Costamare Inc. reported unaudited financial results for the second quarter and six-months ended June 30, 2016.

Voyage revenues adjusted on a cash basis of $117.9 million and $237.7 million for the three and six-months ended June 30, 2016, respectively.

Adjusted EBITDA of $83.9 million and $169.2 million for the three and six-months ended June 30, 2016, respectively.

Adjusted Net income available to common stockholders of $31.9 million or $0.42 per share and $64.0 million or $0.85 per share for the three and six-months ended June 30, 2016, respectively.

See “Financial Summary” and “Non-GAAP Measures” below for additional detail.

New Business Developments

A. New financing transactions

In May 2016, we entered into a $39.0 million, 5 year loan facility with a leading US financial institution. The facility will be secured with a first priority mortgage on the 2010-built 8,531TEU Navarino.

In June 2016, we entered into a loan agreement with a leading European financial institution for the financing of the first two 11,000 TEU vessels on order which were acquired pursuant to our joint venture with York. The facility is for an amount of up to $88 million and will be payable in five years. The proceeds are expected to finance the remaining yard instalments for each of the two vessels.

B. Re-financing of an existing facility

In July 2016, we finalized the re-financing of our credit facility secured with the 2013-built 8,827 TEU MSC Athens and MSC Athos containerships as collateral, with a Chinese financial institution. The new financing, which is for a total of approximately $152 million, is under the structure of a sale and leaseback transaction.

C. Newbuild vessel deliveries

On May 3, 2016 and June 13, 2016, we accepted delivery of the 14,424 TEU containerships Triton and Titan, two containerships acquired pursuant to our joint venture with York that are subject to sale and leaseback transactions with Chinese financial institutions. The vessels commenced their 10year time charters with Evergreen. Costamare holds a 40% interest in the entities that own each vessel.

D. New charter agreements

The Company entered into the following charter arrangements:

Agreed to extend the charters of the 4,890 TEU containerships Oakland Express, Halifax Express and Singapore Express, built in 2000, with Hapag-Lloyd for a period expiring at the charterer’s option during the period from November 2016 through June 2017, starting from September 8, 2016, October 25, 2016 and July 14, 2016, respectively, at a daily rate of $6,300.

Agreed to extend the charter of the 2004-built, 4,992 TEU containership Zim Piraeus with Zim for a period of 5 to 8 months starting from August 1, 2016 at a daily rate of $5,350.

Agreed to extend the charter of the 1992-built, 3,351 TEU containership Marina with Evergreen for a period expiring at the charterer’s option during the period from June 10, 2016 through November 30, 2016, at a daily rate of $6,000.

Agreed to charter the 1998-built, 3,842 TEU containership Itea with ACL for a period of 70 to 75 days starting from June 30, 2016, at a daily rate of $6,250.

Agreed to charter the 2000-built, 1,645 TEU containership Neapolis with Evergreen for a period of 6 to 9 months starting from July 11, 2016, at a daily rate of $6,900.

Agreed to charter the 1996-built, 1,504 TEU containership Prosper with Evergreen for a period of 3 to 6 months starting from May 15, 2016, at a daily rate of $6,600.

Agreed to extend the charters of the 4,890 TEU containerships Oakland Express, Halifax Express and Singapore Express, built in 2000, with Hapag-Lloyd for a period expiring at the charterer’s option during the period from November 2016 through June 2017, starting from September 8, 2016, October 25, 2016 and July 14, 2016, respectively, at a daily rate of $6,300.

Agreed to extend the charter of the 2004-built, 4,992 TEU containership Zim Piraeus with Zim for a period of 5 to 8 months starting from August 1, 2016 at a daily rate of $5,350.

Agreed to extend the charter of the 1992-built, 3,351 TEU containership Marina with Evergreen for a period expiring at the charterer’s option during the period from June 10, 2016 through November 30, 2016, at a daily rate of $6,000.

Agreed to charter the 1998-built, 3,842 TEU containership Itea with ACL for a period of 70 to 75 days starting from June 30, 2016, at a daily rate of $6,250.

Agreed to charter the 2000-built, 1,645 TEU containership Neapolis with Evergreen for a period of 6 to 9 months starting from July 11, 2016, at a daily rate of $6,900.

