Global Ship Lease, Inc.

Good morning, good afternoon, everybody, and welcome to our first quarter 2021 earnings conference call. The slides that accompany today's presentation are available on our website at www.globalshiplease.com. Slides 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 Harvest 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 was for 2020 and was filed with the SEC on the 19th of March this year. You can obtain this via our website or via the SEC's. All of our statements are qualified by these and other disclosures other disclosures in our reports filed with the SEC. We do not undertake any duty to update forwarded 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, George Yeroukos, our chief financial officer, Tasos Tsouroupoulos, 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 and financials, and the current market environment, after which we'll be pleased to take your questions. 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. Simply put, this has been a great quarter. It's been great for the industry in general, it's been great for our liner customers, and it's been great for global shipplies. The strong container ship market momentum of late 2020 has further accelerated in 2021, positioning the sector for levels of profitability not seen in many years. No doubt, you have seen the earnings guidance upgrades put out by the likes of Maersk. Poor delays, equipment shortages, and congestion in the Suez Canal have helped at the margins by tying up container ship capacity. But this strong market is actually based on strong fundamentals, particularly for the size segments we focus on. And we expect these fundamentals to be sustainable well beyond when some of the temporary factors eventually dissipate, which I will tell you more about shortly. In line with our long-standing strategy, we are taking advantage of the opportunity presented by this red-hot market to lock in upside for extended durations and to deliver sustainable and accretive contracted revenue and earnings growth. Since the start of the year, we have concluded 11 new charters for terms ranging from 21 months to over four years on our existing fleet, adding over 280 million US dollars of contracted cover. And we have contracted to purchase and are in the midst of taking delivery of seven ships, all of which have charters attached. We have also taken the opportunity to refinance a little over 330 million of our 2022 debt, pushing maturities out to 2026 and reducing annual debt service by almost $20 million. The rating agencies have clearly appreciated all of the above and have upgraded our credit ratings to B-plus stable and B-2 positive. On the right of this slide, you can see that we have grown our quarterly revenue to $73 our adjusted EBITDA to 44.7 million and our normalized net income to 17.8 million. And we strongly believe that we are well positioned for further earnings growth, both from locking in high charter and longer charter terms on our existing ships and by continuing to grow selectively and accretively. On the back of all this, we have declared a quarterly dividend of 25 cents per quarter, which is to be paid on June 3rd to shareholders of record on May 24th. This is more than double the 12 cents per quarter we announced in January. Since then, we have agreed to purchase seven ships, four of which are already in our fleet and contributing to earnings, and have added additional charter cover at higher rates for longer periods. Basically, we strongly believe in the sustainability of earnings and we're putting our money where our mouth is. If you now turn to slide 5, I'll give you a helicopter view of the dynamics shaping our industry and explain to you why we believe that the best is yet to come. We all know that container shipping had a remarkable 2020, despite global volumes falling by 2% year-on-year. So with volumes expected to grow in 2021 by almost 7%, well in excess of supply growth, it makes sense that the market continues to tighten and charter rates continue to strengthen. And to be perfectly clear, this volume growth figure represents the underlying demand for containerized freight to be moved. So our expectation of the market tightening does not depend on factors like port delays and other such temporary impacts of COVID. The question is, what happens next? And here I point you to the top chart on the left of this slide, which shows containerized demand growth forecasts. The dark blue bars and supply growth forecasts, which are shown in two ways. The pale blue bars show supply growth for the global container ship fleet as a whole, while the red bars show supply growth specifically for the mid-size and smaller ship we focus on. And these are the bars to look at, which, as you can see, is tiny. An encouraging picture, I hope you will agree, especially when you consider that CPI slots are already pretty much full all the way into 2024, and that the data shown here assumes zero scrapping, so if anything, may even overstate supply growth. That brings us to the ever-growing pressure on the industry to decarbonize, coming both from capital providers and other stakeholders, putting increasing emphasis on ESG and from a growing pipeline of regulations aimed at enforcing carbon reductions over the coming years. As you will have read, considerable work is being done on developing green fuels and proportional technology, and there are certainly a number of existing prospects being discussed. But in reality, it will be a number of years and many, many billions of dollars before these fuels, and crucially, the energy chain and source site infrastructure required to support them are in place at any meaningful commercial scale. In the meantime, the only way that industry can materially reduce emissions is to reduce speed, full stop. And this is exactly what is contemplated by the new IMO initiative, EEXI, which is expected to be implemented from January 1st, 2023. EEXI will effectively require ships already on the water to meet the emission standards required of newly built ships. And a large portion of the global fleet will only be able to achieve this standard by slowing down. And this is the interesting part. If you speed ships up, you increase effective capacity, allowing them to carry more cargo. As you can see from the chart at bottom left, that's what the liner operators have been doing as supply has got tighter. So what happened? If, when actually, EXI forces ships to slow down? The answer is that effective capacity is reduced. A rough rule of thumb is that reducing the average speed of the global fleet by one knot is equivalent to reducing effective capacity by 5-6%. So, long story short, we see today's capacity crunch and the resulting high earnings continued for some time yet. On that note, I'll hand the call over to Ian.

