GSL - Earnings call transcript Q1 2024 | Global Ship Lease, Inc.

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Operator

Thank you for standing by. My name is Alex, and I will be your conference operator today. At this time, I would like to welcome everyone to the Global Ship Lease Q1 2024 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Tom Lister, Chief Executive Officer. Please go ahead.

Thomas A. Lister

Alex. you, Thank welcome XXXX and Global Lease Ship Hello, Conference to Call. Quarter Earnings First everyone, the

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

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

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

our SEC. of on on You the website can the form that or find

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

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

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

Georgios Youroukos

of XXXX, the operators in Macro earnings reversal until tightening charter downward you values due XXXX's the to Suez industry to been liner Thereby, uptick and started early morning, post year Tom. the and an part, asset Sea you, demand mainly us have the uncertainty freight has and this momentum. have situation heightened avoiding remained today. geopolitical afternoon rates Good of Thank in Red In market with supply security is most containerized all and improved. positive has but the but effective Canal. evening normalization by of or driven joining

this of Nobody happen, knows but conditions are to flows when market cover working our will and we're contract hard course, while supportive. grow cash

to at Our XXXX. needs and and continuing robust, refinancing lower have X.XX% of our no floating we delever to cost Also, XXXX. debt before made balance through capped sheet SOFR have is rate exposure our efforts interest more

disciplined next opportunistic acquisition shareholders Now opportunities protecting the happens of focused that And call that and us we financial on our shareholder move they right quarterly or position quickly arise, building cycle. remain on prioritizes and the returning buybacks. next capital towards that, the when dividend sustainable to I'll our week year, GSL's With efforts all turn to and strengthen to Tom. to back positioned through whether goal the value our continued allocation have boosted our policy resilience via capital

Thomas A. Lister

X. Slide to turn Please George. Thanks,

Here, well-diversified our we portfolio. highlight charter

contract As had the in average new a quarter, contracted billion March duration $XX.X of contract first over in adding X.X X charters We XX, $X.X million revenues we signed years. TEU of of weighted cover.

XXXX. about firming end based Including have market open XX of by ships charter the median we a ships with options and extension coming redeliveries, on in

and customers very the updating forward forward contract much hard basis continue our on strong. will financially to way, a progress by on the and to grow remain both capitalize conditions We current prompt next to look to on work you cover liner quarter. market well-capitalized and And

please. X, Slide Turning to

all you can X earnings note scenarios So forecasts. record results Slide under these are not and to in even relative line But implied X future our XXXX. different important it's in to performance marginally under remain illustrates with as or our XXXX scenarios, improved rate see,

meaningful ships have recharter of While fixed. this means year number XXXX, our in of nevertheless a the up revenue we is our the for for that already majority still contracted extent coverage of

which we On and where do. to constant recap we our Slide capital X, allocation risk-adjusted, value-driven, is strategy, everything guides under review

key in first importantly, to cyclicality volatile contains that The also very and managed thing a keep industry, to risks value-generating we to mind operate capture. that be in is cyclical but and it is opportunities as

the capital for capital, allocation allocate apologies, in which what order first capital. does So terms? we need stating to in obvious this generate mean Well, to

points. So running main the through

a is ours leasing First, business.

generation capital driver we're building of which always cover, the working so on And is our contract extending. main and

to capital biggest equity talk service principle also be also by risk Delevering the competitively costs. way serviced. value. needs debt about will reducing but debt, by shortly, has time benefits by which the had over building up Tassos costs, only be not to debt from here free of we reducing sheet that to balance reducing very reducing and gains significant The Second, of allocate are priced

