Costamare Inc. Form 6-K Summary
Business Context and Reporting Period
This Form 6-K, filed on May 10, 2012, incorporates by reference the unaudited interim condensed consolidated financial statements for the three-month period ended March 31, 2012. Costamare Inc. is a container ship owner and operator, managing a fleet of 46 vessels with a total capacity of approximately 235,190 TEU. The Company charters its vessels to major liner operators under long-term time charters. During the quarter, the Company completed a follow-on public offering of 7.5 million shares.
Key Financial Metrics
| Metric (in thousands USD) | Q1 2012 | Q1 2011 |
|---|---|---|
| Voyage Revenue | $100,031 | $85,961 |
| Operating Income | $41,583 | $31,784 |
| Net Income | $24,534 | $17,948 |
| Earnings Per Share (Basic & Diluted) | $0.40 | $0.30 |
| Net Cash from Operating Activities | $35,431 | $39,416 |
| Cash and Cash Equivalents (End of Period) | $273,708 | $5,541 |
| Total Debt (Current + Non-Current) | $1,545,075 | $1,443,420 |
| Stockholders' Equity | $446,633 | $374,405 |
Material Changes vs. Prior Period
- Revenue Growth: Voyage revenue increased by 16.4% to $100.0 million, driven by a larger fleet and favorable charter rates.
- Profitability: Net income rose 36.7% to $24.5 million. Operating income increased to $41.6 million despite a $2.8 million loss on the sale of a vessel for scrap.
- Liquidity Surge: Cash and cash equivalents increased significantly from $5.5 million to $273.7 million. This was primarily due to a follow-on equity offering yielding $100.6 million in net proceeds and new debt drawdowns of $148.1 million.
- Capital Structure: Total debt increased by $101.7 million to $1.55 billion, reflecting new borrowings to finance vessel acquisitions and construction. Stockholders' equity increased by $72.2 million, largely due to the equity offering.
- Dividends: The Company declared and paid dividends of $0.27 per share ($16.3 million total) in Q1 2012, compared to $0.25 per share ($15.1 million) in Q1 2011.
Outlook, Risks, and Unusual Items
- Unusual Items: The Company recognized a $2.8 million loss on the sale of the vessel Gather for scrap. Additionally, the Company incurred a $3.0 million gain on derivative instruments, down from $4.7 million in the prior year.
- Commitments: The Company has significant future commitments for ten newbuild vessels with a remaining aggregate price of $791.5 million payable through 2014. Future minimum contractual charter revenues are secured for over $2.9 billion through 2017 and beyond.
- Risks and Contingencies: The Company utilizes interest rate swaps to hedge floating rate exposure. As of March 31, 2012, the fair value of these swaps represented a liability of approximately $160.3 million. The Company is subject to financial covenants, including a minimum liquidity requirement and debt-to-asset ratios.
- Subsequent Events: In April 2012, the Company agreed to sell two vessels for scrap ($12.4 million) and purchase two secondhand vessels ($24.9 million). A dividend of $0.27 per share was declared for the first quarter.
Investor Verification Checklist
- Verify the utilization of the $100.6 million net proceeds from the March 2012 follow-on offering.
- Confirm the status of the ten newbuild vessels under construction and the timing of their delivery (2012-2014).
- Review the specific terms of the new debt drawdowns ($148.1 million) and their impact on future interest expense.
- Assess the impact of the $2.8 million loss on vessel disposal and the $3.0 million derivative gain on core operating performance.
- Monitor compliance with financial covenants, specifically the liquidity requirement (greater of $30 million or 3% of total debt) and the debt-to-asset ratio.