Costamare Inc (CMRE) 2011 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Costamare conference call on the fourth-quarter and year-end 2011 financial results. We have with us Mister Gregory Zikos, Chief Financial Officer. 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 (Operator Instructions). I must advise you that this conference is being recorded day on Thursday, February 2nd, the year 2012.

This earnings release presentation contains forward-looking statements. In some cases you can identify these statements by forward-looking words such as believe, intend, anticipate, estimate, project, forecast, plan, potential, may, should, could, and expect and similar expressions. These statements are not historical facts but instead represent only Costamare's belief regarding future results, many of which by their nature are inherently uncertain and outside of Costamare's control. It is possible that actual results may differ possibly materially from those anticipated in these forward-looking statements.

For a discussion of similar risks and important factors that could affect the future results see the discussion in our Registration statements on [Form F-1, File Number] 333170033 under the caption Risk Factors. And now I will pass the floor to your speaker today, Mr. Zikos.

Thank you and good morning, ladies and gentlemen. During the fourth quarter and the year, the Company delivered positive results. In 2011 we executed our growth plans, investing at an opportune timing north of $1 billion in newbuilding and secondhand ships. Debt founding for our capital commitments has been properly arranged issuing no financing risk.

We have been selective in our investments. We remain returns-oriented and we do not take growth at unidentified prices assuming excessive market risk. Consistent with our progressive dividend policy we already increased the dividend once since going public, and our goal remains to increase it within payments over time.

Going forward, our (technical difficulty) cash flows combined with our low leverage puts us in a position to execute fast should attractive opportunities arise in a down market, or remain strong and enjoy the upside of a healthy market environment. And now let's move to the slide presentation.

On the first slide you can see the fourth-quarter 2011 results versus the same period of 2010. During the fourth-quarter 2011, the Company generated revenues of $102 million, EBITDA of $68 million and net income of $26 million. For the same period of 2010, the revenues amounted to $86 million and EBITDA income to $[50] million and $12 million, respectively. Considerably, with our previous press releases we feel that the EBITDA net income figures need to be adjusted for the following items.

First the accrued charter revenues and the resulting discrepancy between revenues received on a cash basis and revenues accounted for based on the straight-line amortization schedule. Secondly, the gains or losses resulting from derivatives and, thirdly, the accounting gains and losses resulting from asset disposals.

Adjusting for the above, the fourth-quarter EPS amounts to $0.54 versus $0.33 for the same period of last year and the fourth-quarter EBITDA to $75 million versus $56 million for the same period of last year.

As you can see from the above, the Company generated strong results during the quarter based on [certain] fundamentals. Moving on to the next slide.

On the next slide we are showing the revenue contribution and coverage of our fleet. Our revenues come from first-class operators. Including our contracted new buildings we have $3.15 billion of fixed revenue. More than 90% of our contracted cost comes from Maersk, MSC, Evergreen, and Cosco.

The TEU-weighted average remaining time charter duration of the fleet is 5.7 years. We have pretty much eliminated the [near-term recharter] in Greece and on the right-hand graft you can see the revenues from re-chartering, assuming same rates versus the contracted revenues until 2015. As you can see we have a solid cash flow base..

Moving onto the next slide, slide 5 is dealing with the re-chartering exposure of the Company in 2012. The long story short here based on our above assumptions the Company as of today has a 2012 cash EBITDA of $291 million if 4 ships coming out of charter during the year are rechartered at the same rate.

You can see the cash sensitivity. For a 30% discount on all 2012 rechartering, the cash effect is $12 million, which goes up to $24 million for a 60% discount. So even at this level, the cash EBITDA effect is pretty manageable. If one goes one step further, and assumes that ships coming out of employment during the year and built prior to 1995 are sold for demolition, assuming a scrap arise of $450 per ton, cash proceeds of $48 million more than offset the cash shortfall.

We feel that in order to assess a company's real recharter in Greece someone needs to focus on cash since cash is what servicing a company's debt obligations and cash available for distribution is what is paying the dividends and allows for further growth. Based on the above, we feel that the market in 2012 may be more of an opportunity for us rather than a challenge. Moving on to the next slide.

On slide 6, we discussed our balance sheet management and we are providing some performance ratios. Our debt repayment schedule is more than given its credit in the coming year and is not backloaded and so [we know the] refinancing risk. Since our distributable cash flow on of both debt service bases is [not artificially enhanced]. Our loan portfolio is hedged at the weighted average rate of 4.1% which adds to the cash flow visibility.

