Good day and thank you for standing by. Welcome to the Global Ship Lease Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host, Mr. Ian Webber, Chief Executive Officer of Global Ship Lease. Please go ahead.

Thank you very much. Good morning. Good afternoon, everybody, and welcome to the Global Ship Lease third quarter 2021 earnings conference call. The slides that accompany today's presentation were posted to our website earlier today, www.globalshiplease.com. Slides 2 and 3 of that presentation, 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 Harbor section of the slide presentation. We also draw your attention to the risk factors section of our most recent annual report on Form 20-F, which is for 2020 and was filed with the SEC on March the 19, 2021. You can obtain this via our website or via the SEC's. All 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 to the most directly comparable measures calculated and presented in accordance with GAAP, please refer to the earnings release that we issued this morning, which is also available on our website. I am joined as usual by our Executive Chairman, George Youroukos; our Chief Financial Officer, Tassos Psaropoulos; and our Chief Commercial Officer, Tom Lister. George will begin the call with a high-level commentary on GSL and on our industry. And then Tassos, Tom, and I will take you through our recent achievements, quarterly results, and financials and the current market environment. After that, we'd be pleased to take your questions. So turning now to Slide 4, I'll pass the call over to George.

Thank you, Ian, and good morning or good afternoon to all of you joining us today. I have, in recent quarters, described the containership market as red hot, and with both freight and charter markets continuing to set record high levels, that has certainly remained the case through today. We see ample reason why this trend should continue for some time, and we will come back to this theme throughout today's presentation. But let me first highlight what this amazing market has meant for GSL. Year-to-date, we have grown our fleet by more than 50%, acquiring 23 ships for just under $0.5 billion, with the last of those vessels delivering to us and commencing its charter in mid-October. We have signed a total of 48 new charters, adding a total of $1.25 billion of contracted revenue and approximately $930 million of expected adjusted EBITDA, providing additional long-term support to the $0.25 per share dividend that we introduced earlier this year. We have remained highly accretive, active in managing our balance sheet, refinancing a total of just under $400 million of debt this year alone, bringing down our cost of debt from 6.3% to 4.9%, and addressing all debt maturities through 2024. As our industry, our fleet, our charter book, and our balance sheet have all continuously improved, we have received yet another round of credit rating upgrades, the most recent of which was to BB- from Standard & Poor's. I would like to highlight the increase in normalized earnings per share, which at $1.74 for the quarter is nearly 4 times the prior year period and at $3.01 for the year-to-date, approximately 2.5 times the prior year period. While we are, of course, very pleased with our results for the third quarter, the full cash impact will really only be on display in the quarters ahead. Moreover, our focus on long-term charters in the present market conditions means that GSL will benefit from these actions for years to come, even before the impact of any further acquisitions, which we are well-positioned to continue pursuing on a disciplined, selective basis. In the meantime, we're working on some significant charter extensions which we hope to conclude in the near term. These, together with the growth we have achieved year-to-date and our contracted cash flow for the next couple of years, will help determine an increase in the sustainable dividend from Q1 2022. We will make an announcement as soon as we can. If you now turn to Slide 5, I'll describe the big picture for our industry at this moment. As you have undoubtedly heard, the current market environment in the container shipping industry is truly extraordinary. Contrary to early suggestions that the economy opening back up following COVID lockdowns would undermine containerized freight demand, with the expectation that consumers would spend again on services rather than goods, we have actually seen an additional acceleration alongside economic recovery, despite that recovery being uneven. Nevertheless, 2021 cargo volumes are expected to increase by 8.2%, up from the projection of less than 7% that we were already very pleased to share with you on our last quarterly call. These strong fundamental demand growth rates are double the rate of nominal cellular capacity growth, that is the supply of container ships. This imbalance is set to increase further through at least next year, even before the significant impact of supply chain congestion, which absorbs capacity and amplifies the tightness of supply and demand. Now, very importantly, when you zoom in on the segment of the market where we focus, the sub-10,000 TEU container ships, the order book is even more limited. And the advanced age of much of the global fleet is going to drive significant scrapping in the years ahead, particularly as scrapping of the global fleet's oldest vessels is currently being deferred due to the strong market building a backlog of very old ships. Tom will provide more detail on this later. But this is something I really want to emphasize upfront. 100% of container ships on the water today, which are 25 years old or older, are under 10,000 TEU. So the mid-sized and smaller ships segment, on which we focus, is aging. In fact, by the end of 2024, roughly 7% of sub-10,000 TEU capacity on the water today will be at least 25 years old. This almost exactly mirrors total capacity on order through 2024 for sub-10,000 TEU ships. Now what this means is that if all ships, all of them 25 years or older were to be scrapped, which is a normal occurrence, net growth of the sub-10,000 TEU fleet between now and the end of 2024 would be under 1%. And that is without taking anything into account about cargo growth year-on-year for the next two years. Meantime, earnings and asset values are on a clear upward trajectory, with the liner companies delivering record earnings that continue to reach previously unthinkable levels. And as we look forward, the drawdown of U.S. retail inventories to far below their normal levels suggests that the vast amounts of restocking that are required will provide further support to containership demand for some time to come. Speaking to you one week after the COP26 Conference and the many related announcements from industry regulators, financiers, and operating companies, it is very clear that ESG, in general, and decarbonization in particular, is going to play a growing role in shaping the future of all industries, including shipping. As we have mentioned before, we expect that the EEXI regulation coming into effect from January 2023 will force the global fleet to slow down. And a 1 knot reduction in global average containership sailing speeds equates to a 5% to 6% reduction in effective capacity. Similarly, while there has certainly been some ordering of new vessels in our sector, the significant uncertainty about which green fuels will become the standards of the future has continued to constrain speculative ordering. This is a major difference from previous bull markets in container shipping. Finally, while we have dramatically increased our fleet already this year, we continue to see the potential for selective growth that meets our high standards for vessels' specifications, forward visibility on employment, overall risk management, and returns. We have no intention of compromising acquisition criteria or required terms in order to pursue growth for growth's sake. But we continue to see potential for selective growth in a highly fragmented sector with many subscale players and with a continuous exodus of financial sponsors. Where the opportunity exists to serve the long-term interest of GSL shareholders by pursuing growth, our operating platform, industry relationships, and balance sheet place us in an excellent position to seize that opportunity. But, and I cannot emphasize this enough, if we don't like the risk-return profile of a deal, we will not proceed. With that, I will turn the call back to Ian.

