Q1 2025 Global Ship Lease Inc Earnings Call

Operator: Good day, everyone, and thank you for standing by.

Good day, everyone and thank you for standing by my name is <unk> and I will be a conference operator today at this time I would like to welcome everyone to the global ship lease Q1, 'twenty 25 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers.

Operator: My name is Argy, and I will be your conference operator today.

Operator: At this time, I would like to welcome everyone to the Global Sheep Police Q1 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you.

Mike: Mike So there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star. One again. Thank you I would now like to turn the call over to Mr. <unk> the CEO of Lobo.

Thomas Lister: I would now like to turn the call over to Thomas Lister, the CEO of Global League. Please go ahead. Thank you.

Please.

Speaker Change: Please go ahead.

Mike: Thank you.

Thomas Lister: Hello everyone and welcome to the Global Ship Lease First Quarter 2025 Earnings Conference Call. You can find the slides that accompanies today's presentation on our website at www.globalshiplease.com. As usual, slides 2 and 3 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 on our 2024 Form 20-F, which was filed in March 2025.

Mike: Hello, everyone and welcome to the global ship lease first quarter 2025 earnings Conference call. You can find the slides that accompanies today's presentation on our website at www Dot global ship lease Dot com.

Mike: As usual slides two and three you 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 presents.

Mike: <unk>.

Mike: We would also like to direct your attention to the risk factors section of our most recent annual report on our 2020 full form 20-F, which was filed in March 2025.

Thomas Lister: You can find the form on our website or on the SEC website. 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 states.

Mike: You can find the for them on our website or on the Sec's.

Mike: All of our statements are qualified by these and other disclosures in our reports filed with the SEC, we do not take undertake any duty to update forward looking statements. The 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 usually refer to.

Thomas Lister: The 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, usually refer to the earnings release that we issued this morning, which is also available on our website.

Mike: The earnings release that we issued this morning, which is also available on our website.

Thomas Lister: I'm joined as usual today by our Executive Chairman, Georgios Youroukos, and by our Chief Financial Officer, Tassos Psaropoulos. Georgios will begin the call with high-level commentary on GSL and our industry, and then Tassos and I will take you through our recent activity, quarterly results and financials, and the current market environment.

Speaker Change: I'm joined as usual today by our executive Chairman, George your recourse and by our Chief Financial Officer, Tassos subtle photos, George will begin the call with high level commentary on G. S L and our industry and then cancel Tonight will take you through our recent activity quarterly results and financials and the current market environment.

Thomas Lister: After that, we'll be very pleased to answer your questions.

Speaker Change: After that we'll be very pleased to answer your questions. So turning now to slide four I'll pass the call over to George.

Georgios Youroukos: So turning now to slide four, I'll pass the call over to Georgios. Thank you, Tom, and good morning, afternoon, or evening to all of you joining us today. In the face of unprecedented levels of macro uncertainty, the container ship charter market has remained exceptionally tight through the opening months of 2025. Even as the headline freight rates and by our liner customers continue to normalize The fundamental need for mid-sized and smaller container ships has remained very strong. with essentially zero idle capacity in the global system. Against that backdrop, we added a further $352 million of contracted revenues in the first quarter.

Speaker Change: Okay.

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

George: In the face of unprecedented levels of macro uncertainty the container ship charter market has remained exceptionally tight through the opening months of 2025.

George: Even though the headline freight rates.

George: And by Atlanta customers continued to normalize there.

George: The fundamental need for mid sized and smaller container ships has it remains very strong.

George: Essentially zero idle capacity in the global system.

George: Against that backdrop, we added a further 352 million.

George: Of contracted revenues in the first quarter.

Georgios Youroukos: bringing our 2025 contract cover to 93%. and 2026 cover to 75% which provides good insulation against uncertainty. More recently, tariffs and other proposed non-tariff barriers to trade have further complicated the macroeconomic picture. Tom will discuss this more later, but the situation remains very fluid and it is too early to speculate on longer term ramifications. although were encouraged by the recent apparent de-escalation in trade tensions and rhetoric.

George: Bringing our 'twenty to 'twenty five concert covered 293%.

George: And 'twenty 'twenty six cover 75%, which provides good installation against uncertainty.

George: More recently thought Ifs and other proposed non type of thought is to trade have further complicated the macroeconomic picture.

George: Don will discuss this more later, but the situation remains very fluid and it just.

George: Too early to speculate on longer term ramifications.

Speaker Change: Although we're encouraged by the recent patent the escalation and trade tensions and the toric.

George: In any case.

Georgios Youroukos: In any case... From what we have seen so far, it seems likely that the impact of tariffs and other trade barriers will be uneven. across different segments of the internet. For example, we are beginning to see early data that container flows displaced from China-U.S. routes are in some cases leading to notable increases in volumes in smaller trades that more heavily utilize mid-sized and smaller ships of the kind that GSA loans.

George: From what we have seen so far it seems likely that the impact of tariffs and other trade that is would it be uneven.

George: It's different segments of the industry.

George: For example.

George: But we're beginning to see early data that container flows displaced from China, you issues and in some cases, leading to notable increases in volumes and smaller trades, that's more heavily utilize mid size and smaller ships off the guy in the GSA loans.

George: Now in addition to chartering, we have opportunistically monetize some of our oldest ships by selling them at cyclically at attractive prices.

