COSTAMARE INC. Athens, Greece, October 21, 2015 - Costamare Inc. ('Costamare' or the 'Company') (NYSE: CMRE) today reported unaudited financial results for the third quarter and nine months ended September 30, 2015.
Voyage revenues of $124.0 million and $368.1 million for the three and the nine months ended September 30, 2015, respectively.
Voyage revenues adjusted on a cash basis of $124.7 million and $370.1 million for the three and nine months ended September 30, 2015, respectively.
Adjusted EBITDA of $88.7 million and $262.0 million for the three and nine months ended September 30, 2015, respectively.
Net income of $34.8 million and $105.4 million for the three and nine months ended September 30, 2015, respectively.
Net income available to common stockholders of $29.5 million or $0.39 per share and $92.8 million or $1.24 per share for the three and nine months ended September 30, 2015, respectively.
Adjusted Net income available to common stockholders of $34.6 million or $0.46 per share and $97.6 million or $1.30 per share for the three and nine months ended September 30, 2015, respectively.
See 'Fina ncial S u m mar y' a nd 'No n -G AAP Meas ures' b elo w fo r ad d itiona l detail.
New Business Developments
In August 2015, together with York Capital, we agreed to acquire the 2001-built, 1,550 TEU containership Arkadia for a price of $6.0 million. The Company holds a 49% equity percentage in the vessel owning entity. The vessel was delivered on September 9, 2015. The Company agreed to charter the vessel to Evergreen, for a period of two years at a daily rate of
$10,600.
In October 2015, together with York Capital, we agreed to acquire the 1998-built, 2,472 TEU containership Helgoland Trader for a price of $6.5 million. The Company holds a 49% equity percentage in the vessel owning entity. The vessel is expected to be delivered not later than April 30, 2016. The vessel is currently on charter to Maersk at a daily rate of $8,750.
The Company entered into the following charter arrangements:
Exercised the options to extend for one year the charters of the 2002-built 4,992 TEU containerships Zim New York and Zim Shanghai with Zim. The daily rate has been determined at $14,534 starting from October 1, 2015.
Agreed to extend the charter of the 2004-built, 4,992 TEU containership Zim Piraeus with Zim for a period of minimum 9 and maximum 13 months starting from October 31, 2015 at a daily rate of $12,500.
Agreed to extend the charter of the 2001-built, 1,078TEU containership Stadt Luebeck with CMA CGM for a period of minimum 5.5 and maximum 12 months starting from September 22, 2015 at a daily rate of $7,400 or $8,000 per day
depending on the vessel's trading pattern. Currently the vessel is earning $8,000 per day.
Agreed to extend the charter of the 1994-built, 1,162TEU containership Petalidi with CMA CGM for a period of minimum 8 and maximum 12 months starting from October 3, 2015 at a daily rate of $7,600.
Agreed to extend the charter of the 1998-built, 3,842TEU containership MSC Itea with MSC for a period of minimum 6 and maximum 8 months starting from August 7, 2015 at a daily rate of $10,000.
Agreed to extend the charter of the 1991-built, 3,351TEU containership Karmen with Evergreen for a period of minimum 6 and maximum 9 months starting from September 21, 2015 at a daily rate of $11,000.
Agreed to extend the charter of the 2003-built, 5,928 TEU containership Venetiko with OOCL for a period of minimum 40 and maximum 150 days starting from October 15, 2015 at a daily rate of $10,000.
Agreed to extend the charter of the 1996-built, 1,504TEU containership Prosper with Sea Consortium for a period of minimum 3 and maximum 6 months starting from November 15, 2015 at a daily rate of $8,400.
Fixed the 1992-built, 3,351TEU containership Marina on a trip charter for a voyage from the Mediterranean to the Far East. Subsequently agreed to charter the vessel with Evergreen for a period of minimum 6 and maximum 9 months starting from November 7, 2015 at a daily rate of $8,800.
Dividend Announcements
On October 1, 2015, 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 and a dividend of
$0.546875 per share on our Series D Preferred Stock which were paid on October 15, 2015 to holders of record on October 14, 2015.
