Welcome to the Costamare Inc. Conference Call on the Q2 2022 Financial Results. We have with us Mr. Gregory Zikos, Chief Financial Officer of the company. At this time, all participants are in 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, Thursday, July 28, 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, sir.
Thank you, and good morning, ladies and gentlemen. During the second quarter, revenues reached approximately $290 million and adjusted net income more than doubled to $119 million, compared to $58 million for the same period of last year. As of quarter end, cash balances stood at around $700 million, and total liquidity, including undrawn credit lines, was above $850 million. Over the last months, we executed on our previously announced share buyback program by $60 million worth of common shares. At the same time, we did conclude the five-year syndicated loan facility of $0.5 billion, proactively refinancing the indebtedness of 16 vessels and significantly reducing our cost of funding at competitive terms. Regarding the market, congestion and pressure supply chains remain challenging as we enter the second half of the year.
On the container market, asset values and charter rates remain at healthy and historically high levels, as also evidenced by our latest fixtures. On the dry bulk market, rates have recently been under pressure but still remain at profitable levels, especially for owners who entered the market the year before. We view any potential softening of asset values as a compelling buying opportunity, as we feel comfortable with the long-term supply and demand dynamics of the sector. On the back of our increased liquidity, we are actively evaluating new investment opportunities in the shipping sector that have the potential to provide enhanced returns at acceptable risk levels. Turning now to the slide presentation. On slide three, you can see our second quarter results, which was the best Q2 on record since our listing. For the quarter, net income was $114 million or $0.92 per share.
Adjusted net income was around $119 million or $0.95 per share. Our liquidity is up almost $600 million year-over-year to $854 million. On slide four, you can see an update on our refinancing arrangements. We closed a half a billion facility refinancing 17 vessels with 12 US, European, and Asian financing institutions. The new facility increased our liquidity by $200 million, reduced our cost of funding significantly, and extended the maturity of almost all the refinanced vessels while maintaining our corporate leverage at a very low 24%. We also repurchased 4.1 million shares for around $60 million. Slide five. Our revenue days are 100% fixed for 2022 and over 95% fixed for 2023.
We also forward fixed two container vessels at $58,500 per day per vessel for a period of three years, starting in the first half of 2023. We continue to fix on our dry bulk vessels in the spot market, fixing 37 vessels since our last release. Finally, we sold one dry bulk vessel, the Thunder, for a capital gain of around $3.5 million. Slide six, the containership charter market remains at very strong levels. The dry bulk market is still at healthy levels, and the order book remains low as current rates are well above historical average. Finally, we continue to have a long uninterrupted dividend track record boosted by strong sponsor support. Looking at our levels of liquidity, our liquidity has increased significantly while our leverage continues to trend down.
This liquidity gives us the ability to look for opportunities to grow the company without risking our balance sheet. Slide eight, you can see that our containership fleet has a current backlog of $3.3 billion with a duration of four years. We are fully fixed for 2022, 95% fixed for 2023, and 84% for 2024. Revenues come from a diversified list of first-class charterers like Maersk, Evergreen Marine, ZIM, COSCO, Yang Ming, and Hapag-Lloyd. On slide nine, you can see the second quarter 2022 snapshot. We had an average of 118 vessels during Q2, up 65% year-over-year, and our adjusted net income was $119 million or $0.95 per share.
The adjusted figures take into consideration non-cash items like the accrued charter revenues, accounting gains from asset disposals, and other non-recurring items. Turning to slide 10 and the containership market overview. Rates for vessels above 2,500 TEU continue to remain at historically high levels. The commercial containership fleet also remains fully employed. Slide 11. Here we're discussing the dry bulk market, where rates have come up slightly from the seasonally strong first quarter but do remain well above cash break-even levels. Finally, the dry bulk order book is 7.2%, a very low figure historically, which translates into modest fleet growth for at least the next two years. 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. That's star then one to ask a question. Your first question today comes from Omar Nokta with Jefferies. Please go ahead.
Thank you. Hi, Greg. Good afternoon.
Hi, Omar.
Thanks for the overview. Yeah, I just wanted to ask, you know, just about the container ship market and, you know, how things have been developing there recently. Maybe just first off, just on the new buildings that you had that were canceled earlier this month. Those six ships, can you give a bit of color as to what happened causing you guys to go ahead and terminate those charters or, sorry, those contracts altogether?
