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Costamare Inc. Reports Results for the First Quarter Ended March 31, 2020

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MONACO, April 29, 2020 (GLOBE NEWSWIRE) -- Costamare Inc. (“Costamare” or the “Company”) (CMRE) today reported unaudited financial results for the first quarter ended March 31, 2020 (“Q1 2020”).

  • Net Income of $32.8 million or $0.21 per share in Q1 2020.

  • Adjusted Net Income available to common stockholders(1) of $32.6 million or $0.27 per share in Q1 2020.

  • Voyage Revenues of $121.4 million.

  • Liquidity of $268.4 million as of end Q1 2020 (including our share of cash amounting to $31.0 million held in subsidiaries co-owned with York Capital Management Global Advisors LLC and an affiliated fund (collectively, together with the funds it manages or advises, “York”)).

  • No material balloon payments in 2020(2).

  • Chartered in total 12 vessels over the quarter.

  • Declared dividend of $0.10 per share on its common stock and dividends on all four classes of its preferred stock.

  • Initiated a Preferred Shares buyback program for an amount of up to $15.0 million.

  • Arranged financing agreements for an aggregate amount of $165.0 million. More specifically:

º Signed a loan facility agreement with a European financial institution for an amount of up to $65.0 million in order to refinance the existing indebtedness of one 11,010 TEU capacity containership (co-owned under our joint venture with York) and for general corporate purposes.

º Signed a loan facility agreement with a European financial institution for an amount of up to $30.0 million in order to partially finance the acquisition cost of four 4,258 TEU capacity containerships.

º Signed a loan facility agreement with a European financial institution for an amount of up to $70.0 million in order to refinance two existing loan facilities originally maturing in 2021.

(1) Adjusted Net Income available to common stockholders and Adjusted Earnings per Share are non-GAAP measures and should not be used in isolation or as substitutes for Costamare’s financial results presented in accordance with U.S. generally accepted accounting principles (“GAAP”). For the definition and reconciliation of these measures to the most directly comparable financial measure calculated and presented in accordance with GAAP, please refer to Exhibit I.
(2) Balloon payment of $12.0 million payable in December 2020 for two 7,403 TEU containerships with a total lightweight of about 69,000 tons.

New Business Developments

A. New charter agreements

º The Company has chartered in total 12 vessels over the quarter. More specifically, the Company agreed to:

I. Vessels above 5,500 TEU capacity (Post – Panamax)

- Extend the charter of the 2017-built, 11,010 TEU containership Cape Artemisio with Hapag Lloyd for a period of 34 to 38 months at charterers’ option, starting from May 12, 2020 at a daily rate of $38,750 (net). Previous daily rate was $32,500 (net).

- Extend the charter of the 2017-built, 11,010 TEU containership Cape Tainaro with ZIM for a period of 11 to 13 months at charterers’ option, starting from April 13, 2020 at a daily rate of $38,000. Previous daily rate was $39,500.

- Extend the charter of the 2017-built, 11,010 TEU containership Cape Sounio with ZIM for a period of 11 to 13 months at charterers’ option, starting from April 15, 2020 at a daily rate of $38,000. Previous daily rate was $33,500.

- Extend the charter of the 2006-built, 9,469 TEU containership Cosco Guangzhou with COSCO for a period of 3 to 6 months at charterers’ option, starting from May 15, 2020 at an undisclosed daily rate.

- Extend the charter of the 2006-built, 9,469 TEU containership Cosco Ningbo with COSCO for a period of 3 to 6 months at charterers’ option, starting from May 15, 2020 at an undisclosed daily rate.

- Charter the 2010-built, 8,531 TEU containership Navarino with MSC for a period of 12 to 14 months at charterers’ option, starting from March 16, 2020 at a daily rate of $23,000. Previous daily rate was $21,900.

- Extend the charter of the 1997-built, 7,400 TEU containership Maersk Kawasaki with Maersk for a period starting from March 30, 2020 and expiring at charterers’ option during the period from June 1, 2020 to June 10, 2020, at a daily rate of $24,750. Previous daily rate was $17,050.

- Charter the 2000-built, 6,648 TEU containership York with Maersk starting from March 29, 2020 and expiring at charterers’ option during the period from May 15, 2020 to June 30, 2020, at a daily rate of $21,500. Previous daily rate was $11,450.

II. Vessels below 5,500 TEU capacity

- Charter the 2010-built, 4,258 TEU containership Volans with Maersk starting from March 7, 2020 and expiring at charterers’ option during the period from May 7, 2020 to November 15, 2020, at a daily rate of $12,000. Previous daily rate was $13,250.

- Charter the 2005-built, 2,556 TEU containership Etoile for a period of 5.5 to 11 months, at an undisclosed daily rate.

- Extend the charter of the 2000-built, 2,474 TEU containership Areopolis with Yang Ming for a period of 2 to 4 months at charterers’ option, starting from March 6, 2020, at a daily rate of $9,100. Previous daily rate was $8,800.

