NYSE:GSL Global Ship Lease Q2 2024 Earnings Report $20.54 +0.37 (+1.84%) Closing price 04/17/2025 03:59 PM EasternExtended Trading$20.53 -0.01 (-0.06%) As of 04/17/2025 04:43 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Global Ship Lease EPS ResultsActual EPS$2.46Consensus EPS $2.27Beat/MissBeat by +$0.19One Year Ago EPS$2.09Global Ship Lease Revenue ResultsActual Revenue$175.00 millionExpected Revenue$172.07 millionBeat/MissBeat by +$2.93 millionYoY Revenue GrowthN/AGlobal Ship Lease Announcement DetailsQuarterQ2 2024Date8/5/2024TimeBefore Market OpensConference Call DateMonday, August 5, 2024Conference Call Time10:30AM ETUpcoming EarningsGlobal Ship Lease's Q1 2025 earnings is scheduled for Thursday, May 15, 2025, with a conference call scheduled at 10:30 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Global Ship Lease Q2 2024 Earnings Call TranscriptProvided by QuartrAugust 5, 2024 ShareLink copied to clipboard.There are 7 speakers on the call. Operator00:00:00Thank you for standing by. My name is Dee, and I will be your conference operator today. At this time, I would like to welcome everyone to Global Shipley Second Quarter 2024 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. Operator00:00:30Thank you. I would now like to turn the call over to Tom Lister, Chief Executive Officer. Please go ahead. Speaker 100:00:37Thank you very much. Hello, everyone, and welcome to the Global Ship Lease Second Quarter 2020 4 Earnings Conference Call. You can find the slides that accompany today's presentation on our website at www.globalshiplease dotcom. As usual, Slides 23 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. Speaker 100:01:15We would also like to direct your attention to the Risk Factors section of our most recent annual report on our 2023 Form 20 F, which was filed in March 2024. 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. 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. Speaker 100:01:56I'm joined today by our Executive Chairman, George Irukos and our Chief Financial Officer, Tasos Psaropoulos. George will begin the call with a high level commentary on GSL and our industry. And then Tasos and I will take you through our recent activity, quarterly results and financials and the current market environment. After that, we'll be pleased to answer your questions. So with that, I'm turning to slide 4, I will pass the call over to George. Speaker 200:02:23Thank you, Tom. Good morning, afternoon or evening to all of you joining us today. So far in 2024, it is safe to say that macro and geopolitical uncertainty have persisted and arguably increased. Most notably, through the continued disruption in the Red Sea and the resulting large scale rerouting away from Suez Canal and around the Cape of Good Hope, this uncertainty has added a significant layer of ton mile demand to an already strong containership charter market. While I'm not going to make a prediction about when or how the conflict in the Middle East ultimately resolves, it's clear that the liner operators, our customers have been increasingly willing to commit to multi year charters, suggesting a growing industry consensus that the Red Sea security situation and its numerous knock on effects in the supply chain may not resolve for some time. Speaker 200:03:26At GSL, we're capitalizing on these supportive conditions to increase our contractual cash flows at firm and rising charter rates. We added over $400,000,000 of contracted revenue in the first half of the year, more than 85% of which during the Q2 and are continuing to do so. And by the way, this includes vessels coming open in the market in the near term and also on a forward basis, including into 2025. We continue to delever to grow our equity value, to reduce our breakevens and to benefit from floating interest rate exposure capped at 0.64% of sulfur through 2026. With all of this highly supportive context and reflecting our positive momentum across the board, we decided during the quarter to introduce a supplemental dividend in addition to a fixed quarterly dividend, effectively increasing our quarterly dividend by 20% for as long as market conditions and cash flow remain so extraordinarily strong. Speaker 200:04:45In addition to the dividend and our opportunistic use of buybacks, our disciplined capital allocation policy remains focused on building our resilience, taking advantage of countercyclical opportunities and maximizing value for our shareholders throughout the cycle. Now with that, I will turn the call back to Tom. Speaker 100:05:07Thank you, George. Please turn to Slide 5. Here we highlight our well diversified charter portfolio. As of June 30, we had $1,800,000,000 in contracted revenues over a TEU weighted average contract duration of 2.2 years. We signed 24 new charters in the first half and added €403,000,000 of contracted revenues. Speaker 100:05:29It's worth emphasizing that while we continue to keep our eyes peeled for the right investment opportunities, all of this revenue and cash flow growth comes from sweating our existing fleet assets. And we still have some ships coming open in 2024 for which, as George has already said, we're seeing appetite from lines even in fact to fix off positions in 2025. On to slide 6, where we recap our capital allocation strategy, which is value driven, risk adjusted, under constant review and guides everything we do. The first thing to keep in mind is that we operate in a cyclical and volatile industry. And that cyclicality is key as it involves risks to be managed, but also very importantly, value generating opportunities to capture. Speaker 100:06:22In short, we look to allocate capital in ways that number 1, reinforce our resilience through the cycle and sharpen our cost competitiveness number 2, support our ability to sustain, in other words, renew and when conditions are supportive, selectively expand our fleet to build long term value. Number 3, ensure sufficient CapEx to meet the evolving regulatory and commercial needs of decarbonization and importantly number 4, sustainably return capital to our shareholders through a combination of dividends and share buybacks. On this last point and in the context of physical market conditions that have dramatically improved, we have introduced a supplemental dividend that effectively increases our quarterly dividend payments by 20% for as long as market conditions remain