Thank you for standing by, ladies and gentlemen, and welcome to the Costamare Inc conference call on the fourth quarter 2020 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, Tuesday, February 2nd, 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. During the fourth quarter, the company continued its profitability. On the back of a rising market, we chartered in total 20 second-hand vessels during the quarter for periods of up to 10 years, substantially enhancing both our contracted revenues and charter coverage. The new charters contribute north of $440 million in incremental revenues and have a weighted average duration of about five years. On the market, the idle container fleet continued to shrink and now stands at about 1%. Supported by healthy demand and the chronic shortage of vessels, charter rates have been on the rise. We have 10 ships coming off charter over the next six months, which positions us favorably should current market dynamics persist.
With liquidity of above $200 million, a streamlined debt repayment schedule, and minimal CapEx commitments, we are well-positioned for a healthy expansion in a volatile market environment. Turning now to the slides presentation. On slide three, you can see a company snapshot. More than 46 years in the shipping industry. Uninterrupted dividend payments since going public. Strong sponsor support. Never had to restructure our debt, a smooth debt repayment profile, fully aligned interests, no related party acquisitions, steady management and ownership, and high growth potential with no legacy debt restrictions. Moving to the next slide. Here you can see the resilience of our business model, steady revenues and income in a highly volatile shipping environment. On slide five, you can see the highlights. Adjusted net income for the quarter is $32.5 million, and the adjusted EPS is $0.27.
Our adjusted net income for 2020 is $124 million, and the EPS is $1.02. We do maintain a strong balance sheet with liquidity of about $210 million. Book leverage of 55%, market value-based leverage of 37%, and no meaningful debt maturities until 2024. Moving to the next slide. We have chartered in total 20 vessels during the quarter. The new charters represent an increase of $440 million in contracted revenues and have a weighted average duration of about five years. As you can see, we have chartered four ships on a forward basis for a 10-year period at the rate of $33,000 per day per vessel and a 1996 build vessel for two years at the rate of $31,000. Slide seven. The charter market has continued to rise on the back of positive supply and demand fundamentals. Time charter rates increased substantially over the last six months.
The idle fleet is 1%, and the order book stands at 10% of the existing fleet, which is a historically low number. As part of our fleet renewal program, we continued the sale of older tonnages. Over the past quarter, we sold a 21-year-old container ship and have bought three younger vessels. The two 2004 build 7,000 TEU ships are expected to be delivered this month, and upon delivery, will be chartered to a leading liner company for a period of two years. Slide eight. We will pay our 41st consecutive quarterly dividend in February. Insiders have been participating in the DRIP instituted in June 2016 and since inception have reinvested in total $95 million. Slide nine. During the fourth quarter, the company generated revenues of $119 million and adjusted net income of $33 million. Based on the above, the fourth quarter adjusted EPS is $0.27.
The adjusted figures take into consideration the following non-cash items: accrued charter revenues, accounting gains or losses from asset disposals, prepaid lease rentals, and other non-cash charges. On slide 10, you can see a summary of our capital structure. Our leverage sits comfortably below 40%. Net debt 2-1 2-month trailing EBITDA is 2.4 x, and EBITDA over net interest expense is at 5.1 x, when our covenants have a minimum requirement of about 2.5 x coverage. On slide 11, we are showing the revenue contribution for our fleet. Almost 100% of our contracted tons comes from first-class charters like Maersk, MSC, Evergreen, COSCO, Yang Ming, and Hapag-Lloyd. We have today $2.4 billion in contracted revenues, and the remaining time charter duration of about 4.4 years. On the last two slides, we're discussing the market. As already mentioned, charter rates have significantly improved, especially in the second half of 2020.
Box rates have increased by more than 170% on a yearly basis. Slide 13. The idle fleet has been reduced to 1% from a high of 11.6% in May 2020. The order book stands at 10%. As mentioned, we are well-positioned to capitalize on opportunities in this market environment. 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'd like to ask a question, please press star and 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. That star then one to ask question. Your first question comes from the line of Chris Wetherbee with Citi. Please go ahead.
Hi, this is Liam on for Chris. Thank you for taking my question.
Hi, Liam.
First, I just wanted to ask a little bit about your charter strategy. It seems that most of the vessels you rechartered during the quarter were for about one to three-year periods, but there were also four vessels that were put away on 10-year charters. I just wanted to ask a little bit, get a sense from you guys on what your appetite is for longer term charters and if you're going to be focusing on those as opposed to more of the shorter term charters that have been kind of making up a little bit, a decent size of your book lately?
