Global Ship Lease, Inc. (NYSE:GSL) (the “Company”), a containership
charter owner, announced today its unaudited results for the three
months and nine months ended September 30, 2016.
Third Quarter and Year To Date Highlights
- Reported revenue of $41.2 million for the third quarter 2016.
Revenue for the nine months ended September 30, 2016 was $125.1
million
- Reported net loss(1) of $23.7 million for the third quarter
2016, after a $29.4 million non-cash impairment charge in respect
to two vessels. For the nine months ended September 30, 2016,
net loss was $13.1 million after the impairment charge
- Excluding the non-cash impairment, normalized net income(1)(2)
was $5.2 million for the third quarter 2016. Normalized net
income was $16.3 million for the nine months ended September 30,
2016
- Generated $28.1 million of adjusted EBITDA(2) for the third
quarter 2016. Adjusted EBITDA for the nine months ended
September 30, 2016 was $86.2 million
- Agreed with CMA CGM to extend the charters of the Marie Delmas
and Kumasi, two 2,207-TEU vessels, for a period of up to 3.25
years, at GSL's option. A revised rate of $13,000 per day applies
from August 1, 2016 until the charters' previous earliest expiry
dates in September 2017, after which Global Ship Lease has three
consecutive option periods, the first of 1.25 years and the second
and third of one year each, through December 31, 2020 at a rate of
$9,800 per day
Ian Webber, Chief Executive Officer of Global Ship Lease,
stated, “Our reliable cashflows and high-quality operating
performance in the third quarter of 2016 once again demonstrated
the stability and value of our long-term, fixed-rate chartering
strategy. At a time when market conditions continue to be extremely
challenging for both owners and operators, Global Ship Lease
remains fully insulated from the market through late 2017. We were
pleased during the quarter to reduce our market exposure by
successfully securing extensions for two of our earliest expiring
charters through late
2020.”
Mr. Webber continued, “Despite difficult market conditions in
the near term, the combined effect of record levels of vessel
scrapping and low levels of new vessel ordering is moving the
market for mid-sized and smaller containerships in the direction of
equilibrium. Our financial strength and the stability and forward
visibility afforded by our contracted cashflows position us to
benefit from the eventual recovery. In the interim, we believe that
we can maximize shareholder value by continuing our disciplined and
highly selective pursuit of accretive, charter-attached growth
opportunities, while also opportunistically delevering our balance
sheet.”
|
SELECTED FINANCIAL DATA – UNAUDITED (thousands of
U.S. dollars) |
|
Three |
Three |
Nine |
Nine |
|
monthsended |
monthsended |
monthsended |
monthsended |
|
September30, 2016 |
September30, 2015 |
September30, 2016 |
September30, 2015 |
|
|
|
|
|
Revenue |
|
41,154 |
|
|
42,184 |
|
|
125,097 |
|
|
120,890 |
|
Operating
(Loss) Income |
|
(11,884 |
) |
|
(28,270 |
) |
|
24,422 |
|
|
(160 |
) |
Net (Loss)
Income (1) |
|
(23,685 |
) |
|
(41,084 |
) |
|
(13,085 |
) |
|
(38,183 |
) |
Adjusted
EBITDA (2) |
|
28,051 |
|
|
27,954 |
|
|
86,169 |
|
|
78,465 |
|
Normalised
Net Income (Loss) (1)(2) |
|
5,240 |
|
|
3,616 |
|
|
16,301 |
|
|
6,517 |
|
|
|
|
|
|
(1) Net income (loss) and Normalized net income (loss) available
to common shareholders
(2) Adjusted EBITDA and Normalized net income (loss) are non-US
Generally Accepted Accounting Principles (US GAAP) measures, as
explained further in this press release, and are considered by
Global Ship Lease to be useful measures of its performance.
Reconciliations of such non-GAAP measures to the interim unaudited
financial information are provided in this Earnings Release.
Revenue and Utilization
The fleet generated revenue from fixed rate, mainly long-term
time charters of $41.2 million in the three months ended September
30, 2016, down $1.0 million from revenue of $42.2 million for the
comparative period in 2015, due mainly to reduced revenue as a
consequence of the disposals of Ville d’Aquarius and Ville d’Orion
in fourth quarter 2015 and increased levels of offhire from
regulatory drydockings, and partly offset by the addition of OOCL
Ningbo from September 17, 2015 at a daily charter rate of $34,500.
There were 1,656 ownership days in the quarter, down 6.0% from
1,762 in the comparable period in 2015. In the third quarter 2016,
there was no unplanned offhire and 38 days of planned offhire from
regulatory drydockings, giving an overall utilization of 97.7%.
In the comparable 2015 period, there were 1,762 ownership
days and only one day offhire, which was unplanned, giving an
overall utilization of 99.9%.
