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Costamare Inc. Reports Fourth Quarter and Year Ended December 31, 2011 Results

Thursday, 02 February 2012 | 00:00
Costamare Inc. yesterday reported unaudited financial results for the fourth quarter and year ended December 31, 2011. Financial Highlights • Voyage revenues of $102.0 million and $ 382.2 million for the three months and year ended December 31, 2011, respectively. • Voyage revenues adjusted on a cash basis of $ 109.1 million and $412.5 million for the three months and year ended December 31, 2011, respectively. • Adjusted EBITDA of $ 74.7 million and $274.7 million for the three months and year ended December 31, 2011, respectively.
• Net income of $ 26.1 million or $0.43 per share and $87.6 million or $1.45 per share for the three months and year ended December 31, 2011, respectively.
• Adjusted Net Income of $ 32.6 million or $ 0.54 per share and $112.8 million or $1.87 per share for the three months and year ended December 31, 2011, respectively.
New Business Developments
• Delivery of the 4,132 TEU, 2002-built containership MSC Ulsan expected within the next weeks. Upon delivery, the vessel will commence a time charter with Mediterranean Shipping Company, S.A. ("MSC") for a duration of approximately 63 months, at a daily rate of $16,500.
• Agreed to sell the 1984-built 2,922 TEU vessel Garden for demolition for a sale price of approximately $6.0 million. The vessel was delivered to her scrap buyers on December 30, 2011.
• Agreed with charterers to substitute the 1984-built 2,922 TEU vessel Gifted, whose charter expired in December 2011, into the charter of the 1984-built 2,922 TEU vessel Garden, which was scrapped.
• Delivered for scrap the 1978-built vessels MSC Tuscany and MSC Fado, which the Company had previously agreed to sell for a total price of approximately $8.8 million.
• Agreed to extend the time charter of the 3,351 TEU, 1992-built containership Konstantina with current charterers for a minimum of three months and a maximum of six months at a daily rate of $7,100.
Dividend Announcements
• On January 12, 2012, the Company declared a dividend for the fourth quarter ended December 31, 2011, of $0.27 per share, payable on February 8, 2012 to stockholders of record at the close of trading of the Company's common stock on the New York Stock Exchange on January 25, 2012. This was the Company's fifth 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 fourth quarter and the year ended December 31, 2011, the Company delivered positive results.
"In 2011, we executed our growth plans investing, at an opportune time, in excess of $ 1 billion in newbuilding and secondhand ships. Debt funding for our capital commitments has been arranged in order to minimize financing risk.
"We have been selective in our investments; we remain returns-oriented and we do not seek growth at unjustified prices by assuming excessive market risk.
"Consistent with our progressive dividend policy, we already increased our dividend once since going public, and our goal remains to increase dividend payments over time, consistent with our dividend policy.
"Going forward, our contracted cash flows combined with our low leverage, put us in a position to execute quickly, should attractive opportunities arise in a down market or remain firm and benefit from the upside of a healthy market environment."
Results of Operations
Three-month period ended December 31, 2011 compared to the three-month period ended December 31, 2010
During the three-month periods ended December 31, 2011 and 2010, we had an average of 48.3 and 42.0 vessels, respectively, in our fleet. In the three-month period ended December 31, 2011, we accepted delivery of the secondhand vessel MSC Methoni with a TEU capacity of 6,724, and we sold three vessels, while the vessel Rena was determined to be a constructive total loss ("CTL") for insurance purposes in October 2011, with an aggregate TEU capacity of 8,922. In the three-month period ended December 31, 2010, we accepted delivery of the vessels Karmen and Rena with an aggregate TEU capacity of 6,702. In the three-month periods ended December 31, 2011 and 2010, our fleet ownership days totaled 4,446 and 3,864 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
Voyage revenue increased by 19.0%, or $16.3 million, to $102.0 million during the three-month period ended December 31, 2011, from $85.7 million during the three-month period ended December 31, 2010. This increase is mainly due to increased average number of vessels in our fleet during the three month period ended December 31, 2011 compared to the three month period ended December 31, 2010. Voyage revenues adjusted on a cash basis, increased by 25.8%, or $22.4 million, to $109.1 million during the three-month period ended December 31, 2011, from $86.7 million during the three-month period ended December 31, 2010. The increase is attributable to the increased ownership days of our fleet, as well as to the increased charter hire received in accordance with certain escalation clauses of our charters, during the three-month period ended December 31, 2011 compared to the three-month period ended December 31, 2010.