supportive. Slide 7 shows the long term development of charter rates and asset values. And here I would point out 3 things in particular. Speaker 100:07:22The first goes to my earlier comment. There is opportunity in the shipping cycle. The second is that to capture those opportunities, you need to be selective, stay disciplined and have the funds available to move fast, buy at the right time, buy the right assets and then sweat those assets for all their worth. And as you can see from the chart, that's exactly what we do. While our balance sheet and market reach enable us to move quickly and decisively to make acquisitions when the time is right, you can see in the orange portion of the chart that we didn't chase asset prices into the stratosphere during COVID, instead opting to redirect capital to share buybacks. Speaker 100:08:03And thirdly, in the first half of twenty twenty four, there has been a sharp market up turn that arrested and reversed the post COVID downward normalization trend and that has driven rates and asset values sharply upwards. Not coincidentally, we have not been active buyers in recent times, instead focusing on locking in earnings from the buoyant charter market. But we certainly continue to assess possibilities with a view to moving quickly if the right risk adjusted investment opportunities arise. With that, I'll pass the call to Tassos to further discuss our financials. Speaker 300:08:41Thank you, Tom. Slide 8 is an overview of our 2nd quarter financials. I would like to highlight a few key takeaways. Earnings and cash flow were up materially from the already increased prior year. We have continued to lower our gross debt 64 basis points of interest rate caps that maturing 2026. Speaker 300:09:07Our cash position increased to $350,000,000 with $126,000,000 that being restricted. The balance covers working capital needs, CapEx investment and covenant requirements with some space to act selectively on the right purchase opportunities. We continue to return capital to shareholders in multiple forms, most recently with the addition of the supplemental dividend. We continue to delever and build equity value and our recent corporate credit rating upgrades to BA II from Moody's and BB plus from both of S and P and KBRA are now with this positive momentum. Now Slide 9 illustrates our progress in delivering and de risking our balance sheet. Speaker 300:09:52On the left, you can see our aggressive amortization schedule on which we are on track to reduce our debt outstanding to $630,000,000 at the end of this year and other $500,000,000 at the end of next year. On the right, our financial leverage, adjusted net debt divided by adjusted EBITDA has reduced from 8.4 times at the year end 2018 to now just 0.9 times. This theme continues on Slide 10, where you can see on the left that our cost of debt remains highly competitive at a blended rate of 4.75%. On the right, you can see how breakeven rates have trended over time with the impacts of inflation on operated cost heavily weighted by reductions in interest expense. Such low breakevens mean that we can minimize risk and maximize economic upside through the shipping cycle. Speaker 300:10:50Taken together, it is clear that we are not only in a much stronger position than we used to be or strong for this point in the cycle. We are in a very strong position, full stop. And by the way, it goes without saying that optimizing our balance sheet is a journey rather than our destination, and we will continue to explore and develop ways to further reduce our cost of debt and increase our financial flexibility going forward. Tom will now discuss our market focus in ship deployment. Speaker 100:11:23Tom? Thanks very much, Tassels. And before I move on to the next slide, just to correct a slight slip of the tongue. Our blended cost of debt is even slightly lower than the 4.75% mentioned by Tassels. It's actually 4.57%. Speaker 100:11:37Anyway, with that said, on to slide 11. We reemphasize our focus on midsize and smaller container ships on this slide. And those sizes range from 2,000 TEU to about 10,000 TEU. With the flexibility and reach, these assets are the backbone of global trade as highlighted in the top map. The lower map shows the deployment of larger ships at 10,000 TEU and higher which require deepwater port infrastructure limiting where they can go. Speaker 100:12:10Both maps incidentally show normal trade patterns before Red Sea and Suez transits were disrupted. We have also prioritized vessels in our fleet with higher than normal capacity to carry refrigerated cargoes, which are the fastest growing and most lucrative cargo segment. On to slide 12, which shows supply side trends, namely idle capacity and ship recycling. Following the period of post COVID normalization, idle capacity has trended down to 0.8% year to date 2024. Meanwhile, scrapping activity has once again slowed as owners are inclined to continue to make good money from ships that would be scrapping candidates in more normal market conditions. Speaker 100:12:57To the extent that markets loosen at some stage, there is now a significant backlog of vessels in the global fleet that we would expect to transition towards the breakers. So please keep that dynamic in mind as we move to slide 13, which shows the order book. It's well known that the order book has expanded in recent years, but the specifics matter here. And so we would note that those orders remain heavily skewed towards the larger container ships where GSL does not participate. For the midsize segments where GSL does compete, the order book to fleet ratio is 10.8%, which is smaller but still meaningful. Speaker 100:13:36However, it is also important to highlight the older age profile of the ships in our market peer group. To illustrate, if we were to assume that all ships over 25 years old were scrapped and set that number against the order book delivering for midsized and smaller container ships through 2027, our peer group fleet segments would actually contract. In other words, they would shrink by 4.2%. Slide 14 showcases the impact on the industry of disruptions in the Red Sea. Before these disruptions around 20% of global containerized trade volumes, the boxes themselves, went through the Suez Canal at the northern end of the Red Sea. Speaker 100:14:19Furthermore, much of this trade is long haul, meaning that over a third of global container