Global Ship Lease Stock

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the Global Ship Lease Third Quarter 2026 Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to Mr. Thomas Lister, Chief Executive Officer of Global Ship Lease. Please go ahead.

Thank you. Hello, everyone, and welcome to the Global Ship Lease Third Quarter 2026 Earnings Conference Call. You can find the slides that accompany today's presentation on our website at www.globalshiplease.com. As usual, Slides 2 and 3 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 slide presentation.

We would also like to direct your attention to the Risk Factors section of our most recent annual report on our 2025 Form 20-F, which was filed in March of 2026. You can find the form on our website or on the SEC. 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. The reconciliations of the non-GAAP financial measures to which we will refer during this call to the most directly comparable measures calculated and presented in accordance with GAAP, usually refer to the earnings release that we issued this morning, which is also available on our website.

I'm joined as usual today by our Executive Chairman, George Youroukos, and by our Chief Financial Officer, Tassos Psaropoulos. George will begin the call with high-level commentary on GSL and our industry, and then Teslas and I will take you through our recent activity, quarterly results and financials and the current market environment. After that, we will be pleased to answer your questions.

So turning now to Slide 4. I'll pass the call over to George.

Thank you, Tom, and good morning, afternoon or evening to all of you joining today. As has been the case for some time now, uncertainty, disruption and volatility continue to be the overriding trends in the container shipping industry, keeping trading patterns in flux even as underlying freight flows and vessel demand continue to surprise to the upside. The security situation around the Red Sea and stress remain dynamic. Although momentum appears to be growing towards a cautious resumption of transits.

Global tariff policies have likewise remained live issues with the potential for the stroke of a pen to bring about large-scale supply chain reorientation. Overall, containerized supply chains have continued to become more fragmented and decentralized at an increasing restructured level. facing the need to continue delivering containers on a reliable basis while reacting to macro events and disruptions in real time, liner operators are building slack into a system that was previously oriented towards leaningness, efficiency and capacity optimization. And this has heightened their reliance upon midsize and smaller containerships that give them the agility to quickly respond to changing circumstances and diverse needs.

Now against this backdrop, we have found opportunities to selectively execute fleet renewal on attractive derisked terms, namely, we have placed orders for 17 new buildings at attractive prices, 15 of which have been derisked with multiyear charters ex yard and with debt financing already secured. More than $1 billion of aggregate adjusted EBITDA is expected to be generated from these initial charters. -- which have a weighted average term equivalent to around 25% of the ship's useful lives.

Now this means that 3/4 of the newbuilding contract price for these 15 ships will be covered by the adjusted EBITDA generated within the first quarter of their economic lives. Furthermore, the 7-year $1 billion syndicated loan facility priced at offer plus 1.5% that we announced in October is well structured to support the newbuild program. It is secured today to be drawn down in tranches upon delivery of each new building, which is scheduled to take place from late 2028 through early 2030. When the ships begin generating cash flow from their initial charters.

We have also exercised 2 in the money newbuild options for delivery in 2029, in a market in which new building prices continue to rise and delivery slots for quality yards are pushing increasingly into 2030 and beyond. With the wind in our sales, we have continued to add charter coverage and forward cash flow visibility, with over $1.8 billion of contracted revenue including the charters for 15 of our new builds in the first 9 months of 2026.

All told, as at the end of September, we have forward cover of $3.4 billion of contracted revenues spread over 3.5 years. Our Fortis balance sheet both enabled us our new $1 billion facility and benefits from it, demonstrating the virtuous cycle that is underway, as evidenced by strong credit ratings. Now as a result of all of the above, we're very pleased to announce today yet another increase in our quarterly supplemental dividend, which were upsizing by 25%. And bringing our overall annualized dividend to $2.75 per common share. We remain committed to resilience, optionality, discipline and a healthy return of capital to our shareholders, principles that have served us well over the years.

Now with that, I will turn the call over to Tom.

Thanks, George. Hello, again, everyone. Please turn now to Slide 5, which shows our track record of disciplined and opportunistic fleet renewal to build long-term value through the cycle. Significant recent developments on this front are, of course, our orders of 17 midsized ultra-high reefer wide beam latest-generation containerships highlighted in the blue boxes on the chart. These newbuild orders are consistent with our well-established prudent and selective fleet renewal and capital allocation strategy.

In other words, high specification vessels with high upside potential, acquired at attractive prices and derisked out of the gate with multiyear charters and finance already in place for 15 of them. These vessels be joining and gradually replacing a segment of the global containership fleet that is aging out and which has been underinvested for a number of years. And we expect them to be powerful generators of value for years to come. a new generation of cash cows in other words.

We're always looking for value-accretive opportunities. And as you'll see on the chart, there's opportunities for nearly a decade were to be found, at least in our view, in the market for secondhand vessels. Only in the past few years, have the index values of secondhand vessels, in other words, the dark blue line on the chart, surged well beyond those of new builds, which are shown in the pale blue line, which, although inflationary tend to be less affected by market cyclicality and volatility.

With this in mind, we waited patiently and work to develop the right opportunities. When those opportunities crystallized, we were able to move quickly, thanks to our robust balance sheet, and our long-standing industry relationships.

Moving now on to Slide 6. Here we dive further into our progress with strategic fleet renewal with our order of 17 new buildings. The 15 vessels we ordered in the second quarter come with multiyear charters averaging 7.1 years in duration and are collectively expected to generate over $1 billion of adjusted EBITDA from those charters. As George already observed, that is over 75% of the $1.33 billion we have agreed to pay for them, meaning that they are effectively derisked right out of the gate, covering 3/4 of their aggregate cost in just the first quarter of their useful economic lives with a further 20-plus years of earnings upside potential thereafter.

Tassos and his team further derisk these new builds with the $1 billion syndicated loan facility we announced in October, this oversubscribed facility has a 7-year term, bears interest at a rate of SOFR plus 1.5% is comprised of 8 top-tier highly diversified international banks and is accessible in tranches corresponding to the respective deliveries of our 15 newbuildings delivering from late 2028 through early 2030.

This new facility underlines the progress we've made in strengthening our balance sheet and financial position over the past several years as well as the breadth of banking relationships that we maintain across global geographies and it represents a major strategic milestone that will benefit us for years to come.

In the third quarter, and as you saw on the chart on the previous slide, we also exercised in the money options for a further 2 ultra-high reefer wide beam midsized container ships, which are designed and specified to ensure a superior fit for existing and anticipated future market needs. These ships are scheduled to deliver in the fourth quarter of 2029 and the aggregate contract price of $163 million and other contract terms, in fact, are meaningfully better than those now available in the market for comparably specified ships, especially for the vanishingly rare slots with quality yards remaining for 2029 deliveries.

Rounding out this slide is the observation that we also opportunistically monetize aging noncore assets. And to date this year, we have agreed to sell 4 ships at the end of their existing charters for an anticipated aggregate gain on sale of around $33 million. Slide 7 shows our charter portfolio.

As of September 30 and including the charters from our 15 newbuilds, we have $3.4 billion in contracted revenues over an average of 3.5 years, spread across high-quality and diversified charters. We have 100% revenue days covered in 2026, 98% covered in 2027, and we even have 74% already covered in 2028, which is valued -- which is valuable in an unpredictable world.

On Slide 8, we reiterate our dynamic capital allocation policy, which continues to guide us through the natural cyclicality and volatility of the industry, which has been compounded by macro disruptions and geopolitical, economic and regulatory uncertainty over the past several years. We have delevered to strengthen our balance sheet, build equity value and increase our resilience in an unpredictable environment while positioning GSL to seize opportunities as they arise. This progress has been borne out by our orders for the 17 new builds, our affirmed credit ratings and outlook and our robust quarterly dividend, which, as George mentioned at the outset, we have just upsized once again bringing it to an annualized $2.75 per common share.

And with that, I'll pass the call to Tassos to discuss our financials.

Thank you, Tom. Slide 9 shows our financial highlights for the first 9 months of 2026. I would like to highlight a few key takeaways. Our financial performance and cash flow have remained very strong. Our cash position at quarter end was $636 million, of which $141 million is restricted. The remainder ensures that we can fully cover our covenants and working capital needs and manage the potential financial implications of geopolitical disruptions and other macro events in an unpredictable world. Among other things, it also covers the net future remaining contractual commitments for our 17 new buildings.

In gross terms, these remaining commitments amount to a little over $1.3 billion as of September 30, 2026. $1 billion of this is expected to be financed upon delivery of the vessels with our recently announced syndicated loan facility. Oversimplifying things and what that leaves a net amount of around $300 million, much of which will fall due before the vessels delivered.

Furthermore, it proves dry powder, both for CapEx to optimize the commercial value and marketability of our existing fleet and for disciplined value-accretive investment in fleet renewal when the right opportunities arise. And of course, we continue to pay out a robust dividend, which we are increasing once again. Introduced in the second quarter of 2024, we have increased our supplemental dividend 3 times now with this latest in Greece, bringing the supplemental up to $1.25 per common share annualized and our overall dividend to $2.75.

On Slide 10, we show our success in strengthening our optionality via delevering and derisking. On the left, you can see that we had $950 million of outstanding debt at the end of 2022, which we have progressively reduced and now are on track to have just under $600 million by year-end, which has put us in the position to re-level with our $1 billion new building facility as the ships and the cash flows they generate come online.

Also, I want to highlight that by way of this new $1 billion syndicate loan facility, our portfolio of lender relationships has been further expanded to include top-tier financial institutions spanning 3 continents demonstrating the widespread bankability of GSL on the basis of our prudent business model, capital allocation discipline and balance sheet strength. The graph on the right shows the same progress, but to an even more emphatic degree, thanks to the significant expansion of our cash flows over time.

On an adjusted net debt to adjusted EBITDA basis, since the 2018 merger of GSL and Poseidon, we have reduced our financial leverage from 8.4x to 0.3x as of the end of Q3 this year.

Slide 11 further shows our focus on strengthening GSL's financial position. Cost of debt is shown on the left-hand graph which we have lowered from over 7.56% at the end of 2018 to 4.86% at September 30, 2026, thanks to our improving credit profile balance sheet optimization and progressive refinancing on an increasingly favorable terms. And all of this is against the backdrop in which market rates have been increasing over the last 5-plus years.

Even more strikingly and returning to the growing bankability of GSL, our average margin over SOFR has continuously reduced over that period. from 6.28% in 2018 to 2.26% now, a reduction of over 400 basis points. The right-hand chart shows our ongoing efforts to lower our average daily breakeven cost from over 12,000 per seat 8 years ago to just over 9,500 per se today despite the financial environment, we have navigated that time frame in both interest rates and operating expenses, notably including coming costs.

With that, I will turn the call back over to Tom to discuss the market and the fleet.

Thanks, Tassos. Let's turn now to Slide 12. And here, we reemphasize our focus on midsize and smaller container ships, ranging from 2,200 TEU to a little over 11,000 TEU. Our fleet segment service around 75% and of global containerized trade volumes, which are concentrated in the non-mainlane, intermediate and intra-regional trades. These ships are the workhorses of the global fleet with the flexibility to service a wide and diverse range of ports and container trades. This stands in contrast to the largest container ships, which tend to be constrained to deepwater ports with well-developed shoreside infrastructure and are only economically competitive in trades with cargo volumes sufficient to fill them.

And as supply chains have become fragmented and decentralized amid disruptions of geopolitical uncertainty, liner operators have increasingly opted for flexibility, reliability and wide operating scope of midsized and smaller container ships like ours.

On Slide 13, we take a look at 2 major choke points for shipping in the Middle East. While it is impossible to predict how events will ultimately unfold, we can shed light on the effects we've seen so far in our sector. So over 20% of global containerized trade volumes passed through the Red Sea and Suez Canal before severe transit disruptions began back in the tail end of 2023. Since then, vessels have largely been rerouted around the Cape of Good Hope, a longer and costlier journey and 1 that at its peak, was estimated to absorb around 10% of effective global containership capacity.

There is now growing momentum on liner operators to resume transits, but the security situation remains such that risks are reviewed on a per vessel per transit basis. Strikingly, despite capacity being released into the market as a result of this tentative return to the Red Sea and Suez, we have yet to see downward pressure on market charter rates, and I'll come back to this point later.

Turning to the Strait of Hormuz, roughly 3% to 4% of containerized trade volumes passed through the straight before the Iran conflict. Major ports in the Persian Gulf have experienced large scale impacts on their operations and shipping into and out of the Gulf remains severely constrained. As has been the case for some time now, the situation remains unsettled, highly dynamic and with clear implications for the long term. For the time being, these developments add uncertainty and introduce inefficiencies into the containerized supply chain, requiring continuous adaptation and advantaging those with the ability to be flexible and dynamic. Meanwhile, our top priority, of course, remains seafarer safety.

On Slide 14, we show the supply side and scrapping trends where the story remains essentially the same. Both idle capacity and scrapping activity are near 0. Disruptions to the containerized supply chain caused by extreme weather events, port congestion and geopolitical instability have generated the need for additional container ship capacity, eliminating slack in the system and making it profitable to keep older ships on the water for longer than might be the case in more normal conditions.

Slide 15 highlights the order book, which in recent years has grown meaningfully. However, as you can see, the extent of growth is far greater for the very large segments than is the case for the midsize and smaller segments in which we operate for which the order book-to-fleet ratio is around 27% to 28%. This figure stands in stark contrast to the 62% ratio for the larger container ships, over 10,000 TEU, which pulls the average ratio for the overall order book up to 44%.

