Costamare Inc.

Thank you for standing by, ladies and gentlemen, and welcome to the Costa Mare Inc. conference call on the fourth quarter 2020 financial results. We have with us Mr. Gregory Zekos, 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 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 announced. I must advise you that this conference is being recorded today, Tuesday, February 2nd, 2021. 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 statements. And I will now pass the floor to your speaker today, Mr. Zekos. Please go ahead, sir.

Thank you and good morning, ladies and gentlemen. During the fourth quarter, the company continued its profitability. On the back of a rising market, we charted a total of 22,000 investors during the quarter for periods of up to 10 years, substantially enhancing both our contracted revenues and charter coverage. The new charters contribute north of $440 million in incremental revenues and have a weighted average duration of about five years. On the market, the idle contingency fleet continued to shrink and now stands at about 1%. Supported by healthy demand and the chronic shortage of vessels, charter rates have been on the rise. We have 10 ships coming off charter over the next six months, which positions favorably should current market dynamics persist. With liquidity of above $200 million, a streamlined debt repayment schedule and minimal capex commitments, We are well positioned for a healthy expansion in a volatile market environment. Turning now to the slide presentation. On slide three, you can see a company snapshot. More than 46 years in the shipping industry. Uninterrupted dividend payments since going public. Strong sponsor support. Never had to restructure our debt. A smooth debt repayment profile. Fully aligned interests. No related party acquisitions. Steady management and ownership. and high growth potential with no legacy debt restrictions. Moving to the next slide, here you can see the resilience of our business model, steady revenues and income in a highly volatile shipping environment. On slide five you can see the highlights. Adjusted net income for the quarter is $32.5 million and the adjusted EPS is 27 cents. Our adjusted net income for 2020 is $124 million and the EPS is $1.02. We do maintain a strong balance sheet with liquidity of about $210 million, book leverage of 55%, market value-based leverage of 37%, and no meaningful debt maturities until 2024. Moving to the next slide, we have charted in total 20 vessels during the quarter. The new charters represent an increase of $440 million in contracted revenues and have a weighted average duration of about five years. As you can see, we have chartered four ships on a forward basis for a 10-year period at a rate of $33,000 per day per vessel and a 1996-built vessel for two years at a rate of $31,000. Slide 7. The charter market has continued to rise on the back of positive supply and demand fundamentals. Time charter rates increased substantially over the last six months. The idle fleet is 1%. and the order book stands at 10% of the existing fleet, which is a historically low number. As part of our fleet renewal program, we continue the sale of all the tonnage. Over the past quarter, we sold a 21-year-old container ship and have bought three younger vessels. The two 2004-built 7,000 TU ships are expected to be delivered this month, and upon delivery will be chartered to a leading liner company for a period of two years. Slide eight. We will pay our 41st consecutive quarterly dividend in February. Insiders have been participating in the DRIP instituted in June 2016, and these exceptions have reinvested in total $95 million. Slide 9. During the fourth quarter, the company generated revenues of $119 million and adjusted net income of $33 million. Based on the above, the fourth quarter adjusted TPS is $0.27. The adjusted figures take into consideration the following non-cast items, accrued charter revenues, accounting gains or losses from asset disposals, prepaid lease rentals, and other non-cast charges. On slide 10, you can see a summary of our capital structure. Our leverage is comfortably below 40%. Net debt to 12-month trailing EBITDA is 3.4 times, and EBITDA over net interest expense is at 5.1 times, when our companies have a minimum requirement of about 2.5 times coverage. On slide 11, we are showing the revenue contribution for our fleet. Almost 100% of our contracted cash comes from first-class charters like Maersk, MSC, Evergreen, Costco, Yang Ming, and Hapagloid. We have today 2.4 billion in contracted revenues, and the remaining times are the duration of about 4.4 years. On the last two slides, we're discussing the market. As already mentioned, charter rates have significantly improved, especially in the second half of 2020. Box rates have increased by more than 170% on a yearly basis. Slide 13. The idle fleet has been reduced to 1% from a high of 11.6% in May 2020. The order book stands at 10%. As mentioned, we are well positioned to capitalize on opportunities in this 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 2. Press star then 1 to ask a question. And your first question comes from the line of Chris Weatherby with Citi. Please go ahead.