- Extend the charter of the 2001-built, 1,550 TEU containership Arkadia with Evergreen for a period of 5 to 7 months at charterers’ option, starting from April 28, 2020 at a daily rate of $8,650. Previous daily rate was $9,450.

B. Vessel Disposal

º In January 2020, we concluded the sale of the 2000-built, 1,645 TEU containership Neapolis.

C. New Financing Agreements

º In February 2020, we entered into a financing agreement with a European financial institution for the four 4,258 TEU capacity sister containerships (2010-built Vulpecula, 2010-built Volans, 2009-built Vela and 2009-built JPO Virgo) for a total financing amount of $30 million. The loan facility will be repayable over four years.

º In February 2020, we entered into a loan agreement with a European financial institution for an amount of $65 million. The loan proceeds have been used for the refinancing of the existing indebtedness of the 2016-built, 11,010 TEU containership Cape Akritas (co-owned under our joint venture with York) and for general corporate purposes. The new facility will be repayable over five years.

º In April 2020, we signed a loan facility agreement with a European financial institution for an amount of up to $70.0 million, in order to refinance two facilities originally maturing in 2021 (balloon payments of $54.3 million). The refinancing is expected to be completed in May 2020 and the new facility will mature in 2025.

D. Dividend announcements

º On April 1, 2020, we declared a dividend for the quarter ended March 31, 2020, of $0.10 per share on our common stock, payable on May 7, 2020, to stockholders of record of common stock as of April 21, 2020.

º On April 1, 2020, 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, 2020 to holders of record as of April 14, 2020.

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

“COVID-19 presents the largest shock in the global economy since the 2008-2009 crisis. The supply of containerized goods has experienced a rare episode of disruption and the industry must now contend with the consequences of reduced demand.

Determining the timing and shape of the recovery is a challenge, yet it is worth noting that the protective measures adopted across the world are intended to be temporary, and we believe that the restrictions enforced are also creating a deferred built-in demand.

In this environment the safety of our vessels’ crews as well as of our onshore employees remains our top priority. We have taken steps in order to protect our employees as well as to ensure uninterrupted service to our clients.

For the first quarter the Company delivered profitable results. We have contracted revenues of $2.1 billion, continued access to commercial bank debt, a smooth debt repayment schedule and minimal cap ex requirements.

During the quarter we chartered in total 12 ships, including three 11,000 TEU vessels, which were chartered for periods ranging from one to three years.

Finally, we recently declared our 38th dividend since going public.

As has always been the case, but especially during today’s unprecedented times, our top priority is to cover our downside; building upon that, we will continue to monitor the market and assess new initiatives in order to bolster our balance sheet and liquidity position, while at the same time evaluating new opportunities in a volatile market environment.”

COVID-19 Update

The outbreak of the COVID-19 virus has had a negative effect on the global economy and has adversely impacted the international container shipping industry. The situation is rapidly evolving and, as such, it is difficult to predict the ultimate severity and long-term impact of the pandemic on the industry and Costamare at this time. For a detailed discussion of the impact of COVID-19 on our operations and financial performance, the Company response and an update of the relevant risk factor in the Company’s most recent Annual Report on Form 20-F (File No. 001-34934), please see below.

Financial Summary

Three-month period ended
March 31,

(Expressed in thousands of U.S. dollars, except share and per share data):

2019

2020

Voyage revenue

$

112,974

$

121,404

Accrued charter revenue (1)

$

(1,849

)

$

696

Amortization of time-charter assumed

$

47

$

48

Voyage revenue adjusted on a cash basis (2)

$

111,172

$

122,148

Adjusted Net Income available to common stockholders (3)

$

13,580

$

32,560

Weighted Average number of shares

113,035,525

119,535,940

Adjusted Earnings per share (3)

$

0.12

$

0.27

Net Income / (Loss)

$

(1,654

)

$

32,776

Net Income / (Loss) available to common stockholders

$

(9,297

)

$

25,624

Weighted Average number of shares

113,035,525

119,535,940

Earnings / (Losses) per share

$

(0.08

)

$

0.21

(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, 2020 and 2019. 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

Three-month period ended
March 31,

(Expressed in thousands of U.S. dollars, except share and per share data)

2019

2020

Net Income / (Loss)

$

(1,654

)

$

32,776

Earnings allocated to Preferred Stock

(7,643

)

(7,693

)

Gain on retirement of Preferred Stock

-

541

Net Income / (Loss) available to common stockholders

(9,297

)

25,624

Accrued charter revenue

(1,849

)

696

General and administrative expenses – non-cash component

778

676

Amortization of prepaid lease rentals, net

2,009

-

Amortization of Time charter assumed

47

48

Realized (Gain) / Loss on Euro/USD forward contracts (1)

96

(24

)

(Gain) / Loss on sale / disposal of vessels

18,420

(10

)