Georgios Youroukos: Now in addition to chartering, we have opportunistically monetized some of our older ships by selling them at cyclically attractive prices to bolster our dry powder for investment and fleet renewal. We have proven our patience and discipline over many years. but we must also ensure that we are in a position to act quickly when the time and conditions are right. complex and fast-moving times Meanwhile, our balance sheet remains in excellent condition and we have increased our return of capital to shareholders by growing our annualized dividend to $2.10 per share. starting this quarter and up 40% on this time last year.

George: To bolster our dry powder put investments in Florida, and New York.

George: We have proven our patience and discipline over many years, but we must also ensure that we are in a position to act quickly when the diamond conditions are right.

George: In complex and fast moving times Optionality is key.

George: Meanwhile.

George: Our balance sheet remains in excellent condition, and we have increased our return of cash.

George: Capital to shareholders by growing our annualized dividend to $2.10 per share starting this quarter and up 40% on this time last year.

George: In sum.

Georgios Youroukos: In sum, by strengthening our balance sheet and locking in extensive contract cover, we have built GSL to maximize optionality, both to take advantage of the natural cyclicality of our industry and also to ensure that we can remain strong for the long term in any market condition. Both as a company and as an investment proposition, GSL has enjoyed a very strong multi-year run, and we look forward to sustain and build on that momentum in the years ahead.

George: Strengthening our balance sheet and looking in extensive contract cover we have built GSL to maximize optionality both to take advantage of the natural cyclicality of our industry and also to ensure that we can remain strong for the long term in any market conditions.

George: Both as a company and as an investment proposition GSL has enjoyed a very strong multi year run and we look forward to sustain and build on that momentum in the years ahead.

Thomas Lister: And with that, I will turn the call back to Thomas. Thank you, George. Please turn to slide 5, where you will see the diversification of our charter portfolio. As of March 31, we have nearly $1.9 billion in contracted revenues and 2.3 years of average remaining contract cover. including extension options that have been declared. We added 19 charters for approximately 352 million of contracted revenues in the first quarter.

Tom: That I will turn the call back to Tom.

Tom: Thank you George.

Speaker Change: Please turn to slide five where you will see the diversification of our charter portfolio.

Speaker Change: As of March 31, we have nearly $1.9 billion in contracted revenues and 2.3 years of average remaining contract cover <unk>.

Speaker Change: Including extension options that have been declared we added 19 charters for approximately 352 million of contracted revenues in the first quarter.

Speaker Change: Yeah.

Thomas Lister: On slide six, we discuss our dynamic capital allocation policy, which will be familiar to many of you, but which is critically important as a cyclical industry such as ours. As George mentioned, we are returning substantial capital to shareholders, we have significantly delevered our balance sheet, and we have maintained a disciplined, selective approach to fleet renewal. At the same time, we have sought to maximise optionality, while ensuring that our CAPEX obligations and various downside risks are well covered in any market context.

Speaker Change: On slide six we discuss our dynamic capital allocation policy, which will be familiar to many of you, but which is critically important as a cyclical industry such as ours.

Speaker Change: George mentioned, we are returning substantial capital to shareholders, we have significantly de levered, our balance sheet and we have maintained a disciplined and selective approach to fleet renewal.

Speaker Change: At the same time, we have sought to maximize optionality, while ensuring that all capex obligations and various downside risks are well covered in any market context.

Thomas Lister: In short, our strategy and business model is for GSL to provide investors with a stable and liquid platform through which to participate in the opportunities, cyclical upside and positive volatility of the industry while mitigating exposure to downside risk, in other words taking the white knuckle part out of the shipping rollercoaster ride while keeping the fun bits.

Speaker Change: In short our strategy and business model is for GSL to provide investors with stable and liquid platform through which to participate in the opportunities cyclical upside and positive volatility of the industry, while mitigating exco exposure to downside risk in other words, taking the white knuckle part out of the shipping.

Speaker Change: Roller coaster ride, while keeping the fun bits.

Speaker Change: Slide seven illustrates our disciplined in acquisitions.

Thomas Lister: Slide seven illustrates our discipline in acquisitions. The notes on the chart show where we have bought vessels since our transformative merger in 2018, and it is clear that our preference is to buy during periods of relatively low asset prices, or when we can structure the equivalent, as with our vessels purchased in late 2024 with below-market charters attached, facilitating their acquisition at a 30% below-market charter-free value, while preserving their upside potential post-charter. Notably, we refrained from buying any ships during the super-peak asset price period shown in orange on the chart, a period during which markets were exuberant, with asset prices at levels we saw as providing little upside potential.

Speaker Change: It's on the chart show, where we have bought vessels since our transformative merger in 2018 and it is clear that our preference is to buy during periods of relatively low asset prices. When we constructed the equivalent as with all vessels purchased in late 2024 with below market charters attached facilitation that acquisition.

Speaker Change: 30% below market charter free value, while preserving the upside potential.

Speaker Change: Chaucer.

Speaker Change: Notably, we refrained from buying any ships during the Super peak asset price periods shown in Orange on the chart a period during which markets were exuberant with asset prices are at levels, we source, providing little upside potential.

Speaker Change: Potential.

Tassos Psaropoulos: With that, I'll pass the call to Tasos to discuss our financials. Thank you Tom. Slide 8 shows our first quarter financial highlights. I would like to emphasize a few points. Earnings and cash flow are all up versus the first quarter of 2024, which was already a strong quarter. With the financing of our recently acquired vessels, our gross debt has increased to a little under $778 million. And with the debt for those ship purchases, we have made use of all remaining headroom under a 64-base point SOFR interest rate caps, which run through 2026 and as of March 31st, covered a little over 80% of our floating rate debt.