Third, we our that assets, our need value-generating in economically words, other ensure relevant. remain to ships,

capital need of to and meet in decarbonization. order regulatory to to we allocate So evolving CapEx demands commercial

a to and the resilience in a to point place, to ships X have shipping the in both cyclicality to view taking case optionality is having which buy and support disciplined for coming I including covenants cash the to of of means need, the value-accretive outset, it selective reasons back be on to basis. and asset-based the liquidity Fourth, made longer at exposed first

feed can buy keep be in likes motivated. access the and challenging cycle have As you capital to ships while often the to feed the exceptionally are when And sellers is -- the this George to cow, sellers say, of to time the cow bottom towards want cow. the also often you analogy to if milking right to

in And time, through of worth which QX, finally, is we to $X $X.XX it sized our than annualized it shares to share position count million per dividend, the means shareholders, lower the -- otherwise also via would be share return to we X% including is around over shares, being repurchased means of sorry, be. in that in do capital buyback opportunistic And our a which cycle. sustainable via which

point, showing Slide both one. our value our X disciplined generative a on to acquisitions. builds cycle itself And approach and approach the is this

You'll did in single the we lower, of on opportunity. not purchase chart, orange notice skyrocketed, that back the section prices prices opting instead containership a When were when GSL vessel, that buy shares. to capitalized

attractive So in May with XXXX, X purchased X,XXX ships when prices normalized, we had TEU charters.

terms I'll we've to strict Tassos? doing basis. risk-adjusted value criteria our Tassos we're financials. genuinely are discuss to acquisition ships to when on happy and unless the met a call in no the adds our but so, the absolutely So interest right, buy pass With that, are

Tassos Psaropoulos

Thank Slide overview highlights. for is and you, X Tom. an financials first quarter

takeaways. key year-over-year. and While up cash quarter million, every a won't go were of to to with adjusted XXXX flow into I in XX% I highlight a would first like $XXX EBITDA increase item, Earnings few up

and allowing continued gross might mature debt level leverage, still headroom have to us our returns to we lower rate We have caps on XX in SOFR our that financial make. under any and we supercharge XXXX, points interest basis acquisitions

sheet on working The to that strong and $XXX purchase requirements, restricted. investments Our opportunities. million cash right the of being remains at space million, providing even accelectively needs, covenant resilience capital CapEx balance covers also $XXX balance though some in position

our George buybacks. dividend As have have sustainable and quarterly we return shareholders continued Tom and through remarked, share to to capital

equity BAX ratings adverse build BB to BB and the success delever credit the stable stable, business value, both had positive continue and our of our going we in forward. We to approach date risk corporate have and and derisking reflect continued

interest of progress rate in we our by interest caps, illustrates of reduce we XXXX. XX track X/X our our turning market debt minimizing to risen, delevering Slide the in of of to with even Now risk, our rate X.X%, interest and to the on as to to cost remain our have managed balance from capping sheet, and rates our the our end cost end reduce XXXX have debt debt outstanding

financial circumstances. resilient market combined has year-end and made end to X.Xx significantly opportunities the and X.Xx Our XXXX. all XXXX respond deployment. the discuss our These in Tom positioned or will quickly far well at QX and have dropped and effectively change focus to as efforts make now so well of to to progress GSL robust, SIP lever from at

Thomas A. Lister

Tassos. Thanks,

XX. global map and go. Sea Both trade the of shows The reemphasize ships focus TEU. where ranging our transits port maps deployment lower before at larger X,XXX midsize can flexibility XX,XXX on which the deployment smaller patterns were trade these their TEU to higher, that incidentally, as We XX,XXX container deepwater TEU and require infrastructure, of widespread to show backbone about limit can of "normal" Red they map which ships disrupted. the ships. the assets with from reach top Slide We in Moving and see these highlighted shows

the Moving up. to shows Sea. due by from ship in trajectory a to both trended that Idle This capacity Slide the Red XX. reversal This capacity the end of activity were and idle saw and to edging when idle capacity normalizing primarily slide down was QX scrapping recycling. XXXX we disruptions in X.X%

when whenever mode hanging an otherwise is market the resume that and on uptick. that uptick does option that to wait-and-see in might breakers. to market be the a scrapping potentially normalization anticipate attached a Currently, and sizable will be, earnings with there We might ships be value to in sent

does containership sizes, the heavily participate. the which book, larger Slide XX remains shows order towards GSL skewed where not