Another key factor to consider in this discussion is the aging out of the vessels in the midsized and smaller global containership segments. Deliveries from the order book is significantly offset by existing ships hitting 25 years or older over the course of the next 3 to 4 years. In fact, if we were to assume that all these ships of 25 years or older was scrapped through 2030, net growth in sub 10,000 TEU fleet would only be around 3%. So -- while the market remains strong and demand remains robust, we will continue to lock in charters at attractive rates for our existing fleet.

On the flip side, if there were to be a downturn in the market, then global scrapping would likely increase materially, providing a useful supply-side safety valve. And as we have said many times in the past, in shipping, up cycles are a great opportunity to make money, but down cycles where the most compelling value-accretive opportunities are typically to be had, as long as you are well capitalized and agile, which we are and have every intention to remain.

On Slide 16, we returned to the continued strength of the charter market, which I touched upon earlier, indicative market rates for term charters of prompt positions are shown on the right-hand side of the slide. and these look even more attractive alongside our daily breakeven rates, which we've worked hard to lower to just over $9,500 per day despite an inflationary environment.

And with that, I will turn the call back to George on Slide 17.

Thank you, Tom. To summarize, maximizing optionality and resilience remains our key focus as we and our customers navigate a world fraud with macroeconomic, geopolitical and regulatory uncertainty and risk. The fragmentation and decentralization of the global supply chains have increased the need for flexible and reliable ships that can easily be deployed throughout liner operators Networks, a straight pattern shift and the midsized and smaller containerships that GSL provides fit that requirement deftly. In this supporting environment, we have built up extensive multiyear charter coverage, now standing at $3.4 billion contracted revenues spread over 3.5 years. Renewal our cash cows is progressing well with the addition of a total of 17 new build orders, including our recent exercise of two in-the-money options. This grows come in hand with our optimistic monetization of selected aging noncore ships earlier in the year.

In addition to the multiyear charters, we further derisk the newbuilds by securing a $1 billion syndicated loan facility with 8 top-tier international banks priced at shops 1.5% and to be drawn down in tranches as 15 of our 17 new builds come online and start generating cash between late 2028 and early 2030. And last, -- and we are very pleased to once again increase the return of capital to our shareholders by upsizing our supplemental quarterly dividend by 25%, bringing our overall annualized dividend to $2.75 per common share.

Now with that, we'll be happy to take your questions.

[Operator Instructions] And your first question comes from the line of Liam Burke with B. Riley Securities.

Yes. Thank you. George, Tom, Tassos, how are you doing today?

We're doing well, Liam, thanks very much.

I've got a macro question for you. We're talking about congestion a lot now, and there are many things feeding into that. But what's surfacing now seems to be an underinvestment in port infrastructure, primarily on the ports that the sub-10,000 TEU would visit, are you seeing that in the macro effects of the business now?

I'll kick this off Liam and George will no doubt weight in. Short answer, yes. And it's cropping up increasingly on earnings calls from the liner operators where they observe that growth in demand for containerized transport has far outstripped investment in shoreside infrastructure both in the ports themselves and in the infrastructure serving those ports by which I mean rail heads trucking infrastructure, et cetera, et cetera.

So you're absolutely right. That's an important structural consideration that is making the containerized supply chain less efficient. And as a result, is once again increasing demand for containerized shipping capacity because an awful lot of capacity is effectively stuck in port congestion due to the limitation in those ports. George, do you want to add to that?

Yes, I might just say that -- it's much easier to grow the fleet, but it's much harder to grow the ports, especially given the fact that container ports usually, if not always, are situated next to cities or in the inside cities, where the expansion of the lands, it's almost impossible or very hard. But then even if you expand the land, so you can unload the ships, you need to expand the roads, which is, again, so hard for the trucks or the rails to take the ships out of the port or back into the port for loading.

So these things take decades to be done. Therefore, it seems that the line of companies have a lot of ships to create slack today because they need that slack, given the fact that a lot of ships at all times have been stack into ports with conversion.

Great. Thanks, George. And just quickly on the new builds, you don't have charter agreements in place, but it does sound like the appetite by the liners for tonnage is still there. And presuming you're anticipating a favorable terms on those 2 new vessels.

Yes, that's right, Liam. We have charter commitments in place for 15 of the 17 new builds. And for those 15, they're going to generate, we expect roughly $1 billion of adjusted EBITDA over the course of an average of 7 years. For the remaining 2 ships, the in-the-money options that we exercised, prices for new buildings have continued to climb.

Availability of delivery slots in 2029 are, as I said on the call, vanishingly rare, and demand and appetite from liner companies is clearly still there, and you'll hear that as I'm sure you have, when listening into the earnings calls of the liner companies, they're all providing very constructive forward guidance. So all of this means that we're feeling confident, let's say, about fixing those vessels in due course, and we're in no particular hurry to do so.

Your next question comes from the line of Omar Nokta with Clarksons Security.

Things are obviously humming along quite nicely. Got the contracted revenue backlog just keeps getting extended, given you plenty of visibility and a good stream of visible free cash flow. This backlog opportunities kind of really just seemingly quarter-on-quarter, are you just able to provide some forward fixing, it looks like you did at recent dozen ships this time or at least over the past 3 months.

In the past, you haven't been afraid to buy older vessels just given the lucrative earnings potential that can be there, especially, say, on an ROE basis given the late in life age of those vessels, but you've also really kind of shifted and you get these new buildings, the 17, 15 of which are contracted. How do you think about opportunities to deploy capital now in the market for vessels on the water you mentioned liners, the appetite is there for them to secure contracts for existing ships.

Do you think there's opportunities to go and buy vessels on the water, whether they're modern or older? Or do you feel like your market footprint is fine and that you're happy with what you have and you've got the new buildings as your real kind of growth profile going forward?

Omar, a lot in there. I'll kick things off, and I have no doubt that Safes will add to it. I think the -- backing into it a little bit, we're not empire builders. So we're not shooting for a particular fleet size or anything of that nature. Hopefully, our track record demonstrates that we purely focus upon deals in a very disciplined manner, where we like the mix of low risk and high returns.

Now whether those deals are new buildings or older ships on the water, we're agnostic. It's simply a question of getting comfortable with the return profile. And if we like a deal, we'll move forward with it. And if we don't, we won't. But we're not pivoting specifically towards new buildings. We continue with the sort of broad church approach we've had from the outset and everything is driven by our assessment of risk and return. George, do you want to add to that?

Yes. If I just can say in a very simple expression, the type of ship we love is the ship that makes money. So whether that is a very old one, 20, 25 year old or a brand new one. It doesn't matter to us. For us, Growth for the sake of growth is something we would never do. We'll only do deals when they make sense and they make real sense. -- like I said many times, running a public company, running at a private company should make no difference.

It's all about whether you have one shareholder or 1,000 shareholders, it's the same. You have to make money for the shareholders, whether it's yourself or another 99 people. It's the same principle, nothing else than that. So under this understanding, -- of course, we will be looking at secondhand ships. If the price is right. Today, we have not seen any deals that make sense. We did get the opportunity with the new builds. I mean the newbuild market softened for in a bit. That's the time we chose to enter.

We chose to go for a new type of ship that wasn't there. So we found an opportunity that was unique and future type of ship that will replace all the Panamaxes anything between 3,500 to 7,000. So it's a ship that is multi-purpose ship, it goes to every type of sizes. So that's really the -- in a nutshell, our investment is a good deal, if I can say that.

Thanks, George. And Tom, also, yes. So I guess, maybe just on that last point, George, you mentioned the new buildings in looks like they're high-powered or at least high spec shift that will replace some of the existing older vessels, I guess, in the market. But I guess, as you think of your portfolio, I can't remember if it was last quarter or the quarter before, where you had agreed on a forward basis to sell those 4 ships. And sort of an interesting opportunity at the time, you were able to continue to generate cash flow from the ships, but then lock in a sales price at today's perhaps elevated levels, but not have to actually deliver them for another year or so out work.

How do you think about that in today's market? Are there opportunities to do that again with some of the older vessels that you potentially would be replaced by your new buildings, can you sell them in today's market and also perhaps have your cake and eat it too in terms of generating the cash from them, but then not having to deliver them until down the line.

Omar, this is Tom again. You've put it beautifully. If we can have our cake and eat it to, we will. But that's not an easy recipe. So we were delighted with the structure of the sale for those 4 vessels that you mentioned, where we presold them with charter still attached and continue to milk those charters until the end of them, at which point we're selling the vessels as you observed at very good prices, but it's super tricky. If -- we'll look everything basically. And if we can, we will structure such deals, but it's not straightforward.

Your next question comes from the line of Stephanie Moore with Jefferies.

I appreciate the time. maybe talking a bit on a more of a global question here. How are you thinking about the reds and the potential return to the Suez from here? Maybe just can you give us any color from your conversations with liner customers. Has their willingness to transit the region changed at all? Or what do you think -- or do you think a broad return is still some way off?

Stephanie, this is Tom. So I mean, making any sort of prognosis about what will happen in the Middle East more broadly is tricky. However, we are seeing at least some increase in momentum of lines looking to transit the Red Sea and Suez. I think Maersk, for example, have been quite vocal on that front. It has yet to be let's say, a wholesale return. It remains somewhat tentative in nature and will be -- will remain sensitive to security developments in the region.

But I think one thing that is worth observing is that despite the return of at least selected services by the line of companies to transit the Red Sea and Suez. We've seen charter rates holding up really quite well, which is significant because I think people have been very cautious about what the reopening of the Red Sea and Suez could do in terms of the appetite for liner operators for chartered tonnage. But at least for the time being, that appetite has held up. Charter rates have held up -- and so it has not been so far at least, the transformative event that was anticipated. But I think broadly speaking, it's going to be a bit of a watchlist space situation.

Understood. Really helpful. Last one for me. I think your 2028 coverage now is over 74%, but I do think you have roughly 20 ships that have the early redelivery in 2028. So obviously, there's a lot of charter options for you guys. But would love to get your thoughts here as you try to lock in rates now just given where rates have been for the last 6 to 12 months? And then also, how do you kind of balance duration over rate here. So I'd love to hear your thoughts there.

Sure. I'll kick this off and then George will probably weigh in. Our business model definitely is unchanged. So we will tend to focus as long as rates and economics are supportive on longer-term cover if we can get it. So rather than focusing upon potentially short-lived high upside spikes in the charter market, we will tend to stick to our risk-averse approach of locking in charters and thus cash flow visibility for as long as possible as long as it makes economic sense to do so.

In terms of fixing forward of 2028 positions, that's theoretically possible for the right ships, by which I mean ships towards the upper end of the size scale in our fleet, which are very high specification. So it is theoretically possible. It's not straightforward, but it is theoretically possible. Just as it is in the case of newbuilds with the right specification to fix forward of delivery dates that are somewhere in the future. So we'll stick to uniting essentially and retain the same sense of discipline that we have always. George, do you want to add to that?

Yes. Today, the market is quite hot and quite in demand ships. Ships that are open in '27 are considered prompt and they would go for 3 years depending on the size of the ships, smaller ships, 3 years, larger ships, maybe 4, maybe 5. It very much depends how early on '27 they're opening. '28 ships can also be fixed the further away we get from today, the larger the ship needs to be to be forward fixed as a general rule, I would say. But other than that, I think the market is right now quite good.

[Operator Instructions] And your next question comes from the line of -- that concludes our question-and-answer session. I will now turn the call back over to Mr. Thomas Lister for closing remarks.

Well, thank you, everyone, for joining the call, and we look forward to reconnecting with you on our fourth quarter earnings call. Thanks again. Bye-bye.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Thank you for standing by. My name is Jordan, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Global Ship Lease Q2 2026 Earnings Conference Call.

[Operator Instructions]

I would now like to turn the call over to Thomas Lister, Chief Executive Officer. Please go ahead.

Thank you very much. Hello, everyone, and welcome to the Global Ship Lease Second Quarter 2026 Earnings Conference Call. You can find the slides that accompany today's presentation on our website at www.globalshiplease.com. As usual, Slides 2 and 3 remind you that today's call may include forward-looking statements that are based on current expectations and assumptions and are, by their nature, inherently uncertain and outside of the company's control. Actual results may differ materially from these forward-looking statements due to many factors, including those described in the safe harbor section of the slide presentation.

We would also like to direct your attention to the Risk Factors section of our most recent annual report on our 2025 Form 20-F, which was filed in March 2026. You can find the form on our website or on the SEC's. All of our statements are qualified by these and other disclosures in our reports filed with the SEC. We do not undertake any duty to update forward-looking statements. The reconciliations of the non-GAAP financial measures to which we will refer during this call to the most directly comparable measures calculated and presented in accordance with GAAP usually refer to the earnings release that we issued this morning, which is also available on our website.

I'm joined as usual today by our Executive Chairman, George Youroukos; and our Chief Financial Officer, Tassos Psaropoulos. George will begin the call with high-level commentary on GSL and our industry, and then Tassos and I will take you through our recent activity, quarterly results and financials and the current market environment. After that, we'll be pleased to answer your questions.

So turning now on to Slide 4. I'll pass the call over to George.

Thank you, Tom, and good morning, afternoon or evening to all of you joining today. Once again, geopolitical uncertainty and volatility played an outsized role during the second quarter. Our liner customers are doing extraordinary work from day-to-day and even from hour to hour as circumstances change. Supply chains are reorganized and often, they are then reorganized again. In addition to the repeated closure and partial reopening of the Strait of Hormuz, the security situation in the Lower Red Sea and Gulf of Aden has once again taken a step back. On top of that, the reintroduction of broad-based tariffs on U.S. imports is likely to contribute to continued supply chain fragmentation and inefficiency as procurement managers, suppliers and other cargo interests adjust their operations and risk management strategies.

