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 and six month periods ended June
30, 2022.
Second Quarter 2022 and Year to Date
Highlights
- Reported operating revenue of $154.5 million
for the second quarter 2022, almost double revenue of $82.9 million
for the prior year period. For the six months ended June 30, 2022,
operating revenue was $308.1 million, up 97.6% from $155.9 million
in first half 2021.
- Reported net income available to common
shareholders of $54.5 million for the second quarter of 2022, an
increase of 81.1% or 1.8 times net income of $30.1 million for the
prior year period. Normalized net income(3) was $67.4 million
almost three times normalized net income of $23.7 million for the
prior year period. Normalized net income(3) is adjusted for a $2.1
million fair value adjustment on derivatives, the prepayment fee
and associated non-cash write off of deferred financing charges of
$14.1 million on the full repayment of our Hayfin Credit Facility,
the non-cash write off of deferred financing charges of $0.3
million on the full repayment of our Hellenic Credit Facility and
$0.6 million premium paid on the redemption in April 2022 of $28.5
million aggregate principal amount of our 8.00% Senior Unsecured
Notes due 2024 (the “2024 Notes”). Normalized net income(3) for the
prior year period is adjusted for a $7.8 million net gain from sale
of the 2,272 TEU 2001 built, containership, La Tour and the
prepayment fee of $1.4 million on the completion of the refinancing
of our Deutsche, CIT, HCOB, Entrust, Blue Ocean Credit Facility
(“Odyssia Credit Facilities”).
- For the six months ended June 30, 2022, net
income available to common shareholders was $124.7 million.
Normalized net income (3) for the same period was $137.0 million,
after a $6.6 million positive fair value adjustment on derivatives,
the prepayment fee and associated non-cash write off of deferred
financing charges of $14.1 million on the full repayment of our
Hayfin Credit Facility, the non-cash write off of deferred
financing charges of $0.3 million on the full repayment of our
Hellenic Credit Facility, a $0.6 million premium paid on the
redemption in April 2022 of $28.5 million aggregate principal
amount of our 2024 Notes and the prepayment fee and associated
non-cash write off of deferred financing charges of $4.1 million on
the full repayment of our Blue Ocean Junior Credit Facility. For
the six months ended June 30, 2021, net income available to common
shareholders was $34.2 million. Normalized net income(3) was $41.5
million for the same period, after a $5.8 million premium paid on
the full optional redemption of our outstanding 9.875% Senior
Secured Notes due 2022 (“2022 Notes”) on January 20, 2021, an
associated non-cash write off of deferred financing charges of $3.7
million and of original issue discount of $1.1 million, a non-cash
charge of $1.3 million for accelerated stock-based compensation
expense, the prepayment fee of $1.6 million on the partial
repayment of the Blue Ocean Junior Credit Facility, the prepayment
fee of $1.4 million on the completion of the refinancing of our
Odyssia Credit Facilities and the $7.8 million net gain from sale
of La Tour.
- Generated $95.3 million of Adjusted EBITDA(3)
for the second quarter 2022, almost twice Adjusted EBITDA(3) of
$49.5 million for the prior year period. Adjusted EBITDA(3) for the
six months ended 30 June, 2022 was $189.9 million, two times
Adjusted EBITDA(3) of $93.8 million for the prior year period.
- Earnings per share for the three months ended
June 30, 2022 was $1.50, 1.8 times the earnings per share of $0.83
for the prior year period. Normalized earnings per share for the
three months ended June 30, 2022 was $1.85, 2.8 times the
Normalized earnings per share of $0.65 for the prior year
period.
- Declared a dividend of $0.375 per Class A
common share for the second quarter of 2022 to be paid on September
2, 2022 to common shareholders of record as of August 23, 2022.
Paid a dividend of $0.375 per Class A common share for the first
quarter of 2022 on June 2, 2022 to common shareholders of record as
of May 24, 2022.
- Between July 14, 2022 and August 1, 2022 our
corporate family credit ratings were improved by Moody’s, from B1 /
Stable to B1 / Positive, and by S&P Global, from BB- / Stable
to BB / Stable.
-On June 17, 2022, announced the full redemption
of our 2024 Notes of $89.0 million aggregate principal amount. The
redemption was completed on July 18, 2022 at a price of 102.00% of
the principal amount plus accrued and unpaid interest, up to but
not including, the redemption date. Previously, on April 5,
2022, completed the partial redemption of $28.5
million principal amount of our 2024 Notes at a price equal to
102.00% of the principal amount plus accrued and unpaid
interest.
-On June 16, 2022 our indirect wholly-owned
subsidiary closed the private placement of $350.0 million of
privately rated investment grade 5.69% Senior Secured Notes due
2027 (the “2027 USPP Notes”) to a limited number of accredited
investors. Pricing on June 1, 2022 was based on the 3.2 year
Interpolated US Treasury Yield (ICUR3.2) plus a spread of 2.85%. A
portion of the net proceeds was used to repay the remaining
outstanding balance of the Hayfin Facility (priced at LIBOR +
7.00%), and the outstanding balance of the Hellenic Facility
(priced at LIBOR + 3.90%) – with the latter releasing five
unencumbered ships. The remaining net proceeds were used to redeem
all of the outstanding 2024 Notes in July 2022 and for general
corporate purposes.
- On May 12, 2022, announced our investment and
participation in a carbon capture initiative led by Aqualung Carbon
Capture AS (“Aqualung”), an innovator in carbon dioxide capture and
separation technology, alongside other industry leaders in
shipping, energy generation and infrastructure, and lithium
production. We were invited to invest in Aqualung and to pool our
technical expertise to support the application of Aqualung’s carbon
capture solution to the maritime sector, with a particular focus on
the development of containerized carbon capture units to be
retrofit-able to containerships and other seagoing vessels.
- In April 2022, repurchased 184,684 Class A
common shares at an average price of $26.66 per share for
a total of $4.9 million under the authorized program
of $40.0 million for opportunistic share repurchases.
- In February 2022, entered into USD 1-month
LIBOR interest rate caps of 0.75% through fourth quarter 2026
on $507.9 million of floating rate debt, which reduces
over time and represented the remaining balance of the outstanding
floating rate debt, after entering a similar interest rate cap
in December 2021, on $484.1 million of floating rate
debt, which also reduces over time, leaving us fully hedged on our
floating rate debt.
- In January 2022, agreed an amendment to the
existing $268.0 million Syndicated Senior Secured Credit Facility
with an outstanding balance of $213.2 million, to extend the
maturity date from September 2024 to December 2026, favorably amend
certain covenants, and release three vessels from the facility’s
collateral basket, at an unchanged rate of LIBOR + 3.00%. The three
vessels were subsequently used as collateral for a new $60.0
million syndicated senior secured debt facility, maturing in July
2026 and priced at LIBOR + 2.75%, which was used to fully repay our
10.00% Blue Ocean junior debt facility and for general corporate
purposes.
