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Mar 05, 2018

Global Ship Lease Reports Results for the Fourth Quarter of 2017

LONDON, March 05, 2018 (GLOBE NEWSWIRE) -- Global Ship Lease, Inc. (NYSE:GSL) (the “Company”), a containership charter owner, announced today its unaudited results for the three months and year ended December 31, 2017.

Fourth Quarter and Year Highlights

- Reported operating revenues of $37.9 million for the fourth quarter 2017.  Operating revenues for the year ended December 31, 2017 were $159.0 million

- Reported net loss(1) of $99.8 million for the fourth quarter 2017, after costs and charges totaling $14.4 million associated with the refinancing completed in October 2017 and a non-cash impairment charge of $87.6 million.  For the year ended December 31, 2017, net loss was $77.3 million

- Generated $24.8 million of Adjusted EBITDA(2) for the fourth quarter 2017.  Adjusted EBITDA for the year ended December 31, 2017 was $110.3 million

- Normalized net income (1)(2), excluding the costs and charges associated with the refinancing, was $2.1 million for the fourth quarter 2017.  Normalized net income was $25.1 million for the year ended December 31, 2017

- On October 19, 2017, agreed a new time charter with CMA CGM for the 2005-built OOCL Tianjin, which has been renamed GSL Tianjin, an 8,063 TEU containership.  The charter was for a period of three to eight months (at the charterer's option) at a fixed rate of $13,000 per day, which commenced on October 25, 2017, immediately upon re-delivery from its previous charter.  This new charter was extended with effect from January 26, 2018 for a period of eight to 12 months (at the charterer’s option) at a fixed rate of $11,900 per day

- On October 31, 2017, closed the previously announced offering of $360 million aggregate principal amount of 9.875% first priority secured notes due 2022.  The net proceeds, together with borrowings under a new $54.8 million super senior secured term loan facility and cash on hand, were used to refinance all outstanding debt comprising 10.000% notes due 2019, the revolving credit facility and the secured term loan

- Reduced net debt to $341.5 million at December 31, 2017 from $375.1 million at end 2016; net debt to Adjusted EBITDA reduced to 3.1 times for 2017 from 3.3 times for 2016

- 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.

Ian Webber, Chief Executive Officer of Global Ship Lease, stated, “In 2017, we continued to benefit from our attractive long-term charters and strong relationships with top-tier liner companies.  By maintaining full time charter employment for our fleet and extremely high utilization levels in line with our historical averages, we ensured that we would continue to generate consistent cashflows to support our deleveraging and growth efforts.  Alongside improving market fundamentals, this consistent track record of performance enabled us to refinance all of our outstanding debt on improved terms, not only generating ongoing savings, but also securing Global Ship Lease’s long-term financial strength and flexibility.”

Mr. Webber continued, “Over the course of 2017 and into early 2018, the overall container shipping industry has experienced a significant recovery, as continued strength in underlying freight demand has driven increasing supply/demand tension and upward pressure on both spot charter rates and asset values.  Amid this promising market environment, we have been able to achieve satisfactory renewals at EBITDA positive levels with no down time for vessels that have come open.  With our consistent long-term cashflows, balance sheet strength, and high-quality fleet, Global Ship Lease is in an excellent position to pursue a range of value creation opportunities, as we have demonstrated with the vessel purchase recently announced, for the benefit of our shareholders.” 

SELECTED FINANCIAL DATA – UNAUDITED (thousands of U.S. dollars)

  Three Three    
  months
ended
months
ended
Year
 ended
Year
 ended
  December
31, 2017
December
31, 2016
December
31, 2017
December
31, 2016
         
Operating Revenues  37,871 41,426 158,988 166,523
Operating (Loss) (72,183) (44,902) (15,324) (20,480)
Net (Loss) (1) (99,824) (55,072) (77,328) (68,157)
Adjusted EBITDA (2) 24,835 28,578 110,281 114,747
Normalized Net Income (1)(2) 2,190 6,140 25,206 22,441

(1) Net income (loss) and Normalized net income available to common shareholders

(2) 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 most directly comparable US GAAP measure are provided in this Earnings Release.

