Costamare Inc (CMRE) 2023 Q2 法說會逐字稿

Thank you for standing by, ladies and gentlemen, and welcome to the Costamare Inc. Conference Call on the Second Quarter 2023 Financial Results. We have with us Mr. Gregory Zikos, Chief Financial Officer of the company. (Operator Instructions)

I must advise you that this conference is being recorded today, Friday, July 28, 2023. We would like to remind you that this conference call contains forward-looking statements. Please take a moment to read Slide #2 of the presentation, which contains the forward-looking statements. And I will now pass the floor to your speaker today, Mr. Zikos. Please go ahead, sir.

Thank you, and good morning, ladies and gentlemen. During the second quarter of the year, the company generated net income of about $69 million as of quarter end liquidity was $1 billion. In the containership sector, the Charter market has been softening, although rates still remain at healthy levels. The order book, however, remains at risk or Threat to the market. For the Dry bulk side, our own Dry bulk prices continue to trade on a spot basis, while the trading platform has grown to a fleet of 56 ships. Having invested $200 million in the Dry bulk operating platform, we have a long-term commitment to the sector whose fundamentals we view positively.

Regarding Neptune Maritime Leasing, the platform has been steadily growing on a prudent basis, having concluded in total leasing transactions worth of $120 million, which are complemented by a healthy pipeline extending over the coming quarters. Finally, during the quarter, we proceeded with our share buyback program, and we have bought $50 million worth of common shares, highlighting our strong belief that the share price is heavily undervalued, considering both the company's performance and prospects.

moving now to the slides presentation. On Slide 3, you can see our second quarter results. Net income for the quarter was roughly $63 million or $0.52 per share. Adjusted net income was around $69 million or $0.56 per share. Our liquidity stands at over $1 billion. On Slide 4, you can see an update on our share repurchase program. Since the beginning of Q2, we purchased approximately 5.4 million common shares for $50 million worth. Slide 5. As far as CBI is concerned, we have chartered in 56 period vessels with the majority of the fleet being on index lean chartering agreements. 53 of those vessels have been already delivered and are running.

Regarding our leasing platform, we have already invested around $50 million. Since inception, NML has financed 12 ships through sale and lease-back transactions. Slide 6. Our financing arrangements amounted roughly to $175 million without an increase in leverage. Those deals were coupled with extension of maturities and improvement on funding costs. We continue to Charter on our Dry bulk vessels in the spot market, having entered into more than 50 chartering agreements since our last earnings release.

On the containership side, our revenue days are essentially 100% fixed for '23 and 87% fixed for '24, while our contracted revenues are $2.9 billion with a TEU-weighted remaining time-Charter duration of about 3.9 years.

Slide 7. We have sold to Dry bulk vessels and have agreed to acquire to Capesize Dry bulk ships. Both vessels will be partnered with cash on hand. In addition, we have concluded concurrent S&P transactions with York capital for 2 continency vessels, while we have agreed to sell another containership where we own a 49% equity interest. Moving to Slide 8. The Containership Charter market has been softening, although rates remain at healthy levels. Dry bulk market remains volatile, while for the remainder of 2023, the FFA market indicates signs of recovery in Q3 and further strengthening in Q4.

Finally, we continue to have a long and interactive dividend track record boosted by strong sponsor support. On Slide 9, our liquidity has increased significantly over the year, standing at above $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 Rate the containership market has softened remaining at healthy levels. As the capacity remains at historically low levels of about 1%. We -- and finally, on Slide 11, you can see the recent Dry bulk market trends in the Sport and Forward market. Order book is at 7.4% of the total fleet. With that, we can conclude our presentation, and we can now take questions. Thank you. Operator, we can take questions now.

(Operator Instructions) The first question comes from the line of Mr. Omar Nokta from Jefferies.

Just wanted to check on how things are going operationally. Clearly, customer has shifted more so into Dry bulk over the past couple of years with investments in the midsize segments previously. You've now got the capes that are coming on, and you've also have CBI. The sector has been obviously kind of soft here over the past few quarters. And I just wanted to see kind of in terms of profitability in that business, it looks like it's eating somewhat into the container profits.

In the release, you show the container business earning $127 million in the quarter. Dry bulk or the Dry bulk fleet loss just $3, but the trading business, $24. I just wanted to ask about that $24 million. Would you say that is just simple. Is that commercial performance? Or is it more of just start-up costs in building up CBI?

