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Exhibit 99.2
Financial Report
Results of Operations
Three-month period ended September 30, 2020 compared to the three-month period ended September 30, 2019
During the three-month periods ended September 30, 2020 and 2019, we had an average of 59.5 and 60.0 vessels, respectively, in our fleet. In the three-month period ended September 30, 2020, we accepted delivery of the newbuild vessels YM Triumph, YM Truth and YM Totality with an aggregate TEU capacity of 38,070 and the secondhand vessel JPO Scorpius with a TEU capacity of 2,572; and we sold the vessels Kawasaki, Kokura and Zagora with an aggregate TEU capacity of 15,968. In the three-month periods ended September 30, 2020 and 2019, our fleet ownership days totaled 5,478 and 5,520 days, respectively. Ownership days are one of the primary drivers 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) | Three-month period ended September 30, | Percentage | ||||||||||||||
| 2019 | 2020 | Change | Change | |||||||||||||
| Voyage revenue | $ | 123.6 | $ | 107.9 | $ | (15.7 | ) | (12.7 | %) | |||||||
| Voyage expenses | (0.7 | ) | (2.4 | ) | 1.7 | 242.9 | % | |||||||||
| Voyage expenses – related parties | (1.7 | ) | (1.6 | ) | (0.1 | ) | (5.9 | %) | ||||||||
| Vessels’ operating expenses | (29.2 | ) | (30.2 | ) | 1.0 | 3.4 | % | |||||||||
| General and administrative expenses | (1.5 | ) | (1.5 | ) | – | – | ||||||||||
| Management fees – related parties | (5.3 | ) | (5.5 | ) | 0.2 | 3.8 | % | |||||||||
| General and administrative expenses - non-cash component | (0.9 | ) | (0.9 | ) | – | – | ||||||||||
| Amortization of dry-docking and special survey costs | (2.3 | ) | (2.2 | ) | (0.1 | ) | (4.3 | %) | ||||||||
| Depreciation | (25.3 | ) | (25.9 | ) | 0.6 | 2.4 | % | |||||||||
| Loss on sale / disposals of vessels | – | (0.4 | ) | 0.4 | n.m. | |||||||||||
| Loss on vessels held for sale | (0.5 | ) | – | (0.5 | ) | n.m. | ||||||||||
| Interest income | 0.8 | 0.3 | (0.5 | ) | (62.5 | %) | ||||||||||
| Interest and finance costs | (24.0 | ) | (16.1 | ) | (7.9 | ) | (32.9 | %) | ||||||||
| Income from equity method investments | 3.1 | 4.0 | 0.9 | 29.0 | % | |||||||||||
| Other | 0.3 | 0.1 | (0.2 | ) | (66.7 | %) | ||||||||||
| Loss on derivative instruments | (0.4 | ) | (0.4 | ) | ||||||||||||
| Net Income | $ | 36.0 | $ | 25.2 | ||||||||||||
| (Expressed in millions of U.S. dollars, except percentages) | Three-month period ended September 30, | Percentage | ||||||||||||||
| 2019 | 2020 | Change | Change | |||||||||||||
| Voyage revenue | $ | 123.6 | $ | 107.9 | $ | (15.7 | ) | (12.7 | %) | |||||||
| Accrued charter revenue | (0.3 | ) | 8.2 | 8.5 | n.m. | |||||||||||
| Amortization of time charter assumed | – | – | – | – | ||||||||||||
| Voyage revenue adjusted on a cash basis (1) | $ | 123.3 | $ | 116.1 | $ | (7.2 | ) | (5.8 | %) | |||||||
| Vessels’ operational data | Three-month period ended September 30, | Percentage | ||||||||||||||
| 2019 | 2020 | Change | Change | |||||||||||||
| Average number of vessels | 60.0 | 59.5 | (0.5 | ) | (0.8 | %) | ||||||||||
| Ownership days | 5,520 | 5,478 | (42 | ) | (0.8 | %) | ||||||||||
| Number of vessels under dry-docking | – | 2 | 2 | |||||||||||||
(1) Voyage revenue adjusted on a cash basis is not a recognized measurement under U.S. generally accepted accounting principles (“GAAP”). Refer to “Financial Summary” below for the reconciliation of Voyage revenue adjusted on a cash basis.
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Voyage Revenue
Voyage revenue decreased by 12.7%, or $15.7 million, to $107.9 million during the three-month period ended September 30, 2020, from $123.6 million during the three-month period ended September 30, 2019. The decrease is mainly attributable to revenue not earned by three vessels sold during the fourth quarter of 2019, one vessel sold during the first quarter of 2020 and three vessels sold during the third quarter of 2020, to decreased charter rates for certain of our vessels during the third quarter of 2020 compared to the third quarter of 2019 and to the increased idle days of our fleet during the third quarter of 2020 compared to the third quarter of 2019; partly offset by revenue earned by three vessels acquired during the fourth quarter of 2019, one vessel acquired during the first quarter of 2020 and four vessels acquired during the third quarter of 2020.
Voyage revenue adjusted on a cash basis (which eliminates non-cash “Accrued charter revenue”), decreased by 5.8%, or $7.2 million, to $116.1 million during the three-month period ended September 30, 2020, from $123.3 million during the three-month period ended September 30, 2019. Accrued charter revenue was a positive amount of $8.2 million for the three-month period ended September 30, 2020 and a negative amount of $0.3 million for the three-month period ended September 30, 2019.
Voyage Expenses
Voyage expenses were $2.4 million and $0.7 million for the three-month periods ended September 30, 2020 and 2019, respectively. Voyage expenses mainly include (i) off-hire expenses of our vessels, primarily related to fuel consumption and (ii) third party commissions.
Voyage Expenses – related parties
Voyage expenses – related parties were $1.6 million and $1.7 million for the three-month periods ended September 30, 2020 and 2019, respectively. Voyage expenses – related parties represent fees of 1.25% in the aggregate on voyage revenues charged by related managers and charter brokerage fees payable to two related charter brokerage companies for an amount of approximately $0.2 million, in the aggregate.
Vessels’ Operating Expenses
Vessels’ operating expenses, which also include the realized gain / (loss) under derivative contracts entered into in relation to foreign currency exposure, were $30.2 million and $29.2 million during the three-month periods ended September 30, 2020 and 2019, respectively. Daily vessels’ operating expenses were $5,520 and $5,282 for the three-month periods ended September 30, 2020 and 2019, respectively. Daily operating expenses are calculated as vessels’ operating expenses for the period over the ownership days of the period.
General and Administrative Expenses
General and administrative expenses were $1.5 million and $1.5 million during the three-month periods ended September 30, 2020 and 2019, respectively, and both include $0.63 million paid to a related manager.
Management Fees – related parties
Management fees paid to our related managers were $5.5 million and $5.3 million during the three-month periods ended September 30, 2020 and 2019, respectively.
General and administrative expenses - non-cash component
General and administrative expenses - non-cash component for the three-month period ended September 30, 2020 amounted to $0.9 million, representing the value of the shares issued to a related manager on September 30, 2020. General and administrative expenses - non-cash component for the three-month period ended September 30, 2019, amounted to $0.9 million, representing the value of the shares issued to a related manager on September 30, 2019.