For the nine months ended September 30, 2016, revenue was $125.1
million, up $4.2 million from revenue of $120.9 million in the
comparative period of 2015, mainly due to the additions of OOCL
Qingdao from March 11, 2015 and OOCL Ningbo from September 17,
2015, as above, offset by the effect of the disposals of Ville
d’Aquarius and Ville d’Orion and substantially higher offhire from
planned drydockings in 2016.
The table below shows fleet utilization for the three and nine
months ended September 30, 2016 and 2015, and for the years ended
December 31, 2015, 2014, 2013 and 2012.
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
Nine months ended |
|
|
|
|
Sept 30, |
Sept 30, |
Sept 30, |
Sept 30, |
|
Dec 31, |
Dec 31, |
Dec 31, |
Dec 31, |
Days |
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
Ownership days |
|
1,656 |
|
|
1,762 |
|
|
4,932 |
|
|
5,132 |
|
|
|
6,893 |
|
|
6,270 |
|
|
6,205 |
|
|
6,222 |
|
Planned offhire - scheduled drydock |
|
(38 |
) |
|
0 |
|
|
(89 |
) |
|
(9 |
) |
|
|
(9 |
) |
|
(48 |
) |
|
(21 |
) |
|
(82 |
) |
Unplanned offhire |
|
0 |
|
|
(1 |
) |
|
(2 |
) |
|
(6 |
) |
|
|
(7 |
) |
|
(12 |
) |
|
(7 |
) |
|
(16 |
) |
Idle time |
|
0 |
|
|
0 |
|
|
0 |
|
|
0 |
|
|
|
(13 |
) |
|
(64 |
) |
|
0 |
|
|
0 |
|
Operating days |
|
1,618 |
|
|
1,761 |
|
|
4,841 |
|
|
5,117 |
|
|
|
6,864 |
|
|
6,146 |
|
|
6,177 |
|
|
6,124 |
|
|
|
|
|
|
|
|
|
|
|
Utilization |
|
97.7 |
% |
|
99.9 |
% |
|
98.2 |
% |
|
99.7 |
% |
|
|
99.6 |
% |
|
98.0 |
% |
|
99.5 |
% |
|
98.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Five regulatory drydockings have been completed in the nine
months to September 30, 2016; one further regulatory drydocking is
planned for fourth quarter 2016. There was only one drydocking in
2015, in the first quarter.
Vessel Operating Expenses Vessel operating expenses, which
include costs of crew, lubricating oil, spares and insurance, were
$11.8 million for the three months ended September 30, 2016
compared to $12.7 million in the comparative period. The
absolute reduction is due to lower ownership days following the
disposals of Ville d’Aquarius and Ville d’Orion. The average
cost per ownership day in the quarter was $7,103 compared to $7,233
for the comparative period, down $130 per day or 1.8%. The
reduction is primarily attributable to reduced crew costs and
insurance costs on renewal, together with the elimination of the
relatively high costs related to the operation of Ville d’Aquarius
and Ville d’Orion, and partly offset by costs incurred in
drydockings that are expensed rather than capitalized.
For the nine months ended September 30, 2016, vessel operating
expenses were $34.5 million or an average of $6,991 per day,
compared to $37.9 million in the comparative period or $7,376 per
day. The $385 reduction, or 5.2%, reduction in vessel operating
expenses per day is due mainly to reasons noted above.
Depreciation Depreciation for the three months ended September
30, 2016 was $10.6 million, compared to $11.5 million in the third
quarter 2015; the reduction is attributable to a reduced number of
vessels in the fleet.
Depreciation for the nine months ended September 30, 2016 was
$32.4 million, compared to $33.9 million in the comparative period
of 2015, the decrease again due to a reduced number of vessels in
the fleet.
Impairment
The Company’s accounting policies require that tangible fixed
assets such as vessels are reviewed individually for impairment
when events or changes in circumstances indicate that their
carrying amounts may not be recoverable. On August 10, 2016,
the Company agreed with CMA CGM to amend and extend the charters of
the Marie Delmas and Kumasi. A revised rate of $13,000 per day
applies from August 1, 2016 until the charters' previous earliest
expiry dates in September 2017, after which the Company has three
consecutive option periods, the first of 1.25 years and the second
and third of one year each, through December 31, 2020 at a rate of
$9,800 per day. These amendments triggered the performance of
an impairment test on these two vessels as at August 1, 2016.
A non-cash impairment charge of $29.4 million has been
recognized in the quarter ended September 30, 2016 as the sum of
the expected undiscounted future cash flows from these assets over
their estimated remaining useful lives is less than the carrying
amounts. The impairment charge is equal to the amount by
which the assets’ carrying amounts exceed their fair values. Fair
value is the net present value of estimated future cash flows
discounted by an appropriate discount rate.
Following receipt of notices of re-delivery for Ville d’Aquarius
and Ville d’Orion, the Company’s two oldest vessels and the
Company’s assessment of the vessels’ re-chartering prospects, sales
of the vessels were completed on November 5, and December 8, 2015
respectively, for total net proceeds of approximately $9.3 million.
