Costamare Inc. yesterday reported unaudited financial results for the fourth quarter (“Q4 2023”) and year ended December 31, 2023.
I. PROFITABILITY AND LIQUIDITY
- FY 2023 Net Income available to common stockholders of $354.7 million ($2.95 per share).
- FY 2023 Adjusted Net Income available to common stockholders1 of $249.0 million ($2.07 per share).
- Q4 2023 Net Income available to common stockholders of $96.6 million ($0.82 per share).
- Q4 2023 Adjusted Net Income available to common stockholders1 of $80.0 million ($0.68 per share).
- 2023 Year-end liquidity2 of $989.0 million.
II. DRY BULK OPERATING PLATFORM
Costamare Bulkers Inc. (“CBI”) has currently fixed a fleet of 51 dry bulk vessels on period charters, consisting of:
- 32 Newcastlemax/ Capesize vessels.
- 19 Kamsarmax vessels.
Majority of the fixed fleet is on index linked charter-in agreements, consisting of:
- 26 charters for Newcastlemax/ Capesize vessels that are index linked.
- 9 charters for Kamsarmax vessels that are index linked.
- Average remaining tenor for the Newcastlemax/ Capesize and Kamsarmax chartered-in fleet of 13 and 6 months, respectively.
III. LEASE FINANCING PLATFORM
- Controlling interest in Neptune Maritime Leasing Limited (“NML”).
- Company’s current investment in NML of $123.2 million.
Growing leasing platform, having funded 23 shipping assets as of the date of this press release, for a total amount of approximately $250 million, on the back of what we believe is a healthy pipeline.
IV. SALE AND PURCHASE ACTIVITY
Vessel Disposals
- Conclusion of the sale of the following dry bulk vessels:
-m/v Peace built in 2006 with a 55,709 DWT capacity.
-m/v Pride built in 2006 with a 55,705 DWT capacity.
-m/v Manzanillo built in 2010 with a 34,426 DWT capacity.
-m/v Progress built in 2011 with a 32,400 DWT capacity.
-m/v Cetus built in 2010 with a 32,527 DWT capacity.
- Net sale proceeds after debt prepayment amounted to $32.9 million.
Agreement for the sale of the following dry bulk vessels:
-m/v Merida built in 2012 with a 56,670 DWT capacity (expected conclusion of sale within Q1 2024).
-m/v Konstantinos built in 2012 with a 32,178 DWT capacity (expected conclusion of sale within Q1 2024).
-m/v Adventure built in 2011 with a 33,755 DWT capacity (expected conclusion of sale within Q1 2024)3.
-m/v Alliance built in 2012 with a 33,751 DWT capacity (expected conclusion of sale by Q2 2024)3.
Estimated net sale proceeds from the vessels agreed to be sold after debt prepayment of $25.8 million.
Vessel/ Equity Interest Acquisitions
Conclusion of the acquisition of the 51% equity interest in the company owning the 2001-built, 1,550 TEU capacity containership, Arkadia in December 2023. Prior to the conclusion of this acquisition, the Company already owned 49% equity interest with the remaining 51% owned by York Capital.
Agreement for the acquisition of the 2011-built, 180,643 DWT capacity dry bulk vessel, Iron Miracle (tbr. Miracle) (expected conclusion within Q1 2024).
V. NEW DEBT FINANCING
Conclusion of a new financing in the form of a hunting license facility with a European financial institution for the financing of the acquisition of containerships and dry bulk vessels. More specifically:
– Committed amount of up to $60 million.
– Drawdown availability until Q2 2025.
– Loan tenor of six years following each respective drawdown.
No meaningful debt maturities until 2026.
3 Subject to final documentation.
VI. OWNED FLEET CHARTER UPDATE4 – FULLY EMPLOYED CONTAINERSHIP FLEET FOR 2024
95% and 78% of the containership fleet5 fixed for 2024 and 2025, respectively.
Contracted revenues for the containership fleet of approximately $2.5 billion with a TEU-weighted duration of 3.6 years6.
Entered into more than 40 chartering agreements for the owned dry bulk fleet since Q3 2023 earnings release.
VII. DIVIDEND ANNOUNCEMENTS – SHARE REPURCHASE PROGRAM
On January 2, 2024, the Company declared a dividend of $0.115 per share on the common stock, which was paid on February 7, 2024, to holders of record of common stock as of January 22, 2024.