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Amortization of dry-docking and special survey
Amortization of deferred dry-docking and special survey costs was $2.2 million and $2.3 million during the three-month periods ended September 30, 2020 and 2019, respectively. During the three-month period ended September 30, 2020, two vessels underwent and completed their special survey. During the three-month period ended September 30, 2019, no vessel underwent any special survey.
Depreciation
Depreciation expense for the three-month period ended September 30, 2020 and 2019 was $25.9 million and $25.3 million, respectively.
Loss on sale / disposal of vessels
During the three-month period ended September 30, 2020, we recorded an additional loss of $0.4 million, in the aggregate, from the sale of the vessel Zagora which was classified as an asset held for sale as at December 31, 2019 and from the sale of the vessels Kawasaki and Kokura which were classified as assets held for sale as at June 30, 2020.
Interest Income
Interest income amounted to $0.3 million and $0.8 million for the three-month periods ended September 30, 2020 and 2019, respectively.
Interest and Finance Costs
Interest and finance costs were $16.1 million and $24.0 million during the three-month periods ended September 30, 2020 and 2019, respectively. The decrease is mainly attributable to the decreased financing cost and the reduced average loan balances during the three-month period ended September 30, 2020 compared to the three-month period ended September 30, 2019.
Swaps’ Breakage Costs
During the three-month period ended September 30, 2020, we terminated two interest rate derivative instruments that qualified for hedge accounting and we paid the counterparties breakage costs in the amount of $0.006 million in the aggregate. During the three-month period ended September 30, 2019, we terminated eight interest rate derivative instruments that qualified for hedge accounting and three that did not qualify for hedge accounting and we paid the counterparties breakage costs, net in the amount of $0.016 million in the aggregate.
Income from Equity Method Investments
During the three-month period ended September 30, 2020, we recorded an income from the equity method investments of $4.0 million representing our share of the income in jointly owned companies pursuant to the Framework Deed dated May 15, 2013, as amended and restated (the “Framework Deed”), with York. As of September 30, 2020, 13 companies are jointly-owned with York (of which, 10 companies currently own vessels). During the three-month period ended September 30, 2019, we recorded an income from equity method investments of $3.1 million also relating to investments under the Framework Deed.
Gain/(Loss) on Derivative Instruments
The fair value of our seven interest rate derivative instruments which were outstanding as of September 30, 2020 equates to the amount that would be paid by us or to us should those instruments be terminated. As of September 30, 2020, the fair value of these seven interest rate derivative instruments in aggregate amounted to a liability of $7.9 million. The change in the fair value of the interest rate derivative instruments that qualified for hedge accounting is recorded in “Other Comprehensive Income” (“OCI”) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings and is presented in the same income statement line item as the earnings effect of the hedged item while the change in the fair value of the interest rate derivatives representing hedge components excluded from the assessment of effectiveness are recognized currently in earnings and are presented in Gain/(Loss) on Derivative Instruments. The change in the fair value of the interest rate derivative instruments that did not qualify for hedge accounting is recorded in Gain/(Loss) on Derivative Instruments. For the three-month period ended September 30, 2020, a net gain of $0.4 million has been included in OCI and a loss of $0.1 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 September 30, 2020.
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Cash Flows
Three-month periods ended September 30, 2020 and 2019
| Condensed cash flows | Three-month period ended September 30, | |||||||
| (Expressed in millions of U.S. dollars) | 2019 | 2020 | ||||||
| Net Cash Provided by Operating Activities | $ | 66.4 | $ | 66.7 | ||||
| Net Cash Used in Investing Activities | $ | (0.4 | ) | $ | (23.3 | ) | ||
| Net Cash Used in Financing Activities | $ | (145.7 | ) | $ | (57.2 | ) | ||
Net Cash Provided by Operating Activities
Net cash flows provided by operating activities for the three-month period ended September 30, 2020, increased by $0.3 million to $66.7 million, from $66.4 million for the three-month period ended September 30, 2019. The increase is mainly attributable to favorable 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 $12.2 million and the decreased payments for interest (including swap payments) of $3.4 million during the three-month period ended September 30, 2020 compared to the three-month period ended September 30, 2019; partly off-set by decreased cash from operations of $7.2 million and by the increased special survey costs of $2.5 million during the three-month period ended September 30, 2020 compared to the three-month period ended September 30, 2019.
Net Cash Used in Investing Activities
Net cash used in investing activities was $23.3 million in the three-month period ended September 30, 2020, which mainly consisted of payments for upgrades for certain of our vessels and payments for the delivery of three newbuild vessels and one second hand vessel; partly off-set by proceeds we received from the sale of three vessels.
Net cash used in investing activities was $0.4 million in the three-month period ended September 30, 2019, which mainly consisted of dividend distributions we received from 10 entities jointly -owned with York pursuant to the Framework Deed and advance payments for upgrades for certain of our vessels.
Net Cash Used in Financing Activities
Net cash used in financing activities was $57.2 million in the three-month period ended September 30, 2020, which mainly consisted of (a) $32.7 million net payments relating to our debt financing agreements, (b) $9.3 million we paid for dividends to holders of our common stock for the second quarter of 2020 and (c) $0.9 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”), $2.2 million we paid for dividends to holders of our 8.75% Series D Cumulative Redeemable Perpetual Preferred Stock (“Series D Preferred Stock”) and $2.5 million we paid for dividends to holders of our 8.875% Series E Cumulative Redeemable Perpetual Preferred Stock (“Series E Preferred Stock”) for the period from April 15, 2020 to July 14, 2020.
Net cash used in financing activities was $145.7 million in the three-month period ended September 30, 2019, which mainly consisted of (a) $128.4 million of net payments relating to our debt financing agreements, (b) $7.0 million we paid for dividends to holders of our common stock for the second quarter of 2019 and (c) $1.0 million we paid for dividends to holders of our 7.625% Series B Preferred Stock, $2.1 million we paid for dividends to holders of our 8.500% Series C Preferred Stock, $2.2 million we paid for dividends to holders of our 8.75% Series D Preferred Stock and $2.5 million we paid for dividends to holders of our 8.875% Series E Preferred Stock for the period from April 15, 2019 to July 14, 2019.
