Costamare Inc . (NYSE: NYSE:CMRE), a leading international owner of containerships, reported a net income of approximately $80 million for the third quarter of 2024. The company's liquidity remains strong, exceeding $1 billion. During the quarter, Costamare achieved full employment for its containership fleet and chartered seven containerships, which are expected to generate over $165 million in incremental contracted revenues.
The total contracted revenues now stand at $2.3 billion with a remaining charter duration of 3.3 years. On the dry bulk side, Costamare is renewing its fleet with the acquisition of newer vessels and the disposal of smaller tonnage. The company continues to invest in its dry bulk business and trading platform, CBI, which manages a fleet of 56 ships, and its next-in-line leasing platform, NML, which has committed funding for 32 shipping assets.
Key Takeaways
- Costamare Inc. posted a net income of about $80 million for Q3 2024.
- Liquidity is robust, with over $1 billion available.
- Containership fleet employment is at 100% for 2024 and 94% for 2025.
- The company has secured $2.3 billion in total contracted revenues.
- Costamare is renewing its dry bulk fleet and has acquired new vessels.
- CBI manages a fleet of 56 ships, mostly on index-linked charter agreements.
- NML has committed funding for 32 ships, signaling growth in the leasing platform.
Company Outlook
- Costamare Inc. anticipates continued firm charter rates for larger containerships due to limited supply.
- The company's strategy includes fleet renewal on the dry bulk side and maintaining a significant investment in vessel owning and trading activities.
Bearish Highlights
- The primary market threat is the continued introduction of new building capacity in the containership sector.
- Dry bulk asset prices for capes may be considered high, indicating a cautious approach to further acquisitions in this segment.
Bullish Highlights
- The containership market charter rates remain strong, especially for larger vessels.
- The idle fleet is at a low level of 0.8%, suggesting robust demand for shipping assets.
Misses
- There is a slight decrease in the containership fleet employment for 2025, standing at 94%.
Q&A Highlights
- Costamare redeemed €100 million Greek bonds early due to tax implications and legal reasons.
- The company supports the long-term business of CBI and has no intention to scale back the trading platform.
- Dividend policy remains flexible, with the possibility of an increase or buybacks, subject to board decisions.
- Asset pricing for both dry bulk and containerships is considered high, leading to a cautious approach to new acquisitions.
Costamare Inc. continues to navigate the shipping market with a strong financial position and a strategic approach to fleet management and growth. The company's focus on maintaining high employment rates for its fleet and prudent financial management has positioned it well for future opportunities and challenges in the global shipping industry.
InvestingPro Insights
Costamare Inc.'s strong financial performance and strategic positioning in the shipping industry are further supported by data from InvestingPro. The company's market capitalization stands at $1.64 billion, reflecting its significant presence in the marine transportation sector.
One of the most striking metrics is Costamare's P/E ratio of 4.45, which indicates that the company is trading at a relatively low earnings multiple. This aligns with an InvestingPro Tip that highlights CMRE as "Trading at a low earnings multiple." This valuation could be particularly attractive to value investors, especially considering the company's robust financial performance reported in the article.
Additionally, Costamare's revenue growth is impressive, with a 58.37% increase over the last twelve months as of Q3 2024. This substantial growth supports the company's strong market position and successful charter strategy mentioned in the article. The operating income margin of 21.51% further underscores Costamare's operational efficiency.
An InvestingPro Tip notes that Costamare "Has maintained dividend payments for 14 consecutive years," which is particularly relevant given the company's discussion of its flexible dividend policy in the Q&A highlights. The current dividend yield of 3.35% may be attractive to income-focused investors.
Lastly, the InvestingPro Fair Value estimate of $16.9 suggests potential upside from the previous closing price of $13.61, which could be of interest to investors considering the company's strong market position and financial performance.
For readers interested in a more comprehensive analysis, InvestingPro offers 8 additional tips for Costamare Inc., providing a deeper insight into the company's financial health and market position.
Full transcript - Costamare Inc (CMRE) Q3 2024:
Operator: Thank you for standing by, ladies and gentlemen, and welcome to the Costamare Inc. Conference Call on the Third Quarter 2024 Financial Results. We have with us today Mr. Gregory Zikos, Chief Financial Officer of the company. At this time, all participants are in a listen-only mode. [Operator Instructions]. I must advise you that this conference is being recorded today, Friday, November 1st, 2024. 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. And I will now pass the floor to your speaker today, Mr. Zikos. Please go ahead, sir.
