CMRE - Costamare Inc. Reports Results For The First Quarter Ended March 31 2021

MONACO, June 01, 2021 (GLOBE NEWSWIRE) -- Costamare Inc. (“Costamare” or the “Company”) (NYSE: CMRE) today reported unaudited financial results for the first quarter ended March 31, 2021 (“Q1 2021”).

NEW BUSINESS DEVELOPMENTS

B. New Financing Agreements

• In March 2021, we signed a loan facility agreement with a leading European financial institution for an amount of $150 million, in order to refinance the existing indebtedness of the 2017-built, 11,010 TEU containerships Cape Kortia and Cape Sounio and for general corporate purposes. The new facility will be repayable over 10 years.
• In March 2021, we signed a loan facility agreement with a leading U.S. financial institution for an amount of $147 million, in order to refinance the existing indebtedness of the 2017-built, 11,010 TEU containerships Cape Tainaro and Cape Artemisio and for general corporate purposes. The new facility will be repayable over 7.5 years for the Cape Tainaro tranche and over 5 years for the Cape Artemisio tranche.
• In March 2021, we signed a loan facility agreement with a leading European financial institution for an amount of $75 million, in order to refinance the existing indebtedness of the 2016-built, 11,010 TEU containership Cape Akritas and for general corporate purposes. The new facility will be repayable over 8 years.
• In March 2021, we signed loan facility agreement with a European financial institution for an amount of $23 million, in order to finance the acquisition of the 2004-built, 6,492 TEU containerships Aries and Argus. The facility will be repayable over 5 years.
• In March 2021, we signed a loan facility agreement with a European financial institution for an amount $14 million, in order to finance the acquisition of the 2006-built, 5,642 TEU containership Glen Canyon. The facility will be repayable over 5 years.
• In March 2021, we signed a loan facility agreement with a European financial institution for an amount $18.5 million, in order to refinance the existing indebtedness of the 1996-built, 8,044 TEU containerships Maersk Kleven and Maersk Kotka and for general corporate purposes. The original facility was scheduled to mature in 2021 whilst the new facility will be repayable over 2.5 years.

C. Dividend announcements

• On April 1, 2021, we declared a dividend for the quarter ended March 31, 2021, of $0.10 per share on our common stock, which was paid on May 6, 2021, to stockholders of record of common stock as of April 20, 2021.
• On April 1, 2021, we declared a dividend of $0.476563 per share on our Series B Preferred Stock, a dividend of $0.531250 per share on our Series C Preferred Stock, a dividend of $0.546875 per share on our Series D Preferred Stock and a dividend of $0.554688 per share on our Series E Preferred Stock, which were all paid on April 15, 2021 to holders of record as of April 14, 2021.

Mr. Gregory Zikos, Chief Financial Officer of Costamare Inc., commented:

“We are pleased to announce the results of another profitable quarter.

The market rebound that began in the second half of last year has continued, drawing strength from favorable supply and demand dynamics. Strong demand for goods, restocking of inventories and a balanced container vessel market have all helped the charter market reach levels that we have not seen for a decade.

Since the beginning of the year, we have agreed to acquire in total 15 secondhand vessels and we have taken delivery of our last two newbuildings, which have commenced their 10-year charters. Employment already secured for the new acquisitions, together with the newbuildings delivered, is expected to provide incremental contracted revenues of more than $830 million.

Since our previous quarterly earnings release, we chartered out a total of 17 secondhand ships at increasingly high levels of hire. We have a total of 23 ships coming off charter over the next 18 months, which is a favourable position, should the current market conditions continue.

Finally, on the financing side, we recently concluded the issuance and listing of the first shipping unsecured bond on the Athens Exchange for 100 million Euro. Based on an exceptionally high demand the bond was priced at the low end of the yield range with a 2.7% coupon for a five-year period.

Based on these business developments and on our increasing long-term cash flows and liquidity, management is pleased to recommend to the Board of Directors to increase our second quarter 2021 dividend by 15%.

Our balance sheet, together with cash flows from operations and liquidity position provides us with the ability to increase the dividend without any impact on our growth plans.”