- Between January 1 and August 3, 2022,
contracted approximately $435.5 million of additional revenues,
assuming median redelivery dates for the corresponding charters.
Included were five forward fixtures of charters of four to five
years duration each (one 8,600 TEU ship and four 4,000 – 4,250 TEU
ships), one prompt fixture of just over three years for a 2,200 TEU
feeder, and three charter extension options of 12 months each
exercised by the charterers on three ships of 5,900 – 7,800
TEU.
George Youroukos, Executive Chairman
of Global Ship Lease, stated, “By operating our fleet at a
high level of utilization and servicing our diversified portfolio
of multi-year charters with high-quality counterparties throughout
the second quarter, GSL once again generated excellent results and
strong profits. Driven by the accretive growth and the extensive
new longer term charters at higher rates that we mainly secured
last year and which are coming into full effect in 2022, we have
shown a substantial uplift in earnings which is largely locked in
for multiple years; our adjusted EBITDA for the first half of 2022
is more than double its level in the prior year period. Following
near-continuous rate strengthening since mid-2020, the charter
market is presently in “wait-and-see” mode, as sources of macro
uncertainty have grown more pronounced and charterers have been
more inclined to take shorter charters on the very limited number
of ships that have come into the charter market. That said, we have
been very pleased to forward fix a number of our ships on
multi-year charters in recent weeks and remain in active
discussions with charterers about the potential for forward-fixing
additional ships consistent with our conservative and risk-averse
business model.
In the mid-sized and smaller vessel classes
where we operate, supply growth in the years ahead is modest
compared to that for larger vessels. We believe that the
combination of increasing regulation related to decarbonization, a
relatively older global fleet, and a near-absence of scrapping in
recent years suggests that net fleet growth in the mid-sized and
smaller segments will remain very limited through the foreseeable
future. As we deploy CAPEX on a disciplined basis to maximize the
useful life of our fleet and ensure a continued high level of
performance and competitiveness in the evolving regulatory
environment, we are focused on utilizing proven solutions to
improve fuel efficiency while also monitoring promising new
decarbonization solutions, such as the Aqualung carbon capture
venture in which we made a limited investment during the quarter.
With $1.9 billion of contracted revenue over an average remaining
duration of 2.6 years, more than enough to fully cover expenses,
debt service, CAPEX, and dividends, while also building cash
liquidity to manage any challenges and capitalize on opportunities
that may lie ahead, Global Ship Lease is well placed to continue
creating additional value for our shareholders.
I would like to take this opportunity to thank
Hank Mannix, who recently stood down as a Director of Global Ship
Lease. Hank has been a Director since the merger with
Poseidon Containers in late 2018, having been a director of
Poseidon for many years. During his time, we have greatly valued
his advice and wish him well for the future. And I am
delighted to welcome Ulrike Helfer to the Board. Ulrike has more
than 40 years of experience in the finance industry, of which more
than 20 have been in ship finance. Since 2016 Ulrike has been a
Member of the Board of Managing Directors of portfoliomanagement
AöR, where she and her team have been responsible for the
successful wind-down of a €4.2 billion shipping loan portfolio
previously spun off from HSH Nordbank AG.”
Ian Webber, Chief Executive Officer
of Global Ship Lease, commented, “With our fleet already fully
chartered through this year and nearly all of 2023, we have
remained highly active in strengthening our balance sheet in a
sustainable, long-term manner. In this uncertain macro environment
of increased interest rates, we are delighted to have raised in the
US private placement market $350 million of privately rated
investment grade Senior Secured Notes due 2027 at a total interest
cost of 5.69%, based on 2.84% 3.2 year Interpolated US Treasury
Yield plus a margin of 2.85%. We have thus unlocked a new pool of
capital, secured an attractive, fixed rate financing, and released
five unencumbered vessels, while substantially streamlining and
enhancing our capital structure by eliminating higher priced debt.
Having taken these actions to reduce our average margin from 4.62%
at the start of the year to 3.05% today, with floating interest
rate exposure fully capped at 0.75% LIBOR, Global Ship Lease
is financially stronger and more flexible than we have ever
been.”
SELECTED FINANCIAL DATA – UNAUDITED
(thousands of U.S. dollars)
|
|
Three |
Three |
Six |
Six |
|
|
months ended |
months ended |
months ended |
months ended |
|
|
June 30, 2022 |
June 30, 2021 |
June 30, 2022 |
June 30, 2021 |
|
|
|
|
|
|
Operating Revenue
(1) |
|
154,456 |
82,871 |
308,087 |
155,851 |
Operating Income |
|
84,766 |
45,404 |
170,882 |
75,676 |
Net Income
(2) |
|
54,531 |
30,065 |
124,713 |
34,224 |
Adjusted EBITDA
(3) |
|
95,332 |
49,510 |
189,870 |
93,751 |
Normalized Net Income
(3) |
|
67,366 |
23,733 |
137,035 |
41,498 |
|
|
|
|
|
|
(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.
Brokerage commissions are included in “Time charter and voyage
expenses”.
(2) Net Income available to common
shareholders.
(3) Adjusted EBITDA, Normalized Net Income and
Normalized Earnings Per Share 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 measure to net
income or earnings per share as reported, the most directly
comparable U.S. GAAP financial measures, please see “Reconciliation
of Non-U.S. GAAP Financial Measures” below.
Revenue and Utilization
Revenue from fixed-rate, mainly long-term,
time-charters was $154.5 million in the three months ended June 30,
2022, up $71.6 million (or 86.4%) on revenue of $82.9 million for
the prior year period. The period-on-period increase in revenue was
principally due to (i) a 39.0% increase in ownership days, due to
the net acquisition of 22 vessels in 2021, all of which were
delivered after March 31, 2021, resulting in 5,915 ownership days
in the second quarter 2022, compared to 4,255 in the second quarter
2021, (ii) increased revenue on charter renewals at higher rates on
12 vessels, (iii) $8.6 million credit from amortization of
intangible liabilities arising on below-market charters attached to
certain vessel additions partially offset by an increase in
unplanned offhire days from 36 in the second quarter of 2021 to 154
days in the same quarter of 2022. The 154 days of unplanned offhire
in the second quarter of 2022 include an aggregate of 125 days for
main engine damages for two ships and 19 days for damage to a
diesel generator in one ship. The 82 days of planned offhire for
drydockings in the second quarter 2022 were attributable to four
regulatory drydockings in progress or completed, while in the
comparative period of 2021, the 168 days of planned offhire were
mainly attributable to five regulatory drydockings. Idle time was
30 days in the second quarter of 2022, compared to 12 days in the
comparative period. Utilization for the second quarter of 2022 was
95.5% compared to utilization of 94.9% in the same period of the
prior year.
For the six months ended June 30, 2022, revenue
was $308.1 million, up $152.2 million (or 97.6%) on revenue of
$155.9 million in the comparative period, mainly due to the factors
noted above.
