Earnings call transcript Q2 2023

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Operator

Hello, and welcome to Global Ship Lease Q2 2023 Earnings Conference Call. I will now turn the call over to Ian Webber, Chief Executive Officer. Sir, you may begin.

Ian Webber

Thank you very much. Good morning, everybody, and welcome to the Global Ship Lease Second Quarter 2023 Earnings Conference Call.

slides www.globalshiplease.com. company the our presentation find at website will that today's a on You

slides and control. slide of safe including differ those in statements usual, are, today's on results the materially As X expectations presentation. by call to you from presentation, current certain and are Actual may that due their remind nature, include assumptions forward-looking and that factors, outside inherently these based X are section many the and of of harbor the company's may forward-looking statements that described

would attention most Factors We year. also our was the like report on annual the your to XXXX our this to March in with XX-F, of which direct filed section on Form Risk recent SEC XX

our the indeed You or on on SEC's. can find website the form

of non-GAAP measures call forward-looking qualified statements which our this release reports in duty with these the disclosures comparable to measures undertake other refer please The We statements. we are reconciliations to that most filed to available also and financial this any in earnings do directly to the presented call GAAP, not with which issued morning, our we SEC. will refer update our All by -- the the accordance that we website. calculated earnings is on and the of during

Lister. Chief As industry. commentary usual, Tom I'm begin with Tassos will Officer, Financial our and GSL Chairman, by Psaropoulos Chief on our Youroukos, joined our a Officer, George today the George and our Commercial Executive high-level call

and current through quarter's I Tassos, recent Tom you the market activity, and results and then financials And the our environment. take the will

pleased to After that, be your take questions. we'll

pass X. slide the George. over to call now turning to I'll So

George Youroukos

us all or Ian, good today. and you joining Thank afternoon evening you, to morning, of

feeder at some rate activity First, a XXXX. that the levels market. spike of with stability X%. coming Charter that at and compare hovering limited overall the before capacity on those the modest showed favorably available chartering XXXX In outside recovery-driven and quarter few end, segment idle around to historical quarter, by remained standards, capacity second words at prevailed

course, will sentiment and However, of things it charter predict notwithstanding, ahead. to over how the quarters limited current difficult the market macroeconomic apparent the uncertainty evolve in make improvements liquidity U.S. recent in in

market we or lack speak, with extensions and will forward by visibility, when As opportunities which extend from arise. the most reflected cases. charter continue to In to conviction cover relatively contract as are our this duration signings we direction charter of short environment, seems recent strong charter a strong in benefiting both additional and

sheet importantly, We we requirements to through just floating no the have this we X robust XXXX. debt strengthen the to agencies. in both upgrade ever. as the our refinancing outlook as priced recent is our our evidenced by growth, a to stronger improvements selective balance continued support And competitively and with profile debt before ships that have quarter credit and purchased than Overall, has financed rating access interest XXXX, our from hedged debt credit fact such as and

platform disciplined existing a With million dividend attractive supporting $XX to and its allowing is value Ian. and call turn capital with focus buyback merit, to to and sustainable long-standing I'll Our allocation the forward. continue us providing also new buyback our authorization from value-accretive resilience, countercyclical us strong back while opportunities on our that, added program showing growth pursue which share going

Ian Webber

X. to Thank you, George. Please turn slide

about years TEU first a contracted top added agreed well In contracted as the $XXX includes half Here, of charter which liner reputable billion makeup of during tier $X weighted counterparties, across had about going XX, revenue. average which total, This companies. we X.X of XXXX, base, the our June with spread the of show charters collectively XXXX, of diversification of out. XX million and revenue over of is spread new we

show next the rate different across slide, scenarios. we illustrative guidance slide X, On

I always, want clear that is be very As forecast. this to not a

We and fully limited very extent XXXX. market are booked are through we days our fully exposure ownership covered. XXXX XXXX essentially are our have simply in our XX% Indeed, of spot contracted this illustrating and revenues the year of already over

You good can positive more charters of adjusted the rates EBITDA right chart, the come forward see our side in into but agreed at each of as on already effect. columns impact

which cash significant flow particularly environments. forward cover uncertain charter Our visibility, in welcomed is and gives us earnings macro

an Moving we show strategy. our X, allocation capital disciplined to of slide overview and dynamic