Speaker Change: With that I'll pass the call to tussle to discuss our financials tunnels.

Speaker Change: Thank you Don Slide eight shows our first quarter financial highlights I would like to emphasize a few points.

Speaker Change: Nixon Castro are all up versus the first quarter of 2024, which was already a strong quarter.

Speaker Change: With the financing of our recently acquired vessels, our gross debt has increased to a little under 778 million.

Speaker Change: And with a date for those sheep purchases. We have made use of one remaining headroom under our 64 basis points show for interest rate cuts, which run through 2026, and that's sort of March 31st covered there little over 80% of our floating rate debt.

Tassos Psaropoulos: Our cash position is $428 million. $95 million is restricted, of which $73 million is advanced received of Charter Hire. The remainder ensures that we can fully cover our covenants, working capital needs and dividends while also providing dry powder to move quickly on the right opportunities.

Speaker Change: Our gas position is 428 million 95 million as restricted of which 73 medium. These advanced received the charter hire.

The remainder and soon as that weekend fully cover our covenants working capital needs and dividends, while also providing dry powder to move quickly on the right opportunities.

Tassos Psaropoulos: Slide 9 provides a closer look at our efforts to build both resilience and equity value by delivery. The graph on the left shows our progress in reducing our outstanding debt, while the right shows that same deleveraging from a net debt to EBITDA perspective. As you can see, although we increased our gross debt through our recent SIP purchases, we have continued to see our net debt to EBITDA, our financial leverage, in other words, reduce now under 1 as of the end of the first quarter. To underscore that point, that figure was 8.4 times at the end of 2018.

Speaker Change: Slide nine provides a closer look at our efforts to build both resilience and equity value by Delevering the.

Speaker Change: The graph on the left shows our progress in reducing our outstanding debt wide variety shows that same deleveraging from a net debt to EBITDA perspective.

Speaker Change: As you can see although we increased our gross debt through a recent seat purchases. We have continued to see our net debt to EBITDA financial leverage you know the rewards reduce now under one as of the end of the first quarter to underscore that point that figure was eight four times at the end of 2018.

Speaker Change: More progress on this phone can be seen on slide 10.

Tassos Psaropoulos: More progress on this front can be seen on slide 10. On the left, we have our cost of debt, which we have successfully lowered to a blended cost of 3.99%. We have reduced this cost of debt significantly over the years, even as 10-year US Treasuries have risen quite a lot. The right graph shows our breakeven rates and tells a closely related story. That is because we have sharply reduced our interest expenses, we have been able to absorb rising operating expenses and keep overall breakevens flat over several years, when the prevailing global narrative was one of high inflation.

Speaker Change: On the left we have our coastal as bad when we have successfully lowered our blended cost of three point in 99%. We have reduced this cost of debt significantly over the years, even as the 10 year U S treasuries have ryzen quite a lot.

Speaker Change: You're right the graph shows the breakeven rates and tells a closely related story.

Speaker Change: These because we have sort of period you suddenly there is expenses, we have been able to absorb rising operating expenses and keep overall breakeven slot over several years when the prevailing global not I think it was one of high inflation.

Tassos Psaropoulos: We are proud of this result, which puts us in a position of strength at a time of macro-volatility and unpredictability.

Speaker Change: We are proud of this result, which puts us in a position of strength at the time of macro volatility and unpredictability.

Thomas Lister: I will now turn it back over to Tom to discuss our market focus and ship deployment. Thanks Tom. Slide 11 restates our focus on mid-sized and smaller container ships between 2,000 and 10,000 TEU, roughly, which make up the backbone of global trade, are super flexible operationally, and are not dependent upon any one trade or country.

Tom: I'll now turn it back over to Tom to discuss our market focus and see the deployment.

Tom: Thanks Stifles slightly.

Tom: Slide 11, restates I'll focus on midsize and smaller container ships between 2010 thousand Teu, roughly which make up the backbone of global trade a super flexible operationally and are not dependent upon any one trade or country.

Thomas Lister: This stands in contrast to the very large container ships which, because of their size, physical restrictions in many ports and the need for sophisticated port infrastructure tend to be limited to the big mainland trades such as those between China and the US or Northern Europe. We consistently reiterate this aspect of our business because we believe that it's important for investors to understand and I will, in a moment, speak to why it is especially valuable in the current environment.

Tom: This stands in contrast to the very large container ships, which because of their size physical restrictions in many ports and the need for sophisticated port infrastructure tend to be limited to the big mainland trades, such as those between China and the U S for Northern Europe.

Tom: We consistently reiterate this aspect of our business because we believe that it's important for investors to understand and I will in a moment speak to why it is especially valuable in the current environment.

Thomas Lister: The impact of one significant and ongoing market dynamic is shown on slide 12. Before the disruption in the Red Sea, 20% of all global containerized volumes passed through it, representing 34% of container ship fleet capacity. These vessels have since been forced to transit around the Cape of Good Hope, lengthening voyages and thereby limiting effective vessel supply considerably. Various initiatives have emerged over time to try to restore navigation through the region, notably including an apparent recent ceasefire agreement between the US and the Houthis.

Tom: The impact of one significant and ongoing market dynamic is shown on slide 12.

Tom: Before the disruption in the Red Sea, 20% of all global Containerized volumes pass through it representing 34% of containership fleet capacity.

Tom: These vessels have since been forced to transit around the Cape of good hope lengthening voyages and thereby limiting effective vessel supply considerably.