The table below shows fleet utilization for the
three and six months ended June 30, 2022 and 2021, and for the
years ended December 31, 2021, 2020, 2019 and 2018.
|
|
Three months ended |
|
Six months ended |
|
Year ended |
|
|
June 30, |
June 30, |
|
June 30, |
June 30, |
|
Dec 31, |
Dec 31, |
Dec 31, |
Dec 31, |
Days |
|
2022 |
2021 |
|
2022 |
2021 |
|
2021 |
2020 |
2019 |
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
Ownership days |
|
5,915 |
4,255 |
|
11,765 |
8,125 |
|
19,427 |
16,044 |
14,326 |
7,675 |
Planned offhire - scheduled
drydock |
|
(82) |
(168) |
|
(309) |
(195) |
|
(752) |
(687) |
(537) |
(34) |
Unplanned offhire |
|
(154) |
(36) |
|
(236) |
(61) |
|
(260) |
(95) |
(105) |
(17) |
Idle time |
|
(30) |
(12) |
|
(30) |
(27) |
|
(88) |
(338) |
(164) |
(47) |
Operating days |
|
5,649 |
4,039 |
|
11,190 |
7,842 |
|
18,327 |
14,924 |
13,520 |
7,577 |
|
|
|
|
|
|
|
|
|
|
|
|
Utilization |
|
95.5% |
94.9% |
|
95.1% |
96.5% |
|
94.3% |
93.0% |
94.4% |
98.7% |
Two drydockings to meet regulatory requirements
were completed in the second quarter 2022 and, as of June 30, 2022,
two more drydockings were in progress. In 2022, we anticipate 11
further drydockings.
Vessel Operating Expenses
Vessel operating expenses, which primarily
include costs of crew, lubricating oil, repairs, maintenance,
insurance and technical management fees, were up 47.3% to $41.4
million for the second quarter 2022, compared to $28.1 million in
the comparative period. The increase of $13.3 million was mainly
due to 1,660, or 39.0%, net additional ownership days in the second
quarter 2022 as the result of the net acquisition of 22 vessels in
2021, all of which were delivered after March 31, 2021. The average
cost per ownership day in the quarter was $7,006, compared to
$6,609 for the prior year period, up $397 per day, or 6.0% mainly
due to increased crew expenses as a result of COVID-19 and the
conflict in Ukraine, increased insurance costs and increased
lubricant expenses as a result of higher oil prices.
For the six months ended June 30, 2022, vessel
operating expenses were $80.9 million, or an average of $6,875 per
day, compared to $52.4 million in the comparative period, or $6,450
per day, an increase of $425 per ownership day, or 6.6%.
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 $5.1 million for the second quarter 2022,
compared to $2.1 million in the second quarter of 2021. The
increase was mainly due to the commissions of the 22 vessels
acquired in 2021, all of which were delivered after March 31, 2021,
plus higher costs for bunker fuel for owner’s account due to
increase in unplanned off hire days, additional voyage
administration costs, and other voyage expenses mainly related to
COVID 19 port restrictions and additional operational requests from
charterers.
For the six months ended June 30, 2022, time
charter and voyage expenses were $9.5 million, or an average of
$804 per day, compared to $3.9 million in the comparative period,
or $479 per day, an increase of $325 per ownership day, or
67.8%.
Depreciation and AmortizationDepreciation and
amortization for the second quarter 2022 was $20.3 million,
compared to $13.1 million in the second quarter of 2021. The
increase was mainly due to the net acquisition of 22 vessels in
2021, all of which were delivered after March 31, 2021 and the 14
drydockings that have been completed since July 1, 2021, including
five drydockings for vessels acquired in 2021.
Depreciation for the six months ended June 30,
2022 was $40.1 million, compared to $25.5 million in the
comparative period, with the increase being due to the net
acquisition of 22 vessels in 2021, all of which were delivered
after March 31, 2021.
Gain on sale of vessel
The 2001-built, 2,272 TEU containership, La
Tour, was sold on June 30, 2021 for net proceeds of $16.5 million
resulting in a gain of $7.8 million.
General and Administrative Expenses
General and administrative expenses were $2.9
million in the second quarter 2022, compared to $1.9 million in the
second quarter of 2021. The increase was mainly due to the non-cash
effect of stock-based compensation expense due to vesting recorded
in the second quarter of 2022. The average general and
administrative expense per ownership day for the second quarter
2022 was $486, compared to $436 in the comparative period, an
increase of $50 or 11.5%.
For the six months ended June 30, 2022, general
and administrative expenses were $6.7 million, compared to $6.1
million in the comparative period mainly due to the non-cash effect
of accelerated stock-based compensation expense recognized in the
first and second quarter of 2022. The average general and
administrative expense per ownership day for the six-month period
ended June 30, 2022 was $572, compared to $755 in the comparative
period, a decrease of $183 or 24.2%. The decrease in average
general and administrative expenses is due to the increase in
ownership days following the net acquisition of 22 vessels in 2021,
all of which were delivered after March 31, 2021.
Adjusted EBITDA
Adjusted EBITDA was $95.3 million for the second
quarter 2022, up from $49.5 million for the second quarter of 2021,
with the net increase being mainly due the net acquisition of 22
vessels in 2021, all of which were delivered after March 31, 2021
and increased revenue from charter renewals at higher rates.
Adjusted EBITDA for the six months ended June
30, 2022 was $189.9 million, compared to $93.8 million for the
comparative period, with the increase being due to the net
acquisition of 22 vessels in 2021, all of which were delivered
after March 31, 2021.
Interest Expense and Interest Income
Debt as at June 30, 2022 totaled $1,125.7
million, comprising $526.7 million of secured bank debt
collateralized by vessels, $350.0 million of 2027 USPP Notes
collateralized by vessels, $160.0 million under sale and leaseback
financing transactions and $89.0 million of unsecured indebtedness
on our 2024 Notes which were fully redeemed in July 2022. As of
June 30, 2022, five of our vessels were unencumbered.
Debt as at June 30, 2021 totaled $835.4 million,
comprising $684.2 million secured debt collateralized by our
vessels, $68.7 million from sale and leaseback financing
transactions and $82.5 million of unsecured indebtedness on our
2024 Notes. As of June 30, 2021, none of our vessels were
unencumbered.
Interest and other finance expenses for the
second quarter 2022 was $30.0 million, up from $14.0 million for
the second quarter of 2021. The increase was mainly due to $0.6
million premium paid on the partial redemption of the 2024 Notes in
April 2022, the prepayment fee and the associated non-cash write
off of deferred financing charges of $14.1 million on the full
repayment of Hayfin Credit Facility, the non-cash write off of
deferred financing charges of $0.3 million on the full repayment of
Hellenic Credit Facility, compared to a prepayment fee of $1.4
million on the refinancing of the Odyssia Credit Facilities and
interest on new loans with Hamburg Commercial Bank AG and new sale
and leaseback agreements with Neptune Maritime Leasing and with CMB
Financial Leasing Co. Ltd., all for vessel acquisitions, offset by
a decrease in our blended cost of debt from approximately 5.08% for
second quarter 2021 to 4.51% for second quarter 2022, as a result
of the refinancings, although three month Libor has increased in
second quarter of 2022 to 1.30% as compared to 0.17% in second
quarter of 2021.
