think is gonna be difficult to see.
I would say increased activity.
In Newbuilding ordering a soon.
Which I understand you see sports people for these for the supply and demand dynamics and I would say that they have from 2000 today 22 on Ward said two days the order book is facing.
So that all of this is a I would say important development and on top of that I would have to out of that Oh. We have also seen some increased activity in demolition, who knows I think the militia likely to was close to because of the Corbett outbreak.
During the second quarter all the year.
Demolition activity, because how does your old [noise].
I'm not predicting what's gonna be that that number 50, you said it was you know wouldn't be scrapped the during the year, but at least it's also a positive side as well.
Got it and just really quickly one final question I know you guys have preferred shares buyback program can you just please update us on that program at how much you guys have for purchased to date and possibly the second quarter and that's how much is that stop standing for that program.
We didn't do any a into what they'll do the program has been for like up to $50 million.
We didn't didn't make a any parts as as a during the last month.
Because a they price over the first 'cause they moved up I think today, you said 22 indoors and and about would dictate some parts of the during that first quarter, we'd say like we announced a.
In April but they since then we haven't done anything I think that broke the broker I missed any open and Opportunistically I wouldn't happy.
I would I be accessing it but the 11 looked oriented to end to endorse I think we would or would wait.
Alright. Thank you very much taking my questions are thinking.
Personally.
Our next question comes from Ben Nolan Stifel. Please go ahead.
Well. Thank you are good morning, Greg So I wanted to circle around on a couple of things first.
With respect to the balance sheet and the debt specifically a subsequent to the refinancing I I just looked in and there was the yes that 20.
And third <unk> repayment schedule for 2021 and 291 for 2021.
Can you maybe update me on what the.
It is post refinancing a repayment schedule looks like for this year next year.
Yes.
For the second crop of Twentytwenty. The repayment schedule is close to seven to 7 million.
And for 22 into another quarterly payment schedule.
Looking some small balloons is now closed 235 million.
And for 2022 is say founded 29 million.
Nice perfect.
No that's helpful or the but actually it was going to ask is.
Really related to the Newbuilding market and you talked a little bit about sort of the state of.
A state of the world as it relates or where we are at the moment, but I'm curious if there's been any uptick among a among the aligners for potentially looking to to add newbuildings ordered a little too early for that.
And then also maybe you could comment on sort of the competitive landscape.
For some of those Newbuilding orders, there's still a lot of capital chasing that kind of thing or is it become a little bit more.
Selected.
No we haven't seen a Andrea newbuilding activity recently apart from a couple of small exceptions, where pretty abuse.
Auctions I have been exercise for a couple of Newbuildings from radical in punished by the problem that we have not seen any real activity now of course.
As the market develops and you know this may change then to assess it from 2022 on Wednesday. The order book is very very thing is is you know like meaning about <unk>.
We haven't seen anything today now I'll take one by need generally I would have been quite active or a new building transactions and this is something we you know we would definitely look at and we've done it looked like Newbuilding got deals in the past. So there's something that it's definitely open interest to us, but I think to date is a bit pretty much.
Sure.
To forecast when do you building market is going to return to this could be sooner or later I think it's a much of time, but today I don't think that they would have any clearer.
Visibility.
Okay helpful. And then I I've two just little quick ones, if I could the first is on the idle capacity.
Mostly it's coming down closer to 8% definitely moving into right direction looks like maybe you guys. Only have have won it it maybe one or two that are idle or.
Have you guys been able to deploy your ships without sort of.
Being hit by some of this a downturn as much as everybody else sort of where you can you maybe talk to sort of how you layered and and expect a fair and the environment no weren't.
Yeah, we have a couple of shipset today that they don't have blown many good but we are in the process.
Im blowing them.
I would say that but the these us more shape. So I don't think that they would change the fundamentals will probably be no.
For this quarter or like for the for the next quarter.
Finally, we haven't been active we did the into it though they tend to for a Utah marketing arrangements, a sincere quarterly results fleets, which I do consider to be a big figure I said there are a couple of small she is where we're now discussing yeah employment and and generally I wouldn't want.
Those are I think are absolutely no no because I've been shopping our vessels.
As we typically at levels, which are lower compared to others. It earlier that the last quarter of 2019 like beginning of 2020, but still leaves a a double that breakeven levels.
And you saw were broken up into this quarter like a adjusted EPS will quit doing to seek sense, which is something that that I would say makes makes sense, it's something respectable.
Yeah I agree.
And then last for me is that the write off is pretty big.
Could you maybe just talk through.
Obviously, I guess, it's forced by selling assets, but maybe if you look at your.
And your balance sheet as compared to.
The state of the market.
First of all it isn't there you think it need to maybe do further write offs in future and B is it simply selling ships that as a catalyst to cause that to happen or is there you know another mechanism.
I think look.
Right, though and I got to be more specific it's gone from day to 7002, you Betcha said we sold.
Turning to three years old a week's like we sold for scrap but the price of close like and then maybe on each.
And they had a book value of close to 32 media.
And then because we have a third the sister vessel. We also took a anybody them as though they work with measurably zone.
Why we thought that the it would make sense to scrap those shapes and then use the equity generated a I would say she has the scrap price in order to replace those vessels with the you know younger Donuts and this is what we would expect to do.