Gregory Zikos: Thank you and good morning, ladies and gentlemen. During the third quarter of the year, the company generated net income of about $80 million. As of quarter-end, liquidity was above $1 billion. In the containership sector, with added vessels of less than 1%, the fleet can still be considered as fully employed. The market is split between the larger sizes, which do remain in limited supply, and smaller vessels, where the availability of tonnage is greater. As the pool of bigger tonnage is unable to meet demands, charter rates continue to evolve at firm levels. During the quarter, we chartered seven containerships at healthy levels. The new charter agreements are expected to generate incremental contracted revenues of above $165 million. The containership fleet employment stands at 100% and 94% for 2024 and 2025 respectively. Total contracted revenues amount to $2.3 billion, with a remaining time charter duration of 3.3 years. On the dry bulk side, we are now progressing with our strategy to renew the owned fleet and decrease its average size. During the quarter, we agreed to acquire two 2014 and 2015 built Ultramax vessels and during 2011 built Capesize ships, while at the same time progressing with the disposal of smaller tonnages. CBI manages a fleet of 56 ships, the majority of which are on index-linked charter agreements. We have a long-term commitment to the sector, and we view the vessel owning and the trading platform as highly complementary activities. Finally, with regards to next-in-my-time leasing, the platform continues to grow with committed funding for 32 shipping assets, reflecting total funding commitments of above $410 million on the back of a healthy pipeline. Moving now to the slide presentation. On slide three, you can see our third quarter results. Net income for the quarter was $75.5 million or $0.62 per share. Adjusted net income was $81 million or $0.68 per share. Our liquidity stands at over $1 billion. Turning into slide four, regarding our S&P activity, we have agreed to acquire one Cape size and two Ultramax dry bulk ships. In parallel, we have concluded the sale of two Supramax vessels and agreed to sell one Handysize ship. Slide five. On the chartering side, we have chartered seven containership with incremental contracted revenues of above $165 million. Our revenue days are fixed 100% for '24 and 94% for '25, while our contracted revenues are $2.3 billion with a TEU-weighted remaining duration of 3.3 years. In parallel, we continue to charter all our dry bulk prices in the sport market, having entered into more than 30 chartering agreements since our last earnings release. Slide six. Regarding our financing arrangements, we will fully prepare with cash on $100 million unsecured bonds issued by customary participations. In addition, we have agreed to refinance our dry bulk fleet without an increase in leverage. This deal is coupled with improvement of funding cost and extension of maturities. Finally, we have roughly available $94 million for financing of vessel acquisitions. Slide seven. Regarding CBI, we have chartered 56 period vessels, with the majority of the fleet being on index-linked agreements. On our leasing platform, we have already invested around $123 million. NML continues to grow with complete funding for 32 ships and has a very healthy pipeline. On Slide 8, on this slide, you can see our liquidity exceeding $1 billion. This gives us the ability to look for opportunities to grow the company on a healthy basis. Slide 9. Charter rates in the containership market continue to evolve at very firm levels, especially in the latter segments, despite there is a decrease in book rates. The continued injection of new building capacity, though, remains the principal threat of the market. The idle fleet remains at low levels of 0.8%. Moving to the final slide, then, you can see the recent dry bulk market trends in the spot and forward markets. The dry bulk order book stands at 10.3% of the total fleet. With that, we can conclude our presentation and we can now take questions. Thank you. Megan, we can take questions now.
Operator: Thank you. [Operator Instructions] Your first question comes from the line of Omar Nokta with Jefferies. Please go ahead.
Omar Nokta: Thank you. Hi, Greg. Thanks for the update. Just a couple of questions from my side. Just first on the Greek bond, I think it's the Greek bonds, the €100 million that you've redeemed early. Just wondering, I know those were relatively much lower interest cost, and so just want to get a sense of what drove the early redemption of those bonds.
Gregory Zikos: Yes, yes. You're right. Yes, this is a bond which was originally maturing next year, and we are like preparing a year earlier. This was on an unsecured basis, relatively competitive terms, at like a 2.7% cost. The reason being that there are some tax implications which have to do with pillar 2, and for that reason, because this bond was issued by Costamare participation, a Cypriot, meaning European Union subsidiary of ours, for tax reasons and for some legal implications, we had to redeem it earlier. However, we did use those funds for close to four years, and as you rightly said, it was in terms of pricing, I think it was competitively priced.
Omar Nokta: Okay, got it. Thank you for that. And then just, we've talked about this in the past, but just on the dry bulk business with the CBI, and there's been reports and shipping circles of changes happening there at the personnel level. Just in general, wanted to ask, how are you thinking about that platform? Clearly, you've been investing in the actual dry bulk ownership platform with the Cape acquisitions. But just in general about the trading business, how are you thinking about that going forward? Is it still a main piece of the pie, or are you looking to scale that back?