ship fleet capacity, the ships in other words transited the Suez Canal. The majority of this traffic is now being forced to take a much longer route around the southern tip of Africa effectively tightening vessel supply by as much as 10%, which is in turn driving up charter rates. Now of course trying to predict how geopolitics will evolve in the Middle East is anybody's guess. But at this moment there is little to suggest that the security situation at least in the Red Sea is improving. This brings us to slide 15 where we take a closer look at the charter market. Speaker 100:15:00We have already mentioned the overall phenomenon and drivers, but I would point you to 2 items here. 1st, you can see on the right side of the slide the current indicative rates which are quite healthy and trending positively. And relatedly, second, that is especially true when you consider that our breakeven rates is a highly competitive $9,300 or so per day per vessel. As you would imagine, we're working hard to lock in as much charter cover as we can in these conditions. And with that, I'll turn the call back to George to conclude our prepared remarks on Slide 16. Speaker 200:15:39Thank you, Tom. So to briefly summarize, 1st and foremost, we have capitalized on supporting market conditions throughout the first half of this year to add over $400,000,000 of contracted revenues, growing our forward contract cover to $1,800,000,000 over 2.2 years. So in fact, we are continuing to milk the cash cows that we already have. This activity is in the context of heightened macro and geopolitical uncertainty and as we have all seen disruptions to the supply chain tend to be supportive of earnings in container shipping. Now the situation in the Red Sea is a perfect example of this, with longer voyages around Africa sucking up effective capacity and pushing a fair market into an extraordinary one. Speaker 200:16:30Then we're focused on locking in as much contract cover as we can at strong rates, both on a prompt and forward basis and we continue to make good progress on that. Deleveraging has brought down our breakevens to a point where we're resilient throughout the cycle, but exceptionally profitable in conditions like this. We benefit from 0.64 percent sulfur caps through 2026 and we have additional headroom to use them if we have occasion to do so. And in the meantime, we continue to explore ways to further optimize our balance sheet. Now robust cash flow position positions us well for both opportunistic investments and to return significant capital to shareholders as evidenced by the recent addition of our supplementary quarterly dividend. Speaker 200:17:24We remain laser focused on building our through cycle resilience, building and protecting shareholder value over the long term and ensuring that we're poised and ready when the right of counter cyclical opportunities become available. Just as importantly, we are disciplined and will not chase growth for growth sake. Now we're ready to take your questions. Operator00:17:53Thank you. We will now begin the question and answer session. And your first question comes from the line of Omar Mukhtar from Jefferies. Please go ahead. Speaker 400:18:28Thank you. Hi, guys. Good afternoon. I have a couple of questions. I guess, first off, as Tom, you mentioned and George, you've been adding a good amount of revenue backlog and securing cover. Speaker 400:18:42I wanted to ask, how would you characterize the pace of liners, say, over the past several weeks relative to how it had been? We had the big surge in container freight rates back in, say, May, June. Things seem to have kind of leveled off, although they're high. But just in general here, over the past maybe month or so, how would you say the appetite for capacity on the part of liners is and if it's maintained the same pace or not? Speaker 100:19:11Hi, Omar. You mentioned a second question. Are you going to follow-up with that? Or should I address this first one right now? Speaker 400:19:17Sure. I mean, let's address this one maybe Speaker 300:19:20and then I'll follow-up with the Speaker 400:19:21second one, make it easier. Speaker 100:19:24Sure. Okay. So I would say that the pace of chartering activity has slowed a little bit. But to a very significant extent that's because the availability of charter tonnage in the market has also come down. So there was a frenzy of chartering during the Q2 and we were lucky to jump on that and capitalize upon that. Speaker 100:19:48And now the pace is slowing because 1 on the one hand it's holiday period, but on the other hand crucially there's comparatively limited, tonnage available to charter, which is why even 2025 positions are coming onto the table. Speaker 400:20:07Okay. Thanks, Tom. And I guess last time we had maybe a bit of a frenzy perhaps if you want to call it that, I would say 3 years ago and a lot of the liners were looking to just scoop up shifts themselves and buy them outright from the owners. Is that a dynamic that has shown itself here recently? Are there opportunities developing on that side? Speaker 100:20:30We have seen some of the lines move to buy ships. And generally speaking, that's a very good sign. So if you're an owner and lessor of container ships as we are, if you see the liner operators themselves buying ships out of the secondhand market that means that for them charter rates are at such attractive levels from our perspective that it actually makes more sense for them to buy ships. And that feeds into the expression that George used. We've been milking the existing cows in the herd for all they're worth because the earnings available in the market are extremely attractive. Speaker 100:21:13Asset values are creeping up. And there is quite a lot of money to be made from existing ships. George, I don't know if you want to add to that. Speaker 200:21:24Yes. No, it's right, what Tom said. I mean, we are very disciplined in what we do with the money that we have. And this is our 4 most important focus. I mean, we want to sweat our assets, take out every dollar that we can out of them before we see the opportunities to invest in other assets. Speaker 200:21:50So we are very, very careful in making sure that all the money that comes out of our assets goes down to our balance sheet. So this is $400,000,000 of money that is coming from the existing assets without any investment. So it's real money