Interest and other finance expenses for the six
months ended June 30, 2022 was $48.7 million, up from $39.3 million
for the comparative period. The increase is mainly due to a
prepayment fee and the associated non-cash write off of deferred
financing charges of $14.1 million on the full repayment of the
Hayfin Credit Facility, the non-cash write off of deferred
financing charges of $0.3 million on the full repayment of the
Hellenic Credit Facility, $0.6 million premium paid on the
redemption in April of $28.5 million of 2024 Notes and a prepayment
fee and the associated non-cash write off of deferred financing
charges of $4.1 million on the full repayment of the Blue Ocean
Junior Credit Facility compared to $5.8 million premium paid on the
redemption in full of the 2022 Notes in January 2021 plus the
acceleration of deferred financing charges of $3.7 million, and the
acceleration of amortization of original issue discount associated
with the redemption of the 2022 Notes of $1.1 million plus the
prepayment fee of $1.6 million paid on the partial repayment of the
Blue Ocean Junior Credit Facility, plus the prepayment fee of $1.4
million paid on the repayment and completion of the refinancing of
the Odyssia Credit Facilities.
Interest income for the second quarter 2022 was
$0.27 million, up from $0.12 million for the second quarter of
2021. Interest income for the six months period ended June 30, 2022
was $0.5 million, compared to $0.4 million for the comparative
period.
Other (expenses)/income, Net
Other expenses, net was $0.2 million in the
second quarter 2022, compared to an income of $0.5 million in the
second quarter of 2021. Other income, net was $0.2 million for the
six month period ended June 30, 2022, compared to $0.9 million for
the comparative period.
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 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 fourth quarter 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 positive
fair value adjustment of $2.1 million for the second quarter of
2022 was recorded through our statement of income. The positive
fair value adjustment for the six month period ended June 30, 2022
amounted to $6.6 million.
Earnings Allocated to Preferred Shares
Our Series B Preferred Shares carry a coupon of
8.75%, the cost of which for the second quarter 2022 was $2.4
million, compared to $2.0 million for the second quarter 2021. The
increase was due to additional Series B Preferred Shares issued
under our ATM program since July 1, 2021. The cost was $4.8 million
in the six months ended June 30, 2022, compared to $3.5 million for
the comparative period.
Net Income Available to Common ShareholdersNet
income available to common shareholders for the three months ended
June 30, 2022 was $54.5 million. Net income available to common
shareholders for the three months ended June 30, 2021 was $30.1
million.
Earnings per share for the three months ended
June 30, 2022 was $1.50, an increase of 80.7% from the earnings per
share for the comparative period, which was $0.83.
For the six months ended June 30, 2022, net
income available to common shareholders was $124.7 million. For the
six months ended June 30, 2021, net income available to common
shareholders was $34.2 million.
Earnings per share for the six months ended June
30, 2022 was $3.41, an increase of 241.0% from the earnings per
share for the comparative period, which was $1.00.
Normalized net income (a non-GAAP financial
measure) for the three months ended June 30, 2022, was $67.4
million adjusting for $2.1 million fair value adjustment on
derivatives, the prepayment fee and the associated non-cash write
off of deferred financing charges of $14.1 million on the full
repayment of the Hayfin Credit Facility, the non-cash write off of
deferred financing charges of $0.3 million on the full repayment of
the Hellenic Credit Facility and $0.6 million premium paid on the
redemption in April of $28.5 million of 2024 Notes. Normalized net
income for the three months ended June 30, 2021, was $23.7 million,
adjusting for the $7.8 million net gain on the sale of La Tour and
the prepayment fee of $1.4 million paid on the repayment of the
Odyssia Credit Facilities.
Normalized earnings per share (a non-GAAP
financial measure) for the three months ended June 30, 2022 was
$1.85, an increase of 184.6% from Normalized earnings per share for
the comparative period, which was $0.65.
Normalized net income for the six months ended
June 30, 2022, was $137.0 million adjusting for $6.6 million fair
value adjustment on derivatives, the prepayment fee and the
associated non-cash write off of deferred financing charges of
$14.1 million on the full repayment of the Hayfin Credit Facility,
the non-cash write off of deferred financing charges of $0.3
million on the full repayment of the Hellenic Credit Facility, $0.6
million premium paid on the redemption in April of $28.5 million of
2024 Notes and the prepayment fee and the associated non-cash write
off of deferred financing charges of $4.1 million on the full
repayment of the Blue Ocean Junior Credit Facility. Normalized net
income for the six months period ended June 30, 2021 was $41.5
million adjusting for the $7.8 million net gain on the sale of La
Tour, the prepayment fee of $1.6 million on the partial repayment
of the Blue Ocean Junior Credit Facility, the prepayment fee of
$1.4 million on the completion of the refinancing of the Odyssia
Credit Facilities, the non-cash effect of $1.3 million for
accelerated stock-based compensation expense, $5.8 million premium
paid on the redemption in full of the 2022 Notes in January 2021,
and the associated accelerated amortization of $3.7 million
deferred financing charges and $1.1 million original issue
discount. Normalized net income in the comparative period was $24.4
million, adjusting for $8.5 million non-cash impairment charges
associated with the decision to dispose of GSL Matisse and Utrillo,
the non-cash effect of $0.4 million for accelerated stock-based
compensation expense and $2.3 million premium paid on the
redemption of $46.0 million of the 2022 Notes in February 2020.
Normalized earnings per share for the six months
ended June 30, 2022 was $3.75, an increase of 207.4% from
Normalized earnings per share for the comparative period, which was
$1.22.