(1) Accrued charter revenue represents the difference between cash received during the period and revenue recognized on a straight-line basis. In the early years of a charter with escalating charter rates, voyage revenue will exceed cash received during the period and during the last years of such charter cash received will exceed revenue recognized on a straight-line basis.
(2) Voyage revenue adjusted on a cash basis represents Voyage revenue after adjusting for non-cash “Accrued charter revenue” recorded under charters with escalating charter rates. However, Voyage revenue adjusted on a cash basis is not a recognized measurement under U.S. generally accepted accounting principles (“GAAP”). We believe that the presentation of Voyage revenue adjusted on a cash basis is useful to investors because it presents the charter revenue for the relevant period based on the then current daily charter rates. The increases or decreases in daily charter rates under our charter party agreements are described in the notes to the “Fleet List” below.
(3) Adjusted Net Income available to common stockholders and Adjusted Earnings per Share are non-GAAP measures. Refer to the reconciliation of Net Income to Adjusted Net Income.

Non-GAAP Measures

The Company reports its financial results in accordance with U.S. GAAP. However, management believes that certain non-GAAP financial measures used in managing the business may provide users of these financial measures additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain items that impact the overall comparability. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company’s performance. The tables below set out supplemental financial data and corresponding reconciliations to GAAP financial measures for the three-month periods ended March 31, 2021 and 2020. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, voyage revenue or net income as determined in accordance with GAAP. Non-GAAP financial measures include (i) Voyage revenue adjusted on a cash basis (reconciled above), (ii) Adjusted Net Income available to common stockholders and (iii) Adjusted Earnings per Share.

Exhibit I
Reconciliation of Net Income to Adjusted Net Income available to common stockholders and Adjusted Earnings per Share

Adjusted Net Income available to common stockholders and Adjusted Earnings per Share represent Net Income after earnings allocated to preferred stock and gain on retirement of preferred stock, but before non-cash “Accrued charter revenue” recorded under charters with escalating charter rates, realized gain on Euro/USD forward contracts, vessels’ impairment loss, (gain) loss on sale / disposal of vessels, loss on vessels held for sale, fair value measurement of equity securities, non-recurring, non-cash write-off of loan deferred financing costs, general and administrative expenses - non-cash component, non-cash changes in fair value of derivatives, amortization of Time charter assumed and other non-recurring, non-cash items. “Accrued charter revenue” is attributed to the timing difference between the revenue recognition and the cash collection. However, Adjusted Net Income available to common stockholders and Adjusted Earnings per Share are not recognized measurements under U.S. GAAP. We believe that the presentation of Adjusted Net Income available to common stockholders and Adjusted Earnings per Share are useful to investors because they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. We also believe that Adjusted Net Income available to common stockholders and Adjusted Earnings per Share are useful in evaluating our ability to service additional debt and make capital expenditures. In addition, we believe that Adjusted Net Income available to common stockholders and Adjusted Earnings per Share are useful in evaluating our operating performance and liquidity position compared to that of other companies in our industry because the calculation of Adjusted Net Income available to common stockholders and Adjusted Earnings per Share generally eliminates the effects of the accounting effects of capital expenditures and acquisitions, certain hedging instruments and other accounting treatments, items which may vary for different companies for reasons unrelated to overall operating performance and liquidity. In evaluating Adjusted Net Income available to common stockholders and Adjusted Earnings per Share, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted Net Income available to common stockholders and Adjusted Earnings per Share should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

(1) Items to consider for comparability include gains and charges. Gains positively impacting Net Income available to common stockholders are reflected as deductions to Adjusted Net Income available to common stockholders. Charges negatively impacting Net Income available to common stockholders are reflected as increases to Adjusted Net Income available to common stockholders.

Results of Operations

Three-month period ended March 31, 2021 compared to the three-month period ended March 31, 2020

During the three-month periods ended March 31, 2021 and 2020, we had an average of 62.7 and 60.2 vessels, respectively, in our fleet. In the three-month period ended March 31, 2021, we accepted delivery of the newbuild vessel YM Target with a TEU capacity of 12,690, the secondhand vessels Aries , Argus and Glen Canyon , which have an aggregate TEU capacity of 18,626 and we sold the vessel Halifax Express with a TEU capacity of 4,890. Furthermore, in the three-month period ended March 31, 2021, we acquired (i) the 75% equity interest of York Capital Management in each of the 11,010 TEU container vessels Cape Kortia and Cape Sounio and (ii) the 51% equity interest of York Capital Management in each of the 11,010 TEU container vessels Cape Tainaro , Cape Artemisio and Cape Akritas and as a result we obtained 100% of the equity interest in each of these five vessels. In the three-month period ended March 31, 2020, we accepted delivery of the secondhand containership Virgo with a TEU capacity of 4,258 and we sold the containership vessel Neapolis with a TEU capacity of 1,645. In the three-month periods ended March 31, 2021 and 2020, our fleet ownership days totaled 5,640 and 5,475 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.