On October 1, 2015, we declared a dividend for the third quarter ended September 30, 2015, of $0.29 per share on our common stock, payable on November 4, 2015, to stockholders of record on October 21, 2015. This will be the Company's twentieth consecutive quarterly dividend since it commenced trading on the New York Stock Exchange.
Mr. Gregory Zikos, Chief Financial Officer of Costamare Inc., commented:
'During the third quarter of the year, the Company continued to deliver positive results.
We have opportunistically acquired with equity two secondhand ships with time charters in place. At the same time we are actively looking for new opportunities, either in the second hand, or in the newbuildings market.
Regarding market conditions, charter rates and asset values have been under pressure, as a result of weak demand.
We continue to grow in a low asset value environment, which provides opportunities and upside for healthy and well capitalized players.'
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): | 2014 | 2015 | 2014 | 2015 | ||
Voyage revenue | $363,129 | $368,102 | $124,726 | $124,033 | ||
Accrued charter revenue (1) | $6,241 | $2,029 | $1,120 | $643 | ||
Voyage revenue adjusted on a cash basis (2) | $369,370 | $370,131 | $125,846 | $124,676 | ||
Adjusted EBITDA (3) | $260,461 | $262,018 | $87,021 | $88,690 | ||
Adjusted Net Income available to common stockholders (3) | $92,139 | $97,579 | $28,103 | $34,569 | ||
Weighted Average number of shares | 74,800,000 | 74,952,340 | 74,800,000 | 75,100,826 | ||
Adjusted Earnings per share (3) | $1.23 | $1.30 | $0.38 | $0.46 | ||
EBITDA (3) | $246,546 | $260,964 | $94,136 | $84,876 | ||
Net Income | $84,287 | $105,436 | $37,074 | $34,823 | ||
Net Income available to common stockholders | $75,456 | $92,799 | $33,962 | $29,499 | ||
Weighted Average number of shares | 74,800,000 | 74,952,340 | 74,800,000 | 75,100,826 | ||
Earnings per share | $1.01 | $1.24 | $0.45 | $0.39 | ||
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.
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.
Adjusted net income available to common stockholders, adjusted earnings per share, EBITDA and adjusted EBITDA are non- GAAP measures. Refer to the reconciliation of net income to adjusted net income and net income available to common stockholders to EBITDA and adjusted EBITDA below.
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 nine-month periods ended September 30, 2015 and 2014. 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, (iii) Adjusted Earnings per share, (iv) EBITDA and (v) Adjusted EBITDA.
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) | 2014 | 2015 | 2014 | 2015 | ||||
Net Income | $ | 84,287 | $ | 105,436 | $ | 37,074 | $ | 34,823 |
Earnings allocated to Preferred Stock | (8,831) | (12,637) | (3,112) | (5,324) | ||||
Net Income available to common stockholders | 75,456 | 92,799 | 33,962 | 29,499 | ||||
Accrued charter revenue | 6,241 | 2,029 | 1,120 | 643 | ||||
Gain on sale / disposal of vessels | (2,543) | - | (5,446) | - | ||||
Swaps breakage cost | 10,192 | - | - | - | ||||
Unrealized loss from swap option agreement held by a jointly owned company with York included in equity loss on investments | 4,905 | 585 | 190 | 145 | ||||
General and administrative expenses - non-cash component | - | 7,219 | - | 1,836 | ||||
Amortization of prepaid lease rentals | 2,768 | 3,726 | 1,256 | 1,256 | ||||
Realized Loss on Euro/USD forward contracts (1) | 63 | 2,729 | 63 | 775 | ||||
(Gain) / Loss on derivative instruments (1) | (4,943) | (11,508) | (3,042) | 415 | ||||
Adjusted Net income available to common stockholders | $ | 92,139 | $ | 97,579 | $ | 28,103 | $ | 34,569 |
Adjusted Earnings per Share | $ | 1.23 | $ | 1.30 | $ | 0.38 | $ | 0.46 |
Weighted average number of shares | 74,800,000 | 74,952,340 | 74,800,000 | 75,100,826 | ||||
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 charter rates, loss on sale/disposal of vessels, realized (gain) /loss on Euro/USD forward contracts, swaps breakage costs, unrealized loss from a swap option agreement held by a jointly owned company with York, which is included in equity loss on investments, General and administrative expenses - non-cash component, amortization of prepaid lease rentals 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 are reflected as deductions to adjusted net income. Charges negatively impacting net income are reflected as increases to adjusted net income.