Agreed to charter the 1996-built, 1,504 TEU containership Prosper with Evergreen for a period of 3 to 6 months starting from May 15, 2016, at a daily rate of $6,600.

E. Dividend announcements

On July 6, 2016, we declared a dividend for the second quarter ended June 30, 2016, of $0.29 per share on our common stock, payable on August 17, 2016, to stockholders of record on August 3, 2016.

On July 6, 2016, 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 and a dividend of $0.546875 per share on our Series D Preferred Stock which were all paid on July 15, 2016 to holders of record on July 14, 2016.

F. New dividend reinvestment plan

On July 6, 2016, we implemented a dividend reinvestment plan (the “plan”). The plan offers holders of Company common stock the opportunity to purchase additional shares by having their cash dividends automatically reinvested in Company common stock. Participation in the plan is optional, and shareholders who decide not to participate in the plan will continue to receive cash dividends, as declared and paid in the usual manner.

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

 

 

“During the second quarter the Company continued to deliver solid and profitable results.

Regarding new financings, we have secured funding for our first two 11,000 TEU new buildings, minimizing our remaining capital commitments and we have entered into new debt transactions financing debt free and refinancing existing assets at competitive terms.

On the chartering side, we continue to employ our vessels at favorable rates despite adverse market conditions, having chartered in total eight ships opening during the last three months.

Regarding our new building program, we have accepted delivery, as per schedule, of the first two out of the five 14,000 TEU vessels, which have commenced their 10-year charter.

Finally, we implemented a dividend reinvestment plan available to all common stock holders. As long term committed shareholders, members of the founding family, currently controlling an interest of about 65% in the aggregate, have each decided to reinvest in full the second quarter cash dividend.

In a challenging market environment our main goal is to preserve liquidity and strengthen our balance sheet. Going forward, the Board will continue reviewing our dividend policy based on market conditions and our liquidity requirements.”

 

 

Results of Operations

Three-month period ended June 30, 2016 compared to the three-month period ended June 30, 2015

During the three-month periods ended June 30, 2016 and 2015, we had an average of 54.0 and 55.0 vessels, respectively, in our fleet. In the three-month periods ended June 30, 2016 and 2015, our fleet ownership days totaled 4,914 and 5,005 days, respectively. Ownership days are the primary driver 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.

Voyage Revenue

Voyage revenue decreased by 3.0%, or $3.7 million, to $119.5 million during the three-month period ended June 30, 2016, from $123.2 million during the three-month period ended June 30, 2015. The decrease was mainly attributable to the decreased average number of vessels and the decreased revenue days of our fleet, during the three-month period ended June 30, 2016 compared to the three-month period ended June 30, 2015.

Voyage revenue adjusted on a cash basis (which eliminates non-cash “Accrued charter revenue”), decreased by 4.9%, or $6.1 million, to $117.9 million during the three-month period ended June 30, 2016, from $124.0 million during the three-month period ended June 30, 2015. The decrease was mainly attributable to the decreased average number of vessels and the decreased revenue days of our fleet, during the three-month period ended June 30, 2016 compared to the three-month period ended June 30, 2015.

Voyage Expenses

Voyage expenses were $0.5 million and $0.4 million, during the three-month periods ended June 30, 2016 and 2015, respectively. Voyage expenses mainly include (i) off-hire expenses of our vessels, mainly related to fuel consumption and (ii) third party commissions.

Voyage Expenses – related parties

Voyage expenses – related parties in the amount of $0.9 million during the three-month periods ended June 30, 2016 and 2015, represent fees of 0.75% in the aggregate on voyage revenues charged by Costamare Shipping Company S.A. (“Costamare Shipping”) and by Costamare Shipping Services Ltd. (“Costamare Services”) pursuant to the Framework Agreement between Costamare Shipping and us dated November 2, 2015 (the “Framework Agreement”), the Services Agreement between Costamare Services and our vessel-owning subsidiaries dated November 2, 2015 (the “Services Agreement”) and the individual ship-management agreements pertaining to each vessel.

Vessels’ Operating Expenses

Vessels’ operating expenses, which also include the realized gain / (loss) under derivative contracts entered into in relation to foreign currency exposure, decreased by 15.6%, or $4.7 million, to $25.5 million during the three-month period ended June 30, 2016, from $30.2 million during the three-month period ended June 30, 2015.

