LONDON, May 10, 2023 (GLOBE NEWSWIRE) -- Global Ship Lease, Inc. (NYSE: GSL) (the “Company”, “Global Ship Lease” or “GSL”), an owner of containerships, announced today its unaudited results for the three months ended March 31, 2023.
First Quarter 2023 Highlights
- Reported operating revenue of $159.3 million for the first quarter 2023, an increase of 3.7% on operating revenue of $153.6 million for the prior year period.
- Reported net income available to common shareholders of $72.2 million for the first quarter of 2023, an increase of 6.5% on net income of $67.8 million for the prior year period. Normalized net income (a non-U.S. GAAP financial measure, described below) for the same period was $75.6 million, up 12.3% on Normalized net income of $67.3 million for the prior year period.
- Generated $104.9 million of Adjusted EBITDA (a non-U.S. GAAP financial measure, described below) for the first quarter of 2023, up 16.0% on Adjusted EBITDA of $90.4 million for the prior year period.
- Earnings per share for the first quarter of 2023 was $2.02, up 8.6% on earnings per share of $1.86 for the prior year period. Normalized earnings per share (a non-U.S. GAAP financial measure, described below) for the first quarter of 2023 was $2.12, up 14.6% on Normalized earnings per share of $1.85 for the prior year period.
- Declared a dividend of $0.375 per Class A common share for the first quarter of 2023 to be paid on June 2, 2023 to common shareholders of record as of May 24, 2023. Paid a dividend of $0.375 per Class A common share for the fourth quarter of 2022 on March 6, 2023.
- On May 8, 2023, announced an agreement to purchase four post-panamax containerships, each with carrying capacity of approximately 8,500 TEU ships for $123.3 million, and charter them back to a leading liner operator. Contract cover for each vessel is for a minimum firm period of 24 months from the date each vessel is delivered, anticipated to be late second quarter / early third quarter 2023, followed by a 12-month extension at the charterer’s option. The vessels are expected to generate aggregate Adjusted EBITDA of approximately $76.6 million over the minimum firm period, implying an average Purchase Price/Annual Adjusted EBITDA multiple of approximately 3.2x. If all options are exercised, the vessels are expected to generate approximately $95.3 million of aggregate Adjusted EBITDA.
- Between January 1, 2023, and May 9, 2023, including the four 8,500 TEU ships we have contracted to purchase, added $188.8 million of firm contracted revenues to forward charter cover, calculated on the basis of the median firm periods of the respective charters. For vessels in our pre-existing fleet, new charter fixtures or extensions were agreed on seven ships between 2,200 and 3,500 TEU, and a forward fixture was agreed for one ECO 9,100 TEU ship; charter terms range from a few months to two years.
- Continued to utilize the $40.0 million authorization (the “Buy-back Authorization”) for opportunistic share repurchases, repurchasing a total of 582,178 Class A common shares during January 2023 for a total investment of $10.0 million. During April 2023 we repurchased a further 203,140 Class A common shares for a total investment of $3.8 million. Re-purchase prices in 2023 ranged between $16.12 and $18.69 per common share, with an average price of $17.50. A total of 1,845,958 Class A common shares have been repurchased under the Buy-back Authorization, for approximately $33.8 million, with approximately $6.2 million of capacity remaining.
- In March 2023, completed on the previously-announced sale of GSL Amstel, a 1,100 TEU feeder and non-core asset with imminent special survey and dry-docking requirements, for net proceeds of approximately $5.9 million.
George Youroukos, Executive Chairman of Global Ship Lease stated: “The ongoing normalization of charter rates and asset values in the container shipping sector continued into early 2023, although the rate of change has moderated in recent months. It remains to be seen whether this trend can be sustained, but there have recently been signs of potential stabilization at rate levels that, despite being well below recent peaks, are still attractive by historical standards. The availability of tonnage, and overall liquidity, within the charter market remains comparatively limited, incentivizing liner companies to continue securing tonnage on term charters, albeit for durations that rarely extend beyond a year or two.
In this environment, and with a highly specified fleet focused on the “workhorse” size segments, we have continued to have success in agreeing new charters and extensions. We have recently also returned to value-focused growth with the purchase and charter back of four 8,500 TEU post-panamax containerships, GSL’s first vessel acquisitions in nearly two years. These high-specification, enhanced-efficiency vessels will provide GSL with immediate cash flow from a top-tier counterparty and are being acquired on attractive terms, reflecting the recent normalization of asset values, while ensuring low residual value risk. All told, we have added almost $190.0 million of contracted revenue so far this year, bringing our forward charter cover to more than $2.1 billion over 2.5 years. Our strong contracted cash flows and discipline throughout the recent period of sharply elevated asset prices have put GSL in a strong position to selectively participate in secondhand acquisition opportunities that meet our strict criteria.”
Ian Webber, Chief Executive Officer, commented: “By remaining disciplined, aggressively deleveraging, and continually identifying opportunities to reduce our cost of debt, including by hedging our interest rate exposure, and enhance our overall financial flexibility, GSL is entering this new phase of the cycle with both good forward visibility on contracted cash flows and a robust balance sheet. This allows us to continue to be nimble with our capital allocation, moving quickly on the right growth opportunities while maintaining our well-supported dividend and capitalizing on stock market volatility to improve shareholder returns by buying back shares. Since third quarter of 2021, in total we have invested almost $44 million in share buy-backs, reducing our share count by nearly 7%. Our financial strength and discipline enable us to create value in multiple ways, and we intend to continue doing so in the manner that we believe best serves the long-term interests of our shareholders.”
SELECTED FINANCIAL DATA – UNAUDITED
(thousands of U.S. dollars)
| Three months ended | Three months ended | |
| March 31, 2023 | March 31, 2022 | |
| Operating Revenue (1) | 159,291 | 153,631 |
| Operating Income | 85,098 | 83,740 |
| Net Income (2) | 72,220 | 67,806 |
| Adjusted EBITDA (3) | 104,906 | 90,380 |
| Normalized Net Income (3) | 75,564 | 67,293 |
(1) Operating Revenue is net of address commissions which represent a discount provided directly to a charterer based on a fixed percentage of the agreed upon charter rate and also includes the amortization of intangible liabilities and the effect of the straight lining of time charter modifications. Brokerage commissions are included in “Time charter and voyage expenses” (see below).
