GSL - Earnings call 4 2023 | Global Ship Lease, Inc.

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Operator

Hello, and thank you for standing by. My name is Jeannie, and I will be your conference operator today. I would like to welcome you to the Global Ship Lease Q4 2023 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Ian Webber, Sorry, Chief Executive Officer of Global Ship Lease.

You may begin your conference.

Ian J. Webber

much. very you Thank welcome Conference Global Call. and Quarter Lease, XXXX Earnings to everyone, Ship the Fourth Hello,

You today's website presentation find on can the our at slides www.globalshiplease.com. that accompany

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

We most would to recent attention filed XXXX. your our which Risk report, was to on was the also like annual And of XXXX. Factors March section, that direct in

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

our SEC. not We our by other these All are to do statements. qualified the and update reports with of disclosures statements forward-looking filed duty undertake any in

non-GAAP this earnings accordance is we usually on the we presented available which in refer financial with to the of morning, this issued measures that and our also comparable the to to reconciliations directly please call, website. The calculated measures during release GAAP, refer which will most

Anastasios Georgios Tom today Youroukos, Chief our high-level usual, DSL then quarterly And and on answer begin you some we'll current I Executive commentary George As questions. Financial to Tom industry. the Officer; that, Tassos, financials results environment. and your activity, our I'm will by Officer, and our our Psaropoulos; pleased and be will Lister. our After recent market take through the joined Chairman, and Chief Commercial call with

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

Georgios Youroukos

good where around from situation, today. the cape you and stress visible in and evening afternoon of longer or rerouting Red Elevated away much route much fourth the uncertainty the quarter. the to Ian, services instead, the defined most all so and joining deteriorating of you, was hope. the security liners the of morning, macro This good geopolitical Thank many canal taking Sea, us

the last. causing to the market are In is and normalization disruptions Containership grow and forward It has of know cash supply-demand the This we how Charter in to XXXX. work our rates hard continue Red with to to lock firm impossible through long charter and balance core market, been contract order Sea March that strategy, meantime, while the underway, has cover, tightened consistent visibility. supportive, will to in additional conditions in flows to deferring

balance value X.XX%. back which no of floating before On our strong our by flows, build exposure to and cash kept fortify suffer Furthermore, our at the we delevering. equity also we continue have XXXX, sheet contracted rate have time to until we interest needs refinancing

quarters a to business annualized our remains expect the in the we shares. continue selectively model emerge and act same positioning ahead. the At and time, capital to active allocation sustainability of dividend Our priority, are we opportunistic focused to investment $X.XX the GSL's be on resilience and ourselves on The ensuring opportunities approach and unchanged. to in key of months remain buyback

value of our Ian. shareholders. all building and is that, Driving With focus actions turn to call long-term for our preserving back on the relentless I'll our

Ian J. Webber

to Please Slide X. turn Thank George. you,

charter base, of top-tier illustrate of we Here, extensive the an diversification companies. composition our liner whether across

capitalize hard the weakening the $XX contract adding added million to in million a fourth we despite quarter George work that as momentum going market positive $XXX And week XXXX, the continue grow extensions were to of revenues. new into said, XX we that time. at contracted XXXX on charters or During signed cover. to Almost

average remaining X.X contracted with approximately an $X.X had years. of revenues we XXXX, XX, December of of duration As billion

rate scenarios. an earnings potential on under provides our of view Moving This charter illiterate to X. different future Slide

not a is As in that prior quarters, forecast. it's emphasize this important to

with However, that XXXX in to XXXX a to Slide and strong which XXXX, is contracted. XXXX itself X. start days On you year, off of see been a by has can results our XX% record was ownership surpassed already

and sustainable or capital $X.XX our dividend buybacks is and allocation We dynamic per review execute on basis, maintain to quarter a yield $X.XXX a of strategy. of we per annualized continue an disciplined we over opportunistically. dividend X%, Here, which share their