(1) Voyage revenue adjusted on a cash basis is not a recognized measurement under U.S. generally accepted accounting principles (“GAAP”). Refer to “Financial Summary” above for the reconciliation of Voyage revenue adjusted on a cash basis.

Voyage Revenue

Voyage revenue increased by 4.4%, or $5.3 million, to $126.7 million during the three-month period ended March 31, 2021, from $121.4 million during the three-month period ended March 31, 2020. The increase is mainly attributable to revenue earned (i) by five vessels acquired during the third and fourth quarter of 2020 and nine vessels acquired during the first quarter of 2021 and (ii) to decreased idle days of our fleet during the first quarter of 2021 compared to the first quarter of 2020; partly off-set (i) by decreased charter rates for five of our vessels (fixed in 2020 under long term time charters), (ii) by decreased charter rates in certain of our vessels whose newly agreed time charters at higher rates will commence in the second quarter of 2021, (iii) by revenue not earned by five vessels sold during the year ended December 31, 2020 and one vessel sold during the first quarter of 2021 and (iv) by revenue not earned due to decreased calendar days by one day during the first quarter of 2021 (90 calendar days) compared to the first quarter of 2020 (91 calendar days).

Voyage revenue adjusted on a cash basis (which eliminates non-cash “Accrued charter revenue”), increased by 4.6%, or $5.6 million, to $127.7 million during the three-month period ended March 31, 2021, from $122.1 million during the three-month period ended March 31, 2020. Accrued charter revenue for the three-month periods ended March 31, 2021 and 2020 was a positive amount of $1.0 million and $0.7 million, respectively.

Voyage Expenses

Voyage expenses were $1.0 million and $2.5 million for the three-month periods ended March 31, 2021 and 2020, respectively. Voyage expenses mainly include (i) off-hire expenses of our vessels, primarily related to fuel consumption and (ii) third party commissions.

Voyage Expenses – related parties

Voyage expenses – related parties were $1.9 million and $1.6 million for the three-month periods ended March 31, 2021 and 2020, respectively. Voyage expenses – related parties represent (i) fees of 1.25% in the aggregate on voyage revenues charged by a related manager and a service provider and (ii) charter brokerage fees payable to two related charter brokerage companies for an amount of approximately $0.3 million and $0.1 million, in the aggregate, for the three-month periods ended March 31, 2021 and 2020, respectively.

Vessels’ Operating Expenses

Vessels’ operating expenses, which also include the realized gain under derivative contracts entered into in relation to foreign currency exposure, were $31.8 million and $27.9 million during the three-month periods ended March 31, 2021 and 2020, respectively. Daily vessels’ operating expenses were $5,634 and $5,090 for the three-month periods ended March 31, 2021 and 2020, 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 $2.0 million and $1.4 million during the three-month periods ended March 31, 2021 and 2020, respectively, and both include $0.63 million paid to a related manager.

Management Fees – related parties

Management fees paid to our related managers were $5.5 million and $5.3 million during the three-month periods ended March 31, 2021 and 2020, respectively.

General and Administrative Expenses - non-cash component

General and administrative expenses - non-cash component for the three-month period ended March 31, 2021 amounted to $1.4 million, representing the value of the shares issued to a related manager on March 31, 2021. General and administrative expenses – non-cash component for the three-month period ended March 31, 2020 amounted to $0.7 million, representing the value of the shares issued to a related manager on March 30, 2020.

Amortization of Dry-Docking and Special Survey

Amortization of deferred dry-docking and special survey costs was $2.3 million and $2.2 million during the three-month periods ended March 31, 2021 and 2020, respectively. During the three-month period ended March 31, 2021, one vessel underwent and completed her special survey and two vessels were in the process of completing their special survey. During the three-month period ended March 31, 2020, five vessels underwent and completed their special survey and one was in the process of completing her special survey.

Depreciation

Depreciation expense for the three-month periods ended March 31, 2021 and 2020 was $27.1 million and $28.1 million, respectively.