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Nine-month period ended September 30, | Three-month period ended September 30, | |||||||
(Expressed in thousands of U.S. dollars) | 2014 | 2015 | 2014 | 2015 | ||||
Net Income | $ | 84,287 | $ | 105,436 | $ | 37,074 | $ | 34,823 |
Interest and finance costs | 75,601 | 71,387 | 27,239 | 21,644 | ||||
Interest income | (531) | (1,053) | (240) | (321) | ||||
Depreciation | 78,845 | 76,034 | 27,027 | 25,623 | ||||
Amortization of prepaid lease rentals | 2,768 | 3,726 | 1,256 | 1,256 | ||||
Amortization of dry-docking and special survey costs | 5,576 | 5,434 | 1,780 | 1,851 | ||||
EBITDA | 246,546 | 260,964 | 94,136 | 84,876 | ||||
Accrued charter revenue | 6,241 | 2,029 | 1,120 | 643 | ||||
Gain on sale / disposal of vessels | (2,543) | - | (5,446) | - | ||||
Swaps breakage cost | 10,192 | - | - | - | ||||
Unrealized loss from swap option agreement held by a jointly owned company with York included in equity loss on investments | 4,905 | 585 | 190 | 145 | ||||
General and administrative expenses - non-cash component | - | 7,219 | - | 1,836 | ||||
Realized Loss on Euro/USD forward contracts | 63 | 2,729 | 63 | 775 | ||||
(Gain) / Loss on derivative instruments | (4,943) | (11,508) | (3,042) | 415 | ||||
Adjusted EBITDA | $ | 260,461 | $ | 262,018 | $ | 87,021 | $ | 88,690 |
EBITDA represents net income before interest and finance costs, interest income, amortization of prepaid lease rentals, depreciation and amortization of deferred dry-docking and special survey costs. Adjusted EBITDA represents net income before interest and finance costs, interest income, amortization of prepaid lease rentals, depreciation, amortization of deferred dry- docking and special survey costs, non-cash 'Accrued charter revenue' recorded under charters with escalating charter rates, loss on sale / disposal of vessels, realized gain / (loss) on Euro / USD forward contracts, swaps breakage costs, unrealized loss from swap option agreement held by a jointly owned company with York, which is included in equity loss on investments, General and administrative expenses - non-cash component and non-cash changes in fair value of derivatives. 'Accrued charter revenue' is attributed to the time difference between the revenue recognition and the cash collection. However, EBITDA and Adjusted EBITDA are not recognized measurements under U.S. GAAP. We believe that the presentation of EBITDA and Adjusted EBITDA 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 EBITDA and Adjusted EBITDA are useful in evaluating our ability to service additional debt and make capital expenditures. In addition, we believe that EBITDA and Adjusted EBITDA are useful in evaluating our operating performance and liquidity position compared to that of other companies in our industry because the calculation of EBITDA and Adjusted EBITDA generally eliminates the effects of financings, income taxes and the accounting effects of capital expenditures and acquisitions, items which may vary for different companies for reasons unrelated to overall operating performance and liquidity. In evaluating EBITDA and Adjusted EBITDA, 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 EBITDA and Adjusted EBITDA 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 are reflected as deductions to adjusted EBITDA. Charges negatively impacting net income are reflected as increases to adjusted EBITDA.
Results of Operations
Three-month period ended September 30, 2015 compared to the three-month period ended September 30, 2014During the three-month periods ended September 30, 2015 and 2014, we had an average of
55.0 vessels in our fleet. In the three-month period ended September 30, 2015, pursuant to the Framework Agreement with York, a jointly-owned vessel entity accepted delivery of the secondhand vessel Arkadia with a TEU capacity of 1,550. In the three-month period ended September 30, 2014, we sold the vessels MSC Kyoto and Akritas with an average TEU capacity of 7,028. Furthermore, pursuant to the Framework Agreement with York, a jointly-owned vessel entity accepted delivery of the secondhand vessel Elafonisos with a TEU capacity of 2,526. In the three-month periods ended September 30, 2015 and 2014, our fleet ownership days totaled 5,060 and 5,058 days, respectively. Ownership days are the primary driver 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.
