Costamare Inc. (CMRE) Q2 2025 Earnings Report, Transcript and Summary

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. [Operator Instructions] 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 #2 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.

Thank you, and good morning, ladies and gentlemen. During the second quarter of the year, the company generated net income of about $99 million. In May, we have successfully completed the spin-off of Costamare Bulkers, which encompasses the own 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 4 newbuilding containerships from a Chinese 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 8-year time charter with a first-class liner company. At the same time, we chartered two 6,500 TEU containerships for a 3-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 fleet deployment stands at 100% and 75% for 2025 and '26, respectively. Total contracted revenues amount to $2.5 billion with a remaining time charter duration of about 3.2 years. Regarding the market, with less than 1% of the fleet being commercially idle, the containership fleet can be considered as fully employed. Current low fixing activity is mainly the result of low availability of prompt tonnage rather than lack of demand. Charter rates remain healthy across the board and the short supply keeps rates at robust levels. Finally, with regards to Neptune Maritime Leasing, the growing leasing platform, 47 shipping assets have been funded or committed and total commitments and investments are exceeding $650 million. Moving now to the slide presentation. On Slide 3, 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 starts at above $0.5 billion. Slide 4, we have concluded newbuilding contracts for four 3,100 TEU containerships with expected deliveries between Q2 and Q4 2027. Upon delivery, each vessel will commence an 8-year charter with a leading liner company. On the employment side, we have forward fixing of 2 containerships, which along with the previously mentioned 8-year charters, have incremental contracted revenues of more than $310 million. In addition, as already mentioned, our revenue days are fixed 100% for '25 and 75% for '26, while our contracted revenues are $2.5 billion with a remaining time charter duration on a TEU-weighted basis of 3.2 years. Slide 5, regarding our financing arrangements, we have agreed to refinance 6 containerships with no increase in leverage. We have no major maturities up until 2027. Slide 6, on our leasing platform, we have invested around $180 million. Neptune Maritime Leasing has funded or committed to fund 47 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 7. Charter rates in the containership market remain at firm levels. The continued tight supply of tonnage, along with the increased ton miles due to the closure of the Suez Canal is supporting the current charter rates. The idle fleet remains at low levels at 0.5%, indicating a fully employed market. With that, we can conclude our presentation, and we can now take questions. Thank you. Operator, we can take any questions now.

[Operator Instructions] And your first question comes from the line of Omar Nokta of Jefferies.

You spun off the dry bulkers now. You're placing these orders for the 4 containerships. It's your first order in some time. Is this reshift in focus effectively more -- is this -- just trying to ask, I guess, perhaps, is this a renewed effort now now that you're back to almost effectively a pure-play container 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 4 newbuilds?

Okay. No, I don't think it is a shift in focus. We didn't put any newbuilding orders in containers 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 rate period. This deal 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 made sense. So it's not that we shifted focus. We have been focusing on containers. It's just that asset values at those levels we've seen up to now didn't make much sense. Now if there is a correction in the market or if we find similar transactions that we feel make sense, we will definitely proceed. So the main reason had nothing to do with the dry bulk. It had to do mainly with elevated asset prices in the market.

Okay. No, that makes sense. And then maybe just a follow-up and perhaps a bit more bigger picture. Now that you're back to a container-focused platform, obviously, you've Neptune. But I guess just -- is there any change in strategy or approach with the customer platform now going forward as a result of this new focus?

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 did have as a private entity. So as long as we feel that there are opportunities, we will proceed like now. Otherwise, in times of elevated high prices, we have been patient. And we can sit and wait. We do have a fleet of 68 containerships today, all chartered with very good charter coverage for '25, '26 and for the years to come with solid counterparties and with low leverage. So we don't have to do any new transactions unless they deal by themselves, justify entering into those deals. Otherwise, we can just sit and wait. Now this was a deal that we feel it made sense. Also, it made sense to charter on a forward basis from 2026 onwards to 6,500 TEU vessels. So selectively, we will be doing new stuff like we have always been doing in the past.

Our next question comes from Climent Molins of Value Investor's Edge.

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?

Yes. I mean -- I think that Neptune has been progressing well. We have -- in total, we have been far more committed to fund 47 vessels from various sizes and 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, et cetera, I'm not prepared to tell you now. But, in general, I think that this investment has been going as initially planned a couple of years ago. And I have to remind you that all this growth has been affected in a relatively shorter time period.

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

I think the dividend policy -- first of all, this is a Board decision, which is repeating the dividend policy periodically. But the dividend policy remains the same, irrespective of like whether we had the dry bulk vessels or sort of in a spun-off entity. We were paying and we still pay $0.115 per share per quarter, which we do feel is a healthy dividend. But of course, I cannot exclude any changes in the dividend policy being in terms of share buybacks or sort of dividend increases, et cetera, but this is subject to the Board's decision. We do pay dividends, but at the same time, we feel that an accretive deployment of our capital should be invested into new business rather than paying one-off dividends.

[Operator Instructions] This concludes the question-and-answer session. Mr. Zikos, please have your closing remarks.

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 results call. Thank you. Operator, we can conclude now. Thank you.

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