Operating Revenues and Utilization

The 18 vessel fleet generated operating revenues from fixed-rate, mainly long-term time charters of $37.9 million in the three months ended December 31, 2017, down $3.5 million on operating revenues of $41.4 million for the comparative period in 2016, with the reduction due mainly to the effect of (i) the 12-month extensions of the charters of Julie Delmas and Delmas Keta effective mid-September 2017 at $7,800 per day compared to $18,465 per day previously and (ii) the new charter of GSL Tianjin to CMA CGM effective late October 2017 at $13,000 per day compared to $34,500 per day for the expiring charter to OOCL.  There were 1,656 ownership days in the quarter, the same as in the comparable period in 2016.  In the fourth quarter 2017, there was no planned offhire from regulatory drydocking and 10 days of unplanned offhire, giving an overall utilization of 99.4%.  There were a total of 12 days offhire in the fourth quarter 2016, of which one was unplanned and 11 were from regulatory drydockings, giving an overall utilization of 99.3%. 

For the year ended December 31, 2017, operating revenues were $159.0 million, down $7.5 million or 4.5% on operating revenues of $166.5 million in the prior year, mainly due to the effect of the amendments to the charters noted above and, in addition, a stepdown from the previous charter rate of $18,465 per day for Marie Delmas and Kumasi, effective August 1, 2016, following amendments to these charters, whereby the charter rate reduced to $13,000 per day and further reduced to $9,800 per day from mid-September 2017 as we exercised the first of three options in our favor to extend the charters to end 2018.

The table below shows fleet utilization for the three months and years ended December 31, 2017 and 2016 and for the years ended December 31, 2015, 2014 and 2013.

               
  Three months ended Year ended  
  Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31,
Days 2017 2016 2017 2016 2015 2014 2013
               
Ownership days 1,656 1,656 6,570 6,588 6,893 6,270 6,205
Planned offhire - scheduled drydock 0 (11) (62) (100) (9) (48) (21)
Unplanned offhire (10) (1) (40) (3) (7) (12) (7)
Idle time 0 0 0 0 (13) (64) 0
Operating days 1,646 1,644 6,468 6,485 6,864 6,146 6,177
               
Utilization 99.4% 99.3% 98.4% 98.4% 99.6% 98.0% 99.5%

There were four regulatory drydockings in 2017 and six in 2016.  Two regulatory drydockings are due in 2018.

Vessel Operating Expenses

Vessel operating expenses, which include costs of crew, lubricating oil, repairs, maintenance and insurance, were $11.6 million for the three months ended December 31, 2017, compared to $11.2 million in the prior year period.  The average cost per ownership day in the quarter was $6,992, compared to $6,772 for the prior year period, up $220 per day or 3.2%.  The increase is mainly attributable to insurance deductibles incurred in the three months ended December 31, 2017.  

For the year ended December 31, 2017, vessel operating expenses were $43.5 million, or an average of $6,614 per day, compared to $45.7 million in the prior year period or $6,936 per day.  The $322, or 4.6%, reduction in vessel operating expenses per day is due mainly to lower repair and maintenance costs, partly offset by increased costs for insurance deductibles.

Depreciation

Depreciation for the three months ended December 31, 2017 was $9.4 million, compared to $10.4 million in the fourth quarter 2016; the reduction is due to the effect of lower book values for a number of vessels following impairment write downs taken in the third and fourth quarters of 2016.

Depreciation for the year ended December 31, 2017 was $38.0 million, compared to $42.8 million in the prior year.

Impairment

The Company’s accounting policies require that tangible fixed assets such as vessels are reviewed for impairment when events or changes in circumstances indicate that their carrying amounts may not be recoverable.

In October 2017, the Company agreed a new charter for GSL Tianjin with CMA CGM.  The charter is for a period of three to eight months (at the charterer's option) at a fixed rate of $13,000 per day, which commenced on October 25, 2017, immediately upon re-delivery from its previous charter.  This new charter was subsequently extended with effect from January 26, 2018 for a period of eight to 12 months (at the charterer’s option) at a fixed rate of $11,900 per day. The new charter to CMA CGM triggered the performance of an impairment test on the vessel. No impairment was identified.

Charter rates in the spot market and asset values saw improvements through 2017.  Whilst market developments are encouraging, taking into account the seasonal as well as cyclical nature of the container shipping industry, we determined that it would nonetheless be appropriate under US GAAP to undertake a fleet-wide review for impairment as at December 31, 2017.  This review gave rise to a non-cash charge in the fourth quarter of $87.6 million, as the sum of the expected undiscounted future cash flows from five vessels over their estimated remaining useful lives was less than the carrying amounts.  The impairment charge was equal to the amount by which the assets’ carrying amounts exceed their fair values.  Fair value was assessed, on a vessel by vessel basis, as the net present value of estimated future cash flows, discounted by an appropriate discount rate. 