Thank you, George. Please turn to Slide 6. 2021 has provided numerous opportunities for us not only to grow through vessel acquisitions but also to fix much of our existing fleet on significantly lower charter rates. Our charter rates are in many instances, 2 or 3 times their previous levels. This slide shows those vessels that were not fixed at the beginning of the year, with the dark blue bars indicating where we have signed new or extended charters in the year-to-date. On this status quo fleet, we've agreed 18 new charters so far this year, adding a little over $600 million of contracted revenue cover. As you'll notice, a number of these new charters have been agreed to commence in the months ahead. So new terms have been agreed one in advance of expiry, meaning that we've got good visibility on continued increased cash generation from this part of the fleet in the remainder of the fourth quarter this year and into the first quarter next year, even if we don't take any further action. On the next slide, we saw something similar for the 23 vessels that we have acquired this year. They've all now been delivered. The last one came 2 or 3 weeks ago in the middle of October. The majority have commenced new charters agreed under our ownership, succeeding charters in place at the date of acquisition. And these new charters are again at considerably higher rates. The 23 ships grow our on-water fleet by more than 50% and add over $640 million of contracted revenue. The dark blue bars on this page are those legacy charters that were in place when we agreed to the transactions. And to our considerable benefit, these were below market rates, which translated into below market purchase prices for the vessels. The red bars, on the other hand, show the chances that we've agreed in the hot market subsequent to acquiring the vessels, capturing significant upside potential for GSL. Once again, these new charters are multiples of their prior rates and extend well into the middle part of the decade. With the new charters for the pre-existing fleets and existing and new charters on the 23 vessels acquired year-to-date, we've locked in an additional $929 million of total adjusted EBITDA so far this year. And total contracted forward revenue cover at the 30th of September stands at $1.6 billion spread over 2.5 years. As George mentioned, this substantial additional multi-year contracted cash flow has allowed us to revisit the dividend for common shareholders. With the concluding of some significant charter extensions, which we expect within the next short number of weeks, we look to increase the dividend on a sustainable basis for Q1 of 2022 and beyond. Moving onto Slide 8, this is a slide that we introduced last quarter, and we think it's helpful in illustrating what the new charters and vessel acquisitions mean for our revenue and cash flow. We show this in three different forward rate scenarios. These three scenarios are for any vessels that come open in the next 2 years. They're put back at market rates prevailing today, or alternately at 15-year historic rates, or alternately at 10-year historic rates. To be absolutely clear, these are not forecasts of what will happen but rather illustrations of how a number of different scenarios would flow through to GSL's financials. I'd encourage you all to spend some time with this slide, and for those of you who want to get into the fine details, we spelled out the assumptions and the relevant factors in detail on Slide 21 in the appendix. From now, though, I would like to make just a couple of points. First, you'll notice that there's only a negligible variation for us across the different scenarios for 2021, the current year, as remaining charter market exposure is less than 1 month on a single 2,300 TEU ship. This high proportion of already contracted revenue days persists through 2022, where we have only about 4% or so of our total days open at the moment. The EBITDA on each scenario of 2022 shows a dramatic increase compared to 2021 levels. And to remind you, every incremental dollar of slot revenue flows straight through to adjusted EBITDA and cash flow. Our second point for historical context: annual adjusted EBITDA in the years since the 2018 merger with Poseidon has been around $160 million. Now, we've already exceeded that level in the first nine months of this year, 2021, and we are well-positioned to move dramatically higher. Assuming no revenue from additional spot days, open days, while still assuming OpEx on all of our fleets, our adjusted EBITDA would be approximately $380 million for 2022, and $272 million in 2023, significantly up from what we were earning before this year. So this expansion of our cash flow is both transformative and lasting. Moving onto Slide 9, I will summarize our strategy and focus. We continue to believe that the sweet spot in the market is existing ships rather than new builds, particularly in the mid-size and smaller sections. We put nearly $0.5 billion towards acquiring 23 assets this year, and we have already secured nearly that entire amount in adjusted EBITDA over the coming years, related only to these newly acquired vessels. We have been disciplined and selective in our acquisitions for both fleet renewal and growth, maintaining a risk-averse approach that has consistently yielded compelling returns. We focus on immediately accretive deals and have secured transactions with an estimated purchase price to average annual adjusted EBITDA ratios of between 3.64 and 4 times. We've also ensured that the charters attached to the acquisitions we made have not been reliant upon rosy residual value scenarios. Between the charters agreed and the scrap value of vessels, we have in many of these instances already fully covered the cost of the acquisition. We have been able to purchase older vessels, and the charters that we have agreed subsequently have demonstrated the extraordinary upside potential of that strategy. As George mentioned in his remarks, both GSL and the shipping industry in general are increasingly focused on decarbonization. Our environmental and commercial strategies are well-aligned by taking a full life cycle approach to the carbon footprint of our ships. We consider the impact of building and operating the ships as well as just simply operating them. We see expanding the economic life of existing ships and optimizing their operation until next-generation sustainable fuels and propulsion technologies become well-established and commercially viable as both environmentally sensible and financially prudent. Relatedly, we look to ensure that we're flexible and agile, avoiding speculation or long-term bets. We focus instead on a short-term to medium-term horizon to drive returns, which in turn enable us to respond appropriately to an evolving decarbonization environment. We also look to position the company to be in a strong cash position so that we can move quickly and decisively in capitalizing on opportunities ahead. I'll turn the call over to Tassos to talk you through our financials.

