Declares Dividend of $0.25 per Common Share
Expanded Fleet by over 50% in Year to Date, with all Acquired Ships Now Delivered and on Charter
London - Nov 10, 2021
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 nine month periods ended September 30, 2021.
Third Quarter 2021 and Year To Date Highlights
- Reported operating revenue of $138.6 million for the third quarter 2021. Operating revenue for the nine months ended September 30, 2021 was $294.4 million.
- Reported net income available to common shareholders of $62.9 million for the third quarter 2021 after a prepayment fee of $0.2 million on the repayment of the Hayfin Facility, giving normalized net income(3) for the quarter of $63.1 million.
- For the nine months ended September 30, 2021, net income available to common shareholders was $97.1 million, after $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, associated non-cash write offs 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, a prepayment fee of $1.6 million on the partial repayment of the Blue Ocean Junior Credit Facility, a prepayment fee of $1.4 million on the completion of the refinancing of the Odyssia Credit Facilities, a prepayment fee of $0.2 million on the repayment of Hayfin Facility and a $7.8 million net gain from the sale of La Tour, giving normalized net income (3) for the nine months of $104.6 million.
- Generated $72.7 million of Adjusted EBITDA(3) for the third quarter 2021. Adjusted EBITDA(3) for the nine months ended September 30, 2021 was $166.5 million.
- Earnings per share for the third quarter of 2021, as reported, was $1.73. Normalized earnings per share (3) for the third quarter of 2021 was $1.74. Earnings per share for the nine months ended September 30, 2021, as reported, was $2.80. Normalized earnings per share (3) for the nine months ended September 30, 2021 was $3.01.
- Declared a dividend of $0.25 per Class A common share for the third quarter of 2021 to be paid on December 2, 2021 to common shareholders of record as of November 22, 2021. Paid a dividend of $0.25 per Class A common share for the second quarter 2021 on September 3, 2021 to common shareholders of record as of August 23, 2021.
- During the third quarter 2021, raised $16.9 million net proceeds under the ATM program for the 8.75% Series B Preferred Shares (“Series B Preferred Shares”). During the period from October 1, 2021 through November 9, 2021, a further $0.03 million net proceeds was raised under this ATM program and since the inception of this ATM program in December 2019, a total of $71.4 million net proceeds has been raised, providing non-dilutive funding and facilitating both growth and the refinancing of more expensive debt. As of September 30, 2021, we had 43,579 Series B Preferred Shares outstanding.
- On June 8, 2021, announced the agreement to purchase 12 containerships from Borealis Finance LLC (the “Borealis Fleet”), with an average size of approximately 3,000 TEU and a weighted average age of 11 years for an aggregate purchase price of $233.9 million. All of these vessels were delivered in July 2021.
- The total outstanding on our Senior Unsecured Notes due 2024 (the “2024 Notes”) as at September 30, 2021 was $117.5 million, which includes the issuance in July 2021 of $35.0 million aggregate principal amount of the 2024 Notes to the sellers of the Borealis Fleet, as part of the consideration. Since the inception of the ATM program for the 2024 Notes in November 2019, a total of $50.9 million net proceeds has been raised. We did not sell any 2024 Notes under our ATM program in the third quarter of 2021.
- On June 16, 2021, announced the agreement to purchase four 5,470 TEU ultra-high reefer capacity Panamax containerships with an average age of approximately 11 years for an aggregate purchase price of $148.0 million. Three of these vessels were delivered to us in September 2021 and the remaining vessel was delivered on October 13, 2021. All 23 ships acquired year-to-date have now been delivered and are on charter.
- On August 20, 2021, S&P upgraded the Corporate Family Rating to BB- from B+.
- On August 27, 2021, entered into a term loan facility of $12.0 million with Sinopac Capital International (HK) Limited to refinance the Hayfin Facility, which was the last facility maturing in 2022. There are now no material debt maturities until May 2024.
- On September 1, 2021, announced the purchase and retirement of 521,650 shares for $10.0 million, reducing our issued and outstanding shares to 36,216,803 as of that date.
- Between January 1 and November 9, 2021, including the charters on the 23 ships purchased year to date, added 48 charters (including extensions), representing approximately $1.25 billion of contracted revenues and $929.0 million of expected aggregate Adjusted EBITDA(3), calculated on the basis of the median firm periods of the respective charters. 25 charters were for 1,100 – 3,500 TEU feeder ships, nine were for 4,250 – 5,470 TEU Panamax ships, and 14 were for 5,900 – 6,800 TEU Post-Panamaxes. Charter durations ranged from approximately 21 months to five years, with shorter durations for the smaller ships and longer durations for the larger ships. Rates were up significantly against those previously contracted.