Loss on vessel held for sale

-

232

Vessels’ impairment loss

3,042

3,071

Loss on derivative instruments, excluding interest accrued and realized on non-hedging derivative instruments (1)

334

2,247

Adjusted Net Income available to common stockholders

$

13,580

$

32,560

Adjusted Earnings per Share

$

0.12

$

0.27

Weighted average number of shares

113,035,525

119,535,940

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)/loss on Euro/USD forward contracts, vessels’ impairment loss, (gain)/loss on sale / disposal of vessels, loss on vessel held for sale, non-cash general and administrative expenses and non-cash other items, amortization of prepaid lease rentals, net, amortization of Time charter assumed and non-cash changes in fair value of derivatives. “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, 2020 compared to the three-month period ended March 31, 2019

During the three-month periods ended March 31, 2020 and 2019, we had an average of 60.2 and 61.9 vessels, respectively, in our fleet. In the three-month period ended March 31, 2020, we accepted delivery of the secondhand containership JPO 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 period ended March 31, 2019, we sold the containership vessels MSC Pylos and Piraeus with an aggregate capacity of 7,012 TEU. In the three-month periods ended March 31, 2020 and 2019, our fleet ownership days totaled 5,475 and 5,575 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.

(Expressed in millions of U.S. dollars,
except percentages)

Three-month period ended
March 31,

Change

Percentage
Change

2019

2020

Voyage revenue

$

113.0

$

121.4

$

8.4

7.4%

Voyage expenses

(1.8

)

(2.5

)

0.7

38.9%

Voyage expenses – related parties

(1.0

)

(1.6

)

0.6

60.0%

Vessels’ operating expenses

(30.0

)

(27.9

)

(2.1

)

(7.0%)

General and administrative expenses

(1.3

)

(1.4

)

0.1

7.7%

Management fees – related parties

(5.5

)

(5.3

)

(0.2

)

(3.6%)

General and administrative expenses - non-cash component

(0.8

)

(0.7

)

(0.1

)

(12.5%)

Amortization of dry-docking and special survey costs

(2.3

)

(2.2

)

(0.1

)

(4.3%)

Depreciation

(29.9

)

(28.1

)

(1.8

)

(6.0%)

Loss on sale / disposal of vessels

(18.4

)

-

(18.4

)

n.m.

Loss on vessel held for sale

-

(0.2

)

0.2

n.m.

Vessels’ impairment loss

(3.0

)

(3.1

)

0.1

3.3%

Foreign exchange losses

-

(0.1

)

(0.1

)

n.m.

Interest income

0.8

0.6

(0.2

)

(25.0%)

Interest and finance costs

(22.9

)

(18.5

)

(4.4

)

(19.2%)

Income from equity method investments

1.7

4.2

2.5

147.1%

Other

-

0.4

0.4

n.m.

Loss on derivative instruments

(0.3

)

(2.2

)

1.9

n.m.

Net Income / (Loss)

$

(1.7

)

$

32.8

(Expressed in millions of U.S. dollars,
except percentages)

Three-month period ended
March 31,

Change

Percentage
Change

2019

2020

Voyage revenue

$

113.0

$

121.4

$

8.4

7.4%

Accrued charter revenue

(1.8

)

0.7

2.5

138.9%

Amortization of time charter assumed

-

-

-

n.m.

Voyage revenue adjusted on a cash basis

$

111.2

$

122.1

$

10.9

9.8%


Vessels’ operational data

Three-month period ended
March 31,

Percentage
Change

2019

2020

Change

Average number of vessels

61.9

60.2

(1.7

)

(2.7

%)

Ownership days

5,575

5,475

(100

)

(1.8

%)

Number of vessels under dry-docking

3

6

3

100.0

%

(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 7.4%, or $8.4 million, to $121.4 million during the three-month period ended March 31, 2020, from $113.0 million during the three-month period ended March 31, 2019. The increase is mainly attributable to revenue earned by (i) three vessels acquired during the fourth quarter of 2019 and one vessel acquired during the first quarter of 2020, (ii) increased charter rates for certain of our vessels during the first quarter of 2020 compared to the first quarter of 2019 and (iii) decreased off-hire days for certain of our vessels during the first quarter of 2020 compared to the first quarter of 2019, partly off-set by revenue not earned by five vessels sold during the year ended December 31, 2019 and one vessel sold during the first quarter of 2020.

Voyage revenue adjusted on a cash basis (which eliminates non-cash “Accrued charter revenue”), increased by 9.8%, or $10.9 million, to $122.1 million during the three-month period ended March 31, 2020, from $111.2 million during the three-month period ended March 31, 2019. Accrued charter revenue for the three-month period ended March 31, 2020 was a positive amount of $0.7 million and for the three-month period ended March 31, 2019 was a negative amount of $1.8 million.