The vessels were written down as at September 30, 2015 by $44.7
million to their estimated net realizable value, including
estimated selling costs.
General and Administrative Costs General and administrative
costs were $1.4 million in the three months ended September 30,
2016, compared to $1.6 million in the third quarter of 2015.
For the nine months ended September 30, 2016, general and
administrative costs were $4.6 million, compared to $4.9 million
for the 2015 period.
Other Operating Income
Other operating income in the three months ended September 30,
2016 was $32,000, compared to $93,000 in the third quarter of
2015.
For the nine months ended September 30, 2016, other operating
income was $0.2 million, compared to $0.3 million in the
comparative period.
Adjusted EBITDA
As a result of the above, Adjusted EBITDA was $28.1 million for
the three months ended September 30, 2016, up from $28.0 million
for the three months ended September 30, 2015 as lower vessel
operating costs offset lower revenue from increased levels of
planned dry-docking.
Adjusted EBITDA for the nine months ended September 30, 2016 was
$86.2 million, compared to $78.5 million for the comparative
period; an increase of 9.8%, due mainly to the acquisitions of OOCL
Qingdao and OOCL Ningbo.
Interest Expense
Debt at September 30, 2016 comprised amounts outstanding on our
Notes, the revolving credit facility which was drawn March 11,
2015, and the secured term loan which was drawn September 10,
2015.
Interest expense for the three months ended September 30, 2016,
was $11.1 million, down $1.0 million on the interest expense for
the three months ended September 30, 2015 of $12.1 million.
The reduction is mainly due to reduced interest on our 10.0% Notes
following the repurchase of $26.7 million principal amount of the
Notes in March 2016 and the $0.5 million gain realized in August
2016 on the purchase in the open market of $5.0 million principal
amount of the Notes, offset by interest on the secured term loan
drawn in the third quarter of 2015 and higher amortization of
deferred financing charges and the original issue discount on the
Notes, occasioned by the reduction in the principal amount of Notes
outstanding.
For the nine months ended September 30, 2016, interest expense
was $35.3 million, For the nine months ended September 30, 2015,
interest expense was $35.7 million. The decrease is due to
the effect of drawing on the secured term loan in September 2015,
$0.5 million premium paid in March 2016 in relation to the tender
offer which retired approximately $26.7 million of Notes, and
accelerated write-off of the portion of deferred financing charges
and the original issue discount attributable to Notes which were
purchased and retired, partially offset by lower interest on the
Notes following the tender offer and market purchases and the $1.0
million gains realized in May and August 2016 on the market
purchases of Notes.
Interest income for the three months ended September 30, 2016
was $57,000, up from $19,000 in the comparative period of 2015 due
to higher cash balances. Interest income for the nine months
ended September 30, 2016 was $139,000 compared to $46,000 in the
comparative period.
Taxation
Taxation for the three months ended September 30, 2016 was
$17,000, compared to $9,000 in the third quarter of 2015.
Taxation for the nine months ended September 30, 2016 was
$32,000, compared to $39,000 for the comparative period in
2015.
Earnings Allocated to Preferred Shares
The Series B Preferred Shares carry a coupon of 8.75%, the cost
of which for the three months ended September 30, 2016 was $0.8
million, the same as in the comparative period.
The cost in the nine months ended September 30, 2016 was $2.3
million, the same as in the comparative period.
Net Loss/Income Available to Common Shareholders
Net loss for the three months ended September 30, 2016 was $23.7
million, after the non-cash impairment charge of $29.4 million
related to the Marie Delmas and Kumasi. Net loss for the
three months ended September 30, 2015 was $41.1 million, after the
non-cash impairment charge of $44.7 million related to the Ville
d’Aquarius and Ville d’Orion.
Normalized net income, which excludes the effect of the non-cash
impairment charge, the gain on the purchase of Notes in August 2016
and accelerated amortization of deferred financing charges and
original issue discount consequent upon the retirement of Notes,
was $5.2 million for the three months ended September 30,
2016. Normalized net income was $3.6 million for the three
months ended September 30, 2015.
Net loss was $13.1 million for the nine months ended September
30, 2016 after the $29.4 million non-cash impairment charge
associated with Marie Delmas and Kumasi. Net loss was $38.2
million for the nine months ended September 30, 2015 after the
$44.7 million non-cash impairment charge associated with Ville
d’Aquarius and Ville d’Orion.
Normalized net income, which excludes the effect of the non-cash
impairment charges, the premium paid on the tender offer for Notes
completed in March 2016, the gain on the purchase of Notes and the
accelerated amortization of deferred financing charges and original
issue discount consequent upon the retirement of Notes, was $16.3
million for the nine months ended September 30, 2016 and was $6.5
million for the nine months ended September 30, 2015.