An impairment review was performed for the three months ended December 31, 2016 on all vessels, due to continued poor industry conditions.  This gave rise to a non-cash charge in the fourth quarter of $63.1 million on four vessels.

Including a non-cash impairment charge of $29.4 million that was recognized in the three months ended September 30, 2016, following our agreement with CMA CGM to amend and extend the charters of the Marie Delmas and Kumasi, the total non-cash impairment charge for the year ended December 31, 2016 was $92.4 million.

General and Administrative Costs

General and administrative costs were $1.5 million in the three months ended December 31, 2017, compared to $1.7 million in the fourth quarter of 2016; the reduction is due mainly to lower staff costs and legal and professional fees.

For the year ended December 31, 2017, general and administrative costs were $5.3 million, compared to $6.3 million for 2016; the reduction is again mainly due to lower staff costs and legal and professional fees.

Other Operating Income

Other operating income in the three months ended December 31, 2017 was $1,000, compared to $41,000 in the fourth quarter 2016.

For the year ended December 31, 2017, other operating income was $51,000, compared to $0.2 million for 2016. 

Adjusted EBITDA

As a result of the above, Adjusted EBITDA was $24.8 million for the three months ended December 31, 2017, down from $28.6 million for the three months ended December 31, 2016, mainly as a result of lower revenue, offset by lower vessel operating expenses.

Adjusted EBITDA for the year ended December 31, 2017 was $110.3 million, compared to $114.7 million for 2016 with the reduction mainly as a result of lower revenue.

Interest Expense

Debt at December 31, 2017 comprised $360.0 million outstanding on our new 9.875% notes due 2022 and $54.8 million under the new secured term loan, both of which were closed in October 2017 as part of a re-financing.  The net proceeds, together with cash on hand, were used to refinance our previous 10.000% notes due 2019.  In addition, all outstanding borrowings under both the previous revolving credit facility and the previous secured term loan were repaid and terminated.

Debt at December 31, 2016 comprised amounts outstanding on our 10.000% notes, the revolving credit facility and the secured term loan.

Interest expense for the three months ended December 31, 2017, was $27.0 million, up $17.6 million on the interest expense for the three months ended December 31, 2016 of $9.5 million.  The increase is mainly due to the consequences of the refinancing completed in October 2017, which resulted in a premium on the redemption of the 2019 Notes of $8.7 million, the write off of the remaining balance of original issue discount associated with the 2019 notes of $1.4 million and the write off of the remaining balance of deferred financing charges of $4.3 million associated with debt repaid.  In contrast, interest expense for the three months ended December 31, 2016 benefitted from a $1.9 million gain on the open market purchases of $18.0 million principal amount of the 2019 notes in November 2016.

For the year ended December 31, 2017, interest expense was $59.4 million, up $14.6 million on interest expense of $44.8 million for the year ended December 31, 2016.  The increase is mainly for the reasons noted above.

Interest income for the three months ended December 31, 2017 was $154,000, up from $59,000 in the comparative period in 2016 due to higher average cash balances and increased interest rates.  Interest income for the year ended December 31, 2017 was $489,000, compared to $198,000 in 2016.

Taxation

Taxation for the three months ended December 31, 2017 was a charge of $9,000, compared to $14,000 in the fourth quarter of 2016.

Taxation for the year ended December 31, 2017 was a charge of $40,000, compared to $46,000 for 2016. 

Earnings Allocated to Preferred Shares

The Series B Preferred Shares carry a coupon of 8.75%, the cost of which for the three months ended December 31, 2017 was $0.8 million; the same as in the comparative period.

The cost in the year ended December 31, 2017 was $3.1 million; the same as in the comparative period.

Net (Loss) Available to Common Shareholders and Normalized Net Income

Net loss for the three months ended December 31, 2017 was $99.8 million, after the costs and charges totaling $14.4 million associated with the refinancing completed in October 2017 and the non-cash impairment charge of $87.6 million.  For the three months ended December 31, 2016, net loss was $55.1 million, after the $63.1 million non-cash impairment charge.