First of all, it also has got to do with the time charter rate. In today's environment and considering where the rates are, I think from a shipowner's perspective, it would make sense to lock in contracted revenues, especially from first-class and bankable charterers for a longer period, as opposed to chartering a ship for one year. For instance, as you can see, we chartered the three 9,500 TEU vessels for a period of three years at around $40,000 per day. We could go for a shorter period, but we felt that the $40,000 for the three-year period for those vessels would make sense. Now, specifically for those four 11,000 TEU ships, these are 2016 and 2017 build. The 10-year charter, which is on a forward basis, so the vessels will be delivered to the new charterer close to mid of 2021.
You have a time charter coverage until mid-2031. The $33,000 for those ships for a 10-year period, I think it is something that makes sense. The long story short, in today's market, of course, assuming that the charter rates offered by the charterers we feel make sense, which in most cases do, we would love to go for a longer period and have incremental contracted revenues rather than go for a shorter period, even if the charter could be marginally higher.
Got it. Just also so I understand on the 10-year charters, because I did see that the rates are obviously a little bit lower than what they were previously contracted at. Is that kind of just because you're playing the market a little bit because you have to, like they're not going to be delivered until 2021, and then you guys want to just kind of lock it in at a fairly high rate, even if it's a little bit lower than what your previous rate was?
Yeah, the previous rate, it was in the region of $40,000 +, but it was for a year, or a year and a half. At this point in time, a year or a year and a half ago, we decided that there was no visibility of the five or 10-year charters. I mean, we decided to go for a shorter period at the highest rate available. Now that the market fundamentals are such so that you can find 10-year charters for those vessels, we decided to go longer for 10 years at $33,000 per day. When those ships were fixed in the past, a year and a half ago, the market was not there for a five or for a 10-year charter. Market fundamentals have improved, especially after the second half of 2020.
Got it. Just one additional question. I know your leverage ratios have gotten a little bit lower on a historical basis. I just wanted to ask a little bit about your priorities in terms of your capital allocation and how you might leverage your balance sheet. When you guys think about that, what would your plans be or thoughts be around more aggressively pursuing secondhand vessel acquisitions or maybe even new builds? An d then how you compare that to your thoughts about maybe raising the dividend or any other sort of capital allocation priorities?
Yeah. The leverage we have today on a book basis, leaving aside adjustments and market-based, you know, valuations is 55%. If we take the market adjusted value of the assets on a charter inclusive basis, as per broker valuations we have to obtain for our financial covenants, the leverage goes down to 37%. I think that no one would disagree that this is a low leverage level. On top of that, we have a cash of close to $210 million and a very streamlined debt repayment schedule with no meaningful maturities up until 2024. Starting from, you know, that basis and on a capital allocation question, I think that generally we have been active. We are looking both for secondhand vessels with or without charter, younger or like older vessels.
We don't have a problem with older vessels as long as the returns justify the acquisitions and as long as the physical condition of the vessel justifies this as well, o r also new buildings. Now, the dividend, this is a question we have been receiving quite often. First of all, we own close to 65% of the company, so you have fully aligned interest between the sponsors and the rest of the shareholders. We like dividends. Our goal would be to raise the dividend. However, we wouldn't hike, but first of all, the dividend we have today, it is definitely sustainable. Secondly, increased dividends should come with increased contracted cash flows going forward, coming from, like, great working charters. We are not against the dividends, it's a matter of deciding whether we're going to be seeing any new incremental transactions coming in.
What's going to be the chartering in the next couple of quarters and whether we're going to be able to secure similar long-term charters.
All right, great. Thank you very much for taking my questions.
Thank you.
Our next question today comes from Ben Nolan at Stifel. Please go ahead.
Hey, good morning, Greg. I've got a handful of them here. One just for record keeping purpose or modeling purposes. Last quarter, you talked about the acquisition of a 5,600 TEU container ship, 2006 build. I didn't see it anywhere in the fleet list. Could you just update me on the status of that?
Yeah. This is a vessel that has been bought and that will be delivered over the next months. Either upon its delivery or the latest, I hope, during the next quarterly result, it should appear on our fleet list. You're right, it's a 5,600 TEU vessel, 2006 build. It has been bought, it is a matter of the delivery taking place within Q1 of this year.
Okay, perfect. That's helpful. With respect to the two 6,500 TEU ships that you acquired, any color on the price? Maybe a better question is, you have a handful of new vessel deliveries coming. How much CapEx is collectively on the schedule over, you know, the next six months or, you know, for 2020 effectively?