George Youroukos, Executive Chairman of Global Ship Lease, stated, “Driven by the continued strength of underlying containerized freight volumes, supply chain congestion that shows little sign of near-term resolution, and the heightened competition between the liner companies to secure containership capacity, the demand for high-quality mid-sized and smaller containerships like those in the GSL fleet is as strong as it has ever been. With few new vessels delivering in our target size segments through at least 2023/2024, liner companies have been willing to pay attractive charter rates well above those available in the market in recent years. Moreover, liners have been eager to secure that capacity for extended durations spanning multiple years, significantly longer than has been the case historically and well aligned with GSL’s strategic preference to lock in value over time and provide forward visibility on cash flows while reinforcing our long-term relationships with our customers. As the factors driving both the demand for containerships and the limitations to supply growth appear to be increasingly durable, particularly as forthcoming environmental regulations in 2023 are expected to reduce the operating speed and thus the effective capacity of the global fleet, we are confident that the conditions are in place to sustain this tight containership market for some time to come.”
“We have taken numerous steps to translate this extraordinary market environment into sustainable, long-term benefits for GSL, adding 48 charters in the year-to-date for incremental contracted revenues of $1.25 billion of contracted revenues and almost $930 million of expected Adjusted EBITDA(3) over durations ranging from 21 months to five years. Notably, we have grown our fleet by more than 50% while maintaining strict pricing discipline and selectivity in regards to vessel specifications, condition, and chartering prospects. All of the vessels that we agreed to acquire earlier in the year have now been delivered with attractive charters in place and are set to provide full earnings contribution from mid October, when the twenty-third vessel was delivered. The economics of the twelve-ship deal we announced in June are even stronger than originally anticipated, with five of the nearer-term availability ships now forward fixed, at superior rates, on charters agreed since the transaction closed. Moving forward, our long-term contracted cashflows from a diversified group of strong liner counterparties put us in an excellent position to maintain strategic discipline and selectivity in regards to additional growth opportunities, all the while providing an attractive and well supported dividend for our shareholders.”
Ian Webber, Chief Executive Officer of Global Ship Lease, commented, “As we have expanded our portfolio of long-term contracted cashflows with our liner company customers who themselves have rapidly improving balance sheets, we have repeatedly found opportunities to improve our own balance sheet in ways that will benefit GSL for the long term. In the year-to-date, we have refinanced $383.1 million of debt, reducing our blended cost of debt from 6.3% to 4.9%, while eliminating all debt maturities until May 2024. This significant progress was acknowledged most recently by S&P’s upgrade of GSL’s Corporate Family Rating to BB- from B+, unlocking still further opportunities to sustain the virtuous cycle of balance sheet enhancement and reduction in the cost of debt that we have achieved since our strategic combination with Poseidon in 2018. In the third quarter, we opportunistically repurchased and retired 521,650 of our common shares at an attractive price, for total consideration of $10 million. At the same time, our Executive Chairman purchased a further 521,650 common shares for $10 million. In this highly supportive environment, we aim to continue pursuing a range of value-creative opportunities to strengthen our balance sheet, enhance our financial and strategic flexibility, and ensure that we achieve the greatest possible long-term benefit for our shareholders.”
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. On November 15, 2018, it completed a strategic combination with Poseidon Containers.
Global Ship Lease owns 49 containerships and has contracted to purchase a further 17 ships, ranging from 1,118 to 11,040 TEU, with a total capacity (when fully delivered) of 344,650 TEU. 32 ships are Post-Panamax, of which nine are fuel-efficient new-design wide-beam.
Adjusted to include all charters agreed, and ships acquired or divested as at May 31, 2021 for a total on-the-water fleet of 49 ships, the average remaining term of the Company’s charters as at March 31, 2021, to the mid-point of redelivery, including options under the Company’s control, was 2.6 years on a TEU-weighted basis. Contracted revenue on the same basis was $984.3 million. Contracted revenue was $1,134.9 million, including options under charterers’ control and with latest redelivery date, representing a weighted average remaining term of 3.1 years.
Global Ship Lease press release