Tom: Various initiatives have emerged over time to try to restore navigation through the region, notably, including an apparent recent ceasefire agreement between the U S and the who Ts.

Thomas Lister: Recent commentary however from certain of the major liner companies has captured well the dilemma faced in considering a return to that routing, and why it is not necessarily a given in the near future. First and foremost, the safety of seafarers, not to mention the vessels and the cargos, cannot be taken lightly. Secondly, with rerouting having settled into stable new norms after a protracted period of reshuffling, a return to Red Sea and Suez transits would represent a major undertaking for the liner companies, involving network disruption, complexity, and significant costs. So, taken together, the threshold for a large-scale return to Suez transits is quite high, especially for liner companies operating complex service networks.

Tom: Recent commentary however from certain of the major liner companies has captured well the dilemma faced in considering a return to that routing and why it is not necessarily a given in the near future.

Tom: First and foremost the safety of seafarers not to mention the vessels and cargoes cannot be taken lightly.

Tom: Secondly, with rerouting, having settled into stable new norms. After a protracted period of reshuffling of.

Tom: Iran to a return to Red Sea and Suez Transits would represent a major undertaking for the liner companies involving network disruption complexity and significant costs.

Tom: So taken together the thresholds for large scale returns Suez transits is quite high, especially for liner companies operating complex service networks. Consequently.

Thomas Lister: Consequently, the sector wants to first regain comfort and high conviction that transits can be completed safely on a consistent basis for the long term.

Tom: Sector wants to first regain comfort and high conviction. The transits can be completed safely on a consistent and I emphasize consistent basis for the long term.

Tom: On slide 13, we provide some data as to help frame a couple of the hot topics of the day, namely U S. China tariffs and the proposed U S port fees on Chinese built and operated ships. The latter of which is typically referred to as U S. T O.

Thomas Lister: On slide 13, we provide some data to help frame a couple of the hot topics of the day, namely U.S.-China tariffs and the proposed U.S. port fees on Chinese-built and operated ships, the latter of which is typically referred to as USTR.

Operator: Terence Thost So, big picture. U.S. imports represent a meaningful slice of global containerized trade, although perhaps less than some might imagine, at 13%. That's 1-3%. A significant portion of which, almost 40%, comes from China. a smaller but still non-negligible volume of containerized trade goes back the other way. During April, tariffs on this bilateral trade climbed as high as 145% and 125% respectively, triggering severe disruptions to supply chains, which are still rippling through the system. Unfortunately, the situation appears to be de-escalating, with tariffs now set, at least for the time being, at the 30% and 10%, while the US and China work on establishing a longer term framework.

Tom: Terrorists first.

Tom: So big picture U S imports represent a meaningful slice of global containerized trade, although perhaps less than some might imagine at 13%, one 3% a significant portion of which almost 40% comes from China.

Tom: A smaller but still non negligible volume of containerized trade go goes back the other way.

Tom: During April tariffs almost bilateral trade climbed as high as 145% and 125%, respectively, triggering severe disruptions to supply chains, which is still rippling through the system.

Tom: Fortunately the situation appears to be D. Escalating with tariffs now set at least for the time being at 30% and 10%, while the U S and China work on establishing a longer term framework.

Thomas Lister: Turning to USTR, the US is looking to impose fees both on Chinese-built and on Chinese-operated ships. The implications will be wide-ranging, as ships built in China currently account for 28% of the global container ship fleet on the water and 71% of the order book, so almost everyone has or will have such ships in their fleet. Having said that, USTR is not yet in its final form and has already passed through various iterations and reviews, each of which has tempered the terms, and a further review is in fact scheduled to take place today. As things currently stand, it seems that ships of 4,000TU or smaller will not be impacted by USTR.

Tom: Turning to U S. T O U S is looking to impose fees both on Chinese built and on Chinese operated ships.

Tom: The implications will be wide ranging ships built in China currently account for 28% of the global Containership fleet on the water and 71% of the order book. So almost everyone has or will have such ships in the fleet.

Tom: Having said that U S. T. R is not yes in its final form and has already passed through various iterations and reviews each of which has tempered the terms and a further review is in fact scheduled to take place today.

Tom: As things currently stand it seems that ships are 4000, teu or smaller will not be impacted by U S. T O.

Tom: Turning to G. S. L. Specifically all fleets at the end of the first quarter included 10, Chinese built ships of which only four are larger than 4000 Teu.

Thomas Lister: Turning to GSL specifically, our fleet at the end of the first quarter included 10 Chinese built ships, of which only 4 are larger than 4000TU, of which none are currently deployed on China-US trade. In fact, it's quite typical for mid-sized and smaller ships, such as ours, to be deployed outside of the main lane trades, both because of their flexibility and also because the majority of global trade does indeed happen outside of these main lanes. That deployment flexibility for our ships is something that has always been valued and hopefully this helps make clear why.

Tom: Which none are currently deployed on China U S trades.

Tom: And in fact, it's quite typical for midsized and smaller ships such as all has to be deployed outside of the mainland trades, both because of that flexibility and also because the majority of global trade does indeed happen outside of these main lanes that deployment flexibility for our ships is something that has always been valued and hopefully this.

Tom: Helps make clear why.

Tom: On slide 14, we look to U S. China trade tensions in 2019 as an illustrative example of how second and third order effects can counterintuitively be positive for tonnage providers like G. S. L.

