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0:03 Thank you for standing by, ladies and gentlemen, and welcome to the Costamare, Inc. Conference Call on the Fourth Quarter 2021 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.

[Operator Instructions] I must advise you that this conference is being recorded today Thursday, March 10th 2022. We would like to remind you that this conference call contains forward-looking statements. Please take a moment to read Slide number 2 of the presentation, which contains the forward-looking statements.

01:02 And I will now pass the floor to your speaker today, Mr. Zikos. Please go ahead, sir..

01:08 Thank you, and good morning, ladies and gentlemen. 2021 has been a record year for Costamare, with a fleet of 123 vessels, including 46 dry bulk ships, the Company generated net income of above $400 million. As of the end of the year, liquidity stood at $550 million.

01:26 On the containerships side, market conditions remained firm with strong demand and logistical disruptions continuing to impact the sector. We chartered in total 35 secondhand vessels during the year, which added incremental contracted revenues of $1.4 billion.

Total contracted revenues amount to $3.3 billion [sic] with a weighted average remaining time charter duration of about four years. 01:52 We have covered substantially all of our containership open days for 2022 and now we are in the process of arranging employment for the vessels coming off charter next year.

At the same time, we agreed to dispose of some older tonnage with forward, year-end deliveries at prices that do reflect today’s tight market environment. 02:14 Regarding our expansion into the dry bulk shipping business, we entered a market with favorable supply and demand dynamics underpinned by a historically low order book.

Our dry bulk fleet is currently trading in the spot market, generating healthy returns, on the back of timely acquisitions. 02:32 In light of the above, the Company has decided to declare a special dividend of $0.50 per common share.

While rewarding our shareholders as a result of increased cash flows and profitability, the payment of that dividend is not expected in any way to affect our capacity to continue growing opportunistically in a volatile market environment. 02:53 Moving now to the Slide presentation. On Slide 3, you can see that 2021 record results.

For the full-year, net income was above $400 million, or $3.3 per share. Net income for Q4 ‘21 was above $150 million. Adjusted net income for the last quarter was $0.91 per share. Based on that performance, we have decided to declare a special dividend of $0.50 per share payable with our Q1 2022 dividend.

We also initiated the share repurchase program of up to $150 million for our common shares and up to $150 million for our preferred stock. 03:37 On Slide 4 and 5, you can see our recent S&P activity.

As you can see on Slide 4, we have agreed to sell five vessels with forward deliveries in late ‘22 and early ’23 for total gross proceeds of $333 million. The same prices of these vessels reflect today’s tight market dynamics.

We have also been very active on the dry bulk sector where our fleet now stands at 45 vessels, with one more ship to be delivered during Q1 of this year. 04:11 On Slide 6, you can see our fixtures. Recently, we fixed seven vessels at rates that are on average 80% higher, compared to their current rates, adding contracted revenues for $410 million.

For 2022 our containership revenue days are essentially 100% fixed and for 2023, we are around 90% fixed. 04:38 Moving to Slide 7. On Slide 7, you can see an update on our liquidity and current financing arrangements.

During Q4, we have concluded around $180 million of financings to three new loan agreements in order to refinance nine dry bulk vessels and five containerships. We have concluded another hunting license of $100 million that gives us additional firepower and extended the $150 million hunting license facility.

At the same time, we continue to maintain a strong balance sheet with liquidity of about $550 million and market value-based leverage at around 26%. 05:20 Moving to Slide 8, the containership charter market continues to outperform even the highest expectations. The dry bulk market has rebounded from its seasonal lows in February.

As already mentioned, we have put together a share repurchase program of up to $150 million of our common shares and up to $150 million for our preferred shares. We also continue to have strong sponsor support through the DRIP. 05:46 Slide 9. On this slide, you can see the fourth quarter 2021 results.

We had an average of 108.1 vessels during Q4, up 79% year-over-year and our adjusted net income was $0.91 per share. Our best quarters is going public. Our adjusted figures take into consideration the following non-cash items, accrued charter revenues, accounting gains from asset disposals and other non-cash items.

06:15 On Slide 10, you can see our capital structure and liquidity. Our leverage is at a very conservative 26% based on current market values. And we have ample liquidity of $550 million to continue growing opportunistically in a volatile market environment.

6:32 On Slide 11, we show the containership market environment where rates remain at historically high levels and the idle fleet is at 0.5%. Charterers continue to look for vessels to fix and chartering one here in advance has become the norm. 06:50 On the last slide, we discuss the drybulk market.

Rates for vessels in our size class remain at healthy levels, up 17% year-over-year in February. The dry bulk fleet order book is, up 6.8% as historically low level that will keep supply growth in check for the years to come. 07:09 With that, we can hand the call back over to the operator for the Q&A session. Thank you.