(2) Net Income available to common shareholders.
(3) Adjusted EBITDA and Normalized Net Income are non-U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) financial measures, as explained further in this press release, and are considered by Global Ship Lease to be a useful measure of its performance. For reconciliations of these non-U.S. GAAP financial measures to net income, the most directly comparable U.S. GAAP financial measure, please see “Reconciliation of Non-U.S. GAAP Financial Measures” below.
Revenue and Utilization
Operating revenue derived from fixed-rate, mainly long-term, time-charters was $159.3 million in the three months ended Μarch 31, 2023, up $5.7 million (or 3.7%) on revenue of $153.6 million for the prior year period. The period-on-period increase in revenue was principally due to charter renewals at higher rates on nine vessels partially offset by (i) $9.5 million reduction in the amortization of intangible liabilities arising on below-market charters attached to certain vessel additions, and (ii) $1.9 million reduction in the credit from straightlining the effect of timecharter modifications. There were 302 days of offhire in the first quarter of 2023 of which 200 were for scheduled drydockings, compared to 309 days of offhire in the prior year period of which 227 were for scheduled drydockings. Utilization for the first quarter of 2023 was 94.8% compared to utilization of 94.7% in the same period of the prior year.
The table below shows fleet utilization for the three months ended March 31, 2023 and 2022, and for the years ended December 31, 2022, 2021, 2020 and 2019.
| Three months ended | Year ended | ||||||||||||
| March 31, | March 31, | Dec 31, | Dec 31, | Dec 31, | Dec 31, | ||||||||
| Days | 2023 | 2022 | 2022 | 2021 | 2020 | 2019 | |||||||
| Ownership days | 5,843 | 5,850 | 23,725 | 19,427 | 16,044 | 14,326 | |||||||
| Planned offhire - scheduled drydock | (200 | ) | (227 | ) | (581 | ) | (752 | ) | (687 | ) | (537 | ) | |
| Unplanned offhire | (102 | ) | (82 | ) | (460 | ) | (260 | ) | (95 | ) | (105 | ) | |
| Idle time | nil | nil | (30 | ) | (88 | ) | (338 | ) | (164 | ) | |||
| Operating days | 5,541 | 5,541 | 22,654 | 18,327 | 14,924 | 13,520 | |||||||
| Utilization | 94.8 | % | 94.7 | % | 95.5 | % | 94.3 | % | 93.0 | % | 94.4 | % | |
In 2023, we anticipate five further regulatory drydockings.
Vessel Operating Expenses
Vessel operating expenses, which are primarily the costs of crew, lubricating oil, repairs, maintenance, insurance and technical management fees, were up 8.6% to $42.8 million for the first quarter of 2023, compared to $39.4 million in the comparative period. The increase of $3.4 million was mainly due to (i) high inflation impact on all categories, ii) increase in repairs, spares and maintenance expenses for planned main engine maintenance and overhaul of diesel generators as well as main engine annual spares delivery, (iii) increased crew expenses as salaries were higher primarily due to limited crew supply as a consequence of current container market conditions, worldwide inflation and higher crew travel expenses due to increased number of crew changes and higher airfare prices and (iv) increased cost of lubricant consumption due to higher average prices. The average cost per ownership day in the quarter was $7,319, compared to $6,743 for the prior year period, up $576 per day, or 8.5%.
Time Charter and Voyage Expenses
Time charter and voyage expenses comprise mainly commission paid to ship brokers, the cost of bunker fuel for owner’s account when a ship is off-hire or idle and miscellaneous owner’s costs associated with a ship’s voyage. Time charter and voyage expenses were $5.5 million for the first quarter of 2023, compared to $4.4 million in the first quarter of 2022. The increase is mainly due to additional voyage administration costs and increased commissions on charter renewals at higher rates.
Depreciation and Amortization
Depreciation and amortization for the first quarter of 2023 was $21.2 million, compared to $19.9 million in the first quarter of 2022. The increase was mainly due to the 11 drydockings completed after March 31, 2022.
General and Administrative Expenses
General and administrative expenses were $4.8 million in the first quarter of 2023, compared to $6.2 million in the first quarter of 2022. The decrease was mainly due to lower stock-based compensation expense in the first quarter of 2023 and a one-off expense that occurred in first quarter of 2022 due to social security charges related to vesting of shares under the stock-based compensation plan. The average general and administrative expense per ownership day for the first quarter of 2023 was $820, compared to $1,066 in the comparative period, a decrease of $246 or 23.1%.
Adjusted EBITDA
Adjusted EBITDA (a non-GAAP financial measure) was $104.9 million for the first quarter of 2023, up from $90.4 million for the first quarter of 2022, with the net increase being mainly due to decrease in amortization of intangible liabilities.
Interest Expense and Interest Income
Debt as at March 31, 2023 totaled $896.5 million, comprising $440.2 million of secured bank debt collateralized by vessels, $323.8 million of 2027 Secured Notes collateralized by vessels, and $132.5 million under sale and leaseback financing transactions. As of March 31, 2023, five vessels were unencumbered.
Debt as at March 31, 2022 totaled $1,078.5 million, comprising $791.8 million of secured debt collateralized by vessels, $169.2 million under sale and leaseback financing transactions and $117.5 million of unsecured indebtedness on the 2024 Notes. As of March 31, 2022, no vessels were unencumbered.
Interest and other finance expenses for the first quarter of 2023 was $11.1 million, down from $18.7 million for the first quarter of 2022. The decrease in interest and other finance expenses was mainly due to lower average amount of debt outstanding and a $4.0 million prepayment fee on repayment of one facility in first quarter 2022. Including the effect of the interest rate caps and refinancing and repayment of certain of our debt using the net proceeds of our 2027 Secured Notes which closed in June 2022, the blended cost of our debt has decreased from approximately 4.72% for the first quarter 2022 to 4.53% for the first quarter 2023, despite an increase in three-month LIBOR/SOFR in first quarter of 2023 to 4.92% as compared to 0.53% in the prior year period.
Interest income for the first quarter of 2023 was $1.8 million, up from $0.3 million for the first quarter of 2022.