In short, any one of these factors in isolation would typically be highly significant for our industry. But having all of that same time is driving an extraordinary level of demand for additional vessels and capacity on top of that from underlying containerized freight demand, which is itself remaining quite firm. Flexible midsize and smaller container ships like those in the GSL fleet are the greatest beneficiaries as evidenced by liner company's continued appetite for ships that under more normal circumstances would be considered overage in these size categories.

Meanwhile, prudent and selective fleet renewal has always been at the front of our minds. Against the backdrop of this evolving market, we have placed newbuild orders for a total of 15 container ships at attractive prices and derisked from the outset with multiyear charters attached and over 75% of the contract cost expected to be captured from the adjusted EBITDA generated by those charters within, on average, the first 25% of the ship's useful lives only. These container ships, which we will speak more on briefly, are best-in-class ultra-high-reefer, latest generation eco vessels and will replace our aging cash cows, providing us with visible cash flows well into the years ahead.

In this supportive demand environment, at the same time as putting in place charter cover for the newbuilds, we have also locked in additional coverage at attractive rates for various of our existing ships coming up in the market. Our contracted revenues now stand at $3.2 billion over 3.3 years of cover, of which $1.450 billion was added during the first half of this year. Our fleet contract coverage is 100% for 2026 and is already at 90% for 2027.

Our strong balance sheet and delevering efforts have been reflected in our affirmed credit ratings and an improved outlook for Moody's as well as a healthy recently upsized dividend of $2.5 per share annualized. We remain focused on maximizing optionality in these turbulent and unpredictable times. Our recent newbuild orders represent a continuation of our long-running focus on flexibility, discipline, downside protection and upside potential. These principles guide our actions and have served us well, and we believe that our emphasis on maintaining optionality is an excellent fit for the containership market of today and of tomorrow.

With that, I will turn the call over to Tom.

Thank you, George. Hello again, everyone. Please now turn to Slide 5, where you will see in great detail our strategic fleet renewal, which consists of both investment in the next generation of cash cows for our fleet and the opportunistic monetization of older noncore assets. To echo George's words, on the newbuild front, we see our acquisition of 15 midsized ultra-high-reefer wide beam latest generation container ships with long-term charters attached as the exact combination of prudent downside protection and attractive upside potential that we look for in any transaction. As highly specified ships in a structurally underbuilt but crucially important segment of the containership fleet, we see these vessels as best-in-class, flexible, future-proofed and strong earners going forward.

It's worth underlining the fact that more than $1 billion of the $1.3 billion of contract price is covered by contracted EBITDA expected to be generated by the firm charters in place ex yard over a TEU weighted average term of 7.1 years, meaning that these newbuilds are materially derisked right out of the gate. And essentially, we're covering over 3/4 of their aggregate contract price within roughly the first quarter of their collective economic life and all that with charter cover from top-tier charterers.

It's also worth highlighting that several of these newbuilds include options for the operator to extend the charters at rates more than 25% above those for the initial firm periods, suggesting that the end users share our conviction that these ships will continue to be in high demand, valuable and with significant upside earnings potential well beyond their initial charters. These newbuild transactions were possible due to our ability to move fast, thanks to our discipline in building a fortress balance sheet, and we expect the forward visibility on contracted revenues to support attractive funding alternatives for these assets, which will likely involve a combination of cash from our balance sheet and debt to enhance returns on equity.

For modeling purposes, it is important to keep in mind that the contract payments for these newbuilds are milestone-based and backloaded with more than half of the contract price not payable until the respective ship is delivered. We also consider the opportunistic monetization of older assets to be an integral part of fleet renewal. And at the bottom of the slide, you can see that we have sold forward 4 older noncore ships during the first half of the year for a total of $65.5 million, with an aggregate gain on book expected to be in the region of $33 million. Added to which we will continue to benefit from these ships earnings until they deliver to buyers in scheduled slots ranging between the end of this year and the end of next year.

Moving to Slide 6, we show the structural rationale behind the new building orders and why this is the right time for us to pounce on these opportunities. As we have highlighted for some time, the midsized and smaller containership classes have been underbuilt for many years with the lion's share of investment capital piling into ultra-large ships. That has left the crucially important sub-10,000 TEU portion of the global fleet with an advanced age profile. And to illustrate this point, the median age of the oldest quartile by TEU capacity within each fleet segment below 10,000 TEU ranges from 21 to 28 years, and that's today, which translates to around 24 to 31 years by the time our newbuilds actually deliver into the space. So you have an aging global fleet combined with a more limited order book at a time when the value proposition of such flexible assets is proving to be increasingly important and in growing demand from liner operators.

Furthermore, with the industry and its regulators now looking less likely to coalesce around a long-term decarbonization trajectory and rule set anytime soon, we see the option value of a wait-and-see approach on fuels and propulsion as having materially diminished. The convergence of these factors, together with the commercial terms available to us, our ability to transact on the newbuilds while derisking them with charter coverage ex yard and the aging out of our existing cash cows made these orders a clear and compelling opportunity for us and for our shareholders.

We expand further on our rationale for investing in newbuilds on Slide 7. We have a history of being prudent in managing risk through the shipping cycle while capitalizing on upside cyclicality and volatility, particularly in time charter earnings to build value for shareholders. In the chart, you can see how secondhand asset prices, which are the dark blue line and particularly the time charter rate index, the green line, have both trended and spiked upwards, while the newbuild price index, the pale blue line, has remained comparatively flat in recent years. In fact, with yard order books essentially full for the next few years, the main factor currently expected to drive new building prices is inflation.

So combining all these considerations, this is a good entry point for newbuilds as long as they are in the right size categories, appropriately specified and derisked with charters. And with the combination of our fortress balance sheet and strong industry relationships, we have the ability to move quickly and decisively in developing these compelling opportunities. The result is 15 newbuilds contracted on attractive terms with multiyear charters attached, which lower our average fleet age and crucially increase our cash generation runway as our cash cows begin to age out. In other words, exactly the recipe for low risk and high upside potential that we like.

On Slide 8, you will see our diversified charter portfolio with the chart showing the breakdown of our charter revenues by charterer from our operating fleet for the first half of this year. As of June 30, and to be clear, these figures also include the firm charters from our 15 newbuilds, we have over $3.2 billion in forward contracted revenues over a 3.3 year of average TE weighted contract cover. In 2026, our revenue days are 100% covered with 90% coverage in 2027.

Slide 9, we recap our dynamic capital allocation policy with which we have navigated both the cyclical nature of our industry and the flock of black swan events that have occurred in recent years. We have delevered to build resilience and create a fortress balance sheet, which in turn has allowed us to mitigate risk, build equity value and position ourselves to seize opportunities as they arise. This is reflected in our improved credit outlook, our order book of 15 new buildings and the continued return of capital to our shareholders via our annualized dividend of $2.50 per common share.

With that, I'll pass the call to Tassos to discuss our financials.

Thank you, Tom. Slide 10 shows our financial highlights for the first half of 2026. I would like to emphasize a few key takeaways. Our financial performance and cash flow have remained very strong. Our cash position at quarter end was $649 million, of which $140 million is restricted. The remainder ensures that we can fully cover our covenants, our working capital needs and manage the potential financial implication of geopolitical disruptions and other macro events in an increasingly unpredictable world. It also provides dry powder both for CapEx to optimize the commercial value and marketability of our existing fleet and for disciplined investment in fleet renewal when the right opportunities present themselves, including the payment installments, of course, for our 15 new buildings.

During the second quarter, we were also pleased to put in place a new $55.5 million debt facility with Bank of America, 5-year paper secured against ships we bought with cash at the end of 2025, priced at SOFR plus 140 basis points, a good addition to our capital stack. And of course, we continue to pay our compelling dividend.

On Slide 11, we highlight our ongoing efforts to delever and derisk to build resilience and maximize optionality. The graph on the left shows our outstanding debt, which was $950 million at the end of 2022, and we have managed to reduce it to just under $600 million by June 30, 2026, while at the same time, growing our fleet considerably and increasing the number of unencumbered ships. The graph on the right shows the same story of the financial leverage front, but with even great progress, improving from 8.4x in 2018 to 0.4x today.

Slide 12 further emphasize our commitment to a strong financial platform. The left-hand graph shows how we have successfully lowered our borrowing cost from 7.56% in 2018 to 4.43% today, even as base rates have moved higher. And despite an inflationary environment, we have managed to reduce our average daily breakeven cost from over $12,000 per ship at the end of 2018 to just over $10,000 per ship today.

With that, I will turn the call back over to Tom to discuss the market and our fleet.

Thank you, Tassos. On Slide 13, we reiterate our focus on midsized and smaller containerships with our fleet ranging from 2,200 TEU at the bottom end to a little over 11,000 TEU at the top. Vessels in this range are workhorses of the global fleet, predominantly serving the non-mainlane trades that collectively comprise around 75% of total global containerized trade volumes. Very large ships are more or less restricted to the big East-West mainlane trades as they require specialized port infrastructure, deepwater berths and very long terminals to be operationally viable and equally importantly, huge volumes of cargo to be economically viable. Midsize and smaller container ships, on the other hand, like those in GSL's fleet, trade on a truly global basis. And as geopolitical uncertainty has decentralized and fragmented the containerized supply chain beyond China and throughout Southeast Asia, our liner customers have placed a growing priority and value on the commercial and operational flexibility that such ships provide.

On Slide 14, we provide a snapshot of the choke points currently impacting containerized trade in the Middle East. While we cannot predict how these situations will develop, we can provide some context on how things are playing out for the industry in real time. Starting with the Red Sea and Suez through which around 20% of global containerized trade volume was transited before the security situation was disrupted in 2023. Since then, vessels have been forced to reroute around the Cape of Good Hope. This longer, costlier journey has absorbed around 10% of effective containership capacity. And after a brief period of cautious optimism with some minor operators trialing a return to this transit with selected vessels, the security status has since deteriorated again. So as with so many things at the moment, it's a watch and brief.

As for the Strait of Hormuz, the on again, off again situation there is both dangerous and unpredictable. Prior to this conflict, about 3% to 4% of containerized trade volumes passed through the strait in global terms. Now major hubs and ports within the Persian Gulf are severely constrained. Liner companies are rejigging service networks and although considerable effort is being put into trying to explore alternative means to reliably flow cargo into and out of the region, it is not proving straightforward. Both of these situations are highly dynamic and their long-term implications for container shipping are unclear. But in the near term, they add layers of complexity and inefficiency for the shipping industry to navigate with seafarer safety of paramount concern.

On Slide 15, we highlight supply side and scrapping trends where little has changed. Idle capacity and scrapping activity both continue to hover near 0. The inefficiencies in the supply chain and subsequent longer voyages have both nearly eliminated slack in the system and kept vessels on the water longer than would otherwise have been expected in a "normal environment." Why? Because earnings have remained so attractive.

Slide 16 shows the order book. While the order book has certainly grown meaningfully, it remains smaller in the segments upon which GSL is focused. For the big ship segments over 10,000 TEU, the order book-to-fleet ratio stands at 55%, which drags the average ratio for the overall fleet order book to 39%. Meantime, the ratio for the midsized and smaller containership segments relevant to GSL is significantly lower at around 25% with deliveries spread over the next 4 years or so.

As I mentioned earlier in the context of our own newbuild orders, the midsize and smaller size segments of the global fleet are also aging such that the corresponding order book is quite closely matched by ships that are or will shortly become 25 years or older. Essentially, these ships will be scrapping candidates whenever the market eventually pulls back. If we assume that all vessels over 25 years old were to be scrapped through 2030, the net effect will be growth of under 1% for the global fleet sub-10,000 TEU.

In any case, while charter rates remain strong, we're very happy to lock in charter coverage. If the market were to normalize on the other hand to the downside, then we would expect global scrapping activity to pick up meaningfully, offsetting fleet growth and potentially also creating countercyclical purchase opportunities for owners like us with strong finances and a long-term through-cycle strategy. So it's a win-win as we see it.

On Slide 17, we provide a snapshot of the charter market. The right side of the slide shows market rates for term charters, which remain strong and should be considered alongside our average breakeven rates, which stand at just over $10,000 per vessel per day.

With that, I will turn the call back to George on Slide 18.

Thank you, Tom. To summarize, we continue to focus on maximizing optionality and resilience in a world beset by geopolitical complexity, macroeconomic volatility and regulatory uncertainty. Supply chains have decentralized and fragmented, making the operational flexibility offered by GSLs, midsized and smaller ships a priority for our liner customers. We have continued adding charter coverage, which now stands at $3.2 billion, up by over $1 billion on where it stood at the end of the first quarter, thanks largely to the addition of our 15 newbuilds with charters attached.

Our delevering efforts have resulted in a fortress balance sheet and our high operational efficiency and capital allocation discipline have resulted in highly competitive breakeven rates. Our prudent selective fleet renewal has seen us monetize older noncore ships and acquire both secondhand vessels and more recently newbuilds. But our recipe remains the same, be disciplined, be patient and be nimble and use the cycle to minimize downside risk and maximize upside potential. And of course, returning capital to shareholders remains a top priority. Our recently upsized dividend now stands at $2.5 per share annualized, which is a dividend yield of about 5.7% on the basis of yesterday's close.