Normalized net income for the three months ended December 31, 2017 was $2.2 million, adjusting for the costs associated with the refinancing, compared to $6.1 million in the comparative period in 2016, adjusting mainly for the non-cash impairment charge.

Net loss was $77.3 million for the year ended December 31, 2017 after the $87.6 million non-cash impairment charge.  Net loss was $68.2 million for the year ended December 31, 2016 after the $92.4 million non-cash impairment charge.

Normalized net income for the year ended December 31, 2017 was $25.2 million and was $22.4 million for the prior year.

Fleet

The following table provides information about the on-the-water fleet of 18 vessels as at December 31, 2017, updated for subsequent charter extensions.  16 vessels are chartered to CMA CGM, and two to OOCL.

        Remaining Earliest Daily
        Charter Charter Charter
Vessel Capacity Year Purchase Term (2) Expiry Rate
Name  in TEUs (1) Built by GSL  (years) Date $
CMA CGM Matisse 2,262 1999 Dec 2007 2.0 Sept 21, 2019 15,300
CMA CGM Utrillo 2,262 1999 Dec 2007 1.9 Sept 11, 2019 15,300
Delmas Keta 2,207 2003 Dec 2007 0.7 Aug 6, 2018 7,800
Julie Delmas 2,207 2002 Dec 2007 0.7 Jul 28, 2018 7,800
Kumasi 2,207 2002 Dec 2007 1.0 - 3.0(3) Nov 16, 2018 9,800
Marie Delmas 2,207 2002 Dec 2007 1.0 - 3.0(3) Nov 16, 2018 9,800
CMA CGM La Tour 2,272 2001 Dec 2007 2.0 Sept 20, 2019 15,300
CMA CGM Manet 2,272 2001 Dec 2007 1.9 Sept 7, 2019 15,300
CMA CGM Alcazar 5,089 2007 Jan 2008 3.0 Oct 18, 2020 33,750
CMA CGM Château d’If 5,089 2007 Jan 2008 3.0 Oct 11, 2020 33,750
CMA CGM Thalassa 11,040 2008 Dec 2008 8.0 Oct 1, 2025 47,200
CMA CGM Jamaica 4,298 2006 Dec 2008 5.0 Sept 17, 2022 25,350
CMA CGM Sambhar 4,045 2006 Dec 2008 5.0 Sept 16, 2022 25,350
CMA CGM America 4,045 2006 Dec 2008 5.0 Sept 19, 2022 25,350
CMA CGM Berlioz 6,621 2001 Aug 2009 3.7 May 28, 2021 34,000
GSL Tianjin(4) 8,063 2005 Oct 2014 0.9 Sept 26, 2018 11,900
OOCL Qingdao(5) 8,063 2004 Mar 2015 1.1 Jan 1, 2019 14,000
OOCL Ningbo 8,063 2004 Sep 2015 0.8 Sep 17, 2018 34,500
           
(1) Twenty-foot Equivalent Units.          
           
(2) As at December 31, 2017 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) A new time charter for GSL Tianjin, formerly named OOCL Tianjin, with CMA CGM commenced October 25, 2017, immediately upon re-delivery from its previous charter to OOCL, at a fixed rate of $13,000 per day for a period of three to eight months at the charterer’s option. The charter 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. The new period is reflected in the table.
 
(5) In February 2018 we agreed to an extension of our charter with OOCL for the OOCL Qingdao. 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. The new period is reflected in the table.

Conference Call and Webcast

Global Ship Lease will hold a conference call to discuss the Company's results for the three months ended December 31, 2017 today, Monday March 5, 2018 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: 4072849
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 Wednesday, March 21, 2018 at (855) 859-2056 or (404) 537-3406. Enter the code 4072849 to access the audio replay.  The webcast will also be archived on the Company’s website: http://www.globalshiplease.com.

Annual Report on Form 20F

The Company’s Annual Report for 2017 is on file with the Securities and Exchange Commission.  A copy of the report can be found under the Investor Relations section (Annual Reports) of the Company’s website at http://www.globalshiplease.com   Shareholders may request a hard copy of the audited financial statements free of charge by contacting the Company at info@globalshiplease.com or by writing to Global Ship Lease, Inc, care of Global Ship Lease Services Limited, Portland House, Stag Place, London SW1E 5RS or by telephoning +44 (0) 207 869 8806.