Yes. It's 2 things. First of all, regarding our participation and our investment in the Dry bulk sector, we are there for the long term. So this is a long-term commitment of the company, as I think I have also stated in my commentary. Now more specifically regarding CBI, the company started operations within the last 6 months. And has grown quite substantially, starting from a 0 ships chartered into 56 ships chartering and 53 of those have been delivered.

So I think we -- two things. First, we need to allow the company some time in order to amortize setup costs. At the same time, we had a lot of deliveries, which are ignore from day 1 that are eating us without the ships having operated for a full period. So I would say that it's mainly setup cost and the rollover of a new business.

We have invested $200 million. And we are very happy with the way the company has grown over the last 6 months. At the same time, we are patient. So I think it's mainly setup cost, and we are now at the initiation phase. We need to allow more time in order to see the results that this entity will be yielding. Also, you know that the Dry bulk is quite volatile environment, especially right now. But I think we have the right setup and the right people and the experience. In order to capitalize on the market upside whenever that comes.

That's helpful. And then just in terms of -- you mentioned giving it some time. Do you think you've got 53 of the 56 ships in-house now. So maybe the media's part of the start-up costs have taken place. Is that the case? Or do you potentially look to maybe -- does that 56 ship fleet, is that going to be -- are you aiming to get that to 75 or 100? Or is 56 sort of the going number within that range here in the near term?

It depends on market conditions. Our goal is to grow the company and to have a meaningful size within that sector as an operator. Now whether we're going to go to a bigger number of ships sooner or later, there's also a lot of commercial considerations. We have the equity. We have the capacity to grow, but we also need to look at market conditions. So most probably, I would say that it's a question of like when rather than whether we're going to be growing or not. But I think the growth needs to be on a healthy basis and step by step. So let's see, I cannot predict the growth were simply because I cannot predict the market.

That was a tough question, I guess. And then maybe just one final one. Clearly, you announced the buyback. You were very aggressive putting $50 million to work. And you paid roughly about $9 a share, a little above that. The stock is up a little bit from there. Do you still see the price today as attractive? And can we expect that remaining $40 million to be put to work quickly?

Look, regarding the first part of the question, I do consider that the stock is undervalued whether someone looks in terms of NAV in terms of profitability, in terms of prospects, in terms of track record, however, if you look at it, he can divide it in to this is the reason we bought those common stock shares $50 million worth over the last quarter. Now I cannot predict also for legal reasons, I cannot tell you now what's our plan for the remaining $40 million of the program or likely whether this program is going to be extended and add more capacity there. I cannot predict this now, but I can tell you that we generally believe that the stock is undervalued. And we have faith that the buying back common stock at those levels, definitely made sense.

The next question comes from Mr. Ben Nolan with Stifel.

It's actually Panella, on for Ben, I wanted to ask about, at the moment, both container and Dry bulk asset prices have come down, although in each case, they're still historically elevated. But at the moment, do you see Costamare as a better buyer or seller of each type?

I think, yes, you're right. I mean asset values have come down, but not to a level where they reflect today's Charter rates and especially for the containers, not at the level where they reflect consensus about how the Charter rates are going to be developing over the next quarters. So regarding the containerships for the time being, we are not buyers. And as you know, we haven't bought any containerships over the last couple of years. And also, we didn't put any new building orders because we felt that asset prices, both for second half and for new buildings were elevated.

So then we wait and see. But I agree with you that although asset values can come down still, they are not at levels that they are so attractive the way we like normally buying vessels. Now regarding the Dry bulk market, again, as usual, we bought to Capesize of middle age we felt the price made sense. But for the time being, we haven't seen a substantial correction in asset prices at levels close to levels we bought our Dry bulk fleet a couple of years ago.

It was actually 2 years ago. So there, we do wait and see. So we have the equity. We have cash together with available liquidity of slightly above $1 billion. We have access to commercial bank debt. So when we feel that the asset prices do make sense, also judging from a track record, we have the ability to buy and execute quite fast. For the time being, we are sitting and waiting opportunistically, we could be buying some assets here and there if on a case by case, we feel it makes sense.

Seeing no further questions. This concludes the question-and-answer session. I will now pass the floor back to Mr. Zikos for his closing remarks.

Thank you for dialing in, and thank you for your interest in Costamare. We look forward to speaking with you again during our next quarterly results call. Thank you

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