Costamare Inc.

Thank you for standing by, ladies and gentlemen, and welcome to the Custom Alley, Inc. conference call on the third quarter 2021 financial result. We have with us Mr. Gregory Zicos, 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, Wednesday, October 27, 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. The container market rebound that began in the second half of last year is continuing, drawing strength from favorable supply and demand dynamics. The availability of container ships in the market has been stretched thin due to high cargo volumes and strong tonnage demand that has been exacerbated by port congestion and an overall shortage of equipment. All our container ships started during the quarter have been fixed at increasingly high levels of hire. On the dry-bark side, we took delivery of 20 additional vessels, bringing the number of dry-bark vessels that have been delivered to us to 34. The remaining three ships are expected to be delivered by year-end. All our dry-bark vessels are employed in the sport market, yielding very healthy returns. Contracted revenues have reached 3.3 billion and the average time-travel duration for our potentially fleet stands at more than four years. We have nine containerships coming off-charter by the end of next year and 37 dry-bark vessels operating in the spot market, favorably positioning our company should the currently strong market conditions continue. Moving now to the slide presentation. On slide three, you can see the highlights of a very profitable third quarter. Net income for the quarter is $107 million and the EPS is $0.87. an increase of over 500% year-over-year. Advantaged net income is $81 million, up more than 200% compared to the third quarter of last year, and adjusted TPS is $0.66. We have now taken delivery of 34 out of the 37 type of vessels, and the three remaining ships are expected to be delivered by year-end. We have also selectively sold some of our older container ships at attractive levels, booking capital gains of $36 million. On slide four, you can see our liquidity and new financing arrangements. We have concluded another heavy license financing of $150 million that gives us additional firepower. All our contenderships and dry-bark purchases have the funding in place, and our remaining capital commitments are minor relative to our cash position. We do maintain a strong balance sheet with liquidity of about $560 million, market value-based leverage of 32%, and no meaningful debt maturities until 2025. On slide five, we discuss our new chartering arrangements. We have entered into or extended the charges of 5Ss at much higher levels. On average, the new charters were fixed at a rate of 2.3 times higher with a much longer average duration. Our most recent fixture, the Glen Canyon, is a forward fixture commencing in Q2 2022 and was done at $62,500 per day for three and a half years. Moving to slide six, on slide six you can see the charting of our dry vessels. We have charted in total 18 ships at healthy levels. You can see a sample of some of the pictures which have been concluded during the quarter. Moving to slide seven, the containership charter market has continued to outperform on the back of positive supply and demand fundamentals. The added fleet was 0.6% in October, indicating a fully employed market. The dry ballot market has reached levels not seen since 2008, as demand for commodities continues and supply constraints remain to drive the market. We have also paid our 43rd dividend in August, and we will pay our 44th consecutive dividend in November. Slide 8. On this slide, you can see the third quarter 2021 results. The company generated revenues of $216 million and adjusted an income of $81.5 million. Based on the above, the third quarter adjusted TPS is $0.66, up 200% year-over-year. The adjusted figures take into consideration the following non-cash items, the accrued charter revenues, accounting gains or losses from massive disposals, prepaid lease rentals and other non-cash charges, and changes in the fair value of equity securities. On slide 9, you can see our capital structure. Our leverage is constantly at 32% based on current market values. As you can see from the slide, our market value adjusted assets is equal to $7.6 billion. Slide 10. On this slide, you see the revenue contribution for our container ship fleet and our contractors' revenues. The revenues come from top charters like Maersk, MSC, Evergreen, Costco, Youngmin, We have 3.3 billion in contracted revenues and a remaining weighted time charted duration of about 4.2 years. On the next two slides, we discuss the contingency market that remains in tight supply. Charter rates continue to significantly improve across all venture sizes, up over 900% since the end of June 2020. Box rates have increased by over 210% on a yearly basis. And while there was a slight dip during the Chinese quarter week, rates continue to remain at healthy levels. Moving on to slide 12, the adult fleet is at 0.6% or full commercial utilization from a high of 12% one year ago. The order book has risen to 23% as new ordering has accelerated over the past quarters. It should be noted, however, that it takes close to two years to build a new vessel. and the majority of new building versions that have been ordered will not be delivered until 2023 and beyond. On the last two slides, we discussed the dry bulk market. As shown on slide 13, charter A's have significantly improved since Q3 2020 and have remained at healthy levels. Although asset values have been trending upward since late 2020, they have lacked the increase in charter A's. On the last slide, you can see that the expectation is for demand growth to continue to exceed supply growth, at least through the end of 2022. At the same time, the order book remains at historical low levels, especially for the sizes that we have invested in, and feed growth is expected to decline over the next several years, which creates a favorable backdrop for the market. 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 request, please press star then 2. Once again, that's star then 1 to ask a question. And your first question today comes from Chris Weatherby at Citi. Please go ahead.