Voyage Expenses
Voyage expenses increased by 80.0%, or $0.4 million, to $0.9 million during the three-month period ended December 31, 2011, from $0.5 million during the three-month period ended December 31, 2010. The increase was primarily attributable to the third party commissions charged to us in the three-month period ended December 31, 2011 compared to the three-month period ended December 31, 2010.
Voyage Expenses - related parties
Voyage expenses - related parties in the amount of $0.8 million during the three-month period ended December 31, 2011 and in the amount of $0.4 million during the three-month period ended December 31, 2010 represent fees of 0.75% on voyage revenues charged to us by Costamare Shipping Company S.A. as provided under our management agreement signed on November 4, 2010 (Initial Public Offering completion date).
Vessels' Operating Expenses
Vessels' operating expenses, which also include the realized gain (loss) under derivative contracts entered into in relation to foreign currency exposure, increased by 3.4%, or $0.9 million, to $27.0 million during the three-month period ended December 31, 2011, from $26.1 million during the three-month period ended December 31, 2010. The increase is attributable to the increase of 15.1% of the ownership days of our fleet offset to a great extent by more efficient logistics achieved in the three-month period ended December 31, 2011 compared to the three-month period ended December 31, 2010.
General and Administrative Expenses
General and administrative expenses increased by 250.0%, or $1.0 million, to $1.4 million during the three-month period ended December 31, 2011, from $0.4 million during the three-month period ended December 31, 2010. The increase in the three-month period ended December 31, 2011 was mainly attributable to increased public-company related expenses charged to us (i.e. legal, audit and Directors and Officers insurance) subsequent to the completion of our Initial Public Offering on November 4, 2010, compared to the three-month period ended December 31, 2010. Furthermore, General and administrative expenses for the three-month period ended December 31, 2011 include $0.25 million compared to $0.16 million for the three month period ended December 31, 2010, for the services of the Company's officers in aggregate charged to us by Costamare Shipping Company S.A. as provided under our management agreement signed on November 4, 2010 (Initial Public Offering completion date).
Management Fees - related parties
Management fees paid to our managers increased by 32.3%, or $1.0 million, to $4.1 million during the three-month period ended December 31, 2011, from $3.1 million during the three-month period ended December 31, 2010. The increase was attributable to the daily management fee charged by our managers subsequent to the completion of our Initial Public Offering on November 4, 2010 and to the increased fleet ownership days for the three-month period ended December 31, 2011, compared to the three-month period ended December 31, 2010.
Amortization of Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs decreased by 13.0% or $0.3 million, to $2.0 million during the three month period ended December 31, 2011, from $2.3 million during the three month period ended December 31, 2010. The decrease is mainly attributable to the amortization expense not charged relating to the vessels sold during the year ended December 31, 2011 as their unamortized dry-docking balance at the date they were sold, was written-off and was included in the sale result; partly offset by the amortization expense charged for the vessels that were dry-docked during the year ended December 31, 2011. During the three-month period ended December 31, 2011, no vessel underwent special survey. During the three-month period ended December 31, 2010, three vessels underwent special survey.
Depreciation
Depreciation expense increased by 13.1%, or $2.4 million, to $20.7 million during the three-month period ended December 31, 2011, from $18.3 million during the three-month period ended December 31, 2010. The increase was primarily attributable to the depreciation expense charged for the two container vessels that were delivered to us in November 2010 and to the ten container vessels that were delivered to us during the year ended December 31, 2011; partly offset by the depreciation expense not charged relating to the vessels sold during the year ended December 31, 2011.
Charter agreement early termination fee
The Charter agreement early termination fee of $9.5 million represents a one-time payment made to the charterer of MSC Navarino (renamed to Hyundai Navarino in January 2011) in December 2010, compensating the charterer MSC for the early termination of the charter party agreement of MSC Navarino. The vessel was redelivered to us by the charterer on January 28, 2011 and on January 30, 2011 she was delivered to charterers HMM for a daily charter rate of $44,000, compared to a daily charter rate of $22,000 under the MSC charter party agreement.
Gain on Sale of Vessels
During the three-month period ended December 31, 2011, we recorded in aggregate, on a net basis, a gain of $2.3 million from the sale of three vessels and the "CTL" of the vessel Rena. During the three month period ended December 31, 2010 no vessel was sold.