Gregory Zikos: No, no, no. First of all, thank you for that question, because you're right, there were reports in Lois Vincent and Trade Vincent [ph], rightfully so. A lot of people ask the same questions you are asking. A couple of points. We do support CBI. This is a long-term business for us. As I mentioned in my commentary, we consider the dry bulk owning side, together with the trading platform of CBI, as highly complementary activities. And there is absolutely no thought to scale it back. Quite the opposite. The personnel changes, they were affected for various reasons, but they have absolutely nothing to do with our intention to continue investing in the dry bulk business, including the trading platform. So today, CBI commercially managed loans to 56 vessels, plus 37 ships owned by the dry bulk business. So we're going to be getting close to 100 ships. This is quite a substantial business of operation, which I think we should consider this internally as one business, as one entity. So going forward, our goal is to stay there and to continue investing.
Omar Nokta: Okay. All right. Thank you, Greg. That's it for me. I'll turn it over.
Operator: The next question comes from a line of Ben Nolan with Stifel. Please go ahead.
Unidentified Analyst: Hi, this is [indiscernible] on Ben, but thanks for taking my question. I wanted to ask, with the announced time charters giving some better cash flow visibility and strengthening balance sheet, any thoughts on moving the dividend higher from the $11.5 per quarter?
Gregory Zikos: Okay. Now the dividend is like, yes, as we already said, $11.5 or $0.46 per year. Couple of points. First of all, this is a board decision and I'm not authorized now to sort of speak on behalf of the board. We have a dividend policy which is flexible and can be revised. Of course, I cannot exclude the possibility of like one of the dividend payments or of increasing the dividend steadily per quarter. In the past, we have done both. And also in the past, we use sell buybacks. But I'm afraid that at this moment, I cannot give any color on that. This is something which is not for me to say right now. But definitely in the past, we have done one of the dividend payments. We have not increased the dividend and we have also done buybacks and also prefer stock buybacks. Probably it's not the case now for the preferred stock, but this is something for the board to decide.
Unidentified Analyst: All right. Appreciate it. Thank you.
Gregory Zikos: Thank you.
Operator: The next question comes from the line of Clement Mullins with Value Investors Edge. Please go ahead.
Clement Mullins: Good morning. Thank you for taking my questions. Most has already been covered, but I wanted to touch upon your sale and purchase activity. Over the past year, you've acquired some capes while also shedding some older tonnage. And I was wondering what's your view on current asset pricing on the dry side? And secondly, going forward, do you have a preference to continue building your cape exposure or are you comfortable as is?
Gregory Zikos: Yes. I mean, what we have been traditionally doing over the last year or a year and the half, we have been buying capes opportunistically and disposing of smaller tonnage. Now, we have been quite careful on how much we buy and how much we sell. And where, like, asset prices are today for capes, for example, let's take the new buildings. I think they are at levels which we would consider high in order to put a new building order for a cape. Also, I'm not sure today whether asset values for the capes represent today's chartering capacity of those vessels and the FFA curve going forward. So they may be a bit overpriced. So, I mean, we don't have a reason to buy if something we feel is expensive. We can see the weight. Our fleet is big enough. So there is no need to grow it further. So asset prices are today, we have more opportunistic rather than buying and block vessels where, especially considering two, four for the capes, it hasn't been a great market as of now. So, I mean, we're going to be more careful and take it as we go.
Clement Mullins: That's very helpful. Thank you. And on the containership side, you've taken a fairly conservative approach to fleet renewal, basically focusing on generating cash flow from existing assets. Is there maybe any appetite to going forward, acquire some modern tonnage or is asset pricing still too high?
Gregory Zikos: Look, we haven't, we don't have any new buildings, any new building commitments today, because had we any new buildings delivered today or like next year, I think asset prices for the containers of new buildings have been extremely high from a historical perspective. So either new buildings or like three, five-year old tonnage containers today, I think the prices are high irrespective of the chartering market. So I think we would be assuming excessive residual value risk. And this is the reason we haven't done it. Now, of course, there may be opportunities. We look at the market, but we are extremely cautious.
Clement Mullins: Makes sense. Thanks for the color and congratulations for the quarter.
Gregory Zikos: Thank you.
Operator: This concludes our question and answer session. I would like to turn the call to turn the conference back over to Mr. Zikos for any closing remarks.
Gregory Zikos: Yes. Thank you very much for your interest in Costamare and for dialing in today. We're looking forward to speaking with you again during the next quarterly results call. Thank you.
Operator: Thank you. That does conclude our conference for today. Thank you all for participating. You may now disconnect.
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