into the balance sheet. Speaker 400:22:13Yes. And then maybe just a final point, given you're milking these cows for everything that they have, and is there do you see an opportunity to sell some of these ships into strength? I guess you mentioned, Tom, that values are creeping up, but perhaps is it enough to warrant you looking to sell? Or is it still more lucrative to just put these ships on charter given the active liners looking to secure capacity? Speaker 100:22:40Sure. Generally speaking, when the liners are looking to buy, it's because they feel that it's cheaper for them to own than it is for them to charter in. And the flip side of that coin is that it's better for us to hold on to the assets and continue to charter into strength to build our cash flows. However, this is not something we're dogmatic about. So if someone makes us an offer on a ship that is too attractive to refuse and the economics work in our estimation better through the sale than they would through retaining and re chartering the asset, well then we wouldn't refuse the offer. Speaker 400:23:20Makes sense. Yes. Cool. Thanks guys. I'll turn it over. Speaker 100:23:25Great. Thanks very much, Operator00:23:36Our next question comes from the line of Liam Burke with B. Riley. Please go ahead. Speaker 500:23:42Thank you. Hi, Tom, George, Tassos, how are you today? Speaker 100:23:46We're very well. Thanks, Liam. Hopefully you too. Speaker 200:23:50Thank you. Speaker 500:23:50I'm doing fine. Thank you. You have a high class problem here. Your debt is slugging down pretty fairly quickly at an almost accelerating pace. How are you looking at managing the balance sheet where you're looking at potentially being debt free over relatively short period of time and more efficient capital structure where you do carry some debt. Speaker 300:24:22Reality is that although it's very good to hear that it will take some time in order for us to reach at a zero level debt. But the amortization and the fixed amortization has been built up like that, Liam, due to a purpose. It usually follows the age profile of the assets. Reality is that we're feeling very comfortable right now with the level of the leverage and how the amortization is being fixed and structured in our loan documents. We always explore the opportunity of making even better and we are seeking for that. Speaker 300:25:00But yes, the reality is that we are kind of comfortable with that and how the amortization has been structured. Speaker 500:25:07Great. Speaker 100:25:07And Liam, just to add to that, obviously low leverage in a highly volatile macro geopolitical and sectoral environment gives optionality and that's valuable. Speaker 500:25:21Sure. And you haven't made an acquisition in a while for good reason. You make good ones and they always generate nice returns. Speaker 400:25:33Are you seeing any deals Speaker 500:25:34at all or is that pipeline completely dried up? Speaker 100:25:40No. I mean it's not a pipeline that has dried up by any means Liam. And we're looking at potential deals all of the time. So just because you don't see us executing deals doesn't mean we're not looking at deals, but it means we're looking at deals and deciding that we don't like the risk reward metrics on those deals. So I think it's a symptom of continued discipline on our part rather than a lack of potential deal flow. Speaker 500:26:11Great. Thank you, Tom. Speaker 100:26:15Pleasure. Thanks, Leon. Operator00:26:18Our next question comes from the line of Clement Mullins from Value Investors. Please go ahead. Speaker 600:26:26Good morning. Thank you for taking my questions. Following up on Liam's question on the balance sheet, I wanted to ask about the preferred. You're now sitting on a very solid financial position, especially considering the swaps you locked in when rates were lower. Is there maybe any appetite to repurchase the preferred? Speaker 600:26:44Or do you still like the optionality those provide despite their higher price? Speaker 100:26:52We like that paper in the capital structure. It is as you say providing optionality. And if you contrast 8.75% which is the par coupon on that paper versus where let's say more meaningful debt is priced in the market if you strip out the benefits of our 64 basis points SOFR. We see it as useful paper with a lot of optionality and we like it in the capital structure. But as with everything, we always review our overall capital stack and we'll do what we believe is best over the long term when it comes to optimization. Speaker 600:27:37Thanks for the color. I also wanted to ask about the supplemental dividend. You mentioned this is contingent on both market conditions and the company's underlying cash flows. How should we think about this supplemental dividend once rates decline from current levels? Because contracted cash flows will obviously allow you to maintain it for a few more quarters? Speaker 100:28:01Yes. So let's start by saying we've got €1,800,000,000 of contracted revenues over a weighted average term of 2.2 years. And so it was with a view to building that, contracted revenue that we announced our intention, I think it was back in May to introduce the supplemental dividend. And because we are generating more cash from the business than I think any of us anticipated certainly in the Q4 of last year when we were looking forward on the market environment. We wanted to share some of the benefits of this highly supportive market with our investors, hence the introduction of the supplemental dividend. Speaker 100:28:50Now, obviously, it's a very difficult thing to predict forwards. But again, I would point you back to that €1,800,000,000 of contracted revenues and 2.2 years of weighted average contract cover, which at least provides us with some comfort. Speaker 600:29:11That's helpful. That's all for me. Thank you for taking my questions. Congratulations for the quarter. Speaker 100:29:16Thank you very much. Operator00:29:19That concludes our Q and A session. I will now turn the conference back over to Tom Lister for closing remarks. Speaker 100:29:27Thank you very much indeed. And thank you to everyone for joining our 2Q call. And we very much look forward to you joining again, we hope, for the Q3 conference call, which will be in November. Thank you very much indeed. Operator00:29:43Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallGlobal Ship Lease Q2 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K) Global Ship Lease Earnings HeadlinesGlobal Ship Lease: A High Yield Opportunity Amid Market TurmoilApril 15, 2025 | seekingalpha.com3 Dividend Stocks Yielding Over 8% With Rock-Solid FinancialsApril 11, 2025 | 247wallst.comClaim Your FREE Protection GuideIn the final days of his first term, Trump quietly left open an "off the books" wealth-protection loophole hidden in the 6,871 pages of the IRS Tax Code... 