Thomas Lister: On slide 14 we look to US-China trade tensions in 2019 as an illustrative example of how second and third order effects can, counterintuitively, be positive for tonnage providers like GSL. In 2019, as tariffs between the U.S. and China ratcheted up, larger container ships did indeed see decreased demand as U.S.-China trade flows reduced. However, U.S. consumer demand didn't go away, and so replacement goods were sought from elsewhere in a form of cost and tariff arbitrage. The net result, broadly the same volume of goods continued to flow into the U.S., but the supply chain moved away from the simplicity and concentration of the previous China focus and fragmented into a more complex and dispersed form with cargo flowing both via and from Southeast Asian countries such as Vietnam, Thailand, and Indonesia.

Tom: In 2019 as tariffs between the U S and China Ratcheted up larger container ships didn't did indeed see decreased demand as as U S. China trade flows reduced however.

Tom: U S consumer demand didn't go away and so replacement goods was sort from elsewhere in a form of cost and tariff arbitrage.

Tom: The net result broadly the same volume of goods continued to flow into the U S. But the slipped the supply chain moved away from the simplicity and concentration of the previous China focus and fragmented into a more complex and dispersed form with cargo flowing both via and from South East Asian countries such as via.

Tom: And Thailand and Indonesia.

Thomas Lister: As you can imagine, supply chain, sorry, supply chain concentration and simplicity plays to the strengths of really big ships. On the flip side, however, supply chain complexity and dispersion amped up by heightened uncertainty requires the operational flexibility of mid-size and smaller ships like ours.

Tom: As you can imagine supply chain at CIT, sorry, [laughter] supply chain concentration and simplicity plays to the strengths of really big ships on the flipside, However supply chain complexity and dispersion amped up by heightened uncertainty requires the operational flexibility of mid size and.

Tom: Smaller ships like ours.

Tom: We're waiting for more hard data those things are moving and changing so fast but anecdotal evidence suggests that a similar phenomenon is establishing itself now in 2025 with volumes displaced from U S. China being instead picked up from South East Asian locations.

Thomas Lister: We're waiting for more hard data, as things are moving and changing so fast, but anecdotal evidence suggests that a similar phenomenon is establishing itself now, in 2025, with volumes displaced from US-China being instead picked up from Southeast Asian locations.

Thomas Lister: So, it's obviously very early in the game, the rules are in flux, and we don't have a crystal ball. However, what we can say, with some confidence, is that one, the impact of tariffs is rarely captured in a single snapshot of first order effect. Two, different size segments of the containership fleet are likely to experience tariffs quite differently. And three, in a highly uncertain environment, everyone is looking for optionality. And for the shipping lines, that optionality is capacity, often in the form of operationally flexible mid-size and smaller containerships.

Tom: So it's obviously very early in the game. The rules are in flux and we don't have a crystal ball.

Tom: However, what we can say with some confidence is that one the impact of tariffs is really rarely captured in a single snapshot of first order effects.

Tom: Two different size segments of the containership fleet are likely to experience tariffs tariffs quite differently and three in a highly uncertain environment, everyone is looking for optionality for the shipping lines that Optionality is capacity often in the form of operationally flexible midsize and smaller container ships.

Tom: <unk>.

Tom: Next slide 15 provides a barometer of supply side dynamics, both idle capacity and scrapping activity are negligible as the strong charter market has kept older vessels on the water, making lots of money. However, if demand were to drop scrapping could pick up quickly and at scale.

Thomas Lister: Next, slide 15 provides a barometer of supply-side dynamics. Both idle capacity and scrapping activity are negligible, as the strong charter market has kept older vessels on the water making lots of money. However, if demand were to drop, scrapping could pick up quickly and at scale.

Tom: Turning to slide 16, which shows the order book the overall order book has indeed grown in recent years, but again nuance as important as the 54, 3% order book for ships over 10000 Teu is in sharp contrast to the 11.5% order book for our focus.

Thomas Lister: Turning to slide 16, which shows the order book. The overall order book has indeed grown in recent years, but again, nuance is important. As the 54.3% order book for ships over 10,000TU is in sharp contrast to the 11.5% order book for our focus segments under 10,000TU, which is itself spread out over approximately three years of delivery. you also need to consider the age of the fleet into which the order book is delivering.

Tom: Months under 10000, Teu, which is itself spread out over approximately three years of deliveries.

Tom: You also need to consider the age of the fleet into which the order book is delivering if you were to assume the striping out of all ships of 25 years or older and will then to net that capacity out against the order book.

Thomas Lister: If you were to assume the scrapping out of all ships of 25 years, or older, and were then to net that capacity out against the order book, our peer group would actually contract, shrink, by 6.5% through 2028. So, the sub-10,000 TEU fleet segment, which has a median age of 17, one seven years, has the double benefit of being both comparatively old, and having limited replacement capacity in the pipeline. Furthermore, age is comparative rather than absolute in container ships. Does it matter if you have old ships if the ships against which they are competing are also primarily old?

Tom: Our peer group would actually contract shrink by 6.5% through 2028. So the sub 10000 Teu fleet segment, which has a median age of 17, one seven years as the double benefit of being both comparatively old.

And having limited replacement capacity in the pipeline.

Tom: Furthermore, ages comparative rather than absolute and container ships does it matter. If you have old ships, if the ships against which they are competing are also primarily old.

Thomas Lister: we would argue that it does not. What does matter, however, is how well-specified those ships are in relation to their peer group. And that's where we are well-placed.

Tom: We would argue that it does not what does matter. However is how well specified those ships all in relation to that peer group and that's where we are well placed long story short scrapping represents a safety valve. How many ships are ultimately scrapped out remains to be seen but it's important to remember that medium term fleet growth is N.

