Costamare - Earnings Call - Q2 2025

Transcript

Speaker 1

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. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, please press the star key followed by zero on your teleconference keypad and wait for your name to be announced. 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 number two of the presentation, which contains the forward-looking statements. I will now pass the floor to your speaker today, Mr. Zikos. Please go ahead, sir.

Speaker 0

Thank you, and good morning, ladies and gentlemen. During the second quarter of the year, the company generated a net income of about $99 million. In May, we have 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 newbuild containerships from a top-tier shipyard, each one of approximately 3,100 TEU capacity. The vessels are expected to be delivered between the second and fourth quarters of 2027. Upon delivery, they will commence an eight-year time charter with a first large liner company. At the same time, we chartered two 6,500 TEU containerships for a six-year period and on a forward basis, commencing from Q1 and Q2 2026.

The above transactions resulted in an increase in contracted revenues of about $310 million. Our pre-deployment stands at 100% and 75% for 2025 and 2026, respectively. Total contracted revenues amount to $2.5 billion, with the remaining terms of the charter duration of about 3.2 years. Regarding the markets, with less than 1% of the fleet being commercially idle, the containership fleet can be considered as fully employed. Current load fixing activity is mainly the result of low availability of prompt owners rather than lack of demand. Charter rates remain healthy across the board, and the scarce supply keeps rates at robust levels. Finally, with regard to Neptune Maritime Leasing, the growing platform, 47 shipping assets have been funded or committed, and total commitments and investments are exceeding $650 million. Moving now to the live presentation. On slide three, you can see our quarter 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 position is at above half a billion dollars. Slide four, we have concluded newbuild orders for 4,100 TEU containerships with expected deliveries between Q2 and Q4 2027. Upon delivery of each vessel, we commence an eight-year charter with a leading liner company. On the deployment side, we have fixed two containerships, which, along with the previously mentioned eight-year charters, have incremental contracted revenues of more than $310 million. In addition, as already mentioned, our revenue days have increased 100% for 2025 and 75% for 2026, while our contracted revenues are $2.5 billion, with the remaining time charter duration on a TEU-weighted basis of 3.2 years. Slide five. Regarding our financing arrangements, we have agreed to refinance six containerships with no increase in levels.

We have no major maturities up until 2027. Slide six. On our leasing platform, we have invested around $180 million. Neptune Maritime Leasing has funded or committed to fund four different 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 seven. Charter rates in the containership market remain at current levels. The continued high supply of tonnage, along with the increase on miles due to the closure of the Suez Canal, is supporting the current charter rate. The idle fleet remains at low levels at 0.5%, indicating a fully employed market. With that, we conclude our presentation, and we can now take questions. Thank you. Operator, we can take any questions now.

Speaker 1

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 the star, then two. Again, that's star, one to ask a question. Your first question comes from the line of Omar Mostafa Nokta of Jefferies LLC. Go ahead, please.

Speaker 3

Hi, Greg. Thanks for the update. I just wanted to ask you, good morning or good afternoon. You spun off the Costamare Bulkers now. You're placing these orders for the four containerships. It's your first order in some time. Is this a reshift in focus? Correct me if I'm wrong. Is this a, I'm trying to ask, I guess, perhaps, is this a renewed effort now, now that you're back to almost effectively a pure play containership company? Is it now time to invest a lot more in the sector, or was this more of like an isolated opportunity to acquire those four new boats?

Speaker 0

Okay. No, I don't think it is a shift in focus. We didn't put any newbuild orders in containerships 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 duration. This means for the four 3,000 TEU vessels, in terms of price, in terms of counterparty, in terms of charter period, on a back-to-back basis, it made sense. It's not that we shifted focus. We have been focusing on containerships. It's just that the asset values at those levels we've seen up to now didn't make much sense. If there is a correction in the market or if we find similar transactions that we feel make sense, we will definitely proceed. The main reason had nothing to do with the dry bulk fleet.

It had to do mainly with elevated asset prices in the market.

Speaker 3

Okay. No, that makes sense. Thank you. Maybe just a follow-up and perhaps a bit more bigger picture. You know, now that you're back to a container-focused platform, obviously Neptune's, but I guess is there any change in strategy or approach with the Costamare platform now, going forward as a result of this new focus?

Speaker 0

No, definitely not. I think it is the same strategy we have been following since November 2010 that we went public, and still it is the same strategy we describe as a private entity. As long as we feel that there are opportunities, we will proceed right now. Otherwise, in times of elevated high prices, we have been patient and we can see the wait. We do have a fleet of 68 containerships today, all chartered with a very good asset coverage for 2025, 2026, and for the years to come, with a solid counterparty, with low leverage. We don't have to do any new transactions unless the deal by themselves justify entering into those deals. Otherwise, we can just sit and wait. This was a deal that we feel made sense, although it made sense to charter on a forward basis from 2026 onwards to 6,500 TEU vessels.

Collectively, we will be doing the new stuff like we have always been doing in the past.

Speaker 3

That's clear. Thank you, Greg. I'll pass it back.

Speaker 0

Thanks.

Speaker 1

Our next question comes from Climent Molins of Value Investor's Edge. Go ahead, please.

Speaker 2

Hi. Good afternoon. Thank you for taking my questions. 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 about whether there is potential to increase your investment above the amount you initially committed?

Speaker 0

Yeah. I mean, I think that Neptune has been progressing well. We have, in total, been funding or committed to fund 47 vessels, from various sizes and to various types of assets. You are right. We have employed close to 90% of our initially committed capital. So far, this investment goes well. Now, whether we're going to be employing more and at what terms, etc., I'm not prepared to tell you now. In general, I think that this investment has been going as initially planned, a couple of years ago. I have to remind you that all this growth has been affected in a relatively short time period.

Speaker 2

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

Speaker 0

I think the dividend policy, first of all, this is a board decision, which is a bit different than policy periodically. The dividend policy remains the same, irrespective of whether we had the dry bulk vessels or, in all sorts of, in the spun-off entity. We were paying, and we still pay $0.115 per share per quarter, which we do feel is a healthy dividend. Of course, I cannot exclude any changes in the dividend policy being in terms of byproducts or sort of dividend increases, etc. This is subject to the board decision. We do pay dividends, but at the same time, we feel that an aggressive deployment of our capital should be in investing into new business, rather than paying one-off dividends.

Speaker 2

Yeah, thanks for the call. Thank you for taking my questions.

Speaker 0

Sure.

Speaker 1

Again, if you have a question, please press star, then one. This concludes the question and answer session. Mr. Zikos, please have your closing remarks.

Speaker 0

Yeah, 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 sales call. Thank you. Operator, we can conclude now. Thank you.

Speaker 1

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