Q3 2024 Costamare Inc Earnings Call
Operator: Thank you for standing by, ladies and gentlemen, and welcome to the Costamare Inc. conference call on the third quarter 2024 financial results.
Thank you for standing by ladies and gentlemen, and welcome to the Coast Tomorrow, Inc. Conference call on the third quarter 'twenty 'twenty four financial results.
Operator: We have with us today Mr. Gregory Zikos, Chief Financial Officer of the At this time, all participants are in a listen-only mode. There will be a presentation followed by a question and answer session. At which time, if you wish to ask a question, please press star then 1 on your telephone keypad and wait for your name to be entered.
Speaker Change: Harvest, we have with US today, Mr. Gregory Z Coast, Chief Financial Officer of the company.
Speaker Change: At this time all participants are in a listen only mode.
Speaker Change: There will be a presentation followed by a question and answer session at which time if you wish to ask a question. Please press Star then one on your telephone keypad and wait for your name to be announced.
Operator: I must advise you that this conference is being recorded today, Friday, November 1, 2024. We would like to remind you that this conference call contains forward-looking statements. Please take a moment to read slide number two of the presentation which contains the forward-looking state.
Speaker Change: I must advise you that this conference is being recorded today Friday November 1st 'twenty 'twenty four.
Speaker Change: I would like to remind you that this conference call contains forward looking statements.
Speaker Change: Please take a moment to free fly them or two of the presentation, which contains the forward looking statements.
Operator: And I will now pass the floor to your speaker today, Mr. Zikos. Please go ahead.
Speaker Change: And I will now pass the floor to your speaker today, Mr. Xie Kos. Please go ahead Sir.
Gregory Zikos: Thank you and good morning ladies and gentlemen. During the third quarter of the year, the company generated net income of about $18 million. As of quarter end, liquidity was above $1 billion. In the container ship sector, with added vessels of less than 1%, the fleet can still be considered as fully employed. The market is split between the larger sizes, which do remain in limited supply, and smaller vessels, where the availability of tonnage is greater. As the pool of bigger economies is unable to meet demands, charter rates continue to evolve at the same level. During the quarter, we charge with certain contingencies at healthy levels.
Xie Kos: Thank you Ed good morning glad to judge it.
Speaker Change: During the third quarter over year, the company generated net income of about 18 million.
Speaker Change: We'll go to Angie Boise was about $1 billion.
Speaker Change: Do you think within a sector with Adler vessels upsize that 1% the fleet can still be considered as a fully employed the market is split between the larger sizes, which duty mainly linked to supply and smaller banks, that's where the availability of doughnuts is greater.
Speaker Change: How's it will not be get honest is unable to meet demands Saturdays continue do a bond offering.
Speaker Change: Yes.
Speaker Change: During the quarter, which all of a sudden container chassis tablets. They don't trade agreements are expected to generate incremental contracted revenues of about $65 million.
Gregory Zikos: The new charging agreements are expected to generate incremental contracted revenues of above $165 million. The continuous lead employment stands at 100% and 94% for 2024 and 2025 respectively. Total contractual revenues amount to $2.3 billion, with a remaining time slotted duration of 3.3 years.
Speaker Change: Because industry fleet employment stuff, that's kind of a percent to 94% for 2024 and 25, respectively.
Speaker Change: Total contracted revenues amount to two points at $8 billion were very demanding times like a duration of 3.3, yes.
Gregory Zikos: on the diabolic side. We are now progressing with our strategy to renew the OWN fleet and decrease its average size. During the quarter, we agreed to acquire two 2014 and 2015 build Ultramax vessels.
Speaker Change: Although that bauxite.
Speaker Change: We are now progressing with our strategy to renew the own fleet and decrease its other size during the quarter. We agreed to acquire two 2014 and 2015 onetime expenses.