Voyage revenue | $ 124.7 $ | 124.0 | $ (0.7) | (0.6%) |
Voyage expenses | (0.8) | (0.9) | 0.1 | 12.5% |
Voyage expenses - related parties | (0.9) | (0.9) | - | - |
Vessels' operating expenses | (30.5) | (28.8) | (1.7) | (5.6%) |
General and administrative expenses | (2.0) | (1.4) | (0.6) | (30.0%) |
Management fees - related parties | (4.9) | (4.9) | - | - |
General and administrative expenses - non-cash component | - | (1.8) | 1.8 | 100.0% |
Amortization of dry-docking and special survey costs | (1.8) | (1.9) | 0.1 | 5.6% |
Depreciation | (27.0) | (25.6) | (1.4) | (5.2%) |
Amortization of prepaid lease rentals | (1.2) | (1.2) | - 1 | - |
Gain on sale / disposal of vessels | 5.4 | - | (5.4) | (100.0%) |
Foreign exchange gains/ (losses) | 0.1 | (0.2) | (0.3) | (300.0%) |
Interest income | 0.2 | 0.3 | 0.1 | 50.0% |
Interest and finance costs | (27.2) | (21.6) | (5.6) | (20.6%) |
Equity gain on investments | - | 0.1 | 0.1 | 100.0% |
Gain / (Loss) on derivative instruments | 3.0 | (0.4) | (3.4) | (113.3%) |
Net Income | $ 37.1 $ | 34.8 |
(Expressed in millions of U.S. dollars, except percentages)
ended September 30, 2014 2015
(Expressed in millions of U.S. dollars, except percentages) | Three-month period ended September 30, | Percentage Change | |||||
2014 | 2015 | Change | |||||
Voyage revenue | $ | 124.7 | $ | 124.0 | $ | (0.7) | (0.6%) |
Accrued charter revenue | 1.1 | 0.7 | (0.4) | (36.4%) | |||
Voyage revenue adjusted on a cash basis | $ | 125.8 | $ | 124.7 | $ | (1.1) | (0.9%) |
Vessels operational data | Three-month period ended September 30, | Percentage Change | ||
2014 | 2015 | Change | ||
Average number of vessels | 55.0 | 55.0 | - | - |
Ownership days | 5,058 | 5,060 | 2 | - |
Number of vessels under dry-docking | 2 | 4 | 2 | |
Voyage Revenue
Voyage revenue decreased by 0.6%, or $0.7 million, to $124.0 million during the three-month period ended September 30, 2015, from $124.7 million during the three-month period ended September 30, 2014. This decrease was mainly due to (i) increased off-hire days, mainly due to scheduled dry- dockings during the three-month period ended September 30, 2015, compared to the three-month period ended September 30, 2014, (ii) by revenue not earned by vessels sold for demolition during the three-month period ended September 30, 2014; partly offset by increased charter rates in certain of our vessels during the three-month period ended September 30, 2015, compared to the three-month period ended September 30, 2014 and the revenue earned by one secondhand vessel delivered to us during the three-month period ended December 31, 2014.
Voyage revenue adjusted on a cash basis (which eliminates non-cash 'Accrued charter revenue'), decreased by 0.9%, or $1.1 million, to $124.7 million during the three-month period ended September 30, 2015, from $125.8 million during the three-month period ended September 30, 2014. This decrease was mainly due to (i) increased off-hire days, mainly due to scheduled dry-dockings during the three-month period ended September 30, 2015, compared to the three-month period ended September 30, 2014, (ii) by revenue not earned by vessels sold for demolition during the three-month period ended September 30, 2014; partly offset by increased charter rates in certain of our vessels during the three-month period ended September 30, 2015, compared to the three-month period ended September 30, 2014 and the revenue earned by one secondhand vessel delivered to us during the three- month period ended December 31, 2014.
Voyage Expenses
Voyage expenses were $0.9 million, during the three-month period ended September 30, 2015 and $0.8 million during the three-month period ended September 30, 2014. Voyage expenses mainly include (i) off-hire expenses of our vessels, mainly related to fuel consumption and (ii) third party commissions.
