Thank you for standing by, ladies and gentlemen, and welcome to the Costamare Inc conference call on the third quarter 2021 financial results. We have with us Mr. Gregory Zikos, Chief Financial Officer of the company. At this time, all participants are in a listen only mode. There will be a presentation followed by a question and answer session, at which time, if you wish to ask a question, please press star then one on your telephone keypad and wait for your name to be announced. I must advise you that this conference is being recorded today, Wednesday, October 27, 2021. We would like to remind you that this conference call contains forward-looking statements. Please take a moment to read slide number two of the presentation, which contains the forward-looking statements. I will now pass the floor to your speaker today, Mr. Zikos.
Please go ahead, sir.
Thank you, and good morning, ladies and gentlemen. The container market rebound that began in the second half of last year is continuing, drawing strength from favorable supply and demand dynamics. The availability of container ships in the market has been stretched thin due to high cargo volumes and strong tonnage demand that has been exacerbated by port congestion and an overall shortage of equipment. All our container ships chartered during the quarter have been fixed at increasingly high levels of hire. On the dry bulk side, we took delivery of 20 additional vessels, bringing the number of dry bulk vessels that have been delivered to us to 34. The remaining three ships are expected to be delivered by year-end. All our dry bulk vessels are employed in the spot market, yielding very healthy returns.
Contracted revenues have reached $2.3 billion, and the average time charter duration for our potential fleet stands at more than four years. We have nine container ships coming off charter by the end of next year and 37 dry bulk vessels operating in the spot market, favorably positioning our company should the currently strong market conditions continue. Moving now to the slides presentation. On slide three, you can see the highlights of a very profitable third quarter. Net income for the quarter is $107 million, and the EPS is $0.87, an increase of over 500% year-over-year. Adjusted net income is $81 million, up more than 200% compared to the third quarter of last year, and adjusted EPS is $0.66.
We have now taken delivery of 34 out of the 37 dry bulk vessels, and the three remaining ships are expected to be delivered by year-end. We have also selectively sold some of our older container ships at attractive levels, booking after-tax gains of $36 million. On slide four, you can see our liquidity and new financing arrangements. We have concluded another hunting license financing of $150 million that give us additional firepower. All our container ships and dry bulk purchases have the funding in place, and our remaining capital commitments are minor relative to our cash position. We do maintain a strong balance sheet with liquidity of about $560 million, market value based leverage of 32% and no meaningful debt maturities until 2025. On slide five, we discuss our new chartering arrangements.
We have entered into or extended the charters of five vessels at much higher levels. On average, the new charters were fixed at a rate of 2.3 x higher, with a much longer average duration. Our most recent fixture, the GLEN CANYON , is a forward fixture commencing in Q2 2022 and fixed at $62,500 per day for 3.5 years. Moving to slide six. On slide six, you can see the chartering of our dry vessels. We have chartered in total 18 ships at healthy levels. You can see a sample of some of the fixtures which have been concluded during the quarter. Moving to slide seven. The container ship charter market has continued to outperform on the back of positive supply and demand fundamentals.
The added fleet was 0.6% in October, indicating a fully employed market. Dry bulk market has reached levels not seen since 2008 as demand for commodities continues and supply constraints remain to drive the market. We have also paid our 43rd dividend in August, and we will pay our 44th consecutive dividend in November. Slide eight. On this slide you can see the third quarter 2021 results. The company generated revenues of $216 million and adjusted net income of $81.5 million. Based on the above, the third quarter adjusted EPS is $0.66, up 200% year-over-year.
The adjusted figures take into consideration the following non-cash items, the accrued charter revenues, accounting gains or losses from asset disposals, prepaid lease rentals and other non-cash charges, and changes in the fair value of equity securities. On slide nine, you can see our capital structure. Our leverage is comfortably at 32% based on current market values. As you can see from the slide, our market value adjusted assets is equal to $7.6 billion. Slide 10. On this slide you see the revenue contribution for our container ship fleet and our contracted revenues. The revenues come from top charterers like Maersk, MSC, Evergreen, COSCO, Yang Ming, ZIM and Hapag-Lloyd. We have $3.3 billion in contracted revenues and a remaining weighted time charter duration of about 4.2 years. On the next two slides, we discuss the containership market that remains tight supply.