Thank you, Ian. Our first nine months of the year have been very active with a significant number of moving pieces in the financials. So we have summarized the key points for you on Slide 10. Revenue for the first nine months was $294.4 million, up from $212.8 million in the first nine months of 2020. Similarly, adjusted EBITDA for the nine months was $166.5 million, up from $124.5 million in the same period of last year, including a material impact on total operating revenue from amortization of intangible liabilities arising on below-market charters from vessel additions. Normalized net income, which adjusts for one-off items, was $104.6 million for the first nine months, up approximately 170% from $38.3 million in the prior year period. I would like to spend a moment on the material one-off items within this quarter. We have completed the refinancing of our last 2022 debt maturity, moving the next earliest to May 2024. We have also completed, within this quarter, the scheduled purchasing financing of 16 vessels, and the last being completed in October out of the total 23 new vessels we acquired this year. Moving to the balance sheet items, there are various points to highlight. Our cash position at September 30th, 2021 was $113 million. As I mentioned above, in the quarter, we successfully refinanced our last 2022 maturity debt from our $5.8 million Hayfin Facility, and concluded $140 million facilities for 12 Borealis vessels. Meantime, we raised $16.9 million on the ATM programs further increasing our flexibility. Regarding our acquisitions for the 7 post-Panamax ships, we concluded the delivery over the last vessel with a purchase price of $17.6 million and drew down the last $10.7 million of the arranged facility. Additionally, we also concluded the purchase of 12 container ships from Borealis for an aggregate purchase price of $233.9 million, which we financed with the issuance of $35 million of 2024 notes to the sellers, and senior secured loans of $400 million in cash-on-hand. Finally, for the four 5,500 TEU Panamax containerships, we contracted to purchase for an aggregate price of $148 million. We have arranged financing of $120 million, of which we've drawn down $90 million against the three ships delivered by September 30, 2021. The last vessel was delivered in October. Our detailed financial statements appear in full in Slides 11 through 13. On the basis of our strong contracted revenues, our board has declared a dividend of $0.25 per common share for the third quarter to be paid on December 2nd to common shareholders of record as of November 22.