Operator, we can take questions now..

07:17 Thank you. [Operator Instructions] And our first question today comes from Ben Nolan at Stifel. Please go ahead..

07:38 Hey, Greg, good quarter and the asset sales are -- it really impressive. I have a couple of questions on the dry bulk side, if I could.

So first, I am just curious, obviously you have that hunting license, there has been a decent amount of sale and purchase activity in the market, you now have a war chest of a lot of cash that you’ve got all the container space.

I mean, how do you feel about where you sit in that market and where asset prices are at the moment?.

08:16 Yes. Thanks, Ben. First of all those two facilities, the hunting licenses we are referring to the one is expiring in June and the other is expiring in December. Now depending on market conditions, we may extend them or not.

We have them in case we see some softening in the market, especially in asset values for the dry bulk vessels, so that in order to have them available. It doesn't mean that like we're going to use them.

As you know this last year we bought a lot of ships beginning from last May -- May to June or May to September, where asset values where a generally lower levels where they are today. So we're going to be very opportunistic, we don't have to grow. We don't have to buy vessels.

09:06 As long as we feel that market values makes sense, also considering the cash generating capacity of those assets, we're going to proceed. Otherwise, we will not. So those facilities there, they may not be extended or in case, we see some deals, we may utilize them.

It's all have to do with market conditions and it's -- as like proactively managing our liquidity nothing more than that. However, should we see some softening in the market and should we take the view that it makes sense to expand.

Based on our balance sheet, you can see that we have the firepower in order to conclude, a lot of transactions currently..

9:49 Okay. So need to see your asset values a little lower than they are right now, but you're keeping an eye on it. All right. And then I had a question on the employment side. I noticed there was half a dozen or so ships, where employment was being negotiated, and so that has a little bit of an impact on utilization.

At the same time, there is a time charter market, we've seen it from others.

Any thoughts on what you might be able to do to either improve the cash flow visibility through time charter or maybe just get a little bit more consistent utilization of those assets?.

10:33 Yes, first of all, you're referring to the dry bulk vessels, right?.

10:37 Yes, yes. I'm sorry, yes. Right..

10:39 Yes. Okay, look, we currently -- we do try those vessels in the spot market and some of those vessels, they are linked the -- charter rate is linked to an index.

Now, we may take the view that at some point when we see the rates moving up, sort of, when we take the view that there may be some softening in the market, we may charter those vessels for longer period for dry-bulk, I mean, a year-over-year, it was something that, nothing compared to the containers. It remains to be seen.

11:22 Now regarding utilization, this is something, I will look at sometimes, we may prefer -- to hold on to the vessel before chartering this out in order to get a better rate and we have achieved that. So I think utilization needs to be considered alongside the charter rates finally received.

For the time being, we're going to continue the same strategy for the dry bulk vessels. Also I need to mention here that we bought those ships last summer in lower asset value environment. The leverage there is in the region of 50% ballpark figures. So the cash breakeven, including debt service, is at relatively low levels.

So I mean, we have the luxury to sit and wait in order to get the best rate available. Of course, should market conditions change, it would take a different view we may go for longer, but this remains to be seen. I'm afraid, I cannot predict one on that..

12:32 Okay. No that's a good color. Just -- you're trying to optimize for rate, not necessarily utilization. Understood. All right. Well, I will turn it over and congrats on those asset sales those are pretty eye-popping numbers..

12:48 Thank you. Thanks, Ben..

12:50 Thank you. And our next question today comes from Chris Wetherbee of Citigroup. Please go ahead..

12:56 Hey, guys. James on for Chris. Just wanted to sort of follow-up on the questions around the bulk fleet.

In terms of the purchases that you're doing, do you see more of an opportunity essentially to buy -- essentially the large -- largest collections of ships or individual ship? Trying to understand the sense of like eventually how fast do you plan on growing that fleet to be clear..

13:19 Look, we are pretty much flexible, it could be a fleet of vessels, some sort of vessels by the same owner book together or like it could be individual assets here and there. In the past, we've done pretty much both although we have tended to rely more on buying individual assets from various owners.

However, we wouldn't exclude anything, it’s all going to do with the purchase price and with where the market is and how we feel about the assets. So assuming that the numbers make sense, whether it is a fleet of vessels also whether it's individual assets, we can go both ways.

Also, from the 46 vessels we bought, up to now most of them were both from individual owners here and there. So this is not an issue, should we see asset values that we feel it makes sense..

14:24 Got it.

And then also just trying to understand, essentially sort of how you envision sort of the fleet collectively, or maybe even separately moving forward? The long-term goal still to separate them individually and sort of what level of scale or size and position, do you want the bulk fleet to be in if that is the case? Or do you actually sort of see some benefit keeping them together and sort of essentially cyclically offsetting elements.