Gregory Zikos: and 200,000 in heaven with Gates I see, while at the same time progressing with the disposal of smaller tons. TBI, 556 ships, the majority of which are on index-linked chartering agreements. We have a long-term commitment to the sector, and we view the business of divestment loaning and the trading platform as highly complementary activities. Finally, with regards to next-to-my-time leasing, the platform continues to grow with committed funding for 32 shipping assets, reflecting total funding commitments of above $410 million on the back of a healthy pipeline.
Speaker Change: And 200000 Elevens mitigates IC, while at the same time progressing with the disposal of smaller tonnage.
Speaker Change: It would be a positive little 56 ships the majority of weeds out an index linked charter.
Speaker Change: I have a long term commitment to the sector and we view the business as the basketball with me at the trading platform is highly complementary activities.
Speaker Change: Finally, with regards to next to my time, leading the platform continues to grow with committed financing for surgical shipping assets.
Speaker Change: Total funding commitment of about $410 million well debacle for CST pipeline.
Gregory Zikos: Moving now to the slides presentation. On slide three, you can see our three-quarter results. Net income for the quarter was $75.5 million, or $0.62 per share. Adjusted net income was $81 million, or $0.68 per share. Our liquidity stands at over $1 billion. Turning into slide four, regarding our SFB activity, we have agreed to acquire one cape size and two Ultramax driver ships. In parallel, we have concluded the sale of two Supramax vessels and agreed to sell one anti-size ship.
Speaker Change: Moving now to the slide presentation.
Speaker Change: On slide three.
Speaker Change: See our third quarter results net income for the quarter about $75 5 million or six 6% of adjusted net income was eight 1 million or 68 cents per share.
Speaker Change: Our liquidity stands at all but $1 billion.
Speaker Change: Turning to slide four regarding our S&P activity, we have agreed to acquire one capesize dry.
Speaker Change: Dry bulk ships in parallel we have completed the sale of two supermax vessels in that region on besides you.
Gregory Zikos: Slide 5. On the chartering side, we have chartered seven containers with incremental contracted revenues of above $165 million. Our revenue days are fixed 100% for 2024 and 94% for 2025, while our contracted revenues are $2.3 billion with a TU-weighted remaining duration of 3.3 years. In parallel, we continue to charter all our dry bulk matches in the sport market, having entered into more than 30 chartering agreements since our last earnings release.
Speaker Change: Slide five well, it's opening sites, we have stopped the cyclical diagnosis with angry birds on contract with wrapping this up above kind of 65 million.
Speaker Change: Oh revenue days are fixed for 24, and 94% footprint as well.
Speaker Change: While article exactly two boys rebuild with the Teu weighted remaining duration of three three years.
Speaker Change: In parallel we continue to target all of our dry bulk vessels in the spot market, having entered into more than 30 agreements since our last earnings release.
Gregory Zikos: Slide 6. Regarding our financing arrangements, we will fully prepare with cash on hand a $100 million unsecured bond issued by Costamare participation. In addition, we have agreed to retire our driver fleet without an increase in leverage. This bill is coupled with improvement of funding costs and extension of maturity. Finally We have roughly available $94 million for financing of acquisition.
Speaker Change: Slide six regarding our financing arrangements, we will fully prepared with gaslog around 800 million bond.
Speaker Change: What about these patients.
Speaker Change: In addition, we have a great story fighters, all dry bulk fleet without an increase in leverage.
Speaker Change:
Speaker Change: This deal is coupled with improvement in factory cost and fixation for maturity.
Speaker Change: Finally.
Speaker Change: Because what athlete available 94 million for financing.
Speaker Change: Musicians.
Gregory Zikos: Slide 7. Regarding CBI, we have chartered 56 period vessels, with the majority of the fleet being on index-linked agreements. On our leasing platform, we have already invested around $123 million. NML continues to grow, with complete funding for two little ships, and has a very healthy pipeline. On slide 8, on this slide you can see our liquidity exceeding $1 billion. This gives us the ability to look for opportunities to grow the company on a healthy basis.
Speaker Change: Slide seven regardless you'd be I would have a child with 56 billion pesos with a majority of the fleet being or indexing agreements.