Liquidity currently stands at $144 million in cash and $153 million in undrawn credit facilities. At the same time, we have 15 unencumbered vessels and a moderate fleet leverage estimated at around 55%, based on draft compliant certificates.

As we have mentioned we are returns-oriented and this shows in the relevant ratios. Return on equity comes at approximately 33% for 2011 while return on assets stands at 14%. If someone goes back to our historical financials, we have been pretty consistent in delivering similar returns. And now moving to the last slide.

On the last slide, we are discussing the market because [earnings we see] that we will have a fairly balanced market in 2012 with charter rates and asset values recovery expected after the first half of the year. Several high values have been showing signs of weakness correlating to charter rates. The number of family ships has moved up especially during the past couple of weeks. Still today, the ratio of ships at idle is less than 4.5% of the total fleet, well below the peak of 5 vessels in 2009. We expect this figure to further increase before freight rates improve and stabilize on healthier levels.

As mentioned however numerous times in the past, our business model is based on optionality, meaning that we are in a position act whichever way the market goes. Thank you very much.

This concludes our presentation and we can now take questions. Operator?

(Operator Instructions). Ken Hoexter from Merrill Lynch.

Good morning, Greg. It's [Scott Weber] in for Ken. Can you remind us of the dry powder you have available today? What that amounts to and how it breaks down between unencumbered assets and the available liquidity?

Yes. As of year end, we have cash on balance sheet of $144 million and an undrawn credit line of $153 million. Now out of this $153 million we are going to be drawing $21 million which is for the delivery of the containership vessel Ulsan and we expect to get delivery of this vessel, we think February. So this goes down to approximately $130 million and out of that we expect to be drawing this amount, part of it, before the end of -- the end of the availability of the loan facility.

Now I cannot tell you exactly when, but let's say that we have another liability of close to $130 million after the drawing of the Ulsan. Now, for this facility there are some ships that are -- 11 ships which have been identified out of the 15 ships which are unencumbered today. But we are going to be living outside of these facility ships like the MSC, like the Hyundai Navarino which is a 2010 newbuilding, and some other ships which could still be levered and give us additional cash proceeds.

Now, when and what potential acquisitions we are going to be using this fast I'm afraid I cannot give you an exact answer right now. This depends on market conditions, on the view we take about future opportunities and [they're not] speaking about the status of the market.

Sure. And you mentioned briefly that you thought the year ahead would provide some attractive opportunities. Can you talk a little about what you're seeing now and also if you expect to see opportunities with new builds at yards if prices have fallen dramatically there or what you expect with prices at yards?

Yes. First of all regarding -- let's start with the secondhand ships, like the last month we have been looking to renew our fleet. We have some ships which are current employment and we thought about renewing them with some younger assets which we could buy charter 3. Now the charted 3 prices, however, we came across we don't think that they justify today's market conditions and especially today's charter rates.

So we can sit and wait. We are not in a hurry, but this is one such direction we have.

Now regarding sales and leaseback or you know charter-inclusive transactions, from our side we want to make sure that the whole investment is going to be amortized prudently without assuming excessive market risk.

Newbuildings, this is something we would also look at. I'm afraid I cannot be more specific at this point in time. But for the newbuildings we need to bear in mind that it is not only the acquisition cost of a new building, it is also the charter rate attached. All the newbuilding orders we put, we have had them on a back-to-back basis with charter employment. So even if acquisition costs theoretically could go down one should also factor in what is going to be the charter rate the owner is going to be getting for sort of employing the vessel to a charter.

Michael Webber from Wells Fargo.

Just wanted to zero back in on acquisitions for a second and just curious and think maybe get a little bit more detail on in terms of what you are seeing on the market in terms of the size of the deals. You guys filed a shelf a couple of days ago and you just went through your liquidity. So I guess maybe if you could talk about whether you are seeing on block deals or one-offs? And then just to clarify on the shelf the family is not listed there. So the family will not be -- would not be participating on any sort of issuance that comes out of that shelf at any point in time. Just to clarify that.

Yes, first of all, regarding the shelf, I think this is a pretty market proxy for companies that have in public for that say at least 12 months to file a self registration statement and I think from our side it's just a safe and proper housekeeping. Now as you rightly pointed out this particular shelf registration statement does not allow the major holders of Costamare, meaning the Konstantakopoulos family, to sell. And I think this should be sending a very strong message that about the prospects of the Company and about -- you, the major holders, have regarding the potential lag ahead.

