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DATE
Tuesday, Aug. 5, 2025 at 2:30 p.m. ET
CALL PARTICIPANTS
Chief Executive Officer — Thomas Lister
Executive Chairman — George Youroukos
Chief Financial Officer — Tassos Psaropoulos
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TAKEAWAYS
Forward Contracted Revenue-- $1.73 billion in forward revenue with an average remaining contract duration of 2.1 years as of June 30, 2025, supporting long-term cash flow visibility.
Additional Charter Coverage-- Nearly $400 million in incremental contracted revenue from 22 new and extended charters added in the first half of 2025, removing remaining market exposure for the year.
Dividend Increase-- Annualized dividend increased to $2.10 per common share as of Q2 2025, reflecting higher returns to shareholders.
Cash Position-- Total cash was $511 million as of June 30, 2025, of which $80 million was classified as restricted as of June 30, 2025, providing both operational liquidity and flexibility for opportunistic investments.
Debt Management-- Gross debt was under $700 million as of June 30, 2025, compared to $950 million at year-end 2022; Weighted average debt maturity was extended to 4.9 years as of the first half of 2025 and Weighted average cost of debt was reduced to 4.18% for the first half of 2025.
Net Leverage-- Net debt to EBITDA was 0.7x for the first half of 2025, reflecting a continued deleveraging trend.
Vessel Sales-- Realized a gain of $28.3 million from the sale of three older, smaller vessels in the first half of 2025. A fourth ship is contracted for sale at $35.6 million in Q4 2025.
Buyback Authorization-- $33 million remained under the share repurchase program as of June 30, 2025, with ongoing deleveraging to support equity value.
Fleet Charter Rates-- Average breakeven rates remain below $9,400 per vessel per day, positioningGlobal Ship Lease(GSL 2.69%) to generate free cash flow even in weaker market conditions.
SUMMARY
Management emphasized that essentially all 2025 fleet days are covered, stating there are "essentially no open days in 2025," with 80% coverage secured for 2026, sharply reducing short-term charter market exposure. Vessel sales were timed to capitalize on high secondhand values, enabling redeployment of capital into future fleet renewal. The call highlighted minimal idle and scrapping activity in the global containership fleet, underscoring persistent high utilization and demand for even aging ships. Executives stated that liner customers continue to seek multiyear charters for mid-sized and smaller vessels, with particular interest in durations of up to three years. Credit ratings were recently reaffirmed, reflecting confidence in the company's balance sheet and recurring contracted revenues.
Chief Executive Officer Lister said, "charter rates remain very attractive," despite recent freight rate softness on the Transpacific, pointing to buoyant conditions in other trade lanes such as Asia-Europe.
Executives explained that although additional order activity is emerging for smaller ships, speculative newbuild orders remain subdued due to challenges in securing long-term charters for these vessels.
Global Ship Lease outperformed peers and the S&P 500 "by approximately four times" on a total return basis so far this year.
The company completed $85 million in refinancing during the first half of 2025, further optimizing debt maturity and interest cost structure.
INDUSTRY GLOSSARY
TEU: Twenty-foot equivalent unit; a standardized maritime industry measure of containerized cargo capacity.
Breakeven Rate: The average daily revenue per vessel required to cover all operating and financing costs.
Panamax / Post-Panamax: Categories of ship size based on dimensions that determine their ability to transit the Panama Canal; post-panamax vessels exceed the canal's original size limits.
Full Conference Call Transcript
Operator: Hello, and thank you for standing by. My name is Bella, and I will be your conference operator today. At this time, I would like to welcome everyone to Global Ship Lease Q2 2025 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. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. To withdraw your question, press star one again. I would now like to turn the conference over to Mr. Thomas Lister, CEO of Global Ship Lease. You may begin. Thank you.
Thomas Lister: Hello, everyone, and welcome to the Global Ship Lease Second Quarter 2025 Earnings Conference Call. You can find the slides that accompany today's presentation on our website at www.globalshiplease.com. As usual, Slides two and three 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 section of our most recent annual report on our 2024 form 20-F, which was filed in March 2025.
