Global Ship Lease Reports Results for the Second Quarter of 2022

Declares Dividend of $0.375 per Common Share

London - Aug 04, 2022







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.”

Full report

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.

Global Ship Lease press release