Costamare - Earnings Call - Q3 2025

Transcript

Operator (participant)

Good day and welcome to the Costamare Third Quarter 2025 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Gregory Zikos, CFO. Please go ahead.

Gregory Zikos (CFO)

Thank you and good morning, ladies and gentlemen. During the third quarter of the year, the company generated net income of about $99 million. After the spin-off of Costamare Bulkers Holdings Limited, Costamare remains the sole shareholder of 69 containerships, as well as the controlling shareholder of Neptune Maritime Leasing. In September, following up from our previously announced order of four 3,100 TEU capacity containerships, we exercised our option for two more sister ships to be delivered in Q1 2028. Upon delivery, they will also commemorate an eight-year time charter with a first-class liner company. Since last quarter, we have also fixed eight vessels with a forward start for periods ranging from 12-38 months. These transactions resulted in increased contracted revenues of about $310 million. Our fleet deployment stands at 100% and 80% for 2025 and 2026, respectively.

Total contracted revenues amount to $2.6 billion, with the remaining time charter duration of about 3.2 years. Regarding the market, the positive outcome from the latest trade discussion between the U.S. and China and the delay in the implementation of port fees should positively contribute to globally increased trade flows. With an idle fleet of less than 1%, the charter market remains strong, with rates fixed at healthy and stable levels on the back of vessel shortage and steady demand. Finally, with regards to Neptune Maritime Leasing, the growing leasing platform, 50 shipping assets have been funded or are committed, and total investments and commitments are exceeding $650 million. Moving now to the slides presentation. On slide three, you can see our third-quarter results. Additional net income was $98 million or $0.81 per share. Net income for the quarter was around $93 million or $0.77 per share.

Our liquidity stands at about $560 million. Slide four. We have concluded newbuild contracts for another two 3,100 TEU containerships, with expected delivery in Q1 2028, bringing the total number of newbuilding orders to six. Upon delivery, each vessel will commence an eight-year charter with a leading liner company. On the employment side, we have increased our contracted revenues through new chartering agreements by more than $310 million. In addition, our revenue days are 100% fixed for 2025 and 80% for 2026, while our contracted revenues are $2.6 billion, with a weighted remaining duration of 3.2 years. Moving to slide five. Regarding our financing arrangements, we have agreed to the pre- and post-delivery financing of our four newbuildings. We have no major maturities till 2027. On the sale-and-leaseback side, we have concluded the acquisition of one 6,500 TEU containership. Slide six. On our leasing platform, we have invested around $180 million.

Neptune Maritime Leasing has funded or committed to fund 50 shipping assets for a total amount of more than $650 million. Finally, we continue to have a long uninterrupted dividend track record. Moving to slide seven, the last slide. Charter rates in the containership market remain at firm levels. The idle fleet remains at low levels, at about 0.9%, indicating a fully employed market. With that, we can conclude our presentation, and we can now take questions. Thank you. Operator, we can take questions now.

Operator (participant)

We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Omar Mostafa Nokta with Jefferies. Please go ahead.

Omar Mostafa Nokta (Analyst)

Thank you. Hi, Greg. Good afternoon. Couple of questions.

Gregory Zikos (CFO)

Good morning.

Omar Mostafa Nokta (Analyst)

Hi there. Yeah, just a couple for me. You know, obviously, just looking at your chartering activity, you've been able to add a good amount of visibility forward-fixing several ships. Looks like maybe an average of at least two years or so from what's on the, you know, from where they were before. Just wanted to get your sense in terms of how has chartering activity in general sort of developed here over the past maybe couple of months because you've had obviously a very volatile year for, say, the underlying freight market where there's been, you know, huge swings upwards and downwards for freight rates. They bottomed about a month ago. Now they've jumped. Just want to get a sense from you, you know, given just how active you are in the chartering markets, have you noticed any shift in liner appetite?

Have things changed here over the past several weeks? Any kind of color you can give on developments on the chartering would be great. Thank you.

Gregory Zikos (CFO)

Sure. First of all, regarding box rates, you are right. I mean, last week and last month in general, box rates are going up, especially on the US West Coast trade route. Now, regarding the charter market, there is a shortage of ships, especially larger vessels. I mean, whichever ships come out, there are definitely candidates to have them chartered in. Still, the market remains at very healthy levels. There is demand, and ships are easily absorbed. I think the main indicator someone needs to look at is the idle vessels, where if you back out any dry dockings or sort of technical issues, this is less than 1%. Less than 1% idle fleet means that practically we have a fully employed market. Charter rates in general are holding up very well.