About Global Ship Lease

Global Ship Lease is a containership charter owner. Incorporated in the Marshall Islands, Global Ship Lease commenced operations in December 2007 with a business of owning and chartering out containerships under 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 December 31, 2017 of 13.0 years. All 18 vessels are currently fixed on time charters, 16 of which are with CMA CGM. The average remaining term of the charters at December 31, 2017 is 2.8 years or 3.2 years on a weighted basis, taking into account the charter extensions recently agreed for GSL Tianjin and OOCL Qingdao.

Reconciliation of Non-U.S. GAAP Financial Measures 

A. Adjusted EBITDA

Adjusted EBITDA represents net income before interest income and expense including amortization of deferred finance costs, earnings allocated to preferred shares, income taxes, depreciation, amortization and impairment.  Adjusted EBITDA is a non-US GAAP quantitative measure used to assist in the assessment of the Company's ability to generate cash from its operations.  We believe that the presentation of Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.  Adjusted EBITDA is not defined in US GAAP and should not be considered to be an alternate to Net income or any other financial metric required by such accounting principles.  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 Year Year
    ended ended ended ended
    Dec 31, Dec 31, Dec 31, Dec 31,
    2017 2016 2017 2016
           
Net (loss) available to common shareholders (99,824) (55,072) (77,328) (68,157)
           
Adjust: Depreciation 9,394 10,415 37,981 42,805
  Impairment 87,624 63,065 87,624 92,422
  Interest income (154) (59) (489) (198)
  Interest expense 27,021 9,450 59,391 44,767
  Earnings allocated to preferred shares 765 765 3,062 3,062
  Income tax 9 14 40 46
           
Adjusted EBITDA 24,835 28,578 110,281 114,747
         

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.

NORMALIZED NET INCOME - UNAUDITED

(thousands of U.S. dollars)
    Three Three    
    months months Year Year
    ended ended Ended ended
    Dec 31, Dec 31, Dec 31, Dec 31,
    2017 2016 2017 2016
           
Net (loss) available to common shareholders (99,824) (55,072) (77,328) (68,157)
           
Adjust: Impairment charge 87,624 63,065 87,624 92,422
  Premium paid on redemption of 2019 Notes 8,657 --- 9,047 533
  Accelerated write off of deferred financing charges related to 2019 Notes 4,310 34 4,371 134
  Accelerated write off of original issue discount related to 2019 notes 1,423 51 1,492 374
  Gain on purchase of 2019 Notes --- (1,938) --- (2,865)
Normalized net income 2,190 6,140 25,206 22,441
         

Safe Harbor Statement

This communication contains forward-looking statements. Forward-looking statements provide Global Ship Lease's current expectations or forecasts of future events. Forward-looking statements include statements about Global Ship Lease's expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such as "anticipate," "believe," "continue," "estimate," "expect," "intend," "may," "ongoing," "plan," "potential," "predict," "project," "will" or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. These forward-looking statements are based on assumptions that may be incorrect, and Global Ship Lease cannot assure you that these projections included in these forward-looking statements will come to pass. Actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors.
The risks and uncertainties include, but are not limited to:

  • future operating or financial results;

  • expectations regarding the future growth of the container shipping industry, including the rates of annual demand and supply growth;

  • the financial condition of our charterers, particularly CMA CGM, our principal charterer and main source of operating revenue, and their ability to pay charterhire in accordance with the charters;

  • Global Ship Lease’s financial condition and liquidity, including its ability to obtain additional waivers which might be necessary under the existing credit facility or obtain additional financing to fund capital expenditures, vessel acquisitions and other general corporate purposes;

  • Global Ship Lease’s ability to meet its financial covenants and repay its credit facilities;

  • Global Ship Lease’s expectations relating to dividend payments and forecasts of its ability to make such payments including the availability of cash and the impact of constraints under its credit facility;

  • future acquisitions, business strategy and expected capital spending;

  • operating expenses, availability of crew, number of off-hire days, drydocking and survey requirements and insurance costs;

  • general market conditions and shipping industry trends, including charter rates and factors affecting supply and demand;

  • assumptions regarding interest rates and inflation;

  • changes in the rate of growth of global and various regional economies;

  • risks incidental to vessel operation, including piracy, discharge of pollutants and vessel accidents and damage including total or constructive total loss;

  • estimated future capital expenditures needed to preserve its capital base;

  • Global Ship Lease’s expectations about the availability of ships to purchase, the time that it may take to construct new ships, or the useful lives of its ships;

  • Global Ship Lease’s continued ability to enter into or renew long-term, fixed-rate charters;

  • the continued performance of existing long-term, fixed-rate time charters;

  • Global Ship Lease’s ability to capitalize on its management’s and board of directors’ relationships and reputations in the containership industry to its advantage;

  • changes in governmental and classification societies’ rules and regulations or actions taken by regulatory authorities;

  • expectations about the availability of insurance on commercially reasonable terms;

  • unanticipated changes in laws and regulations including taxation;

  • potential liability from future litigation.

Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Global Ship Lease's actual results could differ materially from those anticipated in forward-looking statements for many reasons specifically as described in Global Ship Lease's filings with the SEC.  Accordingly, you should not unduly rely on these forward-looking statements, which speak only as of the date of this communication. Global Ship Lease undertakes no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this communication or to reflect the occurrence of unanticipated events. You should, however, review the factors and risks Global Ship Lease describes in the reports it will file from time to time with the SEC after the date of this communication.

 

 
Global Ship Lease, Inc.
           
Interim Unaudited ConsolidatedStatements of Income
           
(Expressed in thousands of U.S. dollars except share data)
           
    Three months ended December
  Year ended
 
    31,    December 31,
 
      2017     2016     2017     2016  
                           
                           
Operating Revenues                          
Time charter revenue   $ 7,022   $ 9,444   $ 35,044   $ 37,567  
Time charter revenue – related party     30,849     31,982     123,944     128,956  
      37,871     41,426     158,988     166,523  
                           
Operating Expenses                          
Vessel operating expenses      11,179     10,814     41,858     44,096  
Vessel operating expenses – related party     400     400     1,599     1,599  
Depreciation     9,394     10,415     37,981     42,805  
Impairment of vessels     87,624     63,065     87,624     92,422  
General and administrative     1,458     1,675     5,301     6,297  
Other operating income     (1)     (41)     (51)     (216)  
Total operating expenses     110,054     86,328     174,312     187,003  
                           
Operating Loss     (72,183)     (44,902)     (15,324)     (20,480)  
                           
Non Operating Income (Expense)                          
Interest income     154     59     489     198  
Interest expense     (27,021)     (9,450)     (59,391)     (44,767)  
                           
Loss before Income Taxes     (99,050)     (54,293)     (74,226)     (65,049)  
                           
Income taxes     (9)     (14)     (40)     (46)  
                           
Net Loss   $   (99,059)   $   (54,307)   $   (74,266)   $   (65,095)  
                           
Earnings allocated to Series B Preferred Shares     (765)     (765)     (3,062)     (3,062)  
Net Loss                           
available to Common Shareholders   $   (99,824)   $   (55,072)   $   (77,328)   $   (68,157)  
                           
                           
                           
Earnings per Share                          
                           
Weighted average number of Class A common shares outstanding                          
Basic (including RSUs without service conditions)     47,976,722     47,867,266     47,975,889     47,854,351  
Diluted     47,976,722     47,867,266     47,975,889     47,854,351  
                           
Net loss per Class A common share                           
Basic (including RSUs without service conditions)   $   (2.08)   $   (1.15)   $   (1.61)   $   (1.42)  
Diluted   $   (2.08)   $   (1.15)   $   (1.61)   $   (1.42)  
                           
Weighted average number of Class B common shares outstanding                          
Basic and diluted     7,405,956     7,405,956     7,405,956     7,405,956  
                           
Net income per Class B common share                          
Basic and diluted   $ 0.00   $ 0.00   $ 0.00   $ 0.00  


Global Ship Lease, Inc.  
   
Interim Unaudited Consolidated Balance Sheets  
   
(Expressed in thousands of U.S. dollars)  
    December 31,
2017
    December 31,
2016
 
         
Assets        
         
Cash and cash equivalents   $   73,266     $   54,243  
Accounts receivable     72       29  
Due from related party     1,932       906  
Prepaid expenses     918       1,146  
Other receivables     458       52  
Inventory     742       553  
Total current assets     77,388       56,929  
                 
Vessels in operation     597,779       719,110  
Other fixed assets     10       7  
Intangible assets     7       16  
Other long term assets     -       195  
Total non-current assets     597,796       719,328  
Total Assets   $   675,184     $   776,257  
                 