Fleet
The following table provides information about the on-the-water
fleet of 18 vessels as at September 30, 2016. 15 vessels are
chartered to CMA CGM, and three are chartered to OOCL.
|
|
|
|
Remaining |
Earliest |
Daily |
|
|
|
|
Charter |
Charter |
Charter |
Vessel |
Capacity |
Year |
Purchase |
Term (2) |
Expiry |
Rate |
Name |
in TEUs (1) |
Built |
by GSL |
(years) |
Date |
$ |
CMA CGM Matisse |
2,262 |
1999 |
Dec 2007 |
3.25 |
Sept 21, 2019 |
15,300 |
CMA CGM Utrillo |
2,262 |
1999 |
Dec 2007 |
3.25 |
Sept 11, 2019 |
15,300 |
Delmas Keta |
2,207 |
2003 |
Dec 2007 |
1.25 |
Sept 20, 2017 |
18,465 |
Julie Delmas |
2,207 |
2002 |
Dec 2007 |
1.25 |
Sept 11, 2017 |
18,465 |
Kumasi (3) |
2,207 |
2002 |
Dec 2007 |
1.25-4.25(3) |
August 6,
2017(3) |
13,000(3) |
Marie Delmas (3) |
2,207 |
2002 |
Dec 2007 |
1.25-4.25(3) |
July 31,
2017(3) |
13,000(3) |
CMA CGM La Tour |
2,272 |
2001 |
Dec 2007 |
3.25 |
Sept 20, 2019 |
15,300 |
CMA CGM Manet |
2,272 |
2001 |
Dec 2007 |
3.25 |
Sept 7, 2019 |
15,300 |
CMA CGM Alcazar |
5,089 |
2007 |
Jan 2008 |
4.25 |
Oct 18, 2020 |
33,750 |
CMA CGM Château d’If |
5,089 |
2007 |
Jan 2008 |
4.25 |
Oct 11, 2020 |
33,750 |
CMA CGM Thalassa |
11,040 |
2008 |
Dec 2008 |
9.25 |
Oct 1, 2025 |
47,200 |
CMA CGM Jamaica |
4,298 |
2006 |
Dec 2008 |
6.25 |
Sept 17, 2022 |
25,350 |
CMA CGM Sambhar |
4,045 |
2006 |
Dec 2008 |
6.25 |
Sept 16, 2022 |
25,350 |
CMA CGM America |
4,045 |
2006 |
Dec 2008 |
6.25 |
Sept 19, 2022 |
25,350 |
CMA CGM Berlioz |
6,621 |
2001 |
Aug 2009 |
5.00 |
May 28, 2021 |
34,000 |
OOCL Tianjin |
8,063 |
2005 |
Oct 2014 |
1.25 |
Oct 28, 2017 |
34,500 |
OOCL Qingdao |
8,063 |
2004 |
Mar 2015 |
1.50 |
Mar 11, 2018 |
34,500 |
OOCL Ningbo |
8,063 |
2004 |
Sep 2015 |
2.00 |
Sep 17, 2018 |
34,500 |
(1) Twenty-foot Equivalent Units. |
|
|
|
|
|
(2) As at September 30, 2016. Plus or minus 90 days,
other than (i) OOCL Tianjin which is between October 28, 2017 and
January 28, 2018, (ii) OOCL Qingdao which is between March 11, 2018
and June 11, 2018, and (iii) OOCL Ningbo which is between September
17, 2018 and December 17, 2018, all at charterer’s option. |
(3) The charters for Kumasi and Marie Delmas were
amended in July 2016. The earliest possible re-delivery date
is shown in the table. However, the Company may exercise
three consecutive options to extend the charters, at $9,800 per
day, which extend the earliest re-delivery date to October 2,
2020. |
|
Conference Call and Webcast
Global Ship Lease will hold a conference call to discuss the
Company's results for the three months ended September 30, 2016
today, Thursday October 27, 2016 at 10:30 a.m. Eastern Time. There
are two ways to access the conference call:
(1) Dial-in: (877) 445-2556 or (908) 982-4670;
Passcode: 99902538
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
If you are unable to participate at this time, a
replay of the call will be available through Saturday, November 12,
2016 at (855) 859-2056 or (404) 537-3406. Enter the code 99902538
to access the audio replay. The webcast will also be archived on
the Company’s website: http://www.globalshiplease.com.
Annual Report on Form 20F
The Company’s Annual Report for 2015 is on file with the
Securities and Exchange Commission. 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.
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, Portland House, Stag
Place, London SW1E 5RS or by telephoning +44 (0) 207 869 8806.
About Global Ship Lease
Global Ship Lease is a containership charter owner. Incorporated
in the Marshall Islands, Global Ship Lease commenced operations in
December 2007 with a business of owning and chartering out
containerships under long-term, fixed rate charters to top tier
container liner companies.
Global Ship Lease owns 18 vessels with a total capacity of
82,312 TEU and an average age, weighted by TEU capacity, at
September 30, 2016 of 11.8 years. All 18 vessels are currently
fixed on time charters, 15 of which are with CMA CGM. The average
remaining term of the charters at September 30, 2016 is 4.1 years
or 4.2 years on a weighted basis.