On Slide 14, you can see in the upper left our scheduled amortization in the coming years. Based on our third quarter results, our total gross debt to annualized adjusted EBITDA is approximately 3.7 times, and this is scheduled to come down meaningfully from there. On the upper right, you can see the dramatic reduction in our cost of debt, from 7.7% at the year-end 2018 to 6.3% at the beginning of this year, to high 4% now. On the lower left, you will see that the trading liquidity in our stock has increased dramatically over the last year, making it far easier for new investors to take a position in GSL since our public float now accounts for just under 80%. With that, I will turn it over to Tom.

Thanks, Tassos, and hello, everyone. Please turn to Slide 15, which is intended to highlight the ship sizes on which we're focused. GSL is focused on mid-size and smaller ships, which is shorthand for ships ranging from about 2,000 TEU up to 10,000 TEU. The top map on the left shows the deployment of our sizes of ship, i.e., ships under 10,000 TEU, and emphasizes their operational flexibility. As you can see, they're deployed everywhere. The bottom map shows where the larger ships, in other words, those larger than 10,000 TEU, are deployed, which tends to be on the east-west main lane trades where the cargo volumes and shore-side infrastructure can support them. It's important to note that roughly 70% of global containerized trade volumes are moved outside these main lanes in the north-south, regional, and intermediate trades served by ships like ours. George covered the demand side in his earlier remarks, highlighting the rebound in containerized volumes driven by a progressive reopening of economies, and ongoing restocking with continued supply chain disruption amplifying all of the above. The next slides are mainly supply-oriented. Slide 16 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 September was 0.88%. This is pretty much full employment, which is a strong baseline. The bottom chart tells a similar story. Ship recycling, or scrapping, has been almost non-existent for containerships this year. Why? Because the charter market and earnings environment is so hot. Why scrap an ancient ship if you can squeeze a few more millions of earnings out of it? I'll come back to this point on the next slide. Slide 17, which looks at the Order Book, shows the composition of the Order Book by size segment. As I'm sure you have read in the industry press, the Order Book has expanded during the course of 2021, reaching an overall Order Book to fleet ratio of around 23%. However, this overlooks the fact that the order book is very heavily weighted towards the bigger ships, over 10,000 TEU. If you look at our focus segments of 2,000 to 10,000 TEU highlighted in the red box, you can see that the dynamic is very different. For these sizes, the Order Book to fleet ratio is a modest 6% or so. Another point to emphasize when discussing the Order Book is the delivery schedule is back-loaded. What I mean by this is that the Order Book deliveries tend to be weighted more heavily towards 2023 and 2024 rather than 2021 or 2022. This back-loading is significant as 2023 marks the implementation of the new environmental regulations, which we expect to cause a slowing down of the global fleet, and slowing down the fleet reduces effective capacity. It also ties in with the point George underlined in his commentary on Slide 5, that the mid-size and smaller container ship fleet is aging. As you can see from the chart on the right, if scrapping were to continue to be deferred, by the end of 2024, around 7% of sub-10,000 TEU capacity currently on the water would be at least 25 years old and potential candidates for the recycling yards. Net this against the total order book of sub-10,000 TEU due to be delivered from the fourth quarter of this year through to the end of 2024, and you would get an implied, and I emphasize implied, net growth in these sizes of just 0.7%. Negligible. The long and short of this is that we continue to see supportive supply side fundamentals for our focus size segments, which brings us neatly to Slide 18, the charter markets. The chart here provides an index covering charter market rates for a basket of containership sizes and shows the general direction of travel for the market as a whole. The index is up by almost four times from where it was at the start of this year, and staggeringly, between nine and ten times since the lows of Q2 2020. On the right of the slide, we provide an indication of where market rates stood in October of this year for 3 to 5-year charters in our various size segments. This is a bit of an art really, as the market is so tight at the moment that reference fixtures have been pretty limited. In any case, for simplicity, we have grouped some size categories; for example, the 2,200 to 2,800 TEU feeder category shows a rate of $34.5 thousand per day. Rates for the smaller vessels in this category would be lower than this, while for larger vessels, they would be a bit higher. Hence, the recent fixtures of two of our 2,200 TEU ships for $32 thousand per day. Anyway, returning to the big picture, any way you look at it, we're seeing a truly fantastic market. And with that, I will turn the call back to George to wrap up.