Just trying to understand sort of how you're thinking about that fleet longer-term.

And just to follow-up on the prior question, sort of, what do you think -- how fast do you think you can grow that bulk fleet across the coming year?.

15:01 Okay, the second part, how fast we think we can grow. I mean, we can easily grow the fleet substantially subject to market conditions. We have available credit lines, which like we mentioned of substantial amount.

We have cash on balance sheet of like $350-plus million, we have a very strong contracted revenues, and we have fixed all our containers for 2022 and most of the days for 2023. So there’s a lot of cash coming from there. So there is lot of cash also generated organically, so we can grow substantially.

It is to find the right transactions rather than our equity capacity or like our ability to secure that. So it’s all going to do with market conditions. We can be patient like we are now or like we have been in the past or we can accelerate like we did last year, last summer.

16:15 Now the first part of the question, which got to do where we keep them altogether also that we separate the two fleets. For the time being, I think we're going to continue as we are. We have the benefit of trading those dry bulk vessels in the spot market. Those ships have a low breakeven and we can be opportunistic regarding that chartering.

And at the same time, we have the contracted cash flows of the secondhand vessels of $3.4 billion which extends for more than four years, which do provide us with a lot of incremental cash flow, so we have the best of both worlds. 16:57 Now how things are going to develop in the future? I'm afraid I cannot predict.

But for the time being, based on what we know today, I think we are going to be proceeding the same way we are set up today..

17:13 Yes. Thank you..

17:15 Okay, thanks. Thank you..

17:17 Thank you. [Operator Instructions] Our next question comes from Climent Molins with Value Investor's Edge. Please go ahead..

17:31 Good morning. Congratulations for this quarter. You have declared a $0.50 special dividend.

And I was wondering, if you could provide some commentary on the reasoning behind declaring the special dividend? And why did you choose to move that instead of, for example, raising the regular dividend or repurchasing shares at the discount you are trading at?.

17:53 Yes. It’s two things.

First of all, this is an one-of dividend, which coincides with additional contracted cash flows coming either from long-term chartering of our containerships and with a substantial gains, which have resulted from sales of containership vessels and those sales they are committed now, but with deliveries from Q4 2022, up to beginning of 2023.

If you've noticed, for example, we sold some 6,500 TEU ships 2000 built for $75 million or so. So there is a lot of incremental cash and we felt that part of that cash and it is something that could be shared with our shareholders.

This is an one-off dividend, however, and obviously there can be no sugar-free guarantee about the future dividend payments. 19:00 Now you've seen, we have liquidity of north of $0.5 billion and we have also put together asset repurchase program, both for the common and for the preferred shares, which is something that we may be utilizing as well.

But I think that cash outflow coming from that dividend, so it is a $0.50 for more or less a 120 million shares we have today outstanding. It's not an amount that we consider are substantial that could affect our future growth plans for the contrary..

19:46 That's helpful. Thank you.

And then following up on Ben's question on the bulker fleet, if asset pricing was to be deemed attractive, would you continue to focus on the mid-sized to smaller bulker classes? And if so, could you provide some commentary as to the reasoning behind such decision? What have been the main drivers behind your decision to focus in the smaller sizes of the bulker market?.

20:13 You're referring to the dry bulk vessels, correct?.

20:16 Exactly, yes..

20:18 Yes, for the dry bulk vessels, if you look at our 46 ships, we have bought on average -- our like average dry bulk vessel, it’s like 11-years old and it has a bit weight of like 52,000. We have focused on those ships and we have bought from Handy’s up to Ultramax’s. And for the time being we have stayed away from the case.

Now with the benefit of the hindsight the Handy’s and the Supra’s we have bought since May of last year, they have turned out to be a very good investment.

And I cannot comment about our future potential acquisitions, as mentioned earlier this is subject to market conditions, but we straight away at this point in time last year of the case, which were much more volatile, compared to the Handy’s or to the Supra’s. 21:25 The Supra’s today they are getting close to $30,000 per day in the spot market.

Those vessels were both at relatively low prices from a historical perspective. And we feel quite comfortable with those investments..

21:42 All right, that's helpful. That's all from me. Thank you very much for taking my questions and congratulations again for this quarter..

21:49 Okay, thank you..

21:51 Again ladies and gentlemen, this concludes the question-and-answer session. I would like to turn the conference back over to Mr. Zikos for any closing remarks..

22:00 Thank you very much for dialing in today and for your interest in Costamare. We are looking forward to speaking with you again in our next quarterly results call. Thank you..

22:12 Thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day..