Thank you, George. Please turn to slide six. One of our principal objectives is to deliver earnings growth from both locking in higher rates for longer durations on our existing ships and from accretive acquisitions. This first quarter, we've done both, with charter renewals and the agreed acquisition of the 7,000 and 6,000 TU ships, bringing our total forward contracted cover to around $984 million spread over 2.6 years. As usual on this slide, we show our contract cover and charter portfolio. The pale blue bars show charters already in place when we started 2021, while the dark blue bars show the 11 new charters that we've agreed since January the 1st. As you can see, building on an already strong second half of 2020, Rates have just got stronger and charter terms longer as this current year has progressed. We were pleased to have fixed an over 20-year-old 2,500 TU feeder vessel, the Myra, early in January this year at a little over $14,000 a day, substantially higher than the prior charter, which was at $8,000 a day. But we've recently fixed her sister, the New Yorker, through mid-2024 at $20,700 a day, That should give you a sense of how the market is continuing to evolve, and it's by no means an outlier, this fixture. In fact, the story is replicated across all size categories. Those of you who have been with us for a while will recall that we acquired the GSL Nicoletta and the GSL Kristen to 6,800 TU ships for about $13 million each back in early 2020. Those have now been fixed on multi-year charters at rates north of $35,000 a day, $35,000 a day, which should generate approximately $10 million of EBITDA each per year, not far short of the purchase price of the vessels. And we have another seven ships coming open in the balance of 2021 and more in 2022. But as you can imagine, we may likely have to wait until the very end of the current charter's redelivery windows before we can redeploy the ships or extend them at higher rates. In today's tight supply environment, charters will hang on to ships, especially at below market rates, for as long as they possibly can. So that pushes you out to the end of the redelivery window. In the middle of the slide, with the names in red, you can see the seven ships that we've contracted to purchase with the charters attached. All of these ships were delivered in late April, a little earlier than we were expecting, and the remaining three will deliver later this quarter or early next. If you now turn to slide seven, I'll recap why these seven ships that we're welcoming into our fleet are such an attractive investment and such a clear illustration of our value accretive growth strategy. In short, firstly, we focus on existing ships with charters attached or arranged in tandem with the purchase, which are immediately accreted to cash flows. This is as opposed to new buildings for which there can be a two- or three-year wait before the vessels come online earning revenue and during which time the owner has all of the funding costs. We expect these seven ships to add approximately $29 million to our annual adjusted EBITDA. We're risk-averse, secondly. We've looked for good returns right out of the gate on assets with low economic depreciation, limited residual value risk, and compelling upside potential. These seven ships fit the bill perfectly. They have at least three years of contract cover, deliver a purchase price to EBITDA multiple of approximately four times, push net income and earnings per share up significantly, and have good downside cover, with scrap value alone 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 footprints of ships. This means considering the footprints associated with the building and recycling of ships as well as operating them. 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, in our view, better to optimize and, where possible, extend the economic life of existing ships, such as the seven we've just agreed to buy. 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 next-generation green technologies as they're proven out and mature over the coming decade. With that, I'll turn the call over to Tasos to talk you through our financials.