Thanks, Tom. I will briefly summarize, and then we will be happy to take your questions. As we have grown our fleet by more than 50% over the course of 2021 and also signed a large number of long-term charters on attractive terms, we have expanded our contracted revenue to over $1.6 billion with an average remaining duration of 2.5 years. While we see further upside potential in our fleet, when certain vessels come into the charter market in the months and quarters ahead, our extensive contract cover means that we are in a great position in any charter market. We have a very strong balance sheet with $82 million in cash following the delivery of all our recent acquisitions. Our credit ratings have been upgraded yet again, most recently to double-B minus stable, and all our 2022 debt has been successfully refinanced with no further maturities until May 2024, while our leverage ratios and cost of debt continue to trend in the right direction. We have demonstrated our ability to utilize diverse capital sources on better terms to fund accretive growth and have firmly established a virtuous cycle in that regard. Mid-sized post-Panamax and smaller container ships with higher rate capacity continue to be the sweet spot in the market, with highly supportive supply side fundamentals as the vast majority of new vessel ordering continues to be fulfilled by larger container ships that cannot compete in the majority of trade lanes where mid-sized and smaller vessels are the workhorse. The current market is causing a growing number of owners to defer scrapping of older ships, creating a large backlog of ships ready to be scrapped whenever the market eventually normalizes. We also expect total effective container ship capacity to shrink from January 2023 when new decarbonization regulations lead to the reduction of fleets. In the meantime though, charter market rates continue to be truly extraordinary, up 3.8 times since the beginning of the year and almost tenfold since the lows in the second quarter of 2020, with far longer durations that were previously available for anything but a new build. We expect this market tightness to persist well into 2022 and potentially straight through to regulation-driven supply reduction in 2023. Our success in growing the fleet and having substantially contracted cash flow over a multi-year period allows us to revisit the dividend, which we expect to increase from Q1 2022. Many customers continue to set records for profitability and are rapidly improving their balance sheets and credit profiles. The safety and welfare of our personnel remains our top priority, and we're working to embed an ESG culture into everything that we do. Our charter portfolio provides great support to the quarterly dividend that we introduced earlier this year. We bought back a large block of stock during the quarter, both GSL and I personally making a great investment in GSL's future while also reducing our large legacy shareholder, Kelso, to below 5% of shares outstanding. Having already grown our fleet by more than 50% this year, we continue to evaluate additional growth opportunities in a disciplined, highly selective manner. We are committed to our principles and being risk-averse, which have served us very well to this point. And we will not begin now to chase growth for growth's sake. Rather, we will keep a focus on using our platform and our balance sheet to maximize the long-term benefit to our shareholders. With that, we'll be happy to take your questions.

Thank you, sir. We have our first question from the line of Kevin Uherek with Deutsche Bank. Please go ahead.

Hey, guys. I just had a quick question. You guys were talking about your dividend policy and thinking about potentially increasing it. How are you guys thinking about that? Are you thinking of more of it like a fixed increase or considering doing something where it depends on the available cash that you might have?

