Thank you for standing by ladies and gentlemen, and welcome to the Costamare Inc conference call on the third quarter 2022 financial results. We have with us Mr. Gregory Zikos, Chief Financial Officer of the company. At this time, all participants are on a listen only mode. There will be a presentation followed by a question and answer session, at which time if you wish to ask a question, please press star then one on your telephone keypad and wait for your name to be announced. I must advise you that this conference is being recorded today, Wednesday, November 2, 2022. We would like to remind you that this conference call contains forward-looking statements. Please take a moment to read slide number two of the presentation, which contains the forward-looking statement. I will now pass the floor to your speaker today, Mr. Zikos, please go ahead.
Thank you, and good morning, ladies and gentlemen. During the third quarter, revenues reached approximately $290 million and adjusted net income reached a hundred and seven million, compared to $216 million and $82 million for the same period last year. As of quarter end, cash balances and short-term investments stood at around $745 million, and total liquidity, including add-on credit lines, was above $890 million. Focusing on increasing visibility into our contracted cash flow base, we have recently chartered with a leading liner company, a total of 11 container ships with existing charters originally expiring between 2023 and 2025.
Seven of those vessels were chartered for a period ranging from 4-5 years, starting from 2025 onwards, and the remaining ships were chartered for a period ranging from 2-3 years, with former starts in 2023 and 2024. The new charters increase our contracted revenues by about $420 million and result in incremental charter covers 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 do remain at profitable levels. On the dry bulk market, rates for our vessel 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 review 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 a specific sector that have the potential to provide enhanced returns at acceptable risk levels. Moving now to the slide presentation. On slide three, you can see our third quarter results, which was the best Q3 since our listing. For the quarter, net income was $180 million, or $0.89 per share. Adjusted net income was $0.88 per share, and our liquidity is up by almost $340 million year-over-year to roughly $900 million. Slide four.
As already mentioned, during the quarter we forward-fixed 11 container ships for an incremental average period of 4.6 years that adds approximately $420 million in contracted revenues. The new charters begin between 2023 and 2025 at the latest. Our revenue days are 100% fixed for 2022, over 96% fixed for 2023 and 84% fixed for 2024. We do continue to charter all our dry bulk purchases in the spot market, chartering 24 ships since our last earnings release. On slide five, you can see an update on our financing arrangements. We refinanced two 26-year-old vessels during Q3 for four years through a $46 million facility. Our corporate leverage remains below 30%, and we continue to maintain a strong balance sheet.
Finally, in October, we concluded the sale of three container ships for a combined capital gain of around $106 million expected to be realized in Q4 of this year. Slide six. The container ship charter market has been under pressure over the past months. The dry bulk market has also weakened but remains at healthy levels, especially for smaller sized vessels which we operate. The order book is at historically low levels. Finally, we continue to have a long uninterrupted dividend track record boosted by strong sponsor support. Slide seven. Our liquidity has increased significantly both year-over-year and quarter-over-quarter. This liquidity gives us the ability to look for opportunities to grow without breaching our balance sheet and provides us with a strong cushion. Moving to the next slide, Slide eight.
You can see our container ship fleet has a current backlog of $3.5 billion with a duration of 4.4 years. As already mentioned, we are fully fixed for 2022 and we are more than 96% and 84% fixed for 2023 and 2024 respectively. These fixed revenues come from a diversified list of first class charterers such as Maersk, MSC, Evergreen, COSCO, Yang Ming, and Hapag-Lloyd. Slide nine. You can see the third quarter 2022 snapshot. We had an average of 117 vessels, and our adjusted net income was $107 million or $0.88 per share. The adjusted figures take into consideration the following items: accrued other revenues, accounting gains and losses from asset disposals, and other non-recurring or non-cash items. Moving to slide ten.
Over the past few months, there have been a limited number of fixtures, and the ones that have been concluded were for shorter periods and at lower rates. However, charter rates remain firm in a historical context. The commercial container fleet remains essentially employed with a very low idle capacity of about 1.8%, while vessel availability remains low. Moving to the last slide 11. You can see the recent dry bulk market trends, where rates have been volatile but do remain at profitable levels, especially for owners like us who entered the market last year. The order book is around 7%, a historically low figure which translates into modest fleet growth. With that, we conclude our presentation, and we can now take questions. Thank you. Operator, we can take questions now.
Thank you. As a reminder, if you would like to ask a question, please press star then one on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press star then two. Press star one to ask a question. The first question today comes from Chris Wetherbee with Citigroup. Please go ahead.