This and going existing like accretive renewal under and our conservative amount share Board growing only $XX demonstrated We commitment to the ability This fleet but opportunities approach buybacks, energy-saving availability the which has by forward. capacity at a during acquisitions shares our to X-year evolving transactions cash timing driven market. potential familiar with deleveraging desks balance refrained and which the contracted long-term to period, a the cash risks particular, levels. and opportunistically to selective million $XX to agree this is the fleet values with sustainable market cycle. point liquidity our of found I'd shows orange, and we providing to a our substantially prices highlight our pursue briefly $X would acquired the risk us both a you to latter this back full year. our in the leads to roughly when in This many I X In as we $X.XX growth take so value focus right permitting are of of create when for dividend our the believe did May section arose, be We leaves flows way recently record-breaking year invest in sustainable the of ships from will million far Despite the opportunity year, period opportunities limited in vessels spiked crossing growth only complements the for moderated and for that various indicated asset this and long-term basis. to uncompelling, further which This return the we've acquiring many buy industry. on authorization and to throughout fleet perspective ongoing best you, to our to retrofits and $XX buyback authorization. specific on in consideration million disciplined management the in continue cyclical million to X, of prompted making we disciplined when this our mix return a shareholder slide

TEU so that expense requires of we've we when that take us to aim a at returns These optimistic each slide acquisitions the and XXXX will were X provides in assumption additional attached and of We firm particularly benefit built ship. through ships. on XXXX, make and charter will comes our residual they details to of the months business or a to x value X,XXX demonstrated XX actions have XX X chase our growth doing shareholders, purchase only to and the our not

see, the $XX.X EBITDA SOFR interest vessels charters up can existing purchased to firm is to by debt headroom exercises high-spec caps. the options if price financed you the attractive are which covered ships EBITDA to million charter efficiency an of rate period. months of X.XX% debt. was extend XX XX beyond The senior hand million, to on $XX their these contribute at expected initial were XX-month our going million by secured of The $XXX.X energy and on As new cash

So has margin of and overall gives with debt the this of amortization tenor cost an very approximately debt. us X.X%, attractive X-year The an profile.

maturity interest X.XX% clarify, the With this rate SOFR to I'll to LIBOR previously turn rate cap. over the call a at XXXX, caps as being interest referred to remains of that, X.XX%. the Just the The effect their our middle they caps to of financials. due Tassos talk at end to we through economic But from to transition unchanged. year

Anastasios Psaropoulos

of Ian. first Thank you, shows in in XXXX. from for XXXX $XXX million XX Revenue of the highlights. year-to-date the million, was first million, half $XXX.X $XXX.X financial last the of our up million Adjusted EBITDA up from half $XXX.X Slide was half year. first

million income XXXX from the to $XXX.X net half first items normalized for Our of in adjusted half million XXXX. $XXX.X increased one-off of in first

sheet debt XXXX. reduced in we we down new since balance bringing number million that For ships the quarter, financed X gross million, second $XXX have for June XX, despite $XXX the approximately debt items, to by our facility the

We million is capital. cash $XXX.X of million on in with restricted advance. in $XX.X the quarter $XXX and our which that million working had end, balance being The of liquidity of million sheet charter covenants $XXX.X at hire covers minimum balance of receipt

during shareholders XXXX have since buybacks of million the buybacks $XX continued and to XXXX. dividend quarter, us to third half with million around to the also quarter bringing and return first through our capital We $X in of $XX million quarterly

additional giving of our part million are As with flexibility Ian indicated, new authorization, allocation share has valuable a going buyback $XX an important forward. buybacks capital toolkit us

managing our senior past July grade success our Moody's notes upgrading rating BBB S&P by KBRA the million stable multiple investment improving Notably, from us positive, our reaffirming our secured BX, BaX in rating quarter of this sheet from recognized XX, outlook balance credit to agencies was and $XXX to X.XX% with XXXX. due

Now turning to slide XX.

our We are of lowering debt. and delevering cost

our in scheduled progress sheet down year balance from to this nearly You with $XXX million chart can the amortization our derisking set see our alone. pay

and interest down close keep lowering that despite XXXX. the rate financial from X.X% at year-end to basis continue levels to rising XXX X.X% debt at overall cost above to our of points We level leverage overall our the environment the

schedule I Tom. amortization the deleverage. aggressive to that, us further call track derisk is will Our and pass With keeping to on

Thomas Lister

lower mid-size relative ships the and slide arterial infrastructure X,XXX of map other ranging which within ship about and trade larger routes on XX,XXX Thanks, the presentations, operational ships port in the the to can of their Tassos reliance support previous deployment deployment range, map roughly on namely where the As our sizes emphasizing top reach. them. global their The flexibility smaller The on hand, TEU. XX the the and quarterly shows from ships shows GSL size focused, TEU is main highlights

prefer and supply more macro rather side than on current the data fundamentals, to particularly the can you visibility provide have understanding we where we the with with focus In uncertain speculation. market environment, forward

