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Costamare Inc. Reports Results for the Third Quarter and Nine-Month Period Ended September 30, 2022

Costamare Inc
Costamare Inc

MONACO, Nov. 02, 2022 (GLOBE NEWSWIRE) -- Costamare Inc. (“Costamare” or the “Company”) (NYSE: CMRE) today reported unaudited financial results for the third quarter (“Q3 2022”) and nine-months ended September 30, 2022.

  1. RECORD PROFITABILITY IN A THIRD QUARTER SINCE NYSE LISTING

    • Q3 2022 Net Income available to common stockholders of $107.6 million ($0.89 per share) vs $107.4 million ($0.87 per share) in Q3 2021.

    • Q3 2022 Adjusted Net Income available to common stockholders1 of $107.4 million ($0.88 per share) vs $81.5 million ($0.66 per share) in Q3 2021.

    • Q3 2022 liquidity of $897.3 million2 vs $557.8 million in Q3 2021.

  2. ELEVEN NEW CHARTER ARRANGEMENTS WITH FORWARD START - FULLY EMPLOYED CONTAINERSHIP FLEET3 FOR THE YEAR AHEAD

    • Chartered 11 containerships on a forward basis with a leading liner company. More specifically:

      • Six containerships with existing charters maturing in 2025, the Cape Artemisio, Valor, Value, Valiant, Valence and Vantage (between 8,800 and 11,000 TEU capacity), have been forward chartered for a period of 60 to 64 months until 2030.

      • One containership with an existing charter maturing in 2025, the Navarino (8,500 TEU capacity), has been forward chartered for a period of 48 to 52 months until 2029.

      • Two containerships with existing charters maturing in 2024, the Luebeck and Trader (between 1,000 and 1,300 TEU capacity), have been forward chartered for a period of 24 to 26 months until 2026.

      • Two containerships with existing charters maturing in 2023, the Michigan and Etoile (between 1,300 and 2,600 TEU capacity), have been forward chartered for a period of 24 to 26 months and 36 to 39 months, respectively, until 2025 and 2026, respectively.

      • Incremental contracted revenues of approximately $420 million.

      • Incremental TEU-weighted duration of forward charters of 4.6 years.

    • More than 96% and 84% of the containership fleet4 fixed for 2023 and 2024, respectively.

    • Entered into a total of 34 chartering agreements for the dry bulk fleet since Q2 2022 earnings release.

  3. SALE AND PURCHASE ACTIVITY

    • Conclusion, in October 2022, of the sale of the following 2000-built, 6,648 TEU capacity containerships:

      • Sealand Michigan, with an estimated capital gain of $34.7 million in Q4 2022.

      • Sealand Illinois, with an estimated capital gain of $34.0 million in Q4 2022.

      • York, with an estimated capital gain of $37.0 million in Q4 2022.

  4. NEW DEBT FINANCING

    • Refinancing of existing indebtedness of two 1996-built, 8,044 TEU capacity containerships (Maersk Kleven / Maersk Kotka):

      • Gross loan proceeds of $46 million used for prepayment of existing indebtedness and general corporate purposes.

      • Four year tenor facility.

      • Extension of original facility’s balloon payment due in Q3 2023.

      • Facility secured by long term vessels charters.

  5. DIVIDEND ANNOUNCEMENTS

    • On October 3, 2022, the Company declared a dividend of $0.115 per share on the common stock, which will be paid on November 7, 2022, to holders of record of common stock as of October 20, 2022.

    • On October 3, 2022, the Company declared a dividend of $0.476563 per share on the Series B Preferred Stock, $0.531250 per share on the Series C Preferred Stock, $0.546875 per share on the Series D Preferred Stock and $0.554688 per share on the Series E Preferred Stock, which were all paid on October 17, 2022 to holders of record as of October 14, 2022.

    • Available funds remaining under the share repurchase program of approximately $90 million for common shares and $150 million for preferred shares.

_________________

1 Adjusted Net Income available to common stockholders and respective per share figures 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 Including our share of cash amounting to $4.0 million held by vessel owning-companies set-up pursuant to the Framework Deed dated May 15, 2013, as amended and restated from time to time (the “Framework Deed”), between the Company and York Capital Management Global Advisors LLC and an affiliated fund (collectively, “York”), short term investments in U.S. Treasury Bills amounting to $24.9 million and $152.5 million of available undrawn funds from our two hunting license facilities as of September 30, 2022.
3 Please refer to the Fleet List table for additional information on vessel employment details for our containership fleet.
4 Calculated on a TEU basis, including vessels owned by vessel owning-companies set-up pursuant to the Framework Deed, and excluding vessels we have agreed to sell.

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

“During the third quarter revenues reached approx. $290 million and Adjusted Net Income reached $107 million, compared to $216 million and $82 million for the same period last year. As of quarter end, cash balances stood at around $745 million and total liquidity, including undrawn credit lines, was above $890 million.