Thank you, Ian. This has been a busy quarter with a significant number of moving P6 in our financials, so we have summarized the key points for you on slide 8. Revenue for the quarter was $73 million, up from $70.9 million in first quarter 2020-20. Similarly, adjusted EBITDA was $44.7 million, up from $40 million first quarter last year. Normalized net income, which addressed for one-off items, was up from $10.5 million to $17.8 million. I would like to spend a moment on the one-off items. Firstly, we have remained very active with refinancings, most notably the 9.875 notes which were due in 2022 and were replaced by a five-year facility with HIFIN maturing in 2026. When taking the notes out, we were obliged to pay a call premium of just under 2.5%, which amounted to 5.8 million. Furthermore, we had to write off the remaining deferred financing costs and original issue discount associated with the issuance of the notes back in 2017, resulting in non-cast charges of $4.8 million. In a partial refinancing repayment of the 10% junior debt associated with the Blue Ocean facility, we incurred a prepaid premium charge of $1.6 million. Another one-off, is a non-cash adjustment of $1.3 million associated with management stock awards in the quarter, partly new awards for additional members of staff, and partly acceleration of existing awards as vesting criteria were met. Now, moving to the balance sheet items here, there are various points to highlight. Our cash position at March 31, 2021 was $162.7 million. As I have alluded to above, we have successfully refinanced much of our 2022 maturity debt. All in, we have refinanced $330.6 million, pushing those maturities out to 2026, reducing annual debt service by about $19.8 million and bringing down our blending cost of debt down from 6.4% to 5.5%. Meantime, we have raised $43.7 million of unsecured paper year-to-date under our ADM programs, further increasing our flexibility. Now, for the seven ships we have contracted to purchase, we have lined up financings of $64.2 million, of which we have drawn down $32.1 million against the three ships delivered so far. We are finalizing additional finance, of $14.7 million, which we expect will be completed in the upcoming days for the fourth shift. On the equity front, we raised approximately $72 million of common equity back in January, including the green shoe. This, combined with a conversion of all our CDC preferred to common shares on completion of the notes refinance and adjustments for the share incentive program, brings our share count at March 31, 2021, to $36.3 million. And finally, just after the end of the quarter, we executed a non-dilutive secondary offering for our common equity that materially increased the size of our free float and meaningfully diversified our shareholder base, which we believe materially improves the attractiveness, liquidity, and investability of our common stock for a growing group of potential investors. Passing over the detailed financial statement, which appears in full on slides 9 through 11, I would now like to spend a little time on the EBITDA calculator slide, slide 12, which is intended to help you with your modeling. The table on the left-hand side is designed to allow you to plug in revenue assumptions for vessels coming open in 2021 and 2022. Please note that given the strength of today's market, the open days for 2021 are based on the conservative assumption that that charters will only re-deliver ships with below-market existing charters at the very end of the permitted windows, as Ian mentioned before. For 2022, we have reverted to our usual assumption that ships will re-deliver in the median of each window. On the right-hand side, we have provided some reference rates. I must emphasize that these are not forecasts and are simply intended to help you benchmark historical average rates and those prevailing at the end of April 2021. I highlight that the latter are based on three-year charters as that term, rather than the traditional six- to 12-month fixture, is more representative of what is actually happening in the market. On slide 13 now, we give some pointers of capex spending. One point worth underlying is that four of the seven ships we have contracted to purchase will be dry docked this year, either on delivery or within a few months. The remaining three will only be dry docked in 2025 or so. Once again, the indicative costs provided are not forecasts. They are based on costs we have historically incurred for compatible ships. I would now like to turn the call over to Tom for his review of the market.