On January 2, 2024, the Company declared a dividend of $0.476563 per share on the Series B Preferred Stock, $0.531250 per share on the Series C Preferred Stock, $0.546875 per share on the Series D Preferred Stock and $0.554688 per share on the Series E Preferred Stock, which were all paid on January 16, 2024 to holders of record as of January 12, 2024.
Available funds remaining under the share repurchase program of $30 million for common shares and $150 million for preferred shares.
Mr. Gregory Zikos, Chief Financial Officer of Costamare Inc., commented:
“2023 has been a growth year for Costamare. The Company had revenues of $1.5 billion and generated Net Income of about $350 million. Liquidity stood at around $1 billion as of year-end.
Following our strategic decision in 2021 to enter into the dry bulk sector at an opportune time in the cycle, we grew during 2023 our newly established trading platform to an operator managing a fleet of 51 dry bulk vessels. Having invested $200 million in the new venture, 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 throughout 2023, having now concluded leasing transactions for 23 ships with a total value of about $250 million. We are committed to growing further the leasing business on the back of a healthy pipeline extending over the coming quarters.
On the owned dry bulk fleet side, we are executing our strategy to renew the dry bulk fleet and increase its average size. During the year we took the decision to dispose of 12 smaller sized vessels and agreed to acquire three capesize and one ultramax vessel. Subject to market conditions, our goal is to continue our expansion in the dry market.
On the containership market, recent events have been contributing positively to the supply and demand dynamics, pushing up box and charter rates. These recent developments are mitigating the effects of oversupply in the containership market, as tonnage is expected to remain tight at least until the Chinese New Year. We have proactively secured employment for 95% and 78% of our open days for 2024 and 2025 respectively, putting our contracted revenues for container vessels at $2.5 billion with a remaining time charter duration of 3.6 years.”
Results of Operations
Three-month period ended December 31, 2023 compared to the three-month period ended December 31, 2022
During the three-month periods ended December 31, 2023 and 2022, we had an average of 111.6 and 114.7 vessels, respectively, in our owned fleet. In addition, during the three-month period ended December 31, 2023, through our dry bulk operating platform Costamare Bulkers Inc. (“CBI”), we chartered-in an average of 63.3 third-party dry bulk vessels. As of February 6, 2024, CBI has chartered-in 51 dry bulk vessels on period charters.
During the three-month period ended December 31, 2023, we sold the dry bulk vessels Peace, Pride and Cetus with an aggregate DWT of 143,941 and the container vessel Oakland with a TEU capacity of 4,890.
Furthermore, during the three-month period ended December 31, 2023, we acquired the 51% equity interest of York Capital of the 2001-built, 1,550 TEU capacity containership Arkadia and as a result we obtained 100% of the equity interest in the vessel.
Up to December 31, 2023, we have invested in Neptune Maritime Leasing Limited (“NML”) the amount of $119.6 million. During the three-month period ended December 31, 2023, NML is included in our consolidated financial statements.
In the three-month periods ended December 31, 2023 and 2022, our fleet ownership days totaled 10,267 and 10,552 days, respectively. Ownership days are one of the primary drivers of voyage revenue and vessels’ operating expenses and represent the aggregate number of days in a period during which each vessel in our fleet is owned.
Voyage Revenue
Voyage revenue increased by 84.8%, or $225.1 million, to $490.5 million during the three-month period ended December 31, 2023, from $265.4 million during the three-month period ended December 31, 2022. The increase is mainly attributable to (i) revenue earned by CBI, which has been fully operational since the first quarter of 2023 and (ii) increased charter rates in certain of our container vessels; partly off-set by decreased charter rates in certain of our dry bulk vessels and by revenue not earned by six container vessels and six dry bulk vessels that were sold during the fourth quarter of 2022 and the year ended December 31, 2023.
Voyage revenue adjusted on a cash basis (which eliminates non-cash “Accrued charter revenue”) increased by 86.6%, or $227.1 million, to $489.2 million during the three-month period ended December 31, 2023, from $262.1 million during the three-month period ended December 31, 2022. Accrued charter revenue for the three-month periods ended December 31, 2023 and 2022 was a negative amount of $1.2 million and a negative amount of $3.4 million, respectively.