Focusing on increasing visibility and our contracted cash flow base, we recently chartered with a leading liner company a total of 11 containerships with existing charters originally expiring between 2023 and 2025. Seven of those vessels were chartered for a period ranging from four to five years starting from 2025 onwards, and the remaining ships, with forward starts in 2023 and 2024. The new charters increase our contracted revenues by about $420 million and result in incremental charter coverage of about 4.5 years.

Regarding the container market, cargo volumes have been softening across several trade lanes with energy costs and inflation impacting consumer spending. Fixing activity has been at low levels and the majority of new fixtures are for short term employment. Charter rates have been under pressure, although they remain at profitable levels.

On the dry bulk market, rates for our vessels sizes remain profitable, especially for owners who entered the market the year before. We feel comfortable with the long-term supply and demand dynamics of the sector, and we view any potential softening of asset values as a compelling buying opportunity.

On the back of our increased liquidity and container charter coverage, we are focused on new investment opportunities in the shipping sector that have the potential to provide enhanced returns at acceptable risk levels.”


Financial Summary

 

 

 

 

 

 

 

 

 

 

 

Nine-month period ended
September 30,

 

Three-month period ended
September 30,

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

 

 

2021

 

 

 

2022

 

 

2021

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voyage revenue

 

$

509,721

 

 

$

848,428

 

 

$

216,226

 

 

$

289,491

 

 

 

 

 

 

 

 

 

 

Accrued charter revenue (1)

 

$

3,170

 

 

$

782

 

 

$

1,024

 

 

$

(4,287

)

Amortization of time-charter assumed

 

$

(463

)

 

$

148

 

 

$

(118

)

 

$

50

 

Voyage revenue adjusted on a cash basis (2)

 

$

512,428

 

 

$

849,358

 

 

$

217,132

 

 

$

285,254

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income available to common stockholders (3)

 

$

177,802

 

 

$

330,436

 

 

$

81,540

 

 

$

107,378

 

Weighted Average number of shares

 

 

122,845,943

 

 

 

123,295,035

 

 

 

123,299,457

 

 

 

121,458,291

 

Adjusted Earnings per share (3)

 

$

1.45

 

 

$

2.68

 

 

$

0.66

 

 

$

0.88

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

273,967

 

 

$

360,516

 

 

$

115,210

 

 

$

115,492

 

Net Income available to common stockholders

 

$

250,665

 

 

$

337,214

 

 

$

107,356

 

 

$

107,638

 

Weighted Average number of shares

 

 

122,845,943

 

 

 

123,295,035

 

 

 

123,299,457

 

 

 

121,458,291

 

Earnings per share

 

$

2.04

 

 

$

2.74

 

 

$

0.87

 

 

$

0.89

 

(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. The reverse is true for charters with descending rates.
(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. 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 of our fleet are described in the notes to the “Fleet List” tables 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 and Adjusted Earnings per Share.


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 and the nine-month periods ended September 30, 2022 and 2021. 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

 

 

Nine-month period ended
September 30,

 

Three-month period ended
September 30,

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

 

2021

 

 

2022

 

 

2021

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

$

273,967

 

$

360,516

 

$

115,210

 

$

115,492

 

Earnings allocated to Preferred Stock

 

(23,302

)

 

(23,302

)

 

(7,854

)

 

(7,854

)

Net Income available to common stockholders

 

250,665

 

 

337,214

 

 

107,356

 

 

107,638

 

Accrued charter revenue

 

3,170

 

 

782

 

 

1,024

 

 

(4,287

)

General and administrative expenses - non-cash component

 

5,523

 

 

5,701

 

 

2,316

 

 

1,341

 

Amortization of Time charter assumed

 

(463

)

 

148

 

 

(118

)

 

50

 

Realized loss on Euro/USD forward contracts (1)

 

26

 

 

1,806

 

 

200

 

 

856

 

Gain on sale of vessels, net

 

(18,075

)

 

(21,250

)

 

(16,669

)

 

-

 

Non-recurring, non-cash write-off of loan deferred financing costs

 

363

 

 

2,395

 

 

-

 

 

56

 

Gain on sale / disposal of vessel by a jointly owned company with York included in equity gain on investments

 

(5,726

)

 

-

 

 

(5,726

)

 

-

 

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

 

1,219

 

 

2,634

 

 

207

 

 

1,724

 

Non-recurring payments for loan cancellation fees

 

-

 

 

1,006

 

 

-

 

 

-

 

Fair value measurement / Change in fair value of equity securities

 

(58,144

)

 

-

 

 

(7,050

)

 

-

 

Other non-recurring, non-cash items

 

(756

)

 

-

 

 

-

 

 

-

 

Adjusted Net Income available to common stockholders

$

177,802

 

$

330,436

 

$

81,540

 

$

107,378

 

Adjusted Earnings per Share

$

1.45

 

$

2.68

 

$

0.66

 

$

0.88

 

Weighted average number of shares

 

122,845,943

 

 

123,295,035

 

 

123,299,457

 

 

121,458,291

 

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

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


Results of Operations

Three-month period ended September 30, 2022 compared to the three-month period ended September 30, 2021

During the three-month periods ended September 30, 2022 and 2021, we had an average of 117.0 and 91.7 vessels, respectively, in our fleet.