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Nine-month period ended September 30, 2020 compared to the nine-month period ended September 30, 2019
During the nine-month periods ended September 30, 2020 and 2019, we had an average of 59.9 and 60.6 vessels, respectively, in our fleet. In the nine-month periods ended September 30, 2020, we accepted delivery of the newbuild vessels YM Triumph, YM Truth and YM Totality with an aggregate TEU capacity of 38,070 and the secondhand vessels JPO Virgo and JPO Scorpius with a TEU capacity of 6,830; and we sold the vessels Neapolis, Kawasaki, Kokura and Zagora with an aggregate TEU capacity of 17,613. In the nine-month period ended September 30, 2019, we sold the container vessels MSC Pylos and Piraeus with an aggregate TEU capacity of 7,012. In the nine-month periods ended September 30, 2020 and 2019, our fleet ownership days totaled 16,413 and 16,555 days, respectively. Ownership days are one of the primary drivers 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, | Nine-month period ended September 30, | Percentage | ||||||||||||||
| except percentages) | 2019 | 2020 | Change | Change | ||||||||||||
| Voyage revenue | $ | 353.6 | $ | 341.2 | $ | (12.4 | ) | (3.5 | %) | |||||||
| Voyage expenses | (3.2 | ) | (6.4 | ) | 3.2 | 100.0 | % | |||||||||
| Voyage expenses – related parties | (3.6 | ) | (4.7 | ) | 1.1 | 30.6 | % | |||||||||
| Vessels’ operating expenses | (87.3 | ) | (85.0 | ) | (2.3 | ) | (2.6 | %) | ||||||||
| General and administrative expenses | (4.1 | ) | (5.3 | ) | 1.2 | 29.3 | % | |||||||||
| Management fees – related parties | (16.2 | ) | (16.0 | ) | (0.2 | ) | (1.2 | %) | ||||||||
| General and administrative expenses - non-cash component | (2.5 | ) | (2.4 | ) | (0.1 | ) | (4.0 | %) | ||||||||
| Amortization of dry-docking and special survey costs | (6.7 | ) | (6.8 | ) | 0.1 | 1.5 | % | |||||||||
| Depreciation | (85.1 | ) | (81.6 | ) | (3.5 | ) | (4.1 | %) | ||||||||
| Loss on sale / disposal of vessels | (18.4 | ) | (65.3 | ) | 46.9 | 254.9 | % | |||||||||
| Loss on vessels held for sale | (0.5 | ) | (14.4 | ) | 13.9 | n.m. | ||||||||||
| Vessels’ impairment loss | (3.0 | ) | (31.6 | ) | 28.6 | n.m. | ||||||||||
| Foreign exchange losses | – | (0.2 | ) | 0.2 | n.m. | |||||||||||
| Interest income | 2.5 | 1.5 | (1.0 | ) | (40.0 | %) | ||||||||||
| Interest and finance costs | (69.3 | ) | (51.5 | ) | (17.8 | ) | (25.7 | %) | ||||||||
| Swaps’ breakage costs | – | – | – | – | ||||||||||||
| Income from equity method investments | 7.4 | 12.2 | 4.8 | 64.9 | % | |||||||||||
| Other | 0.5 | 0.5 | – | – | ||||||||||||
| Loss on derivative instruments | (1.0 | ) | (2.4 | ) | 1.4 | 140.0 | % | |||||||||
| Net Income / (Loss) | $ | 63.1 | $ | (18.2 | ) | |||||||||||
| (Expressed in millions of U.S. dollars, | Nine-month period ended September 30, | Percentage | ||||||||||||||
| except percentages) | 2019 | 2020 | Change | Change | ||||||||||||
| Voyage revenue | $ | 353.6 | $ | 341.2 | $ | (12.4 | ) | (3.5 | %) | |||||||
| Accrued charter revenue | (0.1 | ) | 15.9 | 16.0 | n.m. | |||||||||||
| Amortization of time charter assumed | 0.2 | 0.2 | – | – | ||||||||||||
| Voyage revenue adjusted on a cash basis (1) | $ | 353.7 | $ | 357.3 | $ | 3.6 | 1.0 | % | ||||||||
| Vessels’ operational data | Nine-month period ended September 30, | Percentage | ||||||||||||||
| 2019 | 2020 | Change | Change | |||||||||||||
| Average number of vessels | 60.6 | 59.9 | (0.7 | ) | (1.2 | %) | ||||||||||
| Ownership days | 16,555 | 16,413 | (142 | ) | (0.9 | %) | ||||||||||
| Number of vessels under dry-docking | 6 | 9 | 3 | |||||||||||||
(1) Voyage revenue adjusted on a cash basis is not a recognized measurement under U.S. generally accepted accounting principles (“GAAP”). Refer to “Financial Summary” below for the reconciliation of Voyage revenue adjusted on a cash basis.
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Voyage Revenue
Voyage revenue decreased by 3.5%, or $12.4 million, to $341.2 million during the nine-month period ended September 30, 2020, from $353.6 million during the nine-month period ended September 30, 2019. The decrease is mainly attributable to revenue not earned by five vessels sold during the year ended December 31, 2019 and four vessels sold during the nine-month period ended September 30, 2020, to decreased hire rates in certain of our vessels and to increased idle days of our fleet during the nine-month period ended September 30, 2020 compared to the nine-month period ended September 30, 2019; partly offset by revenue earned by three vessels acquired during the fourth quarter of 2019, one vessel acquired during the first quarter of 2020 and four vessels acquired during the third quarter of 2020.
Voyage revenue adjusted on a cash basis (which eliminates non-cash “Accrued charter revenue”), increased by 1.0%, or $3.6 million, to $357.3 million during the nine-month period ended September 30, 2020, from $353.7 million during the nine-month period ended September 30, 2019. Accrued charter revenue was a positive amount of $15.9 million for the nine-month period ended September 30, 2020 and a negative amount of $0.1 million for the nine-month period ended September 30, 2019.
Voyage Expenses
Voyage expenses were $6.4 million and $3.2 million for the nine-month periods ended September 30, 2020 and 2019, respectively. Voyage expenses mainly include (i) off-hire expenses of our vessels, primarily related to fuel consumption and (ii) third party commissions.
Voyage Expenses – related parties
Voyage expenses – related parties were $4.7 million and $3.6 million for the nine-month periods ended September 30, 2020 and 2019, respectively. Voyage expenses – related parties represent fees of 1.25%1 in the aggregate on voyage revenues charged by related managers and charter brokerage fees payable to two related charter brokerage companies for an amount of approximately $0.5 million, in the aggregate.
Vessels’ Operating Expenses
Vessels’ operating expenses, which also include the realized gain / (loss) under derivative contracts entered into in relation to foreign currency exposure, were $85.0 million and $87.3 million during the nine-month periods ended September 30, 2020 and 2019, respectively. Daily vessels’ operating expenses were $5,179 and $5,275 for the nine-month periods ended September 30, 2020 and 2019, respectively. Daily operating expenses are calculated as vessels’ operating expenses for the period over the ownership days of the period.
General and Administrative Expenses
General and administrative expenses were $5.3 million and $4.1 million during the nine-month periods ended September 30, 2020 and 2019, respectively, and both include $1.9 million paid to a related manager.
Management Fees – related parties
Management fees paid to our related managers were $16.0 million and $16.2 million during the nine-month periods ended September 30, 2020 and 2019, respectively.
_________________
1 0.75% until June 30, 2019
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General and administrative expenses - non-cash component
General and administrative expenses - non-cash component for the nine-month period ended September 30, 2020 amounted to $2.4 million, representing the value of the shares issued to a related manager on March 30, 2020, June 30, 2020 and September 30, 2020. General and administrative expenses – non-cash component for the nine-month period ended September 30, 2019 amounted to $2.5 million representing the value of the shares issued to a related manager on March 29, 2019, June 28, 2019 and September 30, 2019.
