Costamare Inc.

Thank you for standing by, ladies and gentlemen, and welcome to the Costamara, Inc. conference call on the first quarter 2024 financial results. 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 1 on your telephone keypad and wait for your name to be announced. I must advise you that this conference is being recorded today, Friday, May 10, 2024. 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. Zygos. Please go ahead, sir.

Thank you and good morning, ladies and gentlemen. During the first quarter of the year, the company generated net income of about 94 million. As of quarter end, liquidity was close to 1.1 billion. In the container ship sector, charter rates have seen significant improvement from the end of last year. Demolition has fallen to levels below what was experienced during the first quarter of 2023. Although cargo volumes have generally improved, Disruption in Red Sea is the main reason for the improved charter market. We have proactively secured deployment for 97% and 80% of our contingency fleet for 2024 and 2025, respectively, generating contracted revenues of $2.3 billion, with a remaining time-traded duration of 3.4 years. On the dry bulk side, as part of our strategy to renew the fleet and increase its average size, we have agreed to acquire two more cape-sized vessels and accept the delivery of one simpler-sized ship. In total, we have acquired five cape-sized vessels with an average age of about 12.5 years and disposed of a total of 10 smaller-sized ships with an average age of 14 years. Our own dry-bulk vessels continue to trade on a sport basis while the trading platform is commercially managing a fleet of 54 ships. As mentioned in the past, we have a long-term commitment to the dry-bulk sector which has been a strategic decision for us. Regarding Neptune MyTime leasing, the platform has been steadily growing, having concluded leasing transactions for 24 ships in total, on the back of a healthy pipeline extending over the coming quarters. Moving now to the slide presentation. On slide three, you can see our first quarter results. Netting up for the quarter was roughly 94 million, or 79 shares per share. Adjusted net income was about $75 million, or 63 cents per cent. Our liquidity stands at about $1.1 billion. Slide 4. On the container ship side, our revenue dates are fixed 97% for 24 and 80% for 25, while our contracted revenues are 2.3 billion, with a TU weight that remains in duration of 3.4 years. In parallel, we continue to charter all our dry bag vessels in the spot market, having entered into more than 30 charting agreements since our last earnings release. Slide 5. We do execute on our strategy to renew our fleet and increase its size. During the last quarters, we have acquired five Cape Sides and one Ultramax ship with an average age of 12 years, and we also have disposed of 10 smaller vessels with an average age of 14 years. Slide 6 shows in more detail the S&P activity since our last earnings release. Slide 5, regarding CBI, we have charted in 54 period vessels, with the majority of the fleet being on index-linked agreements. On our leasing platform, we have already invested around $120 million. Since inception, NML has financed 24 assets through sale and leaseback transactions, and has a very healthy pipeline going forward. Moving to slide eight, we do have roughly available $116 million for financing of personal acquisitions through hunting licenses. In addition, we continue to have a long uninterrupted dividend track record boosted by strong sponsor support. Moving to slide nine, our liquidity stands at about $1.1 billion. This liquidity gives us the ability to look for opportunities to grow the company on a healthy basis. Moving to slide 10. Charter rates in the contingency market have been rising lately across all segments, having benefited from the red seed disruption. The idle capacity remains at low levels at 0.6%. Moving to slide 11, the final slide. You can see the recent dry market trends in the spot and forward market. Charter rates remain volatile, however, trading higher than the first quarter of last year. The order book is at about 9% of the total fleet. With that, we conclude our presentation, and we can now take questions. Thank you. Operator, we can take questions now.

Thank you, sir. As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press star two. Again, that's star one to ask a question. Your first question comes from the line of Ben Nolan with Stifel. Please go ahead.

Hi, guys. It's actually Prunella on for Ben, but thanks for taking my question. I wanted to ask what the expectation is going forward for putting additional capital into Neptune Leasing.