During the three-month period ended September 30, 2022, we did not purchase, sell or take delivery of any vessels. In the three-month period ended September 30, 2021, we accepted delivery of the secondhand container vessel Gialova with a TEU capacity of 4,578 and we sold the container vessel Venetiko with a TEU capacity of 5,928. Furthermore, during the three-month period ended September 30, 2021, we accepted delivery of 27 secondhand dry bulk vessels (Eracle, Peace, Bernis, Sauvan, Verity, Pride, Alliance, Manzanillo, Dawn, Acuity, Seabird, Discovery, Aeolian, Comity, Clara, Serena, Merida, Progress, Miner, Parity, Uruguay, Resource, Konstantinos, Taibo, Thunder, Athena and Farmer) with an aggregate DWT of 1,337,162.

In the three-month periods ended September 30, 2022 and 2021, our fleet ownership days totaled 10,764 and 8,434 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.

Consolidated Financial Results and Vessels’ Operational Data(1)

(Expressed in millions of U.S. dollars,

 

Three-month period ended
September 30,

 

Change

 

 

Percentage

 

except percentages)

 

2021

 

 

2022

 

 

 

 

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

Voyage revenue

$

216.2

 

 

$

289.5

 

 

$

73.3

 

33.9

%

Voyage expenses

 

(4.4

)

 

(14.2

)

 

9.8

 

 

n.m.

 

Voyage expenses – related parties

 

(3.0

)

 

(4.0

)

 

1.0

 

33.3

%

Vessels’ operating expenses

 

(49.7

)

 

(65.0

)

 

15.3

 

30.8

%

General and administrative expenses

 

(2.3

)

 

(2.6

)

 

0.3

 

13.0

%

Management fees – related parties

 

(8.2

)

 

(11.0

)

 

2.8

 

34.1

%

General and administrative expenses - non-cash component

 

(2.3

)

 

(1.3

)

 

(1.0

)

(43.5)

%

Amortization of dry-docking and special survey costs

 

(2.7

)

 

(3.8

)

 

1.1

 

40.7

%

Depreciation

 

(37.3

)

 

(41.8

)

 

4.5

 

12.1

%

Gain on sale of vessels

 

16.7

 

 

-

 

 

(16.7

)

 

n.m.

 

Foreign exchange gains

 

-

 

 

0.2

 

 

0.2

 

 

n.m.

 

Interest income

 

0.1

 

 

1.0

 

 

0.9

 

 

n.m.

 

Interest and finance costs

 

(24.2

)

 

(31.2

)

 

7.0

 

28.9

%

Change in fair value of equity securities

 

7.1

 

 

-

 

 

(7.1

)

 

n.m.

 

Income from equity method investments

 

7.1

 

 

0.8

 

 

(6.3

)

(88.7)

%

Dividend income from investment in equity securities

 

1.8

 

 

-

 

 

(1.8

)

 

n.m.

 

Other

 

0.5

 

 

0.6

 

 

0.1

 

20.0

%

Loss on derivative instruments

 

(0.2

)

 

(1.7

)

 

 

1.5

 

 

n.m.

 

Net Income

$

115.2

 

 

$

115.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Expressed in millions of U.S. dollars,

 

Three-month period ended
September 30,

 

 

Change

 

 

Percentage

 

except percentages)

 

2021

 

 

 

2022

 

 

 

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

Voyage revenue

$

216.2

 

 

$

289.5

 

 

$

73.3

 

 

33.9

%

Accrued charter revenue

 

1.0

 

 

(4.3

)

 

 

(5.3

)

 

n.m.

 

Amortization of time charter assumed

 

(0.1

)

 

0.1

 

 

 

0.2

 

 

n.m.

 

Voyage revenue adjusted on a cash basis (1)

$

217.1

 

 

$

285.3

 

 

$

68.2

 

 

31.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vessels’ operational data

 

Three-month period ended
September 30,

 

 

 

 

 

 

Percentage

 

 

2021

 

 

 

2022 

 

 

Change

 

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average number of vessels

91.7

 

 

 

117.0

 

 

 

25.3

 

 

27.6

%

Ownership days

8,434

 

 

 

10,764

 

 

 

2,330

 

 

27.6

%

Number of vessels under dry-docking

5

 

 

 

4

 

 

 

(1

)

 



Segmental Financial Summary

 

Three-month period ended September 30, 2021

(Expressed in millions of U.S. dollars)

Container vessels

Dry bulk vessels

Other

Total

 

 

 

 

 

Voyage revenue

$

182.4

 

$

33.8

 

$

-

$

216.2

 