Other income, Net
Other income, net was $1.6 million in the first quarter of 2023, compared to an income of $0.4 million in the first quarter of 2022.
Fair value adjustment on derivatives
In December 2021, we entered into a USD 1 month LIBOR interest rate cap of 0.75% through fourth quarter of 2026 on $484.1 million of floating rate debt, which reduces over time and represented approximately half of the outstanding floating rate debt. In February 2022, we entered into two additional USD 1 month LIBOR interest rate caps of 0.75% through the fourth quarter of 2026 on the remaining balance of $507.9 million of floating rate debt. One of these interest rate caps was not designated as a cash flow hedge and therefore the negative fair value adjustment of $2.8 million for the first quarter of 2023 was recorded through the statement of income as compared to the positive fair value adjustment of $4.6 million in the first quarter of 2022. Interest rate caps will automatically transit to 1 month Compounded SOFR by June 30, 2023.
Earnings Allocated to Preferred Shares
The Series B Preferred Shares carry a coupon of 8.75%, the cost of which for the first quarter of 2023 was $2.4 million, the same as in first quarter 2022. The cost was $2.4 million in both quarters of 2023 and 2022 since there were no additional Series B Preferred Shares issued under our at-the-market program.
Net Income Available to Common Shareholders
Net income available to common shareholders for the three months ended March 31, 2023 was $72.2 million. Net income available to common shareholders for the three months ended March 31, 2022 was $67.8 million.
Earnings per share for the three months ended March 31, 2023 was $2.02, an increase of 8.6% from the earnings per share for the comparative period, which was $1.86.
Normalized net income (a non-GAAP financial measure) for the three months ended March 31, 2023, was $75.6 million. Normalized net income for the three months ended March 31, 2022 was $67.3 million.
Normalized earnings per share (a non-GAAP financial measure) for the three months ended March 31, 2023 was $2.12, an increase of 14.6% from Normalized earnings per share for the comparative period, which was $1.85.
Fleet
As at May 9, 2023, we had 64 containerships in our fleet.
Vessel Name | Capacity in TEUs | Lightweight (tons) | Year Built | Charterer | Earliest Charter Expiry Date | Latest Charter Expiry Date (2) | Daily Charter Rate $ |
| CMA CGM Thalassa | 11,040 | 38,577 | 2008 | CMA CGM | 4Q25 | 2Q26 | 47,200 |
| ZIM Norfolk (ex UASC Al Khor) (1) | 9,115 | 31,764 | 2015 | ZIM | 2Q27 | 4Q27 | 65,000 |
| Anthea Y (1) | 9,115 | 31,890 | 2015 | COSCO | 3Q25 | 4Q25 | 38,000 (3) |
| ZIM Xiamen (ex Maira XL)(1) | 9,115 | 31,820 | 2015 | ZIM | 3Q27 | 4Q27 | 65,000 |
| MSC Tianjin | 8,603 | 34,325 | 2005 | MSC | 2Q24 | 3Q24 | 19,000 |
| MSC Qingdao (4) | 8,603 | 34,609 | 2004 | MSC | 2Q24 | 2Q25 | 23,000 |
| GSL Ningbo | 8,603 | 34,340 | 2004 | MSC | 3Q27 | 4Q27 (5) | 22,500 (5) |
| GSL Eleni | 7,847 | 29,261 | 2004 | Maersk | 3Q24 | 1Q25 (6) | 16,500 (6) |
| GSL Kalliopi | 7,847 | 29,105 | 2004 | Maersk | 3Q23 | 4Q24 (6) | 18,900 (6) |
| GSL Grania | 7,847 | 29,190 | 2004 | Maersk | 3Q23 | 1Q25 (6) | 17,750 (6) |
| Mary (1) | 6,927 | 23,424 | 2013 | CMA CGM (7) | 4Q28 | 1Q31 (7) | 25,910 (7) |
| Kristina (1) | 6,927 | 23,421 | 2013 | CMA CGM (7) | 3Q29 | 3Q31 (7) | 25,910 (7) |
| Katherine (1) | 6,927 | 23,403 | 2013 | CMA CGM (7) | 1Q29 | 2Q31 (7) | 25,910 (7) |
| Alexandra (1) | 6,927 | 23,348 | 2013 | CMA CGM (7) | 2Q29 | 3Q31 (7) | 25,910 (7) |
| Alexis (1) | 6,882 | 23,919 | 2015 | CMA CGM (7) | 2Q29 | 3Q31 (7) | 25,910 (7) |
| Olivia I (1) | 6,882 | 23,864 | 2015 | CMA CGM (7) | 2Q29 | 2Q31 (7) | 25,910 (7) |
| GSL Christen | 6,840 | 27,954 | 2002 | Maersk | 3Q23 | 1Q24 | 35,000 |
| GSL Nicoletta | 6,840 | 28,070 | 2002 | Maersk | 3Q24 | 1Q25 | 35,750 |
| CMA CGM Berlioz | 6,621 | 26,776 | 2001 | CMA CGM | 4Q25 | 2Q26 | 37,750 |
| Agios Dimitrios (4) | 6,572 | 24,931 | 2011 | MSC | 4Q23 | 3Q24 | 20,000 |
| GSL Vinia | 6,080 | 23,737 | 2004 | Maersk | 3Q24 | 1Q25 | 13,250 |
| GSL Christel Elisabeth | 6,080 | 23,745 | 2004 | Maersk | 2Q24 | 1Q25 | 13,250 |
| GSL Dorothea | 5,992 | 24,243 | 2001 | Maersk | 3Q24 | 3Q26 | 18,600 (8) |
| GSL Arcadia | 6,008 | 24,858 | 2000 | Maersk | 2Q24 | 1Q26 | 18,600 (8) |
| GSL Violetta | 6,008 | 24,873 | 2000 | Maersk | 4Q24 | 4Q25 | 18,600 (8) |
| GSL Maria | 6,008 | 24,414 | 2001 | Maersk | 4Q24 | 1Q27 | 18,600 (8) |
| GSL MYNY | 6,008 | 24,873 | 2000 | Maersk | 3Q24 | 1Q26 | 18,600 (8) |
| GSL Melita | 6,008 | 24,848 | 2001 | Maersk | 3Q24 | 3Q26 | 18,600 (8) |
| GSL Tegea | 5,992 | 24,308 | 2001 | Maersk | 3Q24 | 3Q26 | 18,600 (8) |
| Tasman | 5,936 | 25,010 | 2000 | Maersk | 4Q23 | 2Q24 | 20,000 |
| ZIM Europe | 5,936 | 25,010 | 2000 | ZIM | 1Q24 | 2Q24 | 24,250 |
| Ian H | 5,936 | 25,128 | 2000 | ZIM | 2Q24 | 4Q24 | 32,500 |
| GSL Tripoli | 5,470 | 22,259 | 2009 | Maersk | 4Q24 | 4Q27 | 36,500 (9) |
