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Global Ship Lease Reports Results for the First Quarter of 2016
LONDON, April 28, 2016 (GLOBE NEWSWIRE) -- Global Ship Lease, Inc. (NYSE:GSL) (the "Company"), a containership charter owner, announced today its unaudited results for the three months ended March 31, 2016.
First Quarter Highlights
- Reported revenue of $42.6 million for the first quarter 2016
- Reported net income for common shareholders for the first quarter 2016 of $4.6 million and normalized net income of $5.4 million, up from net income and normalized net income of $24,000 in the first quarter of 2015, in line with fleet growth
- Generated $29.3 million of Adjusted EBITDA(1) for the first quarter 2016
- Purchased and cancelled on March 16, 2016, $26.7 million principal amount 10.0% First Priority Secured Notes due 2019, reducing net debt to last 12 months Adjusted EBITDA from 4.0 times at December 31, 2015 to 3.8 times at March 31, 2016
Ian Webber, Chief Executive Officer of Global Ship Lease, stated, "Our results for the first quarter of 2016 once again demonstrate the stability of our long-term, fixed-rate contracts with high-quality counterparties. Our business model, in conjunction with our focus on performance and operational efficiency, has enabled us to continue to generate strong cash flows throughout the difficult market environment currently facing the containership industry. Going forward, we intend to continue to delever while also opportunistically capitalizing on attractive acquisitions aimed at further expanding our earnings power and creating long-term value for our shareholders."
SELECTED FINANCIAL DATA — UNAUDITED
(thousands of U.S. dollars)
|months ended||months ended|
|March 31, 2016||March 31, 2015|
|Net Income for common shareholders||4,557||24|
|Adjusted EBITDA (1)||29,319||23,630|
|Normalized Net Income (1)||5,429||24|
(1) Adjusted EBITDA and Normalized net income 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 time charters of $42.6 million in the three months ended March 31, 2016, up $4.9 million or 13.0% on revenue of $37.7 million for the comparative quarter in 2015. The increase in revenue is mainly due to the addition of OOCL Qingdao from March 11, 2015 and OOCL Ningbo from September 17, 2015, each at a daily charter rate of $34,500, offset by reduced revenue from the disposals of Ville d'Aquarius and Ville d'Orion in fourth quarter 2015. There were 1,638 ownership days in the quarter, down slightly on 1,641 ownership days in the comparative quarter. With no offhire in the three months ended March 31, 2016, utilization was 100.0%. In the comparable quarter of 2015, there were 12 days offhire, including nine for a planned dry-docking, giving a utilization of 99.3%.
The table below shows fleet utilization for the three months ended March 31, 2016 and 2015 and for the years ended December 31, 2015, 2014, 2013, 2012 and 2011.
|Three months ended|
|Mar 31,||Mar 31,||Dec 31,||Dec 31,||Dec 31,||Dec 31,||Dec 31,|
|Planned offhire - drydock||0||(9||)||(9||)||(48||)||(21||)||(82||)||(95||)|
There were no regulatory dry-dockings in the three months ended March 31, 2016; a total of six dry-dockings are planned for 2016. There was one drydocking in 2015.
Vessel Operating Expenses
Vessel operating expenses, which include costs of crew, lubricating oil, spares and insurance, were $11.4 million for the three months ended March 31, 2016, down 8.1% from $12.4 million for the three months ended March 31, 2015. With approximately the same number of ownership days in each quarter, the average cost per ownership day fell $620 per day, or 8.2% from $7,581 in the three months ended March 31, 2015 to $6,961 for the three months ended March 31, 2016. The reduction is due to lower lubricating oil costs from unit price reductions, lower repairs and maintenance, in part from the disposal of Ville d'Aquarius and Ville d'Orion, and lower cost of insurances on renewals.
Depreciation for the three months ended March 31, 2016 was $10.9 million, compared to $11.0 million in the three months ended March 31, 2015, with additional depreciation related to OOCL Qingdao and OOCL Ningbo offset by reduced depreciation following the disposals of Ville d'Aquarius and Ville d'Orion.