Thomas Lister: Long story short, scrapping represents a safety valve. How many ships are ultimately scrapped out remains to be seen, but it's important to remember that medium-term fleet growth of any amount in our segment is far from a certainty. And in fact, it only becomes a likely scenario if the overall market remains highly profitable. So, not something we lose too much sleep over.

Tom: The amount you know flagrant in all our segments is far from a certainty and in fact, it only becomes a likely scenario if the overall market remains highly profitable so not something we lose too much sleep over it.

Tom: Slide 17 takes a closer look at the charter market.

Thomas Lister: Slide 17 takes a closer look at the charter market. After a period of post-peak normalization, you can see that rates over the last several quarters have been quite strong.

Tom: After a period of post peak normalization, you can see that rates over the last several quarters have been quite strong and.

Thomas Lister: And to make this a step further in clarifying the implications for GSL, I would point out that our fleet break-even rate is approximately $9,300 per vessel per day, above which the operating leverage of our business really amplifies value. and we have $1.9 billion of contract cover over the next 2.3 years on average, so we feel quite good about that too. So we're not complacent and we'll continue to lock in as much as we can at attractive rates.

Tom: And to make this a step further and and clarifying the implications for G. S. L. I would point out that all fleet breakeven rate is approximately $9300 per vessel per day above which the operating leverage of our business really amplifies value.

Tom: And we have $1.9 billion of contract cover over the next two three years on average so we feel quite good about that too.

Tom: We're not complacent and we will continue to lock in as much as we can at attractive rates.

Thomas Lister: So, on that high note, I'll turn the call back to George to conclude our prepared remarks.

Tom: So on that high note I'll turn the call back to George to conclude our prepared remarks.

Tom: Yeah.

George: Thank you Tom.

Georgios Youroukos: Thank you, Tom. To summarize, our cash flows are strong and continue to grow, as does FTC.

Tom: To summarize.

Tom: Cash flows are strong and continues to grow.

Tom: This does forward contract cover.

Tom: The macro and geopolitical environment is extraordinarily volatile and uncertain.

Georgios Youroukos: The macro and geopolitical environment is extraordinary, volatile and uncertain. Without knowing what is to come at the macro level, we're focusing on what those things that are under our control. Namely, making ourselves financially resilient and maximizing our optionality to both manage risk and capitalize on opportunity. Our balance sheet is robust, with our recent $85 million refinance pushing our average maturity out to 5.1 years, and maintaining a weighted cost of debt below 4%. Substantial delivering has been achieved and is still underway. Break-even rates are just over $9,300 per day per vessel. Significantly lower than Skyline market charter rates and our strong corporate credit rating reflects the strength of our balance.

Tom: Without knowing what is to come at the macro level, we're focusing on what those things that are under our control named.

Tom: Namely making ourselves.

Tom: Financially resilient and maximizing our optionality to both manage risk and capitalize on opportunities.

Tom: Our balance sheet is robust with a recent $85 million refinance pushing our average maturity.

Tom: Our 5.1 years.

Tom: Maintaining a weighted cost of debt below 4%.

Tom: Substantial delevering has been achieved and its still under way.

Tom: Breakeven rates are just over $9300 per day.

Tom: The vessel.

Tom: Significantly lower than scatter market charter rates.

Tom: And our strong corporate credit rating reflects the strength of our balance sheet.

Tom: When I say elective opportunistic basis, we have monetized older ships at sea cyclically attractive prices in order to build.

Georgios Youroukos: On a selective, opportunistic basis, we have monetized older ships at cyclically attractive prices in order to build Dry Powder We are pleased to continue to increase our return of capital to shareholders by raising our dividend yet again, bringing it to 2.5%. $1 per common share annualized. And finally, we have positioned ourselves well to pursue opportunities as they arise. And we believe there will be opportunities to renew our fleet as certain of our cast cows age out. Now looking ahead, GSL is in a great position to keep generating long-term value for our shareholders and maximizing optionality to capture value at each stage of the cycle.

Tom: That's out there.

Tom: Yeah.

Tom: We are pleased to continue to increase our return of capital to shareholders by raising our dividend yet again, bringing it to two point.

Tom: One dollar per common share annualized.

Tom: And finally, we have positioned ourselves well to pursue opportunities as they arise.

Tom: And we believe there will be opportunities to renew our fleet I sat them, although cash cows age out.

Tom: Now looking ahead just.

Tom: He is in a great position to keep generating long term value for our shareholders and maximizing optionality to capture value at each stage of the site.

Tom: Now what did you take your questions.

Operator: Now we are ready to take your questions.

Speaker Change: Thank you gentlemen at this time I would like to remind everyone.

Operator: Thank you, gentlemen. At this time, I would like to remind everyone, in order to ask questions, press star, then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A.

Speaker Change: Ask a question press Star then the number one on your telephone keypad, we will pause for just a moment to compile the Q&A roster.

Liam Burke: Your first question comes from the line of Liam Burke of B. Reilly Securities. Please go ahead. Thank you, George, Tom, Tassos.

Speaker Change: Your first question comes from the line of Liam Burke of B Riley Securities. Please go ahead. Thank.

Speaker Change: Thank you George Tom toss us.

Thomas Lister: Bye Liam Hello. You mentioned the rate environment has been very strong, going against what freight rates are. Is there any interest on your charter customers to extend existing charters at better rates, or are you just seeing a very good environment as charters roll over?