Speaker Change: Now what do you think about sort of we have already invested around 200.
Speaker Change: $123 million.
And then well continues to grow we finally concluded with ships and hazard ratio to the buyback.
Speaker Change: On slide eight.
Speaker Change: As you can see our liquidity exceeding $1 billion. This gives us the ability to look for opportunities to grow the company while enhancing base.
Gregory Zikos: Slide nine. Charter rates in the contingency market continue to evolve at very firm levels, especially in the larger segments, despite there is a decrease in box rates. The continued ejection of new building capacity, though, remains the principal threat of the market. The idle fleet remains at low levels of 0.8 percent. Moving to the final slide, then, you can see the recent dry bulk market trends in the sport and forward markets. The dry bulk order book starts at 10.3% of the total fleet.
Speaker Change: Slide nine.
Speaker Change: The containership market continues to evolve, but the bedroom levels, especially in the last six months.
Basically decreasing books rates they.
Speaker Change: The continued its excellent capacity, though when he made the principles of the market.
Speaker Change: Adding fleet.
Speaker Change: But it's also beautiful 8%.
Moving to the final slide 10, you can see there is a dry bulk market rents in the spot market.
Speaker Change: The dry bulk order book stands at four 3% of the total fleet.
Gregory Zikos: With that, we can conclude our presentation, and we can now take questions.
Speaker Change: Without the cargo pollute our presentation and we can now take questions. Thank you.
Gregory Zikos: Thank you.
Operator: Megan, we can take questions now. Thank you. As a reminder, if you would like to ask a question, please press star then 1 on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press star then 2. That's star then one to ask a And your first question comes from the line of Omar Nokta with Jeffreys.
Speaker Change: We can take questions now.
Speaker Change: Thank you.
Speaker Change: A reminder, if you would like to ask a question. Please press Star then one on your telephone keypad and wait for your name to be announced.
Speaker Change: Asia Cancercare request. Please press Star then two.
Speaker Change: That's star then one to ask a question.
Speaker Change: And your first question comes from the line of Martin knocked out with Jefferies. Please go ahead.
Omar Nokta: Please go ahead. Thank you.
Speaker Change: Thank you hi, Greg Thanks for the update just.
Omar Nokta: Hi, Greg. Thanks for the update. Just a couple of questions from my side, just first on the Greek bond. I think it's the Greek bond, the 100 million euros that you redeemed early. Just wondering, I know those were a relatively much lower interest cost, and so I just want to get a sense of what drove the early redemption of those bonds.
Speaker Change: Just a couple of questions from.
Speaker Change: Hi, Yeah, just a couple of questions from my side that just first on the on the Greek bond I think it's a great bonds to 100 million euros.
Speaker Change: Euros that.
Speaker Change: You've redeemed early just wondering I know those were a relatively much lower interest cost and so I just wanted to get a sense of what what drove the early redemption of those Oh, sorry, yes, yes.
Gregory Zikos: Yes, yes. You're right.
Gregory Zikos: Yes, this is a bond which was originally maturing next year, and we are like preparing a year earlier. This was on an unsecured basis, relatively competitive terms at like 2.7% cost.
Speaker Change: Right yes.
Speaker Change: This is it.
Speaker Change: One of which was oh, he's only maturity next year and we are like every bank.
Speaker Change: This was all.
Speaker Change: Our domestic with basis relatively competitive.
Speaker Change: Competitive dams are at like a 27% at cost.
Gregory Zikos: The reason being that there are some tax implications which have to do with Pillar 2, and for that reason, because this bond was issued by Costamare Participation, a Cypriot, meaning a European Union subsidiary of ours, for tax reasons and for some legal implications, we had to redeem it earlier. However, we did use those funds for close to four years, and as you rightly said, in terms of pricing, I think it was competitively priced.
Speaker Change: The reason being that.
That did have some docs it applications, we'd say it has to do with pillar two and for that reason because this bond was issued by cause somebody participation cheaply with me.