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Email Address About Global Ship LeaseGlobal Ship Lease (NYSE:GSL), together with its subsidiaries, engages in owning and chartering of containerships under fixed-rate charters to container shipping companies worldwide. As of March 11, 2024, it owned 68 mid-sized and smaller containerships, ranging from 2,207 to 11,040 twenty-foot equivalent unit (TEU), with an aggregate capacity of 375,406 TEU. 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There are 7 speakers on the call. Operator00:00:00Thank you for standing by. My name is Dee, and I will be your conference operator today. At this time, I would like to welcome everyone to Global Shipley Second Quarter 2024 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. Operator00:00:30Thank you. I would now like to turn the call over to Tom Lister, Chief Executive Officer. Please go ahead. Speaker 100:00:37Thank you very much. Hello, everyone, and welcome to the Global Ship Lease Second Quarter 2020 4 Earnings Conference Call. You can find the slides that accompany today's presentation on our website at www.globalshiplease dotcom. As usual, Slides 23 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. Speaker 100:01:15We would also like to direct your attention to the Risk Factors section of our most recent annual report on our 2023 Form 20 F, which was filed in March 2024. 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. 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. Speaker 100:01:56I'm joined today by our Executive Chairman, George Irukos and our Chief Financial Officer, Tasos Psaropoulos. George will begin the call with a high level commentary on GSL and our industry. And then Tasos and I will take you through our recent activity, quarterly results and financials and the current market environment. After that, we'll be pleased to answer your questions. So with that, I'm turning to slide 4, I will pass the call over to George. Speaker 200:02:23Thank you, Tom. Good morning, afternoon or evening to all of you joining us today. So far in 2024, it is safe to say that macro and geopolitical uncertainty have persisted and arguably increased. Most notably, through the continued disruption in the Red Sea and the resulting large scale rerouting away from Suez Canal and around the Cape of Good Hope, this uncertainty has added a significant layer of ton mile demand to an already strong containership charter market. While I'm not going to make a prediction about when or how the conflict in the Middle East ultimately resolves, it's clear that the liner operators, our customers have been increasingly willing to commit to multi year charters, suggesting a growing industry consensus that the Red Sea security situation and its numerous knock on effects in the supply chain may not resolve for some time. Speaker 200:03:26At GSL, we're capitalizing on these supportive conditions to increase our contractual cash flows at firm and rising charter rates. We added over $400,000,000 of contracted revenue in the first half of the year, more than 85% of which during the Q2 and are continuing to do so. And by the way, this includes vessels coming open in the market in the near term and also on a forward basis, including into 2025. We continue to delever to grow our equity value, to reduce our breakevens and to benefit from floating interest rate exposure capped at 0.64% of sulfur through 2026. With all of this highly supportive context and reflecting our positive momentum across the board, we decided during the quarter to introduce a supplemental dividend in addition to a fixed quarterly dividend, effectively increasing our quarterly dividend by 20% for as long as market conditions and cash flow remain so extraordinarily strong. Speaker 200:04:45In addition to the dividend and our opportunistic use of buybacks, our disciplined capital allocation policy remains focused on building our resilience, taking advantage of countercyclical opportunities and maximizing value for our shareholders throughout the cycle. Now with that, I will turn the call back to Tom. Speaker 100:05:07Thank you, George. Please turn to Slide 5. Here we highlight our well diversified charter portfolio. As of June 30, we had $1,800,000,000 in contracted revenues over a TEU weighted average contract duration of 2.2 years. We signed 24 new charters in the first half and added €403,000,000 of contracted revenues. Speaker 100:05:29It's worth emphasizing that while we continue to keep our eyes peeled for the right investment opportunities, all of this revenue and cash flow growth comes from sweating our existing fleet assets. And we still have some ships coming open in 2024 for which, as George has already said, we're seeing appetite from lines even in fact to fix off positions in 2025. On to slide 6, where we recap our capital allocation strategy, which is value driven, risk adjusted, under constant review and guides everything we do. The first thing to keep in mind is that we operate in a cyclical and volatile industry. And that cyclicality is key as it involves risks to be managed, but also very importantly, value generating opportunities to capture. Speaker 100:06:22In short, we look to allocate capital in ways that number 1, reinforce our resilience through the cycle and sharpen our cost competitiveness number 2, support our ability to sustain, in other words, renew and when conditions are supportive, selectively expand our fleet to build long term value. Number 3, ensure sufficient CapEx to meet the evolving regulatory and commercial needs of decarbonization and importantly number 4, sustainably return capital to our shareholders through a combination of dividends and share buybacks. On this last point and in the context of physical market conditions that have dramatically improved, we have introduced a supplemental dividend that effectively increases our quarterly dividend payments by 20% for as long as market conditions