Okay. We talk about eight container ships. This is what we discussed that we had ordered four 13,000 TEUs and four 15,000 TEUs that had like charter coverage upon delivery of the vessels. We did cancel them, but for legal reasons, for the time being, I cannot say anything more over and above what we mentioned in our Form 6-K filings. We did terminate the contracts because the shipyard has been in default. Apart from that, I cannot say anything more, at this stage at least.
Okay. That's fair. I guess, you know, those ships were secured, right? With some long-term charters on their delivery.
Yes. Those ships, each one of them upon delivery, had a 15-year charter covered with a major liner.
Okay. Do you think there's an opportunity, or a chance to replace those? Or have you had those discussions with the customer? Is that something you'd like to do to find-
Uh-
...a different way to?
No, this is a fair question. This is something we would consider. For the time being, where asset values are for the new buildings, this is something we would think twice. I mean, normally, we don't like ordering at the peak of the market or, like, we don't like over-ordering, which can bring the market up. Where today new building prices are in today's environment, I think this is something that doesn't make sense for us, at least. In the future, of course, if there's some softening in the market, the new building prices is something we would consider again, on the back of a time charter, which is good enough in order to amortize our investment.
Yeah. Definitely no speculative ordering. Only against long-term charters.
Even if a new building project today, not on a speculative basis, but on the back of long-term charter, where asset values are, this is something we wouldn't do today. Because even if you have a seven or 10- or 15-year charter, you are still ordering at the peak of the market, and we try to be counter-cyclical. This is the reason we have not ordered new buildings at this point.
Okay. Thanks for that. Maybe just one final one just on the dry bulk investment. You know, it's clearly, you know, it's proven, I think, beneficial and profitable. Any updated thoughts on where, you know, the dry bulk fleet sits long-term? Do you see any thoughts that you can give us on maybe a spinoff, potentially or a gradual sell-down of that fleet? Or do you think that becomes a permanent part of Costamare going forward?
I think, look, those like ships, they were bought last year at prices which are much lower compared to today's market, as you rightly pointed out. It's around 46 vessels. We sold one for a capital gain of $3.5 million. From a strategic point of view, this is a long-term investment, those dry bulk ships. I think those complement quite well the container ships that we have. Starting from the point that, at the peak of the market, at an inflated market level, we didn't want to continue investing in containers. The dry bulk investment last year proved to be quite a right call. We're here to stay in the dry bulk business.
Depending on market conditions, this is something we would examine to also grow the dry bulk business. It's up to market conditions, it's up to asset prices. It's pretty much it. There's nothing else that's holding us back.
Okay. I think that's clear. Thanks, Greg. I'll turn it over.
Thank you, Omar. Thank you.
The next question comes from Ben Nolan with Stifel . Please go ahead.
Hey, Greg. How's it going? I had a couple maybe capital allocation type questions. You guys look to have been pretty busy in the quarter on buybacks. You know, what was it? Three-something million shares? Quite a lot. Although, first of all, maybe to help me out, the share count didn't really move much. Did you buy them all at the end of the quarter or something? Is there a reason why that didn't change the share count?
Yes. I mean, I think most of them they were bought at the quarter end, and as per accounting standards, we take the average shares during the quarter. What we can do is that we can send you the sort of share count schedule so you can see exactly how we come up with this share count figure right now.
Okay. Do you have just any quick number as to how we should model it for 3Q?
For Q3? Yes. I mean, in total, we have bought like, I think, 3.8% in total of our shares outstanding. I think, we haven't bought the last couple of weeks. I mean, for Q3 it should be the share count as of June 30th. Let us get back to you with a very detailed schedule. This is not something that's long.
Okay.
Without a problem.
Yeah, that's helpful. Appreciate it. As it relates to the capital, you know, obviously you're buying back shares. You don't at this point have any CapEx. You're generating lots and lots of cash flow, and leverage is pretty reasonable. You did pay a special dividend a little bit earlier this year. A year ago you increased the dividend a little bit. Do you think that the company can permanently support a higher dividend payout than where we're currently at?
