Global Ship Lease, Inc.

Thank you very much. Good morning, good afternoon, everybody, and welcome to the Global Ship Lease fourth quarter 2020 earnings conference call. The slides that accompany today's presentation are available on our website, www.globalshiplease.com. In those slides, slide two and three, as usual, 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 harbour section of the slide presentation. We also draw your attention to the risk factor section of our most recent annual report on Form 20F, which is for 2019 and was filed with the SEC on April 2, 2020. You can obtain this via our website or via the SEC's. All of our statements are qualified by these and other disclosures in our reports filed with the SEC. We do not undertake any duty to update forward-looking statements. For reconciliations of the non-GAAP financial measures to which we will refer during this call, for the most directly comparable measures calculated and presented in accordance with GAAP, you should refer to the earnings release that we issued this morning, which is also available on our website. As usual, I'm joined by our Executive Chairman, Georgi Rukos, our Chief Financial Officer, TAS Officer Ropoulos, and our Chief Commercial Officer, Tom Lister. George will begin the call with some high-level commentary and an update on our current areas of focus, and then Tasos, Tom, and I will take you through our recent achievements, quarterly results, current market environments, and our financials. After that, we'll be pleased to take your questions. So turning now to slide four, I'll pass the call over to George.

Thank you, Ian, and good morning or good afternoon to you all. Through the second half of 2020 and into 2021, we have taken action to capitalize on the amazing bull container market in ways that will benefit the company for years to come. Our liner operator customers, our charters, have shown impressive capacity discipline during 2020, which is a real game changer that has helped them to deliver incredible results despite the challenges of COVID. From the third quarter of 2020, the lines have increasingly found themselves Thank you very much. of low slot cost, high reefer capacity, fuel and emission efficient container ships at rates and durations well beyond what has been available in recent years. On the back of adding counter cover at higher rates and our ongoing focus on deleveraging, which the rating agencies have acknowledged with ratings upgrades, we were able to achieve the major goal of refinancing our 2022 notes on significantly improved terms. Having eliminated the restrictive covenants that had previously constrained our ability to pursue the full range of attractive market opportunities or to share the proceeds of those efforts with our shareholders, we moved quickly to initiate a sustainable quarterly dividend of $0.12 per quarter for Class A common shares and also announced an agreement to add a further seven vessels to our fleet in a transaction that will immediately be accretive. Has strong downside protection and is estimated to add approximately $19 million to annual net income. Based on today's LIBOR, representing an increase of nearly 40% compared to normalized net income for the year ended December 2020. As we now pass through a period of the year that would typically see pronounced seasonal weakness, post-December holidays and around Chinese New Year, we are pleased to see almost unprecedented resilience and continue to see a highly supportive environment. This is driven by both a sustained high level of container ship demand and a restricted near-term supply of ships. This strength is further reinforced by the mid-term by a negligible order book for mid-size and smaller vessels, which is constrained in significant part by uncertainty over future fuel and propulsion technologies. These factors point to highly supportive supply-side fundamentals throughout the very least the medium term. With a strengthened financial foundation, a highly in-demand fleet, and substantial momentum in unlocking value for our shareholders, we believe that GSL is well-placed to continue executing our accretive growth strategy, taking full advantage of the attractive opportunities ahead of us, whilst also improving the resilience, flexibility, and cost-effectiveness of our balance sheet. With that, I will turn the call to Ian.