Voyage expenses

 

(2.4

)

 

(2.0

)

 

-

 

(4.4

)

Voyage expenses – related parties

 

(2.6

)

 

(0.4

)

 

-

 

(3.0

)

Vessels’ operating expenses

 

(40.8

)

 

(8.9

)

 

-

 

(49.7

)

General and administrative expenses

 

(1.9

)

 

(0.4

)

 

-

 

(2.3

)

Management fees – related parties

 

(6.6

)

 

(1.6

)

 

-

 

(8.2

)

General and administrative expenses - non-cash component

 

(1.9

)

 

(0.4

)

 

-

 

(2.3

)

Amortization of dry-docking and special survey costs

 

(2.7

)

 

-

 

 

-

 

(2.7

)

Depreciation

 

(33.7

)

 

(3.6

)

 

-

 

(37.3

)

Gain on sale of vessels

 

16.7

 

 

-

 

 

-

 

16.7

 

Interest income

 

0.1

 

 

-

 

 

-

 

0.1

 

Interest and finance costs

 

(22.9

)

 

(1.3

)

 

-

 

(24.2

)

Change in fair value of equity securities

 

-

 

 

-

 

 

7.1

 

7.1

 

Income from equity method investments

 

-

 

 

-

 

 

7.1

 

7.1

 

Dividend income from investment in equity securities

 

-

 

 

-

 

 

1.8

 

1.8

 

Other

 

0.5

 

 

-

 

 

-

 

0.5

 

Loss on derivative instruments

 

(0.2

)

 

-

 

 

-

 

(0.2

)

Net Income

$

84.0

 

$

15.2

 

$

16.0

$

115.2

 

 

 

 

 

 

 

Three-month period ended September 30, 2022

(Expressed in millions of U.S. dollars)

Container vessels

Dry bulk vessels

Other

Total

 

 

 

 

 

Voyage revenue

$

211.5

 

$

78.0

 

$

-

$

289.5

 

Voyage expenses

 

(2.9

)

 

(11.3

)

 

-

 

(14.2

)

Voyage expenses – related parties

 

(3.0

)

 

(1.0

)

 

-

 

(4.0

)

Vessels’ operating expenses

 

(42.2

)

 

(22.8

)

 

-

 

(65.0

)

General and administrative expenses

 

(1.6

)

 

(1.0

)

 

-

 

(2.6

)

Management fees – related parties

 

(6.8

)

 

(4.2

)

 

-

 

(11.0

)

General and administrative expenses - non-cash component

 

(0.8

)

 

(0.5

)

 

-

 

(1.3

)

Amortization of dry-docking and special survey costs

 

(3.2

)

 

(0.6

)

 

-

 

(3.8

)

Depreciation

 

(31.8

)

 

(10.0

)

 

-

 

(41.8

)

Foreign exchange gains

 

0.2

 

 

-

 

 

-

 

0.2

 

Interest income

 

0.6

 

 

0.4

 

 

-

 

1.0

 

Interest and finance costs

 

(25.9

)

 

(5.3

)

 

-

 

(31.2

)

Income from equity method investments

 

-

 

 

-

 

 

0.8

 

0.8

 

Other

 

0.5

 

 

0.1

 

 

-

 

0.6

 

Loss on derivative instruments

 

(1.1

)

 

(0.6

)

 

-

 

(1.7

)

Net Income

$

93.5

 

$

21.2

 

$

0.8

$

115.5

 

 

 

 

 

 

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


Voyage Revenue

Voyage revenue increased by 33.9%, or $73.3 million, to $289.5 million during the three-month period ended September 30, 2022, from $216.2 million during the three-month period ended September 30, 2021. The increase is mainly attributable to (i) revenue earned by one container vessel and three dry bulk vessels acquired during the first quarter of 2022, by one container vessel acquired during the third quarter of 2021 and 27 and 13 dry bulk vessels acquired during the third and the fourth quarter of 2021, respectively, and (ii) increased charter rates in certain of our container vessels, partly off-set by revenue not earned by one container vessel and one dry bulk vessel sold during the first and the second quarter of 2022, respectively, and three container vessels sold during the six-month period ended December 31, 2021.

Voyage revenue adjusted on a cash basis (which eliminates non-cash “Accrued charter revenue”) increased by 31.4%, or $68.2 million, to $285.3 million during the three-month period ended September 30, 2022, from $217.1 million during the three-month period ended September 30, 2021. Accrued charter revenue for the three-month period ended September 30, 2022 was a negative amount of $4.3 million and for the three-month period ended September 30, 2021 was a positive amount of $1.0 million.

Voyage Expenses

Voyage expenses were $14.2 million and $4.4 million for the three-month periods ended September 30, 2022 and 2021, respectively. Voyage expenses increased period over period due to the increased size of our fleet and 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 $4.0 million and $3.0 million for the three-month periods ended September 30, 2022 and 2021, respectively. Voyage expenses – related parties represent (i) fees of 1.25%, in the aggregate, on voyage revenues charged by a related manager and a service provider and (ii) charter brokerage fees (in respect of our container vessels) payable to two related charter brokerage companies for an amount of approximately $0.4 million and $0.3 million, in the aggregate, for the three-month periods ended September 30, 2022 and 2021, respectively.