Amortization of dry-docking and special survey
Amortization of deferred dry-docking and special survey costs was $6.8 million and $6.7 million during the nine-month periods ended September 30, 2020 and 2019, respectively. During the nine-month period ended September 30, 2020, nine vessels underwent and completed their special survey. During the nine-month period ended September 30, 2019, six vessels underwent and completed their special survey.
Depreciation
Depreciation expense for the nine-month period ended September 30, 2020 and 2019 was $81.6 million and $85.1 million, respectively.
Loss on sale / disposal of vessels
During the nine-month period ended September 30, 2020, we recorded an aggregate net loss of $65.3 million from the sale of the vessels Neapolis, Kawasaki, Kokura and Zagora. Neapolis and Zagora were classified as assets held for sale as at December 31, 2019. During the nine-month period ended September 30, 2019, we recorded an aggregate loss of $18.4 million from the sale of the vessels Piraeus and MSC Pylos. MSC Pylos was classified as asset held for sale as at December 31, 2018.
Loss on vessels held for sale
During the nine-month period ended September 30, 2020, we recorded a loss on vessels held for sale of $14.4 representing the expected loss from sale of the vessel Singapore Express during the next twelve-month period. During the nine-month period ended September 30, 2019, we recorded a loss on vessels held for sale of $0.5 million representing the expected loss from sale of two of our vessels during the next twelve-month period.
Vessels’ impairment loss
During the nine-month period ended September 30, 2020, we recorded an impairment loss in relation to five of our vessels in the amount of $31.6 million, in the aggregate. During the nine-month period ended September 30, 2019, we recorded an impairment loss in relation to two of our vessels in the amount of $3.0 million, in the aggregate.
Interest Income
Interest income amounted to $1.5 million and $2.5 million for the nine-month periods ended September 30, 2020 and 2019, respectively.
Interest and Finance Costs
Interest and finance costs were $51.5 million and $69.3 million during the nine-month periods ended September 30, 2020 and 2019, respectively. The decrease is mainly attributable to the decreased financing cost and the reduced average loan balances during the nine-month period ended September 30, 2020 compared to the nine-month period ended September 30, 2019.
Swaps’ Breakage Costs
During the nine-month period ended September 30, 2020, we terminated two interest rate derivative instruments that qualified for hedge accounting and we paid the counterparties breakage costs in the amount of $0.006 million in the aggregate. During the nine-month period ended September 30, 2019, we terminated eight interest rate derivative instruments that qualified for hedge accounting and three that did not qualify for hedge accounting and we paid the counterparties breakage costs, net in the amount of $0.016 million in the aggregate.
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Income from Equity Method Investments
During the nine-month period ended September 30, 2020, we recorded an income from the equity method investments of $12.2 million representing our share of the income in jointly owned companies pursuant to the Framework Deed dated May 15, 2013, as amended and restated (the “Framework Deed”), with York. As of September 30, 2020, 13 companies are jointly-owned with York (of which, 10 companies currently own vessels). During the nine-month period ended September 30, 2019, we recorded an income from equity method investments of $7.4 million also relating to investments under the Framework Deed.
Loss on Derivative Instruments
The fair value of our seven interest rate derivative instruments which were outstanding as of September 30, 2020 equates to the amount that would be paid by us or to us should those instruments be terminated. As of September 30, 2020, the fair value of these seven interest rate derivative instruments in aggregate amounted to a liability of $7.9 million. The change in the fair value of the interest rate derivative instruments that qualified for hedge accounting is recorded in “Other Comprehensive Income” (“OCI”) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings and is presented in the same income statement line item as the earnings effect of the hedged item while the change in the fair value of the interest rate derivatives representing hedge components excluded from the assessment of effectiveness are recognized currently in earnings and are presented in Gain/(Loss) on Derivative Instruments. The change in the fair value of the interest rate derivative instruments that did not qualify for hedge accounting is recorded in Gain/(Loss) on Derivative Instruments. For the nine-month period ended September 30, 2020, a net loss of $7.7 million has been included in OCI and a net loss of $2.2 million has been included in 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 nine-month period ended September 30, 2020.
Cash Flows
Nine-month periods ended September 30, 2020 and 2019
| Condensed cash flows | Nine-month period ended September 30, | |||||||
| (Expressed in millions of U.S. dollars) | 2019 | 2020 | ||||||
| Net Cash Provided by Operating Activities | $ | 173.6 | $ | 205.9 | ||||
| Net Cash Provided by/ (Used in) Investing Activities | $ | 8.9 | $ | (21.7 | ) | |||
| Net Cash Used in Financing Activities | $ | (144.8 | ) | $ | (192.7 | ) | ||
Net Cash Provided by Operating Activities
Net cash flows provided by operating activities for the nine-month period ended September 30, 2020, increased by $32.3 million to $205.9 million, from $173.6 million for the nine-month period ended September 30, 2019. The increase is mainly attributable to the increased cash from operations of $3.6 million, the favorable 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 $18.2 million and the decreased payments for interest (including swap payments) of $13.5 million during the nine-month period ended September 30, 2020 compared to the nine-month period ended September 30, 2019; partly off-set by the increased special survey costs of $6.3 million during the nine-month period ended September 30, 2020 compared to the nine-month period ended September 30, 2019.
Net Cash Provided by / (Used in) Investing Activities
Net cash used in investing activities was $21.7 million in the nine-month period ended September 30, 2020, which mainly consisted of payments for upgrades for certain of our vessels and payments for the delivery of three newbuild vessels and two second hand vessels; partly off-set by proceeds we received from the sale of four of our vessels and by return of capital we received from nine entities jointly -owned with York pursuant to the Framework Deed.
Net cash provided by investing activities was $8.9 million in the nine-month period ended September 30, 2019, which mainly consisted of proceeds we received from the sale of two vessels, dividend distribution we received from 11 entities jointly -owned with York pursuant to the Framework Deed and advance payments for upgrades for certain of our vessels.
Net Cash Used in Financing Activities
Net cash used in financing activities was $192.7 million in the nine-month period ended September 30, 2020, which mainly consisted of (a) $133.2 million net payments relating to our debt financing agreements, (b) $25.2 million we paid for dividends to holders of our common stock for the fourth quarter of 2019, the first quarter of 2020 and the second quarter of 2020 and (c) $2.8 million we paid for dividends to holders of our 7.625% Series B Preferred Stock, $6.3 million we paid for dividends to holders of our 8.500% Series C Preferred Stock, $6.6 million we paid for dividends to holders of our 8.75% Series D Preferred Stock and $7.5 million we paid for dividends to holders of our 8.875% Series E Preferred Stock for the period from October 15, 2019 to January 14, 2020, January 15, 2020 to April 14, 2020 and April 15, 2020 to July 14, 2020.
