First Quarter Highlights
- Reported operating revenues of
- Reported net income for common shareholders for the first quarter 2018 of
- Generated
- On February 20, 2018, announced agreement to an extension of our charter with OOCL for the OOCL Qingdao, a 2004-built, 8,063 TEU containership. The extension commences in direct continuation of the current charter with effect from March 11, 2018, at a fixed rate of $14,000 per day. Earliest redelivery is now January 1, 2019, with latest redelivery March 15, 2019 (at charterer's option)
- On March 1, 2018, announced agreement to acquire a 2005-built, 2,800 TEU containership for $11.3 million. Following delivery, which is expected to be during the second quarter of 2018, once the existing charter terminates, the vessel will commence charter employment with CMA CGM for a period of 12 months at a fixed rate of $9,000 per day.
Mr. Webber continued, “The long-term market trends driving the appreciation in mid-sized and smaller containerships continue to be robust, with limited vessel ordering, a strong global economy, and idle capacity of the global fleet at a very low level of less than 1.5%. As we continue to pursue attractive growth opportunities, we remain confident that Global Ship Lease’s track record of high-quality operations, our strong contracted charter coverage, and our stable balance sheet put us in an excellent position to create lasting shareholder value in a strengthening market.”
SELECTED FINANCIAL DATA – UNAUDITED
(thousands of U.S. dollars)
Three | Three | |||||
months ended | months ended | |||||
March 31, 2018 | March 31, 2017 | |||||
Operating Revenues | 36,102 | 39,642 | ||||
Operating Income | 15,491 | 18,434 | ||||
Net Income for common shareholders | 4,192 | 6,794 | ||||
Adjusted EBITDA (1) | 23,647 | 28,034 | ||||
Normalized Net Income (1) | 4,192 | 6,794 | ||||
(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
Operating Revenues and Utilization
The fleet generated operating revenues from fixed-rate time charters of
The table below shows fleet utilization for the three months ended
Three months ended | Year ended | |||||||||||||
Mar 31, | Mar 31, | Dec 31, | Dec 31, | Dec 31, | Dec 31, | Dec 31, | ||||||||
Days | 2018 | 2017 | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||
Ownership days | 1,620 | 1,620 | 6,570 | 6,588 | 6,893 | 6,270 | 6,205 | |||||||
Planned offhire - scheduled drydock | (13) | (47) | (62) | (100) | (9) | (48) | (21) | |||||||
Unplanned offhire | (4) | (3) | (40) | (3) | (7) | (12) | (7) | |||||||
Idle time | 0 | 0 | 0 | 0 | (13) | (64) | 0 | |||||||
Operating days | 1,603 | 1,570 | 6,468 | 6,485 | 6,864 | 6,146 | 6,177 | |||||||
Utilization | 99.0% | 96.9% | 98.4% | 98.4% | 99.6% | 98.0% | 99.5% | |||||||
There was one regulatory drydocking in the three months ended
Vessel Operating Expenses
Vessel operating expenses, which include costs of crew, lubricating oil, spares and insurance, were
Depreciation
Depreciation for the three months ended
Impairment
The Company’s accounting policies require that tangible fixed assets such as vessels are reviewed individually for impairment in case of trigger events or changes in circumstances to assess whether their carrying amounts are recoverable.