Income from investments in leaseback vessels
Income from investments in leaseback vessels was $4.3 million for the three-month period ended December 31, 2023. Income from investments in leaseback vessels was earned from NML’s operations during the fourth quarter of 2023. NML acquires, owns and bareboat charters out vessels through its wholly-owned subsidiaries.
Voyage Expenses
Voyage expenses were $90.0 million and $15.1 million for the three-month periods ended December 31, 2023 and 2022, respectively. Voyage expenses increased, period over period, mainly due to the operations of CBI which has been fully operational since the first quarter of 2023. Voyage expenses mainly include (i) fuel consumption mainly related to dry bulk vessels, (ii) third-party commissions, (iii) port expenses and (iv) canal tolls.
Charter-in Hire Expenses
Charter-in hire expenses were $166.3 million and nil for the three-month periods ended December 31, 2023 and 2022, respectively. Charter-in hire expenses are expenses relating to chartering-in of third-party dry bulk vessels under charter agreements through CBI.
Voyage Expenses – related parties
Voyage expenses – related parties were $3.7 million each of the three-month periods ended December 31, 2023 and 2022. Voyage expenses – related parties represent (i) fees of 1.25%, in the aggregate, on voyage revenues earned by our owned fleet charged by a related manager and a related service provider and (ii) charter brokerage fees (in respect of our container vessels) payable to two related charter brokerage companies for an amount of approximately $0.4 million and $0.4 million, in the aggregate, for the three-month periods ended December 31, 2023 and 2022, respectively.
Vessels’ Operating Expenses
Vessels’ operating expenses, which also include the realized gain/(loss) under derivative contracts entered into in relation to foreign currency exposure, were $64.0 million and $70.9 million during the three-month periods ended December 31, 2023 and 2022, respectively. Daily vessels’ operating expenses were $6,231 and $6,719 for the three-month periods ended December 31, 2023 and 2022, respectively. Daily operating expenses are calculated as vessels’ operating expenses for the period over the ownership days of the period.
General and Administrative Expenses
General and administrative expenses were $3.9 million and $3.1 million during the three-month periods ended December 31, 2023 and 2022, respectively, and include amounts of $0.67 million and $0.67 million, respectively, that were paid to a related service provider.
Management and Agency Fees – related parties
Management fees charged by our related managers were $11.7 million and $11.1 million during the three-month periods ended December 31, 2023 and 2022, respectively. Furthermore, during the three-month period ended December 31, 2023 and 2022, agency fees of $0.6 million and $2.8 million, respectively, were charged by our related agency companies, respectively, in connection with the operations of CBI.
General and Administrative Expenses – non-cash component
General and administrative expenses – non-cash component for the three-month period ended December 31, 2023 amounted to $1.5 million, representing the value of the shares issued to a related service provider on December 29, 2023. General and administrative expenses – non-cash component for the three-month period ended December 31, 2022 amounted to $1.4 million, representing the value of the shares issued to a related service provider on December 30, 2022.
Amortization of Dry-Docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs was $5.3 million and $4.0 million during the three-month periods ended December 31, 2023 and 2022, respectively. During the three-month period ended December 31, 2023, five vessels underwent and completed their dry-docking and special survey and two vessels were in the process of completing their dry-docking and special survey. During the three-month period ended December 31, 2022, two vessels underwent and completed their dry-docking and special survey and five vessels were in the process of completing their dry-docking and special survey.
Depreciation
Depreciation expense for the three-month periods ended December 31, 2023 and 2022 was $41.8 million and $41.7 million, respectively.
Gain / (Loss) on Sale of Vessels, net
During the three-month period ended December 31, 2023, we recorded a net loss of $1.0 million from the sale of the dry bulk vessels Peace, Pride and Cetus and the sale of the container vessel Oakland, which was classified as a vessel held for sale as of September 30, 2023. During the three-month period ended December 31, 2022, we recorded a gain of $105.1 million from the sale of the container vessels Sealand Michigan, Sealand Illinois and York, each of which was classified as a vessel held for sale as of September 30, 2022 (initially classified as vessels held for sale as of December 31, 2021).