With that, we will be very pleased to take your questions.

[Operator Instructions] Your first question comes from the line of Omar Nokta from Clarksons Securities.

A couple of questions. Maybe just first on the investment in the new buildings back in June that you first announced. You've got 15 of them that come with a large backlog that, as you say, derisks the investments in a very big way. And as you highlight, it's interesting, 75% of the cost is earned back in the first 25% of their operable life. Obviously, it's a sizable investment and don't expect you to do more of this, but you do have the flexibility given just how strong your balance sheet is. I wanted to get a sense from you, how repeatable is this type of business? It's clearly unique, and we haven't seen this in the past, but just want to get a sense from you, is this sort of a one-off that you're really able to capture? Or is this sort of like kind of like the norm in what owners can expect to capture in today's market?

Omar, this is Tom. I'll kick it off and no doubt George and Tassos will add. Yes, we're delighted with this transaction, as you say, 15 newbuilds derisked out of the gate to the tune of 75% of the contract price with the adjusted EBITDA implicit in the contracted charters. Not easy to put together such a deal. So I wouldn't say that it's the "new normal" to use your expression, either for us or for the market. Indeed, I would say, while obviously, we're willing to look at new buildings, as we've just demonstrated, we're not dogmatic on that front either. We're happy to look at new buildings, existing tonnage, sale and leasebacks, whatever really, as long as the numbers make sense and the risk profile makes sense. So this doesn't mark a departure from our existing strategy. I would say it marks simply an evolution of that same strategy focusing on minimizing downside risk and maximizing upside potential.

But I'll pass the call to George in case he wants to add more to that.

Yes. If I may say that by no means such a transaction is available in the market, and it's something that it's easy to make. We capitalize on our relationships with our clients and our know-how on designing ships that are not available in the market and that are very particular. So -- and the timing also. We chose to go into the newbuild market at a time where we felt it is an opportune time achieving relatively good prices. It is the same recipe. Timing is everything in what we look to do in container shipping, and we try to time our investments always very carefully. And our first priority is derisking the transactions that we do. That's what we have always been doing on the secondhand ships, same recipe here.

Yes. No, certainly from your history, you've been very nimble and methodical with your investments, and this is a very good example of that. And maybe just a follow-up, a separate topic. You've forward sold 4 ships so far. They're all generally older in age. I know it's a bit tricky. It's a nice problem to have in terms of deciding whether to sell these older ships in your fleet or hold them and put them on more charters. But how are you thinking about, say, the dozen or so feeder ships you have left that are built pre-2010? Are those likely to be sold as well on a forward basis maybe? Or do you think there's an opportunity to keep fixing them out?

There isn't a sort of a general answer that I can give you on that front, Omar. We effectively run a sort of a hold or divest analysis as we're approaching the end of the charter on any ship. And if it makes sense to sell in our view at that particular time, and we think we're going to make more money for shareholders by selling as opposed to by holding the asset, then we will sell depending upon the opportunities that are available to us at that time.

On the other hand, I would say, more generally, at least, we think that you make more money out of holding and operating a containership through the cycle than you do by selling it. It's only because these vessels, these 4 ships that you referred to at the outset of your question were approaching inarguably close to the end of their economic lives that we felt that the option value attached to those vessels, at least for us, was somewhat reduced. And as a result, it made sense to divest them on what we consider to be attractive terms. But it's not a general approach. Every transaction, every ship, every investment and divestment, we analyze on its own rights.

Congratulations on those new buildings.

[Operator Instructions] Your next question comes from the line of Stephanie Moore from Jefferies.

I wanted to follow up on the new buildings as well. To your point, obviously, congrats on unlocking in those -- locking in those time charter rates on those assets. But I wanted to maybe talk through how sensitive is the investment case for these newbuilds around recharter rates after those first contract periods expire? And then I guess, what are your underlying market assumptions embedded in this analysis that supports the newbuild investment. So great to see the first set locked in, but wanted to get your thoughts on kind of even after that, what your underlying outlook is.

Stephanie, thanks for the question. This is Tom. So going back to a point George was making earlier, we focus on risk first and that drives always our investment analysis. So we need to get ourselves comfortable that the downside risk is covered and that the upside potential is attractive before we move forward on anything of this nature. So I think it's significant to say that we're covering off 75% of the contract price of these assets within essentially the first 25% of their respective lives, which means in a cyclical industry such as ours, there is plenty of time to get it right on the up cycle after they come off their initial charters. And I think while it's impossible to gaze into the future, if you look at various sort of historic rates within the sector, we're certainly assuming follow-on rates below those long-term historic averages in order to drive this as an attractive investment. And the rest is [indiscernible].

And I think it's also worth pointing out that in the case, I think it's 5 of these newbuilds, the charterers negotiated charter extension options with us on those units. And for those charter extension options, the rates are over 25% higher than for the initial charters. So I think that suggests that the end users are aligned in thinking that these are likely to be in-demand, valuable, high-earning assets, not just for this initial period, but thereafter, too.

Yes, absolutely. Maybe just as a follow-up, maybe any help you can provide in terms of just, I guess, cadence of cash flows for the newbuilds as well? That's it for me.

You mean in terms of installment payments?

Correct. Yes.

Yes. Okay. So we provide, I think, in the F pages, which you probably haven't had a chance to look at, some fairly granular detail on the stage payments as they materialize. But more broadly speaking, the payments tend to be backloaded. So between 50% and 60% of the contract amount is actually only payable upon delivery of the assets themselves. So you're looking at somewhere between 40% to 50%, which crystallizes as payment obligations in the lead up to the delivery of the assets, and those payments tend to be linked to certain milestones such as steel cutting, keel laying, that sort of thing. So the lion's share of the installments are backloaded.

Stephanie, this is Tassos. Tomorrow probably it will be the filing of the 6-K, and you will see there a breakdown of future commitments by year, if I remember correct. So we will have these details.

That concludes our question-and-answer session. I'd like to turn the call back over to Thomas Lister for closing remarks.

Well, thank you all for joining us, particularly in the middle of the holiday season, and we look forward to reconnecting with you for our third quarter results later in the year. Many thanks.

This concludes today's meeting. You may now disconnect.

Good morning, and welcome to the Global Ship Lease First Quarter 2026 Earnings Conference Call. My name is Franz, and I'll be the operator assisting the call today. [Operator Instructions]

I would now like to turn the call over to Tom Lister, Chief Executive Officer of Global Ship Lease. Please go ahead.

Thank you very much. Hello, everyone, and welcome to the Global Ship Lease First Quarter 2026 Earnings Conference Call. You can find the slides as usual that accompany today's call on our website at www.globalshiplease.com.

As usual, Slides 2 and 3 remind you that today's call may include forward-looking statements that are based on current expectations and assumptions and are, by their nature, inherently uncertain and outside of the company's control. Actual results may differ materially from these forward-looking statements due to many factors, including those described in the safe harbor section of the slide presentation.

We would also like to direct your attention to the Risk Factors section of our most recent annual report on our 2025 Form 20-F, which was filed in March 2026. You can find the form on our website or on the SEC's. All of our statements are qualified by these and other disclosures in our reports filed with the SEC. We do not undertake any duty to update forward-looking statements. The reconciliations of the non-GAAP financial measures to which we will refer during this call to the most directly comparable measures calculated and presented in accordance with GAAP usually refer to the earnings release that we issued this morning, which is also available on our website.

I'm joined as usual today by our Executive Chairman, George Youroukos; and our Chief Financial Officer, Tassos Psaropoulos. George will begin the call with high-level commentary on GSL and our industry. And then Tassos and I will take you through our recent activity, quarterly results and financials and the current market environment. After that, we will be very pleased to answer your questions.

So turning now to Slide 4. I'll pass the call over to George.

Thank you, Tom, and good morning, afternoon or evening to all of you joining today. The opening months of 2026 have been a continuation and, in fact, an escalation of the themes of geopolitical uncertainty and volatility that we saw in 2025. From the continued disruption of tariffs and the Red Sea to the unprecedented disruption in the Strait of Hormuz, which has resulted in the humanitarian crisis of around 20,000 seafarers being trapped in the Persian Gulf.

The world has become more dangerous, extraordinarily unpredictable and complex. And this has ramifications throughout the supply chain. Trade routes have shifted, fragmented and decentralized, ultimately becoming more inefficient, requiring even more containership capacity and more flexible ships to transport a given volume of containers.

In these conditions, we continue to see strong demand for our midsized and smaller container ships, which provide valuable flexibility and reliability for our liner company customers. In this environment, we have worked hard to keep adding charters so that our contracted revenues now stand at $2.1 billion over 2.6 years. Our charter coverage is 100% for 2026 and 86% for 2027. We continue to deleverage and optimize our fortress balance sheet all while paying an annualized dividend of $2.5 per share, which is a dividend yield of around 6% on the basis of our stock price at the close yesterday.

As always, we're keeping an eye on opportunities for disciplined, prudent fleet renewal that will allow us to continue generating strong cash flow through the medium and long term as our existing cash cows age out. Fundamentally, we maintain a focus on resilience and optionality, which has continued to serve us and our shareholders well and provides a start of the foundation in a world of uncertainty from which to act decisively on completing opportunities as they arise -- compelling, excuse me, opportunities as they arise. With that, I will turn the call over to Tom.

Thanks, George. Hello again, everyone. Please turn now to Slide 5, where you will see our diversified charter portfolio. As of March 31, we have over $2 billion in forward contracted revenues with 2.6 years of contract cover from a well-diversified and top-notch set of charterers. We have 100% of our revenue days covered for 2026 and 86% covered for 2027.

On Slide 6, we go over our dynamic capital allocation policy. A steady stream of significant geopolitical events over the past several years has added further volatility into the already cyclical nature of our industry, creating an environment where resilience, flexibility and dynamism are critically important. Maximizing long-term shareholder value is at the core of what we do and our combination of paying an attractive dividend, building equity value through deleveraging and highly selective fleet renewal, which also includes the opportunistic monetization of older noncore assets are all in the service of that goal.

Slide 7 shows the cyclicality of our industry as well as our prudent and long-term thinking when it comes to managing it. You can see our history of ship purchases and how they have been clustered during market downturns or have otherwise been structured to minimize downside risk while maximizing upside potential. While not shown on this chart, it's worth noting that the flip side of choosing the right circumstances under which to buy ships is identifying the right opportunities to sell ships. All of this sounds simple enough to do in theory, but it is less straightforward in practice. And hopefully, you will agree from our track record that we have managed to strike the right balance.

With that, I'll pass the call to Tassos to discuss our financials. Tassos?

Thank you, Tom. Slide 8 shows our financial highlights in the first quarter of 2026. I would like to emphasize a few key takeaways. Our financial performance and cash flow have remained very strong. Our cash position is $655 million, which on paper brings us almost to net zero debt, although $156 million of this cash is restricted. The remainder ensures that we can fully cover our covenants, working capital needs and manage the potential financial implications of geopolitical disruptions and other macro events in an increasingly unpredictable world. It also provides dry powder both for CapEx to optimize the commercial value of our existing fleet and for disciplined investment in fleet renewal when the right opportunities present themselves.

Indeed, as Tom has referenced, we were pleased to agree the forward sales of 3 of our older ships, which will all be 25 years old or older by the time they are delivered to buyers for an aggregate price of $52 million, which we expect will unlock a book gain of around $25 million. Added to which, we will hand on to the cash flows to be generated by their existing charters until they are delivered between fourth quarter of 2026 and fourth quarter of 2027. And we achieved all this while also consistently paying a healthy and recently upsized dividend.

Slide 9 shows our ongoing efforts to build resilience and equity value while delevering our balance sheet. Our outstanding debt is shown on the left graph, which stood at $950 million at the end of 2022, now sits at under $700 million and is on track to be well below $600 million by year-end. The right graph highlights a similar result for financial leverage, but to an even greater extent, which we have reduced from 8.4x in 2018 to 0.3x today.

Slide 10 lays the progress out further. As seen in the left-hand graph, we have been able to maintain a highly competitive cost of debt even as base rates have meaningfully increased. Our breakeven rates have seen a similar trajectory as our progress in reducing interest expense has enabled us to absorb inflationary increases in vessel OpEx over time, primarily related to rising crewing costs.

With that, I will turn the call back over to Tom to discuss the market and our fleet.

Thanks, Tassos. On Slide 11, we reemphasize our focus on container ships between 2,000 TEU and approximately 10,000 TEU. These ship sizes provide the backbone for containerized trade with around 3/4 of global containerized trade volumes flowing in the "non-mainlane" trades, which tend to require ships offering more flexibility and adaptability than the very big container ships, by which I mean the jumbos and A380s of the container shipping industry that attract more media attention. These very big ships tend to be limited to the big East-West mainlane arterial trades requiring specialized port infrastructure, deepwater and huge cargo volumes.

Meanwhile, midsized and smaller container ships like those in our fleet can go almost anywhere and are not reliant on any one region or trade. And as geopolitical uncertainty has increasingly become a fact of life in recent times, liner companies have prioritized operational flexibility and reliability. In addition, trade routes have fragmented and decentralized, leading to a larger percentage of trade occurring intra region, further increasing the demand for these midsized and smaller container ships that GSL provides.

