Hello and thank you for standing by. My name is Ginnie and I will be your conference operator today. I would like to welcome you to the Global Ship Lease Q4 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] I will now turn the conference over to Mr. Ian Webber, Chief Executive Officer of Global Ship Lease. You may begin your conference.

Thank you very much. Hello everyone, and welcome to Global Ship Lease's fourth quarter 2023 earnings conference call. You can find the slides that accompany today's presentation on our website at www.globalshiplease.com. As usual slides two and three of our presentation remind you that today's call may include forward-looking statements that are based on current expectations and assumptions and are by their nature inherently uncertain and outside of the company's control. Actual results may differ materially from these forward-looking statements due to many factors including those described in the “Safe Harbor” section of the slide presentation. We would also like to direct your attention to the Risk Factors section of our most recent annual report which was on 2022 and that was filed in March 23rd. You can find the form on our website or on the SEC's. All of our statements are qualified by these and other disclosures in our reports filed with the SEC. We do not undertake any duty to update forward-looking statements. For reconciliations of the non-GAAP financial measures to which we will refer during this call to the most directly comparable measures calculated and presented in accordance with GAAP, please refer to the earnings release that we issued this morning which is also available on our website. As usual, I'm joined today by our Executive Chairman George Youroukos, our Chief Financial Officer Tassos Psaropoulos; and our Chief Commercial Officer, Tom Lister. George will begin the call with some high-level commentary on GSL and our industry. And then Tassos, Tom, and I will take you through our recent activity, the quarterly results, and financials, and the current market environment. After that we will be pleased to answer your questions. So, turning now please to slide four. I'll pass the call over to George.

Thanks, Ian. And good morning and good morning afternoon or evening to all of you joining us today. Elevated macro and geopolitical uncertainty defined much of the fourth quarter. This was most visible in the Red Sea where the deteriorating securatization so many liners re-routing the services away from the Suez Canal instead taking the much longer route around the Cape of Good Hope. This has tightened supply demand balance in the containership charter market, causing charter rates to firm and deferring the market normalization that had been underway through March of 2023. It is impossible to know how long disruptions to the Red Sea will last. In the meantime, consistent with our core strategy and while conditions are supportive, we continue to work hard to lock in additional contract cover in order to grow cash flows and forward visibility. On the back of our strong contracted cash flows, we continue to fortify our balance sheet and build equity value by delevering. Furthermore, we have no refinancing needs before 2026, until which time we have also capped our floating interest rate exposure to suffer at 0.64%. Our business model and approach to capital allocation are unchanged. The sustainability of our $1.5 annualized dividend remains a key priority and we continue to be active in the opportunistic buyback of shares. At the same time, we remain focused on ensuring GSL's resilience and positioning ourselves to act selectively on the investment opportunities we expect to emerge in the months and quarters ahead. Driving all of our actions is our relentless focus on preserving and building long-term value for our shareholders. With that, I'll turn the call back to Ian.

Thank you, George. Please turn to slide five. Here we illustrate the composition and extensive diversification of our charter base spread across top tier liner companies. During 2023, we signed 22 new charters or extensions, adding $313 million of contracted revenues, almost $90 million of which were added in the fourth quarter, despite the weakening market at that time. And as George said, we continue to work hard to capitalize on the positive momentum going into 2024 to grow that contract cover. As of December 31, 2023, we had approximately $1.7 billion of contracted revenues, with an average remaining duration of 2.1 years. Moving on to slide six, this provides an illustrative view of our future earnings potential under different charter rate scenarios. As in prior quarters, it's important to emphasize that this is not a forecast. However, you can see that 2022, which was itself a record year, has been surpassed by our results in 2023 and 2024 is off to a strong start with 86% of 2024's ownership days already contracted. Onto slide seven, here we review our disciplined and dynamic capital allocation strategy. We maintain our sustainable dividend of $37.5 a quarter, or $1.50 per share on an annualized basis, which is a dividend yield of over 7% and we continue to execute share buybacks opportunistically. Since quarter three of 2021, we've repurchased $54.5 million of our shares in the open market, including $22 million in 2023, with an aggregate of $4 million worth of shares in Q4 2023 and year-to-date 2024. This means that our share count today is more than 8% lower than it would otherwise have been, and we have approximately 35.5 million remaining under our board authorization. We also continue to build equity value and to de-risk by deleveraging our balance sheet, which…