Gain /(Loss) on Sale / Disposal of Vessels

During the three-month period ended March 31, 2021, we recorded a loss of $0.3 million from the sale of the vessel Halifax Express , which was classified as asset held for sale as at December 31, 2020. During the three-month period ended March 31, 2020, we recorded a gain of $0.01 million from the sale of the container vessel Neapolis which was classified as asset held for sale as at December 31, 2019.

Loss on Vessels Held for Sale

During the three-month period ended March 31, 2021, the vessels Venetiko and Prosper were classified as vessels held for sale. No loss on vessels held sale was recorded during the first quarter of 2021 since each vessel’s estimated market value exceeded each vessel’s carrying value. During the three-month period ended March 31, 2020, we recorded an additional loss of $0.2 million on the vessel Zagora that was classified as vessel held for sale as at December 31, 2019, representing the expected loss from her sale during the next twelve-month period.

Interest Income

Interest income amounted to $0.4 million and $0.6 million for the three-month periods ended March 31, 2021 and 2020, respectively.

Interest and Finance Costs

Interest and finance costs were $16.1 million and $18.5 million during the three-month periods ended March 31, 2021 and 2020, respectively. The decrease is mainly attributable to the decreased financing cost during the three-month period ended March 31, 2021 compared to the three-month period ended March 31, 2020.

Fair value measurement of equity securities

Fair value measurement of equity securities of $25.9 million for the three-month period ended March 31, 2021, represents the difference between the aggregate fair value of 1,221,800 ordinary shares of ZIM that we own as at March 31, 2021 of $29.7 million compared to the book value of these shares of $3.8 million as of December 31, 2020. ZIM completed its initial public offering and listing on the New York Stock Exchange of its ordinary shares on January 27, 2021.

Income from Equity Method Investments

During the three-month period ended March 31, 2021, we recorded an income from equity method investments of $4.0 million representing our share of the income in jointly owned companies pursuant to the Framework Deed dated May 15, 2013, as amended and restated (the “Framework Deed”), with York. Since late March 2021, we have held 100% of the equity interest in five previously jointly owned companies with York, and since then these five companies are consolidated in our consolidated financial statements. As of March 31, 2021, 8 companies are jointly-owned with York (of which, 5 companies currently own vessels). During the three-month period ended March 31, 2020, we recorded an income from equity method investments of $4.2 million also relating to investments under the Framework Deed.

Loss on Derivative Instruments

The fair value of our nine interest rate derivative instruments which were outstanding as of March 31, 2021 equates to the amount that would be paid by us or to us should those instruments be terminated. As of March 31, 2021, the fair value of these nine interest rate derivative instruments in aggregate amounted to a liability of $4.3 million. The change in the fair value of the interest rate derivative instruments that qualified for hedge accounting is recorded in “Other Comprehensive Income” (“OCI”) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings and is presented in the same income statement line item as the earnings effect of the hedged item while the change in the fair value of the interest rate derivatives representing hedge components excluded from the assessment of effectiveness are recognized currently in earnings and are presented in Gain/(Loss) on Derivative Instruments. The change in the fair value of the interest rate derivative instruments that did not qualify for hedge accounting is recorded in Gain/(Loss) on Derivative Instruments. For the three-month period ended March 31, 2021, a gain of $2.9 million has been included in OCI and a loss of $0.1 million has been included in Loss on derivative instruments in the consolidated statement of income, resulting from the fair market value change of the interest rate derivative instruments during the three-month period ended March 31, 2021.

Cash Flows

Net Cash Provided by Operating Activities

Net cash flows provided by operating activities for the three-month period ended March 31, 2021, increased by $3.6 million to $71.2 million, from $67.6 million for the three-month period ended March 31, 2020. The increase is mainly attributable to increased cash from operations of $5.6 million, to decreased special survey costs of $2.5 million during the three-month period ended March 31, 2021 compared to the three-month period ended March 31, 2020 and to decreased payments for interest (including swap payments) of $1.0 million during the three-month period ended March 31, 2021 compared to the three-month period ended March 31, 2020; partly off-set by the unfavorable 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) of $1.7 million.