On Slide 12, we go over the developing situations in the Middle East. While we're not geopolitical experts by any means and cannot predict how these situations will unfold, we can provide some context about what we are seeing now and what we have seen in the past. Let's take the Red Sea first. Prior to the disruption, about 20% of containerized trade volumes moved through the Red Sea and Suez Canal. Since the disruption, ships have been forced to reroute around the Cape of Good Hope, a far longer voyage and one that has absorbed about 10% of effective shipping capacity in the process. After a brief period of optimism that saw a limited return of ships to the area, the security situation in the region sharply deteriorated once again. While, of course, we can't know for sure, it certainly appears, for the time being, that liner companies are unlikely to return to transiting at scale in the near term.

Now on to the more recent conflict in the Strait of Hormuz where shipping traffic has been and continues to be seriously constrained since the beginning of the Iran conflict. Most of the press coverage has focused on the significance of closing Hormuz to the energy sector and the growing risk of a global energy and fertilizer crisis.

However, there is also an impact on container shipping as prior to the conflict around 3% to 4% of global containerized trade volumes passed through the Strait. Now major ports and shipping hubs in the area are seeing only a fraction of normal volumes with limited transshipments or overland freight options available to replace the lost trade volumes and cutting across all of this is the awful fact that around 20,000 seafarers are currently estimated to be trapped in the Persian Gulf.

The longer-term implications of these disruptions remain unclear. For the time being, both situations remain highly dynamic and offer yet another set of complex challenges for the shipping world to navigate while keeping seafarer safety at the forefront of any decision-making.

Slide 13 shows supply side and scrapping trends. The situation there remains largely the same as it has been for some time. Idle capacity and scrapping activity both remain negligible. And with capacity constrained and trade routes in continual flux, the global fleet is consistently finding employment and often doing so at very strong rates that are keeping older ships on the water, making money instead of being scrapped.

We highlight the order book on Slide 14. In recent years, the order book has grown meaningfully, although the segments that GSL operates in have seen far less growth. The overall order book-to-fleet ratio stands at 37%, but this is dragged upwards by the 60% ratio for vessels over 10,000 TEU. For ships below 10,000 TEU, in other words, the segments in which GSL primarily competes, the order book-to-fleet ratio stands at a somewhat more digestible 20%. Also, the sub-10,000 TEU size segments are aging. If we were to assume that all ships 25 years and older were scrapped through 2030 and netted out that capacity against new capacity delivering from the order book, then the sub-10,000 TEU fleet would actually shrink by 3.4%.

In the current market, which has minimal slack, GSL is happy to lock in charter coverage at highly supportive rates. And if the market were to experience a downward normalization, we would expect scrapping activity to pick up meaningfully, offsetting the arrival of new vessels in part or in whole or even more.

Slide 15 shows the charter market. When looking at the market rates on the right side, I would like to reemphasize that our average daily breakeven rates are just above $9,800 per ship and the operating leverage in our business means that essentially everything over that point falls straight to the bottom line. In this environment, we have added charter coverage so that we are now -- we now have more than $2 billion of contracted revenues spread over 2.6 years, offering us the comfort of forward visibility in an otherwise highly uncertain world.

And with that, I will turn it back to George on Slide 16.

Thank you, Tom. To summarize, we are focused on maintaining optionality, resilience and operational integrity in a complex and uncertain world. As supply chains fragment and shift from 1 day to the next, flexibility is key, and that is precisely what the GSL fleet provides to our liner company customers. We have extensive multiyear charter cover over $2 billion of contracted revenues spread over the next 2.6 years, in fact. We have built a fortress balance sheet and have highly competitive breakeven rates such that we are in a strong position for any circumstances. And we will continue to follow our mantra of staying patient, disciplined and nimble regarding value-accretive fleet renewals while also prioritizing the return of capital to shareholders via our $2.5 per share annualized dividend.

Now with that, we will be very pleased to take your questions.

[Operator Instructions] As of now, your first question comes from the line of Liam Burke from B. Riley Securities.

If I look at your open charters for '27, have there been -- can you gauge charters' interest in forward fixing those vessels? And any kind of appetite for where the rates are going?

Yes. The market right now, Liam, is as healthy as it has been. There is demand. There's not enough ships. So whatever we see in the market right now is a result of unavailability of tonnage, not a lack of demand. So the market is right now healthy for ships opening in 2026, and obviously for ships that are large enough in 2027. When I say large enough, like I said, always the ships that are in demand forward more than anything else are ships that are in excess of 4,000 TEU or 3,500 to 4,000 maybe.

Great. You got great prices on the 3 2,000 TEU vessels you sold, forward sold, and you've had some great prices on the purchases of the 3 8,500s in the fourth quarter. But looking at the pricing that you got on the older vessels, are you seeing any opportunity to add assets here?

Well, Liam, as you know, having listened to our earnings call now for a number of years, I guess. We always keep our eyes open. But we stick to the mantra that George described at the tail end of his remarks. In other words, we're patient, we're disciplined and we're nimble. So we always keep our eyes open, we're always running numbers, we're always looking at opportunities, but we only move on the right opportunities.

So we're continuing to see interesting things, but none that have met our fairly stringent investment criteria and meet the right mix of risk and returns. So as a result, we have not acquired anything. Instead, we've monetized these older assets. And I know Tassos mentioned that on the call, we get not only the gain on book that we're estimating at roughly $25 million when they're eventually delivered to buyers, but we also get to hang on to the contracted cash flows between now and the time of delivery and the vessels are being delivered between depending on the ship between the fourth quarter of this year and the fourth quarter of 2027. So we're pleased with the deal.

Great. That's fair. And I just have a real quick one for Tassos. On the SG&A for the quarter, I know you have seasonal expenses that don't repeat the balance of the year. But even on a year-over-year basis, they were higher. Is there anything in there unusual?

Nothing unusual. It has to do with the accounting method of the incentive plan that we have mentioned in the 20-F. It has to do with how this is being calculated and of course, comparing to the share price versus the previous time that it was in 2021.

And your next question comes from Stephanie Moore from Jefferies.

I guess given your commentary, the charter market remains firm for now, but forward visibility is certainly limited and sentiment might be somewhat cautious. But how are your customers approaching duration today? Are they still kind of looking to lock in multiyear charters? Are they increasingly favoring shorter tenures, just given the geopolitical uncertainty? I would love to get your thoughts on that.

Sure, Stephanie. This is Tom. Thanks for posing the question. I'll kick it off and no doubt, George and possibly Tassos will add to it. Charter negotiations, it's a 2-way discussion. So you're absolutely right. I would say that in the context of heightened uncertainty, the charterers would probably prefer to go short rather than to go long. But given that there's such limited liquidity and availability in the charter market, if they want the tonnage, they have to move much closer to the terms that are being offered by owners like us, which means that there's always a compromise found between us, between both rate and duration. And going back to George's earlier comments, if -- for the right ships, duration of several years is still possible and at very firm rates.

George, do you want to add anything to that?

No. I'll just echo what you said. It's really a compromise between a negotiation between the charterers and the owners. The owners want the certainty of long employment. The charterers want a good deal. So longer employment gets a better charter rate, obviously, than short employment. So you might have an immediate ship opening, let's say, in the next 6 months might get double what she would get or she might get double for a 6-month period than what she would get for a 3-year period. So it's just a matter of negotiation.

Understood. And then I guess, you continue to talk about being selective and disciplined regarding fleet renewal. Can you maybe just highlight what your ideal replacement profile looks like, the ship size, age, ECO, specification and the likes? And then maybe timing or preferences that relates to vessel renewal in terms of your broader kind of capital allocation priorities?

Sure. I'll kick this off. And again, no doubt, George will weigh in. So let's back into this. We're very comfortable with the size segments upon which we're focused, which we think provide the right combination of operational flexibility and an attractive risk return mix, by which I mean we're going to stay focused upon the roughly 2,000 to roughly 10,000 TEU size segments when it comes to renewal. If you were to offer us the perfect choice, it would probably skew towards the mid and upper end of that, so call it somewhere between 6,000 and 10,000 TEU or so.

In terms of age of asset, we're not dogmatic. We look at every project or every prospect on its own merits. So as you've seen, we're willing to look at ships with charters attached. We're willing to look at ships on a speculative basis as long as the pricing is very much towards the bottom of the cycle and downside risk is minimal, and we're also willing to contemplate new builds. So there's no dogma on that. We'll look at every deal on its merits, but we will continue to focus upon the same size range as is our current focus.

Your next question comes from Omar Nokta from Clarksons Securities.

George, Tom and Tassos, I do have a couple of questions. And maybe just first kind of back on to the -- those 3 ship sales. Tom, you highlighted $52 million combined price looks fairly decent, but then also you get to generate what looks like perhaps maybe $20 million or so of EBITDA until you sell them. So I think just looking at that, it suggests that ship values are quite a bit firmer than certainly than what the share price implies. Just wanted to get a sense from kind of your angle. Is this something broad-based across all container ships? Or is this perhaps an arb that you're able to capture just given that these vessels are maybe later in life? Yes, I just wanted to get a sense in terms of where you see values from here. Is it very firm on the back end versus what we kind of think?

Yes. I mean that's a sort of multimillion or multibillion dollar question, Omar. I don't have a sort of a clear and crisp answer for you. But what I can tell you is, obviously, from an owning perspective, the option value on an asset reduces as that asset ages.

So typically, our view is that it's possible to make much more money from holding and continuing to operate a vessel in the charter market, and you'll see from the chart in the pack, which contrasts the way in which charter rates, asset values and newbuilding values fluctuate through the cycle, and there's always much more upside volatility in charter rates than there is even in secondhand values. So it generally makes sense to hold on to the ships, keep chartering them and keep locking in additional revenues. However, when you get to ships, which are -- well, these are going to be between 25 and 27 years old by the time they're sold, that option value comes down somewhat.

So we like the economics that you've just laid out of retaining the contracted EBITDA until they're delivered and then divesting them at that price. Whether you can draw anything broader from that on where asset values are today or are likely to remain, very, very difficult to say. I think we're in a world where making bets on what will happen in the future or even tomorrow, it would take a brave man, probably a braver man than me.

But George, do you want to add to that?

No, I mean the golden rule for shipping is the entry point. So if you're buying an asset at the right price, then it's only upside potential that you have to worry about rather than downside. So the way we look at transactions is protecting the downside first and foremost. And then the upside will come if we have bought the asset at the right price. This is, in general, our theory, which I think is the golden rule of shipping.

Yes, the GSL way. Well, it certainly seems that the exit point here is quite a bit appealing. And then just a follow-up, second question. You're now officially in a net cash position, and that looks to widen now as we move ahead here over the next several quarters with no real major commitments. Does buying back stock here make any sense? Do you prefer to kind of go in that direction? Or do you think it's best to maybe stay conservative, build a bit of cash and continue to focus on maybe repaying debt?

We think the latter of those 2 positions, Omar, makes most sense. I mean it's not only a question of delevering, but it's also building dry powder for opportunistic acquisitions when the right opportunities arise. We do keep eye on share buybacks from an opportunistic perspective. And I think the average price at which we've bought back shares has been roughly $18.50, so $18.50 or thereabouts through the cycle where we felt that there was a structural disconnect between where the business was being valued and the intrinsic value in the business. So we pounced on it. But at the moment, we think delevering and building dry powder is the right strategy for where the market is in terms of both risk and opportunity at the moment.

[Operator Instructions] And your next question comes from Climent Molins from Value Investor's Edge.

I wanted to follow up on Liam's question regarding fleet renewal. A couple of the vessels are on the smaller sizes. And you have a few more vessels also on the older end on that side of the fleet. Would you be comfortable downsizing the feeder side further if you don't come across interesting acquisition opportunities? Or is there, let's say, minimum size you'd like to maintain there?

Climent, thanks for the question. I mean we sort of tried to address that at least in part in our answer to Stephanie a little earlier. So while we like the 2,000 to 10,000 TEU segment, broadly speaking. If given our choice, we would wait our fleet renewal towards probably the upper half, let's call it, the 6,000 to 10,000 TEU range. We're not dogmatic about a particular size category. So once again, we will either invest or divest assets where we think the returns are likely to be most favorable for the company and for shareholders.

That's helpful. And I also wanted to ask a bit about the effect that the Middle East situation is having on the market. Could you talk a bit about whether you've seen a sizable increase in congestion in regional ports outside the Strait? And are you seeing any other ripple effects?

Yes. I mean it's hugely disruptive. We're seeing ripple effects throughout liner companies networks. And one of the most recent ones we became aware of is congestion in the Panama Canal of all places as lines look to redirect vessels and optimize their network.

So yes, you're absolutely right. There is disruption in terms of congestion, both at choke points like canals and also in ports. And there are also disruption associated with challenges for the liner operators getting fuel into the right places. And not only the challenge of getting fuel into the right places, but also the cost of fuel. And as bunker costs rise, the ship -- the lines try to reduce fuel burn to reduce costs. And the only way to reduce fuel burn is to flow ships down. So we're seeing networks slowing down, which means you need more ships to carry the same volume of cargo. And we're also seeing, to your point, congestion, both in ports and transit locations. So yes, big ripple effects.

Congratulations for the quarter.

There are no further questions at this time. I would now like to turn the call back over to Thomas Lister for the closing remarks. Please go ahead.

Well, thank you very much, everyone, for joining our 1Q call. We wish you a very good summer and look forward to talking to you again on the event of our second quarter call. Thank you again. Bye-bye.

Ladies and gentlemen, thank you all for joining, and that concludes today's conference call. All participants may now disconnect. Thank you.

Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the Global Ship Lease Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to Tom Lister, Chief Executive Officer. You may begin.