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Net cash used in financing activities was $144.8 million in the nine-month period ended September 30, 2019, which mainly consisted of (a) $97.1 million of net payments relating to our debt financing agreements (including the prepayments following the sale of two container vessels during the three-month period ended March 31, 2019), (b) $20.4 million we paid for dividends to holders of our common stock for the fourth quarter of 2018, the first quarter of 2019 and the second quarter of 2019 and (c) $2.9 million we paid for dividends to holders of our Series B Preferred Stock, $6.4 million we paid for dividends to holders of our Series C Preferred Stock, $6.6 million we paid for dividends to holders of our Series D Preferred Stock and $7.5 million we paid for dividends to holders of our Series E Preferred Stock for the period from October 15, 2018 to January 14, 2019, January 15, 2019 to April 14, 2019 and April 15, 2019 to July 14, 2019.
Liquidity and Unencumbered Vessels
Cash and cash equivalents
As of September 30, 2020, we had a total cash liquidity of $187.4 million, consisting of cash, cash equivalents and restricted cash.
Debt-free vessels
As of October 27, 2020, the following vessels were free of debt.
Unencumbered Vessels
(Refer to fleet list for full details)
| Vessel Name | Year Built | TEU Capacity | ||||||
| JPO SCORPIUS | 2007 | 2,572 | ||||||
| ETOILE | 2005 | 2,556 | ||||||
| MICHIGAN | 2008 | 1,300 | ||||||
| ENSENADA (*) | 2001 | 5,576 | ||||||
| MONEMVASIA (*) | 1998 | 2,472 | ||||||
| ARKADIA (*) | 2001 | 1,550 | ||||||
| (*) Vessels acquired pursuant to the Framework Deed with York. | ||||||||
Conference Call details:
On Wednesday, October 28, 2020 at 8:30 a.m. EST, Costamare’s management team will hold a conference call to discuss the financial results. Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1-844-887-9405 (from the US), 0808-238-9064 (from the UK) or +1-412-317-9258 (from outside the US and the UK). Please quote “Costamare”. A replay of the conference call will be available until November 4, 2020. The United States replay number is +1-877-344-7529; the standard international replay number is +1-412-317-0088; and the access code required for the replay is: 10149408.
| 9 |
Live webcast:
There will also be a simultaneous live webcast over the Internet, through the Costamare Inc. website (www.costamare.com). Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.
About Costamare Inc.
Costamare Inc. is one of the world’s leading owners and providers of containerships for charter. The Company has 46 years of history in the international shipping industry and a fleet of 72 containerships, with a total capacity of approximately 529,000 TEU, including two newbuild containerships currently under construction. Ten of our containerships have been acquired pursuant to the Framework Deed with York by vessel-owning joint venture entities in which we hold a minority equity interest. The Company’s common stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock trade on the New York Stock Exchange under the symbols “CMRE”, “CMRE PR B”, “CMRE PR C”, “CMRE PR D” and “CMRE PR E”, respectively.
Forward-Looking Statements
This earnings release contains “forward-looking statements”. In some cases, you can identify these statements by forward-looking words such as “believe”, “intend”, “anticipate”, “estimate”, “project”, “forecast”, “plan”, “potential”, “may”, “should”, “could”, “expect” and similar expressions. These statements are not historical facts but instead represent only Costamare’s belief regarding future results, many of which, by their nature, are inherently uncertain and outside of Costamare’s control. It is possible that actual results may differ, possibly materially, from those anticipated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect future results, see the discussion in the Company’s Annual Report on Form 20-F (File No. 001-34934) under the caption “Risk Factors” and the Company’s Results for the First Quarter ended March 31, 2020 on Form 6-K (filed on May 11, 2020 with the SEC) under the caption “Risk Factor Update”.
Company Contacts:
Gregory Zikos - Chief Financial Officer
Konstantinos Tsakalidis - Business Development
Costamare Inc., Monaco
Tel: (+377) 93 25 09 40
Email: ir@costamare.com
| 10 |
Fleet List
The table below provides additional information, as of October 27, 2020, about our fleet of containerships, including our newbuilds on order, the vessels acquired pursuant to the Framework Deed and those vessels subject to sale and leaseback agreements. Each vessel is a cellular containership, meaning it is a dedicated container vessel.
| Vessel Name | Charterer | Year
Built |
Capacity
(TEU) |
Current
Daily Charter Rate(1) (U.S. dollars) |
Expiration
of Charter(2) | |
| 1 | TRITON(ii) | Evergreen | 2016 | 14,424 | (*) | March 2026 |
| 2 | TITAN(ii) | Evergreen | 2016 | 14,424 | (*) | April 2026 |
| 3 | TALOS(ii) | Evergreen | 2016 | 14,424 | (*) | July 2026 |
| 4 | TAURUS(ii) | Evergreen | 2016 | 14,424 | (*) | August 2026 |
| 5 | THESEUS(ii) | Evergreen | 2016 | 14,424 | (*) | August 2026 |
| 6 | YM TRIUMPH(ii) | Yang Ming | 2020 | 12,690 | (*) | May 2030 |
| 7 | YM TRUTH(ii) | Yang Ming | 2020 | 12,690 | (*) | May 2030 |
| 8 | YM TOTALITY(ii) | Yang Ming | 2020 | 12,690 | (*) | July 2030 |
| 9 | CAPE AKRITAS(i) | ZIM | 2016 | 11,010 | 34,750 | August 2021 |
| 10 | CAPE TAINARO(i) | ZIM | 2017 | 11,010 | 38,000 | March 2021 |
| 11 | CAPE KORTIA(i) | ZIM | 2017 | 11,010 | 34,750 | August 2021 |
| 12 | CAPE SOUNIO(i) | ZIM | 2017 | 11,010 | 38,000 | March 2021 |
| 13 | CAPE ARTEMISIO(i) | Hapag Lloyd | 2017 | 11,010 | 36,650 | March 2025 |
| 14 | COSCO GUANGZHOU | COSCO | 2006 | 9,469 | 30,900 | April 2022(3) |
| 15 | COSCO NINGBO | COSCO | 2006 | 9,469 | 30,900 | April 2022(3) |
| 16 | YANTIAN | COSCO | 2006 | 9,469 | (*) | November 2020 |
| 17 | BEIJING | COSCO | 2006 | 9,469 | (*) | November 2020 |
| 18 | COSCO HELLAS | COSCO | 2006 | 9,469 | (*) | November 2020 |
| 19 | MSC AZOV | MSC | 2014 | 9,403 | 46,300 | December 2026(4) |
| 20 | MSC AMALFI | MSC | 2014 | 9,403 | 46,300 | March 2027(5) |
| 21 | MSC AJACCIO | MSC | 2014 | 9,403 | 46,300 | February 2027(6) |
| 22 | MSC ATHENS(ii) | MSC | 2013 | 8,827 | 45,300 | January 2026(7) |
| 23 | MSC ATHOS(ii) | MSC | 2013 | 8,827 | 45,300 | February 2026(8) |
| 24 | VALOR | Hapag Lloyd | 2013 | 8,827 | 32,400 | April 2025 |
| 25 | VALUE | Hapag Lloyd | 2013 | 8,827 | 32,400 | April 2025 |
| 26 | VALIANT | Hapag Lloyd | 2013 | 8,827 | 32,400 | June 2025 |