Voyage Expenses

Voyage expenses were $2.5 million and $1.8 million for the three-month periods ended March 31, 2020 and 2019, 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 $1.6 million and $1.0 million for the three-month periods ended March 31, 2020 and 2019, respectively. Voyage expenses – related parties represent fees of 1.25%1 in the aggregate on voyage revenues charged by related managers and charter brokerage fees payable to a related charter brokerage company of amount less than $0.09 million, in the aggregate.

Vessels’ Operating Expenses

Vessels’ operating expenses, which also include the realized gain / (loss) under derivative contracts entered into in relation to foreign currency exposure, were $27.9 million and $30.0 million during the three-month periods ended March 31, 2020 and 2019, respectively. Daily vessels’ operating expenses were $5,090 and $5,374 for the three-month periods ended March 31, 2020 and 2019, 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 $1.4 million and $1.3 million during the three-month periods ended March 31, 2020 and 2019, respectively, and both include $0.63 million paid to a related manager.

Management Fees – related parties

Management fees paid to our related managers were $5.3 million and $5.5 million during the three-month periods ended March 31, 2020 and 2019, respectively.

General and administrative expenses – non-cash component

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. General and administrative expenses – non-cash component for the three-month period ended March 31, 2019, amounted to $0.8 million, representing the value of the shares issued to a related manager on March 29, 2019.

Amortization of dry-docking and special survey

Amortization of deferred dry-docking and special survey costs was $2.2 million and $2.3 million during the three-month periods ended March 31, 2020 and 2019, respectively. During the three-month period ended March 31, 2020, five vessels underwent and completed their special survey and one was in process of completing her special survey. During the three-month period ended March 31, 2019, three vessels underwent and completed their special survey.

Depreciation

Depreciation expense for the three-month period ended March 31, 2020 and 2019 was $28.1 million and $29.9 million, respectively.

Gain / Loss on sale / disposal of vessels

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. During the three-month period ended March 31, 2019, we recorded an aggregate loss of $18.4 million from the sale of the container vessels Piraeus and MSC Pylos. MSC Pylos was classified as asset held for sale as at December 31, 2018.

Loss on vessel held for sale

During the three-month period ended March 31, 2020, we recorded an additional loss of $0.2 million on one vessel 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.

Vessels’ impairment loss

During the three-month period ended March 31, 2020, we recorded an impairment loss in relation to three of our vessels in the amount of $3.1 million, in the aggregate. During the three-month period ended March 31, 2019, we recorded an impairment loss in relation to two of our vessels in the amount of $3.0 million, in the aggregate.

Interest Income

Interest income amounted to $0.6 million and $0.8 million for the three-month periods ended March 31, 2020 and 2019, respectively.

Interest and Finance Costs

Interest and finance costs were $18.5 million and $22.9 million during the three-month periods ended March 31, 2020 and 2019, respectively. The decrease is mainly attributable to the decreased financing cost during the three-month period ended March 31, 2020 compared to the three-month period ended March 31, 2019.

Income from Equity Method Investments

During the three-month period ended March 31, 2020, we recorded an income from the equity method investments of $4.2 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. As of March 31, 2020, 13 companies are jointly-owned with York (of which, 10 companies currently own vessels). During the three-month period ended March 31, 2019, we recorded an income from equity method investments of $1.7 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, 2020 equates to the amount that would be paid by us or to us should those instruments be terminated. As of March 31, 2020, the fair value of these nine-interest rate derivative instruments in aggregate amounted to liability of $7.8 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 the same line of the income statement expected for the hedged item. 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 March 31, 2020, a loss of $6.0 million has been included in OCI and a loss of $2.2 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, 2020.

1 0.75% until June 30, 2019

Cash Flows

Three-month periods ended March 31, 2020 and 2019

Condensed cash flows

Three-month period ended
March 31,

(Expressed in millions of U.S. dollars)

2019

2020

Net Cash Provided by Operating Activities

$

47.7

$

67.6

Net Cash Provided by Investing Activities

$

14.6

$

4.7

Net Cash Used in Financing Activities

$

(73.5

)

$

(30.8

)

Net Cash Provided by Operating Activities

Net cash flows provided by operating activities for the three-month period ended March 31, 2020, increased by $19.9 million to $67.6 million, from $47.7 million for the three-month period ended March 31, 2019. The increase is mainly attributable to the increased cash from operations of $11.0 million, the favorable 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 $4.0 million and the decreased payments for interest (including swap payments) of $4.7 million during the three-month period ended March 31, 2020 compared to the three-month period ended March 31, 2019; partly off-set by the increased special survey costs of $3.4 million during the three-month period ended March 31, 2020 compared to the three-month period ended March 31, 2019.

Net Cash Provided by Investing Activities

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 investing activities was $14.6 million in the three-month period ended March 31, 2019, which mainly consisted of proceeds we received from the sale of two vessel and advance payments for upgrades for certain of our vessels.

Net Cash Used in Financing Activities

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 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, 2019 to January 14, 2020.