Fleet
As at August 3, 2022, we had 65 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(3) |
2Q27(3) |
4Q27(3) |
65,000(3) |
Anthea Y (1) |
9,115 |
31,890 |
2015 |
COSCO |
3Q23 |
4Q23 |
38,000 |
ZIM Xiamen (ex Maira XL)(1) |
9,115 |
31,820 |
2015 |
ZIM(3) |
3Q27(3) |
4Q27(3) |
65,000(3) |
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 |
2Q27 |
4Q27(5) |
22,500(5) |
GSL Eleni |
7,847 |
29,261 |
2004 |
Maersk |
3Q24 |
4Q24(6) |
16,500(6) |
GSL Kalliopi |
7,847 |
29,105 |
2004 |
Maersk |
3Q23 |
4Q24(6) |
14,500(6) |
GSL Grania |
7,847 |
29,190 |
2004 |
Maersk |
3Q23 |
4Q24(6) |
14,500(6) |
Mary (1) |
6,927 |
23,424 |
2013 |
CMA CGM |
3Q23 |
1Q24 |
25,910 |
Kristina (1) |
6,927 |
23,421 |
2013 |
CMA CGM |
2Q24 |
4Q24 |
25,910 |
Katherine (1) |
6,927 |
23,403 |
2013 |
CMA CGM |
1Q24 |
2Q24 |
25,910 |
Alexandra (1) |
6,927 |
23,348 |
2013 |
CMA CGM |
1Q24 |
3Q24 |
25,910 |
Alexis (1) |
6,882 |
23,919 |
2015 |
CMA CGM |
1Q24 |
3Q24 |
25,910 |
Olivia I (1) |
6,882 |
23,864 |
2015 |
CMA CGM |
1Q24 |
2Q24 |
25,910 |
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(7) |
GSL Arcadia |
6,008 |
24,858 |
2000 |
Maersk |
2Q24 |
1Q26 |
18,600(7) |
GSL Violetta |
6,008 |
24,873 |
2000 |
Maersk |
4Q24 |
4Q25 |
18,600(7) |
GSL Maria |
6,008 |
24,414 |
2001 |
Maersk |
4Q24 |
1Q27 |
18,600(7) |
GSL MYNY |
6,008 |
24,873 |
2000 |
Maersk |
3Q24 |
1Q26 |
18,600(7) |
GSL Melita |
6,008 |
24,848 |
2001 |
Maersk |
3Q24 |
3Q26 |
18,600(7) |
GSL Tegea |
5,992 |
24,308 |
2001 |
Maersk |
3Q24 |
3Q26 |
18,600(7) |
Tasman |
5,936 |
25,010 |
2000 |
Maersk |
2Q23 |
1Q24 |
12,000(8) |
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 |
4Q27 |
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 |
2Q25 |
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 |
4Q26 |
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 |
4Q27 |
22,000(11) |
CMA CGM Jamaica |
4,298 |
17,272 |
2006 |
CMA CGM |
1Q28 |
2Q28 |
25,350(11) |
CMA CGM Sambhar |
4,045 |
17,429 |
2006 |
CMA CGM |
1Q28 |
2Q28 |
25,350(11) |
CMA CGM America |
4,045 |
17,428 |
2006 |
CMA CGM |
1Q28 |
2Q28 |
25,350(11) |
GSL Rossi |
3,421 |
16,420 |
2012 |
Gold Star/ZIM |
1Q26 |
3Q26 |
38,875 |
GSL Alice |
3,421 |
16,543 |
2014 |
CMA CGM |
1Q23 |
2Q23 |
21,500 |
GSL Eleftheria |
3,404 |
16,642 |
2013 |
Maersk |
3Q25 |
4Q25 |
37,975 |
GSL Melina |
3,404 |
16,703 |
2013 |
Maersk |
2Q23 |
3Q23 |
24,500 |
GSL Valerie |
2,824 |
11,971 |
2005 |
ZIM |
2Q25 |
3Q25 |
35,600(12) |
Matson Molokai |
2,824 |
11,949 |
2007 |
Matson |
2Q25 |
3Q25 |
36,500 |
GSL Lalo |
2,824 |
11,950 |
2006 |
ONE |
4Q22 |
1Q23 |
18,500 |
GSL Mercer |
2,824 |
11,970 |
2007 |
ONE |
4Q24 |
1Q25 |
35,750 |
Athena |
2,762 |
13,538 |
2003 |
Hapag-Lloyd |
2Q24 |
2Q24 |
21,500 |
GSL Elizabeth |
2,741 |
11,507 |
2006 |
ONE |
3Q22 |
1Q23 |
18,500 |
Tbr GSL Chloe |
2,546 |
12,212 |
2012 |
ONE |
4Q24 |
1Q25 |
33,000 |
GSL Maren |
2,546 |
12,243 |
2014 |
Westwood |
4Q22 |
1Q23 |
19,250 |
Maira |
2,506 |
11,453 |
2000 |
Hapag-Lloyd |
1Q23 |
2Q23 |
14,450 |
Nikolas |
2,506 |
11,370 |
2000 |
CMA CGM |
1Q23 |
1Q23 |
16,000 |
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 |
Sea Consortium |
1Q23 |
2Q23 |
20,000 |
Kumasi |
2,207 |
11,791 |
2002 |
Wan Hai |
1Q25 |
2Q25 |
38,000 |
Akiteta |
2,207 |
11,731 |
2002 |
OOCL |
4Q24 |
1Q25 |
32,000 |
GSL Amstel |
1,118 |
5,167 |
2008 |
CMA CGM |
3Q23 |
3Q23 |
11,900 |
|
|
|
|
|
|
|
|
(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) ZIM Norfolk (ex UASC Al Khor)
& ZIM Xiamen (ex Maira XL). On November 22, 2021 we announced
the forward fixture of these two ships, upon the expiry of their
existing charters in the second and third quarters of 2022,
respectively, for approximately five years each at a charter rate
of $65,000 per day.
(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 $16.6 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, with these new rates to apply from 3Q
2022. (7) 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. (8) Tasman. 12-month extension at charterer’s
option was declared in May 2022, at an increased rate of $20,000
per day. The new rate is to apply from 3Q 2022.(9) Ultra-high
reefer ships of 5,470 TEU each. Contract cover on each ship is for
a firm period of three years 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 forward fixed for five years +/- 45 days at
charter rates expected to generate annualized Adjusted EBITDA of
approximately $11.3 million per vessel. The new charter for GSL
Susan is scheduled to commence in late 2022, while those for the
other three ships are due to commence towards the end of 1Q 2023.
(12) GSL Valerie. Chartered to ZIM 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. |
|
Conference Call and Webcast
Global Ship Lease will hold a conference call to
discuss the Company's results for the three and six months ended
June 30, 2022 today, Thursday, August 4, 2022 at 12:00 p.m. Eastern
Time. There are two ways to access the conference call:
(1) Dial-in: (800)
715-9871 or (646) 307-1963; Passcode: 2236251
Please dial in at least 10 minutes prior to
12:00 p.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 Thursday, August 18,
2022 at (800) 770-2030 or (609) 800-9909. Enter the code 2236251 to
access the audio replay. 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 2021 was filed
with the Securities and Exchange Commission (the “Commission”) on
March 24, 2022. 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 August 3, 2022, Global Ship
Lease owned 65 containerships, ranging from 1,118 to 11,040
TEU, with an aggregate capacity of 342,348 TEU. 32 ships are
wide-beam Post-Panamax.
Adjusted to include all charters agreed, up
to August 3, 2022, the average remaining term of the Company’s
charters as at June 30, 2022, to the mid-point of redelivery,
including options under the Company’s control and other than if a
redelivery notice has been received, was 2.6 years on a
TEU-weighted basis. Contracted revenue on the same basis
was $1.91 billion. Contracted revenue was $2.14 billion,
including options under charterers’ control and with latest
redelivery date, representing a weighted average remaining term of
3.1 years.