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 $65.0 million and $49.7 million during the three-month periods ended September 30, 2022 and 2021, respectively. Daily vessels’ operating expenses were $6,037 and $5,895 for the three-month periods ended September 30, 2022 and 2021, respectively. Daily operating expenses are calculated as vessels’ operating expenses for the period over the ownership days of the period.

General and Administrative Expenses

General and administrative expenses were $2.6 million and $2.3 million during the three-month periods ended September 30, 2022 and 2021, respectively, and include amounts of $0.67 million and $0.63 million, respectively, that were paid to a related manager.

Management Fees – related parties

Management fees paid to our related party managers were $11.0 million and $8.2 million during the three-month periods ended September 30, 2022 and 2021, respectively.

General and Administrative Expenses - non-cash component

General and administrative expenses - non-cash component for the three-month period ended September 30, 2022 amounted to $1.3 million, representing the value of the shares issued to a related party manager on September 30, 2022. General and administrative expenses - non-cash component for the three-month period ended September 30, 2021 amounted to $2.3 million, representing the value of the shares issued to a related party manager on September 30, 2021.

Amortization of Dry-Docking and Special Survey Costs

Amortization of deferred dry-docking and special survey costs was $3.8 million and $2.7 million during the three-month periods ended September 30, 2022 and 2021, respectively. During the three-month period ended September 30, 2022, three vessels underwent and completed their dry-docking and special survey and one vessel was in the process of completing her dry-docking and special survey. During the three-month period ended September 30, 2021, two vessels underwent and completed their dry-docking and special survey and three vessels were in the process of completing their dry-docking and special survey.

Depreciation

Depreciation expense for the three-month periods ended September 30, 2022 and 2021 was $41.8 million and $37.3 million, respectively.

Gain on Sale of Vessels

During the three-month period ended September 30, 2022, no vessels were sold.

During the three-month period ended September 30, 2021, we recorded a gain of $16.5 million from the sale of the container vessel Venetiko, which was classified as vessel held for sale during the first quarter of 2021, and an additional gain of $0.2 million from the sale of the container vessel Halifax Express, which was sold in the first half of 2021.

Vessels Held for Sale

As of September 30, 2022, the container vessels Sealand Illinois, Sealand Michigan, York (initially classified as vessels held for sale during the fourth quarter of 2021), Sealand Washington, and Maersk Kalamata (initially classified as vessels held for sale during the first quarter of 2022) continue to be classified as vessels held for sale. No loss on vessels held for sale was recorded during the third quarter of 2022 since each vessel’s fair value less cost to sell exceeded each vessel’s carrying value.

During the three-month period ended September 30, 2021, the container vessels ZIM New York, and ZIM Shanghai were classified as vessels held for sale (initially classified as vessels held for sale as of June 30, 2021). No loss on vessels held for sale was recorded during the third quarter of 2021, since each vessel’s estimated market value exceeded each vessel’s carrying value.

Interest Income

Interest income amounted to $1.0 million and $0.1 million for the three-month periods ended September 30, 2022 and 2021, respectively.

Interest and Finance Costs

Interest and finance costs were $31.2 million and $24.2 million during the three-month periods ended September 30, 2022 and 2021, respectively. The increase is mainly attributable to the increased average loan balances and increased financing costs during the three-month period ended September 30, 2022 compared to the three-month period ended September 30, 2021.

Change in Fair Value of Equity Securities / Dividend Income from Investment in Equity Securities

Change in fair value of equity securities of $7.1 million for the three-month period ended September 30, 2021, represents the difference between the aggregate fair value of 1,221,800 ordinary shares of ZIM that we owned as at September 30, 2021 compared to the fair value of such shares as of June 30, 2021. Furthermore, in the three-month period ended September 30, 2021, we received a special dividend from ZIM in the amount of $1.8 million. During the fourth quarter of 2021 we sold all the ordinary shares of ZIM we owned.

Income from Equity Method Investments

Income from equity method investments for the three-month period ended September 30, 2022 was $0.8 million ($7.1 million for the three-month period ended September 30, 2021) representing our share of the income in jointly owned companies set up pursuant to the Framework Deed dated May 15, 2013, as amended and restated from time to time (the “Framework Deed”), with York. As of September 30, 2022 and September 30, 2021 five and six companies, respectively, were jointly owned pursuant to the Framework Deed out of which four and four companies, respectively, owned container vessels. The decreased income from equity method investments in the third quarter of 2022 compared to the third quarter of 2021 is mainly attributable to the recorded capital gain on the sale of one jointly owned vessel during the third quarter of 2021.