| GSL Kithira | 5,470 | 22,108 | 2009 | Maersk | 4Q24 | 1Q28 | 36,500 (9) |
| GSL Tinos | 5,470 | 22,067 | 2010 | Maersk | 4Q24 | 4Q27 | 36,500 (9) |
| GSL Syros | 5,470 | 22,098 | 2010 | Maersk | 4Q24 | 4Q27 | 36,500 (9) |
| Dolphin II | 5,095 | 20,596 | 2007 | OOCL | 1Q25 | 3Q25 | 53,500 |
| Orca I | 5,095 | 20,633 | 2006 | Maersk | 2Q24 | 4Q25 | 21,000 (10) |
| CMA CGM Alcazar | 5,089 | 20,087 | 2007 | CMA CGM | 3Q26 | 1Q27 | 35,500 |
| GSL Château d’If | 5,089 | 19,994 | 2007 | CMA CGM | 4Q26 | 1Q27 | 35,500 |
| GSL Susan | 4,363 | 17,309 | 2008 | CMA CGM | 3Q27 | 1Q28 | Confidential (11) |
| CMA CGM Jamaica | 4,298 | 17,272 | 2006 | CMA CGM | 1Q28 | 2Q28 | Confidential (11) |
| CMA CGM Sambhar | 4,045 | 17,429 | 2006 | CMA CGM | 1Q28 | 2Q28 | Confidential (11) |
| CMA CGM America | 4,045 | 17,428 | 2006 | CMA CGM | 1Q28 | 2Q28 | Confidential (11) |
| GSL Rossi | 3,421 | 16,420 | 2012 | ZIM | 1Q26 | 3Q26 | 38,875 (12) |
| GSL Alice | 3,421 | 16,543 | 2014 | CMA CGM | 2Q25 | 2Q25 | 20,500 (13) |
| GSL Eleftheria | 3,404 | 16,642 | 2013 | Maersk | 3Q25 | 4Q25 | 37,975 |
| GSL Melina | 3,404 | 16,703 | 2013 | Maersk | 2Q23 | 2Q23 | 24,500 |
| GSL Valerie | 2,824 | 11,971 | 2005 | ZIM | 1Q25 | 3Q25 | 35,600 (14) |
| Matson Molokai | 2,824 | 11,949 | 2007 | Matson | 2Q25 | 3Q25 | 36,500 |
| GSL Lalo | 2,824 | 11,950 | 2006 | MSC (15) | 1Q24 | 2Q24 | 17,500 (15) |
| GSL Mercer | 2,824 | 11,970 | 2007 | ONE | 4Q24 | 2Q25 | 35,750 |
| Athena | 2,762 | 13,538 | 2003 | Hapag-Lloyd | 2Q24 | 2Q24 | 21,500 |
| GSL Elizabeth | 2,741 | 11,507 | 2006 | ONE | 2Q23 | 3Q23 | 18,750 (16) |
| Beethoven tbr GSL Chloe | 2,546 | 12,212 | 2012 | ONE | 4Q24 | 1Q25 | 33,000 |
| GSL Maren | 2,546 | 12,243 | 2014 | Westwood (Swire) | 1Q24 | 2Q24 | 17,200 (17) |
| Maira | 2,506 | 11,453 | 2000 | Hapag-Lloyd | 3Q23 | 4Q23 | 17,750 (18) |
| Nikolas | 2,506 | 11,370 | 2000 | CMA CGM | 1Q24 | 1Q24 | 16,750 (19) |
| Newyorker | 2,506 | 11,463 | 2001 | CMA CGM | 1Q24 | 3Q24 | 20,700 |
| Manet | 2,272 | 11,727 | 2001 | OOCL | 4Q24 | 2Q25 | 32,000 |
| Keta | 2,207 | 11,731 | 2003 | CMA CGM | 1Q25 | 1Q25 | 25,000 |
| Julie | 2,207 | 11,731 | 2002 | Footnote (20) | 2Q25 | 3Q25 | Footnote (20) |
| Kumasi | 2,207 | 11,791 | 2002 | Wan Hai | 1Q25 | 2Q25 | 38,000 |
| Akiteta | 2,207 | 11,731 | 2002 | OOCL | 4Q24 | 1Q25 | 32,000 |
| (1) Modern design, high reefer capacity, fuel-efficient vessel. (2) In many instances charterers have the option to extend a charter beyond the nominal latest expiry date by the amount of time that the vessel was off hire during the course of that charter. This additional charter time (“Offhire Extension”) is computed at the end of the initially contracted charter period. The Latest Charter Expiry Dates shown in this table have been adjusted to reflect offhire accrued up to the date of issuance of this release plus estimated offhire scheduled to occur during the remaining lifetimes of the respective charters. However, as actual offhire can only be calculated at the end of each charter, in some cases actual Offhire Extensions – if invoked by charterers – may exceed the Latest Charter Expiry Dates indicated. (3) Anthea Y was forward fixed to a leading liner operator for a period of 24 months +/- 30 days, with the new charter to commence upon expiry of the existing charter in 3Q or 4Q23. The new charter is expected to generate annualized Adjusted EBITDA of approximately $11.9 million. (4) MSC Qingdao & Agios Dimitrios are fitted with Exhaust Gas Cleaning Systems (“scrubbers”). (5) GSL Ningbo chartered to MSC at $22,500 per day to July 2023. Thereafter, the charter has been extended by 48 to 52 months, at a rate expected to generate annualized Adjusted EBITDA of approximately $16.5 million. (6) GSL Eleni (delivered 2Q 2019) is chartered for five years; GSL Kalliopi (delivered 4Q 2019) and GSL Grania (delivered 3Q 2019) are chartered for three years plus two successive periods of one year each, at the option of the charterer. For GSL Kalliopi and GSL Grania the first option periods were exercised in May 2022. During the option periods the charter rates for GSL Kalliopi and GSL Grania are $18,900 per day and $17,750 per day respectively. (7) Mary, Kristina, Katherine, Alexandra, Alexis, Olivia I were forward fixed to Hapag-Lloyd for five years, followed by two periods of 12 months each at the option of the charterer. The new charters are scheduled to commence as each of the existing charters expire, on a staggered basis, between approximately late 2023 and late 2024, following the expiration of existing charters. The charters are expected to generate average annualized Adjusted EBITDA of approximately $13.1 million per ship. (8) GSL Maria, GSL Violetta, GSL Arcadia, GSL MYNY, GSL Melita, GSL Tegea and GSL Dorothea. Contract cover for each ship is for a firm period of at least three years from the date each vessel was delivered, with charterers holding a one-year extension option on each charter (at a rate of $12,900 per day), followed by a second option (at a rate of $12,700 per day) with the period