Q4 2021 Costamare Inc Earnings Call
Thank you for standing by ladies and gentlemen.
Awesome.
Sure.
This call on the fourth quarter 2021 financial results.
Where were those Mr. Gregory <unk>, Chief Financial Officer of the company.
At this time all participants are in a listen only mode.
There will be a presentation followed by.
A question answer session.
If you wish to ask a question. Please press Star then one on your telephone keypad and wait for your name to be announced.
I must advise you that this conference is being recorded today.
Thursday worse than 2022.
Well I'll just remind you that this conference call contains forward looking statements.
Slide number two of the present.
So we're going to have some forward looking statements.
And I will now pass the floor to your speaker today, Mr. Xie Joe's. Please go ahead Sir.
Thank you and good morning, ladies and gentlemen, 2021 has been a record year for somebody with a fleet of 123 vessels, including 46 dry bulk ships. The company generated net income of about 400 million.
Towards the end of the year liquidity stood at 550 million well the containership side market conditions remain favorable with strong demand and logistical disruptions continue to impact the sector.
We chartered in total 35 cycles have gradually during the year, which added incremental conducted did everything yourself, one 4 billion.
Total contracted revenues amount to 3.3 billion with a weighted average remaining time charter duration of about four years.
We have got very substantially all of our containership open days for 2022 and now we're in the process of arranging employment for the vessels coming off charter next year.
At the same time, we agree to dispose of some older Donuts with fall towards the year end deliveries at prices that do reflect today's type of market environment.
Regarding our exposure to the dry bulk shipping business, we entered the market with favorable supply and demand dynamics underpinned by a historically low order book.
Our drybulk latest currently trading in the spot market didn't already shared the returns on the back of timely acquisitions.
In light of the above the company has decided to declare a special dividend of 50 cents per common share while rewarding our shareholders as a result of increased cash flow and profitability.
Payment of the dividend is not expected in any way to effect out of capacity to continue growing opportunistically.
Volatile market environment.
Moving now to the slides presentation.
Yes.
On slide three you can see the 2022 on very good results for the full year net income was about 400 million or 3.3 dollars per share net income for Q4, 'twenty one was above $150 million.
Adjusted net income for the last quarter was 91 per share.
Based on that before unless we have decided to.
To declare a special dividend of <unk> 50 per share payable without with Q1 2022 dividend.
We also initiated the share repurchases program, where possible probably 60 million for our common shares and up $250 million in for our preferred stock.
On slides four and five you can see our recent S&P activity as you can see on slide four we have agreed to sell five bankers with forward deliveries in late spring to do an early 'twenty three four.
For total gross proceeds so could you comment and $33 million.
The same prices of these vessels reflects a day type of market dynamics.
I've also been very active on the dry bulk sector with our fleet now stands at 45 vessels with one of them to be delivered during Q1 of this year.
On slide six you can see our fixtures.
Suddenly with fixed seven vessels at rates that that will not but it's 80% higher compared to current rates I think contracted revenue shortfall covenant doesn't medium.
For 2022 hour container ship revenue days, essentially becomes a percent fixed for 2023.
And 90% fixed.
Okay.
Moving to slide seven.
On slide seven you can see an update on our liquidity and current financing arrangements. During Q4, we have concluded at all $118 million of financings through three new loan agreements in order to refine those nine dry bulk vessels and five container ships we.
We have concluded another hunting license. So it's probably a million dollars that gives us additional firepower and extended to 150 million fiberglass and facility.
At the same time, we're continuing to maintain a strong balance sheet with liquidity awful hope above 5000 to 50 million in market value based leverage at.
26%.
Yeah.
Moving to slide eight the containership charter market continues to outperform even our highest expectations. The dry bulk market has rebounded from its seasonally lowest in February .
So like we mentioned we have put together a share repurchase program of 515 million common shares and that will probably 50 million for our preferred shares.
We also continue to have strong sponsor support through the tree.
Slide nine well this slide you can see the fourth quarter 2021 results. We've got the now based off of 108, one vessels during Q4 up 79% year over year.
Adjusted net income was 91 seven per se, our best quarter since going public.
Our adjusted figures take into consideration the following noncash items accrued charter revenues accounting gains from asset disposals and other noncash items.
On slide 10, you can see a recap as to actual liquidity our neighbors as other critical services, 26% based on Gartner market in five years.
Okay.
Liquidity opex down to $50 million to continue growing opportunistically in a volatile market environment.
On slide 11, we show the containership market environment, where rates remain at historically high levels and the ideal fleet is a 0.5%.
Doctors continuing to look for breakfast to fix them chartering learning here in advance how does it become the norm.
On the last night, we described the Drybulk market rates for vessels and now the size class remain our purity levels up 70% year over year in February .
Yes.
The dry bulk fleet order book is up six 8%, a historically low level that will keep supply growth in check for the years to come.