Reconciliation of Non-U.S. GAAP Financial
Measures
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
share based compensation, fair value adjustment on derivatives 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 |
|
Three |
|
Six |
|
Six |
|
|
|
months |
|
months |
|
months |
|
months |
|
|
|
ended |
|
ended |
|
ended |
|
ended |
|
|
|
June 30, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
|
|
|
|
|
Net income
available to Common Shareholders |
54,531 |
|
30,065 |
|
124,713 |
|
34,224 |
|
|
|
|
|
|
|
Adjust: |
Depreciation and
amortization |
20,273 |
|
13,136 |
|
40,125 |
|
25,519 |
|
|
Amortization of
intangible liabilities |
(10,565 |
) |
(1,959 |
) |
(23,420 |
) |
(2,461 |
) |
|
Gain on sale of
vessel |
- |
|
(7,770 |
) |
- |
|
(7,770 |
) |
|
Fair value
adjustment on derivative asset |
(2,084 |
) |
- |
|
(6,648 |
) |
- |
|
|
Interest
income |
(265 |
) |
(121 |
) |
(515 |
) |
(364 |
) |
|
Interest
expense |
30,007 |
|
13,998 |
|
48,742 |
|
39,254 |
|
|
Share based
compensation |
1,051 |
|
150 |
|
2,105 |
|
1,854 |
|
|
Earnings allocated
to preferred shares |
2,384 |
|
2,011 |
|
4,768 |
|
3,495 |
|
|
|
|
|
|
|
Adjusted
EBITDA |
95,332 |
|
49,510 |
|
189,870 |
|
93,751 |
|
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
(thousands of U.S.
dollars) |
|
|
|
Three |
|
Three |
|
Six |
|
Six |
|
|
|
months |
|
months |
|
months |
|
months |
|
|
|
ended |
|
ended |
|
ended |
|
ended |
|
|
|
June 30, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
|
|
|
|
|
Net income
available to Common Shareholders |
54,531 |
|
30,065 |
|
124,713 |
|
34,224 |
|
|
|
|
|
|
|
Adjust: |
Fair value
adjustment on derivative assets |
(2,084 |
) |
- |
|
(6,648 |
) |
- |
|
|
Gain on sale of
vessel |
- |
|
(7,770 |
) |
- |
|
(7,770 |
) |
|
Prepayment fee on
repayment of Blue Ocean Credit Facility |
- |
|
- |
|
3,968 |
|
1,618 |
|
|
Accelerated write
off of deferred financing charges related to full repayment of Blue
Ocean Credit Facility |
- |
|
- |
|
83 |
|
- |
|
|
Prepayment fee on
repayment of Odyssia Credit Facilities |
- |
|
1,438 |
|
- |
|
1,438 |
|
|
Premium paid on
redemption of 2022 Notes |
- |
|
- |
|
- |
|
5,764 |
|
|
Accelerated write
off of deferred financing charges related to redemption of 2022
Notes |
- |
|
- |
|
- |
|
3,745 |
|
|
Accelerated write
off of original issue discount related to redemption of 2022
Notes |
- |
|
- |
|
- |
|
1,133 |
|
|
Premium paid on
redemption of 2024 Notes |
570 |
|
- |
|
570 |
|
- |
|
|
Accelerated
stock-based compensation expense due to vesting and new awards of
fully vested incentive shares |
- |
|
- |
|
- |
|
1,346 |
|
|
Accelerated write
off of deferred financing charges related to full repayment of
Hellenic Credit Facility |
298 |
|
- |
|
298 |
|
- |
|
|
Accelerated write
off of deferred financing charges related to full repayment of
Hayfin Credit Facility |
2,822 |
|
- |
|
2,822 |
|
- |
|
|
Prepayment fee on
repayment of Hayfin Credit Facility |
11,229 |
|
- |
|
11,229 |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized net
income |
67,366 |
|
23,733 |
|
137,035 |
|
41,498 |
|
|
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
|
|
Three |
Three |
|
Six |
Six |
|
|
months |
months |
|
months |
months |
|
|
ended |
ended |
|
ended |
ended |
|
|
June 30, |
June 30, |
|
June 30, |
June 30, |
|
|
2022 |
2021 |
|
2022 |
2021 |
|
|
|
|
|
|
EPS as reported
(USD) |
1.50 |
0.83 |
|
3.41 |
1.00 |
Normalized net
income adjustments-Class A common shares (in thousands USD) |
12,835 |
(6,332 |
) |
12,322 |
7,273 |
Weighted average
number of Class A Common shares |
36,347,270 |
36,283,468 |
|
36,578,297 |
34,136,307 |
Adjustment on EPS
(USD) |
0.35 |
(0.18 |
) |
0.34 |
0.22 |
Normalized EPS
(USD) |
1.85 |
0.65 |
|
3.75 |
1.22 |
|
|
|
|
|
|
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 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, particularly our
major charterers, and their ability to pay charterhire in
accordance with the charters;
- Global Ship Lease’s financial condition and liquidity,
including its level of indebtedness or ability to obtain additional
financing to fund capital expenditures, ship 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
facilities;
- risks relating to the acquisition of Poseidon Containers and
Global Ship Lease’s ability to realize the anticipated benefits of
the acquisition;
- 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 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 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 or other ship employment
arrangements;
- Global Ship Lease’s ability to realize expected benefits from
its acquisition of secondhand vessels;
- 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 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)
|
|
June 30, 2022 |
|
December 31, 2021 |
ASSETS |
|
|
|
|
|
|
CURRENT
ASSETS |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
181,202 |
|
$ |
67,280 |
Time deposits |
|
|
7,800 |
|
|
7,900 |
Restricted cash |
|
|
14,630 |
|
|
24,894 |
Accounts receivable, net |
|
|
3,472 |
|
|
3,220 |
Inventories |
|
|
11,953 |
|
|
11,410 |
Prepaid expenses and other
current assets |
|
|
22,425 |
|
|
25,224 |
Derivative assets |
|
|
18,937 |
|
|
533 |
Due from related parties |
|
|
773 |
|
|
2,897 |
Total current
assets |
|
$ |
261,192 |
|
$ |
143,358 |
NON-CURRENT
ASSETS |
|
|
|
|
|
|
Vessels in operation |
|
$ |
1,655,199 |
|
$ |
1,682,816 |
Advances for vessels
acquisitions and other additions |
|
|
5,642 |
|
|
6,139 |
Deferred charges, net |
|
|
48,383 |
|
|
37,629 |
Other non-current assets |
|
|
22,741 |
|
|
14,010 |
Derivative assets, net of
current portion |
|
|
33,222 |
|
|
6,694 |
Restricted cash, net of
current portion |
|
|
104,469 |
|
|
103,468 |
Total non-current
assets |
|
|
1,869,656 |
|
|
1,850,756 |
TOTAL
ASSETS |
|
$ |
2,130,848 |
|
$ |
1,994,114 |
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
CURRENT
LIABILITIES |
|
|
|
|
|
|
Accounts payable |
|
$ |
18,509 |
|
$ |
13,159 |
Accrued liabilities |
|
|
28,191 |
|
|
32,249 |
Current portion of long-term
debt |
|
|
273,614 |
|
|
190,316 |
Current portion of deferred
revenue |
|
|
7,313 |
|
|
8,496 |
Due to related parties |
|
|
602 |
|
|
543 |
Total current
liabilities |
|
$ |
328,229 |
|
$ |
244,763 |
LONG-TERM
LIABILITIES |
|
|
|
|
|
|
Long-term debt, net of current
portion and deferred financing costs |
|
$ |
833,189 |
|
$ |
880,134 |
Intangible liabilities-charter
agreements |
|
|
31,956 |
|
|
55,376 |
Deferred revenue, net of
current portion |
|
|
103,078 |
|
|
101,288 |
Total non-current
liabilities |
|
|
968,223 |
|
|
1,036,798 |
Total
liabilities |
|
$ |
1,296,452 |
|
$ |
1,281,561 |
Commitments and
Contingencies |
|
|
- |
|
|
- |
SHAREHOLDERS'
EQUITY |
|
|
|
|
|
|
Class A common shares -
authorized 214,000,000 shares with a $0.01 par value 36,726,708
shares issued and outstanding (2021 – 36,464,109 shares) |
|
$ |
367 |
|
$ |
365 |
Series B Preferred Shares -
authorized 44,000 shares with a $0.01 par value 43,592 shares
issued and outstanding (2021 – 43,592 shares) |
|
|
- |
|
|
- |
Additional paid in
capital |
|
|
695,641 |
|
|
698,463 |
Retained earnings |
|
|
115,118 |
|
|
13,498 |
Accumulated other
comprehensive income |
|
|
23,270 |
|
|
227 |
Total shareholders'
equity |
|
|
834,396 |
|
|
712,553 |
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
$ |
2,130,848 |
|
$ |
1,994,114 |
|
|
Global Ship Lease, Inc.