In
General and Administrative Costs
General and administrative costs incurred were
Other Operating Income
Other operating income in the three months ended
Adjusted EBITDA
As a result of the above, Adjusted EBITDA was
Interest Expense
Debt at
Debt at
Interest expense for the three months ended
Interest income for the three months ended
Taxation
Taxation for the three months ended
Earnings Allocated to Preferred Shares
The Series B preferred shares, issued on
Net Income Available to Common Shareholders and Normalized Net Income
Net income available to common shareholders for the three months ended
Normalized net income for the three months ended
Fleet
The following table provides information about the on-the-water fleet of 18 vessels as at
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 | 1.7 | Sept 21, 2019 | 15,300 |
CMA CGM Utrillo | 2,262 | 1999 | Dec 2007 | 1.7 | Sept 11, 2019 | 15,300 |
Delmas Keta | 2,207 | 2003 | Dec 2007 | 0.5 | Aug 6, 2018 | 7,800 |
Julie Delmas | 2,207 | 2002 | Dec 2007 | 0.4 | Jul 28, 2018 | 7,800 |
Kumasi | 2,207 | 2002 | Dec 2007 | 0.8 – 2.8(3) | Nov 16, 2018 | 9,800 |
Marie Delmas | 2,207 | 2002 | Dec 2007 | 0.8 - 2.8(3) | Nov 16, 2018 | 9,800 |
CMA CGM La Tour | 2,272 | 2001 | Dec 2007 | 1.7 | Sept 20, 2019 | 15,300 |
CMA CGM Manet | 2,272 | 2001 | Dec 2007 | 1.7 | Sept 7, 2019 | 15,300 |
CMA CGM Alcazar | 5,089 | 2007 | Jan 2008 | 2.8 | Oct 18, 2020 | 33,750 |
CMA CGM Château d’If | 5,089 | 2007 | Jan 2008 | 2.8 | Oct 11, 2020 | 33,750 |
CMA CGM Thalassa | 11,040 | 2008 | Dec 2008 | 7.8 | Oct 1, 2025 | 47,200 |
CMA CGM Jamaica | 4,298 | 2006 | Dec 2008 | 4.7 | Sept 17, 2022 | 25,350 |
CMA CGM Sambhar | 4,045 | 2006 | Dec 2008 | 4.7 | Sept 16, 2022 | 25,350 |
CMA CGM America | 4,045 | 2006 | Dec 2008 | 4.7 | Sept 19, 2022 | 25,350 |
CMA CGM Berlioz | 6,621 | 2001 | Aug 2009 | 3.4 | May 28, 2021 | 34,000 |
GSL Tianjin(4) | 8,063 | 2005 | Oct 2014 | 0.7 | Sept 26, 2018 | 11,900 |
OOCL Qingdao(5) | 8,063 | 2004 | Mar 2015 | 0.9 | Jan 1, 2019 | 14,000 |
OOCL Ningbo | 8,063 | 2004 | Sep 2015 | 0.6 | Sep 17, 2018 | 34,500 |
(1) Twenty-foot Equivalent Units. | ||||||
(2) As at March 31, 2018 to mid-point of re-delivery period, updated for subsequent charter extensions. Plus or minus 90 days, other than (i) Julie Delmas and Delmas Keta which are plus or minus 45 days, (ii) Kumasi and Marie Delmas see footnote 3 below, (iii) GSL Tianjin which is now between September 26, 2018 and January 26, 2019 see footnote 4 below, (iv) OOCL Qingdao which is now between January 1, 2019 and March 15, 2019 see footnote 5 below and (v) 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 to, inter alia, provide us with three consecutive options to extend the charters at $9,800 per day. The first of these options was exercised in July 2017, extending the charters to end 2018. The two remaining options allow us to extend the charters to December 31, 2020 plus or minus 90 days at charterer’s option. The earliest possible re-delivery date, not taking into account our remaining options, is shown in the table. | ||||||
(4) The time charter for GSL Tianjin with CMA CGM which commenced October 25, 2017,was extended with effect from January 26, 2018 at a fixed rate of $11,900 per day for a period of eight to 12 months, at charterer’s option. | ||||||
(5) In February 2018 we agreed to an extension of our charter with OOCL for the OOCL Qingdao. The extension commenced in direct continuation of the current charter with effect from March 11, 2018, at a fixed rate of $14,000 per day. Earliest redelivery is now January 1, 2019, with latest redelivery March 15, 2019, at charterer's option. | ||||||
Conference Call and Webcast
(1) Dial-in: (877) 445-2556 or (908) 982-4670; Passcode: 1597213 | |
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
Annual Report on Form 20-F
About
At
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, 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. Our use of Adjusted EBITDA may vary from the use of similarly titled measures by others in our industry.