Liabilities and Stockholders’ Equity                
                 
Liabilities                
                 
Current portion of long term debt   $   40,000     $   31,026  
Intangible liability – charter agreements     1,771       1,807  
Deferred revenue     2,178       1,940  
Accounts payable     1,486       963  
Due to related party     2,813       1,315  
Accrued expenses     8,788       11,664  
Total current liabilities     57,036       48,715  
                 
Long term debt     358,515       388,847  
Intangible liability – charter agreements     8,011       9,782  
Deferred tax liability     17       20  
Total long term liabilities     366,543       398,649  
                 
Total Liabilities   $   423,579     $   447,364  
                 
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 (2016 – 47,541,484)
  $   476     $   476  
Class B Common stock – authorized
20,000,000 shares with a $0.01 par value;
7,405,956 shares issued and outstanding (2016 – 7,405,956)
    74       74  
Series B Preferred shares – authorized
16,100 shares with $0.01 par value;
14,000 shares issued and outstanding (2016 – 14,000)
    -       -  
                 
Additional paid in capital     386,748       386,708  
Accumulated deficit     (135,693 )     (58,365 )
Total Stockholders’ Equity     251,605       328,893  
Total Liabilities and Stockholders’ Equity   $   675,184     $   776,257  
                 


Global Ship Lease, Inc. 
 
Interim Unaudited Consolidated Statements of Cash Flows 
 
(Expressed in thousands of U.S. dollars)
 
    Three months ended
December 31,
  Year ended
December 31,
 
      2017     2016     2017     2016  
           
           
Cash Flows from Operating Activities          
Net loss   $   (99,059)   $   (54,307)   $   (74,266)   $   (65,095)  
                           
Adjustments to Reconcile Net loss to Net Cash Provided by Operating Activities                          
Depreciation     9,394     10,415     37,981     42,805  
Vessel impairment     87,624     63,065     87,624     92,422  
Amortization of deferred financing costs     5,159     941     7,772     3,622  
Amortization of original issue discount     1,640     402     2,523     1,651  
Amortization of intangible liability     (451)     (515)     (1,807)     (2,104)  
Share based compensation     272     83     272     283  
Gain on repurchase of secured notes     -     (1,938)     -     (2,865)  
Decrease (increase) in accounts receivable and other assets     1,464     681     (441)     219  
(Increase) decrease in inventory     (113)     37     (188)     57  
Increase (decrease) in accounts payable and other liabilities     5,465     9,330     (3,030)     (1,751)  
(Decrease) increase in unearned revenue     (670)     233     238     1,144  
Increase (decrease) in related party balances     465     (699)     1,138     738  
Unrealized foreign exchange (gain) loss     (4)     33     2     26  
Net Cash Provided by Operating Activities     11,186     27,761     57,818     71,152  
                           
Cash Flows from Investing Activities                          
Net proceeds from sale of vessels     -     -     -     (254)  
Cash paid for vessel improvements     (155)     -     (255)     -  
Cash paid for other assets     -     -     (8)     (6)  
Cash paid for drydockings     -     (2,513)     (4,632)     (6,681)  
Net Cash Used in Investing Activities     (155)     (2,513)     (4,895)     (6,941)  
Cash Flows from Financing Activities                          
                           
Repurchase of secured notes     (346,287)     (16,061)     (365,788)     (50,997)  
Proceeds from issue of secured notes     356,400     -     356,400     -  
Proceeds from drawdown of term loan     54,800     -     54,800     -  
Deferred financing costs incurred     (12,675)     -     (12,675)     -  
Repayment of credit facilities     (54,800)     (2,925)     (63,575)     (9,500)  
Series B Preferred Shares – dividends paid     (765)     (765)     (3,062)     (3,062)  
Net Cash Used in Financing Activities     (3,327)     (19,751)     (33,900)     (63,559)  
Net increase in Cash and Cash Equivalents     7,704     5,497     19,023     652  
Cash and Cash Equivalents at Start of Period     65,562     48,746     54,243     53,591  
Cash and Cash Equivalents at End of Period   $   73,266   $   54,243   $   73,266   $   54,243  
                           
Supplemental information                          
                           
Total interest paid   $   5,161   $   881   $   43,152   $   43,134  
                           
Income tax paid   $   10   $   13   $   46   $   50  
                           

 

Investor and Media Contacts:
The IGB GroupBryan Degnan
646-673-9701
or
Leon Berman
212-477-8438 

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Source: Global Ship Lease, Inc.

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