Net cash used in financing activities was $73.5 million in the three-month period ended March 31, 2019, which mainly consisted of (a) $59.2 million payments relating to our debt financing agreements (including the prepayments following the sale of two container vessels during the three-month period ended March 31, 2019), (b) $6.6 million we paid for dividends to holders of our common stock for the fourth quarter of 2018 and (c) $1.0 million we paid for dividends to holders of our 7.625% Series B Preferred Stock, $2.1 million we paid for dividends to holders of our 8.500% Series C Preferred Stock, $2.2 million we paid for dividends to holders of our 8.75% Series D Preferred Stock and $2.5 million we paid for dividends to holders of our 8.875% Series E Preferred Stock for the period from October 15, 2018 to January 14, 2019.

Liquidity and Unencumbered Vessels

Cash and cash equivalents

As of March 31, 2020, we had a total cash liquidity of $237.4 million, consisting of cash, cash equivalents and restricted cash.

Debt-free vessels

As of April 29, 2020, the following vessels were free of debt.

Unencumbered Vessels

(Refer to fleet list for full details)

Vessel Name

Year
Built

TEU
Capacity

ETOILE

2005

2,556

KOKURA

1997

7,403

MICHIGAN

2008

1,300

ENSENADA (*)

2001

5,576

MONEMVASIA (*)

1998

2,472

ARKADIA (*)

2001

1,550

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

COVID-19 Update

Impact on Operations and Financial Performance

Although we have taken steps to protect our seafarers and shore employees and ensure uninterrupted service to our clients, our operations and financial performance have been unavoidably affected by the outbreak of the COVID-19 virus.

  • We have a number of vessels whose charters expire within the year and, subject to market conditions which have been volatile we may be unable to charter these vessels at the same rates or for the same length of time as we had previously expected or find a suitable employment.

  • We have eight vessels currently undergoing or scheduled to undergo periodic repairs until the end of the year, whose repair period may be extended.

  • We are experiencing significant delays in the installation of scrubbers in seven of our vessels, which however remain on hire during the whole installation period.

  • On January 28, 2020, we received notice of a force majeure from the shipyard constructing five vessels. Of these ships, three are currently scheduled to be delivered in the third quarter of 2020 and two will have an average delay of less than a month from the original delivery schedule. At this time we do not expect delays in the delivery of the other three vessels (one scheduled to be delivered in the third quarter of 2020 and two in the second quarter of 2021). Despite the delays in the delivery of our vessels under construction, our contracted revenues from the employment of these vessels are not affected.

Costamare Response:

Our primary concern is ensuring the wellbeing of our seafarers and employees, while also providing safe and reliable services to our clients. In line with industry response we have updated and continue to update vessels’ procedures and supplied our fleet with protective equipment. We have suspended or limited crew changes, superintendent visits and provisioning in heavily affected areas and are complying with local directives and recommendations.

Shoreside, our managers operate with a skeleton staff with the remaining personnel working remotely. Our managers have also instituted enhanced safety protocols such as constant cleaning/disinfection of their premises, temperature readings, prohibition of on-site visitors, severe limitation of travel, mandatory self-isolation of personnel returning from travel and substitution of physical meetings with virtual meetings. We are also taking measures to improve the security of our network and online communications and have stepped up monitoring of our network. Our Shanghai based managers have now fully reopened their office while following the local directives enhanced with additional precautions such as flexible hours to avoid rush hour travel and remote working for employees at risk because of pre-existing conditions or age.

We are constantly monitoring the developing situation, as well as our charterers’ response to the severe market disruption via cost cutting and rationalization of their networks and fleets, and are making necessary preparations to address and mitigate, to the extent possible, the impact of COVID-19 to our Company.

Risk Factor Update

Our financial and operating performance has been and may continue to be adversely affected by the recent outbreak of the COVID-19 virus.

Our business has been adversely affected and may continue to be adversely affected by the recent outbreak of the COVID-19 virus, which has introduced uncertainty into our operational and financial activities and has negatively impacted, and may continue to impact negatively, global economic activity. We may be unable to re-charter our vessels or we may find employment at lower rates or for shorter periods of time. If we cannot find profitable employment for our vessels we may decide to sell them for demolition especially in case of vessels that are scheduled to undergo periodic repairs. The duration of scheduled repairs could exceed the previously calculated period, causing our vessels to remain off hire for longer periods than planned. Possible delays due to quarantine of our vessels caused by COVID-19 infection of our crew or other COVID-19 related disruptions may lead to the termination of charters leaving our vessels without employment. It is also possible that the liner companies that charter our vessels will be materially impacted by the effects of the COVID-19 virus outbreak and therefore may default on their charters or seek to restructure the terms of their charters (which, however, are legally binding).

The outbreak and the related responses to the outbreak across the globe, including self-isolation and lockdown of large sections of the world population, quarantines and travel restrictions, has caused a significant decline in global output and demand in March and April of 2020. The decline has had, and is likely to continue to have, a significant negative effect on both the demand and supply of goods shipped in containerized form. If the outbreak persists or if it is contained only to be followed by successive flare-ups, demand for our services may be reduced further, which will decrease the price and number of our time charters in the future and may result in some of our vessels remaining idle for any length of time thus materially and adversely affecting our business operations.