General and Administrative Costs
General and administrative costs incurred were $2.0 million in the three months ended March 31, 2016, compared to $1.8 million in the three months ended March 31, 2015. The increase is due to higher legal fees.
Other Operating Income
Other operating income in the three months ended March 31, 2016 was $81,000, compared to $109,000 for the three months ended March 31, 2015.
As a result of the above, Adjusted EBITDA was $29.3 million for the three months ended March 31, 2016, up from $23.6 million for the three months ended March 31, 2015.
Debt at March 31, 2016 comprises 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 March 31, 2016, was $13.1 million, up $1.2 million on the interest expense for the three months ended March 31, 2015 of $11.9 million. The increase is due to $0.5 million premium paid in March 2016 in relation to the tender offer which retired approximately $26.7 million of Notes, accelerated write off of that portion of the original issue discount attributable to the Notes which were retired, a full quarter's interest and amortization of deferred financing charges on the revolving credit facility and on the secured term loan.
Interest income for the three months ended March 31, 2016 and 2015 was not material.
Taxation for the three months ended March 31, 2016 and 2015 was not material.
Earnings Allocated to Preferred Shares
The Series B preferred shares, issued on August 20, 2014, carry a coupon of 8.75%, the cost of which for the three months ended March 31, 2016 was $0.8 million.
Net Income Available to Common Shareholders
Net income available to common shareholders for the three months ended March 31, 2016 was $4.6 million. For the three months ended March 31, 2015, net income was $24,000. This year-over-year increase is mainly due to the addition of OOCL Qingdao from March 11, 2015 and OOCL Ningbo from September 17, 2015.
Normalized net income for the three months ended March 31, 2016, which excludes the charges associated with the tender offer for bonds completed in the quarter, was $5.4 million.
Normalized net income for the three months ended March 31, 2015 was the same as reported net income at $24,000.
The following table provides information about the on-the-water fleet of 18 vessels as at March 31, 2016. 15 vessels are chartered to CMA CGM, and three are chartered to OOCL.
|Name||in TEUs (1)||Built||by GSL||(years)||Date||$|
|CMA CGM Matisse||2,262||1999||Dec 2007||3.7||Sept 21, 2019||15,300|
|CMA CGM Utrillo||2,262||1999||Dec 2007||3.7||Sept 11, 2019||15,300|
|Delmas Keta||2,207||2003||Dec 2007||1.7||Sept 20, 2017||18,465|
|Julie Delmas||2,207||2002||Dec 2007||1.7||Sept 11, 2017||18,465|
|Kumasi||2,207||2002||Dec 2007||1.7||Sept 21, 2017||18,465|
|Marie Delmas||2,207||2002||Dec 2007||1.7||Sept 14, 2017||18,465|
|CMA CGM La Tour||2,272||2001||Dec 2007||3.7||Sept 20, 2019||15,300|
|CMA CGM Manet||2,272||2001||Dec 2007||3.7||Sept 7, 2019||15,300|
|CMA CGM Alcazar||5,089||2007||Jan 2008||4.7||Oct 18, 2020||33,750|
|CMA CGM Château d'If||5,089||2007||Jan 2008||4.7||Oct 11, 2020||33,750|
|CMA CGM Thalassa||11,040||2008||Dec 2008||9.7||Oct 1, 2025||47,200|
|CMA CGM Jamaica||4,298||2006||Dec 2008||6.7||Sept 17, 2022||25,350|
|CMA CGM Sambhar||4,045||2006||Dec 2008||6.7||Sept 16, 2022||25,350|
|CMA CGM America||4,045||2006||Dec 2008||6.7||Sept 19, 2022||25,350|
|CMA CGM Berlioz||6,621||2001||Aug 2009||5.5||May 28, 2021||34,000|
|OOCL Tianjin||8,063||2005||Oct 2014||1.7||Oct 28, 2017||34,500|
|OOCL Qingdao||8,063||2004||Mar 2015||2.0||Mar 11, 2018||34,500|
|OOCL Ningbo||8,063||2004||Sep 2015||2.5||Sep 17, 2018||34,500|
|(1) Twenty-foot Equivalent Units.|
|(2) As at March 31, 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.|
Conference Call and Webcast
Global Ship Lease will hold a conference call to discuss the Company's results for the three months ended March 31, 2016 today, Thursday, April 28, 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: 93430773
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, May 14, 2016 at (855) 859-2056 or (404) 537-3406. Enter the code 93430773 to access the audio replay. The webcast will also be archived on the Company's: http://www.globalshiplease.com.