Loss on Derivative Instruments

As of September 30, 2022, we hold 28 interest rate derivatives and two cross currency rate swaps all of which qualify for hedge accounting. As a result, the change in the fair value of each instrument is recorded in “Other Comprehensive Income” (“OCI”). As of September 30, 2022, the fair value of these instruments, in aggregate, amounted to a net asset of $36.7 million. During the three-month period ended September 30, 2022, a gain of $21.2 million has been included in OCI and a loss of $0.1 million has been included in Loss on Derivative Instruments.

Cash Flows

Three-month periods ended September 30, 2022 and 2021

Condensed cash flows

 

Three-month period ended
September 30,

(Expressed in millions of U.S. dollars)

 

 

2021

 

 

 

2022

 

Net Cash Provided by Operating Activities

 

$

125.9

 

 

$

141.8

 

Net Cash Used in Investing Activities

 

$

(395.8

)

 

$

(17.5

)

Net Cash Provided by / (Used in) Financing Activities

 

$

219.3

 

 

$

(96.3

)


Net Cash Provided by Operating Activities

Net cash flows provided by operating activities for the three-month period ended September 30, 2022, increased by $15.9 million to $141.8 million, from $125.9 million for the three-month period ended September 30, 2021. The increase is mainly attributable to increased cash from operations of $68.1 million; partly off-set by the unfavorable change in working capital position, excluding the current portion of long-term debt and the accrued charter revenue (representing the difference between cash received in that period and revenue recognized on a straight-line basis) of $6.2 million, by the increased payments for interest (including swap payments) of $4.8 million during the three-month period ended September 30, 2022 compared to the three-month period ended September 30, 2021 and by the increased dry-docking and special survey costs of $3.3 million during the three-month period ended September 30, 2022 compared to the three-month period ended September 30, 2021.

Net Cash Used in Investing Activities

Net cash used in investing activities was $17.5 million in the three-month period ended September 30, 2022, which mainly consisted of payments (i) for upgrades for certain of our container and dry bulk vessels and (ii) for the purchase of short-term investments in US Treasury Bills.

Net cash used in investing activities was $395.8 million in the three-month period ended September 30, 2021, which mainly consisted of (i) payments for the acquisition of 10 secondhand dry bulk vessels, (ii) settlement payments for the delivery of one container vessel and 15 secondhand dry bulk vessels, (iii) advance payments for the acquisition of five secondhand dry bulk vessels, (iv) payments for the acquisition of the equity interest of sixteen companies (which owned or had committed to acquire dry bulk vessels) owned by our Chairman and Chief Executive Officer, Konstantinos Konstantakopoulos, pursuant to the Share and Purchase Agreement dated June 14, 2021 (agreed to acquire the equity interest of these companies at cost with no mark-up or premium payable to Mr. Konstantakopoulos or his affiliated entities) and (v) payments for upgrades for certain of our container and dry bulk vessels, partly off-set by proceeds we received from the sale of one container vessel and by return of capital we received from one entity jointly -owned with York pursuant to the Framework Deed.

Net Cash Provided by / (Used in) Financing Activities

Net cash used in financing activities was $96.3 million in the three-month period ended September 30, 2022, which mainly consisted of (a) $66.2 million net payments relating to our debt financing agreements (including proceeds of $46.0 million we received from one of our debt financing agreements), (b) $7.7 million we paid for the re-purchase of 0.6 million of our common shares, (c) $10.3 million we paid for dividends to holders of our common stock for the second quarter of 2022, (d) $0.9 million we paid for dividends to holders of our 7.625% Series B Cumulative Redeemable Perpetual Preferred Stock (“Series B Preferred Stock”), $2.1 million we paid for dividends to holders of our 8.500% Series C Cumulative Redeemable Perpetual Preferred Stock (“Series C Preferred Stock”), $2.2 million we paid for dividends to holders of our 8.75% Series D Cumulative Redeemable Perpetual Preferred Stock (“Series D Preferred Stock”) and $2.5 million we paid for dividends to holders of our 8.875% Series E Cumulative Redeemable Perpetual Preferred Stock (“Series E Preferred Stock”) for the period from April 15, 2022 to July 14, 2022.

Net cash provided by financing activities was $219.3 million in the three-month period ended September 30, 2021, which mainly consisted of (a) $240.6 million net proceeds relating to our debt financing agreements (including proceeds of $300.9 million we received from our debt financing agreements), (b) $10.8 million we paid for dividends to holders of our common stock for the second quarter of 2021 and (c) $0.9 million we paid for dividends to holders of our Series B Preferred Stock, $2.1 million we paid for dividends to holders of our Series C Preferred Stock, $2.2 million we paid for dividends to holders of our Series D Preferred Stock and $2.5 million we paid for dividends to holders of our Series E Preferred Stock for the period from April 15, 2021 to July 14, 2021.

