Global Ship Lease(US:GSL)2024-03-04 17:35Financial Data and Key Metrics Changes - Adjusted EBITDA for 2023 was over $460 million, representing a 16% increase compared to 2022 [11] - Gross debt reduced by almost 20% during the year, despite purchasing and partially debt-financing four ships [11] - Cash position at year-end was just under $295 million, with $142 million restricted and $153 million available for liquidity and working capital needs [12] - Adjusted net debt to adjusted EBITDA fell from 8.4 times at year-end 2018 to 1.4 times at the end of 2023, indicating a significant improvement in leverage [13] Business Line Data and Key Metrics Changes - Signed 22 new charters or extensions in 2023, adding $313 million of contracted revenues, with nearly $90 million added in Q4 2023 [2] - As of December 31, 2023, the company had approximately $1.7 billion of contracted revenues with an average remaining duration of 2.1 years [2][27] Market Data and Key Metrics Changes - Idle capacity increased to 1.3% during Q4 but has since tightened due to the Red Sea situation [16] - The charter market has seen normalization after the highs of 2021 and 2022, with downward pressure in the second half of 2023, but has shown positive momentum in early 2024 [24][25] Company Strategy and Development Direction - The company maintains a disciplined capital allocation strategy, sustaining a quarterly dividend of $37.5, which translates to an annualized yield of over 7% [4] - Focus on maintaining cash liquidity for resilience and to pursue acquisition opportunities, especially during down cycles [6][30] - The company aims to build long-term value by purchasing assets during down cycles and being selective in investment opportunities [7][9] Management's Comments on Operating Environment and Future Outlook - Management noted that the current geopolitical and macroeconomic uncertainties have affected market conditions, particularly in the Red Sea, leading to a tightening of supply-demand balance in the container shipping market [61][30] - Despite the cautious sentiment among liner company customers, their balance sheets have been fortified by the recent upcycle, providing a stable foundation for future operations [30] Other Important Information - The company has no refinancing needs before 2026, and its floating interest rate exposure is capped at 0.64% [62] - The company has repurchased $54.5 million of its shares since Q3 2021, including $22 million in 2023 [5] Q&A Session Summary Question: What has been the appetite of your counterparties to extend the duration on some of these open charters? - Management indicated that conditions have been supportive, leading to longer charter durations being fixed, with larger ships being fixed for up to three years [38] Question: Is there any target debt level for the long-term? - Management stated that they are not aggressive in leverage and are comfortable with their current position, maintaining an adjusted EBITDA to debt ratio of about 1.4 times [45] Question: Are vessels currently speeding up around the Cape of Good Hope? - Management confirmed that vessels have increased speed to mitigate disruptions, but the full impact of these changes will be clearer by the end of Q1 [68][78] Question: What does the current S&P market look like for second-hand tonnage? - Management noted that there is liquidity in the market and they are evaluating deals, but they remain selective and cautious about market conditions [79]