Hey, thanks. Good morning. This is Eli after Chris. You know, guys, maybe we can start with the bulk market and try to get a better understanding of what the rate environment looks like specifically there. You don't have a lot of replacement grain. You have more storage on the ships, so that would theoretically be putting pressure downwards on the TCE rates you guys are able to get. It looks like that remained a little stronger than we thought. Maybe you can just help us understand what that could look like going into Q4 and then through the winter and how that would change into 2023.
I'm sorry, I didn't hear you properly. Is it like, the question has to do with the debt levels or sort of the charter rates? I completely missed it.
Charter rates on the bulk side, yeah. How should we be thinking about that? A little stronger than
Well, charter rates. Recently, I mean, the last couple of days, we have seen a softening in the market, and it's been volatile for the markets now. I think they are trading at around $15,000-$16,000 per day, the Handysize and the Supramax. This is where the market has recently been. We do have all our ships spot. In the future, this might change, I don't know, depending on the view we take. Considering our low cash break-even levels and the fact that we're generally positive on the fundamentals of the dry bulk market, for the time being, we follow these strategies.
Now, I cannot forecast, and we never provide forecast where we think the market will be heading the next quarter or the profile Q2, or like a Q1 of next year. I can tell you that, considering the low order book and, being generally bullish on the dry bulk sector, this is the view we have today.
When you look at the macro environment, maybe more specifically understanding it, I'm not looking for a forecast on the rate side, but what are some of the pressures coming in Q4 that could impact the rate side? Do you have a little replacement grain coming out of Russia and just lower demand in some of the other places like in China for soybeans, the imports are down. Just curious what some of those puts and takes are there.
Yeah, well, it's a couple of things. You already pointed out Russia. It is China, which is the biggest player in dry bulk. It is COVID disruptions. It is inflation, which generally does not help. Also congestion easing does not help either. In the past, I have to tell you that there were some sort of part of the upside in the Handysize had to do with the elevated levels of the no and the little availability in the containers and congestion. It was a determining factor there. However, at the same time, as I already mentioned, we have a very low order book, and we do feel that in that sector, compared to the containers, for instance, the supply-demand dynamics are overall more positive.
Now, to conclude, it is Russia, as you mentioned, it is China, it is congestion easing, and it is also inflation. At the same time, if there is some stimulus packages or sort of some growth, for instance, in the construction industry in China, this is gonna be a huge boost for the, you know, dry bulk business, and this could also be the case. It's a lot of factors. It's not only one or two. Okay.
Understand. Thank you.
The next question comes from Omar Nokta with Jefferies. Please go ahead.
Thank you. Hi, Greg. I just wanted to continue on that kind of the topic on dry bulk, and wanted to ask you how you're thinking about deploying, you know, capital right now. You guys are obviously very aggressive last year, expanding into dry bulk looked like it was, you know, well timed. We have seen dry bulk values easing here over the past several months, but also containers are coming down pretty aggressively. What do you think about the S&P market here? And do you look to buy container ships after having taken a step back over the past couple of years? Or do you still look to commit more into the dry bulk market?
Yeah. For the containers, let's take them one by one. For the containers, you're right, we have seen the market softening. In terms of charter rates and also in terms of our box rates. However, we don't feel asset values have come to a level, either new buildings or secondhand vessels where like an investment today would make sense. Probably in the future in the containers there will be opportunities, but this is not something we see today. It may take some time until the box rates and you know, charter rates find their way to asset values. Now, for the dry bulk vessels, yes, last year, I think the timing of our acquisition with the benefit of hindsight, I think it was good.
Those sort of are acquisitions that do make sense, and those ships were acquired with low leverage and have low cost break-even levels. Today they are profitable and they have been profitable since buying them. Now, also for the dry bulk vessels, for dry vessels we have not seen asset values at levels close to those of the summer of last year, where we made our acquisitions. Based on that, I think the proper thing to do is to sit and wait. We don't have to grow. We are close to 120 vessels today. Like in the past, whatever acquisition we do, it's gonna be on the merits and not for the sake of growing.
Asset values on, in the dry bulk sector, we still consider them to be relatively high or we haven't seen something that makes sense. In that respect, we continue to sit and wait. The same applies for the containers for the new buildings. We didn't put any new buildings over the last couple of years, as you mentioned. The main reason was that new building prices were extremely high, and we would be ordering at the peak of the market, which something we try to avoid. We have those vessels now, containers, and dry bulk vessels, they are all profitable. We fix forward as many containers as we can. We receive the yield on the dry bulk vessels, the acquisition of which I think, considering where the market is, was well timed.
Yeah. Thanks, Greg , for that color. Maybe just on the newbuilding, you know, prices have been very high, but wanted just maybe get your sense in talking with the shipyards, is there any sense that values are gonna start to come off a bit now that steel prices have been correcting, or are they still fairly, you know, fairly firm at these high levels?