Thanks, Tassos. So slide 14 is intended to highlight the ship sizes on which we're focused, which will help put the subsequent slides in proper context. So as you can see here, we're focused on midsize and smaller ships, which is shorthand for ships ranging from about 2000 TU up to roughly 10,000 TU. The top map on the left shows the deployment of our quote unquote, our sizes of ship, i.e. ships under 10,000 TU. and emphasizes their operational flexibility. As you can see, they're deployed pretty much everywhere. The bottom map, on the other hand, shows where the big ships, in other words, those larger than 10,000 TU, are deployed, which tends to be the east-west main lane or arterial trades where the cargo volumes and, crucially, the shoreside infrastructure can support them. And it's important to note that roughly 70% of global containerized trade volumes are actually moved outside these main lanes in the north-south, regional, and intermediate trades served by ships like ours. Turning now to slide 15. This slide shows supply-side trends that tend to be a barometer of health for the sector. The top chart shows idle capacity, which at the end of March was 1.5%, and has since fallen to below 1%. This is pretty much full employment and explains why, as George pointed out earlier, the liner operators have had little choice but to speed up their ships to try to accommodate growing demand. The bottom chart tells a similar story. Ship recycling or scrapping has been almost non-existent for container ships this year. Why? Because the charter market and earnings environment is so hot. Why scrap a ship if you can squeeze a few more millions of EBITDA out of her? So that's the baseline, full employment of the global fleet, which sets us up nicely for the next slide, slide 16. Here you can see on the left that the various fleet size segments have grown over the last few years. The segments we're focused on, those sitting in the red box, have seen negligible or even negative fleet growth due to underinvestment. The same phenomenon carries through to the chart on the right, which shows the order book pipeline for deliveries through to 2024. Again, the fleet segments in the red box, our segments, have minimal order books. As you can infer from the chart, the flurry of ordering activity that you will have read about has been heavily focused on the big ships above 10,000 TEU. In other words, not on a sector in which we compete. This explains why the order book to fleet ratios for our focus and core segments are 2.7% and 0.6% respectively versus that for the overall order book as a whole of 15.6%. So what's all this done for earnings in the container ship charter market? And for the answer to this, please turn to the next slide, slide 17. And here a picture tells a thousand words and you can see for yourselves current levels and trajectory of charter rates for the various benchmark sizes in the liquid charter market. These rates are based on indices for six to 12-month charters, while the market is really shifting to a multi-year focus, as Tassos just mentioned. But the directionality and the narrative is effectively the same. So all in all, a fantastic market. And on that high note, I'll turn the call back to George to wrap up. George.

Thanks, Tom. I will very briefly summarize and then we will be happy to take your questions, guys. In a very strong market, we have materially increased our contract cover in both duration and dollar amount as we have signed and expect to continue signing charters with more attractive rates and longer durations that have been available in the market for many, many years. Our balance sheet is in a very good place with substantial cash on hand and improved credit rating a series of proactive refinancings and demonstrable access to diverse capital sources on attractive terms. We have an attractive fleet of high river count, mid-sized post-Panamax and smaller container ships, which are well supported by supply-side fundamentals. Idle capacity in these classes is already essential non-existent, even with the global fleet having sped up in recent quarters. The order book below 10,000 TEU remains negligible, with CPR capacity scarce in the coming years and emissions regulation coming from early 2023 that we believe will shrink effective capacity as ships are forced to reduce speeds in order to achieve compliance. The market is in an excellent position, with both freight rates and charter rates continuing upward. Customers in the liner sector have reportedly decreased very impressive results to date and have provided eye-catching guidance for the duration of the year. To put the current market in context, spot market charter rates have tripled and quadrupled since their lows at around this time last year. And rather than being fixed for months, charters are being agreed for multi-year terms. The safety and welfare of our personnel at sea and on shore remains our highest priority. It is a central component of the ESG culture embedded in the way we do business. We have delivered on our long-held strategy priority of refinancing our 9.875 notes and we've implemented and now declared a quarterly dividend at more than double the amount we previously indicated due to our growth and to the continuing strength of the market. We intend to stay active in chartering ships at good rates as they come open, and we will continue to actively evaluate and selectively act on accretive growth opportunities that meet our criteria. With that, I would be happy to take your questions.