Thank you, Ian. Slide nine is a snapshot of our 2023 financials and highlights. Our key P&L line items all improved in 2023, with adjusted EBITDA at over $460 million, up 16% on 2022. Our gross debt reduced by almost 20% during the year, even as we purchased and partially debt-financed the four ships. Our cash position at year-end was just under $295 million, $142 million of that is restricted, most of which is advanced receipt of charter hire, with the remaining $153 million covering our liquidity governance and working capital needs moving forward. You will also see that we have taken an impairment charge of $18.8 million across two vessels purchased in 2021. This charge is non-cash, has zero impact upon the viability of our business, and is the result of normal course impairment testing. And as Ian and George have already remarked, we have continued to return capital to shareholders via sustainable dividend and opportunistic share buybacks, while also building equity value by delivery. Meantime, our corporate credit ratings of Ba3 stable, BB positive, and BB stable on three credit agencies, referred our cautious and prudent approach. Slide 10 illustrates our successful strategy to deliver and reduce our cost of debt over time. We are on track to reduce our debt outstanding by a third from the end of 2022 to the end of 2024. We have reduced our cost of debt significantly to 450 base points even as interest rates prevailing in the market rose. And on the right side of the slide, you can see the total transformation of our leverage profile, with adjusted net debt to adjusted EBITDA falling from 8.4 times at year-end 2018 to 1.4 times at the end of 2023. That is a radical change with profound implications for our resilience, for our readiness to capitalize on potential opportunities during the down cycle, and for our overall credit profile. Tom will now discuss our market focus and SIP deployment.

Thanks, Tassos. Moving to slide 11, we reiterate our clear focus on high specification, mid-size and smaller container ships, ranging from 2,000 TEU to about 10,000 TEU. The top map illustrates the deployment of ships within our preferred size range, highlighting their operational flexibility, which is a good structural hedge in uncertain times such as these, and their widespread reach. In contrast, the lower map shows the deployment of larger ships at 10,000 TEU or larger, which tend to be more constrained to the main east-west arterial trade routes with suitable Deepwater port infrastructure. I should emphasize that neither of these maps yet reflects the ongoing rerouting of containerized trade around southern Africa as a result of the widely reported disruptions in the Red Sea. We'll come back to this point, incidentally, repeatedly Slide 12 presents a view of idle capacity and ship recycling. Idle capacity increased to 1.3% during the fourth quarter, but has since tightened again as a result of the Red Sea situation. As expected, the uptick in idle vessels was accompanied by the return of scrapping activity for essentially the first time since 2020, albeit at a limited scale thus far. The record-breaking charter markets of 2021 and 2022 saw the lives of many older and lower specification container ships extended and scrapping deferred due to their phenomenal earnings. However, as the market normalizes, which has been delayed for the time being by the situation in the Red Sea, there is an expectation that there will be a catch up in scrapping. Regulatory dry dockings, which ships are obliged to go through typically on a five-year cycle, prompt owners to consider whether investing $2 million to $3 million in a ship is justified by the forward earnings potential of that ship. When a vessel is aging,…

Thank you, Tom. On slides 16 and 17 we provide a summary of key points. We have $1.7 billion of contracted revenue over an average of 2.1 years, which fully covers our debt service CapEx and through the at least 2025 without relying upon contributions from any future charter signings or extensions. We have a very strong balance sheet and credit ratings, including an investment grade rating for our senior secured notes due July 2027. We have almost $295 million of cash on the balance sheet, though much of it is restricted and no refinancing risk before 2026. Our leverage is below 1.5 times, our floating rate debt is fully hedged and our all-in debt cost is 4.55%. The world now is both complex and dynamic, with the Red Sea playing a particularly significant role. Now this environment has weighted on general sentiment, but the implications for rerouting to avoid the Red Sea have in fact materially tightened container ship supply demand and thus improved both freight and charter market earnings. Amid the uncertainty, Liner company customers have been cautious, but importantly they face the current uncertainty with balance sheets fortified by the recent upcycle. So, to sum up, we remain absolutely focused on protecting and building shareholder value through the cycle by growing our cash flows, de-levering, paying a sustainable dividend, buying back shares opportunistically, and building cash liquidity for resilience and to capitalize on the right investment opportunities. Before we transition to your questions, I just want to take a moment to express my appreciation and the appreciation of the GSL board for everything that Ian Webber has contributed to the company since he initially came on board during its earliest days. Ian's impact and influence can be felt in every aspect of GSL, and while we're drawing towards the end of his final quarterly earnings call as CEO, I sincerely look forward to welcoming him onto the board and continuing to benefit from his experience and leadership from the board level.

George, thank you very much for those kind words. It's been an honor to serve as the GSLs CEO for the past 16 years or so, which has covered the worst industry conditions that we've ever seen after the global financial crisis, and the best ever as well. In the super up cycle of 2021, 2022, the company weathered the storms and we took advantage of the strong market where possible with the transformational merger with Poseidon in 2018 and the resulting increase in scale and strengthened management, team GSL is in great shape. Tom, CEO from the end of March, has been with the company throughout all of these times and knows the business intimately also, having had substantial expertise across the industry, he's extremely well positioned to lead GSL going forward at this time of increasingly rapid change, not least from the pressure to decarbonize. With Tom Tassos, George and the rest of the team, GSL is in very capable hands. So, with that, let's move on to Q&A.