Foreign Exchange Gains / (Losses)
Foreign exchange gains/(losses) were gains of $0.2 million during the three-month period ended December 31, 2011, compared to losses of $0.3 million during the three-month period ended December 31, 2010, representing a change of $0.5 million resulted from favorable currency exchange rate movements between the U.S. dollar and the Euro.
Interest Income
During the three-month period ended December 31, 2011, interest income decreased by 66.7%, or $0.2 million, to $0.1 million, from $0.3 million during the three-month period ended December 31, 2010. The change in interest income was mainly due to average lower cash balances and to the decreased interest rates on our cash deposits in interest bearing accounts during the three-month period ended December 31, 2011 compared to the three month-period ended December 31, 2010.
Interest and Finance Costs
Interest and finance costs increased by 9.6%, or $1.7 million, to $19.5 million during the three-month period ended December 31, 2011, from $17.8 million during the three-month period ended December 31, 2010. The increase is partly attributable to increased financing costs and commitment fees charged to us mainly in relation to new credit facilities we entered into with regards to our newbuilding program partly off-set by the capitalized interest in relation with our newbuilding program.
Gain (Loss) on Derivative Instruments
The fair value of our 28 interest rate derivative instruments which were outstanding as of December 31, 2011 equates to the amount that would be paid by us or to us should those instruments be terminated. As of December 31, 2011, the fair value of these 28 interest rate derivative instruments in aggregate amounted to a liability of $170.7 million. Twenty-seven of the 28 interest rate derivative instruments that were outstanding as at December 31, 2011, qualified for hedge accounting and the effective portion in the change of their fair value is recorded in "Comprehensive loss". For the three-month period ended December 31, 2011, a gain of $3.6 million has been included in "Comprehensive loss" and a loss of $0.9 million has been included in "Gain (loss) on derivative instruments" in the consolidated statement of income, resulting from the fair market value change of the interest rate derivative instruments during the three-month period ended December 31, 2011.
Results of Operations
Year ended December 31, 2011 compared to the year ended December 31, 2010

During the year ended December 31, 2011 and 2010, we had an average of 47.8 and 42.4 vessels, respectively, in our fleet. In the year ended December 31, 2011, we accepted delivery of ten secondhand vessels with an aggregate TEU capacity of 29,242, and we sold six vessels, while the vessel Rena was determined to be a constructive total loss ("CTL") for insurance purposes in October 2011, with an aggregate TEU capacity of 13,836. In the year ended December 31, 2010, we acquired the vessel Hyundai Navarino and the secondhand vessels Karmen and Rena with an aggregate TEU capacity of 15,233, and we sold four vessels with an aggregate TEU capacity of 10,766. In the year ended December 31, 2011 and 2010, our fleet ownership days totaled 17,437 and 15,488 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 Expenses
Voyage expenses increased by 100.0%, or $2.1 million, to $4.2 million during the year ended December 31, 2011, from $2.1 million during the year ended December 31, 2010. The increase was primarily attributable to (a) the off-hire expenses, mainly to bunkers consumption, of the eight out of ten container vessels which were delivered to us by their sellers in the year ended December 31, 2011 and the five out of seven vessels sold in year ended December 31, 2011, and (b) the third party commissions charged to us in the year ended December 31, 2011 compared to the year ended December 31, 2010.
Voyage Expenses - related parties
Voyage expenses - related parties in the amount of $2.9 million during the year ended December 31, 2011 and in the amount of $0.4 million during the year ended December 31, 2010 represent fees of 0.75% on voyage revenues charged to us by Costamare Shipping Company S.A. as provided under our management agreement signed on November 4, 2010 (Initial Public Offering completion date).
Vessels' Operating Expenses
Vessels' operating expenses, which also include the realized gain (loss) under derivative contracts entered into in relation to foreign currency exposure, increased by 7.4%, or $7.6 million, to $110.4 million during the year ended December 31, 2011, from $102.8 million during the year ended December 31, 2010. The increase is attributable to the increase of 12.6% of the ownership days of our fleet partly offset by more efficient logistics achieved in the year ended December 31, 2011 compared to the year ended December 31, 2010.