approximately in in our an means X% $XX.X quarter than million under XXXX, share X our aggregate count We This worth otherwise more in with of And of market, shares including is Since it that lower $XX.X have today XXXX. year-to-date $X we've open board XXXX. than remaining QX repurchased authorization. XXXX and million of been. we million $XX million shares would of have

our also and to deleveraging balance value believe period sheet, prudent of in and to equity geopolitical be We continue which uncertainty. we to especially macroeconomic by derisk a build

commercial environmental and vessels. profiles New return financial certain our upgrades, expected regulations to our to have customers add of to value pressure and accordingly technologies and decarbonize, the improved we're acting on chip and

such it for to is by cash that resilience the liquidity, is is real believe in industry After a also and acquisition both into the ours, a buying assets during to important segue way pursue which value to as long-term optimality cyclical for We all maintain neat Slide down opportunities. X. cycle, build

important before, we've X that slide it the is shown points. and This underlines

there cycle. is is that the value shipping in container The first

value asset transaction uniquely closely and unlock to the timing that corresponds that To getting drive. all-time disciplined the XXXX, second spiked cycle term the Cooper and in acquisition potential up in related on The bar orange to When chart XXXX. values to the illustrate point risk is this, highs.

sits in in we to buy mid-XXXX, until this chip We when from asset correction single period continue TEU a values. today. didn't actually approximately later, locked rode last the years X with sharp in purchased we that X,XXXX charters After But market Charter year support earnings charters attacked, XXXX. downward during the up attractive and May

only, when we compelling. Rather, the ships to producing growth we risk-adjusted pursue is compelled can have growth's return record you see track profile So strong are of for a not sake.

our Tasos Now I'll over to discuss pass the call financial. to

Tassos Psaropoulos

is snapshot financials Ian. our a of and X XXXX Thank Slide you, highlights.

key in line with items, EBITDA Our all XXXX. adjusted XX% $XXX P&L XXXX, million, over to on improved up

during XX% purchased almost year, even the the X by we reduced partially as debt gross finance debt Our ships. and

Our $XXX that with at cash is of needs $XXX which covering advanced charter of hire million remaining capital and is million, the under restricted, most forward. just was $XXX our year-end of position working receipt moving governance million liquidity

will we have This of the impact You an taken charge the X our $XX.X already impairment dividend XXXX. purchased capital delivery. viability equity normal also course of share And while business has in we across result continued and X remarked, to also see upon opportunistic is building that vessels noncash, by return as Ian, buybacks, George via have have sustainable million, charge value is to impairment and of testing. shareholders

stable delever BB our over stable of BAAX cautious refer credit strategy and BB+ and Meantime, cost our credit corporate successful to on prudent debt approach. time. Slide reduce agencies, our rating to and X XX of illustrates

We outstanding are our reduce on to track by to end the of from X/X XXXX. debt XXXX end the of

see to That credit falling a cycle a adjusted our debt interest prevailing points, our net can transformation side XXX debt adjusted end And and market reduced the even of EBITDA ship from you in and right the leverage the basis of capitalize change have now the to rates potential as significantly, of the our implication XXXX. overall our will profile. profile resilience slide, down total We deployment. profound during cost discuss with with X.Xx rose. focus at radical on for for at year-end of the on X.Xx is to readiness market Tom XXXX, opportunities to the our for

Thomas A. Lister

Tassos. Thanks,

TEU Moving to to times flexibility, our preferred Slide is focus top a XX. high-specification, structural smaller We in map XX,XXX reiterate as from about The their TEU. which good and midsize size hedge highlighting deployment illustrates ships the ranging reach. our clear their X,XXX these range, widespread of and uncertain such on containerships operational within

disruptions at of map be should tend We'll In of arterial reflects these the in ongoing result more the contrast, trade repeatedly. I suitable neither the constrained lower infrastructure. with containerized back ships of the TEU deepwater Southern around Sea. reported Red the larger, XX,XXX deployment Africa, yet point port as which east-west emphasize shows to come main incidentally this or rerouting to maps routes larger the a of to that widely trade