Well, for the time being, what we've seen, the prices are high and there are still new building orders being put, especially by liners. In this environment of course there could also be some exceptions and opportunities which like we haven't seen. In this environment, if you look at it from a historical perspective, still it is a very high asset value environment which in that we don't want to put any orders. Even if we have charter or not, still, this is something we would avoid ordering at a, you know, peak price or sort of close to peak price.
Yeah. Okay. Got it. Just final one, and you get this question every quarter basically, and it's, you know, how do you think about the company going forward? You've got the dry bulk, you've got the containers together. Do you like that diversity within the same platform or do you ultimately think about just a split at some point down the line?
Look, for the time being, there are no immediate plans to have a spin-off or sort of have a separate company where like, we would have a dry bulk platform and also a container ship platform. The containers, they provide us today with the contracted cash flows which are close to $3.5 billion. We have a solid charter coverage over the next years. The dry bulk vessels at the same time, they are more opportunistic, but we have started from a low cost base. We don't see any reason today to have a spin-off. Of course, in the future, circumstances might change and, you know, it might make sense. But today there are no immediate plans to have the dry bulk vessels spun off under a different entity.
Okay. Got it. Thanks, Greg. I'll hand it over.
Okay.
The next question comes from Benjamin Nolan with Stifel. Please go ahead.
Hi. Good morning. This is Mikaela Rogers on for Ben today. Thank you for taking our questions.
Go ahead.
Our first one, we just kinda wanted to get some color on how you're thinking about maintenance CapEx for vessels moving forward, you know, with the container market softening. Would you expect to maybe retire assets once they come off contract or any insight into kind of how you're thinking about the future?
Yeah. Look, today we don't have any scrap candidates. We have some older ships in our fleet. We have some ships 1996 built. But as we mentioned, those ships have a medium to long-term charter, and we have recently refinanced them. Although they are 36 years old, we have refinanced them for four years forward. Those are not scrap candidates because they do have charter. Nothing we are targeting to scrap today. In the future, of course, it's a matter of timing and of market conditions. We wouldn't have a problem to scrap a vessel if you can use this equity in order to renew the fleet or like the funds released from the scrapping, they could be used in some accretive investments.
Today, there are no plans for scrapping based on our fleet portfolio, both for the containers and obviously for the partners as well.
Thank you. That's very helpful. Just one quick one. Given some of the preferreds are trading below or close to par, would you consider using some liquidity to call in the future or any color around what you guys are thinking there?
Yeah. It's more about the generic capital allocation. We have a buyback program for the preferred of $150 million, which we have not utilized. We have utilized part of our buyback program for common shares and some of the preferred. They are callable as well because five years have lapsed since like they were offered. It's a matter of where we think we're gonna be allocating our excessive liquidity, whether it's gonna be buying back stock as we did common stock, I mean, like we did in the past or some preferred or sort of some other type of investments. These are discussed at the board levels. These are all options which each one of them makes sense.
However, I'm not in a position today to tell you exactly what will happen. There are discussions. We know the preferred. We know the buyback of the stock. We'll, we like it. We think it's trading at below NAV, and so we'll see. It's good to have those options, but nothing has been determined to date as we speak.
Thank you very much. Appreciate the time.
Thank you.
As a reminder, if you have a question, please press star then one to join the queue. The next question comes from Climent Molins with Value Investor's Edge. Please go ahead.
Good morning. Thank you for taking my questions. Following up on the share repurchases alongside Q2 results, Q2 is closed, you have repurchased $60 million worth of shares, but no additional buybacks have been pursued since then. Was there advice behind this decision? Looking ahead, how should we think about your appetite for additional share repurchases given the discount to NAV you're trading at?
Yeah. We bought $60 million of common stock back. We have a program of $150 million for the common. It's $90 million more available under this program, and we also have a program for the preferred. I cannot predict, or sort of I cannot tell you what we're gonna be doing because it's something we're discussing internally. Of course, we have the option to buy back more shares, especially considering where the stock is trading today or sort of where the stock has been trading over the last weeks. At the same time, we have the option for the preferred as well.
This is something that we're considering, but I'm afraid I cannot tell you that we have decided to buy back so much common stock or so much preferred, at this price under those conditions within the next quarter or so. These are discussed at board levels, so I'm not, I don't have anything more to say, on that question right now.
I understand. Thanks for the color. That's all for me. Thank you for taking my questions.
Okay. Thank you.
This concludes our question and answer session. I would like to turn the conference back over to Mr. Zikos for any closing remarks.
Thank you for dialing in today and for your interest in Costamare. We look forward to speaking with you again in our next quarterly results call. Thank you.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.