Voyage Expenses - related parties
Voyage expenses - related parties were $0.9 million during the three-month periods ended September 30, 2015 and 2014, and represent fees of 0.75% on voyage revenues charged to us by Costamare Shipping Company S.A. as provided under our group management agreement.
Vessels' Operating Expenses
Vessels' operating expenses, which include the realized gain / (loss) under derivative contracts entered into in relation to foreign currency exposure, decreased by 5.6%, or $1.7 million, to $28.8 million during the three-month period ended September 30, 2015, from $30.5 million during the three- month period ended September 30, 2014.
General and Administrative Expenses
General and administrative expenses were decreased by 30.0%, or $0.6 million, to $1.4 million during the three-month period ended September 30, 2015, from $2.0 million during the three- month period ended September 30, 2014. General and administrative expenses for the three-month period ended September 30, 2015, included $0.63 million which is part of the annual fee that our manager receives based on the amended and restated group management agreement, effective as of January 1, 2015. For the three-month period ended September 30, 2014 this amount was $0.25 million.
Management Fees - related parties
Management fees paid to our managers were $4.9 million during the three-month periods ended September 30, 2015 and 2014.
General and Administrative expenses - non-cash component
General and administrative expenses - non-cash component for the three-month period ended September 30, 2015, amounted to $1.8 million, representing the value of the shares issued to our manager on September 30, 2015, pursuant to the amended and restated group management agreement, effective as of January 1, 2015. No amounts were incurred in the 2014 period.
Amortization of Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs was $1.9 million for the three- month period ended September 30, 2015 and $1.8 million for the three-month period ended September 30, 2014. During the three-month period ended September 30, 2015, four vessels underwent and completed their special survey. During the three-month period ended September 30, 2014, two vessels underwent and completed their special survey.
Depreciation
Depreciation expense decreased by 5.2%, or $1.4 million, to $25.6 million during the three- month period ended September 30, 2015, from $27.0 million during the three-month period ended September 30, 2014. The decrease was mainly attributable to a change in the estimated scrap value of vessels, which had a favorable effect of $1.4 million for the three-month period ended September 30, 2015.
Amortization of Prepaid Lease Rentals
Amortization of the prepaid lease rentals were $1.2 million during the three-month periods ended September 30, 2015 and 2014.
Gain on Sales / Disposals of Vessels
During the three-month period ended September 30, 2014 we recorded a gain of $5.4 million from the sale of two vessels.
Foreign Exchange Gains/ (Losses)
Foreign exchange losses were $0.2 million during the three-month period ended September 30, 2015. Foreign exchange gains were $0.1 million during the three-month period September 30, 2014.
Interest Income
Interest income for the three-month periods ended September 30, 2015 and 2014, amounted to
$0.3 million and $0.2 million, respectively.
Interest and Finance Costs
Interest and finance costs decreased by 20.6%, or $5.6 million, to $21.6 million during the three-month period ended September 30, 2015, from $27.2 million during the three-month period ended September 30, 2014. The decrease was partly attributable to the decreased loan interest expense charged to the consolidated statement of income resulting from the decrease in the outstanding loan amount.
Equity Gain on Investments
The equity gain on investments of $0.1 million for the three-month period ended September 30, 2015, represents our share of the net gains of sixteen jointly owned companies pursuant to the Framework Agreement with York. We hold a range of 25% to 49% of the capital stock of these companies. The net gain of $0.1 million includes an unrealized loss of $0.1 million deriving from a swap option agreement entered into by a jointly-owned company.
Gain / (Loss) on Derivative Instruments
The fair value of our interest rate derivative instruments which were outstanding as of September 30, 2015, equates to the amount that would be paid by us or to us should those instruments be terminated. As of September 30, 2015, the fair value of these interest rate derivative instruments in aggregate amounted to a liability of $67.0 million. The effective portion of the change in the fair value of the interest rate derivative instruments that qualified for hedge accounting is recorded in 'Other Comprehensive Income' ('OCI') while the ineffective portion is recorded in the consolidated statements of income. 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 September 30, 2015, a net loss of $3.6 million has been included in OCI and a net loss of $0.5 million has been included in Gain / (Loss) on derivative instruments in the consolidated
8
statement of income, resulting from the fair market value change of the interest rate derivative instruments during the three-month period ended September 30, 2015.