Now, whether this will continue or not, and for how long, it is hard to say because we have a series of geopolitical events that might affect it. For the time being, it is a healthy market. Liners are generally eager to charter investors. You can argue that probably they may not want to go for longer periods in general compared to the past. Still, you see like a two- or three-year time charter for second-hand vessels on a forward basis. In that respect, I think that the fundamentals, as they stand today, considering that the supply of vessels is quite thin, the fundamentals are quite tight and quite positive, I would say.

Omar Mostafa Nokta (Analyst)

Thanks, Greg. Maybe just a follow-up. Wanted to ask about the second-hand acquisition you mentioned. You bought the '06-built, you know, 6,500 TEU vessel. That looks like it's on contract to Maersk. Can you maybe talk about kind of how that came about? Was this a direct acquisition from Maersk with a charter back to them? Are there more opportunities like that, you think, in the sale and purchase?

Gregory Zikos (CFO)

Yes. I think this vessel has been chartered back to Maersk. This is a structured sale-and-leaseback deal. There may be more opportunities like that in the future. I mean, we have not come across anything that, something like that that probably would make sense. I mean, definitely there may be. As you have seen, we have been focusing on the newbuildings for the 3,100 TEU ships. We had concluded four previously announced in the Q2 results. We have added two more options now. Those are going to be delivered Q1 2028. On a back-to-back basis, we have pretty much arranged the financing for the first four, and we are closing the commitment of the financing for the last two, which is something that also makes sense. We are generally active.

Add a second-hand or even newbuildings, assuming that we feel comfortable with the residual value risk of our equity, I think we would be quite active.

Omar Mostafa Nokta (Analyst)

Great. Thanks, Greg. Very helpful. I'll pass it back.

Gregory Zikos (CFO)

Thank you.

Operator (participant)

The next question is from Climent Molins with Value Investor's Edge. Please go ahead.

Climent Molins (Head of Shipping Research)

Hi. Good afternoon, and thank you for taking my questions. Following up on Omar's question, on the first one, could you talk a bit about whether you believe the recent increase in freight rates is sustainable? It seems it was mostly a function of front-running as tensions between the U.S. and China increased, but those have been lowered, lowered since. How do you think about the trade-off of having more visibility versus the front-running?

Gregory Zikos (CFO)

Yeah. For the, for the freight rates, I mean, the box rates, this is something that could also be directly addressed to the liners who sort of may have a better visibility. I agree with you that last week and last month, freight rates push has been because of front-running, may have to do with the, you know, pushback of the port fees, etc., rearrangement of schedules of the liner companies. Now, to what extent they are sort of medium or long-term sustainable, I cannot comment on that. They are, they are sort of, because if you look historically at the three or six-month or, like, one-year box rates, they have been on a negative trend. I'm afraid I cannot forecast where box rates are going to be, starting from today over the next three to six months.

To some extent, this is something that also liner companies, I think they do have greater visibility on that.

Climent Molins (Head of Shipping Research)

Yeah. Makes sense. No one can really forecast that. Also, following up on Omar's second question, it seems the Maersk Puello is fully committed until next October, but Maersk has options to extend employment until 2031. Could you talk about how likely those are to be exercised given the rate?

Gregory Zikos (CFO)

Okay. I'm afraid these are chartered options. As mentioned, it's up to the charter to have them exercised. Again, I cannot forecast what a third party will be doing. I think market levels will dictate whether the charter will take those options or not. On a committed basis, you are right. This is a one-year charter. From our side, we have run the numbers so that, being conservative, we have been factoring in this one-year time charter period. After that, it's up to the charter to decide based on its needs, based on market rates, based on the cargo demand, to see whether those options, one by one, are going to be subsequently exercised.

Climent Molins (Head of Shipping Research)

That's helpful. Thank you for taking my questions.

Gregory Zikos (CFO)

Sure. Thank you.

Operator (participant)

This concludes our Q&A, our question-and-answer session. I would like to turn the conference back over to Gregory Zikos for any closing remarks.

Gregory Zikos (CFO)

Yeah. Thank you for dialing in today and for your interest in Costamare. We are looking forward to speaking with you again, during the Q4 and year-end results call. Thank you. Operator, I think we have concluded.

Operator (participant)

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Gregory Zikos (CFO)

Thank you.