Yeah. Those vessels, the vessels that we're going to be buying, we're going to lever them. Assuming a leverage between 60%-70%, not higher than that, I think the sort of equity that would be required, it's going to be minimal. You talk about some millions of dollars, nothing special. Plus, the new buildings that we still have to accept delivery of the two 3,000 TEU chartered to Yang Ming that will be delivered within the first half of this year. The CapEx commitment there, our sort of equity commitment, because these are fully funded, it will be in the region of $12 million or so, $12 million-$13 million. So in total, together with the secondhand ships, I think we wouldn't be north of $25 million-$30 million max.
Okay. That's helpful. [crosstalk] Including the debt gets you to sort of what the all-in CapEx is. Lastly, sort of circling back to a question that you'd talked a little bit about, you know, the possibility of acquiring ships and looking at secondhand ships. Obviously you've done a few of those in the last quarter. But, asset prices have really come up a lot, as you would expect with longer contracts and higher charter rates. At what point do you start to you know, prefer to simply bank the cash as opposed to, you know, potentially taking an increased level of residual risk with asset values if the market should soften at some point in the next couple of years?
Yeah. Normally when we buy a vessel, a secondhand ship, we have a pretty good understanding of its chartering arrangements. Considering that today, for a secondhand ship, you can get a two or three or four or five-year charter commitment, we would buy them on the back of a commitment for a minimum period so that we would make sure that today's acquisition price, combined with the charter commitment for a minimum fixed rate, would make sense. Otherwise, buying something at a price which you can argue that it's high or it's higher than compared to what it used to be a year ago, without a good understanding of the chartering arrangements that you can put in place, this is something we wouldn't do.
Whatever we buy, we have a pretty good understanding of how much we can charter it and for how long, and we make sure that we feel comfortable with the residual value risk for this secondhand vessel acquisition.
Right. Well, maybe the inverse of that question is, you know, obviously quite a number of the big liners have been actually buying ships themselves as opposed to locking in charter commitments and paying premium values for those ships. Are you in the market to potentially sort of sell maybe some of your assets in order to take advantage of the higher prices and further, you know, strengthen the balance sheet and position yourself to be countercyclical to acquirers of assets, possibly?
Yeah. We sold one vessel this quarter. I think it is the Halifax Express. This is something we mentioned in the press release. We are doing this as well. Of course, in the future, we may decide to dispose of more vessels. As you may recall from, you know, the press release of the previous years, we normally don't sell a lot of ships. We normally tend to buy them and hold them and manage them for a period. This ship, because of market conditions, we decided to sell it, and the equity released to be put in other vessels. I mean, we would definitely consider selling additional ships if we take the view that the cash received can be accretive or more accretive in other acquisitions or if it could be used in order to renew the fleet. Yes.
Okay, perfect. Last for me, as you mentioned, obviously cash flow is a lot better. Some of those Preferred are callable. I suspect that that's still a pretty valuable part of your capital structure, but any thoughts about potentially calling back any of the Preferred?
We did buy some Preferred, the most we could last year, when the Preferred were trading at much below par. Due to a lot of legal restrictions, we couldn't buy more than what we did. I know that these Preferred, they have a yield which is on the high side. We pay for that because these are truly preferred instruments with no step-up options and truly Perpetual. This is something to consider as well regarding our capital allocation. It could be the Preferred or most probably it could be new vessel acquisitions. If we don't find any, of course it is the preferred, it's the dividends, it's share buybacks. It's a lot of things that we can do, but the preferred is definitely one of the options. I have to say, however, that all these are board decisions.
These are not issues that have been the dividend raising or the preferred buyback. It's not something that, you know, was discussed in the latest board meeting. Generally, these are thoughts that have to do with how we use our cash going forward in order we don't find any new transactions. Today, I would say, as you can see from our press release, we are generally active, and we think that the transactions we do together with the time charters we attach to those vessels do make sense.
Okay. All right. Perfect. I appreciate it. Thanks, Greg.
Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star then one. We'll pause momentarily to assemble our roster. Ladies and gentlemen, this concludes the question and answer session. I'd like to turn this conference back over to Mr. Zikos for any final remarks.
Thank you for dialing in today and for your interest in Costamare. We are looking forward to speaking with you again at our next quarterly results call. Thank you.
Thank you. That does conclude our conference for today. Thank you all for participating. You may now disconnect.