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 report 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. I'm joined as usual today by our Executive Chairman, George Youroukos, and by our Chief Financial Officer, Tassos Psaropoulos.
George will begin the call with high-level commentary on GSL, and our industry, and then Tassos and I will take you through and the current market environment. After that, we will be pleased to take your questions. So turning now to slide four, I'll pass the call over to George. Thank you, Tom. And good morning, afternoon, or evening to all of you joining today.
George Youroukos: Related to tariffs, trade disruptions, and geopolitical tensions have continued to materially impact the global container shipping industry. This set of factors is highly diverse, and, of course, there have been numerous additional such measures announced in recent days. But as we will explain today, the through line is that they are all making containerized supply chains less efficient, which as long as consumer demand holds up, means that more vessels are needed to carry the same volume of cargo. In this environment, our fleet of flexible midsize and smaller container ships has remained in high demand, and we have secured nearly $400 million of additional charter coverage. In the first half of the year.
Effectively closing out any 2025 market exposure and bringing 2026 coverage to 80%. Meanwhile, we have selectively and opportunistically sold all the ships. Crystallizing the cyclically high values and providing us with additional dry powder for freight renewal when the right opportunities arise. Our strong credit ratings reflect the fortress-like quality of our balance sheet and our extensive contracted revenue backlog. We have also continued to pay dividends to our investors with the recent increase bringing our annualized dividend payment to $2.10 per common share. We are pleased to provide an attractive total return to our shareholders So far this year, have not only outperformed our peer group, but have also out the S&P 500 by approximately four times.
In summary, we're maximizing our optionality to manage risks and capitalize on opportunities in an unprecedented in an unpredictable market. All of which providing our investors with a combination of stability the call over to Tom.
Thomas Lister: Thanks, George. Hello, everyone, and please turn to Slide five where we highlight our well-diversified charter portfolio. As of June 30, we have $1.73 billion in forward revenues with 2.1 years of average remaining contract cover. We added 22 charters in 2025, including extension options that have been declared for nearly $400 million of contracted revenues. On slide six, we discuss our dynamic capital allocation policy. Being in a cyclical industry that is impacted, sometimes positively, other times negatively, by any number of global trends and macro factors we believe it to be fundamentally important. To maintain the long view.
This means looking through both the cycle and short-term volatility and ensuring that we provide ourselves with the optionality to dynamically allocate capital in the manner that best protects and helps build shareholder value. Given the extraordinary uncertainty currently prevailing, we believe that maximizing that optionality is the right course of action for us to take. While, of course, reinforcing our balance sheet, selectively investing in our fleet, and continuing to return capital to shareholders. And indeed, increasing those returns where prudent as we have recently done by growing our annualized dividend to $2.10 per common share. Our strong cash flows from multiyear contracts put us in a strong position to confidently advance each of these priorities.
And as we've said before, it's easier for investors to buy and sell our shares than it is to buy and sell ships. And we're pleased that GSL can serve as a liquid platform through which investors can fully participate in our business and industry while minimizing downside risk and having the share trading liquidity to upsize or downsize their exposure at their option. Moving to slide seven, we continue to take pride in this chart and what it says about our discipline when it comes to acquiring ships. We have consistently bought ships opportunistically and in situations where we believe downside is limited and upside potential is significant. The primary takeaways for investors are twofold.
One, we have a strong track record avoiding acquisitions during periods when asset prices are elevated or in terms that depend upon an optimistic projection of medium or long-term market conditions. When the all-in proposition makes sense on a long-term per share basis, we execute. If it does not, we do not. And two, the old maxim applies. The best opportunities to build long-term value and unlock outsized returns tend to be at the bottom of the cycle when there's blood in the water and access to fresh capital. Is limited. With that, I'll pass the call to Tassos to discuss our financials.
