Costamare Inc. (CMRE) on Q1 2021 Results - Earnings Call Transcript
Operator: Thank you for standing by ladies and gentlemen, and welcome to the Costamare Inc. Conference Call on the Fourth Quarter 2021 Financial results, pardon me it’s the first quarter. We have with us Mr. Gregory Zikos, Chief Financial Officer of the company. I must advise you that this conference is being recorded today, Tuesday, June 1, 2021. 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. And I will now like to pass the call over to your speaker, Mr. Zikos. Please go ahead, sir. Gregory Zikos: Thank you and good morning, ladies and gentlemen. 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. Operator: Our first question today comes from Chris Wetherbee with Citigroup. Please go ahead. Chris Wetherbee: Yes. Thanks. Good afternoon guys. Gregory Zikos: Hi, good morning. Chris Wetherbee: Maybe I could start on leverage and I wanted to get a sense of kind of where you are in your comfort zone in terms of whether it's debt-to-EBITDA or however you want to look at sort of your leverage metrics? How much more capacity do you have, do you think take on some incremental debts or reinvest and potentially grow the fleet? Gregory Zikos: Yeah, the leverage today based on the financial covenants as agreed with our lenders and this is leverage based on market values of the vessel is as mentioned below 40%. This is also due to the fact that we have long-term contracts and the cash flows from those ships are factored in the leverage calculation. So we take other inclusive valuation of which is I think the right thing to do in container shipping. So based on that and based that we're at the below 40% leverage today, I think we do have a lot of capacity to grow. The thing is that the asset values are at very high levels. And we normally don't like buying at the peak of the market, but now charter rates and those other values are at historical high levels. So this is something to consider, but from a leverage perspective and from a capacity perspective, whether discussion balances, access to commercial bank debt and the ability to lever up, I think we have more than enough capacity. Chris Wetherbee: Okay. That's helpful. I appreciate that. And then maybe just a question about the general sort of fleet development than the order books you have a helpful slide on – a chart on Slide 14 that shows that the order book has risen as a percent of the total fleet. I know it takes time to get these ships, but when do we start worrying about that numbers? That's something that we do need to consider as we go out, if we see a significant amount of incremental ordering, what do you think sort of the right number is? And maybe how long could we see this cycle play out if we sort of maintain a more rational approach to adding capacity into the market in new ships, into the order book? Gregory Zikos: Yeah, it's first of all, the level – the order book today at around 18%, although it's come up, I have to remind you that pro-Lehman, the period 2007-2008, the containership order book, it was at around 60%. So it may be considered that it's come up significantly from the 9%, 10%, 11% we had last year. However, we do feel that it's still manageable then say looking at information from a historical perspective it's definitely not at the peak levels. Now, as you mentioned, it takes two or like three years to have a vessel delivered. Most ships have been over – sort of a substantial number of ships that have been ordered, they are long-term charters, but it remains to be seen what the demand and the supply dynamics will be in three year's time. We never forecast the market. This is our principle and the company is being ground based on our cash capacity and liquidity. However I have to say that historically an 18% order book, I don't think it is at the prohibitive levels, considering what we've seen in the past and for the next couple of years, we know what the supply will be, the supply as you know will come to the market and definitely the consensus of analyst is that, we will have very favorable supply and demand dynamics over the next year or over the next couple of years. Chris Wetherbee: Okay. Last question really quick, if you put an order into the order book now when you are receiving your vessel how long does it take to get one? Gregory Zikos: It depends on the vessel and from the shipyard, but I think now most probably like 2021 the most probably delivery would be 2024, but I mean, it's not black and white. It's got to do with the shipyard. It's got to do with the characteristics of the vessel, but I would say generally that the deliveries now would be 2024 going forward. Chris Wetherbee: Okay. That's helpful. Thanks for the time. I appreciate it. Gregory Zikos: Thank you. Operator: The next question comes from Ben Nolan with Stifel. Please go ahead. Ben Nolan: Hey Greg, I have a couple. I wanted to start on the bond. First of all congratulations on historic offering, but the breaks were fantastic frankly. And so I wanted to dig in a little bit on that. I was curious how, if you have any color on how much of it was placed with traditional institutional investors or where there are sort of maybe perhaps some more private capital that was investing in it, something really curious if this is something that can be replicated either by you or others or if you think of this as maybe just sort of available just to you, maybe just in this instance. Gregory Zikos: Yeah. Sure. First of all the allocation, it was close to 70% retail investors and the rest was institutional investors. The bond was 6.6 times