Thank you very much. Hello, everyone, and welcome to the Global Ship Lease fourth quarter 2025 earnings conference call. You can find the slides that accompany today's presentation on our website at www.globalshiplease.com.

As usual, Slides 2 and 3 remind you that today's call may include forward-looking statements that are based on current expectations and assumptions and are by their nature inherently uncertain and outside of the company's control. Actual results may differ materially from these forward-looking statements due to many factors, including those described in the safe harbor section of the slide presentation. We would also like to direct your attention to the Risk Factors section of our most recent annual report on our 2024 Form 20-F, which was filed in March 2025. You can find the form on our website or on the SEC's. All of our statements are qualified by these and other disclosures in our reports filed with the SEC. We do not undertake any duty to update forward-looking statements.

The reconciliations of the non-GAAP financial measures to which we will refer, during this call to the most directly comparable measures calculated and presented in accordance with GAAP, usually refer to the earnings release that we issued this morning, which is also available on our website.

I'm joined as usual today by our Executive Chairman, George Youroukos, and our Chief Financial Officer, Tassos Psaropoulos. George will begin the call with high-level commentary on GSL and our industry, and then Tassos and I will take you through our recent activity, quarterly results and financials and the current market environment. After that, we'll be pleased to answer your questions. So turning now to Slide 4. I'll pass the call over to George.

Thank you, Tom, and good morning, afternoon or evening to all of you joining us today. Both the supportive supply and demand trends and heightened geopolitical uncertainty that we have previously highlighted, remained firmly in place throughout 2025, and then in recent days have clearly ratchet up even more. Tariffs, the prospect of new port fees in the U.S. and elsewhere, security concerns in and around the Red Sea and now the situation in Iran, shifting from tense to violent conflict, the list goes on. These and other factors have all combined to increase unpredictability and volatility, fundamentally alter and fragment trade patterns and make supply chains more inefficient as a consequence.

At the same time and perhaps surprisingly, given the noise, aggregate global containerized trade increased in 2025 by 5%, with input volumes to the U.S. also growing year-on-year. In this environment, demand for midsize and smaller containerships has remained remarkably strong. As a result, we have continued to lock-in charter coverage at attractive rates, with $2.24 billion in contracted revenue over the next 2.7 years, with 99% contract coverage for 2026 and 81% in 2027.

Maximizing optionality remains a key focus to us, in order to both mitigate risk and save value-accretive opportunities. With this in mind, we have transformed our balance sheet, reduce debt and increase liquidity, also serving to bolster our resilience and agility in the process. This progress has been reflected by the affirmation of our strong credit ratings by leading rating agencies and has also supported payment of our quarterly dividend, which raised again with a dividend paid in December 2025. On an annualized basis, we now paid $2.5 per common share.

Another thing at the front of our minds is strategic, but highly selective, fleet renewal. We were pleased to announce a transaction in December for 3 vessels that make our fleet younger and larger and replace some of our aging cash cows, which we have previously monetized at cyclically attractive prices. Tom will discuss this more in a few minutes. But we see this as great ships that are in the post-panel sweet spot acquired at a fantastic price, de-risked right out of the gate and with compelling upside potential. In short, just a short of deal for which we keep our powder dry. Taken together, this progress and these successes are possible because we have worked diligently to maximize optionality in order to manage risks and seize opportunities in the cyclical industry and a turbulent world.

On Slide 5, we thought that it would be helpful for new investors and a new refresher and nice fresher for our friends who have stuck with us and made money with us over time, to put our current status in some historical context. Over the past 5 years, we have transformed the business and dramatically increased all of our key earnings and cash flow metrics while simultaneously de-risking our balance sheet. And we have returned capital to shareholders, both by way of opportunistic share buybacks and by introducing a dividend, which we have repeatedly upsized as we made progress on de-levering and building our contract cash flow. And our share price has responded accordingly tripling over the period. The profound improvements that you can see here are a testament to our dynamic capital allocation policy, the discipline and patience to stick with it through the cycle, and the ability and confidence to seize opportunities as they arise.

We fully intend to continue building on this track record, generating shareholder value by making Global Ship Lease even more competitive, robust and resilient for the long term. With that, I will turn the call over to Tom.

Thank you, George. Hello, again, everyone, and please now turn to Slide 6, where you will see our diversified charter portfolio. As of December 31, we have over $2.2 billion in forward contracted revenues with 2.7 years of remaining contract cover. Throughout 2025 and the first 2 months of this year, we added 52 charters, including options exercised for $1.26 billion in additional contracted revenues. So it's been a pretty good year.

Turning to Slide 7. We take a look at our dynamic capital allocation policy through which we are able to mitigate the risks and capitalize on the opportunities inherent in the natural cyclicality of our industry, not to mention the so-called black Black Swan events industry seems now to be confronting on a regular basis. We have de-levered our balance sheet to reduce risk and build equity value. Our increased cash position has made us more resilient and capable of handling whatever may arise from upheaval in the Middle East to tariffs to an evolving regulatory landscape and, of course, to opportunities as they appear. And as always, a top priority is returning capital to shareholders. And in late 2025, we upsized our dividend yet again to reach $2.50 per share on an annualized basis. We aim to provide investors with a liquid and stable platform from which they can participate in the shipping cycle, maximizing access to upside opportunities while minimizing exposure to downside risks.

Slide 8 shows our patient and disciplined approach regarding investments. As you can see from the chart, we have a strong track record of buying ships during market downturns when asset values are low and then contracting them on super lucrative charters to lock-in the good times of the up cycles. It's easy to say buy low, but it's much more difficult to do, especially as access to capital also tends to be constrained during downturns. That being said, I would underline the following points.

First, our capital allocation policy is dynamic and has us well paired to pounce on value-accretive opportunities when they arise. Second, our relationships throughout the industry give us insight into nascent deal opportunities often before they're known in the broader market. And third, our combination of long-term focus and balance sheet strength put us in a position to take a holistic and through-the-cycle view of risk, returns and option value, which brings us to Slide 9.

On December 1 of last year, we announced the purchase of 3 high specification fuel-efficient 8,600 TEU container ships that were built in 2010 and '11 and had already being fitted with valuable ECO upgrades by their previous owners. This deal was executed on short notice with cash on hand, is de-risked from the get-go and offers high upside potential in the years to come. Moreover, as these are sister ships to high demand, high earnings ships already in the GSL fleet, we have the added advantage of extensive first-hand knowledge of their operating and commercial profiles. By purchasing the ships with below-market charters attached, we were able to achieve an aggregate purchase price of $90 million, which isn't far off what a single ship would cost, charter-free, meaning this is essentially a 3 for the price of 1 deal. Added to which their aggregate scrap value alone is around $40 million and long-term historic average charter rates for ships like these are over $40,000 a day. So we're looking at just the sort of low risk, high upside potential deal we like very much. And there's a nice symmetry in that we funded this fleet renewal almost to the dollar with proceeds from the sale of much older smaller ships that we had monetized at cyclically high values during the course of 2025.

With that, I'll pass the call to Tassos to discuss our financials.

Thank you, Tom. Slide 10 shows our financial highlights in 2025. I would like to emphasize a few key takeaways. Full year earnings and cash flow were up compared to 2024. Our cash position is $637 million, of which $164 million is restricted. The remainder ensures that we can fully cover our covenants, working capital needs and manage the potential financial implications of geopolitical issues, which seems to be rising with increasing frequency and intensity. It also provides dry power from a position of almost net zero debt, both for CapEx to keep our existing fleet commercially relevant and for disciplined investments in fleet renewal when the right opportunities emerge. And all of this without compromising our ability to reliably pay healthy and recently enlarged dividend.

The latest $85 million refinancing has pushed our average debt maturity to 4.5 years and our blended cost of debt down to 4.49%. We also realized a $46.2 million gain from the sale of 4 older ships, and we have strong credit ratings from the leading rating agencies.

Slide 11 highlights our progress in de-levering our balance sheet and building equity value. The graph on the left shows our lower outstanding debt, which stood at $950 million at the end of 2022, was under $700 million at the end of 2025 and is on track to be well below $600 million by the end of 2026. The graph on the right tells a similar story but with stark context. We have worked diligently to reduce our leverage from 8.4x in 2018 to 0.5x today. This comprehensive efforts are shown further on Slide 12, where we have lowered our borrowing costs from a blended 7.56% in 2018, down to 4.49% in 2025. We have also maintained low breakeven rates through multiple years of inflation by aggressively reducing our interest expense. This keeps us both competitive and resilient in any market environment.

With that, I will turn the call back over to Tom to discuss the market and [indiscernible].

Thanks, Tassos. On Slide 13, we put our fleet in context, restating our focus on midsize and smaller container ships between 2,000 TEU and 10,000 TEU. In contrast to the really big ships, which require specialized port infrastructure and tend to be constrained to the big east-west "mainland trade" midsize and smaller container ships are highly flexible and can be employed worldwide without being reliant on, or captive to, any industry or country. As such, they provide the [indiscernible] companies, our customers with valuable optionality at a time when trade patterns are in flux. And by the way, it's often overlooked that roughly 3/4 of containerized trade by volume already takes place in the non-mainland north-south and intra-regional trades, like intra-Asia, and we'll discuss this further over the coming slides.

On Slide 14, we turn to the situation in the Middle East, a subject that is, of course, top of mind for us, as it is for many across the shipping industry and beyond. We will not pretend to be geopolitical analysts or forecasters here, but we can provide some facts and contact fundamentally two key Middle East shipping choke points, the Red Sea and the Strait of Hormuz are now more or less closed at the moment.

First, the Red Sea and Suez Canal, with around 20% of containerized trade volumes would normally transit. Here, the initial green shoots of cautious optimism have been decisively cut back with the [indiscernible] calling for renewed vessel attacks in the Southern Red Sea. Even before this setback, a large majority of transit continue to go the long way around, around the Cape of Good Hope, which sucks up around about 10% of global effective fleet supply in the process. And recent update suggests that this is likely to remain the case for the time being.

The new choke point to address is the Strait of Hormuz, which allows the shipping traffic sorry, let me start that again. The new choke point to address is the Strait of Hormuz through which shipping traffic has pretty much ceased since the outbreak of hostilities with multiple major regional ports suspending operations in-part or in full. While it is more famously a gateway for global energy flows, a normal year would also see between 3% and 4% of global container volumes move through the Strait of Hormuz, serving ports such as [ Jebel Ali ] in Dubai, which is the ninth busiest port in the world as well as Doha, Abu Dhabi and Damam in Saudi. While the overall volumes themselves are not huge, the knock-on effects are much bigger given, among other things, the importance of [ Jebel Ali ] as a transshipment hub and the challenges of serving golf destinations by alternative roots.

So this is a big deal. Container supply chains, which were already complex, now have additional challenges and inefficiencies to confront. We will see how the [indiscernible] of companies adapt, but we are, of course, in the very early days of all this.

In summary, the situation is highly dynamic, and the longer-term implications are unclear. However, the paramount concern for the industry amid the turmoil is and must continue to be seafarers safety.

Turning to another source of disruption on Slide 15. We look at tariffs. While the stance keep shifting on this issue, looking back to 2019's tariffs under the first Trump Administration could be at least directionally instructive in how they develop moving ahead. As expected, the tariffs in 2019 did indeed result in a reduction in direct trade between the U.S. and China. Perhaps unexpectedly, however, there was an increase in demand for midsized and smaller container ships during this period as supply chains shifted and decentralized intra-regional trade, particularly intra-Asia containerized trade volumes rose. Trade networks grew more complex and more inefficient, and those conditions tend to be supportive of earnings for providers of shipping capacity, like GSL.

Slide 16 is where we cover some of the other geopolitical and regulatory trends affecting the shipping world. This slide is backward looking as who knows what other surprises 2026 has in store. USTR port fees were introduced by the U.S. in October 2025. And while they caused some disruption, the industry was able to adapt to the new circumstances given the lead time, with which they announced. However, China's port fees did not offer the same lead time and were much more disruptive as a result. Fortunately, the port fees from both countries were suspended until the fourth quarter of 2026. While these policies and their implications have been deferred for now, the situation was a reminder of how fast things can change and how optionality is more valuable than ever within the current global framework, both for us and for our customers.

Notably, the White House's recently unveiled Maritime Action Plan points to the possibility of future such port fees. Along with the rest of our industry, we will certainly closely monitor future developments there, on this front. The IMO's Net Zero framework faced similar delay to the fourth quarter of 2026. This decision is expected to provide a boost existing conventionally fueled vessels, such as those in the GSL fleet. Amidst this heightened regulatory and geopolitical uncertainty, we will stay prudent disciplined and agile, doing our best to maintain and to leverage the optionality at our disposal.

On Slide 17, we highlight supply-side dynamics and scrapping trends where little has changed from last quarter. Both idle capacity and scrapping activity have remained near zero. With minimal slack in the system due to fragmented and inefficient supply chains, the charter market [indiscernible] environment has remained strong and charterers have proven willing to pay attractive rates even for late in life ships. Unsurprisingly, owners have responded by keeping those ships on the water and profitably in service for absolutely as long as possible.