Yes, it's Ian. We're looking at a fixed increase, really. We're not convinced that special one-off type dividends are right for us in today's circumstances. And as we kind of said in the prepared remarks, we got a couple of quite significant, at least to our minds, charter extensions that we're negotiating right now. We want to get them finalized before we absolutely determine the new level of sustainable dividends. Then we will announce this, and sustainable is important. At the beginning of the year when we announced the $0.125 dividends, we stressed that it was sustainable under those circumstances. The market improves, we acquired ships, and we doubled the dividends when we actually paid the first from $0.125 to $0.25. We're in a different environment now with growth. We think it's right that we allocate some of the extra capital to return to shareholders, so it's sustainable while wanting to preserve financial flexibility for the business, so need capital for growth. As we explained in our prepared remarks, that continues to be a plank of our strategy going forward, and maintaining the strength of our balance sheet.

Thank you. Our next question is from the line of Randy Giveans with Jefferies. Please go ahead.

Hey, team GSL, how's it going?

Thank you, Randy.

Good, Randy. How are you?

Doing very well. All right, two questions for me, maybe a third. But first on the share repurchases, nicely done there. Very good use of $10 million or so. Now, your balance sheet is clearly in great shape, charter backlog, things like $1.6 billion or something, provides you with substantial free cash flow visibility. So I guess my question is, why raise the $17 million in preferred at 8.75%, which seems maybe like an expensive capital raise? Although the repurchase of the common would still be accretive at these levels. So I guess, why do that? And then going forward, what are your plans for further preferred ATM usage and then share repurchases?

Do you want to take that?

Sure. Hi, Randy. Well, as we've tried to make clear, I guess in the prepared remarks, this has been a period of tremendous growth for us. We've grown by 50%. And in that regard, the preferred has been a helpful source of non-dilutive capital that has helped fund that growth. In that respect, we see it as extremely flexible capital. Whether or not we will continue to raise it going forward, we'll keep it under review, but we think it's extremely helpful to have access to various different pockets of capital.

Okay. And then on the share repurchase side?

On the share repurchase side, I think that's something that we would look at sort of selectively, as we've shown, it's something that we're willing to execute if we think the circumstances are justified.

Okay. All right. And then secondly, on the fleet, the past year, very active in growing it. Now, all your acquisitions are fully delivered. So where do you go from here in terms of acquiring additional tonnage versus maybe taking advantage of the high asset values and selling some older assets?

Yes. We always look at all the options. So far, it has always been the case that keeping assets and chartering long-term is far more accretive. Now, on the acquisitions, we are looking at various fleets of ships and we're evaluating. So far we have not reached any, let's say, point where any of the few fits that we are currently looking at and negotiating, meet our criteria. So far we haven't moved towards any of those in certainty. But there are plenty of those fleets out there, which are fleets that many financial sponsors are exiting the sector, and maybe there are ships with charters and the like. So deals that can make sense for us. But we're definitely not there to pay a huge price or take a big risk for the company. We would only do so if these deals are equally accretive to the ones we have been doing so far.

And if I may add, just a quick note to that, Randy. We, as you may recall, did in fact sell one of our older assets, a 20-year-old 2,200 TEU asset at the beginning of the third quarter because we saw the opportunity to, as you say, capture the high values and reinvest that immediately in a deal that we felt rendered even more promising economics. So the equity surrendered from the sale of that ship was immediately reinvested in the four-high reefer, 5,400 TEU ships that we acquired with charters attached to Maersk.

Got it. I had one more question, but I asked two, so I'll hop off, but I will get back in the queue. Thank you.

Thanks, Randy.

Thank you. We have our next question from the line of Frode Morkedal with Clarksons Securities. Your line is open.

Okay. Thank you. Hi, guys. You mentioned you had secured EBITDA of $929 million so far this year. I'm curious what the backlog — EBITDA backlog as of the end of Q3, if you have that number?

We haven't put that into the public domain for this. I'm not sure we can provide that number now, but you could probably infer it by taking the revenue to EBITDA ratio for what we've contracted this year and applying it broadly to the $1.6 billion of forward contracted revenues that we have. But I—I'm sorry, I can't pin a direct number on it now.

You can also go to Page 21 in our investor presentation, in our adjusted EBITDA and operating cash flow calculator when actually, you can make small math because the fixed revenue net is already there and the historical OpEx will make it easier.

Okay. I guess. But it seems to be at least a billion probably, given that you have more already secured contracts from loss there, I would assume. But I'll calculate. And you mentioned that you are looking at securing a number of charters or waiting to compute it, so how many vessels are you looking at?

Yeah, that's the first question.