Reconciliation of Non-U.S. GAAP Financial
Measures
A. Adjusted EBITDA
Adjusted EBITDA represents net income before interest income and
expense including amortization of deferred finance costs, earnings
allocated to preferred shares, income taxes, depreciation,
amortization and impairment. Adjusted EBITDA is a non-US GAAP
quantitative measure used to assist in the assessment of the
Company's ability to generate cash from its 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
US GAAP and should not be considered to be an alternate to Net
income or any other financial metric required by such accounting
principles.
ADJUSTED EBITDA - UNAUDITED
(thousands
of U.S. dollars) |
|
|
|
|
|
|
Three |
Three |
Nine |
Nine |
|
|
months |
months |
months |
months |
|
|
ended |
ended |
ended |
ended |
|
|
Sept 30, |
Sept 30, |
Sept 30, |
Sept 30, |
|
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
|
|
|
|
|
Net (loss)
available to common shareholders |
|
(23,685 |
) |
|
(41,084 |
) |
|
(13,085 |
) |
|
(38,183 |
) |
|
|
|
|
|
|
Adjust: |
Depreciation |
|
10,578 |
|
|
11,524 |
|
|
32,390 |
|
|
33,925 |
|
|
Impairment |
|
29,357 |
|
|
44,700 |
|
|
29,357 |
|
|
44,700 |
|
|
Interest
income |
|
(57 |
) |
|
(19 |
) |
|
(139 |
) |
|
(46 |
) |
|
Interest
expense |
|
11,075 |
|
|
12,058 |
|
|
35,317 |
|
|
35,733 |
|
|
Income
tax |
|
17 |
|
|
9 |
|
|
32 |
|
|
39 |
|
|
Earnings
allocated to preferred shares |
|
766 |
|
|
766 |
|
|
2,297 |
|
|
2,297 |
|
|
|
|
|
|
|
Adjusted
EBITDA |
|
28,051 |
|
|
27,954 |
|
|
86,169 |
|
|
78,465 |
|
|
B. Normalized net income
Normalized net income represents net income adjusted for the
premium paid on the tender offer together with the related
accelerated amortization of deferred financing costs and original
issue discount. Normalized net income is a non-GAAP quantitative
measure which we believe will assist investors and analysts who
often adjust reported net income for non-operating items that do
not affect operating performance or operating cash generated.
Normalized net income is not defined in US GAAP and should not be
considered to be an alternate to net income or any other financial
metric required by such accounting principles.
Normalized net income represents Net income (loss) adjusted for
the unrealized gain (loss) on derivatives, the accelerated write
off of a portion of deferred financing costs, impairment charges
and gain of redemption of preferred shares. Normalized net income
is a non-GAAP quantitative measure which we believe will assist
investors and analysts who often adjust reported net income for
non-operating items such as change in fair value of derivatives to
eliminate the effect of non-cash non-operating items that do not
affect operating performance or cash generated. Normalized net
income is not defined in US GAAP and should not be considered to be
an alternate to Net income (loss) or any other financial metric
required by such accounting principles.
|
NORMALIZED NET INCOME - UNAUDITED |
(thousands
of U.S. dollars) |
|
|
Three |
Three |
Nine |
Nine |
|
|
months |
months |
months |
months |
|
|
ended |
ended |
ended |
ended |
|
|
Sept 30, |
Sept 30, |
Sept 30, |
Sept 30, |
|
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
|
|
|
|
|
Net (loss)
available to common shareholders |
|
(23,685 |
) |
|
(41,084 |
) |
|
(13,085 |
) |
|
(38,183 |
) |
|
|
|
|
|
|
Adjust: |
Gain on purchase of
notes |
|
(475 |
) |
|
--- |
|
|
(927 |
) |
|
--- |
|
|
Premium paid on tender
offer for notes |
|
--- |
|
|
--- |
|
|
533 |
|
|
--- |
|
|
Accelerated write off
of deferred financing charges related to notes purchase and tender
offer |
|
10 |
|
|
--- |
|
|
100 |
|
|
--- |
|
|
Accelerated write off
of original issue discount related to notes purchase and tender
offer |
|
33 |
|
|
--- |
|
|
323 |
|
|
--- |
|