Speaker Change: European Union subsidiary of ours for tax reasons and for some legal implications, we got there to redeem it Andrew however.
Speaker Change: We did see we did use those funds for close to four years and as you rightly said that it was in terms of pricing I think it was competitively priced.
Omar Nokta: Okay, got it. Thank you for that.
Speaker Change: Okay got it. Thank you for that and then just you know we've talked about this in the past, but just on the on the Drybulk business with CPI and Theres been no reports and shipping.
Omar Nokta: And then just, you know, we've talked about this in the past, but just on the dry bulk business with CBI, and there's been, you know, reports and shipping circles of changes happening there at the personnel level. Just in general, I wanted to ask, how are you thinking about that platform? And clearly you've been investing in the actual dry bulk ownership platform with the CAVE acquisitions. But just in general, about the trading business, how are you thinking about that going forward? Is it still a main piece of the pie, or are you looking to scale that back?
Circles of changes happening there at the personnel level just in general wanted to ask how are we thinking about that platform and clearly you've been investing in the actual dry bulk ownership platform with the acquisitions.
Speaker Change: But just in general about the trading business. How are you thinking about that going forward is it that's still yes, there's still a main piece of the pie or are you looking to scale that back.
Gregory Zikos: No, no, no. First of all, thank you for that question, because you're right. There were reports in Lois Leaks and Tradewinds, and rightfully so. A lot of people ask the same questions you are asking. A couple of points. We do support CBI. This is a long-term business for us. As I mentioned in my commentary, we consider the dry pile owning side, together with the trading platform of CBI, as highly complementary activities. And there is absolutely no thought to scale it back. Quite the opposite.
Speaker Change: No no no.
Speaker Change: First of all thank you for the question because right.
Speaker Change: Unfortunately, though as Dave said.
Speaker Change: Today, Dwayne said rightfully so a lot of people ask the second question you are asking.
Speaker Change: A couple of points.
Speaker Change: We do support C. B I. This is a long term business for us.
Speaker Change: As I mentioned in my Goldman Die.
Speaker Change: Consider the dry bulk on the O&M.
Speaker Change: Owning side together with the dreaded glassdoor above CPI.
Speaker Change: Highly complementary activities and there is absolutely.
So to scale its box quite the opposite.
Gregory Zikos: The personnel changes, they were affected for various reasons, but they have absolutely nothing to do with our intention to continue investing in the dry pile business, including the trading platform. So today, CBI commercially manages close to 56 vessels, plus 37 ships owned by the dry bulk business. So we're going to be getting close to 100 ships. And this is quite a substantial business of operation, which I think we should consider this internally as one business, as one entity. So going forward, our goal is to stay there and to continue investing.
Speaker Change: The peso net.
Speaker Change: Yes, James this they were affected for wide bodies.
Speaker Change: Absolutely nothing to do with.
Speaker Change: It's our intention to continue investing in the dry bulk business, including the trading platform. So today's you'd be I, a commercially minded as close to 56 vessels.
Speaker Change: 37 ships are owned by the dry bulk of business. So we're gonna be getting close to Congress shapes are and this is quite a substantial business.
Speaker Change: Shall we say.
Speaker Change: We should consider this internally.
Speaker Change: As one business as one entity so going forward our goal is to.
Speaker Change: To stay there and to continue investing.
Omar Nokta: Okay. All right.
Speaker Change: Okay Alright. Thank you Greg that's it for me I'll turn it over thank you.
Omar Nokta: Thank you, Greg. That's it for me.
Operator: I'll turn it over. Greg, thank you. Thanks.
Pernille Buhl: The next question comes from a line of Ben Nolan with Steve... Please go ahead. Hi, this is Pernille on for VIN, but thanks for taking my question.
Speaker Change: The next question comes from the line of Ben Nolan with Stifel. Please go ahead.
Speaker Change: Hi, This is parnella Entre then, but thanks for taking my question.