So we aren't not sellers and all potential offerings over the next three years under this registration statement are going to be primary, meaning that the cash coming in is going to be used for growth rather than for -- rather than a negative strategy for the current shareholders. So this is the main point.

Now regarding acquisitions, you know, we look at everything. We can look at deals and block. We can look at one asset at a time. We don't have restrictions and we are not prejudiced. As long as the returns are there and the numbers make sense, we can be pretty flexible and I think if you look at our track record, the same period last year at the same time we put newbuilding orders we said [in here] a time charter attached using debt funding and equity, while at the same time buying with equity 90, 94 charter free secondhand vessels. So we can be pretty flexible.

You know, there is one thing we keep hearing from other owners and other private contacts is that lines are starting to link the sale leaseback opportunity with the new build orders. So, basically kind of pawning off some of the residual value risks onto the asset owners and having new build orders placed is to kind of renew their fleet and kind of in combination, which seems like that would be right within your old wheelhouse, in terms of your ability to operate older assets and take on newer tonnage.

Has that sort of been a comprehensive solution, something that you are seeing -- you are hearing a lot from lines right now? Or is it really just kind of more one-off new builds versus sale leaseback or are they getting a little bit more comprehensive in terms of the way they are thinking about their fleets?

I think the latest news we've seen, we have seen the sale leasebacks of secondhand vessels, probably a line of companies especially before year end, they might want to clean up their balance sheet, hopefully provide some capital gains and shrink their asset base and be more efficient or more like operationally flexible by taking off their books some assets. This is something that has been happening although not to a great extent. But this is something that is taking place.

For newbuildings, I am not sure we have seen very big deals taking place. Recently of course, there are rumors, there are discussions, but we haven't seen something big concluded over the last weeks or couple of months.

All right. That's helpful. Just a couple of high-level questions here I guess on the group. I mean the perception of counterparty risks has changed just a touch since mid-December. I -- that's one of the reasons, why I guess, the group has run a little bit here and that that risk premium has come off a bit.

In terms of your counterparties, I mean, has there been any payment issues whatsoever from the public players to the private guys?

No. First of all, the main point is that they would feel extremely comfortable with our charters and with counterparty risks we have assumed. All payments are current and we haven't heard anything to the contrary.

Now, there may be general speculation in the market about the line of companies' counterpart risk; but as far as we are concerned, I can tell you that we have the pie chart in the presentation and you can see where the 90% of our contract the cash comes from and we feel extremely comfortable with the quality of our customers.

Okay. That's fair. I guess just one more and I will turn it over. I guess one of the other probably primary factor in terms of the group's performance has been the rise in freight rates and I think we are all waiting to see whether or not the group can really hold the recent gains following Chinese New Year.

In terms of freight rates, for the lines here and not for you, I know it's a bit down the road -- do you think we are going to see a rollover in freight rates coming out of Chinese New Year? What sort of read are you getting from your customers in terms of those air pricing and how much of the ramp has been a pull forward in volumes versus just a bounce off off of the bottom?

I think what we have all witnessed in the last two weeks, I guess, first of all this is the change in policy of liner companies who may be now more focused on profitability rather than on market share. This combined with the fact that pre Chinese New Year there may have been some incremental activity and some additional shipments they have held -- they have helped freight rates recover.

Now we have seen the number of our ships going up. Still, it is not at levels with an evidence of very profitable freight rate, but I think the whole idea is that now liner companies and also to the alliances, there are more cash flow-focused rather than market share-focused. I think this is sort of the main message now. Where the market is going to be [shedding] after Chinese New Year meaning from next week this is something that, overall, we feel that 2012 is going to be a year where it is going to be a supply demand in general terms of equilibrium. But where the market is going to be heading in February, this is something that is up to the liner companies and up to supply constraints.

So these are the (inaudible) and we have [ready] reasons, reasons that liner companies they are thinking about implementing new measures of hiking some rates in the Europe ready rate. However it does remains to be seen how effective it is going to be and how much this is going to affect the utilization rates of the lines implementing these measures.

All right. That's helpful. I will turn it over. Thanks for the time.

Fotis Giannakoulis for Morgan Stanley.

I want to follow up on Mike's question and we have seen that despite the recent improvements in freight rates the line of companies continue to lose a lot of money. How long do you think that this can last and if you see the capacity reductions that lot of people are talking about stepping up and how this will affect your business, obviously?