Slide 18 shows the order book, which has grown meaningfully in recent years, but importantly, mostly in the larger vessel segments where GSL does not participate. For ships, over 10,000 TEU, in other words, they're really big ships, the order book-to-fleet ratio stands at 55.5%, which drives the overall order book-to-fleet ratio to almost 35%. However, for the size of segments below 10,000 TEU, which are the ones relevant to GSL, that number halved to 16.9%, with deliveries spread over the next 5 years or so. In addition to the smaller order book, if we were to assume all ships, 25 years or older with scrapped through 2030, the sub-10,000 TEU fleet would actually shrink more than 6%. If supply remains low and rates remain high, we will be happy to continue locking-in coverage at attractive rates. If on the other hand, the market were to experience a normalization or even a downturn, we would expect the arrival of new ships to be offset in large part at the very least by a sharp rise in scrapping activity. Similarly, we would expect such a scenario to yield interesting investment opportunities for a patient and well-capitalized owner such as GSL.

We take a look at the charter market on Slide 19, and it is important here to remember that our daily breakeven rate is just over $9,800 per vessel per day, which is well below market rates. In these supportive conditions, we've been hard at work, locking in as much charter coverage as possible to the tune of $2.24 billion over the next 2.7 years or so, providing good forward visibility and insulation against any downside turbulence. And on that note, I will turn the call back to George on Slide 20.

Thank you, Tom. To summarize, we have continued building our forward visibility on cash flows now with $2.24 billion in contracted revenues over 2.7 years with 99% coverage for 2026 and 81% for 2027. Optionality remains a core focus, even with the deferral for the time being of U.S. and China port fees and of the IMO Net Zero framework, as geopolitical and regulatory environments remain volatile. And we are constantly at work to make GSL more resilient, robust and able to capture opportunities. .

The current situation in the Middle East and around the Strait of Hormuz, of course, adds more complexity to a situation that was already highly complex and dynamic. The supply chains has become fragmented. Decentralized and increasingly inefficient, which drives further demand for midsize and smaller containerships. We have successfully delivered, pushed down our cost of debt extended our average debt maturities and lowered our daily breakeven rates to well below market rates. Our fortress balance sheet, which brings us close to being net debt neutral position us well for the opportunities and challenges of the market. We increasingly look to renew our fleet in a disciplined, prudent manner to support earnings now and into the future. And we always look to return capital to shareholders.

To this end, we increased our quarterly dividend to 2025, now up to $2.50 per share on an annualized basis. Finally, looking back on the last 5 years, it is gratifying to see credit ratings agencies acknowledge the progress we've made. Much more gratifying still, is to see the stock price triple over the same period and we will do our best to ensure that positive momentum continues. Now with that, we'll be very pleased to take your questions.

[Operator Instructions] Our first question comes from the line of Liam Burke with B. Riley Securities.

George, Tom, Tassos. There's still -- I mean the timing of this question is probably bad, understand the geopolitical situation, both in the Red Sea and the Strait of Hormuz but the gap between charter and freight rates is staying wide, all things being equal, is there anything that you'd anticipate to have those -- that movement converge in terms of freight and charter rates converging?

Good question, Liam. I'll have a crack at it, and no doubt, George will add to it. It's very, very difficult to comment on the freight market side to that equation, which is obviously much more responsive to day-to-day events given the contract cover is much more limited in terms of duration. However, I can comment on the charter side of things that what we're seeing is that appetite from charters remains to lock in charters at attractive rates. So at least for the time being, and it's very difficult to predict anything really in today's slightly crazy world.

But for the time being, we're seeing customers looking to continue to lock in charters at high rates for meaningful durations. Of course, it's worth highlighting at this stage that 99% of our positions for 2026 are already contracted and over 80% for 2027 are already contracted. Broadly speaking, there is still charter market appetite.

Great. Your leverage ratios are low. You pay a very healthy dividend through the cycle. What about the cash? And how do you see allocating it this year or next year?

Sure. So in this cyclical industry, the way to make genuinely attractive returns for our shareholders is making sure that we have cash to move on opportunities Ideally, at the bottom of the cycle when no one else has capital. That's when you make most money for shareholders within shipping. So holding that cash on our balance sheet, we see as super valuable in that respect. And in fact, the 3 ships that we mentioned during the course of the call, these 8,600 TEU ships that we acquired at the tail end of last year a perfect representation of that. We went from zero to completion within about 30 days or so on that deal, and you can only do that if you have capital at your disposal, which happily we did.

Great. And I apologize for asking such a specific question, but Tasso's SG&A jumped considerably. Is that -- is there a one-timer in there? Or is that just another level to anticipate?

No, no. It has to do with the valuation of the incentive plan that we have calculated and the others have calculated. It's a noncash item. And you will see much more details in our upcoming 20-F.

[Operator Instructions] Our next question comes from the line of Omar Nokta with Clarkson Securities.

Thank you for the update. You obviously touched on this, Tom. I think, I think you talked about this and maybe touched on it also in response to Liam's question, but just kind of about what's going on in the Middle East and the turmoil and whatnot. There's been clearly a lot of focus on the impact on energy and exports out of the region. But sort of in terms of, say, the containers and presumably, it's a lot more of an import market than export, I would think. But just in general, what's been sort of the impact, seen a spike in different commodity prices and we've seen energy shipping rates go through the roof. What have you seen here over the past few days with respect to your business? Have you seen any shift in the freight market dynamics or time charters?

I would say not in time charters. Their appetite remains, as I mentioned to Liam, from charters at attractive rates and for attractive durations. I think in the freight markets, the industry is just struggling to adjust to this massive curve ball. Now although only 2% to 3% or whatever it is, 3% to 4% of containers actually flow into or out of the Persian Gulf, there's a tremendous volume that's actually particularly in [ Jebel Ali ]. So although the overall numbers are comparatively modest in sort of percentage terms as far as global trade are concerned, the ramifications through the liner company networks are considerable.

I think one analyst calculated that roughly 10% of the global fleet actually under normal circumstances calls at ports within the Persian Gulf. So although the volumes in terms of import and export are not huge. The implications for liner companies networks are much bigger than that, and that confusion and complexity breeds disruption in the networks, which breeds inefficiency which breeds the necessity for more ships. That's what we're seeing so far, but it's very, very early days. I don't know, George, do you want to add to that?

Yes. What I would add is that we see clearly the statement of [indiscernible] that they will resume their attacks in Red Sea. So let's say, it's out of the question right now. There was a process where liners were returning slowly to the Red Sea. This is not the case.

And then the second thing we should see this is very similar to the COVID. There is going to be a big reason that is not going to be serviced by ships for until this conflict is over or at least this conflict is to a point where people can cross the Hormuz, and there's going to be a big starvation of cargoes in the region. Now as you can imagine, this is going to create the disruption, and I think it will lead in raising the freight rates at the point when passing through the Hormuz is possible, but not clean cut as it was before the war, I think the freights are going to go up for the ships that are going to go through.

And once the Hormuz is open completely, there's going to be a lot of cargoes that need to go that haven't been going for a while and hence back up in the ports, they're going to be waiting and all of that. Similar many situation of the regional [indiscernible] of COVID i would imagine. So if you ask me, I think the earnings of [indiscernible] should increase for a period of time. And the fleet is going to tighten further for a period of time again.

That's quite helpful. And thanks, Tom, you answer the second question in there for me. And then maybe just one final quick follow-up just on the balance sheet. I noticed a big jump in the long-term restricted cash flowing from $23 million to $113 million quarter-over-quarter. Is that actual restricted cash due to financing? Or is that just sort of a long-term bank deposit?

It's actually Omar revenue received in advance like the previous time that we have in our account. We have again received a revenue received in advance which has been restricted and it will be released following the service of the charter.

Okay. And is that, how long is the duration of that?

If I remember correctly, it's 3 years.

Omar, I think just to correct, I think it's actually 5 years.

There are no further questions at this time. I would like to turn the call back over to Tom Lister for closing remarks.

Thank you very much, operator, and thank you, everyone, for joining today's call. We look forward to regrouping for our 1Q earnings once they are ready. So stay safe. Thanks for joining. Bye-bye.

Ladies and gentlemen, that concludes today's call. Thank you all for joining us. You may now disconnect.

Thank you for standing by. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Global Ship Lease Third Quarter 2025 Earnings Conference Call. [Operator Instructions]

It is now my pleasure to turn today's call over to Thomas Lister, CEO of Global Ship Lease. Sir, the floor is yours.

Thank you very much. Hello, everyone, and welcome to the Global Ship Lease Third Quarter 2025 Earnings Conference Call. You can find the slides that accompany today's presentation on our website at www.globalshiplease.com.

As usual, Slides 2 and 3 remind you that today's call may include forward-looking statements that are based on current expectations and assumptions and are, by their nature, inherently uncertain and outside of the company's control. Actual results may differ materially from these forward-looking statements due to many factors, including those described in the safe harbor section of the slide presentation.

We would also like to direct your attention to the Risk Factors section of our most recent annual report on our 2024 Form 20-F, which was filed in March 2025. You can find the form on our website or on the SEC. 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. The reconciliations of the non-GAAP financial measures to which we will refer during this call to the most directly comparable measures calculated and presented in accordance with GAAP, usually refer to the earnings release that we issued this morning, which is also available on our website.

I'm joined as usual today by our Executive Chairman, Georgios Youroukos; and our Chief Financial Officer, Tassos Psaropoulos. George will begin the call with high-level commentary on GSL and our industry, and then Tassos and I will take you through our recent activity, quarterly results and financials and the current market environment. After that, we'll be pleased to answer your questions.

So turning now to Slide 4. I'll pass the call over to George.

Thank you, Tom, and good morning, afternoon or evening to all of you joining us today. Global Ship Lease's focus continues to be on optionality as geopolitical and trade policy uncertainty continue to be a major factor throughout the third quarter. As we have seen in recent weeks with the IMO Net Zero framework, USTR and China port fees, all of which were deferred at 11 hour or later, even policies that are proposed without even fully coming into effect are having far-reaching real-world implications.

All of these real and potential factors are contributing to 2 major effects, both on which play to our advantage. Number one, making supply chains less efficient, which means that more ships are needed to transport a given quantity of cargo; and number two, increasing the value of flexible, midsized and smaller container ships such as those in our fleet.

Now on the IMO deferment, this accrues particularly to the benefit of older, conventionally fueled vessels that are now likely to have a longer economic life. Taken together with aggregate growth in global containerized trade, these factors are contributing to a situation where there's essentially 0 idle capacity for the vessel size segments in which we operate. Thus, we continue to see strong interest in chartering our vessels, typically on a multiyear basis.

Through the first 9 months of 2025, we added $778 million in contracted revenues with full contract coverage for the remaining of 2025, 96% coverage for 2026 and 74% coverage for 2027. This offer us stability and certainty at a time where both are generally in short supply. Our progress in securing additional charter coverage, adding to our revenue backlog and fortifying our balance sheet has enabled us to achieve strong credit ratings across the board, including an investment-grade rating on our U.S. private placement notes.

These same factors, notably including a clutch of recent agreed long-term charters have put us in a position to once again increase our supplemental dividend, bringing our overall dividend to $2.50 per share on an annualized basis. That's a 19% increase being announced today. But if you look at where our dividend was just over a year ago, which was $1.50 annualized, the total increase is 67%, all done on a nonspeculative basis on the back of real contracted revenues and without compromising our ability to establish a fortress balance sheet and position GSL for opportunistic fleet renewal at the right time.

With everything going on in the world, both GSL and our customers are acutely aware that many of our assumptions and understandings may be turned upside down from one second to the next. In this environment, we are simultaneously locking in the high value and forward visibility that comes from time charter contracts with top-tier global liners while also making sure that we have the strategic and financial flexibility to respond to the challenges and the opportunities of a fast-changing world and the cyclical industry. In this way, we are maximizing GSL's optionality and putting ourselves in the position to protect and generate shareholder value no matter what is waiting around the corner.

Now with that, I will turn the call over to Tom.

Thank you, George. Hello again, everyone. And please turn to Slide 5 to see our diversified charter portfolio. As of September 30, we have over $1.9 billion in forward contracted revenues with 2.5 years of remaining contract cover. Through the first 9 months of 2025, we added 38 charters, including extension options exercised for almost $780 million in contracted revenues, of which about $380 million were added in the third quarter.

Slide 6 is where we discuss our dynamic capital allocation policy. With the inherent cyclicality of our industry, we consider it essential to look at the big picture in order to remain on the front foot, manage risk and capitalize on opportunities as they arise. As George mentioned, this has only become more important in the current environment.

Optionality remains key as we navigate this environment and tackle our priorities. Among other things, these include returning capital to our shareholders through our just upsized $2.50 per share annualized dividend and strengthening our balance sheet. To that end, we've continued to delever to grow equity value and to increase our financial resilience and cash reserves to manage the various geopolitical challenges and uncertainties that confront the industry with growing frequency.

And of course, we need cash on hand to cover CapEx requirements and to seize the right investment opportunities as and when they arise, especially as we've observed on various occasions because the best such opportunities tend to crop up when capital is otherwise scarce. We're proud to have made GSL a stable and liquid platform that allows investors to participate in the industry with us managing and mitigating the risks of the down cycle and negative volatility while maximizing obsess -- sorry, while maximizing access to super returns in the up cycle.

Turning to Slide 7. This slide shows the cyclicality of our industry and how we have managed it. We want to emphasize our history of disciplined capital allocation regarding investments, buying ships during downturns where asset prices are depressed or structuring deals such that downsides are limited and upsides are substantial. This also shows that it is at and near the bottom of cycles where the opportunities for outsized value are to be captured.

I'll now pass the call to Tassos to discuss our financials.