|
Impairment charge |
|
29,357 |
|
|
44,700 |
|
|
29,357 |
|
|
44,700 |
|
|
|
|
|
|
|
Normalized
net income |
|
5,240 |
|
|
3,616 |
|
|
16,301 |
|
|
6,517 |
|
|
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," "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 future growth of the container
shipping industry, including the rates of annual demand and supply
growth;
- the financial condition of our charterers, particularly CMA
CGM, our principal charterer and main source of operating revenue,
and their ability to pay charterhire in accordance with the
charters;
- Global Ship Lease’s financial condition and liquidity,
including its ability to obtain additional waivers which might be
necessary under the existing credit facility or obtain additional
financing to fund capital expenditures, vessel acquisitions and
other general corporate purposes;
- Global Ship Lease’s ability to meet its financial covenants and
repay its credit facilities;
- Global Ship Lease’s expectations relating to dividend payments
and forecasts of its ability to make such payments including the
availability of cash and the impact of constraints under its credit
facility;
- future acquisitions, business strategy and expected capital
spending;
- operating expenses, availability of crew, number of off-hire
days, drydocking and survey requirements and insurance 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 vessel operation, including piracy,
discharge of pollutants and vessel accidents and damage including
total or constructive total loss;
- estimated future capital expenditures needed to preserve its
capital base;
- Global Ship Lease’s expectations about the availability of
ships to purchase, the time that it may take to construct new
ships, or the useful lives of its ships;
- Global Ship Lease’s continued ability to enter into or renew
long-term, fixed-rate charters;
- the continued performance of existing long-term, fixed-rate
time charters;
- Global Ship Lease’s ability to capitalize on its management’s
and board of 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;
- unanticipated changes in laws and regulations including
taxation;
- 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
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 Consolidated
Statements of Income |
(Expressed in thousands of U.S. dollars except share
data) |
|
|
|
Three months ended September 30, |
Nine months ended September 30, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Revenues |
|
|
|
|
|
Time charter revenue |
|
$ |
9,444 |
|
|
$ |
8,561 |
|
|
$ |
28,123 |
|
|
$ |
21,686 |
|
Time charter revenue –
related party |
|
|
31,710 |
|
|
|
33,623 |
|
|
|
96,974 |
|
|
|
99,204 |
|
|
|
|
|
|
|
|
|
|
41,154 |
|
|
|
42,184 |
|
|
|
125,097 |
|
|
|
120,890 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
ExpensesVessel operating expenses |
|
|
11,362 |
|
|
|
12,324 |
|
|
|
33,282 |
|
|
|
36,388 |
|
Vessel operating expenses
– related party |
|
|
400 |
|
|
|
420 |
|
|
|
1,199 |
|
|
|
1,466 |
|
Depreciation |
|
|
10,578 |
|
|
|
11,524 |
|
|
|
32,390 |
|
|
|
33,925 |
|
Impairment of vessels |
|
|
29,357 |
|
|
|
44,700 |
|
|
|
29,357 |
|
|
|
44,700 |
|
General and
administrative |
|
|
1,373 |
|
|
|
1,579 |
|
|
|
4,622 |
|
|
|
4,882 |
|
Other operating
income |
|
|
(32 |
) |
|
|
(93 |
) |
|
|
(175 |
) |
|
|
(311 |
) |
|
|
|
|
|
|
Total operating
expenses |
|
|
53,038 |
|
|
|
70,454 |
|
|
|
100,675 |
|
|
|
121,050 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (Loss)
Income |
|
|
(11,884 |
) |
|
|
(28,270 |
) |
|
|
24,422 |
|
|
|
(160 |
) |
|
|
|
|
|
|
Non Operating
Income (Expense) |
|
|
|
|
|
Interest income |
|
|
57 |
|
|
|
19 |
|
|
|
139 |
|
|
|
46 |
|
Interest expense |
|
|
(11,075 |
) |
|
|
(12,058 |
) |
|
|
(35,317 |
) |
|
|