Speaker Change: Hello.

Speaker Change: You mentioned the rate environment has been.

Speaker Change: Very strong.

Speaker Change: Guess, what freight rates are is there any interest on your charter customers to extend existing charters at better rates or are you just seeing a very good environment as charters rollover.

Speaker Change: Hi, Liam Oh, I'll try to answer that it it depends which charters rolling off so obviously, we fixed some some charters during the super a cyclical high of Covid.

Thomas Lister: Hi Liam, I'll try to answer that. It depends which charters are rolling off. So obviously we fixed some charters during the suplex cyclical high of COVID that are still at extraordinarily high levels. So if they were to be refixed into the current market environment, it would be probably a notch down in some instances. On the flip side, we're seeing appetite to fix at still very, very attractive rates. And I think we provided in the presentation on slide. I think slide 17, a snapshot of where we see rates by vessel size today, and they're still pretty robust.

Speaker Change: But still at extraordinarily high levels. So if they were to be re fixed into the current market environment. It would be probably a notch down in some instances on the flip side, we're seeing appetite to fix at still very very attractive rates and I would I think we provided in the presentation on slides.

Speaker Change: Let me find it I think slide 17, a snapshot of where we see rates by vessel size today, and that's still pretty robust. So there will be some ups and downs, but by and large the there that the charter opportunities that we're seeing a very attractive ones.

Thomas Lister: So there will be some ups and downs, but by and large, the charter opportunities that we're seeing are very attractive.

Thomas Lister: Great.

Speaker Change: Great.

Georgios Youroukos: And you did opportunistically sell assets to, as you said, build dry powder. Is there anything on the acquisition front or just asset prices? Not reasonable right now. um We are, as always, looking at many deals at each given time, but we keep our criteria very strong, very up, let's say very strict. So we don't do acquisition for the sake of growth. We only do it if it makes a lot of sense financially. So yes, we have seen deals, but we don't have something specific in mind. The reason we sold some ships were at the 25-year-old age, more or less.

Speaker Change: You did opportunistically sell assets.

Speaker Change: As you said bill dry powder.

Speaker Change: Is there anything on the acquisition front or just asset prices yes.

Speaker Change: Not not reasonable right now.

Speaker Change:

Speaker Change: Sorry go ahead George.

Speaker Change: Sorry, yeah.

Speaker Change: We are as always looking at many deals, but its a given time, but we will keep a you know a great deal at a very strong they up let's say very strict.

Speaker Change: So we don't do acquisition for the sake of growth, we only do it if it makes a lot of satisfy nationally.

Speaker Change: And so yes, we have seen deals, but we don't have something specific in mind.

Speaker Change: That's the reason we sold some ships away that you know the 25 years of age more or less.

Georgios Youroukos: And we found some prices that were more lucrative than chartering them, because we always look at all the options when we come to a charter. And that's that's why we made this decision. And we keep the cash for, you know, further Great.

Speaker Change: And we found that some prices that were more more lucrative than chartering them because we always look at all the options when we come to that chapter.

Speaker Change: And that's that's why we made this decision and we keep the cash for.

Speaker Change: Further our acquisitions and investments.

Speaker Change: Yeah.

Speaker Change: Great. Thank you George Thank you Tom.

Georgios Youroukos: Thank you, George. Thank you, Tom. Pleasure, Liam.

Speaker Change: Pleasure Liam.

Operator: Again, just a reminder, if you would like to ask a question, press star 1 on your telephone.

Speaker Change: Again, just a reminder, if you would like to ask a question press star one on your telephone keypad.

Omar Nocta: Our next question comes from the line of Omar Nocta of Jeffries. Please go ahead. Thank you. Hi, guys. Good afternoon. Thanks for the always, as usual, detailed. Our pleasure. Thanks for joining, Omar. Of course.

Speaker Change: Next question comes from the line of <unk> of Jefferies. Please go ahead.

Speaker Change: Thank you hi, guys good afternoon.

Speaker Change: Thanks for always as usual detailed update.

Speaker Change: A pleasure thanks for joining yes.

Omar Nocta: Yes, I just wanted to ask, and I know this is probably very, very short term, but I just wanted to ask how you could maybe characterize the target markets over the past week or so. Again, I know it's short term, but, you know, we've seen, you know, you especially, you've added a good amount of backlogs definitely during the first quarter. Things maybe seem to have gotten a bit quieter in April as everybody kind of froze and tried to assess everything. Clearly now we've seen a surge in spot freight rates over the past week following the China-US deal.

Speaker Change: Of course, yeah. So I just wanted to ask and I know this is probably a bunch of them very very short term, but I just wanted to ask how you could maybe characterize the charter markets over the past week or so again I know, it's short term, but you know what.

Speaker Change: We've seen.

Speaker Change: Especially as you've added a good amount of backlog definitely during the first quarter things may be seem to have gotten a bit quieter in April as everybody kind of froze and tried to assess everything.

Speaker Change: Clearly now we've seen a surge in spot freight rates over the past week following the China U S deal.

Thomas Lister: How has that played out in the term target market? Have you noticed any kind of shift or pivot in Liner's kind of appetite? Maybe how it, if you can give some kind of context as how maybe it reacted to everything in April and then perhaps what's happened here over the past week, if anything. I would say how you've characterized the change in sentiments and momentum in the freight market. We've seen a similar thing in the charter market. As we've published during Q1, the appetite was there, strong, and then come Liberation Day on April 2nd, there was a bit of an air pocket in the charter market where people thought, well, they wanted to wait and see a little bit to see how things were going to play out.