Pernille Buhl: I wanted to ask with the announced time charters giving some better cash flow visibility and the strengthening balance sheet, any thoughts on moving the dividend higher from the eleven and a half cents per quarter? Okay, now the dividend is like, yes, as we already said, 11.5 or 46 cents per year.
Speaker Change: I wanted to.
Speaker Change: With the announced time charters, giving some better cash flow visibility and the strengthening balance sheet any thoughts on moving the dividend higher from the 11 and a half cents per quarter.
Speaker Change: Okay now the dividend is like Oh, yes.
Speaker Change: Good day, and a half therefore disease.
Speaker Change: So like Oh, yeah.
Speaker Change: A.
Gregory Zikos: Couple of points. First of all, this is a board decision and I'm not authorized now to sort of speak on behalf of the board. We have a dividend policy which is flexible and can be revised. Of course, I cannot exclude the possibility of one of dividend payments or of increasing the dividend steadily per quarter. In the past, we have done both. And also, in the past, we used share buybacks. But I'm afraid that at this moment, I cannot give any color on that. This is something which is not for me to say right now. But definitely, in the past, we have done one of dividend payments.
Couple of points first of all this is a board decision.
Speaker Change: It is now so to speak would be helpful, but well the boards.
Speaker Change: David the important discipline.
Speaker Change: Mexico, then they can be revised.
Speaker Change: Yeah of course, I cannot exclude the possibility of like a one off dividend payments or elsewhere.
Speaker Change: Increasing the dividend steady per quarter in the past we have done both.
Speaker Change: And also in the past we used to show by box.
Speaker Change: But I'm afraid that at this moment I cannot give any color Oh gosh. This is something which is a which is not for me to say right now, but definitely in the past we have done.
Speaker Change: And one of dividend payments, we have increased.
Gregory Zikos: We have not sort of increased the dividend. And we have also done share buybacks and also preferred stock buybacks. Probably, this is not the case now for the preferred stock.
Increase the dividend and we have also done.
Speaker Change: You know buybacks and those are perpetual buybacks.
Speaker Change: Probably this is not the case now for the preferred stock, but this is something for the board to.
Gregory Zikos: But this is something for the board to decide.
To decide.
Pernille Buhl: All right, appreciate it, thank you. Thank you.
Speaker Change: Alright I appreciate it thank you.
Speaker Change: Thank you.
Climent Molins: The next question comes from the line of Climent Molins with Value Investors Edge. Please go ahead. Good morning. Thank you for taking my question. Most has already been covered, but I wanted to touch upon your sale and purchase activity. Over the past year, you've acquired some capes, while also shedding some older tonnage. And I was wondering, what's your B1 current asset pricing on the dry side?
Speaker Change: The next question comes from the line of Kleeman Marlins with value Investor's edge. Please go ahead.
Speaker Change: Good morning, Thank you for taking my questions.
Speaker Change: Most of it has already been covered but I wanted to touch upon your caelum purchase activity.
Speaker Change: Over the past year, you've acquired some capes, while also shedding some older tonnage and I was wondering what's your view on current asset pricing on dry site.
Climent Molins: And secondly, going forward, do you have a preference to continue building your CAPE exposure or are you comfortable as is? Yeah, I mean, what we have been traditionally doing all like over the last year or a year and a half, we have been buying cake. opportunistically and disposing of smaller tonnets. Now, we have been quite careful on how much we buy and how much we sell. And well, like asset prices are today for CAPES, for example, let's take the new buildings. I think they are at levels which we would consider high in order to put a new building in order for a CAPE.
Speaker Change: And secondly, going forward do you have a preference to continue building eurocreep exposure or are you can first of all ashish.
Speaker Change: Yeah Paul.
Speaker Change: What we have been traditionally either do it or like what was it last year.
Speaker Change: Uh huh.
Speaker Change: We have been buying capes.
Speaker Change: Opportunistically and disposing of a smaller donuts.
Speaker Change: Now we.
We have been there.