determined by – and terminating prior to – each vessel’s 25th year drydocking & special survey. (9) GSL Tripoli, GSL Kithira, GSL Tinos, and GSL Syros. Ultra-high reefer ships of 5,470 TEU each. Contract cover on each ship is for a firm period of three years, from their delivery dates in 2021, at a rate of $36,500 per day, with a period of an additional three years (at $17,250 per day) at charterers’ option. (10) Orca I. Chartered at $21,000 per day through to the median expiry of the charter in 2Q2024; thereafter the charterer has the option to charter the vessel for a further 12-14 months at the same rate. (11) GSL Susan, CMA CGM Jamaica, CMA CGM Sambhar and CMA CGM America. In July 2022, these four vessels were each forward fixed for five years +/- 45 days at charter rates expected to generate average annualized Adjusted EBITDA of approximately $11.2 million per vessel. The new charter for GSL Susan commenced in 4Q 2022, while the charters for the remaining three vessels commenced in late 1Q 2023. (12) GSL Rossi. Chartered at an average rate of $38,875 per day-$42,750 for the first 18 months, $38,000 for the next 18 months and $35,000 for the remaining period. (13) GSL Alice. Chartered at $20,500 per day for a period of 24 months +/- 30 days at the option of charterer. The new charter commenced in May 2023. (14) GSL Valerie. Chartered at an average rate of $35,600 per day-$40,000 for the first 12 months, $36,000 for the next 12 months and $32,000 for the remaining period. (15) GSL Lalo. Chartered to MSC at $17,500 per day for a period of 14 to 16 months, upon expiry of the preceding charter in 1Q 2023. (16) GSL Elizabeth. Charter extended to ONE at $18,750 per day for a period of four to seven months, commenced in late 4Q 2022. (17) GSL Maren. Charter extended to Westwood (Swire) for a period of 11 to 14 months, commenced at the end of 1Q 2023 at a rate of $17,200 per day for the first 2 months and for the remaining period at a rate of $18,200. (18) Maira. Charter extended for four to 6.5 months, commencing at the end of 2Q 2023 at a rate of $17,750 per day. (19) Nikolas. Charter extended for ten to 12 months, commenced at the end of 1Q 2023 at a rate of $16,750 per day. (20) Julie was forward fixed to a leading liner company for a period of 24 months +/- 30 days at the option of the charterer. The new charter is scheduled to commence in 3Q 2023, after the vessel’s scheduled drydock. The new charter is expected to generate annualized Adjusted EBITDA of approximately $2.0 million. | |||||||
On May 8, 2023, we announced that we had contracted to purchase four ships for an aggregate purchase price of $123.3 million. Contract cover for each vessel is for a minimum firm period 24 months from the date each vessel is delivered, with charterers holding one year extension options. The vessels are expected to generate aggregate Adjusted EBITDA of approximately $76.6 million over the minimum firm period. The vessels and their expected delivery dates are shown in the table below.
Vessel Name | Capacity in TEUs | Lightweight (tons) | Year Built | Expected Delivery date | |
| tbr GSL Alexandra | 8,544 | 37,777 | 2004 | Late 2Q23/early 3Q23 | |
| tbr GSL Sofia | 8,544 | 37,777 | 2003 | Late 2Q23/early 3Q23 | |
| tbr GSL Effie | 8,544 | 37,777 | 2003 | Late2Q23/early 3Q23 | |
| tbr GSL Lydia | 8,544 | 37,777 | 2003 | Late 2Q23/early 3Q23 | |
Conference Call and Webcast
Global Ship Lease will hold a conference call to discuss the Company's results for the three months ended March 31, 2023 today, Wednesday May 10, 2023 at 10:30 a.m. Eastern Time. There are two ways to access the conference call:
(1) Dial-in: (800) 715-9871 or (646) 307-1963; Passcode: 6275035
Please dial in at least 10 minutes prior to 10:30 a.m. Eastern Time to ensure a prompt start to the call.
(2) Live Internet webcast and slide presentation: http://www.globalshiplease.com
The webcast will also be archived on the Company’s website: http://www.globalshiplease.com.
Annual Report on Form 20-F
The Company’s Annual Report for 2022 was filed with the Securities and Exchange Commission (the “Commission”) on March 23, 2023. A copy of the report can be found under the Investor Relations section (Annual Reports) of the Company’s website at http://www.globalshiplease.com or on the Commission’s website at www.sec.gov. Shareholders may request a hard copy of the audited financial statements free of charge by contacting the Company at info@globalshiplease.com or by writing to Global Ship Lease, Inc, care of Global Ship Lease Services Limited, 25 Wilton Road, London SW1V ILW.
About Global Ship Lease
Global Ship Lease is a leading independent owner of containerships with a diversified fleet of mid-sized and smaller containerships. Incorporated in the Marshall Islands, Global Ship Lease commenced operations in December 2007 with a business of owning and chartering out containerships under fixed-rate charters to top tier container liner companies. It was listed on the New York stock Exchange in August 2008.