XX%, is is does which in age segments where XX%, of smaller, It midsized meaningful. ships the important but the market book-to-fleet profile ratio is highlight order peer group. also compete, for However, to still the older GSL the our

if actually and XX that over ships the set we for midsized would scrapped all that to number peer shrink fleet order group our illustrate, we old segments XXXX, were container over smaller ships and by To delivering were X%. book through to be assume years against

XX. Moving Red to industry disruptions the the Sea. showcases the impact Slide on to This of slide

of the Suez trade Red disruptions, of I the volumes, global by at which Suez X/X through Canal. around went boxes meaning fleet these of over Canal trade containerized Furthermore, transited capacity mean other much northern is this nature, themselves long containership of that themselves, ships end words, Before XX% Sea. the in in the the haul global the

this which closer of forced around up charter a majority much the effectively in traffic rates. of Hope, is, supply now by as route itself. market XX, take XX% driving a we Good being Cape to take tightening brings as where turn, at much Slide look The and the to This longer charter us is vessel

XXXX tonnage to saw now ensure that a That much into shifted charters they extending has We in they highs as XXXX downward of durations in up work to far so will with momentum through have access rates charter late normalization trending the COVID-driven positive sharp XXXX. before and XXXX that and pressure need. cyclical downward market

can we we but trends favorable. say and as cover working last, how I these while to grow And remain hard updating we that, you will conditions as forward long earlier, this XX said conclude on on cash to and our progress as on We flows charter remarks in are call. to I'll lock turn call can't George? front much With George on XX. Slide look prepared QX to our back the

Georgios Youroukos

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

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

Our notes credit an due ratings, for secured robust July and sheet balance XXXX. our rating strong investment-grade including senior

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

is Our to financial down X.Xx. leverage

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

significant Red the balance role placing Now asset of market the macro conditions. with up and rates normalization remain the Sea in market and particularly charter extending pushing tightening playing supply-demand on voyage effectively values, geopolitical hold and a lengths, uncertainties

such also have or and expand remission, business our quickly manage go ways, we unprecedentedly, as as all unexpected into just as change accordingly. can And issues we up, have can they However, seen. in to flare

positive to the strong more but earnings Sea exceptionally after company momentum containerized by only balance Meantime, XXXX tone calls XXXX. our situation, with and record XXXX, are demand. the by although customers, liner than for QX the an And sheets Red also of in helped QX not the date safe in is increase

arise Lease Ship sheet fortifying positioning generating strategic Global well and our value So acting until demonstrating strong earnings, to returning when the balance continue to up, quickly by shareholders, patients capital maximize to they to placed opportunities is sum right do. shareholder ourselves and

knows Officer. Now George our Compliance headed to also out. to influence member for several moving like as and and a new Q&A, his participation audit a and Gianopulos senior team. I of moment Chief take up before would to look insight the our we has as internal inside management welcome forward And George to organization years

your take to ready we're Now questions.

Operator

of line Omar comes And first with Instructions] from Nokta [Operator Jefferies. question your the

Omar Nokta

capacity. months give are you just booking for it more X charters mentioned I in been past securing to seen charters today container wanted and just ago to market could clearly I'd months. they're where -- to say, secure working where ask maybe on off wanted clearly, to you based in say, ask had sounds earnings in forward and like I Clearly, just very been GSL. they of sense the if your than the they and are about comments. you on upside able maybe market. few more were, We've reversal put these in We've of just in diligently open the could away think extensions more do a big given going a much capacity what's how here There's your XXXX months, the next bit few hard swing a rates and you

Thomas A. Lister

all, volumes surprised of for I the to providers liner upside and think, I all the surprised tonnage indeed, agree with like observations. everyone, of upside us. operators, have not your only Containerized have first the including Well,

obviously positive very that's So a sign.