Without the call back over to the operator for the Q&A session. Thank you operator, we can take questions now.
Thank you as a reminder, if you'd like to ask a question. Please press star one on your telephone keypad and wait for your name to be announced.
I wish I answered your question. Please press Star then two.
That started in the one to ask a question.
And your first question today comes from Ben Nolan at Stifel. Please go ahead.
Hey, Greg.
Good good quarter in asset sales or it really impressive.
I had a couple of questions on the dry bulk side, if I could so first.
I'm just curious obviously you have that hunting licenses theres been a decent amount of sale and purchase activity in the market.
You know you you now have a war chest of a lot of you know cash that.
The container space meter.
How do you feel about where you sit in that are in that market and where asset prices are at the moment.
Yeah.
Thanks, Brandon first of all though.
Those two facilities the cabinet glasses were deferred into the.
The line is expiring in June and the other is expiring in December depending on market conditions, we may extend them or not.
We have them in case, we see some softening in the market, especially in us advisors for the dry bulk vessels. So that's.
In order to have them available.
It doesn't mean that like hey, we're going to use them.
As you know last year, we bought a lot of ships.
From last May.
May to June or major shut down, but where asset values are generally lower levels, where they are today. So we're gonna be very opportunistic.
We don't have to grow we don't have to buy it that shows as long as we feel that.
Market values makes sense.
Also considering the cash generating capacity of those assets. We're gonna proceed otherwise we wouldn't know it's not so those facilities are they may not be extended or engaged we see some.
Some deals we may utilize them.
It all has to do with market conditions.
As like proactively.
Managing our liquidity nothing more than that however, should we see some softening in the market and should we take the view that it makes sense to expand based on our balance sheet you can see that we have the firepower.
Order to conclude a lot of transactions says Mcdonald's fee.
So need to see asset values, a little lower than they are right now but you're.
Keeping an eye on it alright.
And then I had a question on the employment side.
Notice there was a half a dozen or so ships, where where employment was being negotiated and so that has a little bit of an impact on on utilization at the same time. You know is there there is a time charter market, we've seen it from others.
Any thoughts on what you might be able to do to to either improve the cash flow visibility through time charter or maybe just get a little bit more consistent.
Utilization out of those assets.
Yeah.
Turning to the Tidewater vessels right.
I'm, sorry, yes, mhm right, yes, okay Luke.
We currently are.
We do take those vessels in the spot market.
Some of those vessels they are.
The ending the charter rates that you're seeing too I need to ask.
Ill.
We may take the view that at some point when we see a the rates moving up or sort of when do we take the view that there may be some shifting.
In the market, we may charter those vessels.
For longer periods longer periods.
But it made me here or what are you thinking about something that people put into containers.
It remains to be seen now regarding utilization.
This is something that we'll look at sometimes we may prefer to hold onto the vessel before putting this out.
In order to get a better rate than we have achieved that so I think a utilization needs to be.
Consider the alongside.
The charter rates finally finally received.
For the time being we're going to continue the same strategy for the dry bulk vessels.
Also I need to mention here that the that we bought those ships last summer.
In a low asset value environment, they leverage their easy the regional 50% ballpark figures show the cash breakeven, including debt service is that the relatively low levels.
So I mean, we have the luxury to sit and wait in order to get the best rate available.
Of course should the market condition change they would take a different view, we may go for longer.
But this remains to be seen I'm afraid I cannot predict one like that.
Okay. No. That's that's good color just you you're you're trying to optimize for rate not necessarily utilization.
Understood.
Alright, well I will turn it over and congrats on those asset sales those are pretty eye popping numbers.
Thank you thanks, Matt.
Thank you and our next question today comes from Chris Wetherbee Citigroup. Please go ahead.
Hey, guys James on for Chris just wanted to sort of fall.
All up on the questions around the bulkier.
In terms of the purchases that you're doing do you see more of an opportunity essentially to buy essentially large larger collections of ships or individual ships just trying to understand the sense of like essentially how fast do you plan on growing that.
Sure.
Okay, we are pretty much flexible.
It would be a political vessels at some sort of five vessels.
By the same order book together or like it could be individual assets.
Sure.
The bus we've done.
Yeah, it's pretty much bullish although we have tended to rely more on the bank.
Our individual asset values or mix, however, we wouldn't exclude anything.
It's all got to do with the fastest price and with where the market is and how we feel about the asset.
So assuming that the numbers make sense, whether it's to say, if litho vessels or sort of whether it's in.
Individuals.
We can go both ways.
Also from the 46 vessels with what they're up to now most of them were both data from individual owners you didn't go. So this is not an issue should we see.
Asset values that we feel it makes sense.
Got it and then also just.
I understand that's actually sort of how you envision.
Collectively or may be even separately moving forward.
Long term goals are to separate them individually and sort of what level of scale or size. In addition, do you want to be.