Speaker Change: Careful how much we buy and knows how much we sell.
Speaker Change: And we're like assets bright it's hard today for games for example, let's take the new buildings I think they are at levels, which we would consider a high in order to put that you're building or the 40 K oar.
Gregory Zikos: Also, I'm not sure today whether asset prices for the CAPES represent today's chartering capacity of those vessels and the FFA curve going forward. So, they may be a bit overpriced. So, I mean, we don't have a reason to buy if something we feel it is expensive. We consider weight. Our fleet is big enough, so there is no need to grow it further. So where asset prices are today, we are more opportunistic rather than buying and block vessels where, especially considering Q4 for the Capes, it hasn't been a great market as of now. So, I mean, we're going to be more careful and take it as we go.
Also I'm watching today, where the asset advisors for the Capes.
Speaker Change: And at present.
Speaker Change: Today's chartering capacity of those vessels and the FFA curve going forward. So there may be a bit overpriced. So I mean, we don't have a reason to buy something we feel it is expensive.
Speaker Change: Got it the wait out of a fleet is a big enough. So there's no need to grow it further.
Speaker Change: So what I'm surprised is that today, we have more opportunistic rather than buying.
Speaker Change: And global basis.
Speaker Change: Especially considering two four for the games it hasn't been a great market as of now.
Speaker Change: So I mean, we're going to be more careful there.
Speaker Change: As we go.
Gregory Zikos: That's very helpful, thank you. And on the container ship side, you've taken a fairly conservative approach to fleet renewal, basically focusing on generating cash flow from existing assets. Is there maybe any appetite to, going forward, acquire some modern tonnage? Or is asset pricing still too high?
Speaker Change: That's very helpful. Thank you and on the containership side, you've taken a fairly conservative approach to fleet renewal basically focusing on generating cash flow from existing assets.
Speaker Change: There may be at any appetite to going forward to acquire some modern tonnage or you said pricing is still too high.
Gregory Zikos: Look, we haven't, we don't have any new buildings, any new building commitments today because had we any new buildings delivered today or like next year, I think asset prices for the containers of new buildings have been extremely high from a historical perspective. So either new buildings or, like, three, five-year-old tornacing containers today, I think the prices are high, irrespective of the chartering market. So I think we would be assuming excessive residual-value risk, and this is the reason we haven't done it. Now, of course, there may be opportunities. We look at the market. but we are extremely cautious.
Speaker Change: Okay.
Speaker Change: We haven't we don't have any new buildings.
Speaker Change: We think we're going to Miss a day because sadly.
Speaker Change: Deliberate so today or like next year I'm surprised there's political intangible buildings have been extremely high from a historical perspective.
Speaker Change: So I think you'll buildings were like three five year old doing that you can go down as the day I think the brothers, okay irrespective of the chartering.
Speaker Change: Market. So I think we would be assuming excessive residual value risk and this is the reason that we haven't done. It now of course, there may be opportunities, we look at the market.
Speaker Change: But we are extremely cautious.
Climent Molins: Makes sense.
Speaker Change: Makes sense, thanks for the color and congratulations for the order there.
Climent Molins: Thanks for the color and congratulations for the quarter. Thank you.
Speaker Change: Okay. Thank you.
Operator: This concludes our question and answer session.
Speaker Change: This concludes our question and answer session I would like to turn the call to turn the conference back over to Mr. Xie cause for any closing remarks.
Gregory Zikos: I would like to turn the call to turn the conference back over to Mr. Zikos for any closing remarks. Yes. Thank you very much for your interest in Costamare and for dialing in today. We're looking forward to speaking with you again during the next quarterly results call. Thank you.
Speaker Change: Yes.
Xie Kos: You very much for your interest you call somebody and for dialing in today.
Xie Kos: Looking forward to speaking with you again during the next quarterly results call. Thank you.
Speaker Change: Thank you that does conclude our conference for today. Thank you all for participating you may now disconnect.
Operator: That does conclude our conference for today. Thank you all for participating.