(35,733 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Loss before Income
Taxes |
|
|
(22,902 |
) |
|
|
(40,309 |
) |
|
|
(10,756 |
) |
|
|
(35,847 |
) |
|
|
|
|
|
|
Income taxes |
|
|
(17 |
) |
|
|
(9 |
) |
|
|
(32 |
) |
|
|
(39 |
) |
|
|
|
|
|
|
Net
Loss |
|
$ |
(22,919 |
) |
|
$ |
(40,318 |
) |
|
$ |
(10,788 |
) |
|
$ |
(35,886 |
) |
|
|
|
|
|
|
Earnings allocated to
Series B Preferred Shares |
|
|
(766 |
) |
|
|
(766 |
) |
|
|
(2,297 |
) |
|
|
(2,297 |
) |
|
|
|
|
|
|
Net Loss available
to Common Shareholders |
|
$ |
(23,685 |
) |
|
$ |
(41,084 |
) |
|
$ |
(13,085 |
) |
|
$ |
(38,183 |
) |
Earnings per
Share |
|
|
|
|
|
Weighted average number of
Class A common shares outstanding |
|
|
|
|
|
Basic
(including RSUs without service conditions)Diluted |
|
|
47,858,64047,858,640 |
|
|
47,766,48447,766,484 |
|
|
47,850,13947,850,139 |
|
|
47,766,48447,766,484 |
|
Net loss per Class A
common share |
|
|
|
|
|
Basic
(including RSUs without service conditions) |
|
$ |
(0.49 |
) |
$ |
(0.86 |
) |
$ |
(0.27 |
) |
$ |
(0.80 |
) |
Diluted |
|
$ |
(0.49 |
) |
$ |
(0.86 |
) |
$ |
(0.27 |
) |
$ |
(0.80 |
) |
Weighted average number of
Class B common shares outstanding Basic and
diluted |
|
|
7,405,956 |
|
|
7,405,956 |
|
|
7,405,956 |
|
|
7,405,956 |
|
Net income per Class B
common share Basic and diluted |
|
$ |
0.00 |
|
$ |
0.00 |
|
$ |
0.00 |
|
$ |
0.00 |
|
Global Ship Lease, Inc. |
Interim Unaudited Consolidated Balance
Sheets |
(Expressed in thousands of U.S. dollars) |
|
|
|
September
30,2016 |
|
December 31,2015 |
|
|
|
|
|
Assets |
|
|
|
|
Cash and cash
equivalents |
|
$ |
48,746 |
|
|
$ |
53,591 |
|
Accounts receivable |
|
|
55 |
|
|
|
87 |
|
Due from related
party |
|
|
1,567 |
|
|
|
2,124 |
|
Prepaid expenses |
|
|
1,527 |
|
|
|
1,101 |
|
Other receivables |
|
|
394 |
|
|
|
118 |
|
Inventory |
|
|
590 |
|
|
|
610 |
|
|
|
|
|
|
Total current assets |
|
|
52,879 |
|
|
|
57,631 |
|
|
|
|
|
|
|
|
|
|
|
Vessels in operation |
|
|
791,458 |
|
|
|
846,939 |
|
Other fixed assets |
|
|
9 |
|
|
|
5 |
|
Intangible assets |
|
|
18 |
|
|
|
39 |
|
Other long term
assets |
|
|
224 |
|
|
|
306 |
|
|
|
|
|
|
Total non-current
assets |
|
|
791,709 |
|
|
|
847,289 |
|
|
|
|
|
|
Total
Assets |
|
$ |
844,588 |
|
|
$ |
904,920 |
|
|
|
|
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
Current portion of long
term debt |
|
|
26,465 |
|
|
|
35,160 |
|
Intangible liability –
charter agreements |
|
|
1,872 |
|
|
|
2,104 |
|
Deferred revenue |
|
|
1,707 |
|
|
|
796 |
|
Accounts payable |
|
|
874 |
|
|
|
622 |
|
Due to related party |
|
|
4,074 |
|
|
|
1,256 |
|
Accrued expenses |
|
|
2,444 |
|
|
|
13,694 |
|
|
|
|
|
|
Total current
liabilities |
|
|
37,436 |
|
|
|
53,632 |
|
|
|
|
|
|
|
|
|
|
|
Long term debt |
|
|
413,019 |
|
|
|
442,913 |
|
Intangible liability –
charter agreements |
|
|
10,232 |
|
|
|
11,589 |
|
Deferred tax
liability |
|
|
19 |
|
|
|
20 |
|
|
|
|
|
|
Total long term
liabilities |
|
|
423,270 |
|
|
|
454,522 |
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities |
|
$ |
460,706 |
|
|
$ |
508,154 |
|
|
|
|
|
|
Commitments and
contingencies |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Stockholders’
Equity |
|
|
|
|
Class A Common stock –
authorized214,000,000 shares with a $0.01 par value; 47,567,081
shares issued and outstanding (2015 – 47,541,484) |
|
$ |
476 |
|
|
$ |
475 |
|
Class B Common stock –
authorized20,000,000 shares with a $0.01 par value;7,405,956 shares
issued and outstanding (2015 – 7,405,956) |
|
|
74 |
|
|
|
74 |
|
Series B Preferred shares
– authorized16,100 shares with $0.01 par value;14,000 shares issued
and outstanding (2015 – 14,000) |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Additional paid in
capital |
|
|
386,625 |
|
|
|
386,425 |
|
Retained earnings |
|
|
(3,293 |
) |
|
|
9,792 |
|
|
|
|
|
|
Total