If that is the case or do you actually start to see some benefit to keeping them together and somewhat sort of essentially cyclically offsetting elements to it just trying to understand sort of how youre thinking about that longer.
Longer term and just to follow up on the prior question sort of what do you think how fast do you think you can grow that multi across the coming years.
Okay. The second class help us we think we can grow I mean.
We can easily grow their fleets substantially.
Subject to market conditions.
We have a you know.
Eligible credit lines.
Like we mentioned.
A substantial amount that we have cash on balance sheet of like a.
350 plus million.
We have a very strong contracted revenues and we have fixed the all our containers for 2022 and most of the days for 2023, so there's a lot of gas coming from there. So.
So they don't discuss also.
Uh huh.
Generated organically so we can grow substantially.
You can find the right transactions rather than our equity.
Uh huh.
Capacity or for like our ability.
Our ability to secure debt.
So it's all got to do with market conditions.
We can be patient.
We are now or likely would have been in the past.
Or.
We've gone to accelerate like would be the last year last summer and now the first part of the equation, we scheduled the way that we keep them altogether or sort of if we separate the two fleets.
For the time being I think we're going to continue as we are.
We have the benefit of trading those of dry bulk vessels in the spot market those ships have a.
A low breakeven.
And we can be opportunistic regarding that chartering.
And at the same time, we have the contracted cash flows over the second half versus let's say, a $3 4 billion with extended for more than four years.
Which do provide us.
With a lot of incremental cash flow. So we have the best of both worlds now so all things are going to develop in the future I'm afraid I cannot predict but for the time being.
Based on what we know today I think we're gonna be proceeding the same way.
We have set that bar today.
Got it thank you.
Okay. Thanks, Thank you.
Thank you, ladies and gentlemen, as a reminder, if you'd like to ask a question. Please press Star then one.
Our next question comes from Clemens Mones with value Investor's edge. Please go ahead.
Good morning, congratulations for this quarter.
You have declared special.
Special dividend and I was wondering if you could provide some commentary on the reasoning behind declaring a special dividend.
Why did you choose to do that instead of for example, raising the regular dividend will repurchasing shares at a discount youre trading at.
Yeah.
It's still thinks there first of all.
This is a.
One of the bigger liquid coincides.
With.
With additional contracted cash flows coming either from a long term chartering of our container ships and with the substantial gains which have resulted.
From a sales of containership vessels said those shades.
And with that now, but with deliveries from Q4 2022 up to the beginning of 2023.
If you've noticed for example that we sold some six and a half thousand Teu ships 2000 builds.
For 75 million or so so there is a lot of incremental costs and we felt that part of that gas.
And it is something that they could.
Could be shared with our shareholders.
This isn't a one off dividend however, adult loosely a there can be no sort of break that out.
The future dividend payments.
Now you've.
You've seen a we'd have liquidity of north of half a billion and we have also put together a share repurchase program both for the cone and for the preferred status, which is something that we may be utilizing as.
As well.
But I think Oh, gosh outflow coming from that dividends. So its a 50.
It is at 50.
Change for more of a let's say come to 20 million shares would have to be outstanding.
It's not an amount that we consider are substantially higher than that.
Affect our pitch our future growth plans for the country.
That's helpful. Thank you and then following up on Ben's question on the Bunker fleet deep asset pricing was to be deemed attractive.
You continue to focus on the meat side to small.
Group classes.
And if so could you provide some commentary as to the reasoning behind such decision.
Being the main drivers behind your decision to focus in the smaller sizes of the broker market.
Yes.
You're referring to the dry bulk vessels correct.
Exactly yes.
Yes for the dry bulk vessels.
If you look at our 46.
Therefore, the stakes are safe to say, we have bought the or now that edge.
Our like <unk> dry bulk vessel.
11 years old.
And it has a deadweight of like a 52000.
We are focused on those shapes and we have bought from Congress up to up to dry boxes.
And for the time being we have stayed away from the case now with the brand name of the hindsight, regardless and this will put us.
Both are seeing say in may of last year.
I've turned out to be a very good investment.
And.
I cannot comment about our future potential acquisitions as you mentioned.
This is.
Subject to market conditions.
But we stayed that way at this point in time last year of the case.
Most of them are volatile compared to the economy show to the shoe press.
There is robust data getting close to $30000 per day in the spot market.
Those vessels were both relatively low prices will make historical perspective.
And we feel quite comfortable with those investments.
Alright, that's helpful. That's all from me. Thank you very much for taking my questions and congratulations again for this quarter.
Okay. Thank you.
Ladies and gentlemen, this concludes our question and answer session I'd like to turn the conference back over to Mr. Xu for any closing remarks.
Thank you very much for dialing in today and for your interest and put some of it we are looking forward to speaking with you again.
Our next quarterly results call. Thank you.
Thank you Sir This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.