The global recession caused by the pandemic will also severely affect financing institutions. If the impact on the financing system is not addressed, we may find it difficult to refinance loans that are maturing or to obtain financing for new projects thus materially affecting our financial position.

Conference Call details:

On Wednesday, April 29, 2020 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 May 6, 2020. 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: 10143504.

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 46 years of history in the international shipping industry and a fleet of 75 containerships, with a total capacity of approximately 547,000 TEU, including five newbuild containerships currently under construction. Ten 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 Costamare Inc.’s most recent Annual Report on Form 20-F (File No. 001-34934) under the caption “Risk Factors”, as well as the above Risk Factor update.

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 April 29, 2020, about our fleet of containerships, including our newbuilds on order, 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.



Vessel Name

Charterer

Year
Built

Capacity
(TEU)

Current Daily
Charter Rate
(1)
(U.S. dollars)

Expiration of
Charter
(2)

1

TRITON(ii)

Evergreen

2016

14,424

(*)

March 2026

2

TITAN(ii)

Evergreen

2016

14,424

(*)

April 2026

3

TALOS(ii)

Evergreen

2016

14,424

(*)

July 2026

4

TAURUS(ii)

Evergreen

2016

14,424

(*)

August 2026

5

THESEUS(ii)

Evergreen

2016

14,424

(*)

August 2026

6

CAPE AKRITAS(i)

ZIM

2016

11,010

43,250

August 2020

7

CAPE TAINARO(i)

ZIM

2017

11,010

38,000

March 2021

8

CAPE KORTIA(i)

ZIM

2017

11,010

43,250

September 2020

9

CAPE SOUNIO(i)

ZIM

2017

11,010

38,000

March 2021

10

CAPE ARTEMISIO(i)

Hapag Lloyd

2017

11,010

38,750 (net)

March 2023(3)

11

COSCO GUANGZHOU

COSCO

2006

9,469

(*)

August 2020(4)

12

COSCO NINGBO

COSCO

2006

9,469

(*)

August 2020(4)

13

COSCO YANTIAN

COSCO

2006

9,469

28,900

May 2020

14

COSCO BEIJING

COSCO

2006

9,469

28,900

May 2020

15

COSCO HELLAS

COSCO

2006

9,469

28,900

May 2020

16

MSC AZOV

MSC

2014

9,403

43,000

December 2026(5)

17

MSC AMALFI

MSC

2014

9,403

46,300

March 2027(6)

18

MSC AJACCIO

MSC

2014

9,403

46,300

February 2027(7)

19

MSC ATHENS(ii)

MSC

2013

8,827

42,000

January 2026(8)

20

MSC ATHOS(ii)

MSC

2013

8,827

42,000

February 2026(8)

21

VALOR

Hapag Lloyd

2013

8,827

34,500

April 2023

22

VALUE

Hapag Lloyd

2013

8,827

34,500

April 2023

23

VALIANT

Evergreen/Hapag Lloyd

2013

8,827

41,700/34,500

June 2023(9)

24

VALENCE

Evergreen/Hapag Lloyd

2013

8,827

41,700/34,500

July 2023(9)

25

VANTAGE

Evergreen/Hapag Lloyd

2013

8,827

41,700/34,500

September 2023(9)

26

NAVARINO

MSC

2010

8,531

23,000

March 2021

27

MAERSK KLEVEN

Maersk

1996

8,044

17,500

April 2021

28

MAERSK KOTKA

Maersk

1996

8,044

17,500

April 2021

29

MAERSK KOWLOON

Maersk

2005

7,471

16,000

June 2022

30

MAERSK KAWASAKI

Maersk

1997

7,403

24,750

June 2020

31

KURE

COSCO

1996

7,403

21,500

May 2020

32

KOKURA

-

1997

7,403

-

-

33

MSC METHONI

MSC

2003

6,724

29,000

September 2021

34

YORK

Maersk

2000

6,648

21,500

May 2020

35

MAERSK KOBE

Maersk

2000

6,648

17,000

May 2020

36

SEALAND WASHINGTON

Maersk

2000

6,648

(*)

March 2022(10)

37

SEALAND MICHIGAN

Maersk

2000

6,648

(*)

March 2022(10)

38

SEALAND ILLINOIS

Maersk

2000

6,648

(*)

March 2022(10)

39

MAERSK KOLKATA

Maersk

2003

6,644

(*)

March 2022(10)

40

MAERSK KINGSTON

Maersk

2003

6,644

(*)

March 2022(10)

41

MAERSK KALAMATA

Maersk

2003

6,644

(*)

March 2022(10)

42

VENETIKO

Hapag Lloyd

2003

5,928

20,000

August 2020

43

ENSENADA (i)