Thank you, George. Before moving on from slide four, I'd like to emphasize a couple of key numbers on the right-hand side. Firstly, adjusted EBITDA for the year of $161.7 million is up by $4.7 million on 2019. Secondly, adjusted earnings per share for the year is $1.60. a base upon which we will continue to build with accretive earnings from the seven ships which will be delivered to us during the second and third quarters of this year, and I'll come back to them later on. The next slide, slide five, summarises some of the key milestones we've hit since the beginning of 2020 in our continuing efforts to build value. Commercially and operationally, we've kept our people safe and the ships running with negligible downtime despite the challenges of COVID-19. we have secured 22 new charters for our existing fleet in a rising market since 1 July 2020, adding approximately $265 million of contracted revenue and $177 million of adjusted EBITDA. And, as you know, we've agreed to purchase 7 ships, 7 6,000 TU ships, with a minimum of 3 and a maximum of 5-year charters attached. which had another $95 million of adjusted EBITDA over the firm periods of those charters for three years. All in all, as of December 31, 2020, we have $893 million of contracted revenue spread out over a two-and-a-half-year period. And I'll come back onto this on the next slide. Financially, we strengthened our credit profile with a net debt to adjusted EBITDA at the end of 2020 of 4.3 times. Moody's rate us B2 positive and Standard & Poor's rate us B plus stable. We've refinanced in January our expensive and inflexible 9 and 7 eighths notes due 2022 with a facility allowing us much more freedom. reducing debt service by approximately $15 million a year and extending maturity to 2026. Our preferred and unsecured 2024 notes ATMs at the market offerings have been active on an opportunistic basis, allowing us to raise a total of nearly $61 million of cheaper, non-dilutive unsecured capital since the beginning of 2020. We've used this to reduce our expensive debt both now the fully refinanced 2022 notes, and in February 2021, so very recently, we repaid approximately $12 million, about a third of one of our expensive pieces of junior debt, which cost us 10%. Having eliminated these expensive and restrictive 2022 notes, we continue to work on addressing our June 2022 maturities, of which around $134 million was outstanding at the year end. and further reducing the expensive 10% or so junior debt due in September 2024. A few weeks ago, we raised over $72 million gross of common equity to fund accretive growth that precisely results that we're already delivering. Strategically, we've also published our first ESG report, which has helped us to articulate the close alignment between our ESG and our commercial strategies. We've expanded our sell-side analyst coverage and announced, as George said, a dividend of 12 cents per common share per quarter from the first quarter of this year, 2021, which, in addition to returning value to our existing shareholders, we anticipate will also help broaden our investor base. Moving to slide six, you can see our charter contract cover, the principal driver of our day-to-day business. The detail is broken out on our website and also included in our earnings release. but I'll make a few bigger picture points here. The blue bars represent contract cover. The dark blue bars to the right show new charters which have been agreed since July 2020. And hopefully you can see that the charters agreed in the second quarter of 2020 hit a low in terms of rates, and it's not coincidental that we only fixed those charters for short durations. On the other hand, those charters agreed more recently have seen significant increases. For example, feeders, the top 10 or so vessels in the table, were fixing in the second quarter last year at between $6,500 per day and $8,000 per day. But they're now seeing market rates in the high teens and for longer periods. For larger mid-size ships, the improvement is even more dramatic. Panamax ships, such as the Dolphin II, about a third of the way down the page, that were fixing earlier in 2020, at $7,000 a day, barely covering OPEX, are now fixing at rates in the high 20s. And we've just fixed one of our 5,900 TU post-Panamax vessels, the E&H, for over three years at $32,500 a day, up from a rate of $14,500 a day. Substantial improvements. The list goes on. As I mentioned earlier, we've taken advantage of these firm markets to lock in 22 new charters or extensions, adding $265 million of contracted revenue. These are all at increasingly attractive rates and durations and all over the last eight months or so. And when you think about what these increased rates actually mean for GSL, please bear in mind that operating costs through maintenance, lubricating oil, insurance, those sorts of things, is largely fixed, and the fuel cost for a ship on time charter is borne by the charterer. So any increase in contracted charter rates falls straight to our bottom line, improving both our financial results and our cash flows. I'm pleased to say that we have around a dozen ships coming open within the balance of 2021 to take further advantage of this great market. Complementing near-term prospects and providing protection to the downside, we have over $890 million of contracted revenue for two and a half years of TEU-weighted forward cover. This provides us with great visibility on cash flows and a strong base from which to further develop the company, which gives us the confidence to introduce the total dividends by our common shareholders. George, could you mute? This brings us to slide 7, which provides more detail on the seven ships that we've contracted to purchase, clearly illustrating our value-accreted growth strategy. In short, firstly, we focus on existing ships with charters attached or arranged in tandem with the purchase, which are immediately accretive to cash flows, rather than new buildings for when there could be a two- to three-year wait during which you have to finance the build, before they come online and generating any cash flows from charters. We expect these seven ships to add approximately $29 million to annual adjusted EBITDA. We're risk-averse. We look for good returns right out of the gate on assets with low economic depreciation, limited residual value risk, and a compelling upside potential. These seven ships fit the bill perfectly. They have at least three years of contract cover, deliver a purchase price to adjusted EBITDA multiple of four times, push net income and earnings per share up significantly, and have good downside cover, with a scrap value equivalent to about 60% of the purchase price. Thirdly, the ESG and economic strands of our strategy are well aligned. Our view is to take a full lifecycle approach to the carbon footprint of ships. This means considering the footprints associated with building and recycling ships as well as operating. We believe that it only makes sense to build new ships when we and the industry in general know how they're going to be powered on a sustainable basis. Until then, we believe it's better to optimize and where possible, extend the economic life of existing ships, such as the seven we've just purchased. Fourthly, we look to stay flexible and agile. We aim for attractive investment returns within five years or less, allowing us to adjust our strategy to the evolving decarbonization environment. Our aim is to position GSL to be legacy problem-free and with a strong cash position to be able to capitalize on the next generation of green technologies as they crystallize over the coming decade. Let's turn to slide eight, which gives you a helicopter view of some of the key developments we've seen in the last 12, 14 months. As you can see from the chart on the left, container shipping has shown remarkable resilience to COVID. The first half of 2020 was certainly challenging, both in terms of a drop-off in demand and a period of development and adoption of COVID safety-related measures that have proven highly effective. But the market rebound in the second half of the year, which is accelerating in 2021, has been immense. Cargo volumes ended 2021 down only about 2% versus 2019 for the full year. And we've entered 2021 with a forecast volume growth of just under 7%, 6.8%. Almost more significant is the capacity discipline shown by the liner operators, our customers. This is a real game changer, we believe, both now and going forward, allowing the results to deliver great results even when volumes were heavily down in the second quarter of last year. Industry supply-side fundamentals are highly supported. Tom will provide more detail in a moment, but both charter rates and asset values are on a sharp upwards trajectory. Feeding into the positive supply-side fundamentals is the imperative for the industry to decarbonize. This is driven not only by a growing sensitivity to the ESG concerns of all stakeholders, but also by regulation with the International Maritime Organization, the IMO, and the European Union, the EU, taking the lead on forcing the reduction of emissions. High level, this is expected to have two supply side benefits. Firstly, the container fleet may be obliged to slow down as a result of regulatory required engine power reductions from January 2023. Slowing down reduces effective global fleet capacity. And secondly, until the industry has decided on the new generation of green fuels and developed the new types of engines needed for propulsion, there is likely to be a significant damper on the order book. Who wants to invest substantial capital in a 30-year life asset when there is so much uncertainty over propulsion technology over the next 10 years? Finally, after challenging decades for our fragmented industry, which has left very few container ship owners with strong balance sheets and an appetite for growth. We believe that there is scope for consolidation and growth which presents growth opportunities for GSL. Tom, over to you.