ADJUSTED EBITDA - UNAUDITED
(thousands of U.S. dollars) | |||||||
Three | Three | ||||||
months | months | ||||||
ended | ended | ||||||
Mar 31, | Mar 31, | ||||||
2018 | 2017 | ||||||
Net income available to common shareholders | 4,192 | 6,794 | |||||
Adjust: | Depreciation | 8,156 | 9,600 | ||||
Interest income | (269 | ) | (93 | ) | |||
Interest expense | 10,787 | 10,957 | |||||
Income tax | 15 | 10 | |||||
Earnings allocated to preferred shares | 766 | 766 | |||||
Adjusted EBITDA | 23,647 | 28,034 | |||||
B. Normalized net income
Normalized net income represents net income adjusted for the premium paid on the tender offer for the Notes and the gain made on open market purchases of the Notes, together with the related accelerated amortization of deferred financing costs and original issue discount, and for impairment charges. 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. Our use of Normalized net income may vary from the use of similarly titled measures by others in our industry.
There are no differences between Reported Net Income and Normalized Net Income for the quarters ended
Safe Harbor Statement
This communication contains forward-looking statements. Forward-looking statements provide
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 revenues) 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.
Investor and Media Contacts:
646-673-9701
or
212-477-8438
Global Ship Lease, Inc. Interim Unaudited Consolidated Statements of Cash Flows (Expressed in thousands of U.S. dollars except share data) |
||||||
Three months ended March 31, |
||||||
2018 | 2017 | |||||
Operating Revenues | ||||||
Time charter revenue | $ | 5,726 | $ | 9,238 | ||
Time charter revenue – related party | 30,376 | 30,404 | ||||
36,102 | 39,642 | |||||
Operating Expenses Vessel operating expenses |
10,204 | 10,010 | ||||
Vessel operating expenses – related party | 322 | 400 | ||||
Depreciation | 8,156 | 9,600 | ||||
General and administrative | 1,935 | 1,240 | ||||
Other operating income | (6 | ) | (42 | ) | ||
Total operating expenses | 20,611 | 21,208 | ||||
Operating Income | 15,491 | 18,434 | ||||
Non Operating Income (Expense) | ||||||
Interest income | 269 | 93 | ||||
Interest expense | (10,787 | ) | (10,957 | ) | ||
Income before Income Taxes | 4,973 | 7,570 | ||||
Income taxes | (15 | ) | (10 | ) | ||
Net Income | $ | 4,958 | $ | 7,560 | ||
Earnings allocated to Series B Preferred Shares | (766 | ) | (766 | ) | ||
Net Income available to Common Shareholders | $ | 4,192 | $ | 6,794 | ||
Earnings per Share | ||||||
Weighted average number of Class A common shares outstanding | ||||||
Basic (including RSUs without service conditions) | 48,009,734 | 47,975,609 | ||||
Diluted | 48,009,734 | 47,975,609 | ||||
Net income per Class A common share | ||||||
Basic (including RSUs without service conditions) | $ | 0.09 | $ | 0.14 | ||
Diluted | $ | 0.09 | $ | 0.14 | ||
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 ConsolidatedBalance Sheets (Expressed in thousands of U.S. dollars except share data) |
|||||||
March 31, 2018 |
December 31, 2017 |
||||||
Assets |
|||||||
Cash and cash equivalents | $ | 91,288 | $ | 73,266 | |||
Accounts receivable | - | 72 | |||||
Due from related party | 756 | 1,932 | |||||
Prepaid expenses | 2,244 | 918 | |||||
Other receivables | 292 | 458 | |||||
Inventory | 2,525 | 742 | |||||
Total current assets | 97,105 | 77,388 | |||||
Vessels in operation | 590,845 | 597,779 | |||||
Vessel deposits | 1,128 | - | |||||