| 27 | VALENCE | Hapag Lloyd | 2013 | 8,827 | 32,400 | July 2025 |
| 28 | VANTAGE | Hapag Lloyd | 2013 | 8,827 | 32,400 | September 2025 |
| 29 | NAVARINO | MSC | 2010 | 8,531 | 23,000 | March 2021 |
| 30 | MAERSK KLEVEN | Maersk | 1996 | 8,044 | 17,500 | April 2021 |
| 31 | MAERSK KOTKA | Maersk | 1996 | 8,044 | 17,500 | April 2021 |
| 32 | MAERSK KOWLOON | Maersk | 2005 | 7,471 | 16,000 | June 2022 |
| 33 | KURE | COSCO | 1996 | 7,403 | 9,500 | November 2020 |
| 34 | MSC METHONI | MSC | 2003 | 6,724 | 29,000 | September 2021 |
| 35 | YORK | Maersk | 2000 | 6,648 | 21,250 | August 2022(9) |
| 36 | KOBE | RCL Feeder | 2000 | 6,648 | 14,500 | August 2021 |
| 37 | SEALAND WASHINGTON | Maersk | 2000 | 6,648 | 18,500 | March 2022(10) |
| 38 | SEALAND MICHIGAN | Maersk | 2000 | 6,648 | 18,500 | March 2022(10) |
| 39 | SEALAND ILLINOIS | Maersk | 2000 | 6,648 | 18,500 | March 2022(10) |
| 40 | MAERSK KOLKATA | Maersk | 2003 | 6,644 | 18,500 | March 2022(10) |
| 41 | MAERSK KINGSTON | Maersk | 2003 | 6,644 | 18,500 | March 2022(10) |
| 42 | MAERSK KALAMATA | Maersk | 2003 | 6,644 | 18,500 | March 2022(10) |
| 43 | VENETIKO | (*) | 2003 | 5,928 | (*) | July 2021 |
| 11 |
| Vessel Name | Charterer | Year
Built |
Capacity
(TEU) |
Current
Daily Charter Rate(1) (U.S. dollars) |
Expiration
of Charter(2) | |
| 44 | ENSENADA (i) | (*) | 2001 | 5,576 | 21,500 | June 2021(11) |
| 45 | ZIM NEW YORK | ZIM | 2002 | 4,992 | 14,438 | October 2021(12) |
| 46 | ZIM SHANGHAI | ZIM | 2002 | 4,992 | 14,438 | October 2021(12) |
| 47 | LEONIDIO(ii) | Maersk | 2014 | 4,957 | 14,200 | December 2024 |
| 48 | KYPARISSIA(ii) | Maersk | 2014 | 4,957 | 14,200 | November 2024 |
| 49 | MEGALOPOLIS | Maersk | 2013 | 4,957 | 13,500 | July 2025 |
| 50 | MARATHOPOLIS | Maersk | 2013 | 4.957 | 13,500 | July 2025 |
| 51 | OAKLAND EXPRESS | Hapag Lloyd | 2000 | 4,890 | 13,750 | January 2021 |
| 52 | HALIFAX EXPRESS | Hapag Lloyd | 2000 | 4,890 | 10,000 | November 2020 |
| 53 | VULPECULA | OOCL | 2010 | 4,258 | 7,000 | December 2020 |
| 54 | VOLANS | ZIM | 2010 | 4,258 | 7,000 | November 2020 |
| 55 | VIRGO | Evergreen | 2009 | 4,258 | 8,600 | February 2021 |
| 56 | VELA | OOCL | 2009 | 4,258 | 7,950 | November 2020 |
| 57 | ULSAN | Maersk | 2002 | 4,132 | 12,000 | June 2021 |
| 58 | POLAR ARGENTINA(i)(ii) | Maersk | 2018 | 3,800 | 19,700 | October 2024 |
| 59 | POLAR BRASIL(i)(ii) | Maersk | 2018 | 3,800 | 19,700 | January 2025 |
| 60 | LAKONIA | COSCO | 2004 | 2,586 | 7,500 | November 2020 |
| 61 | JPO SCORPIUS | Pool | 2007 | 2,572 | Pool Participation | |
| 62 | ETOILE | (*) | 2005 | 2,556 | (*) | January 2021 |
| 63 | AREOPOLIS | COSCO | 2000 | 2,474 | 7,500 | November 2020 |
| 64 | MONEMVASIA(i) | Maersk | 1998 | 2,472 | 9,250 | November 2021 |
| 65 | MESSINI | (*) | 1997 | 2,458 | 9,850 | February 2021 |
| 66 | ARKADIA(i) | Evergreen | 2001 | 1,550 | 8,650 | November 2020 |
| 67 | PROSPER | Sealand Maersk Asia | 1996 | 1,504 | 8,500 | March 2021(13) |
| 68 | MICHIGAN | MSC | 2008 | 1,300 | 6,650 | November 2020 |
| 69 | TRADER | (*) | 2008 | 1,300 | (*) | January 2021 |
| 70 | LUEBECK | MSC | 2001 | 1,078 | 6,200 | January 2021 |
Newbuilds
| Vessel Name | Shipyard | Capacity (TEU) |
Charterer | Expected Delivery(14) | |
| 1 | YZJ2015-2060 | Jiangsu Yangzijiang Shipbuilding Group | 12,690 | Yang Ming | Q1 2021 |
| 2 | YZJ2015-2061 | Jiangsu Yangzijiang Shipbuilding Group | 12,690 | Yang Ming | Q2 2021 |
| (1) | Daily charter rates are gross, unless stated otherwise. Amounts set out for current daily charter rate are the amounts contained in the charter contracts. |
| (2) | Charter terms and expiration dates are based on the earliest date charters could expire. |
| (3) | This charter rate will be earned by Cosco Guangzhou and Cosco Ningbo from November 15, 2020. Until then both vessels are chartered at an undisclosed daily rate. |
| (4) | This charter rate will be earned by MSC Azov until December 2, 2023. From the aforementioned date until the expiry of the charter, the daily rate will be $35,300. |
| (5) | This charter rate will be earned by MSC Amalfi until March 16, 2024. From the aforementioned date until the expiry of the charter, the daily rate will be $35,300. |
| (6) | This charter rate will be earned by MSC Ajaccio until February 1, 2024. From the aforementioned date until the expiry of the charter, the daily rate will be $35,300. |
| (7) | This charter rate will be earned by MSC Athens until January 29, 2023. From the aforementioned date until the expiry of the charter, the daily rate will be $35,300. |
| (8) | This charter rate will be earned by MSC Athos until February 24, 2023. From the aforementioned date until the expiry of the charter, the daily rate will be $35,300. |
| 12 |
| (9) | This charter rate will be earned by York from December 1, 2020. Until then the daily charter rate will be $11,500. |
| (10) | The daily rate for Sealand Washington, Sealand Michigan, Sealand Illinois, Maersk Kolkata, Maersk Kingston and Maersk Kalamata is a base rate of $16,000, adjusted pursuant to the terms of a 50:50 profit/loss sharing mechanism based on market conditions with a minimum charter rate of $12,000 and a maximum charter rate of $25,000. |
| (11) | This charter rate will be earned by Ensenada from November 12, 2020. Until then the daily charter rate will be $8,700. |
| (12) | The amounts in the table reflect the current charter terms, giving effect to our agreement with ZIM under its 2014 restructuring plan. Based on this agreement, we have been granted charter extensions and have been issued equity securities representing 1.2% of ZIM’s equity and approximately $8.2 million in interest bearing notes maturing in 2023. In May 2020, the Company exercised its option to extend the charters of ZIM New York and ZIM Shanghai for a one year period at market rate plus $1,100 per day per vessel while the notes remain outstanding. The rate for this sixth optional year has been determined at $14,438 per day. |
| (13) | This charter rate will be earned by Prosper from November 28, 2020. Until then the daily charter rate will be $6,000. |
| (14) | Based on latest shipyard construction schedule, subject to change. |
| (i) | Denotes vessels acquired pursuant to the Framework Deed. The Company holds an equity interest ranging between 25% and 49% in each of the vessel-owning entities. |
| (ii) | Denotes vessels subject to a sale and leaseback transaction. |
(*) Denotes charterer’s identity and/or current daily charter rates and/or charter expiration dates, which are treated as confidential.