Charter rates continue to significantly improve across all vessel sizes, up over 900% since the end of June 2020. Box rates have increased by over 210% on a yearly basis, and while there was a slight dip during the Chinese Golden Week, rates continue to remain at healthy levels. Moving on to slide 12. The added fleet is at 0.6% or full commercial utilization from a high of 12% one year ago. The order book has risen to 23% as new ordering has accelerated over the past quarters. It should be noted, however, that it takes close to two years to build a new vessel, and the majority of new building vessels that have been ordered will not be delivered until 2023 and beyond.
On the last two slides, we discuss the dry bulk market. As shown on slide 13, charter rates have significantly improved since Q3 2020 and have remained at healthy levels. Although asset values have been trending upwards since late 2020, they have lacked the increase in charter rates. On the last slide, you can see that the expectation is for demand growth to continue to exceed supply growth at least through the end of 2022. At the same time, the order book remains at historically low levels, especially for the sizes that we have invested in and fleet growth is expected to decline over the next several years, which creates a favorable backdrop for the market. This concludes our presentation and we can now take questions. Thank you. Operator, we can take questions now.
Thank you. As a reminder, if you would like to ask a question, please press star then one on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press star then two. Once again, that's star then one to ask a question. Your first question today comes from Chris Wetherbee at Citi. Please go ahead.
Hi, guys. This is Eli sitting in for Chris. Thanks for taking the question here. I just want to start off with the current rates. Are you guys shifting to a short-term view to capitalize on the higher rates now? Are you guys still playing in the long-term market in terms of duration?
You are referring to the containership vessels, I guess, or to the dry bulk?
On the containership side, yeah.
On the containership side, we go long to the extent we can, obviously for the highest rate available in the market. Assuming that the numbers work, we're gonna opt for the longest period available. Hence the example of the GLEN CANYON , the 5,600 TEU vessel, which we chartered for a period of 39-42 months, starting from Q2 2022 at $62,500. I think at that level of rates, we would prefer to go for the longest available duration.
Got it. That makes sense. We see that you have longer duration, most likely for some of your larger ships, but are you seeing duration increase for the smaller ships as well?
Yes, we have seen a trend that generally the duration of charter parties has been increasing. Now, for the larger vessels, we don't have a lot of recent fixtures simply because most of them are fixed for periods, so there are no ships available in the market. However, generally speaking, yes, we're seeing a trend in such a good market environment that the average time charter durations become longer and longer. This definitely applies for the smaller ships as well, up to feeders or like the smaller vessels, 1,000 TEU or like 2,000 TEUs, yes. Also, in that segment, because we also have some ships of that size, we normally opt to go for the longest period available, of course, assuming that the numbers make sense.
That makes sense. Thank you. Let's turn to the new builds. We know that the trend of ESG focus in terms of new builds and fuel use is something that is being thought about right now in terms of what ships people are turning to order. Are you guys focusing on more fuel efficiency in terms of your new builds or holding off new builds in order to wait for some of the technology to evolve?
No. Look, we do focus on fuel efficiency, and this is one of our priorities. At the same time, regarding new buildings, if it is a new building order which will be placed on a back-to-back basis, with a long-term charter, of course, the ship's specifications is something that needs to be agreed upon with the charterer as well. This is our priority. At the same time, we will also cater to, you know, the needs of the charterer.
Got it. Thank you. One more generalized market question. We see the congestion out of China is increasing due to some of their power constraints. How are those conversations going with your customers and what is your view on the Chinese congestion right now?