As a reminder, if you'd like to ask a question at this time, please press the star, then the number one key on your touch-tone telephone. To withdraw your question, Press the pound key. Our first question comes from Randy Givings with Jefferies.

Howdy, gentlemen. How's it going? I can imagine it's going pretty well. I guess for the recently announced dividend, first, how was that amount decided? You increased it from $0.12 to $0.25 in a positive surprise here. I guess, is this a fixed dividend for the foreseeable future, or is this something you kind of continue to plan on growing on an annual basis? And then, yeah, how did you get to that kind of 25-cent number?

Sure. Yes, of course. Thanks for the question, Randy. We derived the number much in the same way as we derived the 12 cents in the first place. but obviously we've taken into account developments in the last three months. We announced the $0.12 dividend back in January. Since then, as you know, we've agreed to acquire seven 6,000 TU vessels, four of which have been delivered and are earning revenue as we speak, a little earlier than we were expecting and obviously not included in the $0.12. We've refinanced a bunch of debt, as Tasos referred to, which has reduced debt service significantly on an annual basis. The charter market continues to improve significantly and we've been able to add contract cover not only at higher rates but crucially in the context of sustainable cash flows for longer durations. And we continue to see fundamentally a fundamentally supportive market on the supply-demand side, as we talked through in our prepared remarks, decent demand growth, limited supply growth, if any at all, in our size categories. Crunching the numbers led us to reassess that 25 cents was a sustainable dividend, and in the light of how we've approached setting the dividend, we should return that capital to investors. It's worth noting that we retain substantial investment capacity. So please, nobody think that we've given up on growth and therefore we're returning capital to investors. We see plenty of growth opportunities there as well, and we have capital to execute upon them. Yes, we do see this as a fixed dividend. It's not a special dividend. It's not a one-off. We expect it to be recurring on a quarterly basis. And we'll keep it under review as the business develops, as hopefully we're able to add additional vessels on an accretive basis to the GSL fleet. We can look at increasing the dividend if the indications are that that's the right thing to do. I think I've covered everything.

If not, then... No, that was good. I guess you segued into my next question. Obviously, following this pretty busy month on the financing side, the capital raising... coupled with the very strong market. You mentioned GSL is still in very strong shape financially, probably strongest than it's ever been. Clearly, this is shown with the dividend increase. So I guess how do you use that balance strength from here? Is it further acquisitions? Is it more kind of delevering, paying down expensive debt? And then is there a baseline cash balance or leverage ratio that you're targeting?

Well, Randy, if I may say something on that, We like always to crawl before we walk, then to walk before we run. We are very risk-averse as a management team, and we stress test continuously our company with models that take the worst of the worst cases, to be sleeping at night. So, yes, the intention is to grow, and we are working on various opportunities to grow the company, but at the same time, the leverage. We do not intend... to increase our leverage, we intend to reduce our leverage going forward more and more. And at the same time, grow and build a very strong company. Because a strong company is a company that can be powerful in all market conditions and not just in a great market and then when the market changes, you feel that change. We're making our balance sheet very strong. We're leveraging and we're growing very selectively and carefully. and with what we said to the investors on our various roadshows that you've been part of most, is we want to do deals that are immediately accretive to our balance sheet, and that we prove now by increasing the dividend, more than doubling the dividend, which shows that the deals we're doing are bringing the money straight to the investors.

Got it. Makes sense. And then lastly, real quick, on slide six, You know, you have the charters that are coming available. I think you said seven ships coming due by the end of the year. I guess how do you kind of maximize return there in terms of rate versus duration? Is there a relatively larger discount for a two-year or three-year charter, or are you looking to kind of maximize the one-year value on those? Or on the other side of the equation, do you sell those older ships once the current charter expires? What are your thoughts on those options?

