Thank you for standing by, ladies and gentlemen, and welcome to the Costamare Incorporated conference call on the third quarter 2022 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, at which time if you wish to ask a question, please press star then one on your telephone keypad and wait for your name to be announced. I must advise you that this conference is being recorded today, Wednesday, November 2, 2022. We would like to remind you that this conference call contains forward-looking statements. Please take a moment to read Slide No. 2 of the presentation, which contains the forward-looking statements. I will now pass the floor to your speaker today. Mr. Zikos, please go ahead.

Thank you and good morning ladies and gentlemen. During the third quarter, revenues reached approximately $290 million and adjusted net income reached $107 million compared to $216 million and $82 million for the same period last year. As of quarter end, cash balances and short term investments stood at around $745 million and total liquidity, including interim credit lines, was about $890 million. Focusing on increasing visibility into our contracted cash flow base, we have recently chartered with a leading liner company a total of 11 containerships with existing charters recently expanding into 2023 and 2025. Seven of those vessels were chartered for a period ranging from four to five years starting from 2025 onwards, and the remaining ships were chartered for a period ranging from two to three years with [indiscernible] starts in 2023 and 2024. The new charters increase our contracted revenues by about $420 million and result in incremental charter covers of about 4.5 years. Regarding the container market, cargo volumes have been softening across several trade lanes with energy costs and inflation impacting consumer spending. Fixing activity has been at low levels and the majority of new fixtures are for short-term employment. Charter rates have been under pressure, although they do remain at profitable levels. On the dry bulk market, rates for our vessel sizes remain profitable, especially for owners who entered the market the year before. We feel comfortable with the long term supply and demand dynamics of this sector and we view any potential shortening of asset values as a compelling buying opportunity. On the back of our increased liquidity and container charter coverage, we are focused on new investment opportunities in the shipping sector that have the potential to provide enhanced returns at acceptable risk levels. Moving now to the slide presentation, on…

[Operator instructions] The first question today comes from Chris Wetherbee with Citigroup. Please go ahead.

Hey thanks, good morning. This is Eli on for Chris. Guys, maybe we could just start with the bulk market and try to get a better understanding of what the rate environment looks like specifically there. You don’t have a lot of replacement grain, you have more storage on the ships so that would theoretically be putting pressure downwards on the TCE rates that you guys are able to get, so it looks like that remained a little stronger than we thought. Maybe you can just help us understand what that could look going into 4Q and then through the winter, and how that would change in 2023.

Sorry, I didn’t hear you properly. The question had to do with the debt levels, or was it the charter rates? I completely missed it.

It was about the charter rates on the bulk side, yes, so how should we be thinking about that. It looked a little stronger than we thought.

Okay, well charter rates--okay. Recently, the last couple of days, we have seen a shortening in the market and it’s been volatile for the bulkers now. I think they’re trading at around $15,000, $16,000 per day for the Handys and the Supermaxes. This is where the market has recently been. We do have all our ships spot. In the future this might change, I don’t know, depending on the view we take, but considering our low cash breakeven levels and the fact that we are generally positive on the fundamentals of the dry bulk market, for the time being we’ll follow this strategy. Now, I cannot forecast, and we never provide forecasts where we think the market will be heading the next quarter [indiscernible] Q2 or Q1 of next year, but I can tell you that considering the low order book and being internally bullish on the dry bulk sector, this is the view we have today.

When you look at the macro environment maybe more specifically, understanding I’m not looking for a forecast on the rate side, but what are some of the pressures coming in 4Q that could impact the rate side? You have a little replacement grain coming out of Russia and just lower demand in some of the other places, like in China for soybeans - the imports are down, so just curious what some of those puts and takes are there.

Yes well, it’s a couple of things. You’re right to point out Russia, it is China, which is the biggest player in dry bulk. It is COVID disruptions, it is inflation which internally does not help, and also congestion easing does not help either. In the past, I have to tell you that there were some--part of the upside in the Handys had to do with the elevated levels of no and little availability in the containers, and congestion was a determining factor there. However, at the same time, as I already mentioned, we have a very low order book and we do feel that in that sector compared to the containers, for instance, the supply and demand dynamics are overall more positive. Now to conclude, it is Russia, as you mentioned, it is China, it is congestion easing, it is also inflation. At the same time, if there is some stimulus package or some growth, for instance in the construction industry in China, this is going to be a huge boost for the dry bulk vessels, and this could also be the case, so it’s a lot of factors. It’s not only one or two, I’m afraid.

Understood, thank you.

Sure.

The next question comes from Omar Nokta with Jefferies. Please go ahead.

Thank you. Hi Greg. I just wanted to continue on that topic on dry bulk and wanted to ask, how are you thinking about deploying capital right now? You guys were obviously very aggressive last year expanding into dry bulk, it looked like it was well timed. We have seen dry bulk values easing here over the past several months but also containers are coming down pretty aggressively. What do you think about the S&P market here, and do you look to buy containerships after having taken a step back after the past couple of years, or do you still look to commit more into the dry bulk market?