Cash Flows
Condensed cash flows | Three-month period ended September 30, | ||
(Expressed in millions of U.S. dollars) | 2014 | 2015 | |
Net Cash Provided by Operating Activities | $ 65.8 | $ 59.3 | |
Net Cash Provided by / (Used in) Investing Activities | $ 13.9 | $ (9.2) | |
Net Cash Used in Financing Activities | $ (88.9) | $ (75.5) | |
Net cash flows provided by operating activities for the three-month period ended September 30, 2015, decreased by $6.5 million to $59.3 million, compared to $65.8 million for the three-month period ended September 30, 2014. The decrease was primarily attributable to 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 $9.0 million, increased special survey costs of $3.0 million and decreased cash from operations of $1.1 million; partly offset by the decreased payments for interest (including swap payments) during the period of $2.5 million.
Net Cash Provided by / (Used in) Investing ActivitiesNet cash used in investing activities was $9.2 million in the three-month period ended September 30, 2015, which mainly consisted of $4.3 million for an advance payment for the construction of one newbuild vessel, ordered pursuant to the Framework Agreement with York and
$3.2 million, paid for the acquisition of a secondhand vessel pursuant to the Framework Agreement.
Net cash provided by investing activities was $13.9 million in the three-month period ended September 30, 2014, which mainly consisted of: (a) $0.8 million payments (net of $3.7 million we received as a dividend distribution) associated with the equity investments pursuant to the Framework Agreement with York, which range from 25% to 49% in jointly-owned companies, and (b) a $15.3 million payment we received from the sale for scrap of MSC Kyoto and Akritas.
Net Cash Used in Financing ActivitiesNet cash used in financing activities was $75.5 million in the three-month period ended September 30, 2015, which mainly consisted of (a) $49.5 million of indebtedness that we repaid, (b)
$3.4 million we repaid relating to our sale and leaseback agreements (c) $21.8 million we paid for dividends to holders of our common stock for the second quarter of 2015, (d) $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'), both for the period from April 15, 2015 to July 14, 2015 and $1.5 million we paid for dividends to holders of our 8.750% Series D Cumulative Redeemable Perpetual Preferred Stock ( 'Series D Preferred Stock') for the period from May 13, 2015 to July 14, 2015.
Net cash used in financing activities was $88.9 million in the three-month period ended September 30, 2014, which mainly consisted of: (a) $56.0 million of indebtedness that we repaid, (b)
$3.2 million we repaid relating to our sale and leaseback agreements, (c) $20.9 million we paid for dividends to holders of our common stock for the second quarter of 2014, and (d) $1.0 million we paid for dividends to holders of our 7.625% Series B Cumulative Redeemable Perpetual Preferred Stock (the 'Series B Preferred Stock') and $2.1 million we paid for dividends to holders of our 8.500% Series C Cumulative Redeemable Perpetual Preferred Stock (the 'Series C Preferred Stock'), in both cases for the period from April 15, 2014 to July 14, 2014.