Other fixed assets | 8 | 10 | |||||
Intangible assets | 5 | 7 | |||||
Total non-current assets | 591,986 | 597,796 | |||||
Total Assets | $ | 689,091 | $ | 675,184 | |||
Liabilities and Stockholders’ Equity | |||||||
Liabilities |
|||||||
Current portion of long term debt | $ | 40,000 | $ | 40,000 | |||
Intangible liability – charter agreements | 1,771 | 1,771 | |||||
Deferred revenue | 1,866 | 2,178 | |||||
Accounts payable | 726 | 1,486 | |||||
Due to related party | 3,923 | 2,813 | |||||
Accrued expenses | 17,398 | 8,788 | |||||
Total current liabilities | 65,684 | 57,036 | |||||
Long term debt | 359,745 | 358,515 | |||||
Intangible liability – charter agreements | 7,568 | 8,011 | |||||
Deferred tax liability | 20 | 17 | |||||
Total long-term liabilities | 367,333 | 365,543 | |||||
Total Liabilities | $ | 433,017 | $ | 423,579 | |||
Commitments and contingencies | - | - | |||||
Stockholders’ Equity | |||||||
Class A Common stock – authorized | |||||||
214,000,000 shares with a $0.01 par value; | |||||||
47,609,734 shares issued and outstanding (2017 – 47,609,734) | $ | 476 | $ | 476 | |||
Class B Common stock – authorized | |||||||
20,000,000 shares with a $0.01 par value; | |||||||
7,405,956 shares issued and outstanding (2017 – 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 (2017 – 14,000) | - | - | |||||
Additional paid in capital | 387,025 | 386,748 | |||||
Accumulated deficit | (131,501 | ) | (135,693 | ) | |||
Total Stockholders’ Equity | 256,074 | 251,605 | |||||
Total Liabilities and Stockholders’ Equity | $ | 689,091 | $ | 675,184 | |||
Global Ship Lease, Inc. Interim Unaudited Consolidated Statements of Cash Flows (Expressed in thousands of U.S. dollars) |
||||||
Three months ended March 31, |
||||||
2018 | 2017 | |||||
Cash Flows from Operating Activities | ||||||
Net income | $ | 4,958 | $ | 7,560 | ||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities | ||||||
Depreciation | 8,156 | 9,600 | ||||
Amortization of deferred financing costs | 1,029 | 890 | ||||
Amortization of original issue discount | 201 | 282 | ||||
Amortization of intangible liability | (443 | ) | (452 | ) | ||
Share based compensation | 45 | - | ||||
(Increase) in accounts receivable and other assets | (1,104 | ) | (581 | ) | ||
(Increase) in inventory | (1,783 | ) | (48 | ) | ||
Increase (decrease) in accounts payable and other liabilities | 7,850 | (9,548 | ) | |||
(Decrease) increase in unearned revenue | (312 | ) | 428 | |||
Increase in related party balances | 1,838 | 48 | ||||
Unrealized foreign exchange loss | 4 | 6 | ||||
Net Cash Provided by Operating Activities | 20,439 | 8,185 | ||||
Cash Flows from Investing Activities | ||||||
Cash paid for vessel deposits | (1,128 | ) | - | |||
Improvement of vessels | (150 | ) | - | |||
Cash paid for drydockings | (373 | ) | (1,720 | ) | ||
Net Cash Used in Investing Activities | (1,651 | ) | (1,720 | ) | ||
Cash Flows from Financing Activities | ||||||
Repayment of credit facilities | - | (2,925 | ) | |||
Series B Preferred Shares – dividends paid | (766 | ) | (766 | ) | ||
Net Cash (Used in) by Financing Activities | (766 | ) | (3,691 | ) | ||
Net Increase in Cash and Cash Equivalents | 18,022 | 2,774 | ||||
Cash and Cash Equivalents at Start of Period | 73,266 | 54,243 | ||||
Cash and Cash Equivalents at End of Period | $ | 91,288 | $ | 57,017 | ||
Supplemental information | ||||||
Total interest paid | $ | 648 | $ | 18,932 | ||
Income tax paid | $ | 12 | $ | 14 | ||
Source: Global Ship Lease, Inc.