Costamare Inc.

Thank you for standing by, ladies and gentlemen, and welcome to the Costomer Incorporated conference call on the second quarter 2020 financial results. With us, we have Mr. Gregory Zekos, Chief Financial Officer of the company. This time, all participants are in 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 1 on your telephone keypad and wait for your name to be announced. I must advise you that this event is being recorded today, Tuesday, July 28, 2020. We'd 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 statements. And I'll pass the floor to your speaker today, Mr. Sikos, please go ahead, sir.

Thank you, Ed. Good morning, ladies and gentlemen. During the second quarter, the company delivered strong results. Liquidity stood at around $220 million, and as already announced, during the second quarter of the year, we concluded our refinancing program, resulting in a smooth repayment profile with no meaningful debt maturities until 2024. On the market side, Latest capacity has started decreasing, indicating improving market conditions. Demand continues to favor the larger and medium sizes, and especially ships above 8,000 TEUs. Market activity has picked up, and we have charted in total 24 ships during the quarter. After months of inactivity, the demolition market has reopened, and as part of our fleet renewal program, we have sold for demolition to 7,000 TEU ships, which we plan to replace with younger tonnage. Moving now to the slide presentation. On slide three, you can see the highlights. We do maintain a strong balance sheet with liquidity of about $220 million, leverage of approximately 40%, and no meaningful debt maturities until 2024. Adjusted net income for the quarter rose by approximately $5 million to $32 million. The adjusted EPS is $0.26, a 13% increase compared to Q2 2019. The net loss of 84 million is due to one-off non-cash losses of close to 110 million relating to asset disposals. Moving to slide four, our adjusted net income for the first half of the year rose by approximately 25 million to 64 million dollars. The adjusted EPS is 54 cents, a 54% increase compared to the first half of 2019. Net losses for the first half of the year amounted to 58 million, due to one-off non-cash losses of about $110 million relating again to asset disposals. Since the beginning of the year, we have raised more than $435 million in debt financing. Slide 5. We have continued our efficient fleet operation with comparative operating expenses of just over $4,900 per day per vessel. We have recently taken delivery of our first 13,000 TU containership out of a series of five sister vessels. The ship has commenced its 10-year charter with Yang Ming. The remaining four new buildings will also commence their respective 10-year charters upon their deliveries. Finally, as part of our fleet renewal program, we sold two 23-year-old sister vessels, and as already mentioned, we plan to replace them with younger donors. Moving to slide six. In a volatile charter environment, we have chartered in total 24 versions during the quarter. Although the contingency market has been negatively affected by the COVID outbreak, there are signs of improvement in charter rates and market activity over the past two months. The idle fleet has been decreasing, while the order book has dropped to 9% and is expected to remain low. Finally, we will pay our 39th consecutive quarterly dividend in August. Insiders have been participating in the DRIP and since inception have reinvested in total $90 million. On the next slide, this is slide 7, you can see the second quarter 2020 results. During the second quarter of this year, the company generated revenues of $112 million and adjusted net income of $32 million. Based on the above, the second quarter adjusted EPS increased by 13% from last year to $0.26. Our adjusted figures take into consideration the following non-cash items, the accrued charter revenues, accounting gains or losses from asset disposals, and other non-cash items. On slide 8, we are discussing our capital structure. Our leverage is comfortably below 50%. Net debt to 12-month trailing EBITDA is 3.3 times, and EBITDA over net interest expense is at 5.2 times, when our cabinets have a minimum requirement of 2.5 times coverage. On slide 9, we are showing the revenue contribution for our fleet. Almost 100% of our contracted cash comes from first-class charterers like Maersk, MSC, Evergreen, Costco, Yagbing, and Havagloid. We have 2.1 billion in contracted revenues, and the remaining times are the duration of about 3.5 years. On the last two slides, we were discussing the market. As shown on slide 10, charter rates are showing signs of improvement, mainly for the larger vessels. Box rates have risen by 25% over the past three months. On slide 11, the idle fleet has been reduced to slightly below 8%. The order book has fallen to 9% and it is expected to remain at low levels. As mentioned, our main priority is to cover our downside risk, while at the same time looking for opportunities in such a volatile market environment. This concludes our presentation, and we can now take questions. Thank you. Operator, we can take questions now.

Thank you. As a reminder, if you'd 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 two. That'll be star, then one to ask a question. The first question comes from Chris Weatherby of Citi. Please go ahead.