Vessels Held for Sale
During the three-month period ended December 31, 2023, we recorded a loss on vessels held for sale of $2.3 million representing the expected loss from the sale of the dry bulk vessels Konstantinos and Progress during the next twelve-month period. Furthermore, during the three-month period ended December 31, 2023, the dry bulk vessels Manzanillo and Adventure were each classified as a vessel held for sale but no loss on vessels held for sale was recorded, since each vessel’s estimated fair value less costs to sell exceeded each vessel’s carrying value. As of December 31, 2022, the container vessels Sealand Washington and Maersk Kalamata (each of which was initially classified as a vessel held for sale during the first quarter of 2022) continued to be classified as vessels held for sale. No loss on vessels held for sale was recorded during the fourth quarter of 2022, since each vessel’s fair value less cost to sell exceeded each vessel’s carrying value.
Vessels’ Impairment Loss
During the three-month period ended December 31, 2023, we recorded an impairment loss in relation to one of our dry bulk vessels in the amount of $0.2 million. During the three-month period ended December 31, 2022, we recorded an impairment loss in relation to four of our dry bulk vessels in the amount of $1.7 million, in the aggregate.
Interest Income
Interest income amounted to $6.9 million and $4.9 million for the three-month periods ended December 31, 2023 and 2022, respectively.
Interest and Finance Costs
Interest and finance costs were $34.4 million and $35.8 million during the three-month periods ended December 31, 2023 and 2022, respectively. The decrease is mainly attributable to the decreased interest expense due to lower average loan balance during the three-month period ended December 31, 2023 compared to the three-month period ended December 31, 2022.
Income from Equity Method Investments
Income from equity method investments for the three-month periods ended December 31, 2023 and 2022 was $0.1 million and $0.7 million, respectively, representing our share of the gain in jointly owned companies set up pursuant to the Framework Deed. During the three-month period ended December 31, 2023 we acquired the 51% equity interest of York Capital of the 2001-built, 1,550 TEU capacity containership Arkadia and as a result we obtained 100% of the equity interest in the vessel. As of December 31, 2023 and 2022 two and five companies, respectively, were jointly owned pursuant to the Framework Deed out of which nil and four companies, respectively, owned container vessels.
Gain on Derivative Instruments, net
As of December 31, 2023, we hold derivative financial instruments that qualify for hedge accounting and derivative financial instruments that do not qualify for hedge accounting. The change in the fair value of each derivative instrument that qualifies for hedge accounting is recorded in “Other Comprehensive Income” (“OCI”). The change in the fair value of each derivative instrument that does not qualify for hedge accounting is recorded in the consolidated statements of income.
As of December 31, 2023, the fair value of these instruments, in aggregate, amounted to a net asset of $47.7 million. During the three-month period ended December 31, 2023, a net loss of $23.3 million has been included in OCI and a net gain of $24.5 million has been included in Gain on Derivative Instruments, net.
Net Cash Provided by Operating Activities
Net cash flows provided by operating activities for the three-month period ended December 31, 2023, increased by $28.5 million to $152.9 million, from $124.4 million for the three-month period ended December 31, 2022. The increase is mainly attributable to the favorable change in working capital position, excluding the current portion of long-term debt and the accrued charter revenue (representing the difference between cash received in that period and revenue recognized on a straight-line basis), to the decreased payments for interest (including interest derivatives net receipts) during the three-month period ended December 31, 2023 compared to the three-month period ended December 31, 2022 and to the decreased dry-docking and special survey costs during the three-month period ended December 31, 2023 compared to the three-month period ended December 31, 2022; partly offset by the decreased net cash from operations during the three-month period ended December 31, 2023 compared to the three-month period ended December 31, 2022.
Net Cash Provided by / (Used in) Investing Activities
Net cash used in investing activities was $33.3 million in the three-month period ended December 31, 2023, which mainly consisted of (i) an advance payment for the acquisition of the secondhand dry bulk vessel Iron Miracle (tbr. Miracle), (ii) payments for upgrades for certain of our container and dry bulk vessels, (iii) payments for net investments into which NML entered and (iv) payments for the purchase of short-term investments in US Treasury Bills; partly offset by the proceeds we received from the sale of one container vessel and three dry bulk vessels.