Results of Operations
During the nine-month period ended September 30, 2015 and 2014, we had an average of 55.0 and 54.6 vessels, respectively in our fleet. In the nine-month period ended September 30, 2015, pursuant to the Framework Agreement with York, a jointly-owned vessel entity accepted delivery of the secondhand vessel Arkadia with a TEU capacity of 1,550. In the nine-month period ended September 30, 2014, we accepted delivery of the newbuild vessels MSC Azov, MSC Ajaccio and MSC Amalfi with an aggregate TEU capacity of 28,209 TEU and the secondhand vessels Neapolis and Areopolis with an aggregate TEU capacity of 4,119 and we sold the vessels Konstantina, MSC Kyoto and Akritas with an aggregate TEU capacity of 10,379. Furthermore, pursuant to the Framework Agreement with York, a jointly-owned vessel entity accepted delivery of the secondhand vessel Elafonisos with a TEU capacity of 2,526 TEU. In the nine-month period ended September 30, 2015 and 2014, our fleet ownership days totaled 15,015 and 14,903 days, respectively. Ownership days are the primary driver 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) | Nine-month period ended September 30, | Percentage Change | |||||
2014 | 2015 | Change | |||||
Voyage revenue | $ | 363.1 | $ | 368.1 | $ | 5.0 | 1.4% |
Voyage expenses | (2.6) | (1.9) | (0.7) | (26.9%) | |||
Voyage expenses - related parties | (2.7) | (2.8) | 0.1 | 3.7% | |||
Vessels' operating expenses | (90.4) | (88.6) | (1.8) | (2.0%) | |||
General and administrative expenses | (4.5) | (4.1) | (0.4) | (8.9%) | |||
Management fees - related parties | (14.2) | (14.6) | 0.4 | 2.8% | |||
General and administrative expenses - non-cash component | - | (7.2) | 7.2 | 100.0% | |||
Amortization of dry-docking and special survey costs | (5.6) | (5.4) | (0.2) | (3.6%) | |||
Depreciation | (78.8) | (76.0) | (2.8) | (3.6%) | |||
Amortization of prepaid lease rentals | (2.8) | (3.7) | 0.9 | 32.1% | |||
Gain on sale / disposal of vessels | 2.5 | - | (2.5) | (100.0%) | |||
Interest income | 0.5 | 1.1 | 0.6 | 120.0% | |||
Interest and finance costs | (75.6) | (71.4) | (4.2) | (5.6%) | |||
Swaps breakage cost | (10.2) | - | (10.2) | (100.0%) | |||
Equity loss on investments | (2.2) | - | (2.2) | (100.0%) | |||
Other | 2.9 | 0.4 | (2.5) | (86.2%) | |||
Gain on derivative instruments | 4.9 | 11.5 | 6.6 | 134.7% | |||
Net Income | $ | 84.3 | $ | 105.4 | |||
(Expressed in millions of U.S. dollars, except percentages) | Nine-month period ended September 30, | Percentage Change | |||||
2014 | 2015 | Change | |||||
Voyage revenue | $ | 363.1 | $ | 368.1 | $ | 5.0 | 1.4% |
Accrued charter revenue | 6.2 | 2.0 | (4.2) | (67.7%) | |||
Voyage revenue adjusted on a cash basis | $ | 369.3 | $ | 370.1 | $ | 0.8 | 0.2% |
ended September 30, Percentage
2014 2015 Change
ChangeAverage number of vessels | 54.6 | 55.0 | 0.4 | 0.7% |
Ownership days | 14,903 | 15,015 | 112 | 0.8% |
Number of vessels under dry-docking Voyage Revenue | 5 | 7 | 2 |
Voyage revenue increased by 1.4%, or $5.0 million, to $368.1 million during the nine-month period ended September 30, 2015, from $363.1 million during the nine-month period ended September 30, 2014. This increase was mainly attributable to (i) revenue earned by the three newbuild vessels and three secondhand vessels delivered to us during the year ended December 31, 2014; partly offset by (ii) increased off-hire days, mainly due to scheduled dry-dockings during the nine-month period ended September 30, 2015, compared to the nine-month period ended September 30, 2014, and (iii) revenue not earned by vessels which were sold for demolition during the nine-month period ended December 31, 2014.
Voyage revenue adjusted on a cash basis (which eliminates non-cash 'Accrued charter revenue'), increased by 0.2%, or $0.8 million, to $370.1 million during the nine-month period ended September 30, 2015, from $369.3 million during the nine-month period ended September 30, 2014. This increase was mainly attributable to (i) revenue earned by the three newbuild vessels and three secondhand vessels delivered to us during the year ended December 31, 2014; partly offset by (ii) increased off-hire days, mainly due to scheduled dry-dockings during the nine-month period ended September 30, 2015, compared to the nine-month period ended September 30, 2014, and (iii) revenue not earned by vessels which were sold for demolition during the nine-month period ended December 31, 2014.
Voyage Expenses
Voyage expenses decreased by 26.9%, or $0.7 million, to $1.9 million during the nine-month period ended September 30, 2015, from $2.6 million during the nine-month period ended September 30, 2014. Voyage expenses mainly include (i) off-hire expenses of our vessels, mainly related to fuel consumption and (ii) third party commissions.