As at May 9, 2023, Global Ship Lease owned 64 containerships and had contracted to purchase a further four ships, ranging from 2,207 to 11,040 TEU, with an aggregate capacity (when fully delivered) of 375,406 TEU. 36 ships are wide-beam Post-Panamax.
Adjusted to include all charters agreed up to May 9, 2023, and the four ships to be acquired, the average remaining term of the Company’s charters as at March 31, 2023, to the mid-point of redelivery, including options under the Company’s control and other than if a redelivery notice has been received, was 2.5 years on a TEU-weighted basis. Contracted revenue on the same basis was $2.11 billion. Contracted revenue was $2.54 billion, including options under charterers’ control and with latest redelivery date, representing a weighted average remaining term of 3.3 years.
Reconciliation of Non-U.S. GAAP Financial Measures
To supplement our financial information presented in accordance with U.S. GAAP, we use certain “non-GAAP financial measures” as such term is defined in Regulation G promulgated by the SEC. Generally, a non-GAAP financial measure is a numerical measure of a company’s operating performance, financial position or cash flows that excludes or includes amounts that are included in, or excluded from, the most directly comparable measure calculated and presented in accordance with U.S. GAAP. We believe that the presentation of these measures provides investors with greater transparency and supplemental data relating to our financial condition and results of operations, and therefore a more complete understanding of factors affecting our business than U.S. GAAP measures alone. In addition, we believe that the presentation of these matters is useful to investors for period-to-period comparison of results as the items may reflect certain unique and/or non-operating items such as impairment charges, contract termination costs or items outside of our control.
We believe that the presentation of the following non-U.S. GAAP financial measures is useful to investors because they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.
A. Adjusted EBITDA
Adjusted EBITDA represents net income available to common shareholders before interest income and expense, earnings allocated to preferred shares, income taxes, depreciation and amortization of drydocking net costs, gains or losses on the sale of vessels, amortization of intangible liabilities, charges for stock-based compensation, fair value adjustment on derivatives, the effect of the straight lining of time charter modifications, and impairment losses. Adjusted EBITDA is a non-U.S. GAAP quantitative measure used to assist in the assessment of our ability to generate cash from our operations. We believe that the presentation of Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. Adjusted EBITDA is not defined in U.S. GAAP and should not be considered to be an alternative to net income or any other financial metric required by such accounting principles. Our use of Adjusted EBITDA may vary from the use of similarly titled measures by others in our industry.
Adjusted EBITDA is presented herein both on a historic basis and on a forward-looking basis in certain instances. We do not provide a reconciliation of such forward looking non-U.S. GAAP financial measure to the most directly comparable U.S. GAAP measure because such U.S. GAAP financial measure on a forward-looking basis is not available to us without unreasonable effort.
ADJUSTED EBITDA - UNAUDITED
| (thousands of U.S. dollars) | |||||||
| Three months ended | Three months ended | ||||||
| March 31, 2023 | March 31, 2022 | ||||||
| Net income available to Common Shareholders | 72,220 | 67,806 | |||||
| Adjust: | Depreciation and amortization | 21,184 | 19,852 | ||||
| Amortization of intangible liabilities | (3,364 | ) | (12,855 | ) | |||
| Fair value adjustment on derivative asset | 2,785 | (4,564 | ) | ||||
| Interest income | (1,812 | ) | (250 | ) | |||
| Interest expense | 11,103 | 18,735 | |||||
| Stock-based compensation | 2,674 | 3,430 | |||||
| Earnings allocated to preferred shares | 2,384 | 2,384 | |||||
| Effect from straight lining time charter modifications | (2,268 | ) | (4,158 | ) | |||
| Adjusted EBITDA | 104,906 | 90,380 | |||||
B. Normalized net income
Normalized net income represents net income available to common shareholders after adjusting for certain non-recurring items. Normalized net income is a non-U.S. GAAP quantitative measure which we believe will assist investors and analysts who often adjust reported net income for items that do not affect operating performance or operating cash generated. Normalized net income is not defined in U.S. GAAP and should not be considered to be an alternate to net income or any other financial metric required by such accounting principles. Our use of Normalized net income may vary from the use of similarly titled measures by others in our industry.
NORMALIZED NET INCOME - UNAUDITED
| (thousands of U.S. dollars) | |||||
| Three months ended | Three months ended | ||||
| March 31, 2023 | March 31, 2022 | ||||
| Net income available to Common Shareholders | 72,220 | 67,806 | |||
| Adjust: | Fair value adjustment on derivative asset | 2,785 | (4,564 | ) | |
| Accelerated write off of deferred financing charges related to partial repayment of HCOB-CACIB Credit Facility | 108 | - | |||
| Prepayment fee on repayment of Blue Ocean Credit Facility | - | 3,968 | |||
| Accelerated write off of deferred financing charges related to full repayment of Blue Ocean Credit Facility | - | 83 | |||
| Forfeit of certain stock-based compensation awards | 451 | - | |||
| Normalized net income | 75,564 | 67,293 | |||
C. Normalized Earnings per Share
Normalized Earnings per Share represents Earnings per Share after adjusting for certain non-recurring items. Normalized Earnings per Share is a non-U.S. GAAP quantitative measure which we believe will assist investors and analysts who often adjust reported Earnings per Share for items that do not affect operating performance or operating cash generated. Normalized Earnings per Share is not defined in U.S. GAAP and should not be considered to be an alternate to Earnings per Share as reported or any other financial metric required by such accounting principles. Our use of Normalized Earnings per Share may vary from the use of similarly titled measures by others in our industry.
