Costamare Inc.

Thank you for standing by, ladies and gentlemen, and welcome to the Costa Mary conference call on the fourth quarter 2021 financial results. Pardon me, it's the first quarter. We have with us Mr. Gregory Zico, 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, June 1st, 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 like to pass the call over to your speaker, Mr. Tsikos. Please go ahead, sir.

Thank you, and good morning, ladies and gentlemen. We are pleased to announce the results of another profitable quarter. The market rebound that began in the second half of last year has continued, drawing strength from favorable supply and demand dynamics. Strong demand for goods, restocking of inventories, and the balanced container vessel market have all helped the charter market reach levels that we have not seen for a decade. Since the beginning of the year, we have agreed to acquire in total 15 second-hand vessels, and we have taken delivery of our last two new buildings, which have commenced their 10-year charters. Employment already secured for the new acquisitions, together with the new buildings delivered, is expected to provide incremental contracted revenues of more than $830 million. Since our previous quarterly earnings release, we charted out a total of 17 second-hand ships at increasingly high levels of hire. We have a total of 23 ships coming off charter over the next 18 months, which is a favorable position should the current market conditions continue. Finally, on the financing side, we have recently concluded the issuance and listing of the first shipping unsecured bond on the Athens Exchange for 100 million euros. Based on an exceptionally high demand, the bond was priced at the low end of the yield range with a 2.7% coupon for a five-year period. Based on these business developments and our increasing long-term cash flows and liquidity, management is pleased to recommend to the Board of Directors to increase our second quarter 2021 dividend by 15%. Our balance sheet, together with cash flows from operations and liquidity position, provides us with the ability to increase the dividend without any impact on our growth plans. Moving now to the slide presentation. On slide three, you can see a company snapshot. More than 47 years in the shipping industry, uninterrupted dividend payments is going public, strong sponsor support, never had to restructure our debt, smooth debt repayment profile, fully aligned interest, steady management and ownership, and high growth potential with no legacy debt restrictions. On the next slide, slide four, here you can see the resilience of our business model. Steady revenues and net income in a highly volatile shipping environment. On slide five, you can see the highlights. Management will recommend to the board a 15% increase in the quarterly common dividend effect from Q2 2021. Adjusted net income for the quarter is 38 million, and the adjusted TPS, 31 cents. In the previous week, we concluded the issuance of the first unsecured bond on the ATHAS exchange. The ten was five years, and due to the exceptionally high demand, it was priced at the low end of the rate of 2.7 percent. The bond diversifies our farming sources at highly competitive pricing levels. Moving to the next slide. We have been quite active on the SAP market. In total, we have acquired 17 vessels worth north of $760 million. These incremental contracted revenues from the acquisitions amount to approximately $830 million. We have also agreed to sell three of our vessels. Sales are expected to be concluded within 2021. On slide seven, you can see our new financing arrangements in the beginning of the year. In total, we have concluded financing agreements of about $430 million. The new financing commitments amount to $237 million. All VESAs acquired in 2021 have either been financed or have binding commitments for their financing. We do maintain a strong balance sheet with liquidity of about $240 million, book levers of 60%, market value-based levers at around 40%, and no meaningful debt maturities until 2025. On slide 8, we have charted in total 12 vessels in 2021 at higher levels than the previously agreed ones. On top of all, these five second-hand vessels whose delivery is expected to occur within 2021 are our long-term charters. As already mentioned, we have a total of 23 ships coming off charter over the next 18 months, which positions us favorably should current market conditions continue. On the market, the charter market has continued to rise on the back of forced supply and demand fundamentals. Time charter rates have further increased in 2021. The idle fleet remains at levels close to 1%. We have paid our 42nd consecutive quarterly dividend in April. Insiders have been participating in the drip and since inception in 2016 have reinvested north of $100 million. On the next slide, you can see the first quarter 2021 results. During the first quarter of the year, the company generated revenues of 127 million and adjusted NTCAM of 38 million. The first quarter adjusted EPS, as already mentioned, is 31 cents. Our adjusted figures take into consideration the following non-cash items, accrued charter revenues, accounting gains or losses from massive disposals, prepaid lease rentals, and changes in the fair value of equity securities. Moving to the next slide. On slide 11, we are discussing our capital structure. Our leverage is comfortably at around 40%. EBITDA over net interest is at 5.8 times when our cabinets have a minimum requirements of 2.5 times coverage. On slide 12, we are showing the revenue contribution for our fleet. Ninety-six percent of our contracted cash comes from first-class charterers like Maersk, MSC, Evergreen, Costco, Yang Ming, and Hapag Lloyd. Today, we have $3 billion in contracted revenues, and the remaining times are the duration of about 4.2 years. On the last two slides, we're discussing the market. Charter rates have continued to improve. Since the second half of 2020, rates have increased on average by 300%. Box rates have also a positive trend due to favorable supply and demand dynamics. On the last slide, slide 14, the idle fleet is at 1% from a high of 12% the same period one year ago. The order book has risen to circa 18%. It should be noted, however, that it takes close to two years to build a new ship, and new buildings now ordered will be delivered from 2023 onwards. 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 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 question, please press star then 2. That's star 1 to ask a question. Our first question today comes from Chris Weatherby with Citigroup. Please go ahead.