Interim Unaudited Condensed
Consolidated Statements of Income
(Expressed in thousands of U.S. dollars)
|
|
Three months ended June 30, |
|
Six months ended June 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
OPERATING
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
|
Time charter revenue (includes related party revenues of $27,266
and $33,308 for each of the three month periods ended June 30, 2022
and 2021, respectively, and $66,929 and $65,001 for each of the six
month periods ended June 30, 2022 and 2021, respectively) |
|
$ |
143,891 |
|
|
$ |
80,912 |
|
|
$ |
284,667 |
|
|
$ |
153,390 |
|
Amortization of intangible
liabilities-charter agreements (includes related party amortization
of intangible liabilities-charter agreements of $2,094 and $502 for
the three month periods ended June 30, 2022 and 2021, respectively,
and $5,385 and $1,004 for each of the six month periods ended June
30, 2022 and 2021, respectively) |
|
|
10,565 |
|
|
|
1,959 |
|
|
|
23,420 |
|
|
|
2,461 |
|
Total Operating
Revenues |
|
|
154,456 |
|
|
|
82,871 |
|
|
|
308,087 |
|
|
|
155,851 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
Vessel operating expenses
(includes related party vessel operating expenses of $4,230 and
$3,578 for each of the three month periods ended June 30, 2022 and
2021, respectively, and $8,609 and $6,868 for each of the six month
periods ended June 30, 2022 and 2021, respectively) |
|
|
41,442 |
|
|
|
28,120 |
|
|
|
80,886 |
|
|
|
52,406 |
|
Time charter and voyage expenses
(includes related party time charter and voyage expenses of $1,473
and $781 for the three month periods ended June 30, 2022 and 2021,
respectively, and $2,950 and $1,470 for each of the six month
periods ended June 30, 2022 and 2021, respectively) |
|
|
5,101 |
|
|
|
2,124 |
|
|
|
9,458 |
|
|
|
3,889 |
|
Depreciation and
amortization |
|
|
20,273 |
|
|
|
13,136 |
|
|
|
40,125 |
|
|
|
25,519 |
|
General and administrative
expenses |
|
|
2,874 |
|
|
|
1,857 |
|
|
|
6,736 |
|
|
|
6,131 |
|
Gain on sale of vessel |
|
|
- |
|
|
|
(7,770 |
) |
|
|
- |
|
|
|
(7,770 |
) |
Operating
Income |
|
|
84,766 |
|
|
|
45,404 |
|
|
|
170,882 |
|
|
|
75,676 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-OPERATING
INCOME/(EXPENSES) |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
265 |
|
|
|
121 |
|
|
|
515 |
|
|
|
364 |
|
Interest and other finance
expenses |
|
|
(30,007 |
) |
|
|
(13,998 |
) |
|
|
(48,742 |
) |
|
|
(39,254 |
) |
Other (expenses)/income,
net |
|
|
(193 |
) |
|
|
549 |
|
|
|
178 |
|
|
|
933 |
|
Fair value adjustment on
derivative asset |
|
|
2,084 |
|
|
|
- |
|
|
|
6,648 |
|
|
|
- |
|
Total non-operating
expenses |
|
|
(27,851 |
) |
|
|
(13,328 |
) |
|
|
(41,401 |
) |
|
|
(37,957 |
) |
Income before income
taxes |
|
|
56,915 |
|
|
|
32,076 |
|
|
|
129,481 |
|
|
|
37,719 |
|
Income taxes |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net
Income |
|
|
56,915 |
|
|
|
32,076 |
|
|
|
129,481 |
|
|
|
37,719 |
|
Earnings allocated to Series B
Preferred Shares |
|
|
(2,384 |
) |
|
|
(2,011 |
) |
|
|
(4,768 |
) |
|
|
(3,495 |
) |
Net Income available
to Common Shareholders |
|
$ |
54,531 |
|
|
$ |
30,065 |
|
|
$ |
124,713 |
|
|
$ |
34,224 |
|
|
|
Global Ship Lease, Inc.