Tassos Psaropoulos: Thank you, Tom. Slide eight shows our first half 2025 financial highlights. I would like to mention a few key points. Earnings and cash flow have continued to rise while our gross debt has increased relative to year-end 2024 as we brought an additional four vessels into our fleet. Nevertheless, our gross debt figure is down from where it was one year ago. Our cash position is $511 million, of which $80 million is restricted. The remainder ensures that we can fully cover our covenants, working capital needs, and any unexpected contingencies in addition to providing dry powder for both opportunistic investments emerge. And, of course, importantly, it's a pros continue payment of our sustainable dividend.
Ofno will complete it in $85 million refinancing to push our weighted average debt maturity to 4.9 years and bring our weighted average cost of debt to 4.18%. We also realized a gain of $28.3 million on the sale of three relatively older, smaller vessels And we have contracted to sell a fourth vessel, Bill 2,000. For $35.6 million in Q4. In addition to the healthy dividend, which has already been discussed, we have a further $33 million under buyback authorization, and we continue to delever to build equity value. We have also recently had our very strong credit ratings of firm. The details of which are on the slide.
Slide nine shows our ongoing efforts to delever derisk and grow equity value, which ultimately increase our optionality. The graph on the left shows our progress in lowering our outstanding debt, which was $950 million at the end of 2022 and now sits under $700 million. Perhaps more revealingly, the graph on the right shows a reduction in financial leverage with net debt to EBITDA now at 0.7 times. Whatever challenges or opportunities come next, we are ready. Slide 10 further highlights our progress in delivering and building resilience. Our cost of debt is shown on the left and blended cost of 4.18%, down from the six plus percent in 2020.
A similar story is shown on the right where we have maintained low breakeven rates by cutting our interest expense even as operating expenses have risen in the middle of a period of high inflation. I will now turn it back over to Tom.
Thomas Lister: Thanks, Tassos. For the benefit of those of you who may be new to the GSL story and to whom I offer a warm welcome, slide 11 restates our focus on mid-sized and smaller container ships. Between 2,010 TEU, which make up the backbone of global trade, are super flexible, and are not dependent upon any one trade or country. This is quite different from the situation of very large container ships, which are often the focus of media coverage on our industry. Not to mention the bulk of capital investment, which I will come back to.
Because of the huge capacity physical restrictions in many ports, and the need for sophisticated port infrastructure, those very large container ships tend to be limited to the big main lane trades such as those between China and The US, or Northern Europe. We consistently reiterate this aspect of our business because this distinction is not a subtle nuance for purposes of fine-tuning a model, but a major differentiation with real-world implications. Both in the current environment and well into the future.
Moving to slide 12 on the Red Sea, which continues to have a significant impact on our industry, as approximately 10% of global containership capacity is absorbed by routing around the Cape Of Good Hope instead of transiting sewers. It's impossible to predict how long this will last. However, liner operators service networks are complex and interconnected. Meaning that any significant changes in service routing can't simply be dropped in overnight or enacted without incurring substantial costs. Because of that, and more importantly still, the very real implications for seafarer safety industry consensus is that the liner majors will want to see sustained stability and safety before making any material shift back to the Red Sea transits.
Who knows when that will happen?
Thomas Lister: But if or when it does, potentially triggering a meaningful market correction, we're well positioned to take advantage of the opportunities that arise. Turning to Slide 13. We continue to believe as we all try to grapple with the implications of volatile US trade dynamics with much of the rest of the world and most notably, with China. In short, from 02/2019, a combination of tariffs, tariff arbitrage, non-tariff pressures and the prospect of future escalation led to a deconcentration of supply chains throughout the Asia Pacific region and away from huge, highly efficient industrial clusters feeding directly into the largest Chinese ports, and then outward on the very largest vessels. To Northern Europe and The US West Coast.