remain supportive. Slide 7 shows the long term development of charter rates and asset values. And here I would point out 3 things in particular. Speaker 100:07:22The first goes to my earlier comment. There is opportunity in the shipping cycle. The second is that to capture those opportunities, you need to be selective, stay disciplined and have the funds available to move fast, buy at the right time, buy the right assets and then sweat those assets for all their worth. And as you can see from the chart, that's exactly what we do. While our balance sheet and market reach enable us to move quickly and decisively to make acquisitions when the time is right, you can see in the orange portion of the chart that we didn't chase asset prices into the stratosphere during COVID, instead opting to redirect capital to share buybacks. Speaker 100:08:03And thirdly, in the first half of twenty twenty four, there has been a sharp market up turn that arrested and reversed the post COVID downward normalization trend and that has driven rates and asset values sharply upwards. Not coincidentally, we have not been active buyers in recent times, instead focusing on locking in earnings from the buoyant charter market. But we certainly continue to assess possibilities with a view to moving quickly if the right risk adjusted investment opportunities arise. With that, I'll pass the call to Tassos to further discuss our financials. Speaker 300:08:41Thank you, Tom. Slide 8 is an overview of our 2nd quarter financials. I would like to highlight a few key takeaways. Earnings and cash flow were up materially from the already increased prior year. We have continued to lower our gross debt 64 basis points of interest rate caps that maturing 2026. Speaker 300:09:07Our cash position increased to $350,000,000 with $126,000,000 that being restricted. The balance covers working capital needs, CapEx investment and covenant requirements with some space to act selectively on the right purchase opportunities. We continue to return capital to shareholders in multiple forms, most recently with the addition of the supplemental dividend. We continue to delever and build equity value and our recent corporate credit rating upgrades to BA II from Moody's and BB plus from both of S and P and KBRA are now with this positive momentum. Now Slide 9 illustrates our progress in delivering and de risking our balance sheet. Speaker 300:09:52On the left, you can see our aggressive amortization schedule on which we are on track to reduce our debt outstanding to $630,000,000 at the end of this year and other $500,000,000 at the end of next year. On the right, our financial leverage, adjusted net debt divided by adjusted EBITDA has reduced from 8.4 times at the year end 2018 to now just 0.9 times. This theme continues on Slide 10, where you can see on the left that our cost of debt remains highly competitive at a blended rate of 4.75%. On the right, you can see how breakeven rates have trended over time with the impacts of inflation on operated cost heavily weighted by reductions in interest expense. Such low breakevens mean that we can minimize risk and maximize economic upside through the shipping cycle. Speaker 300:10:50Taken together, it is clear that we are not only in a much stronger position than we used to be or strong for this point in the cycle. We are in a very strong position, full stop. And by the way, it goes without saying that optimizing our balance sheet is a journey rather than our destination, and we will continue to explore and develop ways to further reduce our cost of debt and increase our financial flexibility going forward. Tom will now discuss our market focus in ship deployment. Speaker 100:11:23Tom? Thanks very much, Tassels. And before I move on to the next slide, just to correct a slight slip of the tongue. Our blended cost of debt is even slightly lower than the 4.75% mentioned by Tassels. It's actually 4.57%. Speaker 100:11:37Anyway, with that said, on to slide 11. We reemphasize our focus on midsize and smaller container ships on this slide. And those sizes range from 2,000 TEU to about 10,000 TEU. With the flexibility and reach, these assets are the backbone of global trade as highlighted in the top map. The lower map shows the deployment of larger ships at 10,000 TEU and higher which require deepwater port infrastructure limiting where they can go. Speaker 100:12:10Both maps incidentally show normal trade patterns before Red Sea and Suez transits were disrupted. We have also prioritized vessels in our fleet with higher than normal capacity to carry refrigerated cargoes, which are the fastest growing and most lucrative cargo segment. On to slide 12, which shows supply side trends, namely idle capacity and ship recycling. Following the period of post COVID normalization, idle capacity has trended down to 0.8% year to date 2024. Meanwhile, scrapping activity has once again slowed as owners are inclined to continue to make good money from ships that would be scrapping candidates in more normal market conditions. Speaker 100:12:57To the extent that markets loosen at some stage, there is now a significant backlog of vessels in the global fleet that we would expect to transition towards the breakers. So please keep that dynamic in mind as we move to slide 13, which shows the order book. It's well known that the order book has expanded in recent years, but the specifics matter here. And so we would note that those orders remain heavily skewed towards the larger container ships where GSL does not participate. For the midsize segments where GSL does compete, the order book to fleet ratio is 10.8%, which is smaller but still meaningful. Speaker 100:13:36However, it is also important to highlight the older age profile of the ships in our market peer group. To illustrate, if we were to assume that all ships over 25 years old were scrapped and set that number against the order book delivering for midsized and smaller container ships through 2027, our peer group fleet segments would actually contract. In other words, they would shrink by 4.2%. Slide 14 showcases the impact on the industry of disruptions in the Red Sea. Before these disruptions around 20% of global containerized trade volumes, the boxes themselves, went through the Suez Canal at the northern end of the Red Sea. Speaker 100:14:19Furthermore, much of this trade is long haul, meaning that over a third