Interim Unaudited Condensed Consolidated
Statements of Cash Flows
(Expressed in thousands of U.S. dollars)
|
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
Cash flows from
operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
56,915 |
|
|
$ |
32,076 |
|
|
$ |
129,481 |
|
|
$ |
37,719 |
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
$ |
20,273 |
|
|
$ |
13,136 |
|
|
$ |
40,125 |
|
|
$ |
25,519 |
|
|
Gain on sale of vessel |
|
|
- |
|
|
|
(7,770 |
) |
|
|
- |
|
|
|
(7,770 |
) |
|
Amortization of derivative
assets' premium |
|
|
128 |
|
|
|
- |
|
|
|
129 |
|
|
|
- |
|
|
Amortization of deferred
financing costs |
|
|
4,514 |
|
|
|
957 |
|
|
|
6,093 |
|
|
|
5,363 |
|
|
Amortization of original issue
discount on repurchase of notes |
|
|
446 |
|
|
|
92 |
|
|
|
326 |
|
|
|
7,136 |
|
|
Amortization of intangible
liabilities-charter agreements |
|
|
(10,565 |
) |
|
|
(1,959 |
) |
|
|
(23,420 |
) |
|
|
(2,461 |
) |
|
Fair value adjustment on
derivative asset |
|
|
(2,084 |
) |
|
|
- |
|
|
|
(6,648 |
) |
|
|
|
|
Prepayment fees on debt
repayment |
|
|
11,229 |
|
|
|
1,438 |
|
|
|
15,197 |
|
|
|
3,056 |
|
|
Share based compensation |
|
|
1,051 |
|
|
|
150 |
|
|
|
2,105 |
|
|
|
1,854 |
|
|
Changes in operating
assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in accounts
receivable and other assets |
|
$ |
(4,350 |
) |
|
$ |
(1,768 |
) |
|
$ |
(6,184 |
) |
|
$ |
(5,633 |
) |
|
Increase in inventories |
|
|
(968 |
) |
|
|
(476 |
) |
|
|
(543 |
) |
|
|
(139 |
) |
|
Increase in derivative
asset |
|
|
- |
|
|
|
- |
|
|
|
(15,370 |
) |
|
|
- |
|
|
Increase/(decrease) in
accounts payable and other liabilities |
|
|
4,839 |
|
|
|
2,918 |
|
|
|
(1,015 |
) |
|
|
(3,148 |
) |
|
Decrease/(increase) in related
parties' balances, net |
|
|
3,311 |
|
|
|
788 |
|
|
|
2,183 |
|
|
|
(447 |
) |
|
Increase in deferred
revenue |
|
|
2,109 |
|
|
|
572 |
|
|
|
607 |
|
|
|
620 |
|
|
Unrealized foreign exchange
loss |
|
|
2 |
|
|
|
- |
|
|
|
4 |
|
|
|
- |
|
|
Net cash provided by
operating activities |
|
$ |
86,850 |
|
|
$ |
40,154 |
|
|
$ |
143,070 |
|
|
$ |
61,669 |
|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of vessels and
intangibles |
|
$ |
- |
|
|
$ |
(98,400 |
) |
|
$ |
- |
|
|
$ |
(98,400 |
) |
|
Cash paid for vessel
expenditures |
|
|
(1,238 |
) |
|
|
(328 |
) |
|
|
(3,225 |
) |
|
|
(2,233 |
) |
|
Advances for vessel
acquisitions and other additions |
|
|
(1,202 |
) |
|
|
(25,709 |
) |
|
|
(2,324 |
) |
|
|
(25,957 |
) |
|
Cash paid for drydockings |
|
|
(5,938 |
) |
|
|
(2,594 |
) |
|
|
(15,253 |
) |
|
|
(4,181 |
) |
|
Net proceeds from sale of
vessels |
|
|
- |
|
|
|
16,514 |
|
|
|
- |
|
|
|
16,514 |
|
|
Time deposits withdrawal |
|
|
100 |
|
|
|
- |
|
|
|
100 |
|
|
|
- |
|
|
Net cash used in
investing activities |
|
$ |
(8,278 |
) |
|
$ |
(110,517 |
) |
|
$ |
(20,702 |
) |
|
$ |
(114,257 |
) |
|
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of 2024
Notes |
|
$ |
- |
|
|
$ |
7,606 |
|
|
$ |
- |
|
|
$ |
22,702 |
|
|
Repurchase of 2022 Notes,
including premium |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(239,183 |
) |
|
Repurchase of 2024 Notes,
including premium |
|
|
(29,070 |
) |
|
|
- |
|
|
|
(29,070 |
) |
|
|
- |
|
|
Proceeds from drawdown of
credit facilities and sale and leaseback |
|
|
- |
|
|
|
225,605 |
|
|
|
60,000 |
|
|
|
461,805 |
|
|
Proceeds from 2027 USPP
Notes |
|
|
350,000 |
|
|
|
- |
|
|
|
350,000 |
|
|
|
- |
|
|
Repayment of credit facilities
and sale and leaseback |
|
|
(39,007 |
) |
|
|
(23,021 |
) |
|
|
(79,918 |
) |
|
|
(53,838 |
) |
|
Repayment of refinanced debt,
including prepayment fees |
|
|
(246,498 |
) |
|
|
(145,237 |
) |
|
|
(276,671 |
) |
|
|
(146,855 |
) |
|
Deferred financing costs
paid |
|
|
(7,018 |
) |
|
|
(3,680 |
) |
|
|
(9,264 |
) |
|
|
(7,916 |
) |
|
Net proceeds from offering of
Class A common shares, net off offering costs |
|
|
- |
|
|
|
(372 |
) |
|
|
- |
|
|
|
67,612 |
|
|
Cancellation of Class A common
shares |
|
|
(4,925 |
) |
|
|
- |
|
|
|
(4,925 |
) |
|
|
- |
|
|
Proceeds from offering of
Series B preferred shares, net of offering costs |
|
|
- |
|
|
|
23,649 |
|
|
|
- |
|
|
|
34,345 |
|
|
Class A common shares-dividend
paid |
|
|
(13,836 |
) |
|
|
(9,347 |
) |
|
|
(23,093 |
) |
|
|
(9,347 |
) |
|
Series B preferred
shares-dividends paid |
|
|
(2,384 |
) |
|
|
(2,011 |
) |
|
|
(4,768 |
) |
|
|
(3,495 |
) |
|
Net cash provided
by/(used in) financing activities |
|
$ |
7,262 |
|
|
$ |
73,192 |
|
|
$ |
(17,709 |
) |
|
$ |
125,830 |
|
|
Net increase in cash
and cash equivalents and restricted cash |
|
|
85,834 |
|
|
|
2,829 |
|
|
|
104,659 |
|
|
|
73,242 |
|
|
Cash and cash equivalents and
restricted cash at beginning of the period |
|
|
214,467 |
|
|
|
162,675 |
|
|
|
195,642 |
|
|
|
92,262 |
|
|
Cash and cash
equivalents and restricted cash at end of the period |
|
$ |
300,301 |
|
|
$ |
165,504 |
|
|
$ |
300,301 |
|
|
$ |
165,504 |
|
|
Supplementary Cash
Flow Information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest |
|
|
12,708 |
|
|
|
10,078 |
|
|
|
25,297 |
|
|
|
24,547 |
|
|
Non-cash investing
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid capitalized
expenses |
|
|
8,101 |
|
|
|
- |
|
|
|
8,101 |
|
|
|
- |
|
|
Unpaid drydocking
expenses |
|
|
7,417 |
|
|
|
1,890 |
|
|
|
7,417 |
|
|
|
1,890 |
|
|
Unpaid vessel
expenditures |
|
|
- |
|
|
|
3,474 |
|
|
|
- |
|
|
|
3,474 |
|
|
Non-cash financing
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid offering costs |
|
|
- |
|
|
|
63 |
|
|
|
- |
|
|
|
63 |
|
|
Unpaid deferred financing
costs |
|
|
341 |
|
|
|
406 |
|
|
|
341 |
|
|
|
406 |
|
|
Unrealized gain on derivative
assets |
|
|
5,632 |
|
|
|
- |
|
|
|
22,914 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor and Media Contacts: The IGB GroupBryan
Degnan646-673-9701orLeon Berman 212-477-8438
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