Costamare Inc. Q3 FY2025 earnings call

• During the third quarter, the company generated net income of about $99 million. After the spin-off of Costamare Partners Holdings Limited, Costamare Inc. remains the sole shareholder of 69 containerships and controlling shareholder of Neptune Maritime Leasing. • Exercised option for 2 more 3,100 TEU containerships to be delivered in Q1 2028, which will commence an 8-year time charter with a leading liner company. • Fixed 8 vessels with forward start, increasing contracted revenues by about $310 million. • Fleet deployment is 100% for 2025 and 80% for 2026. • Positive outcome from U.S.-China trade discussions and delay in port fees implementation expected to boost global trade flows. • Charter market remains strong with an idle fleet of less than 1%. • Neptune Maritime Leasing has 50 shipping assets funded or committed, with total investments and commitments exceeding $650 million. • Adjusted net income was $98 million or $0.81 per share, net income for the quarter was around $93 million or $0.77 per share. • Concluded newbuild contracts for additional 3,100 TEU containerships with expected delivery in Q1 '28, bringing total newbuilding orders to 6. • Agreed pre- and post-delivery financing for 4 newbuildings, with no major maturities till 2027. • Acquired a 6,500 TEU container vessel. • Continues to have a long uninterrupted dividend track record.

Adjusted net income was $98 million or $0.81 per share. Net income for the quarter was around $93 million or $0.77 per share. Liquidity stands at about $560 million. Regarding Neptune Maritime Leasing, 50 shipping assets have been funded or are committed and total investments and commitments are exceeding $650 million. Total contracted revenues for containerships amount to $2.6 billion with a remaining time charter duration of about 3.2 years.

• Concluded newbuild contracts for another 3,100 TEU containerships with expected delivery in Q1 '28, totaling 6 newbuilding orders. • Increased contracted revenues through new chartering agreements by more than $310 million. • Revenue days are 100% fixed for 2025 and 80% for 2026. • Total contracted revenues amount to $2.6 billion with a TEU-weighted remaining duration of 3.2 years. • No major maturities until 2027.

• Geopolitical events could potentially impact the charter market and freight rates, introducing uncertainty.

Q: Just a couple from me. Obviously, just looking at your chartering activity, you've been able to add a good amount of visibility forward fixing several ships. It looks like maybe an average of at least 2 years or so from what's on the -- from where they were before. But I 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 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, given just how active you are in the chartering market, 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 charter it would be great.

A: Sure. First of all, regarding the box rates, you are right. I mean, last week and last month in general, box rates have been up, especially on the U.S. West Coast trade route. Now regarding the charter market, there is a shortage of ships, especially larger vessels. So I mean, whichever ships come out, there are definitely candidates to have them chartered in. So still the market remains at very healthy levels. There is demand and ships are easily absorbed. And I think the main indicator, or 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%. So less than 1% idle fleet means that practically we have a fully employed market. So -- and charter rates, in general, they are holding up very well. Now whether this will continue or not, and for how long, it's hard to say because we have a series of geopolitical events that might affect it. But for the time being, it is a healthy market. Liners are generally eager to charter in vessels. Now you can argue that probably they may not want to go for longer periods in general compared to the past. But still, you still see like a 2- or 3-year time charter for secondhand vessels on a forward basis. So 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.

Q: And then maybe just a follow-up. I wanted to ask about the secondhand acquisition you mentioned. You bought the 06 built 6,000 TEU vessel. That looks like it's on contract to Maersk. Is that -- could you maybe talk about kind of the -- how that came about? Was this a direct acquisition from Maersk with a charter back to them? Are there more opportunities like that, do you think in the sale and purchase?

A: Yes. I think this vessel has been chartered back to Maersk. This is a structure sale and leaseback deal. There may be more opportunities like that in the future. I mean we haven't come across anything that -- something like that, that probably would make sense. And as -- but definitely, there may be. And as you've seen, we have been focusing on all the new buildings for the 3,100 TEU ships, we had concluded 4 previously announced in the Q2 results. We have added 2 more options now. Those are going to be delivered in Q1 '28. On a back-to-back basis, we have pretty much arranged the charter for the first 4 -- sorry, the financing for the first 4, and we are closing the commitment of the financing for the last 2. So which is something that also makes sense. And we are generally active. So either secondhand or even new buildings, assuming that we feel comfortable with the residual value risk of our equity, I think we are -- we will be quite active.

Q: 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 since. So how do you think about the trade-off of having more visibility versus the front running?

A: Yes. 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 pushback of the port fees, et cetera, 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 sort of -- because if you look historically at the 3 or 6 months or like 1-year box rates, they have been on a negative trend. But I'm afraid I cannot forecast where box rates are going to be starting from today over the next 3 to 6 months. To some extent, this is something that also liner companies. I think they do have a greater visibility on that.

Q: Following up on Omar's second question, it seems the Maersk Puelo 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?

A: Okay. I'm afraid these are charter risk option. So as mentioned, it's up to the charter to have them exercised. So again, I cannot forecast what a third party will be doing. So I think market levels will dictate whether the charter will take those options or not. But on a committed basis, you are right, this is a 1-year charter. And from our side, we have run the numbers to -- so that being conservative, we have been factoring in this 1-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.