in mentioned if prepared of roughly I median XXXX, ships. under redelivery potentially the Now the the charters are within all that's that remarks open course you coming of assume XX that

median. of TEU that so in QX of at the beginning we QX second ships, directionally, is forward larger would I late mean or fixture I XX say, and it's seen something the since, year, those by scope, the X,XXX to haven't above attract are the which say ships XXXX. quarter of between end roughly which this I of least, would So taking end And

number larger particularly vessels, that. larger to interestingly months. by for we're vessels, is seeing a viable fix it specified of forward and So

stretch I market seeing ships, the appetite X.X of for couple of smaller are a years. the range in X,XXX long to to less the of charters For as potentially would call there's we say to it, the even TEU fix, forward duration sort ships, but up as in

general tonnage change the flash have the need demand the side in remind good to operators exhibits and to chain, Sea if indeed, So such And and capacity. they the lock news inefficiencies providers pan capacity strength from the it's port as a for Red a complete listeners tends suck beginning a to not in market is I just inefficiency both think chain their confidence and genuinely in in is see accommodate just there in from also supplying that we're that up just the this as because for like in congestion And in tone. the that very capacity the to supply liner well. be supply the willingness longer tonnage counterintuitively, perspective, market order that an to in the us increase into the inefficiencies

missed follow but Omar. longer other expecting, of answer sorry, were means, covered if So I hope probably points, your than I most by all up you with I questions, anything.

Omar Nokta

detailed. Not and at quite very that all, helpful Tom, was

-- think I Yes.

in in of X not fixing, terms deployment. X,XXX, And to up are contracts years to fixing opportunities the and . understood ships more forward just that months vessels, So there may you of XXX smaller forward there's sure then make be potential seeing clearly, it. I now. more but larger to ahead

Thomas A. Lister

have the just Good of has would dynamics you in looking mentioned lift Yes. have market started that feeding And X, bottom. then with Tom, Summary. values dynamic deal at sticking perhaps, the off in looks like Macau circled milk secondhand the more And the now? you you, you which cow current just general, year. Is purchase are What analogy. The kind Is Slide things to say return back know it stuff now? And most looking too gone in end and still hurdles. stalling things looking market What's transacting? But the have I of quiet there for sailing out compelling? are early? very anything more 'XX the Or strict interesting? GSL that's clearly last at of like is and

Georgios Youroukos

take asymmetrical. the as Omar, we free them low, we make and for strong, be ships and do the cheaply the is let charter market market wait think too because recipe this, market and I specific. When as the me we not high improve away, and at quite are at risk the When we is buy look said. we look then to prices can is them charter

we like have ships like markets, Now at better today, deals charter. during charter that a so stronger which attached, look times are

returns a to not So market residual forth. of value so risk then we're exposed and versus calculation deals it's and

So it's -- from these risk. deals are market isolated, let's say,

attached. were is So along. freight when we looking improved, at the was deals have charter we charter we -- that market mix This looking the market have that's how more follow. deals. we low, was all been doing the or When And less at we're

the at looking always very are risk we So carefully.

Thomas A. Lister

to Omar, desks in at as that say we clear George would the many deals made economics. all the much says, move on comment. prepared And across unless I that of potential don't the I see just Yes. deals we the But numbers. just and remarks, hope we combination times as cycle. like add as we pretty to risk in we like our Unless

making it's you over not of because being seeing just build and protect time or our outbid. how either on reflective deals either them. that's seeing So disciplined approach absolutely in you're value acquisitions, seeing reflective of It's because value we're choosing sticking not not And to us to our case, us deals. us business. not in move

Operator

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

Christopher Robertson

Tom for on Amit. this and George, Robertson is Chris

J. Mintzmyer

present having value but the value discounted about $X.X whatever of This to you're is How think contracted you just . rate the basis, with kind what present Omar. revenues I might discussion of guys billion be a the you of question, simple a relates the using, on it do guess, were that? the of

Thomas A. Lister

look forward our to reasonable is the at And question. it's continuing generate think good value on cash visibility -- a business very very X much a we flows. very I because That's of