ONE

2001

5,576

21,000

May 2020

44

ZIM NEW YORK

ZIM

2002

4,992

12,430

October 2020(11)

45

ZIM SHANGHAI

ZIM

2002

4,992

12,430

October 2020(11)

46

LEONIDIO(ii)

Maersk

2014

4,957

14,200

December 2024

47

KYPARISSIA(ii)

Maersk

2014

4,957

14,200

November 2024

48

MEGALOPOLIS

Maersk

2013

4,957

(*)

July 2025

49

MARATHOPOLIS

Maersk

2013

4.957

(*)

July 2025

50

OAKLAND EXPRESS

Hapag Lloyd

2000

4,890

13,750

January 2021

51

HALIFAX EXPRESS

Hapag Lloyd

2000

4,890

10,000

October 2020

52

SINGAPORE EXPRESS

Hapag Lloyd

2000

4,890

10,000

July 2020

53

VULPECULA

-

2010

4,258

-

-

54

VOLANS

Maersk

2010

4,258

12,000

May 2020

55

JPO VIRGO

CMA CGM

2009

4,258

13,850

May 2020

56

VELA

-

2009

4,258

-

Dry Dock

57

ULSAN

Maersk

2002

4,132

12,000

June 2021

58

POLAR ARGENTINA(i)(ii)

Maersk

2018

3,800

19,700

October 2024

59

POLAR BRASIL(i)(ii)

Maersk

2018

3,800

19,700

January 2025

60

LAKONIA

-

2004

2,586

-

-

61

ETOILE

(*)

2005

2,556

(*)

August 2020

62

AREOPOLIS

Yang Ming

2000

2,474

9,100

May 2020

63

MONEMVASIA(i)

Maersk

1998

2,472

9,250

November 2021

64

MESSINI

Evergreen

1997

2,458

8,650

May 2020

65

ARKADIA(i)

Evergreen

2001

1,550

8,650

September 2020

66

PROSPER

Evergreen

1996

1,504

7,100

May 2020

67

MICHIGAN

MSC

2008

1,300

6,650

September 2020

68

TRADER

-

2008

1,300

-

-

69

ZAGORA

MSC

1995

1,162

6,500

May 2020

70

LUEBECK

MSC

2001

1,078

6,200

January 2021

Newbuilds



Vessel Name



Shipyard



Capacity
(TEU)



Charterer

Expected Delivery(12)

1

YZJ2015-2057

Jiangsu Yangzijiang
Shipbuilding Group

12,690

Yang Ming

Q3 2020

2

YZJ2015-2058

Jiangsu Yangzijiang
Shipbuilding Group

12,690

Yang Ming

Q3 2020

3

YZJ2015-2059

Jiangsu Yangzijiang
Shipbuilding Group

12,690

Yang Ming

Q3 2020

4

YZJ2015-2060

Jiangsu Yangzijiang
Shipbuilding Group

12,690

Yang Ming

Q2 2021

5

YZJ2015-2061

Jiangsu Yangzijiang
Shipbuilding Group

12,690

Yang Ming

Q2 2021


(1)

Daily charter rates are gross, unless stated otherwise. Amounts set out for current daily charter rate are the amounts contained in the charter contracts.

(2)

Charter terms and expiration dates are based on the earliest date charters could expire.

(3)

This charter rate will be earned by Cape Artemisio from May 12, 2020. Until then the daily charter rate will be $32,500 (net).

(4)

An undisclosed charter rate will be earned by each vessel from May 15, 2020 until expiry of the charters. Until then the daily charter rate will be $28,900.

(5)

Following scrubbers’ installation, the daily rate for MSC Azov will be increased from the current daily rate of $43,000 until December 2, 2023. The charter will also be extended for 3 years.

(6)

This charter rate will be earned by MSC Amalfi until March 16, 2024. From the aforementioned date until the expiry of the charter the daily rate will be $35,300.

(7)

This charter rate will be earned by MSC Ajaccio until February 1, 2024. From the aforementioned date until the expiry of the charter the daily rate will be $35,300.

(8)

Following scrubbers’ installation, the daily rate will be increased from the current daily rate of $42,000 until the original earliest redelivery dates of the vessels (January 29, 2023-MSC Athens and February 24, 2023-MSC Athos). The charters will also be extended for 3 years.

(9)

Upon redelivery of each vessel from Evergreen between June 2020 and January 2021, each vessel will commence a 3 year charter with Hapag Lloyd at a daily rate of $34,500. Until then the daily charter rate of each vessel will be $41,700.

(10)

The daily rate for Sealand Washington, Sealand Michigan, Sealand Illinois, Maersk Kolkata, Maersk Kingston and Maersk Kalamata is a base rate, adjusted pursuant to the terms of a profit/loss sharing mechanism based on market conditions until expiry of the charter.