This shift accrued to the benefit of mid-sized and smaller vessels like ours. Which both directly took market share from the very large container ships that cannot service those smaller trades and also saw material incremental demand from a more complex and less efficient supply chain that may now involve multiple voyages within the region before going long haul. To the end markets. We've made this point before, but it pairs repeating. Increased inefficiency in the supply chain means that more vessels are required to transport a given quantity of cargo. From the containership owner's perspective, this is effectively indistinguishable from increased demand.
And it is a key theme of many of the major factors currently impacting the world and global trade. To be clear, those disrupted Chinese supply chains, Marine very significant to global containerized trade. But the diffusion of both intermediate and finished good manufacturing capacity has proved to be lasting as has the general recognition that excessive reliance on any one source country represents a fundamental supply chain vulnerability. In the current context, many of these particulars are fluid, to put it mildly. But the overall dynamic and impacts for container shipping are looking to be directionally similar to this precedent. So if not exactly history repeating itself, it does so far appear to rhyme.
On to slide 14, where we provide our standard check-in on supply side trends in the space. What at one point would have been quite shocking has in recent times just become the way things are. Both idle tonnage and scrapping activity are more or less zero as the system remains stretched. Thin and older vessels, continue to command high rates that more than justify keeping them on the water. Just to drive this point home, in a global fleet with cellular capacity of around 32 million TEU, a global total of 6,800 TEU of capacity was scrapped in the first half of the year.
Or to put it differently, more or less the equivalent capacity of a single ship in our fleet of mid-sized and smaller container ships. Slide 15 covers the order book, which is both meaningful in overall scope and overwhelmingly focused on the very largest size segments. A part of the market in which GSL does not participate. In the segments where we do focus, the order book to fleet ratio is 12%, which is spread over a three to four year worth of deliveries.
Thomas Lister: Crucially, while, the median age for the global fleet above 10,000 TEU is just 7.5 years. The median age under 10,000 TEUs, in other words, in the segments we're focused on and are competing in, the median age has risen to 17.5 years as new additions have been limited. And quite old ships have hung around to reap the benefits of the tight market.
It's a bit hypothetical, but if we were to look to a scenario where that fall sub 10,000 TEU order book is delivered through 2028, and we were to assume that ships over 25 years in the same time frame were scrapped then the global fleet would in fact be trending towards a net fleet reduction of 6.3% in these sizes. As we've said before, it cannot be taken for granted that all of these ships will indeed be promptly scrapped. But as an owner of well-maintained and high specification ships, I can't say that we are particularly worried about a market in which even a generic 28 or 30-year-old ship can be profitably employed. In the charter market.
On the flip side, a scenario in which the wider market turns sharply downward at some stage, pressure on less well-specified vessels and their owners could be meaningfully more widespread. With extensive contract coverage, a high specification in demand fleet, and a balance sheet with both resilience and dry powder, we're inclined to see such a situation as an opportunity. First and foremost. On slide 16, we check-in on the charter market itself. As you would expect from our commentary thus far, the charter market remains quite strong. Both on an absolute basis and even more so in the context of GSL's breakeven rates of under $9,400 per day per vessel.
The amount of chartering activity particularly on a forward or long-term basis, reduced materially during the post deliberation day air pocket when the liners and their own customers were trying to sort out how best to proceed. However, as you can see on the chart, this bout of short-term focus and hesitation to commit did not undermine the very healthy rate environment. Beyond the discussion of fundamentals that we have provided here, forward visibility on market charter rates is rather limited. For GSL though, we're insulated by more than $1.7 billion of contract cover over an average of 2.1 years going forward. So our focus is squarely on the opportunities. Ahead of us.
With that, I'll turn it back to George on slide 17.
George Youroukos: Thank you, Tom. To summarize, we continue to add forward cover and now have a essentially no open days in 2025 and are working on closing out next year as well. Macro, geopolitical, and regulatory uncertainty is high, and we're maximizing an optionality to manage risk capitalize on opportunities. Financially, GSL is stronger than it has ever been, with a fortress balance sheet and annual EBITDA in excess of our net debt. Our average breakeven rates are under $9,400. Per vessel per day. Which means that we are positioned to continue generating free cash flow even if the market were much weaker than today's. As our fleet cash flow cask excuse me.