Yeah, I mean, for nexon leasing we have announced that we're going to be investing up to 200 million of equity. The figure we have in our press release of around 120 million of equity already invested excludes back leverage which, like, we're going to be receiving over the next months. So the net amount actually invested after the back leverage is going to be committed, it's actually lower. So from an equity perspective, I can say that we could definitely invest $150 million more of equity. And subject to our back leverage strategy and commitment, this amount could even go higher. Now, in case there are deals that we feel that make sense from a risk and returns perspective, Also considering our liquidity, we would have a problem revisiting this figure in case we would like to go north of that. However, this is a bit premature now. As of today, I think we have more than enough capacity to grow further this platform, which provides returns that make sense, also considering the risk involved.

Great. Thank you so much.

Thank you.

Thank you. As a reminder, to ask a question, you may press star, then 1. The next question is from Clement Mullins with Value Investor's Edge. Please go ahead.

Good afternoon. Thank you for taking my questions. I wanted to start by asking about the dry bulk fleet. Over the past year, you focused on expanding your gate size exposure while divesting some smaller vessels. Asset values have increased significantly lately, but should we expect additional acquisitions going forward?

Look, we have bought up to now five cave-sized vessels and one ultra-max. We haven't bought more vessels, exactly for the reason you rightly mentioned, that asset values have been going up, and the same applies for new buildings. So, we are very sensitive regarding the acquisition price. If there is a correction in the market, most probably you're going to see us entering into more S&P transactions. Otherwise, we will sit and wait. We don't have to hurry. And there is no reason for us to grow based on deals that cannot be justified on the numbers. So it depends on market conditions, but there is no predetermined growth rate that we need to meet. Quite the opposite. Our goal is to enter into transactions that do make sense and that they do cover our downside, of course, leaving some upside for our shareholders as well.

Thanks for the call. And is it fair to assume that most of the dry vessels are currently operated in the spot market?

For the time being, yes. You talk about our old dry bulk ships. I mean, up to now we have been operating them in the spot market. However, again, this is subject to market conditions. If we take the view for like a period, it could make sense to lock some of them in like fixed rates. Then this is something we could consider. There is no predetermined rule. We are flexible. And this is subject to market circumstances. Also, those vessels were bought, most of them, or the majority of the dry bulk corn flint was bought in the summer of 2021, where prices were much lower. So by default, those ships, they have low leverage, and break-even levels are quite low. So there are no restrictions, and there are no requirements from our lenders, or like from a cost break-even perspective. to charter the ships at the minimum rate. We have the flexibility. As you've seen, we also have the liquidity. So there we're going to be opportunistic. If it makes sense, yes, some of the ships in the future might be chartered out for a period. It remains to be seen. But I'm afraid that at this point I cannot forecast how the market is going to go and what our decision is going to be.

Thanks for the call, Lord. And final question from me. On the container ship side, are you currently seeing any opportunities, or do you believe asset values still remain somewhat elevated relative to underlying fundamentals?

I think that for the container ships, if you look at the new building prices, I think they are still at high levels, looking at it historically. Also, comparing those prices to the prices we had for the new buildings some years ago. Also for second-hand chips, yes, we don't see a lot of opportunities considering where asset values are. I think it may take some time until after rates and values which are correlated see some correction. So we don't see something that does make sense right now for us considering our risk-reward approach. So there we see the weight. What we have been doing, as already mentioned, we have proactively charted on a forward basis most of our fleet with a very solid charter coverage for like 24, where literally all our fleet is chartered close to 97, which is actually close to 100%, and at 80% for next year, which provides us with great visibility Going forward.

Makes sense. That's all from me. Thank you for taking my questions.

Thank you. Again, to ask a question, you may press star, then 1. Seeing no further questions at this time, I would like to pass the call back over to Mr. Zicos for his closing remarks.

Thank you very much for your interest in Costa Mare and for dialing in today. I hope we're going to speak again soon during our next conference results call. Thank you very much.

Thank you. That does conclude our conference for today. Thank you all for participating. You may now disconnect your lines.