Nine-month period ended September 30, 2022 compared to the nine-month period ended September 30, 2021

During the nine-month periods ended September 30, 2022 and 2021, we had an average of 117.4 and 75.4 vessels, respectively, in our fleet.

In the nine-month period ended September 30, 2022, we accepted delivery of (i) the secondhand container vessel Dyros with a TEU capacity of 4,578 and (ii) the secondhand dry bulk vessels Oracle, Libra and Norma with an aggregate DWT of 172,717. Furthermore, in the nine-month period ended September 30, 2022, we sold the container vessel Messini, with a TEU capacity of 2,458, and the dry bulk vessel Thunder, with DWT of 57,334.

In the nine-month period ended September 30, 2021, (i) we accepted delivery of the newbuild container vessels YM Target and YM Tiptop with an aggregate TEU capacity of 25,380, the secondhand container vessels Aries, Argus, Glen Canyon, Androusa, Norfolk, Porto Cheli, Porto Kagio, Porto Germeno and Gialova with an aggregate TEU capacity of 49,909 and we sold the container vessels Halifax Express, Prosper and Venetiko with an aggregate TEU capacity of 12,322 and (ii) we acquired (a) the 75% equity interest of York Capital Management in each of the 11,010 TEU container vessels Cape Kortia and Cape Sounio and (b) the 51% equity interest of York Capital Management in each of the 11,010 TEU container vessels Cape Tainaro, Cape Artemisio and Cape Akritas and as a result we obtained 100% of the equity interest in each of these five vessels.

Furthermore, in the nine-month period ended September 30, 2021, we acquired all of the equity interest of sixteen companies (which owned or had committed to acquire dry bulk vessels) owned by our Chairman and Chief Executive Officer, Konstantinos Konstantakopoulos. We agreed to acquire these companies from Mr. Konstantakopoulos at cost with no mark-up or premium payable to Mr. Konstantakopoulos or his affiliated entities. Mr. Konstantakopoulos did not receive a profit as a result of the acquisition. Fifteen of the dry bulk vessels (Pegasus, Builder, Adventure, Eracle, Peace, Sauvan, Pride, Alliance, Manzanillo, Acuity, Seabird, Aeolian, Comity, Athena and Farmer) that were part of the acquisition with an aggregate DWT of 850,163, were delivered to us during the nine-month period ended September 30, 2021. In addition, in the nine-month period ended September 30, 2021, we accepted delivery of another fifteen secondhand dry bulk vessels (Bernis, Verity, Dawn, Discovery, Clara, Serena, Merida, Progress, Miner, Parity, Uruguay, Resource, Konstantinos, Taibo and Thunder) with an aggregate DWT of 659,021.

In the nine-month periods ended September 30, 2022 and 2021, our fleet ownership days totaled 32,043 and 20,583 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.

Consolidated Financial Results and Vessels’ Operational Data (1)

(Expressed in millions of U.S. dollars,

 

Nine-month period 

 

 

 

 

 

except percentages)

 

ended September 30,

 

 

 

 

Percentage

 

 

2021

 

 

2022

 

 

 

Change 

 

Change 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voyage revenue

$

509.7

 

$

848.4

 

 

$

338.7

 

 

66.5

%

Voyage expenses

 

(7.5

)

 

(34.0

)

 

 

26.5

 

 

n.m.

 

Voyage expenses – related parties

 

(7.3

)

 

(11.7

)

 

 

4.4

 

 

60.3

%

Vessels’ operating expenses

 

(119.3

)

 

(198.3

)

 

 

79.0

 

 

66.2

%

General and administrative expenses

 

(6.0

)

 

(9.3

)

 

 

3.3

 

 

55.0

%

Management fees – related parties

 

(19.9

)

 

(32.9

)

 

 

13.0

 

 

65.3

%

General and administrative expenses – non-cash component

 

(5.5

)

 

(5.7

)

 

 

0.2

 

 

3.6

%

Amortization of dry-docking and special survey costs

 

(7.6

)

 

(9.5

)

 

 

1.9

 

 

25.0

%

Depreciation

 

(96.0

)

 

(124.2

)

 

 

28.2

 

 

29.4

%

Gain on sale of vessels, net

 

18.1

 

 

21.3

 

 

 

3.2

 

 

17.7

%

Foreign exchange gains

 

0.2

 

 

0.5

 

 

 

0.3

 

 

150.0

%

Interest income

 

1.6

 

 

1.1

 

 

 

(0.5

)

 

(31.3)

%

Interest and finance costs

 

(60.8

)

 

(86.5

)

 

 

25.7

 

 

42.3

%

Fair value measurement of equity securities

 

58.1

 

 

-

 

 

 

(58.1

)

 

n.m.

 

Income from equity method investments

 

12.0

 

 

1.6

 

 

 

(10.4

)

 

(86.7)

%

Dividend income from investment in equity securities

 

1.8

 

 

-

 

 

 

(1.8

)

 

n.m.