Annual Report on Form 20-F
Global Ship Lease, Inc has filed its Annual Report for 2015 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 email@example.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 mainly 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 March 31, 2016 of 11.3 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 March 31, 2016 is 4.3 years or 4.6 years on a weighted basis.
Reconciliation of Non-U.S. GAAP Financial Measure
A. ADJUSTED EBITDA
Adjusted EBITDA represents net income before interest income and expense including amortization of deferred finance costs, realized and unrealized gain (loss) on derivatives, income taxes, depreciation and amortization. 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)|
|Mar 31,||Mar 31,|
|Net income available to common shareholders||4,557||24|
|Earnings allocated to preferred shares||766||766|
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 - UNAUDITED|
|(thousands of U.S. dollars)|
|Mar 31,||Mar 31,|
|Net income available to common shareholders||4,557||24|
|Adjust:||Premium paid on tender offer for bonds||533||-|
|Accelerated write off of deferred financing costs related to tender offer||80||-|
|Accelerated write off of original issue discount related to tender offer||259||-|
|Normalized net income||5,429||24|
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 strength of future growth of the container shipping industry, including the rates of annual demand and supply growth;
- the financial condition of CMA CGM (the company's principal charterer and main source of operating revenue) and other charterers and their ability to pay charterhire in accordance with the charters;
- the overall health and condition of the U.S. and global financial markets;
- Global Ship Lease's financial condition and liquidity, including its ability to obtain additional financing to fund capital expenditures, vessel acquisitions and for other general corporate purposes and its ability to meet its financial covenants and repay its borrowings;
- 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 first priority secured notes;
- future acquisitions, business strategy and expected capital spending;
- operating expenses, availability of key employees, crew, number of off-hire days, drydocking and survey requirements, costs of regulatory compliance, insurance costs and general and administrative costs;
- general market conditions and shipping industry trends, including charter rates and factors affecting supply and demand;
- assumptions regarding interest rates and inflation;
- change 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 Global Ship Lease's capital base;
- Global Ship Lease's expectations about the availability of vessels to purchase, the time that it may take to construct new vessels, or the useful lives of its vessels;
- Global Ship Lease's continued ability to enter into or renew charters including the re-chartering of vessels on the expiry of existing charters, or to secure profitable employment for its vessels in the spot market;
- the continued performance of existing charters;
- Global Ship Lease's ability to capitalize on management's and directors' relationships and reputations in the containership industry to its advantage;
- changes in governmental and classification societies' rules and regulations or actions taken by regulatory authorities;
- expectations about the availability of insurance on commercially reasonable terms;
- unanticipated changes in laws and regulations; and
- potential liability from future litigation.
Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Global Ship Lease's actual results could differ materially from those anticipated in forward-looking statements for many reasons specifically as described in Global Ship Lease's filings with the 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 March 31,|
|Time charter revenue||$||42,610||$||37,719|
|Vessel operating expenses||11,402||12,441|
|General and administrative||1,970||1,757|
|Other operating income||(81||)||(109||)|
|Total operating expenses||24,225||25,067|
|Non Operating Income (Expense)|
|Income before Income Taxes||5,329||801|
|Earnings allocated to Series B Preferred Shares||(766||)||(766||)|
|Net Income available to Common Shareholders||$||4,557||$||24|
|Earnings per Share|
|Weighted average number of Class A common shares outstanding|
|Basic (including RSUs without service conditions)||47,841,578||47,766,484|
|Net income per Class A common share|
|Basic (including RSUs without service conditions)||$||0.10||$||nil|
|Weighted average number of Class B common shares outstanding|
|Basic and diluted||7,405,956||7,405,956|
|Net income per Class B common share|
|Basic and diluted||$||nil||$||nil|
Global Ship Lease, Inc.
Interim Unaudited Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars except share data)
|March 31, 2016||December 31, 2015|
|Cash and cash equivalents||$||30,522||$||53,591|
|Total current assets||33,788||57,631|
|Vessels in operation||836,013||846,939|
|Other fixed assets||6||5|
|Other long term assets||279||306|
|Total non-current assets||836,330||847,289|
|Liabilities and Stockholders' Equity|
|Current portion of long term debt||$||26,465||$||35,160|
|Intangible liability — charter agreements||2,073||2,104|
|Total current liabilities||33,929||53,632|
|Long term debt||423,728||442,913|
|Intangible liability — charter agreements||11,091||11,589|
|Deferred tax liability||13||20|
|Total long-term liabilities||434,832||454,522|
|Class A Common stock — authorized 214,000,000 shares with a $0.01 par value; 47,550,013 shares issued and outstanding (2015 — 47,541,484)||$||476||$||475|
|Class B Common stock — authorized 20,000,000 shares with a $0.01 par value; 7,405,956 shares issued and outstanding (2015 — 7,405,956)||74||74|
|Series B Preferred shares — authorized 16,100 shares with a $0.01 par value; 14,000 shares issued and outstanding (2015 — 14,000)||-||-|
|Additional paid in capital||386,458||386,425|
|Total Stockholders' Equity||401,357||396,766|
|Total Liabilities and Stockholders' Equity||$||870,118||$||904,920|
Global Ship Lease, Inc.
Interim Unaudited Consolidated Statements of Cash Flows
(Expressed in thousands of U.S. dollars)
Three months ended March 31,
|Cash Flows from Operating Activities|
|Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities|
|Amortization of deferred financing costs||952||791|
|Amortization of original issue discount||582||346|
|Amortization of intangible liability||(529||)||(529||)|
|Share based compensation||33||25|
|Decrease in accounts receivable and other assets||699||647|
|Decrease (increase) in inventory||34||(71||)|
|Decrease in accounts payable and other liabilities||(10,714||)||(11,291||)|
|(Decrease) increase in unearned revenue||(104||)||205|
|Unrealized foreign exchange loss (gain)||32||(21||)|
|Net Cash Provided by Operating Activities||7,242||1,870|
|Cash Flows from Investing Activities|
|Cash paid for vessel acquisition||-||(54,220||)|
|Costs paid in respect of sale of vessels||(157||)||-|
|Cash paid for other assets||(1||)||-|
|Cash paid for drydockings||-||(1,485||)|
|Net Cash Used in Investing Activities||(158||)||(55,705||)|
|Cash Flows from Financing Activities|
|Repurchase of secured notes||(26,662||)||-|
|Proceeds from drawdown of credit facilities||-||40,000|
|Repayment of credit facilities||(2,725||)||-|
|Series B Preferred Shares — dividends paid||(766||)||(766||)|
|Net Cash (Used in) Provided by Financing Activities||(30,153||)||39,234|
|Net Decrease in Cash and Cash Equivalents||(23,069||)||(14,601||)|
|Cash and Cash Equivalents at Start of Period||53,591||33,295|
|Cash and Cash Equivalents at End of Period||$||30,522||$||18,694|
Investor and Media Contacts: The IGB Group Bryan Degnan 646-673-9701 or Leon Berman 212-477-8438