Azure Fleet's cash cows age we're opportunistically monetizing certain older vessels and are increasingly focused on disciplined fleet renewal to support forward earnings and returns. And finally, we are pleased to be returning capital to our shareholders by paying out an annualized dividend of $2.10 per common share. Now with that, we're ready to take your questions.
Operator: I would like to everyone in order to ask a question, press star. Then the number one on your telephone keypad. Your first question comes from the line of Liam Burke with B. Riley Securities. Your line is now open. Please go ahead.
Liam Burke: Thank you. Hi, George, Tom, Tassos. How are you doing today? Are doing today?
Thomas Lister: We're doing well, Liam. Hi. Good to hear from you.
Liam Burke: Thank you. Thank you. Tom, as we look into, third quarter, freight rates, are sort of weakening or softening as we go further. Is there still that positive disconnect between, you your freight rates and then your charter rates?
Thomas Lister: Short answer, Liam. Yes. I would say that the charter rates in the in the market are holding up firmly despite the, the downward pressure on freight rates in the Transpacific. I would also point out, that there are, more buoyant markets than the Transpacific such as Asia Europe. But main message, charter rates remain very attractive.
Liam Burke: And in terms of your liner customers, is there interest in, longer durations in terms of the vessels that are up for recharter?
Thomas Lister: I wouldn't necessarily say longer durations, but there is certainly appetite for midsize and smaller tonnage from the liner operators for the same multiyear charters that we've been seeing for a while. So, you know, for the smaller ships, maybe a couple of years is on the cards. For the, the ones at the larger end of the size spectrum in our fleet, you may be looking at, three plus years.
Liam Burke: Great. Thank you, Tom.
Thomas Lister: Our pleasure. Thanks, Liam.
Operator: Your next question comes from the line of Omar Nokta with Jefferies. Please go ahead.
Omar Nokta: Thank you. Hi, guys. Good afternoon. Maybe just a follow-up.
Thomas Lister: Tom, on just your last comments about the charger appetite for the midsize and smaller asset classes. You're highlighting in one of the slides just how much the order book has been more attuned towards the bigger vessels. I guess maybe recently, there's been some chatter, some orders coming in for some of the smaller end of the
George Youroukos: of the fleet.
Omar Nokta: So I guess maybe my question is maybe two part. You know? One, you know, what's a behind that or sort of kick started perhaps that interest in the smaller ships? And then two, do you see opportunities to, place orders for smaller ships against long term contracts?
Thomas Lister: Thanks, Omar. And hi. Thanks for joining the call. Okay. I'll get the ball rolling on this, and I'm sure George will also weigh in. I think there is a growing recognition that the midsize and smaller segments are underbuilt. And people are beginning to react to that. However, because it's still rather challenging to get significantly long term charters in the midsize smaller space from the liner operators. That keeps a lid on any speculative orders. In that space, which means that despite the fact that, yes, there is more adding ordering activity than before, it's still not, let's say, worryingly high in nature.
And to the second part of your question, I mean, we're always looking at opportunities in the space, both for existing ships, has been our bread and butter, to date, but also for, for new buildings But we don't move on either of those unless, we can make the risk and return, numbers work. And so far, that hasn't been the case for new buildings, at least for us. But we continue to keep an eye on the market as you would expect George, I don't know if you want to add to
George Youroukos: Yeah. The only thing I would add is that generally speaking, a line of company, smaller ships do not consider them as the backbone of their services. Hence, they are not running to you know, to charter these ships for long durations, more than three years, I would say. Especially if it's a brand new ship, they will go for three years. Or if it's a bargain, they would even go for longer. I mean, it all depends on the rate. So if you if you offer a very low rate, then
Omar Nokta: yes,
George Youroukos: they might get longer than three years. But in general, they are not the ships that liner companies consider as their main ships. So they can always pick them up in the market they fill, the charter market. So I don't think that it is a it is an idea for us to order these ships at today's, high new build prices.