Net cash provided by investing activities was $81.9 million in the three-month period ended December 31, 2022, which mainly consisted of proceeds we received from (i) the sale of three container vessels and (ii) the maturity of part of our short-term investments in US Treasury Bills; partly off-set by payments for the purchase of short-term investments in US Treasury Bills and payments for upgrades for certain of our container and dry bulk vessels.
Net Cash Used in Financing Activities
Net cash used in financing activities was $101.0 million in the three-month period ended December 31, 2023, which mainly consisted of (a) $88.0 million net payments relating to our debt financing agreements and finance lease liability agreement (including proceeds of $12 million we received from one debt financing agreement), (b) $9.3 million we paid for dividends to holders of our common stock for the third quarter of 2023 and (c) $0.9 million we paid for dividends to holders of our 7.625% Series B Cumulative Redeemable Perpetual Preferred Stock (“Series B Preferred Stock”), $2.1 million we paid for dividends to holders of our 8.500% Series C Cumulative Redeemable Perpetual Preferred Stock (“Series C Preferred Stock”), $2.2 million we paid for dividends to holders of our 8.75% Series D Cumulative Redeemable Perpetual Preferred Stock (“Series D Preferred Stock”) and $2.5 million we paid for dividends to holders of our 8.875% Series E Cumulative Redeemable Perpetual Preferred Stock (“Series E Preferred Stock”) for the period from July 15, 2023 to October 14, 2023.
Net cash used in financing activities was $110.6 million in the three-month period ended December 31, 2022, which mainly consisted of (a) $95.3 million net payments relating to our debt financing agreements (including proceeds of $197.9 million we received from three of our debt financing agreements), (b) $10.0 million we paid for dividends to holders of our common stock for the third quarter of 2022 and (c) $0.9 million we paid for dividends to holders of our Series B Preferred Stock, $2.1 million we paid for dividends to holders of our Series C Preferred Stock, $2.2 million we paid for dividends to holders of our Series D Preferred Stock and $2.5 million we paid for dividends to holders of our Series E Preferred Stock for the period from July 15, 2022 to October 14, 2022.
Results of Operations
Year ended December 31, 2023 compared to the year ended December 31, 2022
During the year ended December 31, 2023 and 2022, we had an average of 111.4 and 116.7 vessels, respectively, in our owned fleet. In addition, during the year ended December 31, 2023, through CBI we chartered-in an average of 43.1 third-party dry bulk vessels. As of February 6, 2024, CBI has chartered-in 51 dry bulk vessels on period charters.
During the year ended December 31, 2023, we (i) sold our 49% equity interest in the company owning the 2018-built, 3,800 TEU capacity containership, Polar Argentina to York Capital, (ii) acquired the 51% equity interest of York Capital of the 2018-built, 3,800 TEU capacity containership Polar Brasil and as a result we obtained 100% of the equity interest in the vessel and (iii) we acquired the 51% equity interest of York Capital of the 2001-built, 1,550 TEU capacity containership Arkadia and as a result we obtained 100% of the equity interest in the vessel.
In addition, during the year ended December 31, 2023, we acquired the secondhand dry bulk vessels Enna, Dorado and Arya with an aggregate DWT of 417,241 and we sold the container vessels Maersk Kalamata, Sealand Washington and Oakland with an aggregate TEU capacity of 18,182 and the dry bulk vessels Miner, Taibo, Comity, Peace, Pride and Cetus with an aggregate DWT of 248,655.
During the year ended December 31, 2022, we acquired (i) the secondhand container vessel Dyros with a TEU capacity of 4,578 and (ii) the secondhand dry bulk vessels Oracle, Libra and Norma with an aggregate DWT of 172,717. Furthermore, in the year ended December 31, 2022, we sold the container vessels Messini, Sealand Michigan, Sealand Illinois and York with an aggregate TEU capacity of 22,402, and the dry bulk vessel Thunder, with DWT of 57,334.
Up to December 31, 2023, we have invested in NML the amount of $119.6 million. NML is included in our consolidated financial statements.
In the years ended December 31, 2023 and 2022, our fleet ownership days totaled 40,652 and 42,595 days, respectively. Ownership days are one of the primary drivers of voyage revenue and vessels’ operating expenses and represent the aggregate number of days in a period during which each vessel in our fleet is owned.