Sure. Hi, this is Tom again. If you look at the charter cover slides in the presentation, you can see that we have comparatively few ships coming open during the course of the next 6 to 9 months, let's call it. So the most obvious candidates would be a couple of high-value 9,000s.

Okay. Well, when I look at your chart on page 8, it’s quite clear that next year would be very strong. Apparently, you're basically saying if you secure the current market rate, you would have an EBITDA of roughly $430 million next year? And that's basically just above $300 million, that's profit if I'm not mistaken, which is $8.5 per share. And it's half-debt repayment and capital basically $200 million free cash flow, which is $6 per share, and which is great. Also more interesting is if I look at 2023 on that same slide on Page 8 to add 10-year historic rates, if I'm not mistaken, that's like $14 thousand per day or something on the Panamax versus more than $50 thousand today. And you still would have $308 million EBITDA in 2023, and that's roughly $7.3 EPS, and $5.5 of free cash flow. My point is, do you have basically $15 EPS the next two years? It's quite constructive and cheap. On the time that you basically allow it already, but how do you think about this very secure cash flow when you are going to decide on buybacks really versus dividends? Well, I think it goes further as with — thank you for doing that analysis. As we've already said, we're open to share buybacks. We've done it. It was to a degree opportunistic. But clearly we are prepared to execute on those transactions when the circumstances are justified. We've also indicated, as we discussed, and we can't go into any more detail at this stage, but we've also indicated that we're looking to increase the dividends from Q1 next year, waiting on those charter negotiations that we've also touched on. We've also indicated that we continue to have aspirations for growth. So it's an art and a science, and we keep capital allocation under review. We're prepared to allocate more to returning capital to shareholders, whether that's in the form of increases in regular dividends or special dividends or share buybacks. It depends on the circumstances at the time. I don't think there's much more we can say.

No. That's fair enough. It's a great position to be in, I guess. Well, thank you.

Thanks, Frode.

Thanks, you. Again as a reminder, if you would like to ask a question over the phone. We have our next question from the line of Liam Burke with B. Riley. Your line is now open.

Yes, thank you. How is everybody today?

We're good, Liam. We're good.

Thank you. Ian, your utilization rates were off year-over-year, is that just a function of the lag between taking deliveries and actually getting the vessels to generate revenue, or was there anything else in there?

Let me just remind myself. Yeah, a little bit off. I mean, in the three months utilization this quarter was 93.6% compared to last third quarter of 94.8%. But more importantly, year-to-date utilization is 95.4% this year against 92% last year. So a slight downturn quarter-on-quarter, but up year-to-date. Some of this is just the way you scheduled dry dockings. As the fleet increases, you'd expect that to average out. But we did have some unplanned off-hire in the third quarter of this year totaling 137 days, mainly relating to a couple of unusual incidents with main engine type problems, which took some time to resolve. These things happen, I'm afraid. But again, as we get bigger, the impacts of these rare occurrences become proportionately less.

Great. Thank you. There have been some announcements in the industry about liner companies actually going in and buying secondhand smaller vessel containerships. Does that affect at all your opportunities to selectively go in and add assets?

I will answer that. No, it doesn't, because liner companies are looking for ships so they can promptly take delivery and then load them quickly due to the disruptions they are facing. We are more focused on ships with employment and are currently not pursuing charter opportunities because we believe there is a certain level of risk in the reward. Our focus is on structured transactions when the market is very active. Presently, in the sell and purchase markets, there is a limited number of charter-free ships, and liner companies are competing for any available ones, as their economics differ significantly from ours. They can afford to pay much higher prices than any ship owner would.

If I can just add a footnote to that, Liam. I mean, if you look at the 23 ships that we purchased during the course of this year, 11 of them, so seven that were acquired at the outset of the year, and the four most recent acquisitions, were in fact ships that were purchased in the secondhand market by liner operators and then were spun back to us by way of sale and charter back transaction, so we can actually draw deal flow out of the lines themselves acquiring ships. I don't think it really moves the needle one way or the other.

The next one, we have a follow-up question from Randy with Jefferies. Please go ahead. Hey, fellas. I didn't want to ask my 12 questions there, so hope back on real quick. On the chartering front, you have two bigger ships coming available in May '22, it looks like we've secured a few more fixtures beyond that, right? When do you expect to secure new charters on this?