 

Other

 

3.6

 

 

2.3

 

 

 

(1.3

)

 

(36.1)

%

Loss on derivative instruments

 

(1.2

)

 

(2.6

)

 

 

1.4

 

 

116.7

%

Net Income

$

274.0

 

$

360.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine-month period

 

 

 

 

 

(Expressed in millions of U.S. dollars,

 

ended September 30,

 

 

 

 

Percentage

except percentages)

 

2021

 

 

2022

 

 

 

Change 

 

Change 

 

 

 

 

 

 

 

 

 

 

Voyage revenue

$

509.7

 

$

848.4

 

 

$

338.7

 

 

66.50

%

Accrued charter revenue

 

3.2

 

 

0.8

 

 

 

(2.4

)

 

(75.0)

%

Amortization of time charter assumed

 

(0.5

)

 

0.2

 

 

 

0.7

 

 

n.m.

 

Voyage revenue adjusted on a cash basis (1)

$

512.4

 

$

849.4

 

 

$

337.0

 

 

65.8

%

 

 

 

 

 

 

 

 

 

 

Vessels’ operational data

 

Nine-month period

 

 

 

 

 

 

 

ended September 30,

 

 

 

 

Percentage

 

 

2021

 

 

2022

 

 

 

Change

 

Change

 

 

 

 

 

 

 

 

 

 

Average number of vessels

 

75.4

 

 

117.4

 

 

 

42.0

 

 

55.7

%

Ownership days

 

20,583

 

 

32,043

 

 

 

11,460

 

 

55.7

%

Number of vessels under dry-docking

 

14

 

 

16

 

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

Segmental Financial Summary



Nine-month period ended September 30, 2021

(Expressed in millions of U.S. dollars)

Container vessels

Dry bulk vessels (2)

Other

Total

Voyage revenue

$

475.1

 

$

34.6

 

$

-

$

509.7

 

Voyage expenses

 

(5.4

)

 

(2.1

)

 

-

 

(7.5

)

Voyage expenses – related parties

 

(6.9

)

 

(0.4

)

 

-

 

(7.3

)

Vessels’ operating expenses

 

(110.2

)

 

(9.1

)

 

-

 

(119.3

)

General and administrative expenses

 

(5.6

)

 

(0.4

)

 

-

 

(6.0

)

Management fees – related parties

 

(18.3

)

 

(1.6

)

 

-

 

(19.9

)

General and administrative expenses – non-cash component

 

(5.0

)

 

(0.5

)

 

-

 

(5.5

)

Amortization of dry-docking and special survey costs

 

(7.6

)

 

-

 

 

-

 

(7.6

)

Depreciation

 

(92.3

)

 

(3.7

)

 

-

 

(96.0

)

Gain on sale of Vessels, net

 

18.1

 

 

-

 

 

-

 

18.1

 

Foreign exchange gains

 

0.2

 

 

-

 

 

-

 

0.2

 

Interest income

 

1.6

 

 

-

 

 

-

 

1.6

 

Interest and finance costs

 

(59.5

)

 

(1.3

)

 

-

 

(60.8

)

Fair value measurement of equity securities

 

-

 

 

-

 

 

58.1

 

58.1

 

Income from equity method investments

 

-

 

 

-

 

 

12.0

 

12.0

 

Dividend income from investment in equity securities

 

-

 

 

-

 

 

1.8

 

1.8

 

Other

 

3.6

 

 

-

 

 

-

 

3.6

 

Loss on derivative instruments

 

(1.2

)

 

-

 

 

-

 

(1.2

)

Net Income

$

186.6

 

$

15.5

 

$

71.9

$

274.0

 


 

 

 

Nine-month period ended September 30, 2022

(Expressed in millions of U.S. dollars)

Container vessels

Dry bulk vessels

Other

Total

Voyage revenue

$

591.7

 

$

256.7

 

$

-

$

848.4

 

Voyage expenses

 

(7.3

)

 

(26.7

)

 

-

 

(34.0

)

Voyage expenses – related parties

 

(8.5

)

 

(3.2

)

 

-

 

(11.7

)

Vessels’ operating expenses

 

(126.4

)

 

(71.9

)

 

-

 

(198.3

)

General and administrative expenses

 

(6.0

)

 

(3.3

)

 

-

 

(9.3

)

Management fees – related parties

 

(20.2

)

 

(12.7

)

 

-

 

(32.9

)

General and administrative expenses – non-cash component

 

(3.5

)

 

(2.2

)

 

-

 

(5.7

)

Amortization of dry-docking and special survey costs

 

(8.5

)

 

(1.0

)

 

-

 

(9.5

)

Depreciation

 

(94.6

)

 

(29.6

)

 

-

 

(124.2

)

Gain on sale of vessels

 

17.8

 

 

3.5

 

 

-

 

21.3

 

Foreign exchange gains

 

0.5

 

 

-

 

 

-

 

0.5

 

Interest income

 

0.7

 

 

0.4

 

 

-

 

1.1