Costamare Inc. Q2 FY2025 Earnings Call

Thank you for standing by, ladies and gentlemen, and welcome to the Costamare Inc. Conference Call on the Second Quarter 2025 Financial Results. We have with us Mr. Gregory Zikos, Chief Financial Officer of the company. I must advise you that this conference is being recorded today, Thursday, July 31, 2025. 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 $99 million. In May, we successfully completed the spin-off of Costamare Bulkers, which encompasses the owned dry bulk fleet as well as the CBI operating platform. Costamare Inc. remains the sole shareholder of the 68 containerships as well as the controlling shareholder of Neptune Maritime Leasing. In July, we ordered four newbuilding containerships from a Chinese shipyard, each with a capacity of approximately 3,100 TEU. The vessels are expected to be delivered between the second and fourth quarters of 2027. Upon delivery, they will commence an 8-year time charter with a first-class liner company. At the same time, we chartered two 6,500 TEU containerships for a 3-year period on a forward basis, commencing from Q1 and Q2 2026. The above transactions have resulted in an increase in contracted revenues of about $310 million. Our fleet deployment stands at 100% and 75% for 2025 and '26, respectively. Total contracted revenues amount to $2.5 billion, with a remaining time charter duration of about 3.2 years. Regarding the market, with less than 1% of the fleet being commercially idle, the containership fleet can be considered fully employed. Current low fixing activity is mainly the result of low availability of prompt tonnage rather than a lack of demand. Charter rates remain healthy across the board, and the short supply keeps rates at robust levels. Finally, regarding Neptune Maritime Leasing, the growing leasing platform, 47 shipping assets have been funded or committed, and total commitments and investments are exceeding $650 million. Moving now to the slide presentation. On Slide 3, you can see our quarterly results. Net income for the quarter was $99 million or $0.83 per share. Adjusted net income was around $92 million or $0.77 per share. Our liquidity starts at above $0.5 billion. Slide 4, we have concluded newbuilding contracts for four 3,100 TEU containerships with expected deliveries between Q2 and Q4 2027. Upon delivery, each vessel will commence an 8-year charter with a leading liner company. On the employment side, we have forward fixing of two containerships, which, along with the previously mentioned 8-year charters, have generated incremental contracted revenues of over $310 million. In addition, our revenue days are fixed at 100% for '25 and 75% for '26, while our contracted revenues total $2.5 billion, with a remaining time charter duration on a TEU-weighted basis of 3.2 years. Slide 5, regarding our financing arrangements, we have agreed to refinance six containerships with no increase in leverage. We have no major maturities up until 2027. Slide 6, on our leasing platform, we have invested around $180 million. Neptune Maritime Leasing has funded or committed to fund 47 shipping assets for a total amount of more than $650 million. Finally, we continue to have a long uninterrupted dividend track record. Moving to the last slide, Slide 7. Charter rates in the containership market remain at firm levels. The continued tight supply of tonnage, along with the increased ton miles due to the closure of the Suez Canal, is supporting the current charter rates. The idle fleet remains at low levels at 0.5%, indicating a fully employed market. With that, we can conclude our presentation, and we can now take questions. Thank you. Operator, we can take any questions now.

And your first question comes from the line of Omar Nokta of Jefferies.

You spun off the dry bulkers and are now placing orders for four containerships, marking your first order in a while. Is this shift in focus an indication that you're making a renewed effort to operate as a pure-play container company? Is it time to invest more heavily in this sector, or is this more about taking advantage of an isolated opportunity to acquire those four newbuilds?

Okay. No, I don't think it is a shift in focus. We didn't put in any newbuilding orders for containers during COVID or after COVID, simply because we found asset prices to be extremely high compared to the charter rates that were available, combined with the charter rate period. This deal for the four 3,000 TEU vessels, in terms of price, counterparty, and charter period on a back-to-back basis made sense. So it's not that we shifted focus. We have been focusing on containers. It's just that asset values at those levels we've seen up to now didn't make much sense. Now, if there is a correction in the market or if we find similar transactions that we feel make sense, we will definitely proceed. So the main reason had nothing to do with the dry bulk. It had to do mainly with elevated asset prices in the market.

Okay, that makes sense. I have a follow-up question that takes a broader view. Now that you're back to a container-focused platform, you have Neptune, but is there any change in strategy or approach with the customer platform moving forward because of this new focus?

No, definitely not. I think it is the same strategy we have been following since November 2010 when we went public, and still it is the same strategy we had as a private entity. So as long as we feel that there are opportunities, we will proceed like now. Otherwise, in times of elevated high prices, we have been patient. And we can sit and wait. We do have a fleet of 68 containerships today, all chartered with very good charter coverage for '25, '26, and for the years to come, with solid counterparties and with low leverage. So we don't have to make any new transactions unless the deals themselves justify entering into those deals. Otherwise, we can just sit and wait. Now, this was a deal that we feel made sense. Also, it made sense to charter on a forward basis from 2026 onwards to the 6,500 TEU vessels. So selectively, we will be doing new stuff like we have always been doing in the past.

Our next question comes from Climent Molins of Value Investor's Edge.

You've continued to deploy capital into Neptune Maritime Leasing, and you're now at around 90% of the capital you initially committed. Could you talk a bit about how the venture is developing and whether there is potential to increase your investment above the amount you initially committed?

Yes. I mean, I think that Neptune has been progressing well. We have, in total, committed to fund 47 vessels from various sizes and various types of assets. You are right, we have employed close to 90% of our initially committed capital. So far, this investment is going well. Now, whether we're going to employ more and at what terms, et cetera, I'm not prepared to tell you now. But in general, I think that this investment has been going as initially planned a couple of years ago. And I have to remind you that all this growth has been accomplished in a relatively shorter time period.

Makes sense. And following up on Omar's question on strategy, given the increased visibility you now have on the business after spinning off the bulk side, should we expect any changes in shareholder returns, be it on the dividend or with more share repurchases?

I want to clarify that the dividend policy is a decision made by the Board, which reviews it periodically. The dividend policy remains unchanged, regardless of our dry bulk vessels or the spin-off. We continue to pay $0.115 per share each quarter, which we consider a robust dividend. However, I cannot rule out any potential changes to the policy, including share buybacks or dividend increases, as these are at the Board's discretion. While we do pay dividends, we also believe that effectively deploying our capital is better suited for investments in new business rather than one-off dividends.

This concludes the question-and-answer session. Mr. Zikos, please provide your closing remarks.

Thank you for dialing in today and for your interest in Costamare Inc. We look forward to speaking with you again during our next quarterly results call. Thank you. Operator, we can conclude now. Thank you.

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