I different flows. risk So attribute the a to will thus, and discount a guess, observers different different cash rate

an the an rate, I and appropriate I to although us? most consider think, But is discount do for like be obviously Chris. you What looked flip the I by cycle, roughly through analysts. discount lessors back to think typically, question risk-averse you, typically, X% this varies at rate containership

I Sure. be call. answering this the on particular questions won't probably

Tassos Psaropoulos

to sort mean, applying approach cash everyone discount given up as decide X%, in you fortunately, to of obviously their own take on yes, And it's rate and But how it that result, We're contracted I've but to a can to a cash so I out an out our of our flows. and flows. very those transparent then model. rates, charter people figure contracted model comparatively I terms is easy think business our to profiles value to

Christopher Robertson

Sure.

how is Yes, about it -- up a it you is quarters? is about into it are go compelling just the now different guess This to question bit might are the in the just repurchase How Okay. mid-XXs. program. there'll share relates But a look I more . next was point internally. at program the be now? let maybe steady Or question. analysis it me trading still repurchase that that you a thinking to shares repurchases coming as the as the

Thomas A. Lister

the in think I point Chris. cycle, changes at every analysis the

buybacks its asset give back instead, evaluate to shares. didn't we are were we alternatives wherever look our that. point all best our a we out basis, when and basis capital would I answer at a at the toolbox just the time. But heated we values perspective it's allocation on XXXX, Clearly, on that I forward. figure both certainly merits. part and disciplined -- we a capital buy neat given redirected And open And from dynamic we we in remain to of a what's and allocate can't and cycle, each us will a time ships. capital XXXX super in way going during buying look on use at X to the So all the say share you

Christopher Robertson

me, Okay. to containerized volumes. times congestion noted mean, Yes, now around of obviously, regards question and then you I demand couple port guys that's some for increasing with I Last a fair. have guess.

might a So trying that specific regions in dive specifics import having I'm congestion demand pickup into just into be of you're maybe the issues. seeing to that that ports specific

have to If would details that, around any great be you it hear.

Thomas A. Lister

specific of me, a getting that's terms apologies In I that. bit ports, think for granular little for too

as of seeing terms consumer regions are up, is reliable pick as demand say, I that In U.S. ever. proving the would

probably So taking year-to-date. lot has understand, by there from primarily U.S., the not there's but from of been last been through U.S. particularly in U.S. a just progressing quarter restocking fourth and we an year driven the And in off on demand kicking being the of element of place it's And the what going

Georgios Youroukos

now also containers. same up add that prolong Tom you're of fleet, container of boxes. you so you duration At that, Naturally, you empty the boxes once I see suck of themselves. container of the boxes me lack of a When the the up voyage, also the fleet said to the time, say we containers, Let a the portion portion shaking of the ships. understand

the So the right is us now, in with we the port reminds combination of clear start shortages in with of to which boxes, years. of combination COVID signs concession COVID see situation

not we we're but the to COVID of being concession signs yet as first both there was, see enough. books and So not clear start when

J. Mintzmyer

of to my I guess Right. that, kind follow-up question. final related just

As intensity think? fleet up in the speeding you environmental But further, have being hit voyage point I the carbon speeds. by at guess, Or time? seen a speed can this in and seen the increase of we also capped, regulations? is regulations we've maximum an up other words, that do distances LinkedIn, it voyage the In

Thomas A. Lister

going a EU, particularly potential, of question way in a emissions by costs be trading you accelerate, the the or to simple within by probably the but to at upside complex one that's Yes, at the incremental EU There's speed charters you're to time, analyze same but are hit more be actually going scheme. very hit that. least the as

such stabilize unpredictability balance impacting by their to is operators you the this start adds stabilize congestion also port I terms mean, speed, variables, if liner out of schedules by their and think, network, higher X their every introduce So in to speeds of as calls network. I everyone, issue. trying changing And balance some the port that are trying and you their to

So to is extent absolute to in more case probably keep say, to there are logistically, scope that of would accelerate there yes, think for But the need. I speeds economically and they down possibly I incentives for vessels the liners can.

