Costamare Inc.

Thank you for standing by, ladies and gentlemen. And welcome to the Costa Mera Incorporated conference call on the third quarter 2022 financial results. 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 one on your telephone keypad. and wait for your name to be announced. I must advise you that this conference is being recorded today, Wednesday, November 2nd, 2022. We would like to remind you that this conference call contains four looking statements. Please take a moment to read slide number two of the presentation, which contains the four looking statements. And I will now pass the floor to your speaker today, Mr. Zicos. Please go ahead.

Thank you, and good morning, ladies and gentlemen. During the third quarter, revenues reached approximately $290 million, and adjusted net income reached $107 million, compared to $216 million and $82 million for the same period last year. As of quarter end, cash balances and short-term investments stood at around $745 million, and total liquidity, including interim credit lines, was above 890 million. Focusing on increasing visibility and our contracted cash flow base, we have recently charted with a leading liner company a total of 11 container ships, with existing charters originally expiring between 2023 and 2025. Seven of those vessels were charted for a period ranging from four to five years, starting from 2025 onwards, and the remaining ships were charted for a period ranging from two to three years, with forward starts in 2023 The new charters increase our contracted revenues by about 420 million and result in incremental charter coverage of about 4.5 years. Regarding the container market, cargo volumes have been softening across several trade lanes, with energy costs and inflation impacting consumer spending. Fixing activity has been at low levels, and the majority of new fixtures are for short-term employment. Charter rates have been under pressure, although they do remain at profitable levels. On the dry bulk market, rates for our best sizes remain profitable, especially for owners who entered the market the year before. We feel comfortable with the long-term supply and demand dynamics of the sector, and we view any potential shortening of asset values as a compelling buying opportunity. On the back of our increased liquidity and containers at the coverage, we are focused on new investment opportunities in the shipping sector that have the potential to provide enhanced returns at acceptable risk levels. Moving now to the slide presentation. On slide 3, you can see our third quarter results, which was the best Q3 since our listing. For the quarter, net income was $180 million, or $0.89 per share. Adjusted net income was $0.88 per share. And our liquidity is up by almost $340 million year-over-year to roughly $900 million. Slide 4. As already mentioned, during the quarter, we forward-fixed 11 containerships for an incremental average period of 4.6 years. that adds approximately 420 million in contracted revenues. The new charters begin between 2023 and 2025 for the latest. Our revenue days are 100% fixed for 2022, over 96% fixed for 2023, and 84% fixed for 2024. We do continue to charter all our dry bulk purchases in the sport market, chartering 24 ships since our last earnings release. On slide 5, you can see an update on our refinancing arrangements. We refinanced two 26-year-old vessels during Q3 for four years through a $46 million facility. Our corporate leverage remains below 30%, and we continue to maintain a strong balance sheet. Finally, in October, we concluded the sale of three contenderships for a combined capital gain of around $106 million, expected to be realized in Q4 of this year. Slide 6. The container ship trade market has been under pressure over the past months. The dry bulk market has also weakened but remains at healthy levels, especially for smaller size vessels which we operate. The order book is at historically low levels. Finally, we continue to have a long uninterrupted dividend track record boosted by strong sponsor support. Slide 7. Our liquidity has increased significantly both year-over-year and quarter-over-quarter. This liquidity gives us the ability to look for opportunities to grow without risking our balance sheet and provides us with a strong cushion. Moving to the next slide, slide eight. You can see our contingency fleet has a current backlog of $3.5 billion, with a duration of 4.4 years. As already mentioned, we are fully fixed for 22, and we are more than 96% and 84% fixed for 2023 and 2024, respectively. These fixed revenues come from a diversified list of first-class charters, such as Maersk, MSC, Evergreen, Zim, Costco, Yangming, and Hapaclorid. Slide 9. You can see the third quarter 2022 snapshot. We had an average of 170 investments, and our adjusted net income was $107 million, or $0.88 per share. The adjusted figures take into consideration the following items, accrued charter revenues, accounting gains and losses from massive disposals and other non-recurring or non-cast items. Moving to slide 10. Over the past few months, there have been a limited number of fixtures, and the ones that have been concluded were for shorter periods and at lower rates. However, such rates remain firm in a historical context. The commercial contingency fleet remains essentially employed with a very low idle capacity of about 1.8%, while vessel availability remains low. Moving to the last slide, slide 11, you can see the recent dry mud market trends where rates have been volatile but do remain at profitable levels, especially for owners like us who entered the market last year. The order book is around 7%, a historically low figure, which translates into modest growth. With that, we conclude 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 one 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's star one to ask a question. The first question today comes from Chris Weatherby with Citigroup. Please go ahead.