| 13 |
Consolidated Statements of Income
| (Expressed in thousands of U.S. dollars, | Nine-months ended September 30, | Three-months ended September 30, | ||||||||||||||
| except share and per share amounts) | 2019 | 2020 | 2019 | 2020 | ||||||||||||
| REVENUES: | ||||||||||||||||
| Voyage revenue | $ | 353,641 | $ | 341,176 | $ | 123,631 | $ | 107,903 | ||||||||
| EXPENSES: | ||||||||||||||||
| Voyage expenses | (3,180 | ) | (6,383 | ) | (701 | ) | (2,380 | ) | ||||||||
| Voyage expenses – related parties | (3,610 | ) | (4,753 | ) | (1,658 | ) | (1,623 | ) | ||||||||
| Vessels' operating expenses | (87,322 | ) | (84,999 | ) | (29,158 | ) | (30,241 | ) | ||||||||
| General and administrative expenses | (4,115 | ) | (5,301 | ) | (1,464 | ) | (1,543 | ) | ||||||||
| Management fees - related parties | (16,164 | ) | (16,023 | ) | (5,337 | ) | (5,502 | ) | ||||||||
| General and administrative expenses - non-cash component | (2,453 | ) | (2,416 | ) | (908 | ) | (908 | ) | ||||||||
| Amortization of dry-docking and special survey costs | (6,737 | ) | (6,765 | ) | (2,266 | ) | (2,228 | ) | ||||||||
| Depreciation | (85,081 | ) | (81,618 | ) | (25,320 | ) | (25,881 | ) | ||||||||
| Loss on sale / disposal of vessels, net | (18,420 | ) | (65,260 | ) | – | (432 | ) | |||||||||
| Loss on vessels held for sale | (480 | ) | (14,359 | ) | (480 | ) | – | |||||||||
| Vessels’ impairment loss | (3,042 | ) | (31,577 | ) | – | – | ||||||||||
| Foreign exchange gains / (losses) | (28 | ) | (203 | ) | (45 | ) | 4 | |||||||||
| Operating income | $ | 123,009 | $ | 21,519 | $ | 56,294 | $ | 37,169 | ||||||||
| OTHER INCOME / (EXPENSES): | ||||||||||||||||
| Interest income | $ | 2,512 | $ | 1,464 | $ | 826 | $ | 377 | ||||||||
| Interest and finance costs | (69,342 | ) | (51,452 | ) | (24,026 | ) | (16,085 | ) | ||||||||
| Swaps’ breakage cost, net | (16 | ) | (6 | ) | (16 | ) | (6 | ) | ||||||||
| Income from equity method investments | 7,409 | 12,201 | 3,110 | 3,960 | ||||||||||||
| Other | 561 | 468 | 234 | 160 | ||||||||||||
| Loss on derivative instruments | (1,021 | ) | (2,392 | ) | (446 | ) | (326 | ) | ||||||||
| Total other expenses | $ | (59,897 | ) | $ | (39,717 | ) | $ | (20,318 | ) | $ | (11,920 | ) | ||||
| Net Income / (Loss) | $ | 63,112 | $ | (18,198 | ) | $ | 35,976 | $ | 25,249 | |||||||
| Earnings allocated to Preferred Stock | (23,452 | ) | (23,315 | ) | (7,904 | ) | (7,854 | ) | ||||||||
| Gain on retirement of Preferred Stock | – | 619 | – | – | ||||||||||||
| Net Income / (Loss) available to common stockholders | $ | 39,660 | $ | (40,894 | ) | $ | 28,072 | $ | 17,395 | |||||||
| Earnings / (Losses) per common share, basic and diluted | $ | 0.35 | $ | (0.34 | ) | $ | 0.24 | $ | 0.14 | |||||||
| Weighted average number of shares, basic and diluted | 114,744,125 | 120,319,521 | 117,111,191 | 121,094,924 | ||||||||||||
| 14 |
COSTAMARE INC.