Yes. As mentioned, we have recently witnessed a trend towards profitability rather than market share accompanied by tight supply management and price increases. With I guess this is something positive for the industry. Now regarding how this is going to affect ship owners, container ship owners, the stronger the counterparties are, the better it is obviously for the container ship owner.

At the same time, owners will have long relationships with their charterers who have the cash and who have a strong balance sheet, can definitely find opportunities either for new acquisitions or are going to be there at sort of -- preferred owners from former liner companies are going to charter investments. Because however you look at this the line of companies' charter investors today, as a rule of thumb, close to 50% of the total fleet is chartered in so there will definitely be need for chartering tonnage.

Can I ask you something? If the idle capacity moves up even further, we have already seen the impact on the charter market to be negative. We have seen the charter rates falling off a cliff since last April, May. What did the impact on asset values, where do asset values stand right now and if you think that they are going to be further potential declines in asset values?

First of all regarding charter rates, you are absolutely right. They have fallen substantially especially for some specific advertisers. We don't think that they have a long way to go farther south. Bear in mind that if a vessel is operating below breakeven operating expenses, the owner might as well lay it up.

Now asset values have followed charter rates although not to a great extent, but there is a very strong [type of] relation. We feel that regarding sale and leaseback deals so the prices that are already static, there is not a lot of movement because the buyer also buys the cash flow from the charter party attached.

Regarding charter-free acquisitions, as I alluded to earlier, we feel that in some instances charter-free prices have not fully factored in the level of today's charter rate. So we could see a movement there but we wouldn't expect this to be substantially high.

You mentioned earlier about your available liquidity. That comes to me that the acquisition power can be more than $400 million. But despite that we haven't seen any transactions in the last quarter. Perhaps we were a little bit spoiled every quarter to see some announcement of a new acquisition. Why is that?

And in relation to that where do you see these opportunities coming first, based on charter sale and leaseback transactions or charter free transactions? And also what would you be more keen on buying big ships, medium-size ships, smaller ships, where do you see the segmentation of the market being more opportunistic for you?

We are keen on buying assets that are generating returns, however you call them. Whether it is newbuildings or whether it is opportunistic charter-free vessels with equity or sort of based on sale and leaseback transactions the numbers need to work. Bear in mind the risk assumes -- assumed the capital of the Company tied into this specific transaction and the quality of the counterparty.

Now people were expecting to see a lot of news coming out of financial institutions. I am not saying that this may never happen, but up to now we haven't seen something like that. People were expecting a lot of distressed opportunities, especially from Germany. We don't think that this is something that up to now has materialized. We are looking at staff. We are not in a high of that we have also some internal troubles.

We feel that the charter-free -- the charter-free deals we saw that values were above the prices [satisfied] today and leasebacks, some of these we looked at. We felt there was some residual risk -- market risk that assumed that the expiry of the charter party which did not justify this sort of transaction.

Newbuilding is again something we look at. For newbuildings you need to bear in mind that you tie up some capital for costs to come in over the next one to two years. We are not saying that these are not good transactions. We have done a bunch of those recently. But up to now we haven't seen something which we felt it was compelling.

Now we are not in a hurry to do things as I said. We don't have to create sides. We can be selective. We look at a lot of stuff and we don't have to do a deal as long as the numbers don't work. On the other hand last year, the same period, we did a lot of transactions over a period of two or three months. So, the opportunities arise, we are in a position to move fast and hopefully capitalize on those opportunities.

Is the financing out there? We see that not only the tanker market anymore but also the dry bulk market is facing significant challenges. What is the available financing that can be extended to a container charter owner like yourself at the current market? Can you give us an update and what has changed compared with the previous quarter?

Yes. I mean we do hear like everybody else that funding is not as available as it used to be which is not necessarily a bad thing. I mean we only do -- remember that [ship might have assisted] in overordering at the peak of the market some years ago leading to the 2009 excessive supply issues.

However we still believe, and this is the feedback we get from our bankers, that for the right deal sponsored by a strong owner and a strong charter funding is available as long as solid cash flows can settle with the debt. So going forward should we identify a build that makes sense, we would feel quite comfortable with debt financing.

And I guess we shouldn't forget that Costamare is a company that in the 2009 period or beginning 2010, I think we were one of the few companies that we did not break any leverage-related covenants. We did not lay up any vessels. And over the last 35 years we have built excellent relationships with our commercial bankers who have supported us throughout that period.

And what would be the cost of debt if you do a new financing today? What would be the cost that you would pay?