Voyage Expenses - related parties
Voyage expenses - related parties were $2.8 million and $2.7 million during the nine-month periods ended September 30, 2015 and 2014, respectively and represent fees of 0.75% on voyage revenues charged to us by Costamare Shipping Company S.A. as provided under our group management agreement.
Vessels' Operating Expenses
Vessels' operating expenses, which also includes the realized gain / (loss) under derivative contracts entered into in relation to foreign currency exposure, decreased by 2.0% or $1.8 million to
$88.6 million during the nine-month period ended September 30, 2015, from $90.4 million during the nine-month period ended September 30, 2014.
General and Administrative Expenses
General and administrative expenses decreased by 8.9% or $0.4 million, to $4.1 million during the nine-month period ended September 30, 2015, from $4.5 million during the nine-month period ended September 30, 2014. General and administrative expenses for the nine-month period ended September 30, 2015, included $1.9 million which is part of the annual fee that our manager receives based on the amended and restated group management agreement, effective as of January, 1, 2015. For the nine-month period ended September 30, 2014 this amount was $0.75 million.
Management Fees - related parties
Management fees paid to our managers increased by 2.8%, or $0.4 million, to $14.6 million during the nine-month period ended September 30, 2015, from $14.2 million during the nine-month period ended September 30, 2014. The increase was primarily attributable to (i) the upward adjustment by 4% of the management fee for each vessel (effective January 1, 2015), as provided under our group
management agreement, and (ii) the increased average number of vessels during the nine-month period ended September 30, 2015, compared to the nine-month period ended September 30, 2014.
General and Administrative expenses - non-cash component
General and administrative expenses - non-cash component for the nine-month period ended September 30, 2015, amounted to $7.2 million, representing the value of the shares issued to our manager on March 31, 2015, on June 30, 2015 and on September 30, 2015, pursuant to the amended and restated group management agreement, effective as of January 1, 2015. No amounts were incurred in the 2014 period.
Amortization of Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs for the nine-month periods ended September 30, 2015 and 2014, were $5.4 million and $5.6 million, respectively. During the nine- month period ended September 30, 2014, five vessels, underwent and completed their special survey. During the nine-month period ended September 30, 2015, seven vessels, underwent and completed their special survey.
Depreciation
Depreciation expense decreased by 3.6%, or $2.8 million, to $76.0 million during the nine- month period ended September 30, 2015, from $78.8 million during the nine-month period ended September 30, 2014. The decrease was mainly attributable to the depreciation expense not charged for the vessels sold for demolition during the year ended December 31, 2014 and to a change in the estimated scrap value of vessels, which had a favorable effect of $4.1 million for the nine-month period ended September 30, 2015; partly offset by the depreciation expense charged for the three newbuild and three secondhand vessels delivered to us during the year ended December 31, 2014.
Amortization of Prepaid Lease Rentals
Amortization of the prepaid lease rentals were $3.7 million and $2.8 million during the nine- month periods ended September 30, 2015 and 2014, respectively.
Gain on Sale/Disposal of Vessels
During the nine-month period ended September 30, 2014, we recorded a net gain of $2.5 million from the sale of three vessels.
Interest Income
During the nine-month periods ended September 30, 2015 and 2014, interest income was $1.1 million and $0.5 million, respectively.
Interest and Finance Costs
Interest and finance costs decreased by 5.6%, or $4.2 million, to $71.4 million during the nine-month period ended September 30, 2015, from $75.6 million during the nine-month period ended September 30, 2014. The decrease was partly attributable to the decreased loan interest expense charged to the consolidated statement of income resulting from the decrease in the outstanding loan amount, a reduction in the write off of finance costs relating to loan refinancing in the 2015 period; partially offset by the fact that the 2014 period benefited from the capitalization of interest associated with the delivery of vessels during that period, which did not recur during 2015.
Equity Loss on Investments
During the nine-month period ended September 30, 2015, the equity gain/ (loss) on investments was nil. The equity gain/ (loss) on investments, represents our share of the net losses of sixteen jointly owned companies pursuant to the Framework Agreement with York. We hold a range of 25% to 49% of the capital stock of these companies. The net gain / (loss) includes an unrealized loss of
$0.1 million deriving from a swap option agreement entered into by a jointly-owned company.
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