Georgios Youroukos

that, we have ship I installed fact all these on Limiters, that operate cannot -- the off power regulations the because have get new the EPLs, at I want then restrictors to do are than to we chart. that. add ships we engine completely to the higher which mean, we cannot

say, the because this they -- that have, So the on ships available let's don't the to any power have is used more EX. regulation, regulation of that a

less So very nature see as the speeds. this And now we limit ships they are or capped we as to on more speak. substring, close by trading

be So and I or it, that speed more. be create them more capacity speed Ow the up I suck corrected at trading can to number can is more and going n.. think D, of allow the that -- E up destroy the and we don't to -- go. which the They the would have ships not speed power limiters to imagine EXI speeding by go up so lack or not a are eased capacity, and

Operator

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

Liam Burke

the from declined end -- the you -- -- or of well, I guess debt XX% debt net year. your

you where Your manage the debt an cap mind have declining. rate you to rate want business? are ideal Do relation to in in or levels your debt steadily

Thomas A. Lister

again. Liam,

in heat. age Regarding we leverage, the cycle, to do of where are the it the has always

situation we create we are currently place very both and cash general, advantage acquisition to flow-wise market, amortization of a want we continue also to comfortable leverage a at very a the fall and that value weather that in leverage down in in and level. are X.X%. is with on We good Yes, of investors. our to regarding And actually feeling order good the that we're in value-wise position already put we take every of in at make. any that point for the be to any

Georgios Youroukos

the recently, if created add may I schedule, refinancings have I our to with and so our age may we refinance so -- a of a time. that, which financings on When fleet And fixed given is ability Yes. have repayment of is line at the that any to and is the done And and the needed end up in add which we set at our forth. whatever we

or less fixed So schedules completely. more repayment our it's

Liam Burke

cash Okay. to If shareholders. we returning to can flip over

I stock Are raising benefit it, we'll there's X%. Your lot think the healthy, to a don't call yields. dividend. of

So are -- at to move just how looking process you just basis? you that Are through quarter-to-quarter buybacks? a steadily on going

Thomas A. Lister

on. decide contracts, depending cetera, at Liam, that's I earlier, return to capital again, concerned, capital all, of additional et mean allocate at our in context that the upon we And happening terms the will we're the what's charters, will it it to and the trying how in cetera, I dodging capital in how dynamics, we on et and fixing goes we the cetera, shipping on I And getting market visibility to list view is view cetera. question forward be itself, allocation disposal, here et to but et is answer context. gave don't as include which -- far as dynamically, capital market

the give that shares a of capital whether we or as back this as overall I everything you through in pay the building to going we're cycle neat and value dividend. So won't X answer under allocate the market. of to review most as number and We'll context dividend see buy or keep

Operator

[Operator Ward with comes line Instructions] the Your of Blue question from UBS. next

Unknown Analyst

you've that the extensions or little extensions assume year that a and far, already on. halfway announced them teased better that and to expecting prices as goes Are firm or quarter contract so bit us about just yet. You of we're even we the expect through than have remained sort completed the not some quarter. first

Thomas A. Lister

XQ to We we you, forward let's in horse. put to our on Ward. I cart this And an didn't We the earnings the But mean call think before question. course. the to it providing look for want Thanks way. due tease update wouldn't put

expectations we guidance, everyone constructive you. we've that let's to back but on managed for you say, the to we've hope, we'll come So to I out when execute penciled provided,

Operator

I remarks. over for That to concludes turn Lister Tom will Q&A now our back conference closing the session.

Thomas A. Lister

Well, look I've XQ. very to ward. for work to very to We thank earnings forward And everyone for what Okay. Many you much call next talking just much said again joining our thanks. you on to today. to

Operator

today's concludes joining. that Thank call. all for Gentlemen, you

now disconnect. may You

Global Ship Lease (GSL) 16 May 242024 Q1 Earnings call transcript