of global container ship fleet capacity, the ships in other words transited the Suez Canal. The majority of this traffic is now being forced to take a much longer route around the southern tip of Africa effectively tightening vessel supply by as much as 10%, which is in turn driving up charter rates. Now of course trying to predict how geopolitics will evolve in the Middle East is anybody's guess. But at this moment there is little to suggest that the security situation at least in the Red Sea is improving. This brings us to slide 15 where we take a closer look at the charter market. Speaker 100:15:00We have already mentioned the overall phenomenon and drivers, but I would point you to 2 items here. 1st, you can see on the right side of the slide the current indicative rates which are quite healthy and trending positively. And relatedly, second, that is especially true when you consider that our breakeven rates is a highly competitive $9,300 or so per day per vessel. As you would imagine, we're working hard to lock in as much charter cover as we can in these conditions. And with that, I'll turn the call back to George to conclude our prepared remarks on Slide 16. Speaker 200:15:39Thank you, Tom. So to briefly summarize, 1st and foremost, we have capitalized on supporting market conditions throughout the first half of this year to add over $400,000,000 of contracted revenues, growing our forward contract cover to $1,800,000,000 over 2.2 years. So in fact, we are continuing to milk the cash cows that we already have. This activity is in the context of heightened macro and geopolitical uncertainty and as we have all seen disruptions to the supply chain tend to be supportive of earnings in container shipping. Now the situation in the Red Sea is a perfect example of this, with longer voyages around Africa sucking up effective capacity and pushing a fair market into an extraordinary one. Speaker 200:16:30Then we're focused on locking in as much contract cover as we can at strong rates, both on a prompt and forward basis and we continue to make good progress on that. Deleveraging has brought down our breakevens to a point where we're resilient throughout the cycle, but exceptionally profitable in conditions like this. We benefit from 0.64 percent sulfur caps through 2026 and we have additional headroom to use them if we have occasion to do so. And in the meantime, we continue to explore ways to further optimize our balance sheet. Now robust cash flow position positions us well for both opportunistic investments and to return significant capital to shareholders as evidenced by the recent addition of our supplementary quarterly dividend. Speaker 200:17:24We remain laser focused on building our through cycle resilience, building and protecting shareholder value over the long term and ensuring that we're poised and ready when the right of counter cyclical opportunities become available. Just as importantly, we are disciplined and will not chase growth for growth sake. Now we're ready to take your questions. Operator00:17:53Thank you. We will now begin the question and answer session. And your first question comes from the line of Omar Mukhtar from Jefferies. Please go ahead. Speaker 400:18:28Thank you. Hi, guys. Good afternoon. I have a couple of questions. I guess, first off, as Tom, you mentioned and George, you've been adding a good amount of revenue backlog and securing cover. Speaker 400:18:42I wanted to ask, how would you characterize the pace of liners, say, over the past several weeks relative to how it had been? We had the big surge in container freight rates back in, say, May, June. Things seem to have kind of leveled off, although they're high. But just in general here, over the past maybe month or so, how would you say the appetite for capacity on the part of liners is and if it's maintained the same pace or not? Speaker 100:19:11Hi, Omar. You mentioned a second question. Are you going to follow-up with that? Or should I address this first one right now? Speaker 400:19:17Sure. I mean, let's address this one maybe Speaker 300:19:20and then I'll follow-up with the Speaker 400:19:21second one, make it easier. Speaker 100:19:24Sure. Okay. So I would say that the pace of chartering activity has slowed a little bit. But to a very significant extent that's because the availability of charter tonnage in the market has also come down. So there was a frenzy of chartering during the Q2 and we were lucky to jump on that and capitalize upon that. Speaker 100:19:48And now the pace is slowing because 1 on the one hand it's holiday period, but on the other hand crucially there's comparatively limited, tonnage available to charter, which is why even 2025 positions are coming onto the table. Speaker 400:20:07Okay. Thanks, Tom. And I guess last time we had maybe a bit of a frenzy perhaps if you want to call it that, I would say 3 years ago and a lot of the liners were looking to just scoop up shifts themselves and buy them outright from the owners. Is that a dynamic that has shown itself here recently? Are there opportunities developing on that side? Speaker 100:20:30We have seen some of the lines move to buy ships. And generally speaking, that's a very good sign. So if you're an owner and lessor of container ships as we are, if you see the liner operators themselves buying ships out of the secondhand market that means that for them charter rates are at such attractive levels from our perspective that it actually makes more sense for them to buy ships. And that feeds into the expression that George used. We've been milking the existing cows in the herd for all they're worth because the earnings available in the market are extremely attractive. Speaker 100:21:13Asset values are creeping up. And there is quite a lot of money to be made from existing ships. George, I don't know if you want to add to that. Speaker 200:21:24Yes. No, it's right, what Tom said. I mean, we are very disciplined in what we do with the money that we have. And this is our 4 most important focus. I mean, we want to sweat our assets, take out every dollar that we can out of them before we see the opportunities to invest in other assets. Speaker 200:21:50So we are very, very careful in making sure that all the money that comes out of our assets goes down to our balance sheet. So this is $400,000,000 of money that is coming from the existing assets without any investment. So