Thank you, Tom. Slide 8 shows our financial highlights for the first 9 months of 2025. I would like to emphasize a few key takeaways. Earnings and cash flow are up compared to the first 9 months of 2024. Our cash position is $562 million, of which $72 million is restricted. The remainder ensures that we can fully cover our covenants, working capital needs and manage the potential financial implication of geopolitical issues, which seems to be arising with increasing frequency and sharpness. It also provides dry powder both for CapEx to keep our existing fleet commercially relevant and for disciplined investments in fleet renewal if and when the right opportunities emerge. And of course, importantly, it supports payment of our expanded dividend.

Earlier this year, we completed an $85 million refinancing that pushed our weighted average maturity to 4.7 years and brought our blended cost of debt to 4.34%. We also realized a $28.3 million gain from the sale of 3 older vessels. Our strong credit ratings were affirmed. We have $33 million remaining under our opportunistic share buyback program, and we continue to delever and build equity value.

Slide 9 shows our ongoing process to repeat the resilience, derisk our balance sheet and grow equity value. The graph on the left shows our progress in reducing our outstanding debt. From $950 million at the end of 2022, we are on track to be under $700 million at the end of this year, even as we have acquired ships and put leverage on. The graph on the right is the more telling perspective as our financial leverage has reached to 0.5x. We have come a long way since the days of 8x-plus leverage.

Slide 10. The left graph shows our cost of debt, which we have lowered to a blended 4.34%, down from over 6% in 2020. We have continually reduced our margin even as SOFR has risen materially. And the graph on the right shows our very competitive breakeven rates where interest rate reductions have more or less offset OpEx inflation.

With that, I will turn the call back over to Tom to discuss the market and our fleet.

Thanks, Tassos. Slide 11 reiterates our emphasis on midsized and smaller container ships between 2,000 and 10,000 TEU. These vessels are the backbone of global trade are not dependent upon any one trade or country and are extremely flexible. This stands in contrast to the very big ships that tend to dominate the headlines in the media, but which are more restricted in where they can go due to their size, requiring specialized port infrastructure and deepwater, not to mention huge cargo volumes to fill them. This keeps the very big ships largely confined to the mainlane trades between China and the U.S. or Northern Europe, which, as I'll get to in a minute, have been disrupted in recent quarters.

The flexibility of our fleet offers is a key point that we reiterate because it matters a great deal, particularly in this current environment of heightened uncertainty and shifting trade patterns. Our fleet plays an increasingly vital role as trade routes and supply chains have become fragmented by a wide variety of factors that we'll discuss on the coming slides.

On Slide 12, we break down the impacts we have seen from the ongoing disruption in the Red Sea, prior to which approximately 20% of global containerized trade volumes transited that bottleneck. Since then, about 10% of effective capacity has been absorbed as ships have been forced to reroute around the Cape of Good Hope, which in turn has driven up charter rates. While it is difficult to predict how long these particular conditions will last, we and the industry more broadly are looking to see a sustained period of safety and stability before transiting goods through there again as seafarer safety is key.

If and when the Red Sea does reopen for safe transit, there would be a period of costly and complex rerouting and reshaping of networks for the liner companies. This suggests that there will need to be a reasonably high industry-wide conviction of a long-term normalization of conditions before we would expect to see large-scale rerouting by the Red Sea and Suez, but it's certainly something to keep an eye on.

On Slide 13, we discuss tariffs and how 2019 under the first Trump administration could be instructive in how we might expect things to continue to play out moving forward. Following the 2019 tariffs, there was reduced trade between the U.S. and China, which had a negative impact on larger container ships used for those mainlane trades. While as for midsized and smaller container ships, there was perhaps counterintuitively, an uplift in demand following the tariffs as trade routes shifted and more emphasis was placed on intra-Asian trades where midsized and smaller ships predominate. Regional trade volumes increased, the supply chain diversified and midsized and smaller container ships were the beneficiaries. Put bluntly, if you're providing capacity to the containerized supply chain as we are, increased disruption, complexity and inefficiency in the supply chain tends to be a good thing and supportive of earnings.

Slide 14 is where we discuss the latest developments or non-developments, if you prefer, on the regulatory front, namely USTR fees and the reciprocal China port fees caused quite a lot of agitation, vessel redeployments and uncertainty as the industry sorted out how to adjust. In the case of USTR, that played out with several months of forward notice as the regulations which were announced in February modified in April and implemented in October. Meanwhile, in the China port fee situation, several months' worth of disruption and strategizing were forced into a memorable few days in October with measures announced on a Friday and implemented the following Tuesday. Even with both measures now apparently suspended after only negligible periods of enforcement, the industry was given yet another sharp reminder of the value of maintaining flexibility.

Meanwhile, the long anticipated Net Zero framework at the IMO, which had been due to be adopted in October, was deferred at the 11th hour by 1 year. This deferral will likely extend the lives of older ships and lift the commercial relevance and earnings for conventionally fueled ships such as those in the GSL fleet. Our view has long been that in a period of pronounced regulatory uncertainty, there are clear advantages to investing in mid-life tonnage and being smart followers when it comes to the adoption of new fuels and propulsion technologies.

We cover supply side dynamics and scrapping trends on Slide 15. As ships continue to transit around the Cape of Good Hope and supply chains remain both fragmented and subject to continuous reshuffling, idle capacity and scrapping levels have remained close to 0. In that context, scarcity value is real and the liners continue to show an interest and in fact, a need to charter in scarce tonnage in an uncertain freight environment as the risk of being short on capacity and the value of network optionality override concerns about fleet optimization and the maximization of efficiency.

Slide 16 shows the order book. Here, we want to highlight that although the overall order book is meaningful and has grown over the past few years, the segments in which GSL focused are seeing far less growth. For ships over 10,000 TEU, a segment upon which GSL does not focus or participate, the order book-to-fleet ratio stands at 54% However, this stands in sharp contrast to the 32% ratio for all container ships and even more so for the 15% order book to fleet ratio for the segments GSL does participate in, which are those between 2,000 and 10,000 TEU.

Also, with the current order book, if we were to assume that all vessels over 25 years old were scrapped through 2029, which is how long it would take to deliver the current order book, the sub-10,000 TEU fleet would actually shrink by over 5% in that time frame. While capacity remains tight, we will continue to lock in charter coverage at attractive rates. However, should the market normalize in the coming years, we would expect to see scrapping activity pick up sharply, meaningfully offsetting the impact of new vessels coming into the market in our size segments.

Slide 17 shows the charter market against which I would remind you that our breakeven rate, including operating costs and debt service is just over $9,500 per vessel per day. With the current market conditions, we have been locking in as much charter coverage as possible and now have forward visibility on $1.92 billion of contracted revenues over 2.5 years of coverage. Who knows how macro, geopolitical and industry dynamics will develop going forward, but we're pleased to have built a stable platform in otherwise choppy seas.

On that note, I will turn the call back to George on Slide 18.

Thank you, Tom. To summarize, our cash flows are strong, and we continue to build our charter backlog with almost $2 billion of cover over 2.5 years 2025 fully contracted, marginal open days in 2026 and a significant slice of 2027 already covered.

Even as there is a sigh of relief on the current suspension of USTR and China port fees in some quarters for the deferral of the IMO Net Zero framework, uncertainty remains pronounced. We're maximizing optionality to manage risks and capitalize on opportunities. Less efficient and more fragmented supply chains are increasing demand for our fleet of flexible midsized and smaller containerships.

We have strengthened our balance sheet and continue to amortize debt to build equity value and resilience through delevering. We have lowered our financial leverage and our average breakeven rates stand at just above $9,500 per day per vessel, and our credit ratings are in great shape. As the existing cash flows and cash cows begin to age out, we're focused on the disciplined and opportunistic renewal of our fleet to ensure that we have the right value-generating assets going forward.

And as ever, we're proud of returning capital to shareholders through our dividend, which following the increase announced today stands at an annualized rate of $2.5 per common share, 67% above where it was just 18 months ago.

With that, we would be very pleased to take your questions.

[Operator Instructions] And our first question comes from the line of Liam Burke with B. Riley Securities.

It looks like freight rates have sort of bounced off the bottom from third quarter and are inching up. Are you still seeing a healthy gap between freight rates and charter rates here?

Liam, short answer, yes. Charter rates continue to move sideways at very healthy levels. So historically, I would say, really quite high and attractive levels. So despite the near-term volatility, both up and down in the freight markets, the charter markets are staying steady.

Great. And is there any appetite or how are you balancing rates versus duration when you're looking at either renewals or forward charters?

Look, we're conscious that these are strange and uncertain times. So we continue to be focused on a sort of risk-averse basis on midterm and longer charters, and we're happy to take attractive economic rates on as long charters really as we're able to go at the moment. So for different sizes, that means probably sub-5,000 TEU, you're looking at a couple of years that you can fix for. And from, say, 6,000 or 6,500 TEU up, you're looking at maybe 3 and possibly even 4 years in some instances. And that would be our preference to lean into.

[Operator Instructions] And our next question comes from the line of Omar Nokta.

Obviously, things are coming together quite nicely, pretty solid quarter, added a good amount of backlog despite all the uncertainty in the strange times that you're just referencing, Tom. Just kind of thinking about the fact that you were able to add so much backlog in the third quarter, $380 million, nearly half of what you did for -- or sorry, nearly half -- equal to what you did in the first half. Just wanted to get a sense from you, is this -- is that on the back of a very sort of maybe active fast-paced market on the part of charterers? Or is it something unique to GSL that you were able to accomplish maybe not necessarily representative of the broader market dynamics?

I mean, obviously, we'd take every opportunity to talk up our own book, Omar. But I would say that it's more representative of the market. And if you look at -- look back on 2025 year-to-date, the first quarter was very active, the second quarter was significantly disrupted by Liberation Day. So I would say a lot of chartering activity was effectively put on hold during the second quarter, and that came into the third quarter. So I think it's probably best to look back on the 9 months as a whole as opposed to trying to infer too much from individual quarters.

But what I would say is that in the face of an uncertain environment, and it just seems to get more uncertain every day, the lines see capacity as optionality, particularly midsized and smaller container ships that can be moved around pretty much any trader. And we see, as a result, sustained demand for such tonnage, which is what explains the fact that charter rates in the broader market as well as within our fixtures remain at very attractive levels.

Yes. Especially it looks like for those older vessels, we noticed in your fleet list, several of those ships that are in that 2000, 2001 built age range have now been extended for, say, 3 years. Those ships are going to be, call it, close to 29, maybe 30 years when those ships roll off charter. Do you think -- obviously, it's going to be a different market perhaps in 3 years' time. But as you think about what that market looks like, assuming it's still kind of the same do you think those ships can continue to trade at 29, 30 years old? Or is there an age limit you think for those ships?

Yes. If I may take this, I will tell you. If the market was exactly the same as it was today, these ships will continue to trade. There is one big differentiation between containers and the other types of ships. There is no extra insurance on the cargo depending on the age of the ship. And why is that? Because container ships have the highest and best record of safety versus other types of ships. I mean, ships sinking or breaking into two, et cetera. The construction of the containers, because of the way they are loaded and discharged in a direct way, they have to slide the containers into the cargo hold from the gantry crane. They are super heavy in lightweight, hence, very strong, very well made.

Then the fact that the cargo does not come into contact with the cargo hold, meaning it's just boxes that you stack up in. So you're not putting anything like oil that goes and touches the side of the ship, the cargo hold or bulk cargo, which again gets in contact with the surface of the cargo hold and hence deteriorates over time, make container ships very strong and hence, there's no extra insurance, which means that the ships can trade easily past the 28 or 29 years if the market is there.

And Omar, just to sort of add yet more texture to that. I think the U.S. Jones Act vessels that trade in some instances into the sort of late 30s and occasionally into their 40s are evidence of the fact that technical obsolescence in the containership sector, if you put sort of fuel and propulsion issues to one side for a moment, is not an issue. So that dovetails with what George was just saying. So long story short, if there's economic need, the vessels will "live longer.

Okay. That's very helpful. And then maybe just one final one. Tom, you were talking about the Red Sea. And there's obviously perhaps maybe a growing view that we'll start to see transits pick up again in the near future now that there's a peace deal in Gaza, still obviously a lot of uncertainty there. But just want to get a sense from you. Are you having discussions with your charters at the moment on how that will look? And how does that decision come about? Is that going to be an agreement that you make? Or is it going to be them who force it down? How do you kind of think about the 2 sides of the ship?

Yes. So first of all, no, it's not something which is currently under discussion. Secondly, it's a sort of multilateral decision that has to be taken because also beyond the charterers and the owners, there are also the insurers, not only of the vessels themselves, but of the cargo. So it's a fairly complex web of folks that have to get comfortable with the idea of transiting. And the biggest concern is obviously that of seafarer safety.

But I would say, if we go back to looking at the tonnage that was diverted away from the Red Sea and Suez and around the Cape of Good Hope, it's predominantly the bigger ships, the larger ships because it's those ships that are typically deployed on the Asia to Europe legs. So I would say that the opening or not of the Red Sea is something that will have a proportionately greater impact on bigger ships and less of an impact -- I mean, which is not to say no impact for sure, but less of an impact on midsized and smaller ships, which were not frequent transitors of the Red Sea and Suez in any case even when it was "a normal environment" up until the end of 2023. So we'll have to see. But I think the dynamics remain comparatively supportive.

[Operator Instructions] And with no further questions in queue, I will now hand the call back over to Thomas Lister for closing remarks.

Well, thank you all very much indeed for joining our 3Q call, and we look forward to reconnecting in the new year on the back of our 4Q earnings. Many thanks.

This does conclude today's conference call. You may now disconnect.