General and Administrative Expenses

General and administrative expenses increased by 14.3%, or $0.2 million, to $1.6 million during the three-month period ended June 30, 2016, from $1.4 million during the three-month period ended June 30, 2015. General and administrative expenses for the three-month periods ended June 30, 2016 and 2015, included $0.63 million which is part of the annual fee that Costamare Services receives based on the Services Agreement, effected on November 2, 2015. Prior to November 2, 2015, this annual fee was charged by Costamare Shipping pursuant to the Amended and Restated Group Management Agreement (the “Group Management Agreement”), which was effective from January 1, 2015 until November 2, 2015.

Management Fees – related parties

Management fees paid to our managers were decreased by 2.0% or $0.1 million to $4.8 million during the three-month period ended June 30, 2016 from $4.9 million during the three-month periods ended June 30, 2015. The decrease was attributable to the decreased average number of vessels during the three-month period ended June 30, 2016 compared to the three-month period ended June 30, 2015.

General and Administrative expenses – non-cash component

General and administrative expenses – non-cash component for the three-month period ended June 30, 2016 amounted to $1.4 million, representing the value of the shares issued to Costamare Services on June 30, 2016, pursuant to the Services Agreement. For the three-month period ended June 30, 2015, the non-cash component of general and administrative expenses was $2.7 million, representing the value of shares issued to Costamare Shipping on June 30, 2015, pursuant to the Group Management Agreement. The decrease was attributable to the decrease in the fair value of the shares issued on June 30, 2016 compared to the shares issued on June 30, 2015.

Amortization of Dry-docking and Special Survey Costs

Amortization of deferred dry-docking and special survey costs was $2.0 million for the three-month period ended June 30, 2016 and $1.8 million for the three-month period ended June 30, 2015. During the three-month period ended June 30, 2016, three vessels underwent and completed their special surveys. During the three-month period ended June 30, 2015, one vessel underwent and completed its special survey.

Depreciation

Depreciation expense was $25.3 million during the three-month periods ended June 30, 2016 and 2015.

Amortization of Prepaid Lease Rentals

Amortization of prepaid lease rentals was $1.2 million during the three-month periods ended June 30, 2016 and 2015.

Foreign Exchange Gains/ (Losses)

Foreign exchange losses were $0.1 million during the three-month periods ended June 30, 2016 and 2015.

Interest Income

Interest income amounted to $0.4 million and $0.3 million for the three-month periods ended June 30, 2016 and 2015, respectively.

Interest and Finance Costs

Interest and finance costs decreased by 7.8%, or $1.5 million, to $17.8 million during the three-month period ended June 30, 2016, from $19.3 million during the three-month period ended June 30, 2015. The decrease was mainly attributable to the decreased average loan balance during the three month period ended June 30, 2016 compared to the three month period ended June 30, 2015.

Equity Gain / (Loss) on Investments

The equity loss on investments of $0.2 million for the three-month period ended June 30, 2016, represents our share of the net losses of nineteen jointly owned companies pursuant to the Framework Deed dated May 15, 2013, as amended and restated on May 18, 2015 (the “Framework Deed”), between the Company and a wholly-owned subsidiary, on the one hand, and York Capital Management Global Advisors LLC and an affiliated fund (collectively, together with the funds it manages or advises, “York”) and is mainly attributable to the pre-delivery expenses charged to nine vessels that are currently under construction. We hold a range of 25% to 49% of the capital stock of these companies.

Gain / (Loss) on Derivative Instruments

The fair value of our 18 interest rate derivative instruments which were outstanding as of June 30, 2016 equates to the amount that would be paid by us or to us should those instruments be terminated. As of June 30, 2016, the fair value of these 18 interest rate derivative instruments in aggregate amounted to a liability of $54.2 million. The effective portion of the change in the fair value of the interest rate derivative instruments that qualified for hedge accounting is recorded in “Other Comprehensive Income” (“OCI”) while the ineffective portion is recorded in the consolidated statements of income. The change in the fair value of the interest rate derivative instruments that did not qualify for hedge accounting is recorded in the consolidated statement of income. For the three-month period ended June 30, 2016, a net gain of $2.1 million has been included in OCI and a net loss of $1.0 million has been included in Gain / (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 June 30, 2016.