Look, I think it's common knowledge that the congestion is quite extensive, especially in the West Coast of the U.S. I think there have been a lot of efforts in order to ease that congestion, which we haven't seen yet. This is not something I can predict how it's gonna go over the next months. This is definitely something that the liner companies as well as the States take very seriously and they want to ease. I'm not sure whether this is something that can be easily fixed within weeks or within months. I'm afraid I cannot predict how long this gonna last, but we definitely have seen a lot of effort.
Of course. I guess just to follow up there, how has the interaction communication with your customers changed from this quarter to last quarter, given the increase in congestion across the board at the higher rates?
No, look, our customers are the liner companies. We have been fixing vessels based on supply and demand dynamics. Now, congestion, it is one of the factors that it is affecting the supply of the ships. The demand is there, and we know that there is substantial demand as we speak, again, especially on the transpacific trade. I mean, we still have the same type of communication we used to have. I don't think something has changed. It is just that the market fundamentals are that we are in a very tight market today. This is pretty much it. Liner companies, they are still chartering in vessels. They have also been buying ships for themselves. I think it is the same line of communication. Nothing has changed.
Thanks, Greg. I appreciate it. Congrats on the quarter.
Thank you. Thanks a lot.
Ladies and gentlemen, our next question comes from Ben Nolan with Stifel. Please go ahead.
Hey, thanks. I got a couple for you, Greg. I'll start with the dry bulk side. You have this new hunting license, but you haven't acquired any additional dry bulk vessels since June or so. How are you thinking about the market, the asset prices and the attractiveness of adding to that fleet here? Are you kind of waiting for things to normalize a bit?
Look, we put this hunting license in place. I mean, we have announced this now, but this is something we were discussing with, you know, the lender for quite some time. This is for $150 million for dry bulk vessels. We have it in place. However, we will use it only when we think that the asset prices make sense. I cannot predict how the dry bulk market is gonna evolve or like, what's gonna be the price for a 10- or 15-year-old Panamax or Supramax. But we have it in place. I think it's good to have it in place because, when we felt that market conditions justified it, we committed to 37 vessels within, like, a couple of months.
This is one additional tool, but it doesn't mean that because we have it, we will have to utilize it. We're gonna look at prices, we're gonna look at earnings and how we think these two are gonna play out. I'm afraid I cannot predict the market. All I can say is that should we feel that the numbers make sense, we have the equity, we have access to commercial bank debt. With this facility plus, in any case, we have access to you know, commercial bank debt. If it makes sense, we're gonna proceed. I'm afraid I cannot be more specific. I cannot predict what the situation will be over the next months or quarters.
Yeah. I'm not asking you to predict it. I'm just saying, do you think that right now, asset prices are attractive enough for you guys to buy, or are they too expensive for you to buy?
Look, since we started our acquisitions in May, asset prices have moved up. However, there may still be some opportunities. But definitely today, asset values for the five- or 10-year-old dry bulk vessels we have been buying at those sizes, Handysize and Supramax and Panamax, definitely prices have moved up since we bought those ships. It's not exactly the same environment, but it doesn't mean that there may not be some opportunities in the future.
Okay. My next question, you still have a pretty decent position. It's not life-altering for the company, but pretty decent position in the ZIM equity. Can you maybe talk through a little bit about sort of what the strategy is there and, you know, if you view that as a long-term position or, you know, not?
Yeah, you're right. We have 1.2 million shares of ZIM, which based on the latest price, if I recall correctly, should be slightly above $60 million. This is something we are currently evaluating. We received the latest dividend that, you know, was paid. This currently we are sort of evaluating. We're not in a hurry to act. We take our time. It depends on our view about the market, the liner companies market going forward over the next couple of quarters. You're right, this is a sizable amount. I mean, still $60 million as equity. This is something that cannot be ignored. There we take our time, and we are evaluating internally. I'm afraid I cannot say much more at this point.
You saw in our latest results that the shares were still there.