Slide since XX, recycling. the Sea as Idle ship situation. fourth capacity again have of the view X.X%, capacity tightened during quarter, to but and increased idle presents a Red a result of

uptick was idle since XXXX, the accompanied return activity, for limited vessels expected, in far. scrapping of first the the a scale thus by As albeit time essentially as

many phenomenal earnings. container of Charter of due to 'XX lower specification and scrapping their ships saw and older lives XXXX, record-breaking and The deferred the markets extended

there situation the by which as in However, normalizes, being, time that scrapping. will in delayed is a been the for an catch-up the has the Red be Sea, there market expectation

million whether the earnings or ship to obliged go owners are may aging, dry gets in on look the XX. to mean both, larger poorly heavily $X Slide a likely scrapped. which a million of cycle, this forward shows the consider sizes. the book, well of typically Regulatory When what order $X We'll prompt by there's ship is to justified answer X-year ] a specified towards ships weighted slide. which ahead. dockings, be [ particularly And ship. ethyl's ship the through, challenging no, that on outlook investing the This may potential when at next slide is

XX.X% not is clear, which, an In TEU participate. book segments other book-to-fleet to to order of are relevant hand, midsized segments GSL words, in which but on the smaller the ships, meaningful. much other smaller, does still the and over XX,XXX order the for very ratio With be GSL

and with that and what versus of the invest drydockings. context saying Here, scrap age be by driven may and deferred is the profile about in smaller decisions I ties the regulatory important fleet older was midsized scrapping earlier

scrapping were focus shrink of for those and order negative would assume by ships we if our words, actually the XXXX, other X.X% delivering net numbers XX to growth. point, through old midsized out this they see net against and years smaller the XXXX. In ships would book over actually through Extrapolating segments all

this supply-side industry in for of does but probably an valve safety downturn. scenario, a the it event Now is the illustrate the extreme protracted

Sea put which the trade end boxes at what Under which the Suez we transit the some XX, container circumstances, Sea. normal sits around in Red XX% Red northern global the Slide for Canal, of On volumes, about containerized themselves, mean shipping. data the actually of disruptions are

container Suez the volumes However, Sea the to and capacity if much need the transiting it. on Red of as and at you trade, anything, are long-haul the XX% the the understates longer figure service trades more this play dynamics

the and So you Sea routing Red fact, in which waterway, in over in other XX%, the hand, the as impact is the this words, shown this Good divert to If is would on forced ships, are around shown at line X/X, yellow look then containerized through terms the Hope, if blue with normally of on traffic pass the global map. the of Suez you significant. the capacity, very on line, other Cape the fleet

around in around to is calculates to equal, holding were related diverted Suez containerized it else stating absorb effective and Sea of And all that way. this deal, the obvious, global this containerized feed Cape, fleet diverted already all if containerized an would a MSI, XX% capacity. fact, Suiz-related trades especially XX% being the in of Red as is estimated big XX% capacity be

which and Slide second at This Charter in asset highs After the pressure the XXXX rates both values XX, market half accelerating Charter downward looks been brings have of market. cyclical normalizing super with XXXX. and us XXXX, the of to

decline positive upward in early this and year-end been has converted into towards XXXX. was momentum arrested However,

market we're our I'll on while long our indicated on rates conditions XX are will We these and and to larger ships. the conclude provide is, anyone's How in update guess, right-hand will this for XX. an especially QX With are supportive cash grow flows, side slide, turn but prepared of currently charter the back the from earnings levels to lock do. to remarks also trending cover durations but Charter with our extending, on call, up last that, doing call best and of course, George Slide they you

Georgios Youroukos

of a Thank points. you, Tom. summary XX, provide we XX key On and Slide

XXXX any and through signings of years, from fully revenue, future our contracted at debt average an relying least service, charter, $X.X have extensions. contributions upon without the billion CapEx, covers X.X of or over We which