XX. Turning to slide

This the and in the chart, chartering extent You end, come top tonnage to idle of about back the a market. across shows the can that X.X% to long-term see years year. to the small at continue operators quarter has recent both recharter capacity need does into speaks and happened dropped down earlier fleet global that charter a that uptick in on following

chart lower shows The recycling. ship

the uptick continued been XXXX. total limited and the versus during tonnage, container the availability has recycling demand far up though ship and pause near XXXX Given so of noticeably was in recycling in muted

demand strong particularly further not XX we relatively among removed have of already likely would to over that or from XX seen last the forward, vessels we the see Moving the months more. vessel period spec expect extremely had been if deletions, low service to

takes has a book, at order growing. look XX Slide the which indeed been

segments large And limitations such to the ships, X.X% although there the And to ratio years our XX,XXX that manageable we more fleet order XXXX. which a which for protection growth in segments keep is practical service, on only a old, overall to we over mind assume focus. a trade fleet book order only it sizes is lanes see TEU can of book physical scrapping net there if ratio XX.X%, important ships are of provides for XX some the is focus could currently While have ships our of focus marginal XX.X%. now through and

charter Turning XX, slide the to market.

of levels. are his but pre-COVID lack wrap can the up market to said down peaks, current with on direction, you limited forward. combination back And recent rates As going I'll macro charter a predict challenging still uncertainty generally George will and slide remarks, rates as of in above XX to see, how XX. and that, liquidity make are opening turn to it the call evolve But from George

George Youroukos

up then open Tom. I'll line questions. for the summary, a and provide Thanks, brief we can

have Fully further and billion renewals. on cover of charter average contract X.X including our service XXXX relying excellent liabilities, XXXX an covering and We dividends without debt through years. all over $X of CapEx

this point We in strong have at the see cycle. additional but sheet in balance building value also a liquidity

until leverage, is below which XXXX, reduce have requirements financial Xx. refinancing to our no and have We continued we now

floating the debt debt capped SOFR fully Our basis rate it. floating to points, at rate under XX accommodate we and remains additional incur we have should headroom with cap hedged still

the basis is XX. close finally, cost we to prevailing of way come points, remains Our in below And to which rates overall XXX interest market today. slide debt

a charter is from asset concern the forward at remains and As in value recent macro quarters, uncertainty get is the large. sector for market. normalization difficult this installed, currently visibility time and rate at to Charter much it

guidance with cautious by the that recent years. sheets A they completely are operators in period their extraordinary I would rest on of balance the of liner providing number earnings transformed approaching Though note are XXXX. this

continued at are to million $X.XX have flow buybacks rate As common since our capital bottom and through an to last quarter of we cash we third $X shareholders as to of annualized well share return as line growth, continuing this see per quarter. in XX quarterly dividends XXXX, including million

buyback flexibility forward. with the going million giving And new us $XX added authorization,

recent is of with our very approach, delivered while QX the Our risk during financing. course disciplined also upside acquisition X of cash which attractive and low our prioritizing vessels, to highlighting potential, strong flows continued access consistent

and disciplined intend we best, do doing way through-the-cycle continue forward, to a create value maintaining long-term capital securing dynamic we to sustainable Moving a shareholders. charters for and perspective what new our allocating in

your take to happy be will we that, with questions. Now

Operator

Instructions]. [Operator

Jefferies. the comes question from first Your Nokta of Omar line from

Omar Nokta

very insightful details. in Always

to just that. this appreciate years past from were year, have provided perhaps of deeper anticipated terms charter I we've liner just lot bit. month ships market. ask, wanted commentary able the bit to a securing into than did seen things I a dive think maybe over pretty owners But X liners a a of you or to here at were little the higher rates us slowed So in Earlier want so, get rates. the term busy I spot and X surge maybe to just

environment busier of Is any rising there this somehow liners term freight in -- still too of the is is looking charter that at sort rates? it for of into going of Or all? that Have early? vessels or gotten market sort pass-through

Thomas Lister

question. It's Tom. the for Thanks

it's think still too early. I

collectively, in As George fix pause, to while shorter and there's been the charter a the little the bit how a on fixing people, going tending said to remarks, going in market forward. clarity little of a are say, market until feels have for still they're hiatus what prepared like periods bit let's a is evolve more we ships

harder have In by activity bigger relatively terms anyway. so tied mean have larger bit. it's sizes, rates come charters which call there's durations because to say the So in up limited that I because remained softened are I a firm. on the long ships smaller rates such would although in many perhaps sizes, have

a wait it's So sort going see on at the of and moment.