Generally speaking, you make always, as a rule of thumb, you always make a lot more money in containers by retaining the asset rather than selling the asset. You make more money with the cash flows you can lock in than selling the asset. Now, the intention is to charter the ships as long as possible, at as high rate as possible. Now, in today's market... The norm for the sizes up to, let's call it, I don't know, 2,500 is, I would say, two to three years, maybe even longer. But two to three years is the normal thing. So there's no discount for two to three years. This is the market. If you would be looking in extent of further than three years, then you might have a 10%, 20% discount. having assets that are middle-aged or older in these smaller categories that we have open now, we feel that we want to get the maximum out of these ships by chartering them as long as we can at today's rates. So that's the strategy on the smaller segments, let's call it. Middle-sized segments is definitely long. This is three to five years, easy. And on the large ships, it's at least five years of the norm. So we intend to at least fix our ships for smaller ships at a minimum of three years, mid-sized ships at a minimum of three years, and larger ships at a minimum of three to five years. So we intend to keep on doing what we've been doing successfully, locking more and more cash flows for building up liquidity in the company, making the common stronger, reducing debt, and growing, as well, of course, as giving dividends to our shareholders like we have done.

Sure. Got it. Well, it makes sense. Whatever you're doing is working, so keep it up. Thanks. Thank you.

Our next question comes from Frodo Marcadel with Clarkson Securities.

Yes, thank you. George, you mentioned slower speed to meet the IMO carbon regulations coming due in 2023. So I'm curious if you could try to quantify that effect. Maybe if you look at your own fleet, what roughly portion of that fleet needs to slow down the speed to be compliant? Or if you have it for the whole world fleet, of course, that would be better.

Yes, thank you. I will just say something that is interesting. Before 2020, up to 2019 inclusive, the speed of the ships going from, let's say, the Far East to West, whether it's Europe or the United States, was about 18 knots, and the way back it was 16 knots, the return voyage. So the average was 17. So the ships were trading at an average of 17. Today, this has gone 21 knots from Far East towards the West, and returning at 20 or 19, so call it 20 knots average. So this is three knots higher average than it used to be. So that's an important point to remember. And that has happened because there is not enough ships out there, and the liner companies, in order to compensate, they are increasing the speed of the ships. Now, come January 2023, I would say more than 80%, and Tom knows this in more detail, the numbers, more than 80% of the fleet will have to slow down from today's speeds of 20 knots to, I would say, probably 19 to 18. So a couple of knots lower speeds. That is also applying for GSL's 80% of our fleet. We have in our 50 ships, out of which nine are the new technology. Those ships do not have to slow down to meet the XI. The rest of the fleet has to slow down. That's the proportion of the world fleet of modern ships, new design ships to classic. I would say probably 85% is classic, 15% is the new design. So 85% of the fleet will have to slow down. by a couple of notes, which means roughly a reduction in the fleet capacity as of today of 6 to 10% reduction. So shrinking the fleet by 6 to 10%. And Tom, if you want to say something.

Sure. Just to add to that further, as George says, um eco ships so the latest generation of container ships is less likely materially less likely to be affected by exi than non-eco ships and i think it's worth emphasizing that if you look at the mid-size and smaller ships so the segments that we're participating in and you look at the peer group so just the global peer group of ships within those segments up to say seven and a half thousand TU, comparatively few, so I would say certainly under 20% of the ships in those mid-size and smaller segments are eco. So that means that the mid-size and smaller segments are likely to be disproportionately affected by the implementation of EEXI. In other words, midsize and smaller ships are more likely to have to slow down and more likely to have to slow down further than the larger segments, which is, of course, great news in terms of the sort of supply tension within those midsize and smaller segments.

Yes, that's some great numbers you gave there. And if you compare that to the expected fleet growth, we should be looking at negative fleet growth, right? That's your conclusion.

Yes, that's how we see it.

Which is great, right? And you mentioned fantastic market. And I'm sure you get that question a lot. But what do you say to people who ask for what are going to turn this market down again? So what should investors look at in order to try to be ahead of the curve, so to speak?

Sorry, go for it, George.

Well, I was going to just give a very hedging answer. I find it very difficult when looking at the supply side of the equation for the midsize and smaller vessels to envisage a set of circumstances that would really derail the market for us. Now, I know I'm sort of frantically touching wood and praying not to jinx things by saying that, but I think from a pure supply side picture perspective, particularly if you link it up to the decarbonization and EEXI um dynamics that we've talked about earlier i find it quite difficult to envisage a demand side shock strong enough to derail it i mean we've just seen in 2020 the impact of a global pandemic a once in a century we hope um event and we've seen container shipping come through it um in in very very positive terms so i think that's um That's a helpful reference point, but George, maybe you have something to add or you have a different view.