Lastly, something that we've heard some about is the potential for especially smaller, like Handysize vessels being used to carry containers or more often freight that would have ordinarily gone into containers. I'm curious for your vessels and, you know, your customers that are primarily using them in the spot market, are you seeing any of that? Are people trying to find ways to put containers on those ships, or are you carrying things that ordinarily would not be in a dry bulk ship?
Yeah, you're right. Look, first of all, in our ships, I can tell you that we are using as those ships are supposed to be used and not for containers. Now of course, we've heard a lot of discussions about using dry bulk vessels in order to carry containers. This is not something we have done internally. Now, I cannot exclude that this is something that some shipowners, sort of, may have commissioned some studies. Still, I don't think that this is something that is gonna change the supply and demand dynamics for container ships at all. I'm afraid I don't have much more to say on that. I can tell you that from our side, this is not something that, you know, we have done.
In any case, our average ship is like 50,000-52,000 deadweight. We don't have any capes. I don't know. I agree with you. There have been a lot of discussion. There has also been some press about those issues, but I don't think that it changes the fundamentals, at least for container shipping today, where the market is.
Perfect. Well, I'm gonna slip one more in. You've got three more dry bulk ships to take delivery of that probably are not gonna take a whole lot of capital. After that, you know, there are no new buildings that you guys have. You're really sort of in a period of time where outside of just a little bit of maintenance CapEx, there should be quite a lot of free cash flow, especially signing the types of contracts that you've been signing. How are you thinking about sort of the highest and best use, let's say, over the course of 2022? From where you sit today, again, appreciating that you can't predict the market or whatever, but where would you envision the cash flow going as it comes in?
Yeah, you're right. Yes. Because you see the container ship charter rates, you see the rates today, although they're of a much shorter nature, in the dry bulk fleet. Our CapEx commitments for the remaining three dry bulk vessels to be delivered, and we also have one more container ship to be delivered, a second-hand ship. In total, our equity commitments, because the funding is already in place, is in the region of like $11 million-$12 million. This is pretty minimal for the size of the company. The question is, what's gonna be happening with the excess cash flows? First of all, this is a good topic to discuss.
Now, the cash allocations, we may be looking at additional dry bulk vessels, assuming, as mentioned earlier, that, I mean, we still feel that the prices make sense. I wouldn't exclude, again, subject to, you know, the numbers, to look at new buildings for container ships or for second-hand transactions in container ships. I mean, again, assuming that we find something we feel makes sense and it also makes sense from a price perspective and from a chartering perspective. I mean, other ways to use our cash is obviously debt repayment, although the leverage is relatively low.
In the future, we could discuss share buybacks, we could discuss dividend increases, we could discuss redeeming some of the preferred, which are, as you know, a more expensive source of capital, although they are at the same time very flexible. We do have alternatives. All those are being discussed and agreed upon at board level. This is not something that I can commit now. Most of those issues, although they have been discussed, there is no conclusion yet how we're gonna proceed. We still have some ships, some container ships coming off charter. These are 6,500 TEU vessels coming off charter end of 2022.
Although I understand that it's more than a year from now, still, if we have long-term contracted cash flows on those vessels, this is something that, you know, we're gonna consider as well. So I'm afraid I cannot give you a clear answer. We do have alternatives. This is a good topic of discussion to have. Let's see how asset prices go both for new buildings and containers and for second-hand vessels in both sectors we are now in. And then we'll see. But I can tell you that generally we are active. As we speak, we look at a lot of things in both sectors.
Right. Okay, perfect. I appreciate the time.
Thank you. Thanks a lot, Brad.
Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star then one at this time. We'll pause momentarily to assemble our line. Ladies and gentlemen, this concludes the question and answer session. I'd like to turn the conference back over to Gregory Zikos for any closing remarks.
Thank you for dialing in today. We're looking forward to speaking with you again at our next quarterly results call. Thank you.
Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your.