Speaker Change: How has that played out in the ER and the term charter market have you noticed any kind of shift or pivot and and liners kind of appetite.

Speaker Change: Maybe how it if you can give some kind of context, how maybe it reacted to everything in April and then perhaps what's happened here over the past week if anything.

Speaker Change: Sure I would say how you've characterized them you know the sort of the change in sentiment some momentum in the freight market we've seen a.

Speaker Change: A similar thing in the charter market I'm, assuming you know it was as we've published.

Speaker Change: During our Q1 are the appetite was the strong and then come Liberation day on I think it was April 2nd there was a bit of an air pocket.

Speaker Change: And in the charter market where people thought.

Speaker Change: Well they wanted to wait and see a little bit to see how things were going to play out. So I would say that momentum came off a little bit during the course of April and then suddenly over the course of the last week or so we have seen interest and appetite a pick up again, so sentiment is full.

Thomas Lister: So I would say that momentum came off a little bit during the course of April, and then certainly over the course of the last week or so, we have seen interest and appetite pick up again. So sentiment has followed a very similar trajectory in both the freight and charter markets, but having said that, because there's still very little availability of tonnage in the charter markets, charter rates have tended to remain high, albeit in the absence of much activity, while freight rates came under pressure during the course of April.

Speaker Change: So at a very similar trajectory in both the freight and charter market, but having said that.

Speaker Change: Because there's still very little availability of tonnage in the charter markets.

Speaker Change: Charter rates have tended to remain high, albeit in the absence of much activity a wild freight rates came under pressure during the course of of April.

Speaker Change: Yeah.

Speaker Change: Okay. Thank you.

Omar Nocta: Okay, thank you.

Thomas Lister: And maybe just one, perhaps just a bit more GSL focused and kind of a follow-up to Liam's question. You know, cash is now rising nicely. You talked about leverage having come down. You've got the dividend and buyback, which have been really been put to work. The deal landscape is what it is, right? There's opportunities as they come and go, but clearly there's dry powder that you have in this building. The cash is going to start to come on. What do you think about the cash position you want to have at GSL? And do you intend to just watch the cash balance pick up if there's no deals or is it get put towards repaying debt and keeping maybe a lower level of cash than what you have now?

Speaker Change: And.

Speaker Change: And maybe just one perhaps just a bit more GSL focused in kind of a follow up to the.

Speaker Change: Question I know cash is now rising nicely you talked about leverage having come down.

Speaker Change: You've got the dividend and buyback, which had been really been put to work.

Speaker Change: The deal landscape is what it is right theres opportunities as they come and go but clearly there's dry powder that you have and is building the cash is going to start to come on.

Speaker Change: What do you think about the cash position you want to have that GSL and as they do you intend to just watch the cash balance pick up if there's no deals or is it get put towards repaying debt.

Speaker Change: And in keeping maybe a lower level of casually you have now.

Speaker Change: Well I would say that I'll I'll I'll take those questions not necessarily in order or more so.

Thomas Lister: Well, I would say that I'll take those questions not necessarily in order, Omar. So, as far as de-levering is concerned, as Tasos said in his prepared remarks, we've actually continued to de-lever following the amortization requirements under each of the debt facilities that we have. We're now at a financial leverage ratio of under one times, 1X. So, we think that that's a very, very good place to be. But more broadly speaking, in a time of maximum uncertainty, which is certainly where we seem to be at the moment, we feel that maximal optionality is super valuable. And that's both in terms of the flexibility of our assets themselves, which can be moved around by the line of companies, but it's also about the resilience of our balance sheet.

Speaker Change: As far as Delevering is concerned as Tassos said in his prepared remarks, we've actually continued to delever following.

Speaker Change: The the amortization requirements under each of the the debt facilities that we have we're now at a financial leverage.

Speaker Change: Our ratio of under one one times one ex so we think that that's a very very good place to be but more broadly speaking in a time of maximum uncertainty, which is suddenly way we seem to be at the moment.

Speaker Change: We feel that maximal optionality is super valuable and that's you know both in terms of the flexibility of our assets themselves, which can be moved around by the liner companies, but it's also about the resilience of our our balance sheet and within that I'm holding a very robust cash position.

Thomas Lister: And within that, holding a very robust cash position, so that we can both manage risks as they present themselves, and equally importantly, be very quick to bounce on opportunities as they arise.

Speaker Change: So that we can both manage risks as they present themselves and equally importantly be very quick to bounce on on opportunities as they arise.

Speaker Change: Understood. Thank.

Thomas Lister: Well, thank you, Tom. Thanks, everyone.

Speaker Change: Thank you, Tom and thanks, everyone I'll pass it over.

Thomas Lister: I'll pass it over.

Speaker Change: Thanks, very much tremor.

Speaker Change: That's all while I can day session and we appreciate your participation I will now turn the call over to Mr. CEO of global ship lease Inc. For the closing remarks. Please go ahead.

Operator: That's all for our Q&A session, and we appreciate your participation.

Thomas Lister: I will now turn the call over to Thomas Lister, CEO of Global Police, Inc., for the closing remarks. Please go ahead. Thank you everyone for joining today and we very much look forward to talking to you again around our 2Q earnings in August. speak to you then, we hope. Thank you very much.

Speaker Change: Thank you everyone for joining today and we very much look forward to talking to you again around all to Q earnings in August speak to you then we hope thank you very much.

Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Speaker Change: [music].

Operator: Thank you for watching!