Omar Nokta

back for more obviously of looking bit but as And makes in they I the say, How X sense. to still or in things Yes, deal-making May. you guess compared Or did let's terms -- ago, that are opportunities, stagnant? is are of months kind are you ships a now ago deal, you months X wise, did X compelling? the more opportunities it becoming right

George Youroukos

been charter which with able investment Right market thing to away. this our within will get continuous charter we the Omar, more We now, on we're of deals George. fit looking have seeing and into the flow there. deals is cherry a right before just deals way feel of we profile. a executed we'll the we or -- out flow Well, see have the is it deals, we that that looks, are continuous ones pick be There

want risk opportunistically not take stage. this do We to at market

such that ships. We sense make are not price levels levels a move of at would yet for

So a is, constant flow. yes, the answer is there deal

choosing and these flow Now we between what picking do. is deal

Thomas Lister

sort and is Just comes context we're it the in arise that a market. focused opportunities to of in might a But to it's prudent on cyclical on if macro-outlook. to of quite building which crucial liquidity, anyway being the that position market also in capitalize add strongly to uncertain

looking liquidity continue the the ships we liquidity down to be on over of course built somewhat able order be rebuild quarter, to to while and during we of time and to we drew the to resilient that would the buy that some So be X in we opportunistic.

Omar Nokta

clear. over. very That's I'll turn it

Operator

Securities. question line of Your Riley Burke the comes next Liam from B. from

Liam Burke

Could I statement on is balance rebuilding liquidity? in shape. the just jump great that on Obviously, sheet final

liquidity, when looking buybacks? you're that on You on that's think your the cycle. vessels. don't affect you that But does flexibility healthy grow. an had to I How a want acquisition of dividend thoughts you pay through rebuilding area X nice the last

Thomas Lister

crack possible -- allocation And let's on be cycle. the through Liam. overall a this, as in try we to allocation. of capital have at put capital as the context buybacks Buybacks I'll well, thoughtful

$XX that worked So allocation of the buyback saw, allocation renewed almost $XX we or as put the having we think, so all place, year. million of last you million I through preceding in in April

important buybacks So will definitely an of toolkit. the remain part

capital and prepared his look I one hand, other the buybacks always will Tassos hand, allocation, at but included the remarks, in said risk think opportunities. all context on in on of, we the

work us investors put for the is to dollar cycle? build for every way to which So value the to through best

Liam Burke

terms looking Or to look charters, vis-a-vis past Are on the when question at have in potential shorter a they sacrifice facing do holding recharters do longer-term shorter little how still they you're Omar's of how here? if spot And durations? rates, up? -- you a durations,

George Youroukos

Well, XX-year much a of it right do varies can on that. much small charters. at ships based ship. all, very do can aren't it's very now, more. a the Very ships market. bit year Smaller many, size do the George a Liam can maybe Panamax, Post if barely in there Panamax

do know, a don't they we X. So year max probably but could

what and matter of requirements the have X fulfilled ago the So their get see a a they're is longer charter giving to months duration. right ship of now, charters a dropping It's a duration. we not lower

the plan a X X ship, It's line. or the on of That plan needs they or in year their on doesn't the work. year employ to X really whether charter what need order depending year

Thomas Lister

on could feeders for get a minor off to earlier, up months, correction to up saying tongue think to I of Sorry, that's Obviously, Liam, just the slip record. years the XX that charters. XX by correct started George

Liam Burke

the assume past So very that go right months. XX just

Thomas Lister

hearing We're any this end. on further have not anything questions? we do Operator,

Operator

[Operator Instructions].