We July have ratings, credit very a investment-grade balance rating including due an for strong our secured notes and XXXX. sheet senior

before $XXX refinancing and have on of balance We restricted risk sheet, million of is much the cash almost no it XXXX. though

is Our below leverage X.Xx.

debt Our debt all-in and cost our fully hedged, is floating rate X.XX%. is

role. is playing now world the dynamic, Red with complex Sea particularly both significant The and a

earnings. to environment tightened sentiment, the this Now the but rerouting market in has on general both improved Freight fact, avoid Red containership for demand weighted Sea Charter and have, supply thus and materially implications

face they recent the current sheet uncertainty, cautious. But have the the by company aligner been Amid fortified importantly, uncertainty customers with balance upcycle.

on the liquidity value, and up, delevering, flows, building and by opportunities. focused shareholder to the shares a buying paying our right opportunistically on through capitalize we dividend, So for investment cash back cycle sustainable and growing resilience cash sum absolutely protecting building remain to

felt experience in forward level. from be while towards of as leadership to to your want appreciation the to on a for its days. Board can and to his Ian's end the the look initially transition contributed his influence aspect. appreciation during we Webber GSL quarterly questions, Before just he Board earliest my impact came take everything CEO, to that him benefit moment earnings we're welcoming the Ian I and every of Board final the express And to drawing board from continuing since I call and has company, and on sincerely the to

Ian J. Webber

an for industry the that years we've and CEO after as crisis has covered to XX up or in the which thank you much 'XX,'XX. so, very It's kind the serve worst super global the words. cycle past the ever well GSL's George, of financial been honor ever those best for seen conditions

took and possible. we of strong where The the the advantage company weathered storm, market

can with the those increase resulting XXXX been Tom, the company the in scale of having of and in with has the all had With is business and from merger throughout GSL strengthened end management going Beside also and March, ], to transformational these CEO in great intimately, the times the the team, time, forward gape. very hands. least and extremely With across Tom, rest increasingly not the be [ pre-to industry. GSL lead is team, carbonized. in an from expertise rapid well substantial Tassos, of George this the at He GSL positioned capable is

move So with to Q&A. on let's that,

Operator

[Operator Riley first Burke B. Securities. your Instructions] line from comes Liam question with the of

Liam Burke

rates. a We're tick seeing up in

of the seen of and have open XXXX And them quarter. counterparties we've activity are commitment up your fix. forward any First appetite either rates. for duration some higher quarter these recovering really been extend charters after the you What to fourth 'XX, move has on seeing you in or

Thomas A. Lister

the a add. George no for doubt, question. at thanks Liam, Tom. This have it, will I'll crack and is

supportive, in fix and Conditions has that to market charter has charterers absolutely and You're right. have longer. lifted the made for rates been willing

that now towards and fixed for months years. ships been XXXX as are So being fixed have months call for XX tail for, it, X X larger to X possibly of and would many are the fixed being ships X even end as

would quite say talking months specifically, that fix in -- I'm appetite ship I market at moment market growing I instances. larger and in by specification about of the way. the the say would to the a general by is the the some and GSL the there in that rather And forward the than higher number

progress, to So environment we capitalize of I but on we'll things update we're are call the say, you we moving while doing can QX can. would obviously on best And that well. earnings give directionally, an our

you as rational economically. expect, the however, are caution, that charters, I would entirely would being

to have And charter they in take options then their them, the those callable at -- to money if wherever charter they're option. extend. options tending for them. are So

use conversations of However, environment very no indeed there charterers I given if say, if from supportive no either But those making and charter, it. generally such are broadly. are is will in we're then more with extend we speaking, we look options, would and appetite to there constructive a

Liam Burke

Okay. Great.

target much debt coming for long Your Is debt in level is have term. in the there very line. you any that

Thomas A. Lister

value. Mainly to do the levels met little with the a I of debt has respond this to bit the question. fair

on are the current We position.