NORMALIZED EARNINGS PER SHARE - UNAUDITED
| Three months ended | Three months ended | |||
| March 31, 2023 | March 31, 2022 | |||
| EPS as reported (USD) | 2.02 | 1.86 | ||
| Normalized net income adjustments-Class A common shares (in thousands USD) | 3,344 | (513 | ) | |
| Weighted average number of Class A Common shares | 35,696,225 | 36,401,764 | ||
| Adjustment on EPS (USD) | 0.10 | (0.01 | ) | |
| Normalized EPS (USD) | 2.12 | 1.85 | ||
Safe Harbor Statement
This communication contains forward-looking statements. Forward-looking statements provide Global Ship Lease's current expectations or forecasts of future events. Forward-looking statements include statements about Global Ship Lease's expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such as "anticipate", "believe", "continue", "estimate", "expect", "intend", "may", "ongoing", "plan", "potential", "predict", “should”, "project", "will" or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. These forward-looking statements are based on assumptions that may be incorrect, and Global Ship Lease cannot assure you that these projections included in these forward-looking statements will come to pass. Actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors.
The risks and uncertainties include, but are not limited to:
- future operating or financial results;
- expectations regarding the strength of future growth of the container shipping industry, including the rates of annual demand and supply growth;
- geo-political events such as the conflict in Ukraine;
- the length and severity of the ongoing outbreak of the novel coronavirus (COVID-19) around the world and governmental responses thereto;
- the financial condition of our charterers and their ability to pay charterhire in accordance with the charters;
- the overall health and condition of the U.S. and global financial markets;
- our financial condition and liquidity, including our ability to obtain additional financing to fund capital expenditures, vessel acquisitions and for other general corporate purposes and our ability to meet our financial covenants and repay our borrowings;
- our expectations relating to dividend payments and expectations of our ability to make such payments including the availability of cash and the impact of constraints under our credit facilities;
- future acquisitions, business strategy and expected capital spending;
- operating expenses, availability of key employees, crew, number of off-hire days, drydocking and survey requirements, costs of regulatory compliance, insurance costs and general and administrative costs;
- general market conditions and shipping industry trends, including charter rates and factors affecting supply and demand;
- assumptions regarding interest rates and inflation;
- changes in the rate of growth of global and various regional economies;
- risks incidental to ship operation, including piracy, discharge of pollutants and ship accidents and damage including total or constructive total loss;
- estimated future capital expenditures needed to preserve our capital base;
- our expectations about the availability of vessels to purchase, the time that it may take to construct new vessels, or the useful lives of our vessels;
- our continued ability to enter into or renew charters including the re-chartering of vessels on the expiry of existing charters, or to secure profitable employment for our vessels in the spot market;
- our ability to realize expected benefits from our acquisition of secondhand vessels;
- our ability to capitalize on our management’s and directors’ relationships and reputations in the containership industry to its advantage;
- changes in governmental and classification societies’ rules and regulations or actions taken by regulatory authorities;
- expectations about the availability of insurance on commercially reasonable terms;
- changes in laws and regulations (including environmental rules and regulations); and
- potential liability from future litigation.
Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Global Ship Lease's actual results could differ materially from those anticipated in forward-looking statements for many reasons specifically as described in Global Ship Lease's filings with the U.S. Securities and Exchange Commission (the “SEC”). Accordingly, you should not unduly rely on these forward-looking statements, which speak only as of the date of this communication.
Global Ship Lease undertakes no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this communication or to reflect the occurrence of unanticipated events. You should, however, review the factors and risks Global Ship Lease describes in the reports it will file from time to time with the SEC after the date of this communication.
Global Ship Lease, Inc.
Interim Unaudited Condensed Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars except share data)
| March 31, 2023 | December 31, 2022 | ||||
| ASSETS | |||||
| CURRENT ASSETS | |||||
| Cash and cash equivalents | $ | 125,157 | $ | 120,130 | |
| Time deposits | 9,600 | 8,550 | |||
| Restricted cash | 23,784 | 28,363 | |||
| Accounts receivable, net | 3,566 | 3,684 | |||
| Inventories | 11,544 | 12,237 | |||
| Prepaid expenses and other current assets | 39,326 | 33,765 | |||
| Derivative asset | 27,420 | 29,645 | |||
| Due from related parties | 1,050 | 673 | |||
| Total current assets | $ | 241,447 | $ | 237,047 | |
| NON - CURRENT ASSETS | |||||
| Vessels in operation | $ | 1,602,141 | $ | 1,623,307 | |
| Advances for vessels' acquisitions and other additions | 7,126 | 4,881 | |||
| Deferred charges, net | 59,328 | 54,663 | |||
| Other non - current assets | 31,934 | 31,022 | |||
| Derivative asset, net of current portion | 25,264 | 33,858 | |||
| Restricted cash, net of current portion | 129,418 | 121,437 | |||
| Total non - current assets | 1,855,211 | 1,869,168 | |||
| TOTAL ASSETS | $ | 2,096,658 | $ | 2,106,215 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| CURRENT LIABILITIES | |||||
| Accounts payable | $ | 22,248 | $ | 22,755 | |
| Accrued liabilities | 29,490 | 36,038 | |||
| Current portion of long-term debt | 185,374 | 189,832 | |||
| Current portion of deferred revenue | 13,126 | 12,569 | |||
| Due to related parties | 804 | 572 | |||
| Total current liabilities | $ | 251,042 | $ | 261,766 | |
| LONG-TERM LIABILITIES | |||||
| Long - term debt, net of current portion and deferred financing costs | $ | 697,434 | $ | 744,557 | |
| Intangible liabilities-charter agreements | 10,378 | 14,218 | |||
| Deferred revenue, net of current portion | 126,838 | 119,183 | |||
| Total non - current liabilities | 834,650 | 877,958 | |||
| Total liabilities | $ | 1,085,692 | $ | 1,139,724 | |
| Commitments and Contingencies | - | - | |||
| SHAREHOLDERS' EQUITY | |||||
| Class A common shares - authorized 214,000,000 shares with a $0.01 par value 35,491,054 shares issued and outstanding (2022 – 35,990,288 shares) | $ | 354 | $ | 359 | |
| Series B Preferred Shares - authorized 104,000 shares with a $0.01 par value 43,592 shares issued and outstanding (2022 – 43,592 shares) | - | - | |||
| Additional paid in capital | 681,055 | 688,262 | |||
| Retained earnings | 305,259 | 246,390 | |||
| Accumulated other comprehensive income | 24,298 | 31,480 | |||
| Total shareholders' equity | 1,010,966 | 966,491 | |||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 2,096,658 | $ | 2,106,215 | |
Global Ship Lease, Inc.