Stockholders’ Equity |
|
|
383,882 |
|
|
|
396,766 |
|
|
|
|
|
|
Total Liabilities
and Stockholders’ Equity |
|
$ |
844,588 |
|
|
$ |
904,920 |
|
Global Ship Lease, Inc. |
Interim Unaudited Consolidated Statements of Cash
Flows |
(Expressed in thousands of U.S. dollars) |
|
|
|
Three months
ended September 30, |
Nine months endedSeptember
30, |
|
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Operating Activities |
|
|
|
|
|
Net loss |
|
$ |
(22,919 |
) |
$ |
(40,318 |
) |
$ |
(10,788 |
) |
$ |
(35,886 |
) |
|
|
|
|
|
|
Adjustments to
Reconcile Net loss to Net Cash Provided by Operating
Activities |
|
|
|
|
|
Depreciation |
|
|
10,578 |
|
|
11,524 |
|
|
32,390 |
|
|
33,925 |
|
Vessel impairment |
|
|
29,357 |
|
|
44,700 |
|
|
29,357 |
|
|
44,700 |
|
Amortization of
deferred financing costs |
|
|
909 |
|
|
833 |
|
|
2,681 |
|
|
2,431 |
|
Amortization of
original issue discount |
|
|
333 |
|
|
312 |
|
|
1,249 |
|
|
832 |
|
Amortization of
intangible liability |
|
|
(530 |
) |
|
(530 |
) |
|
(1,589 |
) |
|
(1,589 |
) |
Share based
compensation |
|
|
85 |
|
|
25 |
|
|
200 |
|
|
75 |
|
Gain on repurchase of
secured notes |
|
|
(475 |
) |
|
- |
|
|
(927 |
) |
|
- |
|
(Increase) decrease in
accounts receivable and other assets |
|
|
(64 |
) |
|
863 |
|
|
(462 |
) |
|
1,711 |
|
(Increase) decrease in inventory |
|
|
(54 |
) |
|
(129 |
) |
|
20 |
|
|
(196 |
) |
Decrease in accounts payable and other
liabilities |
|
|
(9,796 |
) |
|
(9,812 |
) |
|
(11,081 |
) |
|
(11,369 |
) |
Increase in unearned
revenue |
|
|
1,119 |
|
|
4 |
|
|
911 |
|
|
130 |
|
Increase (decrease) in
Related party balances |
|
|
374 |
|
|
(403 |
) |
|
1,437 |
|
|
(440 |
) |
Unrealized foreign
exchange loss (gain) |
|
|
21 |
|
|
(40 |
) |
|
(7 |
) |
|
(9 |
) |
|
|
|
|
|
|
Net Cash Provided
by Operating Activities |
|
|
8,938 |
|
|
7,029 |
|
|
43,391 |
|
|
34,315 |
|
|
|
|
|
|
|
Cash Flows from
Investing Activities |
|
|
|
|
|
Cash paid for vessels |
|
|
- |
|
|
(53,629 |
) |
|
- |
|
|
(108,019 |
) |
Cash paid in respect of
sale of vessels |
|
|
- |
|
|
- |
|
|
(254 |
) |
|
- |
|
Cash paid for other
assets |
|
|
(5 |
) |
|
(3 |
) |
|
(6 |
) |
|
(3 |
) |
Cash paid for
drydockings |
|
|
(3,220 |
) |
|
- |
|
|
(4,168 |
) |
|
(2,548 |
) |
|
|
|
|
|
|
Net Cash Used in
Investing Activities |
|
|
(3,225 |
) |
|
(53,632 |
) |
|
(4,428 |
) |
|
(110,570 |
) |
|
|
|
|
|
|
Cash Flows from
Financing Activities |
|
|
|
|
|
Repurchase of secured
notes |
|
|
(4,526 |
) |
|
- |
|
|
(34,936 |
) |
|
(350 |
) |
Proceeds from drawdown of
revolving credit facility |
|
|
- |
|
|
35,000 |
|
|
- |
|
|
75,000 |
|
Deferred financing costs
incurred |
|
|
- |
|
|
(439 |
) |
|
- |
|
|
(809 |
) |
Repayment of credit
facilities |
|
|
(1,925 |
) |
|
- |
|
|
(6,575 |
) |
|
- |
|
Class A Common Shares –
dividends paid |
|
|
- |
|
|
(4,754 |
) |
|
- |
|
|
(4,754 |
) |
Series B Preferred Shares
– dividends paid |
|
|
(766 |
) |
|
(766 |
) |
|
(2,297 |
) |
|
(2,297 |
) |
|
|
|
|
|
|
Net Cash Used in
Financing Activities |
|
|
(7,217 |
) |
|
29,041 |
|
|
(43,808 |
) |
|
66,790 |
|
|
|
|
|
|
|
Net decrease in Cash and Cash
Equivalents |
|
|
(1,504 |
) |
|
(17,562 |
) |
|
(4,845 |
) |
|
(9,465 |
) |
Cash and Cash Equivalents at Start of
Period |
|
|
50,250 |
|
|
41,392 |
|
|
53,591 |
|
|
33,295 |
|
|
|
|
|
|
|
Cash and Cash
Equivalents at End of Period |
|
$ |
48,746 |
|
$ |
23,830 |
|
$ |
48,746 |
|
$ |
23,830 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
information |
|
|
|
|
|
|
|
|
|
|
|
Total interest paid |
|
$ |
20,021 |
|
$ |
21,139 |
|
$ |
42,253 |
|
$ |
42,469 |
|
|
|
|
|
|
|
Income tax paid |
|
$ |
11 |
|
$ |
18 |
|
$ |
37 |
|
$ |
54 |
|
Investor and Media Contacts:
The IGB Group
Bryan Degnan
646-673-9701
or
Leon Berman
212-477-8438
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