As you can imagine, Randy, incrementality and competition. Yeah. We are obviously working on all of our ships that we have open currently, and we hope to have good news in the foreseeable future. But sometimes we might even be able to fix four of our ships that don't look—don't seem the obvious case. We have a large fleet, and there are a lot of combinations and permutations that we can reach with our customers as we have a direct relationship with all of them. We mostly have talked directly with the liner companies, so that allows us to have a bit of a different approach than other competitors.

Hey, gentlemen, thanks for taking my question. Thanks for all your hard work, building up the free cash flow and building up the fleet here. I just want to touch on a topic that has been brought up from a little different angle. I know there was a worry among maybe investors and some people in the industry at the beginning of the year that—well, these charter rates are much higher than the old normal but there's really for much short-term rates. A lot of them are 12 months and there are 18 months alive, the highest rates were for the shortest ones. I remember when you guys re-chartered Dolphin 2 from 7,000, 24,500 a day people thought that's great, but it's a short-term charter. And now we fast-forward today at that 24,500 that people thought wouldn't hold up. You just re-chartered that or extended that out in time at a rate of 53,500. The rate tripled in December and then doubled again. And so that's great, and we're seeing, I don't want to talk to you more offline, I'm seeing other ships in that 5,000 to 6,000 TEU range from your competitors to get 3-year charters, and so I guess, 1. Do you agree with this concern about only this being a COVID-driven shortage and these are only going to be 12 months of these high rates? That's obviously gone now, and if it is, I just want to throw my name in the hat in terms of agreeing with the argument for more share repurchase. I applaud George, your personal purchase and the company's purchase there, and you helped clean up the overhang from Kelso. But even if we doubled the dividend from $0.25 to $0.50 a quarter, there's still tons of excess free cash flow here. And you've got—you're increasingly locking it in and your assets that aren't locked in. I don't think I'm going to jinx that by saying that when they do come up, they'll get at least re-chartered at least the rates they are now in the coming 18 months as things come up for recharter. So, I would just ask that you continue to keep the pedal down on the share repurchase. I think it can benefit you, George, and all of us and could be accretive to free cash flow per share. And I think, if we want to get this stock to $45 or $50, that's the path to doing it. Doing nothing will get you close as it is, but taking down the share count while we can I think is the closest thing to a no-brainer that I see. Anyway, we can talk more offline about some of the things I'm seeing from your competitors and some of these off-market things that have been announced. But the charter rates are just astonishing and they're in the $50,000 to $60,000 range. And so, let's talk more offline. I just want to get that in there. Let me know if you agree or disagree with my thoughts on long-term charters becoming the norm. Thanks, guys.

This is Tom. I'll just give you my two cents on the sustainability of the charters. Who knows what's going to happen with demand going forward. So far, it's surprised again and again to the upside, which is fantastic. But what we do have is forward visibility on the supply side dynamics, which we tried to provide some data around in the guts of the presentation. So looked at from that perspective, the supply side, we do see reasons to be optimistic, but this is a business that we're building for the long term, so obviously prudence informs everything that we do, rather than making a big bet one way or the other. I will leave it there just in case anyone else from the team wants to add something.

If I may add in what we really care when we look at an investment, and when we look at all of our investments is the fundamentals. I am not so sure. I mean, yes, there is a COVID element definitely, and maybe that element is a percentage of today's charter rates, but it's not all fundamentals that we showed in our presentation point to the fact that right now we're undersupplied with ships in 2021, 2022. And we're not going to get oversupplied in our sector for the foreseeable future, I mean, after the Order Book that exists as of today, and I don't see this Order Book growing dramatically going forward. We are still undersupplied. If you take a modest cargo increase year-on-year, historically, you're looking at safe 2% to 2.5% usually growth. So that's 6% to 8% when you only have a supply of 0.7%, that is without taking into account cargo growth year-on-year for the next two years. Now, if you take into account, after the Order Book, you have to take care of environmental regulations, you are really in a good area. And I'm not sure what diploma contains news would change the mathematics of fundamentals we've been presenting. And we remain focused on delivering strong and predictable results moving forward as we effectively invest in assets and that further, the trust of our cash flow.

Thank you.

Thank you. There are no further questions at this time. Mr. Ian Webber, please continue.

Thanks everybody for listening to our remarks and for your questions. We look forward to giving you a further update with our fourth quarter results. Thank you very much.

Thank you. This concludes this conference call. Thank you for participating. You may now disconnect.