Interim Unaudited Condensed Consolidated Statements of Income
(Expressed in thousands of U.S. dollars)
| Three months ended March 31, | |||||||
| 2023 | 2022 | ||||||
| OPERATING REVENUES | |||||||
| Time charter revenue (includes related party revenues of $nil and $39,663 for each of the three-month periods ended March 31, 2023 and 2022, respectively) | $ | 155,927 | $ | 140,776 | |||
| Amortization of intangible liabilities-charter agreements (include related party amortization of intangible liabilities-charter agreements of $nil and $3,291 for the three-month periods ended March 31, 2023 and 2022, respectively) | 3,364 | 12,855 | |||||
| Total Operating Revenues | 159,291 | 153,631 | |||||
| OPERATING EXPENSES: | |||||||
| Vessel operating expenses (include related party vessel operating expenses of $4,345 and $4,379 for each of the three-month periods ended March 31, 2023 and 2022, respectively) | 42,762 | 39,444 | |||||
| Time charter and voyage expenses (include related party time charter and voyage expenses of $1,720 and $1,477 for the three-month periods ended March 31, 2023 and 2022, respectively) | 5,458 | 4,357 | |||||
| Depreciation and amortization | 21,184 | 19,852 | |||||
| General and administrative expenses | 4,789 | 6,238 | |||||
| Operating Income | 85,098 | 83,740 | |||||
| NON-OPERATING INCOME/(EXPENSES) | |||||||
| Interest income | 1,812 | 250 | |||||
| Interest and other finance expenses | (11,103 | ) | (18,735 | ) | |||
| Other income, net | 1,582 | 371 | |||||
| Fair value adjustment on derivative asset | (2,785 | ) | 4,564 | ||||
| Total non-operating expenses | (10,494 | ) | (13,550 | ) | |||
| Income before income taxes | 74,604 | 70,190 | |||||
| Income taxes | - | - | |||||
| Net Income | 74,604 | 70,190 | |||||
| Earnings allocated to Series B Preferred Shares | (2,384 | ) | (2,384 | ) | |||
| Net Income available to Common Shareholders | $ | 72,220 | $ | 67,806 | |||
Global Ship Lease, Inc.
Interim Unaudited Condensed Consolidated Statements of Cash Flows
(Expressed in thousands of U.S. dollars)
| Three months ended March 31, | |||||||
| 2023 | 2022 | ||||||
| Cash flows from operating activities: | |||||||
| Net income | $ | 74,604 | $ | 70,190 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization | $ | 21,184 | $ | 19,852 | |||
| Amounts reclassified from other comprehensive income | (39 | ) | - | ||||
| Amortization of derivative asset’s premium | 891 | 1 | |||||
| Amortization of deferred financing costs | 1,475 | 1,579 | |||||
| Amortization of original issue premium on repurchase of notes | - | (120 | ) | ||||
| Amortization of intangible liabilities-charter agreements | (3,364 | ) | (12,855 | ) | |||
| Fair value adjustment on derivative asset | 2,785 | (4,564 | ) | ||||
| Prepayment fees on debt repayment | - | 3,968 | |||||
| Stock-based compensation expense | 2,674 | 3,430 | |||||
| Changes in operating assets and liabilities: | |||||||
| Increase in accounts receivable and other assets | $ | (6,355 | ) | $ | (1,835 | ) | |
| Decrease in inventories | 693 | 425 | |||||
| Increase in derivative asset | - | (15,370 | ) | ||||
| Decrease in accounts payable and other liabilities | (9,578 | ) | (5,854 | ) | |||
| Increase in related parties' balances, net | (145 | ) | (1,128 | ) | |||
| Increase/(decrease) in deferred revenue | 8,212 | (1,502 | ) | ||||
| Unrealized foreign exchange loss | - | 3 | |||||
| Net cash provided by operating activities | $ | 93,037 | $ | 56,220 | |||
| Cash flows from investing activities: | |||||||
| Cash paid for vessel expenditures | (1,182 | ) | (1,987 | ) | |||
| Advances for vessel acquisitions and other additions | (3,232 | ) | (1,122 | ) | |||
| Cash paid for drydockings | (6,305 | ) | (9,315 | ) | |||
| Net proceeds from sale of vessel | 5,940 | - | |||||
| Time deposits acquired | (1,050 | ) | - | ||||
| Net cash used in investing activities | $ | (5,829 | ) | $ | (12,424 | ) | |
| Cash flows from financing activities: | |||||||
| Proceeds from drawdown of credit facilities and sale and leaseback | - | 60,000 | |||||
| Repayment of credit facilities and sale and leaseback | (53,056 | ) | (40,911 | ) | |||
| Repayment of refinanced debt, including prepayment fees | - | (30,173 | ) | ||||
| Deferred financing costs paid | - | (2,246 | ) | ||||
| Cancellation of Class A common shares | (9,988 | ) | - | ||||
| Class A common shares-dividend paid | (13,351 | ) | (9,257 | ) | |||
| Series B preferred shares-dividend paid | (2,384 | ) | (2,384 | ) | |||
| Net cash used in financing activities | $ | (78,779 | ) | $ | (24,971 | ) | |
| Net increase in cash and cash equivalents and restricted cash | 8,429 | 18,825 | |||||
| Cash and cash equivalents and restricted cash at beginning of the period | 269,930 | 195,642 | |||||
| Cash and cash equivalents and restricted cash at end of the period | $ | 278,359 | $ | 214,467 | |||
| Supplementary Cash Flow Information: | |||||||
| Cash paid for interest | $ | 16,454 | $ | 12,589 | |||
| Cash received from interest rate caps | 7,077 | - | |||||
| Non-cash investing activities: | |||||||
| Unpaid capitalized expenses | 9,543 | 8,201 | |||||
| Unpaid drydocking expenses | 13,869 | 5,903 | |||||
| Unpaid advances for vessels' acquisitions and other additions | - | 890 | |||||
| Non-cash financing activities: | |||||||
| Unrealized (loss)/gain on derivative assets | (8,034 | ) | 17,282 | ||||
Investor and Media Contacts:
The IGB Group
Bryan Degnan
646-673-9701
or
Leon Berman
212-477-8438