(11)

The amounts in the table reflect the current charter terms, giving effect to our agreement with ZIM under its 2014 restructuring plan. Based on this agreement, we have been granted charter extensions and have been issued equity securities representing 1.2% of ZIM’s equity and approximately $8.2 million in interest bearing notes maturing in 2023. In May 2019, the Company exercised its option to extend the charters of ZIM New York and ZIM Shanghai for a one year period at market rate plus $1,100 per day per vessel while the notes remain outstanding. The rate for this fifth optional year has been determined at $12,430 per day.

(12)

Based on latest shipyard construction schedule, subject to change.

(i)

Denotes vessels acquired pursuant to the Framework Deed. The Company holds an equity interest ranging between 25% and 49% in each of the vessel-owning entities.

(ii)

Denotes vessels subject to a sale and leaseback transaction.

(*)

Denotes charterer’s identity and/or current daily charter rates and/or charter expiration dates, which are treated as confidential.


Consolidated Statements of Income

Three-month period ended
March 31,

(Expressed in thousands of U.S. dollars, except share and per share amounts)

2019

2020

REVENUES:

Voyage revenue

$

112,974

$

121,404

EXPENSES:

Voyage expenses

(1,836

)

(2,518

)

Voyage expenses – related parties

(960

)

(1,587

)

Vessels’ operating expenses

(29,964

)

(27,870

)

General and administrative expenses

(1,263

)

(1,402

)

Management fees - related parties

(5,548

)

(5,322

)

Non-cash general and administrative expenses and non-cash other items

(778

)

(676

)

Amortization of dry-docking and special survey costs

(2,276

)

(2,207

)

Depreciation

(29,855

)

(28,136

)

Gain / (Loss) on sale / disposal of vessels

(18,420

)

10

Loss on vessel held for sale

-

(232

)

Vessels’ impairment loss

(3,042

)

(3,071

)

Foreign exchange losses

(11

)

(142

)

Operating income

$

19,021

$

48,251

OTHER INCOME / (EXPENSES):

Interest income

$

835

$

647

Interest and finance costs

(22,933

)

(18,467

)

Income from equity method investments

1,703

4,164

Other

41

428

Loss on derivative instruments

(321

)

(2,247

)

Total other income / (expenses)

$

(20,675

)

$

(15,475

)

Net Income / (Loss)

$

(1,654

)

$

32,776

Earnings allocated to Preferred Stock

(7,643

)

(7,693

)

Gain on retirement of Preferred Stock

-

541

Net Income / (Loss) available to common stockholders

$

(9,297

)

$

25,624

Earnings / (Losses) per common share, basic and diluted

$

(0.08

)

$

0.21

Weighted average number of shares, basic and diluted

113,035,525

119,535,940

COSTAMARE INC.
Consolidated Balance Sheets

As of December 31,

As of March 31,

(Expressed in thousands of U.S. dollars)

2019

2020

ASSETS

(Unaudited)

CURRENT ASSETS:

Cash and cash equivalents

$

148,928

$

189,151

Restricted cash

6,912

8,656

Accounts receivable

7,397

8,926

Inventories

10,546

10,276

Due from related parties

7,576

12,651

Fair value of derivatives

748

70

Insurance claims receivable

1,607

1,285

Asset held for sale

4,908

1,926

Time charter assumed

192

191

Prepayments and other

8,430

8,570

Total current assets

$

197,244

$

241,702

FIXED ASSETS, NET:

Right-of-use assets

$

188,429

$

186,751

Vessels and advances, net

2,431,830

2,425,472

Total fixed assets, net

$

2,620,259

$

2,612,223

NON-CURRENT ASSETS:

Equity method investments

$

111,681

$

88,784

Deferred charges, net

21,983

26,496

Accounts receivable, non-current

8,600

6,785

Restricted cash

40,031

39,570

Fair value of derivatives, non-current

605

-

Time charter assumed, non-current

1,030

983

Other non-current assets

10,525

10,682

Total assets

$

3,011,958

$

3,027,225

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Current portion of long-term debt

$

210,745

$

211,951

Accounts payable

6,215

11,209

Due to related parties

473

1,602

Finance lease liabilities

16,810

16,856

Accrued liabilities

19,417

22,283

Unearned revenue

10,387

10,676

Fair value of derivatives

397

2,346

Other current liabilities

2,090

2,250

Total current liabilities

$

266,534

$

279,173

NON-CURRENT LIABILITIES

Long-term debt, net of current portion

$

1,206,405

$

1,195,655

Finance lease liabilities, net of current portion

119,925

115,694

Fair value of derivatives, net of current portion

433

5,488

Unearned revenue, net of current portion

7,933

9,007

Total non-current liabilities

$

1,334,696

$

1,325,844

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY:

Preferred stock

$

-

$

-

Common stock

12

12

Additional paid-in capital

1,351,352

1,355,217

Retained earnings

60,578

74,165

Accumulated other comprehensive loss

(1,214

)

(7,186

)

Total stockholders’ equity

$

1,410,728

$

1,422,208

Total liabilities and stockholders’ equity

$

3,011,958

$

3,027,225