Look, from a pure cash perspective, we can support a higher dividend. You saw that, like, we have a cash balance of $700 million, right? Contracted cash flows north of $3 billion. All the dry bulk, at least from the containers and all the dry bulk vessels in today's environment are all highly profitable because they have low cash break-even. We bought them last year at much better prices. From a cash perspective, we are more than capable of raising the dividend. Now, as you mentioned, we paid a one-off special dividend. We did raise the dividend before that and we have bought back shares. Whether, you know, we're gonna be buying more shares back, we have a program of $150 million.
We used like $60 million worth for the time being. The program is still there. We'll see. This has to do with whether we find acquisition opportunities or new projects in the market. Our main goal is to continue investing our excess cash from operations in new business, which in turn are gonna be producing more dividends in the future. It remains to be seen what we find in the market. As I mentioned in my commentary, we are quite actively looking at a lot of opportunities. First let's see what happens there, and then this is something to consider as well. I think that we have increased the dividend. We had the payment of the one-off dividend. We bought back shares.
We've done quite a part of it. Let's see how we're gonna continue, investing, accretively the cash from operations.
Okay. That's helpful. That leads sort of to my last question. You know, you said that you would be opportunistic with respect to adding to the dry bulk fleet if prices were better. That said, lately, you know, in the last, I don't know, three quarters or so even, have sold a number of the container ships, even sold one of the dry bulk ships. I'm sure that you have, you know, gains in all of those dry bulk ships at the moment and all of the container ships. Any thoughts of continuing to do that? Or you pretty much done what you'd wanted to do on the sales side?
For the containers, we're pretty much done. We sold what we felt it made sense to sell. For instance, we sold ships, 2000-built, 6,500 TEU, and we sold them at price of like $75 million or more each. I think in that respect, we are pretty much done. Of course, subject to market conditions, you can never predict the market. Based on what we know today, I think on the container ship fleet, we are pretty much done with the disposals. On the dry bulk, we sold like one vessel for a capital gain, but I think for the dry bulk we're here to stay. It was not like a one-off investment which we're gonna dispose of soon.
Actually, should we see some softening in the market in terms of asset values, and if we feel that it does make sense from a capital allocation perspective, we would be more than willing to expand our footprint in the dry bulk business. It's all subject to market conditions, but disposal of vessels, I think for the time being, also in the dry bulk, there may be a couple of exceptions, a couple of smaller vessels we may decide to sell for a profit or something. Generally, the dry bulk fleet is here to stay. Subject to market conditions, our wish would be to expand it further rather than to shrink it.
All right. Very clear. Appreciate it. Thanks, Greg.
Thank you. Thanks, Chris.
The next question comes from Climent Molins with the Value Investor's Edge. Please go ahead.
Good morning, gentlemen. Thank you for taking my questions. You have started to use the share purchase authorization, buying back around 3.8% of the outstanding, which seems like an optimal capital allocation call given the discount your shares are trading at. Is there any interest to initiate a tender or to take out large blocks?
No, for the time being, we have a share purchase program of up to $150 million. We haven't used half of it yet. So I mean, we'll see. I think, should we decide to buy back more shares, this is something we would go through the program, I guess for the time being. Now, of course, if down the road we think, if we wish to continue with our share buyback and there are some more efficient ways to do it, we're gonna consider them. For the time being, we did it on a plain vanilla basis through this authorized by the board program.
That's helpful. Thank you. Your preferred shares have been trading above par. I was wondering if there is any appetite to call any of those series. How do you view the preferred on your present capital structure?
The preferred shares, if I understood the question correctly, in our capital structure today, in our balances, they are being treated as equity because they are truly preferred shares where without they are sort of truly perpetual, without any step-ups, and we can redeem them any time we want, partly or in total after a non-call five-year period. They are treated as equity today, if that's the question. Now, they are trading all above par, above the $25. We have authorized a preferred share buyback program of up to $150 million, which obviously where they are trading today, we have not utilized it. In the past, we bought back a small amount of like preferred shares.
Today, where they are trading, it doesn't make sense to buy them back. We'll see.
Indeed. Thank you. That's all from me.
Okay.
As a reminder, if you would like to ask a question, please press star then one to be joined into the question queue. 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 and for being with us today. We look forward to speaking with you again during our Q3 results call. Thank you.
Thank you. That does conclude our conference for today. Thank you all for participating. You may now disconnect.