aggressive right to X.Xx. be that let's our we mentioned to approach comfortable the There the level us in this EBITDA But now, specific values on in adjusted conservative actually debt is down. level about repack we policy schedule, we amortization on fixed no a to, leverage, an goes has the of depending and where having we fair follow our led knowing We not as to say, of market. are And the were that assets stand. the current

Ian J. Webber

to a very build as cycle. delevering that add we're we the well. was Tassos Liam, to But conscious see way risk risk, that, to value saying, as and equity of through also Just managing as

we So life economic as line balance the that's as long building well depreciation clearly, of assets, sheet. derisking the debt then than faster as amortize the shareholder value the of as

Operator

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

Christopher Robertson

on is congratulations for Ian, Robertson Amit. Chris This the on retirement.

Sorry but be to go, still involved. see you I that know you'll

So good phase next luck in the career. of your

you kind the a were the making regards to to wanted Just around point diverse that to circle back the hope. good Cape of with

One of equal. that the points all it else was was

what or you to So I wondering vessels currently are speeding if not and degree? clarify whether was up could

Ian J. Webber

Yes.

caveat. important right. an That's You're

around So networks. Hope their effort companies speed, in we to seen have of the to Good an disruption line vessels of by the in Cape increase the mitigate

I will to think how at is end the to when our own period, to quarter, we settle in as holiday a everyone disrupted a began the will obviously, of be had react clearer in pretty probably earnest the first view have dust around Sea Red view the change to that serious the because, circumstances.

the you a enormous have is. it is put cork a And it's bottle, Sea Suez So natural Red as bottleneck to in then consequences. clearly, if going that and

short-term accelerate to their tried to vessel everyone So speeds mitigate impacts. networks, reshuffle

I state in early have we clearer we will view nature you sort of the think, the by of to however, speak including time steady May, networks, a vessel again the of speeds.

this fully up which absorbed global the charter both set asset of speeding rates has which as durations values underlying of offset indeed, ships degree diversion, seeing indeed and of fleet this the and capacity why by capacity the has effective But a the been you're not precisely to events. of even result -- is firm

Christopher Robertson

market what's you're opportunities kind to secondhand deep looking guys I Okay. question that opportunities? tonnage, of next guess market there potentially of Are how interesting like? looking liquidity And of the are any is for are Yes, as those currently there at? the you helpful. S&P opportunities the related my look current that's kind out evaluating

Tassos Psaropoulos

Well, there is liquidity indeed.

thing of little are as We the perception The the once up at or well. deals. is up the only bit, a appetite market goes looking sellers goes

the So an thing see it let's we to art the it's see We not still going stay market situation an now, clear up to deal. the seller the whole an do We where a in can follow of the and tend have make upside the the from buyer, right more fundamentally. up say market.

yes, out there. So of deals are plenty there

as are picture very number the speak. very going we and regardless forward. accommodating We whole still rates feel that of whether market is our selective them But are we hasn't changed globally charter evaluating to we fundamentals, a of right stick and the are up. going We now

So everything I we this with may... view if magnifying glass,

Christopher Robertson

Yes, has spread the out with... it bid-ask sounds like widened probably

Tassos Psaropoulos

Exactly.

Christopher Robertson

from some guys record a of pretty of types sellers, positivity have these but Yes, the you disciplined capital cycles. had in good being

going that's So be you that commentary, thank to for it for us.

Operator

next this There for want [Operator Instructions] the question now call Your Webber I time. over ask another further at you Amit. comes apparently Ian will are closing line to Did to remarks. of turn from no back questions the question?

Ian J. Webber

Thank Thank much. in Thank to for look results. you you talking for our forward very you your Tasos, first very George, you much. quarter Thank your May interest after Tom questions. in GSL. you to

Operator

call. today's concludes This

may You disconnect. now

Global Ship Lease (GSL) 4 Mar 242023 Q4 Earnings call transcript