oversubscribed. And the initial yield range, it was between 2.7% and 3.1%. And based on the book we had, obviously we price at the low end of the range at 2.7%. This is a fully unsecured bond which is – it's a pretty typical structure for shipping bonds and it has a five-year maturity. We started with the low value, so €100 million which is $120 million because it was the first pure shipping bond issued in the Greek market. People were not that familiar with shipping or more particularly with Costamare or with container shipping. So we were a bit reluctant and cautious. But finally I think that the result speaks for itself. However, the main point here is apart from the low coupon, which is historically low and I think it is extremely competitive. However, you look at it, is that we have been able to diversify our financing sources. This is definitely something that in the future we can replicate and hopefully at even better terms. Considering that it was fully subscribed within the first 24 hours, and we had the book of north of €650 million within the three days of marketing. Ben Nolan: Great. That's helpful. If I could shift gears a little bit, as I was going through the filings and I recalled as I was reading that you guys had been given some equity as part of the same restructuring a number of years ago. And then also they're doing a secondary offering. Today, I was curious if you guys still have an equity position in that, and I wasn't able to find sort of what that is, but was curious if that is meaningful number at all? Gregory Zikos: You talking about ZIM, sorry, I couldn't hear you clearly. You are talking about ZIM? Ben Nolan: Yes. Gregory Zikos: Yes. I mean we do have 1.2 million shares, and then if you look at our adjustments to the P&L we have adjusted a bit. Now that ZIM is public, at the end of the first quarter, we had to write a gain, sort of some income in our P&L because of the valuation of those shares. And this is something we sort of have adjusted and the adjustment was slightly below 26 million. Ben Nolan: Right. How do you think about that position longer term? Gregory Zikos: I don’t know. I mean, this value of 26 million this reflects the stock price as of the end of the first quarter where the stock was trading at around $20. Now the stock is trading double or more than double, so it's come up, but, I mean, we are patient. So we are in no hurry to sell. So we will see what we're going to do with that asset. But as I said that we're patient, there is, we don't need more liquidity now. So, I mean, generally we're not sellers. We will take our time and considered when is the optimal time based on our thoughts to see what we're going to do with that asset. However, in the $0.31 of adjusted EBITDA, sorry of adjusted EPS this is stripped out. However, the adjusted EPS would be much higher, but we thought that it is fair because this is a non-operating item. It is an asset that is on our balance sheet for some years now. We felt that it is fair to have an adjustment and have a $0.31 of EPS based on pure operational performance. Ben Nolan: Right. Okay. That's helpful. And then lastly, for me, obviously you guys were buying and selling assets even recently basically doing both though. And it may even with the high asset prices, I think you can look at the time charter rates and see that you're generating substantially more than what you're paying for the assets in less than three years and in many cases, and so the math works pretty well on that basis. But I am curious where you – where you stand right now, like, are you a better buyer or seller or both or are you getting close to being at a point where you might just be on the sidelines for a little bit? Any color there? Gregory Zikos: Yes. Look the acquisitions we did, I mean, most of them are like, if not all of them were concluded during the first month of the year, after that, the asset values and charter rates, they are sort of the extremely at the high level. So sort of, after that we stopped and now we are much more cautious. It would be difficult for us to sort of replicate the same acquisition we did in January, February, March of 2021, when now asset values are. So now we take our time in that level of environment in terms of asset values and charter rate. We're going to be much, much more cautious. So take our time. We do have a lot of liquidity. We know that we have to invest internally and generate returns, but were now asset values are even with very high rates, those deals now by default, they are becoming more leveraged, operationally and financially. Also financially because we are at that level, let’s say the same percentage of leverage 60%, 70%, whatever that is, this doesn't matter to a much higher asset value, which we don't like. So now we're going to take our time and consider and think what is the best way in order to invest our liquidity, because based on the charter rates you've seen and without any new business liquidity and the cost balance is going to be climbing up every single quarter going forward, so this is something to think about Ben Nolan: All right, perfect time. I appreciate the color there, Greg. Gregory Zikos: Okay. Thank you. Operator: This concludes our question-and-answer session. I would now like to turn the conference back over to Mr. Greg Zikos for any closing remarks. Gregory Zikos: Thank you very much for being here with us today. We're looking forward to speaking to you again during our next quarterly results. Thank you. Operator: Thank you. This does conclude our conference for today. Thank you for all participating. You may now disconnect.