Yes, for the containers--let’s take them one by one. For the containers, you’re right - we have seen the market softening in terms of charter rates and also in terms of box rates. However, we don’t feel asset values have come to a level, either new buildings or second-hand vessels, where an investment today would make sense. Probably in the future in the containers, there will be opportunities, but this is not something we see today, and it make some time until box rates and charter rates find their way to asset values. Now for the dry bulk vessels, yes, last year I think the timing of our acquisition with the benefit of hindsight, I think it was good. Those acquisitions do make sense and those ships were acquired with low leverage and at low cash breakeven levels, so today they are profitable and they have been profitable since buying them. Now also for the dry bulk vessels, we have not seen asset values at levels close to those of the summer of last year, when we made our acquisitions, so based on that, I think the proper thing to do is to sit and wait. We don’t have to grow, we are close to 120 vessels today. Like in the past, whatever acquisition we do, it’s going to be on the merits and not for the sake of growing, so asset values in the dry bulk sector, we still consider them to be relatively high, or we haven’t seen something that does make sense. In that respect, we continue to sit and wait. The same applies for the containers for the new buildings - we didn’t put any new buildings over the last couple of years, as you mentioned. The main reason was that new building prices were extremely high and we would be ordering at the peak of the market, which is something we try to avoid. So we have those vessels now, containers and dry bulk vessels, they are all profitable. We fix forward as many containers as we can, and we receive the yield on the dry bulk vessels, the acquisition of which I think, considering where the market is, was well timed.

Yes, thanks Greg for that color. Maybe just on the new buildings, prices have been very high, but wanted to just maybe get your sense in dealing--in talking with the shipyards, is there any sense that values are going to start to come off a bit now that steel prices have been correcting, or are they still fairly firm at these high levels?

Well, for the time being, what we’ve seen, the prices are high and there are still new building orders being put, especially by liners, so in this environment--of course, there could also be some exceptions and opportunities like we haven’t seen, so in this environment if you look at it from a historical perspective, still it is a very high asset value environment, which in that we don’t want to put any orders. Even if we have charter or not, still this is something we would avoid ordering at peak prices or close to peak prices.

Yes, okay. Got it. Then just final one, and you get this question every quarter basically, and it is how do you think about the company going forward? You’ve got good dry bulk, you’ve got the containers together. Do you like that diversity within the same platform, or do you also think about just a split at some point down the line?

Look, for the time being, there are no immediate plans to have a spinoff or have a separate company, where we would have a dry bulk platform and also a containership platform. The containers, they provide us today with the contracted cash flows, which are close to $3.5 billion. We have solid charter coverage over the next years. The dry bulk vessels, at the same time they are more opportunistic, but we started from a low cost base, so we don’t see any reason today to have a spinoff. Of course, in the future circumstances might change and it might make sense, but today there is no--there are no immediate plans to have the dry bulk vessels spun off under a different entity.

Okay, got it. Thanks Greg, I’ll hand it over.

Sure, thanks.

The next question comes from Benjamin Nolan with Stifel. Please go ahead.

Hi, good morning. This is Macalla Rogers on for Ben today. Thank you for taking our questions.

Sure.

Our first one, we just kind of wanted to get some color on how you’re thinking about maintenance capex for vessels moving forward. You know, with the container market softening, would you expect to maybe retire assets once they come off contract, or any insight into how you’re thinking about the future?

Yes, look, today we don’t have any scrap candidates. We have some older ships in our fleet. We have some ships 1996 builds, but as we mentioned, those ships have a medium to long term charter and we have recently refinanced them. Although they are 26 years old, we have refinanced them for four years forward, so those are not scrap candidates because they do have charters. Nothing we are targeting to scrap today. In the future, of course, it’s a matter of timing and of market conditions. We wouldn’t have a problem to scrap a vessel if you can use this equity in order to renew the fleet, or the funds released from the scrapping, they could be used in some accretive investments, but today there are no plans for scrapping based on our fleet portfolio, both for the containers and obviously for the bulkers as well.

Thank you, that’s very helpful. Just one quick one, given some of the preferreds are trading below or close to par, would you consider using some liquidity to call in the future, or any color around what you guys are thinking there?

Yes, it’s a question of--it’s more about the general capital allocation. We have a buyback program for the preferreds of $850 million, which we have not utilized. We have utilized part of our buyback program for common shares, and some of the preferreds, they are callable as well because five years have elapsed since they were offered, so it’s a matter of where we think we’re going to be allocating our excess liquidity, whether it’s going to be buying back stock, as we did with common stock, like we did in the past, or some preferreds, also some other types of investments. These are discussed at the board level. These are all options which if some of them make sense, however I’m not in a position today to tell you exactly what will happen. There are discussions, we know the preferreds, we know the buyback of the stock [indiscernible], we think it’s trading at below NAV, so we’ll see. It’s good to have those options, but nothing has been determined to date as we speak.

Thank you very much. Appreciate the time.

Thank you.

As a reminder, if you have a question, please press star then one to join the queue. The next question comes from Climent Molins with Value Investor's Edge. Please go ahead.

Good morning, thank you for taking my questions.

Good morning.

Looking at share repurchases alongside Q2 results, you disclosed you had repurchased $60 million worth of shares, but no additional buybacks have been pursued since then. Was there a driver behind this decision, and looking ahead, how should we feel about your appetite for additional share repurchases given the discount to NAV you’re trading at?

Yes, we bought $60 million of common stock back. We have a program of $150 million for the common, so it’s $90 million more available under this program, and we also have a program for the preferreds. I cannot predict--I cannot tell you what we’re going to be doing because this is something we’re discussing internally. Of course, we have the option to buy back more shares, especially considering where the stock is trading today or where the stock has been trading over the last weeks. At the same time, we have the option for the preferreds as well, so this is something that we are considering, but I’m afraid I cannot tell you that we have decided to buy back so much common stock or so much preferred at this price, under those conditions within the next quarter or so. This is discussed at the board level, so I’m not--I don’t have anything more to say on that question right now.

I understand, thanks for the color. That’s all for me. Thanks for taking my questions.

Okay, thank you.

This concludes our question and answer session. I would like to turn the conference back over to Mr. Zikos for any closing remarks.

Thank you for dialing in today and for your interest in Costamare. We look forward to speaking with you again in our next quarterly results call. Thank you.

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