it's real money into the balance sheet. Speaker 400:22:13Yes. And then maybe just a final point, given you're milking these cows for everything that they have, and is there do you see an opportunity to sell some of these ships into strength? I guess you mentioned, Tom, that values are creeping up, but perhaps is it enough to warrant you looking to sell? Or is it still more lucrative to just put these ships on charter given the active liners looking to secure capacity? Speaker 100:22:40Sure. Generally speaking, when the liners are looking to buy, it's because they feel that it's cheaper for them to own than it is for them to charter in. And the flip side of that coin is that it's better for us to hold on to the assets and continue to charter into strength to build our cash flows. However, this is not something we're dogmatic about. So if someone makes us an offer on a ship that is too attractive to refuse and the economics work in our estimation better through the sale than they would through retaining and re chartering the asset, well then we wouldn't refuse the offer. Speaker 400:23:20Makes sense. Yes. Cool. Thanks guys. I'll turn it over. Speaker 100:23:25Great. Thanks very much, Operator00:23:36Our next question comes from the line of Liam Burke with B. Riley. Please go ahead. Speaker 500:23:42Thank you. Hi, Tom, George, Tassos, how are you today? Speaker 100:23:46We're very well. Thanks, Liam. Hopefully you too. Speaker 200:23:50Thank you. Speaker 500:23:50I'm doing fine. Thank you. You have a high class problem here. Your debt is slugging down pretty fairly quickly at an almost accelerating pace. How are you looking at managing the balance sheet where you're looking at potentially being debt free over relatively short period of time and more efficient capital structure where you do carry some debt. Speaker 300:24:22Reality is that although it's very good to hear that it will take some time in order for us to reach at a zero level debt. But the amortization and the fixed amortization has been built up like that, Liam, due to a purpose. It usually follows the age profile of the assets. Reality is that we're feeling very comfortable right now with the level of the leverage and how the amortization is being fixed and structured in our loan documents. We always explore the opportunity of making even better and we are seeking for that. Speaker 300:25:00But yes, the reality is that we are kind of comfortable with that and how the amortization has been structured. Speaker 500:25:07Great. Speaker 100:25:07And Liam, just to add to that, obviously low leverage in a highly volatile macro geopolitical and sectoral environment gives optionality and that's valuable. Speaker 500:25:21Sure. And you haven't made an acquisition in a while for good reason. You make good ones and they always generate nice returns. Speaker 400:25:33Are you seeing any deals Speaker 500:25:34at all or is that pipeline completely dried up? Speaker 100:25:40No. I mean it's not a pipeline that has dried up by any means Liam. And we're looking at potential deals all of the time. So just because you don't see us executing deals doesn't mean we're not looking at deals, but it means we're looking at deals and deciding that we don't like the risk reward metrics on those deals. So I think it's a symptom of continued discipline on our part rather than a lack of potential deal flow. Speaker 500:26:11Great. Thank you, Tom. Speaker 100:26:15Pleasure. Thanks, Leon. Operator00:26:18Our next question comes from the line of Clement Mullins from Value Investors. Please go ahead. Speaker 600:26:26Good morning. Thank you for taking my questions. Following up on Liam's question on the balance sheet, I wanted to ask about the preferred. You're now sitting on a very solid financial position, especially considering the swaps you locked in when rates were lower. Is there maybe any appetite to repurchase the preferred? Speaker 600:26:44Or do you still like the optionality those provide despite their higher price? Speaker 100:26:52We like that paper in the capital structure. It is as you say providing optionality. And if you contrast 8.75% which is the par coupon on that paper versus where let's say more meaningful debt is priced in the market if you strip out the benefits of our 64 basis points SOFR. We see it as useful paper with a lot of optionality and we like it in the capital structure. But as with everything, we always review our overall capital stack and we'll do what we believe is best over the long term when it comes to optimization. Speaker 600:27:37Thanks for the color. I also wanted to ask about the supplemental dividend. You mentioned this is contingent on both market conditions and the company's underlying cash flows. How should we think about this supplemental dividend once rates decline from current levels? Because contracted cash flows will obviously allow you to maintain it for a few more quarters? Speaker 100:28:01Yes. So let's start by saying we've got €1,800,000,000 of contracted revenues over a weighted average term of 2.2 years. And so it was with a view to building that, contracted revenue that we announced our intention, I think it was back in May to introduce the supplemental dividend. And because we are generating more cash from the business than I think any of us anticipated certainly in the Q4 of last year when we were looking forward on the market environment. We wanted to share some of the benefits of this highly supportive market with our investors, hence the introduction of the supplemental dividend. Speaker 100:28:50Now, obviously, it's a very difficult thing to predict forwards. But again, I would point you back to that €1,800,000,000 of contracted revenues and 2.2 years of weighted average contract cover, which at least provides us with some comfort. Speaker 600:29:11That's helpful. That's all for me. Thank you for taking my questions. Congratulations for the quarter. Speaker 100:29:16Thank you very much. Operator00:29:19That concludes our Q and A session. I will now turn the conference back over to Tom Lister for closing remarks. Speaker 100:29:27Thank you very much indeed. And thank you to everyone for joining our 2Q call. And we very much look forward to you joining again, we hope, for the Q3 conference call, which will be in November. Thank you very much indeed. Operator00:29:43Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.Read morePowered by