General and Administrative Expenses
General and administrative expenses increased by 316.7%, or $3.8 million, to $5.0 million during the year ended December 31, 2011, from $1.2 million during the year ended December 31, 2010. The increase in the year ended December 31, 2011 was mainly attributable to increased public-company related expenses charged to us (i.e. legal, audit and Directors and Officers insurance) subsequent to the completion of our Initial Public Offering on November 4, 2010, compared to the year ended December 31, 2010. Furthermore, General and administrative expenses for the year ended December 31, 2011 include $1.0 million compared to $0.16 million for the year ended December 31, 2010, for the services of the Company's officers in aggregate charged to us by Costamare Shipping Company S.A. as provided under our management agreement signed on November 4, 2010 (Initial Public Offering completion date).
Management Fees - related parties
Management fees paid to our managers increased by 35.4%, or $4.0 million, to $15.3 million during the year ended December 31, 2011, from $11.3 million during the year ended December 31, 2010. The increase was attributable to the daily management fee charged by our managers subsequent to the completion of our Initial Public Offering on November 4, 2010 and to the increased fleet ownership days for the year ended December 31, 2011, compared to the year ended December 31, 2010.
Amortization of Dry-docking and Special Survey Costs
Amortization of deferred dry-docking and special survey costs decreased by 4.7% or $0.4 million, to $8.1 million during the year ended December 31, 2011, from $8.5 million during the year ended December 31, 2010. The decrease is mainly attributable to the amortization expense not charged relating to the vessels sold during the year as their unamortized dry-docking balance at the date they were sold, was written-off and was included in the sale result; partly offset by the amortization expense charged for the vessels that were dry-docked during the year. During the year ended December 31, 2011, eight vessels underwent special survey. During the year ended December 31, 2010, twelve vessels underwent special survey.
Depreciation
Depreciation expense increased by 11.1%, or $7.9 million, to $78.8 million during the year ended December 31, 2011, from $70.9 million during the year ended December 31, 2010. The increase was primarily attributable to the depreciation expense charged for the two container vessels that were delivered to us in November 2010 and to the ten container vessels that were delivered to us during the year ended December 31, 2011.
Gain on Sale/disposal of Vessels
During the year ended December 31, 2011, we recorded in aggregate, on a net basis, a gain of $13.1 million from the sale of six vessels and the "CTL" of the vessel Rena During the year ended December 31, 2010, we recorded a gain of $9.6 million from the sale of four vessels.
Charter agreement early termination fee
The Charter agreement early termination fee of $9.5 million represents a one-time payment made to the charterer of MSC Navarino (renamed to Hyundai Navarino in January 2011) in December 2010, compensating the charterer MSC for the early termination of the charter party agreement of MSC Navarino. The vessel was redelivered to us by the charterer on January 28, 2011 and on January 30, 2011 she was delivered to charterers HMM for a daily charter rate of $44,000, compared to a daily charter rate of $22,000 under the MSC charter party agreement.
Foreign Exchange Gains / (Losses)
Foreign exchange gains/(losses) were gains of $0.1 million during the year ended December 31, 2011, compared to losses of $0.3 million during the year ended December 31, 2010, representing a change of $0.4 million resulted from favorable currency exchange rate movements between the U.S. dollar and the Euro.
Interest Income
During the year ended December 31, 2011, interest income decreased by 66.7%, or $1.0 million, to $0.5 million, from $1.5 million during the year ended December 31, 2010. The change in interest income was mainly due to the decreased interest rates on our cash deposits in interest bearing accounts during the year ended December 31, 2011 compared to the year ended December 31, 2010.
Interest and Finance Costs
Interest and finance costs increased by 4.9%, or $3.5 million, to $75.4 million during the year ended December 31, 2011, from $71.9 million during the year ended December 31, 2010. The increase is partly attributable to increased financing costs and commitment fees charged to us mainly in relation to new credit facilities we entered into with regards to our newbuilding program partly off-set by the capitalized interest in relation with our newbuilding program.
Gain (Loss) on Derivative Instruments
The fair value of our 28 derivative instruments which were outstanding as of December 31, 2011 equates to the amount that would be paid by us or to us should those instruments be terminated. As of December 31, 2011, the fair value of these 28 interest rate swaps in aggregate amounted to a liability of $170.7 million. Twenty-seven of the 28 interest rate derivative instruments that were outstanding as at December 31, 2011, qualified for hedge accounting and the effective portion in the change of their fair value is recorded in "Comprehensive loss". For the year ended December 31, 2011, a loss of $55.5 million has been included in "Comprehensive loss" and a loss of $7.3 million has been included in "Gain (loss) on derivative instruments" in the consolidated statement of income, resulting from the fair market value change of the interest rate swaps during the year ended December 31, 2011.
Source: Costamare Inc.
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