Your of from the next Mehrotra question Deutsche from Bank. comes Amit line

Christopher Robertson

This just technical that vessels? can the those terms reefer ask on And Can on acquired wanted total of of I out the is guess, the slots vessels Chris Robertson me in technical just about on about specifications. remind talk spread differentiators recent for to fleets? the reefer Amit. you were or, X I you amount slots

George Youroukos

don't the have would highest total we in highest. generally, say to the capacity. slot probably of the One, fleet. reefer hand capacity reefer total But comparison have for do that in I the our I

those been back on very Denmark. come at they Now built spec. and in spec dense Shipyard built X But have They you. we were can because look high very ships, that they're high to in

and They capacity, changes. have to reefers. high reefer have there's so also the capacity And they the and been beyond a changed reefer also economic so very they also increase modified to be have X,XXX propellers have EST's, high they capacity the is

So these fuel COX ships have a consumption and very emission. good

Thomas Lister

And attractive. you've looked that, apart most the the economics, if obviously, even Chris, tremendously the assumptions you as quite at conservative are from take returns

So firm each $XX X said, debt over over generating Ian we've And during little amortizing of as these over contracted of put -- they're $XX a the million periods, EBITDA. charters, they're years. million on ships, the

taking value recycling downside on a got the tremendously place. in the you've asset, So the plus cash contracted flows first proposition attractive

we it's And for employment in promising the high and ships onward these that that obviously mentioned, have efficiency investment. enhancements has will George that also reasons the original future, plus to eco the that, think drove ships reefer a

Christopher Robertson

sense more around get recovery manufacturing just more exports. manufacturing are the what a in I seeing has terms more at in the a recovery by just of you know there. do of over improving think year been of service the the stage the and This terms sector what of that a sense. half trying But of to in question, Yes, they're characterized base. terms that is here first market you Okay. general of lot Chinese makes in

Thomas Lister

in crack that. themselves, speaking, This recovery is think lines is say of But I lines closer the a seems that have the Tom, a flow Chris. post-COVID China shipping of view it out be bit I'll generally are the the I that would that little China. real has to at lukewarm. cargoes But been the honest, to

from that a So driver I perspective. there's wouldn't tremendous coming say

that the lot about talked the a And anticipated begun demand first I restocking aware the quarters the far maybe and on was also say, yet were we would hasn't that are as and side. X second linked, during as

add comes has if earnings it to wants back to run of again, So this uncertainty call. that. know sort of theme Guys, through anyone that don't I the else to

Christopher Robertson

quick me, you mind. for Last don't guys question if

vessel any we of? remainder the you the anticipate pressures inflationary to on do cost Just aware that or be of any for are that the pressures there OpEx, year out need

George Youroukos

pressure and, creeping related. up, salaries because inflation the it's crew officers. that as cost something main X of lubricant Apart the come has up. down course, wages, and Lubricant see, That's traveling. the those of Well, goes we is from is on fuel prices fuel the of

tickets travel, and are As we all that up going up all know, we see we up continuously. airline and

these X So the -- X positive. is are

other material. are but inflationary we costs, not negative The anything really that do see X is

Christopher Robertson

All I'll it. Yes. turn Got right. it over.

Operator

The Edge. next question the Value Climent line comes Molins of from Investor's from

Climent Molins

wanted already It's to of trading has for foresee? But new the implementation been exacerbate regulation premium kind further could Union do to impact but covered, system. of you eco the ask this bit early. What relative emissions the a non-eco Most European I still tonnage? about upcoming

Thomas Lister

This is good again. Tom, Very question.

financial shipping focused the worth their you the biggest a upon midsize they would still lines getting the with "eco smaller gone we for the the see the since into where that noting, think have gone in we of essentially the of ships into cyclical upon can. that's are which result has the ships super most efficient investment concentration of tonnage saw been however, bigger focused. COVID exception global fleets crisis, of sector as the always that high I that the and It's most tonnage"

is peer non-eco, around the about was meaning XXXX. of built that to share it The prior lion's group

a of low on right, and we ships focus has on but likely ETS Because initiatives EEXI the relatively have eco the are other fleet. attached dollars of of expect that or in group implemented efficient so we're the decarbonization the EU global further shape which peer other decarbonization important, against is do have to and the prompt ETS you're the are slowing they a EU lower sharpen far them. ships. but relatively concentration So to competing CII been What regulations concentration don't hand, a for to

you incentive dollars dioxide emission the that economic dioxide course, very mitigate clear and as by down. most carbon to attaching carbon a to ships do Of far, start to efficient quick is as slow EU There within way soon to that waters. of the and actually is

Sorry, a rather but helpful. hope rambling response, I

Climent Molins

all that's for helpful. No, very me. That's

Operator

Thank further the you. There questions at no are this over turn time. back Mr. Webber, call you. I'll to

Ian Webber

much. Thank further listening. After Thank vacation all a you for you forward look our to for you XXXX third We the after your period. you very Thank giving questions. summer quarter update results.

summer. Thank wishing excellent So all you an you.

Operator

today's concludes call. now This conference

You disconnect. may now

Global Ship Lease (GSL) 3 Aug 232023 Q2 Earnings call transcript