Well, this depends. I'm afraid that if I gave a figure I may be misleading people. This depends on the tenor, this depends on the assets, this depends on the counterparty meaning of the charterer. This depends -- this may depend on how tight the financial covenants are, what is the repayment schedule meaning what is the balloon. And you know the bank's risk, so there are sort of a lot of factors. I mean, undoubtedly, as a rule of thumb, spreads have gone up.

However, what is the cost of funding? This is something we factor in our -- we factor in our calculations, together with the running expense of the vessel and everything so that we look at the whole deal as a total, what are the equity returns for the shareholders. But giving you a number now might be misleading or you know might sound (multiple speakers).

Is there a range, something that like you got recently LIBOR plus something like 2%, 2.5%? Is there a number either up or down compared to what you've got in your previous deals?

I can tell you that in our previous deals, I mean in our previous newbuilding funding we got pretty competitive rates, close to the number you mentioned or even lower than those. But we sort of put together three or four loan agreements so it's not that in every loan agreement the spread was the same, simply because the details of the transactions were not the same.

So that [is a pattern thing] or you know the last six months of 2011, we got spreads which were considered pretty competitive at very good terms. But it is not only the spread, it is not only the cost of debt, it is the covenants. It is a debt repayment schedule which can boost your equity returns. It is the sort of upfront fees, commitment fees. There is a whole bunch of things that can make the debt funding attractive or unattractive.

For instance, you may get a lower spread but you may have a value meant in this clause that if it is not structured properly you may break it in six months' time which is going to cost you more money rather than agreeing on a couple of 4 basis points on the spread. So I am afraid it is not that simple.

And my last question, there is a lot of discussion about the European crisis and especially about the Greek crisis. You have $140+ million in cash deposits. How much of that is in Greek financial institutions and what other exposure you might have to the sovereign risks of the country?

Okay. Now you put me in a weird position. But, look, since we have a global nature and although we are based in Greece, I don't think that we have really affected in our operations from the Greek crisis. We do not have any Greek clients. We do not rely on funding from any Greek financial institutions. We do not rely on any subsidies from the Greek state, and I guess we do not hold any Greek bond portfolios.

So I would say that our exposure to Greece is more or less minimal and, to sum up, I think we are affected but anybody's health is affected by a global GDP rather than what has happened specifically in Athens.

Thank you very much.

Okay. Thank you.

(Operator Instructions). Brandon Oglenski from Barclays Capital.

Good morning and good afternoon, everyone. Greg, can you just elaborate a little bit because I know you have quite a few vessels up for re-charter here in March. Where are these indications right now if we were to think about it in terms of this EBITDA sensitivity that you have provided us? Are we looking at like a 60% to 50% type outcome right now?

It is -- let me start by saying that we have different vessels of different sizes and age coming out of charter in 2012. For instance, we have on the one hand we have (inaudible) 2010 newbuilding, which comes out of charter by the end of March 2012 and at that same time we have three 1984 built ships which come out of charter at the end of the year.

So at the same time the charter rate is highly correlated to the time charter duration. As a rule of thumb the longer we go and the longer you lock in revenues the higher the rate you would require from the charter. So I am afraid there is no clear-cut answer. I can tell you from the Hyundai Navarino we see some shelf interest for that time being. The vessel is debt-free so, there, we can be flexible. And we can be flexible as far as the duration is concerned.

Now the purpose of this slide was not to give any specific guidance regarding the charter rates, but the purpose was mainly to make sure that people understand that for a pure cost perspective, the Company is not subject to any significant rechartering risk for 2012. Even at the 60% discount, our cost of EBITDA shortfall would theoretically more than cover by sort of scrapping all the ships coming out of charter during the year.

I guess then at what level does scrapping become economical for you then? Is that the way you are thinking about this year? That maybe a couple of those vessels would wind up headed for scrap?

Yes. During the last quarter we scrapped three vessels -- the Fado, the Tuscany and the Garden -- and I think that the scrap prices were very compelling and some of those vessels were like 30, 32 years old. So I think the main considerations are, what is the scrap price, where they were going to be able to find another ship probably charter free and what would be the incremental equity required, meaning that we scrap a vessel we get some cash, we put some equity and we renew the fleet at a relatively low cost.