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

Thank you. Hello, Ian. George, Tom, Tassos. How are you today?

We're well, thanks, Liam. Thank you.

We're seeing a tick up in rates the first quarter of 2024. We've really seen them move up after a recovering fourth quarter. What has been the appetite of your counterparties to either extend the duration on some of these open charters you have in 2024 and forward fix? And are you seeing any activity or commitment for higher rates?

Hi Liam, thanks for the question. This is Tom. I'll have a crack at it and no doubt George will add. You're absolutely right, conditions have been supportive and that has lifted charter rates in the market and has made charters willing to fix for longer, so ships that would have been fixed for call it you two months to six months towards the tail end of 2023 are now being fixed for 12 months and larger ships are being fixed for as many as two and possibly even three years. I would say that and I'm talking about the market in general at the moment rather than GSL specifically by the way. And I would say that the larger the ship and the higher the specification there is growing appetite to forward fix in the market by quite a number of months in some instances. So we're always doing the best we can to capitalize on that environment while we can, and we’ll give you an update on our Q1 earnings call of progress but I would say directionally things are moving well. I would caution however that's the charter is as you would expect are being entirely rational economically, so wherever they have charter options callable their option, to extend and if those charter options are in the money for them than attending to take them, however if there are no such options we are indeed in very constructive conversations with those charters to either extend and if there is no appetite from a given charter then we will look more broadly. But I would say generally speaking supportive environment and we're making use of it.

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

I will respond to this question. Mainly the debt has to do a little bit with the levels of the fair value. We are on the current position. We are not aggressive in our leverage, knowing that the fair values of the assets goes down. And this conservative actually approach has led us to, as we mentioned in the repack, to a level of having an adjusted EBITDA to debt to be about 1.4 times. There is not specific level depending on the market, but let's say that on our current policy right now, we follow the fixed amortization schedule and we are comfortable of where we stand.

Just to add to that, Liam, we're very conscious of risk, as Tassos was saying, and managing that risk through the cycle. But we also see de-levering as a way to build equity value as well. So as long as we amortize debt faster than the depreciation line of the economic life of the assets, then clearly that's building shareholder value as well as derisking the balance sheet.

Great. Thank you very much.

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

Hey, good morning, everybody. This is Chris Robertson on for Amit. Thanks for taking our questions. And Ian, congratulations on the retirement. Sorry to see you go, but I know that you'll still be involved, so good luck in the next phase of your career.

Thank you. Thank you very much.

Just wanted to kind of circle back to the point that you were making with regards to the diversion around the Cape of Good Hope. One of the points was that there was all else equal. So I was wondering if you could clarify whether or not vessels are currently speeding up and to what degree.

Yes, you're right. That's an important caveat. So we have seen vessels increase in speed around the Cape of Good Hope in an effort by the liner companies to mitigate the disruption to their networks. I think our own view is that we will have a clearer view probably at the end of the first quarter, as to how the dust will settle. Because obviously, when the Red Sea began to be disrupted in earnest around the holiday period, everyone had to react to pretty serious change in circumstances. So the Red Sea and Suez is a natural bottleneck as it is. And if you put a cork in that bottle, then clearly it's going to have enormous consequences. So everyone tried to reshuffle their networks, accelerate vessel speeds to mitigate short term impacts. I think, however, by the time we speak to you again in early May, we will have a clearer view of the sort of the steady state nature of networks, including vessel speeds. But even the speeding up of ships has not fully offset the degree to which the capacity, effective capacity of the global fleet has been absorbed by this diversion which is precisely why you're seeing both charter rates and indeed durations and indeed underlying asset values firm as a result of this set of events.

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

Yes, well, there is liquidity, indeed. We are looking at deals. The only thing is, once the market goes up a little bit, the appetite or the perception of sellers goes up as well. So it's an art to make the situation where the buyer and the seller can see eye to eye and have a deal. We do not tend to follow the market. We stay clear from an upside of the market going up right now with the Red Sea, we still see the whole thing more fundamentally. So, yes, there are plenty of deals out there. We are evaluating a number of them as we speak, but we're very selective and we stick to our fundamentals. Regardless of whether the market right now is very accommodating and charter rates are going up, we still feel that the whole picture globally hasn't changed going forward. So, we view everything with this magnifying glass, if I may.

Yes, it sounds like the bid ask spread is probably widened out with…

Exactly.

Yes some positivity from the sellers. But you guys have had a pretty good record of being capital disciplined in these types of cycles. So thank you for that commentary. That's going to be it for us. Thank you very much.

Thanks, Chris.

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

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

This concludes today’s call. You may now disconnect.