Global Ship Lease, Inc. Q1 FY2026 earnings call

- Industry Context and Demand Drivers • Geopolitical uncertainty and volatility continued and escalated in early 2026, with major disruptions to shipping from ongoing Red Sea conflict and new Strait of Hormuz unrest that has trapped ~20,000 seafarers in the Persian Gulf • Trade routes have fragmented, shifted, and decentralized, becoming less efficient, which increases demand for additional shipping capacity and flexible vessels • ~75% of global containerized trade flows through non-mainline trades that prioritize mid-sized and smaller vessels, which can operate across most ports and trade routes, unlike very large container vessels limited to mainline east-west trades with specialized port infrastructure • Geopolitical uncertainty has led liner companies to prioritize operational flexibility and reliability, further boosting demand for the company's fleet profile • Rerouting around the Cape of Good Hope (for Red Sea disruption) absorbs ~10% of global effective shipping capacity, and additional network slow-steaming to offset higher bunker costs and port/canal congestion further reduces available capacity, increasing demand for the company's vessels

- Supply Market Dynamics • Overall idle capacity and scrapping activity remain negligible, with most vessels consistently employed at strong rates that keep older ships in operation rather than being scrapped • The global container order book to fleet ratio is 37%, driven by a 60% ratio for vessels over 10,000 TEU; the company's core segment (vessels under 10,000 TEU) has a much lower 20% order book to fleet ratio, and the segment's fleet is projected to shrink by 3.4% by 2030 if all 25+ year-old vessels are scrapped • If the market cools, management expects meaningful increases in scrapping activity that will offset new vessel deliveries in whole or part

- Capital Allocation and Strategy • Core strategic priorities are long-term shareholder value maximization, operational resilience, and balance sheet optionality, particularly amid industry cyclicality and heightened geopolitical volatility • The company maintains a "fortress balance sheet", with leverage falling steadily to 0.3x today, and targets continued deleveraging to build dry powder for disciplined fleet renewal and CAPEX for existing fleet optimization • Capital allocation combines attractive dividend returns to shareholders, deleveraging to build equity value, and highly selective fleet renewal paired with opportunistic monetization of older non-core assets; management prioritizes downside protection when evaluating transactions, following the principle that entry price is the primary driver of returns • Management currently pays an annualized dividend of $2.5 per share, representing a ~6% dividend yield based on the recent closing stock price

Global Ship Lease operates exclusively in the container ship chartering segment, focused on mid-sized and smaller container vessels (2,000 TEU to ~10,000 TEU). No separate product segment breakdown is provided. As of Q1 2026 end: total cash position is $655 million ($156 million restricted), outstanding total debt is under $700 million, bringing the company to near net zero debt with a financial leverage ratio of 0.3x, down from 8.4x in 2018. Average daily break-even rate per vessel is just above $9,800, with all revenue above this level flowing directly to net income. Forward contracted revenues total $2.1 billion across a remaining average contract term of 2.6 years, with 100% of 2026 revenue days covered and 86% of 2027 revenue days covered. The company agreed forward sales of three oldest (25+ year-old) vessels for an aggregate $52 million, with an expected $25 million book gain upon delivery between Q4 2026 and Q4 2027; the company retains existing charter cash flows for these vessels until delivery.

• No explicit formal quantitative guidance for full-year 2026 financials is provided; management reaffirms that outstanding debt is on track to fall well below $600 million by the end of 2026, continuing the multi-year downward leverage trend • Management maintains its long-standing strategic guidance of patient, disciplined, and nimble approach to fleet renewal, focusing exclusively on the company's core 2,000 TEU to 10,000 TEU vessel segment, with a preference for mid-to-upper range vessels (6,000 TEU to 10,000 TEU) for new acquisitions • Management confirms its commitment to the current $2.5 per share annualized dividend, with no indication of upcoming changes to the payout

• Heightened and escalating geopolitical uncertainty, particularly ongoing conflicts in the Red Sea and Strait of Hormuz, creates unpredictable volatility for global supply chains and shipping markets, with actual results potentially differing materially from forward-looking expectations • Longer-term resolution of current Middle East shipping disruptions remains unclear, and sustained disruptions create ongoing operational and financial uncertainty for the industry and company • The container shipping industry is inherently cyclical, and a future downward market normalization could pressure charter rates and asset values, though the company's high level of forward contracted revenue and fortress balance sheet mitigate this risk • The large order book for very large container vessels (over 10,000 TEU) creates potential medium-term supply glut risk, though this risk is far lower in the company's core under 10,000 TEU segment

Q: What is the current level of charterer interest for forward-fixing the 14% of open 2027 charters, and what rate levels are being seen? Do you see opportunities to acquire new assets given strong pricing for recently sold older vessels? / A: The charter market is currently very healthy, with strong demand driven by a lack of available tonnage, especially for vessels over 3,500-4,000 TEU that are the most in demand for forward coverage. Management continues to evaluate potential acquisition opportunities consistently, but remains patient and disciplined, and no opportunities have yet met the company's strict risk and return investment criteria. Management is pleased with the recent forward sale of three older vessels, which delivers a $25 million expected book gain while retaining all contracted cash flows from the vessels until delivery in 2026-2027.

Q: Amid high geopolitical uncertainty, are charterers preferring shorter charter durations over multi-year contracts, and what does this mean for your forward coverage? What is your ideal vessel profile for fleet renewal? / A: While charterers would generally prefer shorter contracts amid uncertainty, limited available tonnage means owners set most terms, and compromises on rate and duration are typically reached. Multi-year charters are still available at very firm rates for desirable vessels, and owners gain more favorable rates for longer charter commitments. For fleet renewal, management will stay focused on the core 2,000-10,000 TEU segment, with a preference for skewing new acquisitions toward the 6,000-10,000 TEU mid-to-upper end of the range. Management has no strict rules on vessel age, and will evaluate new builds, secondhand vessels with attached charters, and speculative purchases on a case-by-case basis.

Q: The pricing of the recent vessel sales suggests secondhand asset values are firmer than implied by the company's share price. Is this strength broad-based across container shipping, or specific to late-life vessels? The company is now near net cash with no major commitments; would share buybacks be a priority use of cash now? / A: It is difficult to draw broad conclusions about overall asset value trends from this single transaction. For older late-life vessels (25-27 years old), the option value of holding the vessel declines, so the transaction's economics (retaining contracted EBITDA until delivery plus the sale price) were very attractive. Management currently prioritizes continuing deleveraging and building dry powder for opportunistic future fleet acquisition opportunities over share buybacks. While share buybacks are considered opportunistically when there is a large disconnect between market valuation and intrinsic value, they are not a current priority.

Q: If no attractive smaller feeder vessel acquisition opportunities emerge, would you be comfortable further downsizing the feeder segment of your fleet? What ripple effects have you seen from the Middle East shipping disruptions beyond the direct capacity impact? / A: Management is not dogmatic about maintaining a minimum size for the smaller feeder segment. If capital can earn higher returns by shifting more weight to larger mid-sized vessels in the 6,000-10,000 TEU range, management will pursue that shift. The Middle East disruptions have caused broad ripple effects across global shipping networks, including unexpected congestion at choke points like the Panama Canal as lines re-route vessels. Higher bunker costs have also led lines to slow-steam vessels to reduce fuel consumption, which further reduces effective global capacity and increases demand for available vessels.