Costamare Inc. (NYSE:CMRE) Surpasses Third-Quarter Earnings Estimates
- Costamare Inc. (NYSE:CMRE) reported a third-quarter profit of $0.68 per share, exceeding the Zacks Consensus Estimate.
- The company's third-quarter revenue was approximately $538.4 million, significantly higher than the estimated $344.9 million.
- Costamare's financial metrics, including a price-to-earnings (P/E) ratio of 4.22 and an earnings yield of 23.71%, suggest strong potential returns for investors.
Costamare Inc. (NYSE:CMRE) is a prominent player in the shipping industry, specializing in owning and chartering containerships. The company operates a fleet that serves major liner companies worldwide. Costamare's competitors include other shipping giants like Danaos Corporation and Global Ship Lease. The company is known for its strategic fleet management and long-term charter agreements, which contribute to its stable revenue streams.
On November 1, 2024, Costamare reported its third-quarter earnings, revealing a profit of $0.68 per share. This figure exceeded the Zacks Consensus Estimate of $0.64, indicating a strong performance. Compared to the previous year's earnings of $0.46 per share, Costamare has shown significant growth, highlighting its robust financial health and operational efficiency, as noted by Zacks Investment Research.
Costamare's revenue for the third quarter was approximately $538.4 million, significantly surpassing the estimated $344.9 million. This impressive revenue performance underscores the company's ability to generate substantial income from its operations. The company's low price-to-sales ratio of 0.81 suggests that the market values its sales at less than one times its revenue, indicating potential undervaluation.
The company's financial metrics further emphasize its strong position. With a price-to-earnings (P/E) ratio of 4.22, Costamare is valued relatively low compared to its earnings. The enterprise value to sales ratio of 0.67 and an enterprise value to operating cash flow ratio of 2.64 reflect the company's efficient cash generation relative to its enterprise value. Additionally, an earnings yield of 23.71% suggests strong potential returns for investors.
Costamare maintains a conservative capital structure, with a debt-to-equity ratio of 0.21, indicating prudent use of debt. The current ratio of 1.65 demonstrates the company's healthy liquidity position, ensuring it can cover short-term liabilities. These financial metrics collectively highlight Costamare's solid financial foundation and potential for continued growth in the shipping industry.
Costamare Inc. (NYSE:CMRE) Surpasses Third-Quarter Earnings Estimates
- Costamare Inc. (NYSE:CMRE) reported a third-quarter profit of $0.68 per share, exceeding the Zacks Consensus Estimate.
- The company's third-quarter revenue was approximately $538.4 million, significantly higher than the estimated $344.9 million.
- Costamare's financial metrics, including a price-to-earnings (P/E) ratio of 4.22 and an earnings yield of 23.71%, suggest strong potential returns for investors.
Costamare Inc. (NYSE:CMRE) is a prominent player in the shipping industry, specializing in owning and chartering containerships. The company operates a fleet that serves major liner companies worldwide. Costamare's competitors include other shipping giants like Danaos Corporation and Global Ship Lease. The company is known for its strategic fleet management and long-term charter agreements, which contribute to its stable revenue streams.
On November 1, 2024, Costamare reported its third-quarter earnings, revealing a profit of $0.68 per share. This figure exceeded the Zacks Consensus Estimate of $0.64, indicating a strong performance. Compared to the previous year's earnings of $0.46 per share, Costamare has shown significant growth, highlighting its robust financial health and operational efficiency, as noted by Zacks Investment Research.
Costamare's revenue for the third quarter was approximately $538.4 million, significantly surpassing the estimated $344.9 million. This impressive revenue performance underscores the company's ability to generate substantial income from its operations. The company's low price-to-sales ratio of 0.81 suggests that the market values its sales at less than one times its revenue, indicating potential undervaluation.
The company's financial metrics further emphasize its strong position. With a price-to-earnings (P/E) ratio of 4.22, Costamare is valued relatively low compared to its earnings. The enterprise value to sales ratio of 0.67 and an enterprise value to operating cash flow ratio of 2.64 reflect the company's efficient cash generation relative to its enterprise value. Additionally, an earnings yield of 23.71% suggests strong potential returns for investors.