Net Cash Provided By / (Used in) Investing Activities

Net cash used in investing activities was $86.4 million in the three-month period ended March 31, 2021, which mainly consisted of net payments for the acquisition of the 75% equity interest in two companies and the 51% equity interest in two companies, previously jointly owned with York pursuant to the Framework Deed, payments for the delivery of one newbuild vessel and three secondhand vessels, advance payments for the acquisition of three secondhand vessels and payments for upgrades for certain of our vessels; partly off-set by proceeds we received from the sale of one vessel.

Net cash provided by investing activities was $4.7 million in the three-month period ended March 31, 2020, which mainly consisted of return of capital we received from three entities jointly owned with York pursuant to the Framework Deed and the proceeds we received from the sale of one vessel; partly off-set by advance payments for upgrades for certain of our vessels and payment for the acquisition of one secondhand vessel.

Net Cash Provided By / (Used in) Financing Activities

Net cash provided by financing activities was $59.1 million in the three-month period ended March 31, 2021, which mainly consisted of (a) $81.6 million net proceeds relating to our debt financing agreements, (b) $9.4 million we paid for dividends to holders of our common stock for the fourth quarter of 2020 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 October 15, 2020 to January 14, 2021.

Net cash used in financing activities was $30.8 million in the three-month period ended March 31, 2020, which mainly consisted of (a) $14.6 million net payments relating to our debt financing agreements, (b) $6.8 million we paid for dividends to holders of our common stock for the fourth quarter of 2019 and (c) $1.0 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 October 15, 2019 to January 14, 2020.

Liquidity and Unencumbered Vessels

Cash and cash equivalents

As of March 31, 2021, we had a total cash liquidity of $235.8 million, consisting of cash, cash equivalents and restricted cash.

Debt-free vessels

As of June 1, 2021, the following vessels were free of debt.

Unencumbered Vessels
(Refer to fleet list for full details)

(*) Vessels acquired pursuant to the Framework Deed with York.

Conference Call details:

On Tuesday, June 1, 2021 at 8:30 a.m. EST, Costamare’s management team will hold a conference call to discuss the financial results. Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1-844-887-9405 (from the US), 0808-238-9064 (from the UK) or +1-412-317-9258 (from outside the US and the UK). Please quote “Costamare”. A replay of the conference call will be available until June 8, 2021. The United States replay number is +1-877-344-7529; the standard international replay number is +1-412-317-0088; and the access code required for the replay is: 10157083.

Live webcast:

There will also be a simultaneous live webcast over the Internet, through the Costamare Inc. website (www.costamare.com). Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

About Costamare Inc.

Costamare Inc. is one of the world’s leading owners and providers of containerships for charter. The Company has 47 years of history in the international shipping industry and a fleet of 82 containerships, with a total capacity of approximately 582,837 TEU, including five secondhand vessels that we have agreed to acquire and three vessels that we have agreed to sell. Five of our containerships have been acquired pursuant to the Framework Deed with York by vessel-owning joint venture entities in which we hold a minority equity interest. The Company’s common stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock trade on the New York Stock Exchange under the symbols “CMRE”, “CMRE PR B”, “CMRE PR C”, “CMRE PR D” and “CMRE PR E”, respectively.

Forward-Looking Statements

This earnings release contains “forward-looking statements”. In some cases, you can identify these statements by forward-looking words such as “believe”, “intend”, “anticipate”, “estimate”, “project”, “forecast”, “plan”, “potential”, “may”, “should”, “could”, “expect” and similar expressions. These statements are not historical facts but instead represent only Costamare’s belief regarding future results, many of which, by their nature, are inherently uncertain and outside of Costamare’s control. It is possible that actual results may differ, possibly materially, from those anticipated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect future results, see the discussion in the Company’s Annual Report on Form 20-F (File No. 001-34934) under the caption “Risk Factors”.

Company Contacts:

Gregory Zikos - Chief Financial Officer
Konstantinos Tsakalidis - Business Development

Costamare Inc., Monaco
Tel: (+377) 93 25 09 40
Email: ir@costamare.com

Fleet List

The table below provides additional information, as of June 1, 2021, about our fleet of containerships, including the vessels that we have agreed to acquire, the vessels we have agreed to sell, the vessels acquired pursuant to the Framework Deed and those vessels subject to sale and leaseback agreements. Each vessel is a cellular containership, meaning it is a dedicated container vessel.

Vessels agreed to be acquired within 2021

Consolidated Statements of Income

COSTAMARE INC.
Consolidated Balance Sheets