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Value-focused growth adds to significant contract cover, interest rate risk fully hedged, sustainable quarterly dividend of $0.375 per common share
London - May 10, 2023
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 months ended March 31, 2023.
First Quarter 2023 Highlights
- Reported operating revenue of $159.3 million for the first quarter 2023, an increase of 3.7% on operating revenue of $153.6 million for the prior year period.
- Reported net income available to common shareholders of $72.2 million for the first quarter of 2023, an increase of 6.5% on net income of $67.8 million for the prior year period. Normalized net income (a non-U.S. GAAP financial measure, described below) for the same period was $75.6 million, up 12.3% on Normalized net income of $67.3 million for the prior year period.
- Generated $104.9 million of Adjusted EBITDA (a non-U.S. GAAP financial measure, described below) for the first quarter of 2023, up 16.0% on Adjusted EBITDA of $90.4 million for the prior year period.
- Earnings per share for the first quarter of 2023 was $2.02, up 8.6% on earnings per share of $1.86 for the prior year period. Normalized earnings per share (a non-U.S. GAAP financial measure, described below) for the first quarter of 2023 was $2.12, up 14.6% on Normalized earnings per share of $1.85 for the prior year period.
- Declared a dividend of $0.375 per Class A common share for the first quarter of 2023 to be paid on June 2, 2023 to common shareholders of record as of May 24, 2023. Paid a dividend of $0.375 per Class A common share for the fourth quarter of 2022 on March 6, 2023.
- On May 8, 2023, announced an agreement to purchase four post-panamax containerships, each with carrying capacity of approximately 8,500 TEU ships for $123.3 million, and charter them back to a leading liner operator. Contract cover for each vessel is for a minimum firm period of 24 months from the date each vessel is delivered, anticipated to be late second quarter / early third quarter 2023, followed by a 12-month extension at the charterer's option. The vessels are expected to generate aggregate Adjusted EBITDA of approximately $76.6 million over the minimum firm period, implying an average Purchase Price/Annual Adjusted EBITDA multiple of approximately 3.2x. If all options are exercised, the vessels are expected to generate approximately $95.3 million of aggregate Adjusted EBITDA.
- Between January 1, 2023, and May 9, 2023, including the four 8,500 TEU ships we have contracted to purchase, added $188.8 million of firm contracted revenues to forward charter cover, calculated on the basis of the median firm periods of the respective charters. For vessels in our pre-existing fleet, new charter fixtures or extensions were agreed on seven ships between 2,200 and 3,500 TEU, and a forward fixture was agreed for one ECO 9,100 TEU ship; charter terms range from a few months to two years.
- Continued to utilize the $40.0 million authorization (the "Buy-back Authorization") for opportunistic share repurchases, repurchasing a total of 582,178 Class A common shares during January 2023 for a total investment of $10.0 million. During April 2023 we repurchased a further 203,140 Class A common shares for a total investment of $3.8 million. Re-purchase prices in 2023 ranged between $16.12 and $18.69 per common share, with an average price of $17.50. A total of 1,845,958 Class A common shares have been repurchased under the Buy-back Authorization, for approximately $33.8 million, with approximately $6.2 million of capacity remaining.
- In March 2023, completed on the previously-announced sale of GSL Amstel, a 1,100 TEU feeder and non-core asset with imminent special survey and dry-docking requirements, for net proceeds of approximately $5.9 million.
George Youroukos, Executive Chairman of Global Ship Lease stated: "The ongoing normalization of charter rates and asset values in the container shipping sector continued into early 2023, although the rate of change has moderated in recent months. It remains to be seen whether this trend can be sustained, but there have recently been signs of potential stabilization at rate levels that, despite being well below recent peaks, are still attractive by historical standards. The availability of tonnage, and overall liquidity, within the charter market remains comparatively limited, incentivizing liner companies to continue securing tonnage on term charters, albeit for durations that rarely extend beyond a year or two.
In this environment, and with a highly specified fleet focused on the "workhorse" size segments, we have continued to have success in agreeing new charters and extensions. We have recently also returned to value-focused growth with the purchase and charter back of four 8,500 TEU post-panamax containerships, GSL's first vessel acquisitions in nearly two years. These high-specification, enhanced-efficiency vessels will provide GSL with immediate cash flow from a top-tier counterparty and are being acquired on attractive terms, reflecting the recent normalization of asset values, while ensuring low residual value risk. All told, we have added almost $190.0 million of contracted revenue so far this year, bringing our forward charter cover to more than $2.1 billion over 2.5 years. Our strong contracted cash flows and discipline throughout the recent period of sharply elevated asset prices have put GSL in a strong position to selectively participate in secondhand acquisition opportunities that meet our strict criteria."
Ian Webber, Chief Executive Officer, commented: "By remaining disciplined, aggressively deleveraging, and continually identifying opportunities to reduce our cost of debt, including by hedging our interest rate exposure, and enhance our overall financial flexibility, GSL is entering this new phase of the cycle with both good forward visibility on contracted cash flows and a robust balance sheet. This allows us to continue to be nimble with our capital allocation, moving quickly on the right growth opportunities while maintaining our well-supported dividend and capitalizing on stock market volatility to improve shareholder returns by buying back shares. Since third quarter of 2021, in total we have invested almost $44 million in share buy-backs, reducing our share count by nearly 7%. Our financial strength and discipline enable us to create value in multiple ways, and we intend to continue doing so in the manner that we believe best serves the long-term interests of our shareholders."
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 May 9, 2023, Global Ship Lease owned 64 containerships and had contracted to purchase a further four ships, ranging from 2,207 to 11,040 TEU, with an aggregate capacity (when fully delivered) of 375,406 TEU. 36 ships are wide-beam Post-Panamax.
Adjusted to include all charters agreed up to May 9, 2023, and the four ships to be acquired, the average remaining term of the Company's charters as at March 31, 2023, to the mid-point of redelivery, including options under the Company's control and other than if a redelivery notice has been received, was 2.5 years on a TEU-weighted basis. Contracted revenue on the same basis was $2.11 billion. Contracted revenue was $2.54 billion, including options under charterers' control and with latest redelivery date, representing a weighted average remaining term of 3.3 years.
Global Ship Lease press release