This is sort of one consideration. Another consideration, obviously, is what is the condition of the vessel and going forward what is the time charter rate that we are going to be achieving for the next six months, one year, et cetera. If we feel that the vessel is in the condition and there is a market for that and that this vessel can yield positive EBITDA we are not going to scrap it. Otherwise we can substitute it with another vessel with minimal equity injection from our site and renew the fleet, then, sort of we may scrap it.

So it is something that I am afraid I cannot give you an exact answer. But these are the main considerations and some of those vessels come out of charter by the end of 2012. So I guess we still have like 10 or 11 months to see how the market is going to be developing.

Plus, on some vessels there are some charters as auctions so we need to make sure that we see first of all what the current charterers are willing to do with that vessel and, afterwards, we are going to decide how are we going to proceed.

Okay and then, maybe real quick on the newbuilding program that you have, I think you have a couple of vessels coming for delivery at the end of this year. Is that right?

That's correct. It is two vessels coming by the end of 2012.

Now what are the plans on the financing side there? Are you planning to draw down on your current -- on your current facilities or do we have different facilities that you are structuring for those vessels?

Yes. All the newbuilding orders we have whether it is delivery end of 2012 or beginning of 2014 which is the latest delivery. All these orders have been fully funded with separate debt facilities covering this newbuilding program. So, practically how this works as the newbuilding process goes on we are going to be drawing depending on the status of the building of the vessel.

So I think next week, we are going to -- or this week we drew on these two vessels because there's still cutting to place. We have our facilities covering the debt funding for the ships, they are all in place. All have been executed so the debt funding is fully available.

All right. Thank you very much.

Michael Webber from Wells Fargo.

Just wanted to hop back on to touch on your dividend. You guys are sitting here with pretty ample liquidity. You said you are pretty comfortable with your counterparties. You were very successful last year in growing your fleet.

What do you guys need to see in the first half of the year for you to get comfortable enough to hike the dividend again?

Well, first of all the dividend today it's like at $0.37 per quarter per share is close to a 7% dividend yield which we think it is quite high bearing in mind the quality of the dividend in terms of (inaudible). However leaving that aside this doesn't mean that we don't have plans to raise the dividend. But at the same time we are like 14 months public now. We have raised it eight months after going public. We need to make sure that there's going to be cash available for sort of whatever reason, either growth opportunities.

So we are pretty open-minded regarding the dividend. But at the same time we feel that cash is something that is also growing the Company at healthy levels.

So I cannot tell you exactly when we are going to be raising the dividend again. It has got to do with the new business we're going to be doing and you know with the contract that is coming in. But if someone looks at our projected EBITDA when all the newbuildings hit the water and at our projected revenues thus by the projected EBITDA, you can see that our dividend distribution capacity from 2015, 2014, onwards is picking up. Even without doing an additional business.

Sure. That makes sense. And while I've got you on one more question. You guys had a pretty good cost control during the quarter you came in below us in Street. Can you talk a little bit about your cost for the quarter and then how we should be modeling in OpEx for these assets because it seems like we kind of consistently -- the Street is kind of coming in consistently above where you are able to perform.

Yes, I know. You are right on that. Look, first of all, regarding your modeling going forward and I understand that this is a big fleet. We are going to be sending to all analysts daily OpEx [provincial] like we did in the past. So this should provide a very good guidance going forward.

Now, regarding this quarter we tried to cut some costs. Let's say that there were some efficiencies achieved which were planned some time ago, but going forward before the end of this quarter, you are going to have the full 2012 budget per vessel. And it is going to be very detailed and it is going to be accompanied by a dry-docking package for the fleet.

Great. Can you maybe be a little bit more specific in terms of the past quarter what really helped in terms of driving down expenses?

Well, there were some developments in crew costs and there were some positive movements in lubricants. I think this is my lead.

And changes in crew cost, did you change maybe nationalities and where you're crewing from? What sort of (multiple speakers)?

We haven't changed the flag to any of our vessels. But in some vessels flying the Greek flag, we may have had more Greeks than required. But don't get me wrong. We haven't changed any flag on our vessels. Otherwise you would have known.

Right. That's helpful. I appreciate the time and again. Thanks.

(Operator Instructions). We seem to have no further questions. I would now like to hand the floor back to Mr. Zikos for any closing comments. Thank you.

Thank you very much for your interest in Costamare. We are excited about the opportunities that lie ahead for the Company. Our goal remains to be returns-driven, rewarding our shareholders for their trust and commitment to the Company. Thank you very much.

Thank you, ladies and gentlemen. That does conclude the conference for today. Thank you all for participating and you may now disconnect.