Costamare maintains a conservative capital structure, with a debt-to-equity ratio of 0.21, indicating prudent use of debt. The current ratio of 1.65 demonstrates the company's healthy liquidity position, ensuring it can cover short-term liabilities. These financial metrics collectively highlight Costamare's solid financial foundation and potential for continued growth in the shipping industry.
Costamare Inc. (NYSE:CMRE) Earnings Preview: Key Financial Insights
- Earnings per share (EPS) of $0.64 and revenue of approximately $344.87 million are anticipated for the third quarter.
- The company's price-to-earnings (P/E) ratio is around 4.39, suggesting the stock might be undervalued.
- Costamare's debt-to-equity ratio is nearly 1.00, indicating a balanced financing approach.
Costamare Inc. (NYSE:CMRE) is a prominent player in the shipping industry, specializing in the ownership and chartering of containerships. As the company gears up to release its third-quarter earnings on November 1, 2024, analysts predict an earnings per share (EPS) of $0.64 and revenue of approximately $344.87 million. This report is crucial for investors and stakeholders who are keenly observing the company's financial health and market performance.
Despite the anticipation of earnings growth, Costamare may not have the ideal mix of factors for an earnings beat. The company's price-to-earnings (P/E) ratio is around 4.39, which is relatively low, indicating that the stock might be undervalued compared to its earnings. This low valuation could be attractive to investors looking for potential growth opportunities in the shipping sector.
Costamare's price-to-sales ratio is about 0.86, suggesting that the market values its sales modestly. This ratio helps investors understand how much they are paying for each dollar of the company's sales. Additionally, the enterprise value to sales ratio of 1.73 indicates that the company's enterprise value is slightly higher than its total sales, reflecting its market position and operational scale.
The company's enterprise value to operating cash flow ratio stands at approximately 6.33, highlighting its ability to generate cash flow relative to its enterprise value. This is an important metric for assessing the company's financial health and operational efficiency. Furthermore, Costamare boasts an earnings yield of about 22.79%, offering a substantial return on investment for shareholders.
Costamare maintains a debt-to-equity ratio of nearly 1.00, indicating a balanced approach to financing its operations through both debt and equity. This balance is crucial for managing financial risk and ensuring long-term sustainability. Additionally, with a current ratio of approximately 1.61, Costamare demonstrates a strong level of short-term liquidity, ensuring it can meet its immediate liabilities.
Costamare Inc. (NYSE:CMRE) Earnings Preview: Key Financial Insights
- Earnings per share (EPS) of $0.64 and revenue of approximately $344.87 million are anticipated for the third quarter.
- The company's price-to-earnings (P/E) ratio is around 4.39, suggesting the stock might be undervalued.
- Costamare's debt-to-equity ratio is nearly 1.00, indicating a balanced financing approach.
Costamare Inc. (NYSE:CMRE) is a prominent player in the shipping industry, specializing in the ownership and chartering of containerships. As the company gears up to release its third-quarter earnings on November 1, 2024, analysts predict an earnings per share (EPS) of $0.64 and revenue of approximately $344.87 million. This report is crucial for investors and stakeholders who are keenly observing the company's financial health and market performance.
Despite the anticipation of earnings growth, Costamare may not have the ideal mix of factors for an earnings beat. The company's price-to-earnings (P/E) ratio is around 4.39, which is relatively low, indicating that the stock might be undervalued compared to its earnings. This low valuation could be attractive to investors looking for potential growth opportunities in the shipping sector.
Costamare's price-to-sales ratio is about 0.86, suggesting that the market values its sales modestly. This ratio helps investors understand how much they are paying for each dollar of the company's sales. Additionally, the enterprise value to sales ratio of 1.73 indicates that the company's enterprise value is slightly higher than its total sales, reflecting its market position and operational scale.
The company's enterprise value to operating cash flow ratio stands at approximately 6.33, highlighting its ability to generate cash flow relative to its enterprise value. This is an important metric for assessing the company's financial health and operational efficiency. Furthermore, Costamare boasts an earnings yield of about 22.79%, offering a substantial return on investment for shareholders.
Costamare maintains a debt-to-equity ratio of nearly 1.00, indicating a balanced approach to financing its operations through both debt and equity. This balance is crucial for managing financial risk and ensuring long-term sustainability. Additionally, with a current ratio of approximately 1.61, Costamare demonstrates a strong level of short-term liquidity, ensuring it can meet its immediate liabilities.