Consolidated Balance Sheets
| As of December 31, | As of September 30, | |||||||
| (Expressed in thousands of U.S. dollars) | 2019 | 2020 | ||||||
| ASSETS | (Unaudited) | |||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 148,928 | $ | 138,435 | ||||
| Restricted cash | 6,912 | 5,591 | ||||||
| Accounts receivable | 7,397 | 8,321 | ||||||
| Inventories | 10,546 | 10,016 | ||||||
| Due from related parties | 7,576 | 2,122 | ||||||
| Fair value of derivatives | 748 | – | ||||||
| Insurance claims receivable | 1,607 | 1,498 | ||||||
| Asset held for sale | 4,908 | 5,750 | ||||||
| Time charter assumed | 192 | 191 | ||||||
| Prepayments and other | 8,430 | 9,693 | ||||||
| Total current assets | $ | 197,244 | $ | 181,617 | ||||
| FIXED ASSETS, NET: | ||||||||
| Right-of-use assets | $ | 188,429 | $ | 200,921 | ||||
| Vessels and advances, net | 2,431,830 | 2,479,124 | ||||||
| Total fixed assets, net | $ | 2,620,259 | $ | 2,680,045 | ||||
| NON-CURRENT ASSETS: | ||||||||
| Equity method investments | $ | 111,681 | $ | 82,320 | ||||
| Deferred charges, net | 21,983 | 27,064 | ||||||
| Accounts receivable, non-current | 8,600 | 3,911 | ||||||
| Restricted cash | 40,031 | 43,343 | ||||||
| Fair value of derivatives, non-current | 605 | – | ||||||
| Time charter assumed, non-current | 1,030 | 887 | ||||||
| Other non-current assets | 10,525 | 10,456 | ||||||
| Total assets | $ | 3,011,958 | $ | 3,029,643 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Current portion of long-term debt | $ | 210,745 | $ | 167,037 | ||||
| Accounts payable | 6,215 | 9,506 | ||||||
| Due to related parties | 473 | 385 | ||||||
| Finance lease liabilities | 16,810 | 16,451 | ||||||
| Accrued liabilities | 19,417 | 19,977 | ||||||
| Unearned revenue | 10,387 | 12,047 | ||||||
| Fair value of derivatives | 397 | 3,517 | ||||||
| Other current liabilities | 2,090 | 2,390 | ||||||
| Total current liabilities | $ | 266,534 | $ | 231,310 | ||||
| NON-CURRENT LIABILITIES | ||||||||
| Long-term debt, net of current portion | $ | 1,206,405 | $ | 1,312,411 | ||||
| Finance lease liabilities, net of current portion | 119,925 | 120,512 | ||||||
| Fair value of derivatives, net of current portion | 433 | 4,479 | ||||||
| Unearned revenue, net of current portion | 7,933 | 24,326 | ||||||
| Total non-current liabilities | $ | 1,334,696 | $ | 1,461,728 | ||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| STOCKHOLDERS’ EQUITY: | ||||||||
| Preferred stock | $ | – | $ | – | ||||
| Common stock | 12 | 12 | ||||||
| Additional paid-in capital | 1,351,352 | 1,362,370 | ||||||
| Retained earnings / (Accumulated deficit) | 60,578 | (16,879 | ) | |||||
| Accumulated other comprehensive loss | (1,214 | ) | (8,898 | ) | ||||
| Total stockholders’ equity | $ | 1,410,728 | $ | 1,336,605 | ||||
| Total liabilities and stockholders’ equity | $ | 3,011,958 | $ | 3,029,643 | ||||
| 15 |
Financial Summary
| (Expressed in thousands of U.S. dollars, | Nine-month period ended September 30, | Three-month period ended September 30, | ||||||||||||||
| except share and per share data): | 2019 | 2020 | 2019 | 2020 | ||||||||||||
| Voyage revenue | $ | 353,641 | $ | 341,176 | $ | 123,631 | $ | 107,903 | ||||||||
| Accrued charter revenue (1) | $ | (115 | ) | $ | 15,942 | $ | (306 | ) | $ | 8,221 | ||||||
| Amortization of Time-charter assumed | $ | 143 | $ | 144 | $ | 48 | $ | 49 | ||||||||
| Voyage revenue adjusted on a cash basis (2) | $ | 353,669 | $ | 357,262 | $ | 123,373 | $ | 116,173 | ||||||||
| Adjusted Net Income available to common stockholders (3) | $ | 66,700 | $ | 91,005 | $ | 30,948 | $ | 26,740 | ||||||||
| Weighted Average number of shares | 114,744,125 | 120,319,521 | 117,111,191 | 121,094,924 | ||||||||||||
| Adjusted Earnings per share (3) | $ | 0.58 | $ | 0.76 | $ | 0.26 | $ | 0.22 | ||||||||
| Net Income / (Loss) | $ | 63,112 | $ | (18,198 | ) | $ | 35,976 | $ | 25,249 | |||||||
| Net Income / (Loss) available to common stockholders | $ | 39,660 | $ | (40,894 | ) | $ | 28,072 | $ | 17,395 | |||||||
| Weighted Average number of shares | 114,744,125 | 120,319,521 | 117,111,191 | 121,094,924 | ||||||||||||
| Earnings / (Losses) per share | $ | 0.35 | $ | (0.34 | ) | $ | 0.24 | $ | 0.14 | |||||||
(1) 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.
(2) 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” above.
(3) Adjusted Net Income available to common stockholders and Adjusted Earnings per Share are non-GAAP measures. Refer to the reconciliation of Net Income to Adjusted Net Income.
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 and the nine-month periods ended September 30, 2020 and 2019. 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 and (iii) Adjusted Earnings per Share.
| 16 |
Reconciliation of Net Income to Adjusted Net Income available to common stockholders and Adjusted Earnings per Share
| (Expressed in thousands of U.S. dollars, | Nine-month period ended September 30, | Three-month period ended September 30, | ||||||||||||||
| except share and per share data) | 2019 | 2020 | 2019 | 2020 | ||||||||||||
| Net Income / (Loss) | $ | 63,112 | $ | (18,198 | ) | $ | 35,976 | $ | 25,249 | |||||||
| Earnings allocated to Preferred Stock | (23,452 | ) | (23,315 | ) | (7,904 | ) | (7,854 | ) | ||||||||
| Gain on retirement of Preferred Stock | – | 619 | – | – | ||||||||||||
| Net Income / (Loss) available to common stockholders | 39,660 | (40,894 | ) | 28,072 | 17,395 | |||||||||||
| Accrued charter revenue | (115 | ) | 15,942 | (306 | ) | 8,221 | ||||||||||
| General and administrative expenses - non-cash component | 2,453 | 2,416 | 908 | 908 | ||||||||||||
| Amortization of Time charter assumed | 143 | 144 | 48 | 49 | ||||||||||||
| Realized (Gain) / loss on Euro/USD forward contracts (1) | 367 | (488 | ) | 159 | (410 | ) | ||||||||||
| Vessels’ impairment loss | 3,042 | 31,577 | – | – | ||||||||||||
| Loss on sale / disposals of vessels | 18,420 | 65,260 | – | 432 | ||||||||||||
| Non-recurring, non-cash write-off of loan deferred financing costs | 1,127 | 478 | 1,127 | – | ||||||||||||
| Swaps’ breakage costs | 16 | 6 | 16 | 6 | ||||||||||||
| Loss on sale / disposal of vessel by a jointly owned company with York included in equity gain on investments | 38 | – | – | – | ||||||||||||
| Loss on vessels held for sale | 480 | 14,359 | 480 | – | ||||||||||||
| Loss on derivative instruments, excluding interest accrued and realized on non-hedging derivative instruments (1) | 1,069 | 2,205 | 444 | 139 | ||||||||||||
| Adjusted Net Income available to common stockholders | $ | 66,700 | $ | 91,005 | $ | 30,948 | $ | 26,740 | ||||||||
| Adjusted Earnings per Share | $ | 0.58 | $ | 0.76 | $ | 0.26 | $ | 0.22 | ||||||||
| Weighted average number of shares | 114,744,125 | 120,319,521 | 117,111,191 | 121,094,924 | ||||||||||||
Adjusted Net Income available to common stockholders and Adjusted Earnings per Share represent Net Income / (loss) after earnings allocated to preferred stock and gain on retirement of preferred stock, but before non-cash “Accrued charter revenue” recorded under charters with escalating charter rates, realized (gain)/loss on Euro/USD forward contracts, vessels’ impairment loss, loss on sale / disposal of vessels, loss on vessels held for sale, loss on sale / disposal of vessel by a jointly owned company with York included in equity gain on investments, non-recurring, non-cash write-off of loan deferred financing costs, general and administrative expenses - non-cash component, swaps’ breakage costs, amortization of Time charter assumed 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 available to common stockholders are reflected as deductions to Adjusted Net Income available to common stockholders. Charges negatively impacting Net Income available to common stockholders are reflected as increases to Adjusted Net Income available to common stockholders.
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