Well, I mean, container shipping is linked to the global economy. The only thing that I would be worried is if the global economy would dive materially from where it is today. It's something that I don't think the consensus is expecting. Otherwise, And I say materially, meaning very materially. That, I don't think, is in anybody's mind. Now, what is interesting is that in containers, every single year for the last 40 years, the previous year to the next year, the cargoes are growing. So we never had a negative growth apart from two occasions. One occasion was in the meltdown of the Lehman in 2009. and the pandemic of COVID. So these are such unique situations. And these are the only two times in the history of container shipping that we had not a growth year on year of cargo. So the question is why the container shipping has been cyclical. The only reason is supply. People were overordering. So as long as this is kept in check, I would say what Tom says, you know, I'm sleeping very very peacefully at night, and I'm not worried. And keeping fingers, of course, crossed not to jinx it. But even if we were to jinx it, we would only jinx it 25 onwards, because there are no slots available to build ships earlier. I mean, the slots of 24 are finishing rapidly, because there's a lot of other types of ships being built, not just containers, as you can imagine. Dry bulk is also on the up. People are building there. There's a lot more people there to build. It's a bigger environment. It's not a fragmented industry like ours. Tankers as well, and so on and so forth.

That's great. Just a final question for me. I assume when you talk about growth opportunities, you could also look at buying your own stock.

That is also a possibility. We could do. It's a return of capital, effectively, buying stock, paying dividends. But one of the reasons we think stock has been held back in recent times is because of the small free float. We've worked very hard to increase the free float with primary and secondary offerings. We've also worked very hard, as you know, to increase sales side coverage successfully and implementing, announcing and then paying the dividend is the third plank in supporting the stock price as well as just running the business effectively and growing the fleet. We keep all of our options under review, and nothing's ruled out and nothing's ruled in. But for the moment, we look to deploy capital by way of dividend, by way of accretive growth, and by way of debt amortization.

Okay. Thanks, Doug. Thank you very much. Well done.

As a reminder, if you'd like to ask a question at this time, that's star then one. Our next question comes from Liam Burke with BWiley.

Yes, thank you. George, you mentioned growth opportunities on the acquisition front. Are you seeing more competitive competition on the pricing front? The availability of vessels is tight, and how is that continuing to affect where you see opportunities to add assets?

Yes, Liam. Obviously, prices have gone up and they continuously go up. But fortunately, we are always placed to do deals that are off-market, special deals. They have a different angle than a normal standard market deal. And we do have a pipeline of such transactions. And we pull the rabbit out of the hat every now and then, as you have seen. and that's what we intend to do. We do not intend to get into dogfights with buying the single ship here and the single ship there at high prices. We don't do that. We do more strategic transactions.

Great. And you mentioned regulation. The slow speeding is an alternative. Do you see increased regulation in Accelerating scrap rates and further benefiting the capacity side of the equation. That's a dumb question. Tom, fire away.

Sure. I would love to say yes to the scrapping question, but I think in an environment where capacity is already extremely tight, the fleet is already fully employed, and where the supply side growth from a structural perspective is very limited, I think it's highly unlikely that we see much in the way of scrapping at all, Liam, in the near term. Maybe in the out years, by which I mean 2024, 2025 and beyond, the older ships that are being kept out of the scrap yards now because they're earning so much money will start to be recycled out. But I think near term, it's unlikely. They're just making too much money.

Great. Thank you very much, George, Tom. Pleasure.

Thanks, Liam.

That concludes today's question and answer session. I'd like to turn the call back to Ian Webber for closing remarks.

Thanks all for joining us and listening to our remarks and asking your questions. We look forward to giving you a further update on GSL and the markets on our second quarter earnings call, which will be early August. Thank you.

Thank you.