And then speculatively try and fix them, you know, at a higher charter rate because I don't think there's higher charter rates will be available given the appetite of charters and knowing also the price that somebody has paid so the charter is not gonna want to allow the owner of the ship to make a killing, naturally, as a charter could order the ship themselves if it's if it's becoming too expensive.
Omar Nokta: Okay. That's interesting. Thank you, George. And Tom. And maybe just a second question. Seems like you've been perhaps a little bit more transactional on the sales side maybe not dramatically, but you've you've monetized another ship an older one. It looks like I had a much firmer price than what you achieved for the sister ship a few months earlier. Are is your are the sales coming on this, on And also, you seeing in freight rates?
Thomas Lister: Attractive. Going to the second part of your question first. But as a general, comment, Omar, whenever we're looking to either deploy an asset more capital, more returns, more cash. For, for the business. So, it so happens that, yes, we've sold these older assets opportunistically, a total of four during the first half of this year, simply because for those specific assets, when they were coming available, we felt that would be, the more value generative proposition for the company. But, you know, that's not to say that we will continue down that track going forward. It's always the dynamic decision, and we figure out what makes the most sense economically.
But asset values are remaining are remaining quite firm at the moment as our charter rates.
Omar Nokta: Okay. Very, very good. If I may just add something for clarification.
George Youroukos: The first ship was showed, specials surveyed you. The second ship was showed, specials survey passed. Hence, the difference in price.
Omar Nokta: Ah, okay. That's helpful. Appreciate that. Thank you.
Operator: Again, if you would like to ask a question, press Your next question comes from the line of Clement Mullins with The Value Investor's Edge. Please go ahead.
Clement Mullins: Hi. Good afternoon, and thank you for taking my questions.
I wanted to start with the modeling question. You mentioned that as of June 30, two dry dockings were ongoing. And six additional were anticipated. Could you confirm whether the six additional dry dockings are to be pursued throughout Q3? Or does that include the fourth quarter?
Thomas Lister: Oof. That's that's a pretty granular question, Clement. Thanks, nevertheless, for joining the call. Tassos, I don't know if you happen to know that. To respond to it. Otherwise, we can, we can respond to it offline. Clyde. Yes. Yes. Yeah. Because I don't have it right now.
Clement Mullins: Perfectly. I'll I'll follow-up on, like, offline. I also wanted to ask about your b one asset values. Your last acquisition in December focused on large vessels, especially relative to your fleet. And looking ahead, to what extent should we expect you to focus on large vessels, let's say, 4,000 TEU relative to feeders.
George Youroukos: I will answer to that, Clement. The Generally speaking, you know, let's say our focus are on hand the our fleet is, for post Panamax beam ships, so more than 40 meters. 40 meters plus. This is the majority of our fleet. Per TEU. Now we like those ships for various reasons. You know, they take more cargo. They're more flexible and so on and so forth. Now having said that, that does not exclude us from buying, which we have, in the past, smaller ships if the deal makes sense.
But if I had the if I was in a shop and I had to you know, had all the options open to me, and, I would pick and choose what ships I like, I would go for post panamax ships. Rather than smaller. Mid midsize post Panamax ships between six to you know, six to 10,000 TEU. Yeah. That would be my absolute preference. But, you know, just preference, not carved in stone.
Clement Mullins: Makes sense. That's helpful. That's everything for me. Thank you for taking my questions.
Thomas Lister: Our pleasure.
Operator: That concludes our Q and A session. I will now turn the call back over to Mr. Thomas Lister for closing remarks.
Thomas Lister: Well, thank you, everyone, for, joining our earnings call. Today, and we look forward to reconnecting with you in the fall for our 3Q earnings. Have a great summer.
Operator: That concludes, the call in front call today. Thank you all for joining. You may now disconnect. Everyone, have a great day.