Because you know we lease exit to generate that they you can buy shipsets similar size or 10 or 12 over 15 years old. So lets say hey, do think years younger.
With me anymore.
That will.
Incremental cash outflows this was a the logic behind that.
This would you might see now for the future.
I cannot predict but I think because those ships and the they also had some I do drydocking expenses, which we took a intercourse that Asian and looking at that's advisors today with the commercial decision to dispose of those ships and then use the equity people you know acquisitions, a this pretty much it.
Okay, and and so as you look at the balance of your fleet. There there aren't any other that you can proceed as of now there aren't any other big.
Central write offs.
<unk> coming down toward.
Look I cannot predict when we capitalize on mother's usually it's a similar age I say company generally we have been used and we'd like we might not a we like managing a order to announce if we don't have a and nishu without however, a it depends on market conditions.
But they have to stress.
But grabbing some accounting gains or losses or.
And he sees that doesn't mean that a those assets have not been profitable that do they they didn't have a positive cash flow positive.
Over the last 10 15 years, we've got them in our fleet because a yeah those sale accounting losses.
Of course don't take into account or the gas flow decelerated from those best as he said the difference between the book value a and the sale proceeds that's all right danger.
Okay are helpful. Appreciate it thanks.
Thank you.
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Next question comes from Jay You mentioned Meyer value investors age. Please go ahead.
Hi, good afternoon, Greg Congrats on a stable quarter in any period of otherwise market uncertainty.
Good morning, Good morning, Jay.
Excellent Yeah. So you know as I'm looking at your total fleet balance I noticed east scrap the two vessels Kolkata and I was looking to cure. The third sister ship you have a short term charter on that it was previously reported demolished, but it looks like your employing it now is there any sort of update on that do you plan on demolishing got after the short term charter or.
Do you think there's a market to keep her on the water.
Yeah, we sold it to mess it does for that equity Cutera and the costs hockey and then we should.
So the sister ship or the quarter, we just got the under charter.
For this quarter or because this is this if we have taken a impediment.
Okay well.
Which has been factored into the Q2 results.
No.
That's going to happen way, we these vessel it depends on market conditions, which you know are generally Ebola died we may take they view that we may sell these vessels and that goes proceeds could be used to it for you know junket or not.
Or depending on locker conditional we may find employment for the set aside for the next six nine miles and then take the decision not to scrap it I mean, those decisions are taken to kind of person based on market conditions, rather than done or on pushing that Asian regarding the accounting figures. So I'm afraid I cannot predict it wouldn't be sold but equally.
Also be shell, however, just to be consistent with the say no you know over the other two sister ships and we decided to take a any betterment notion that though to see as well this is pretty much it.
Excellent. So no decision on that one yet I know it was initially came across the wire as all three of them being scrapped starts interesting change there looked a little detail you disclosed on the Sealand, Washington, Michigan, Illinois, Ocata Kingston that does the set of six there you disclose it does have a base rate I think a 16000, there's like a.
50, 50 profit share and it's kind of a range of 12 to 25000, what what indexes that it sounds like a contacts or heart backs or is that actual liner profits how how is that the tournament.
It is a pretty I believe the index with a charter and this is said based on a specific broker.
Well calm say when it comes up or.
With a they laid this fixtures for those type Oh vessels and we use a is that the index. It to say, it's a very intensive specific broker a phone, though with whom we both agree to sort of that doesn't mean.
The charter rates for those specific for those Pacific vessels, a this happens on a monthly basis.
Hi, very interesting what they continue to follow that and see what happens final question I have a four more newbuilds coming in I know that's the first one was just delivered here in July I can you remind us I know, they're fully financed but can you remind us what the remaining installment payments are for those five vessels.
Well, it's a yeah yeah. They are fully financed on that on a pre and post delivery basis that was believed that it is for a 10 year period, because those ships club I think your charter.
The main Inc. a equity a GAAP.
Capex a from oversight in the previous quarter was announced a it was close to 31 million now with the delivery of the first visit.
It's I don't I would say 24 25 million.
This is the remaining capex equity pick up eggs from our site for the total over the four remaining newbuildings will be delivered so.
As you can see it's a it's pretty minimal.
Right, just 25 million of equity Capex, what about on the financing side, how much more financing needs to be drawn down just so we can sort of model your balance sheet going forward.
That's fine I think a it's going up be drawn a over the next a mouse up until the first the outflow for 22 into on a so it's not something that's gonna be drawn tomorrow and you know there maybe some changes a in the schedule I don't have the full figure in front of me right now.
However, I have to be careful because we have not announced the acquisition price so by giving them. The full number and then you somewhere device by five and make some adjustment probably someone can come close to the acquisition price, which I'm afraid that we have not announced.
So I'm afraid that have to I have to spoke here.
Hi, Thanks, Greg appreciate you're trying to follow up offline for some more of the housekeeping stuff I appreciate you.
Oh, thank you.
And if there's any more questions at this time. Please press Star then one.
[noise], we have no other questions at this time, so we'll go back to Mr. Xie goes for closing remarks. Thank you.
Thank you for dialing in today, and ER and being with US. We are looking forward to it was speaking to you again during the next quarterly results cool. Thank you.
[noise]. This concludes todays conference you may now disconnect. Thank you.