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Recent acquisitions come online, interest rate risk fully hedged, credit rating and outlook upgrades, sustainable quarterly dividend of $0.375 per common share
London - Aug 03, 2023
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Second Quarter 2023 and Year to Date Highlights
• Reported operating revenue of $162.1 million for the second quarter 2023, up 4.9% from $154.5 million for the prior year period. For the six months ended June 30, 2023, operating revenue was $321.4 million, up 4.3% from $308.1 million in first half 2022.
• Reported net income available to common shareholders of $75.4 million for the second quarter of 2023, an increase of 41.2% on net income of $53.4 million for the prior year period. Normalized net income (a non-U.S. GAAP financial measure, described below) for the same period was $74.0 million, up 11.8% on Normalized net income of $66.2 million for the prior year period. For the six months ended June 30, 2023, net income available to common shareholders was $147.6 million, an increase of 21.8% on net income of $121.2 million for the prior year period. Normalized net income for the same period was $149.5 million, up 12.0% on Normalized net income for the prior year period of $133.5 million.
• Generated $108.2 million of Adjusted EBITDA (a non-U.S. GAAP financial measure, described below) for the second quarter of 2023, up 12.0% on Adjusted EBITDA of $96.6 million for the prior year period. Adjusted EBITDA for the six months ended June 30, 2023 was $213.1 million, up 14.0% on Adjusted EBITDA of $187.0 million for the prior year period.
• Earnings per share for the three months ended June 30, 2023 was $2.13, up 44.9% on the earnings per share of $1.47 for the prior year period. Normalized earnings per share for the three months ended June 30, 2023 was $2.09, up 14.8% on the Normalized earnings per share of $1.82 for the prior year period. Earnings per share for the six months ended June 30, 2023 was $4.15, up 25.4% on the earnings per share of $3.31 for the prior year period. Normalized earnings per share for the six months ended June 30, 2023 was $4.21, up 15.3% on the Normalized earnings per share of $3.65 for the prior year period.
• Declared a dividend of $0.375 per Class A common share for the second quarter of 2023 to be paid on September 4, 2023 to common shareholders of record as of August 23, 2023. Paid a dividend of $0.375 per Class A common share for the first quarter of 2023 on June 2, 2023.
• On May 8, 2023, announced an agreement to purchase four 8,544 TEU vessels for an aggregate purchase price of $123.3 million. All vessels were delivered during the second quarter of 2023 and are chartered to a leading liner operator for a minimum firm period of 24 months, followed by a 12-month extension at the charterer's option. The purchase price was financed by a new credit facility for a total of $76.0 million and cash on hand. The credit facility is priced at SOFR + 3.50%, with SOFR fully covered by the Company's pre-existing interest rate cap at 0.64%.
• On June 20, 2023, announced updates from three leading credit rating agencies. The Company's Corporate Family Rating has been upgraded to Ba3 from B1, with a stable outlook, by Moody's Investor Service. In addition, S&P Global Ratings revised the Company's outlook to positive and affirmed its long-term issued credit rating at ‘BB', and the Kroll Bond Rating Agency affirmed both the Company's BB corporate rating with a stable outlook, as well as the BBB/stable investment grade rating and outlook for the $350.0 million 5.69% Senior Secured Notes due 2027.
• Between January 1, 2023, and June 30, 2023, added $211.9 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 eight ships between 2,200 and 3,500 TEU, charter extensions were exercised for two 7,800 TEU ships, a forward fixture was agreed for one ECO 9,100 TEU ship, and four 8,544 TEU vessels were purchased with charters attached; firm 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 second quarter of 2023 a further 385,064 Class A common shares were purchased for an investment of $7.0 million. Re-purchase prices in 2023 ranged between $16.12 and $18.69 per common share, with an average price of $17.56. A total of 2,027,882 Class A common shares have been repurchased under the Buy-back Authorization, for approximately $37.0 million. The Board has authorized a further $40.0 million for such share repurchases for a total of approximately $43.0 million of authorization capacity remaining.
George Youroukos, Executive Chairman of Global Ship Lease, stated: "In the second quarter, GSL continued to benefit from our strong contract cover at attractive rates, even as prevailing market charter rates and vessel values normalize. Chartering activity in the market has remained modest by historical standards, with limited capacity coming available outside the feeder segment, and idle capacity at quarter-end hovering around 1%. While this limited liquidity and the current macroeconomic uncertainty make it difficult to predict the market over the quarters ahead, charters agreed in the second quarter have shown some stability at rates that compare favorably to those that prevailed before the COVID-driven rate spike of 2021 and 2022. Mid-sized and smaller vessels such as those that make up the GSL fleet form the backbone of liner companies' global networks, and we remain in active discussions with liners on additional opportunities to expand our current forward charter cover of $1.97 billion over 2.3 years, with only a limited number of open days through the end of 2024.
Set against the backdrop of reduced asset prices for the high-specification, workhorse vessels that make up our fleet, we were able to utilize our strong balance sheet to purchase, finance on competitive terms, and take delivery of four post-panamax containerships with attractive charters attached; our first vessel acquisitions since before the period of sharply elevated asset values. Should current trends be sustained, we expect to see an increased number of potential purchase opportunities come into the market over time. We intend to maintain the disciplined and risk-averse approach to acquisitions that has served GSL well, focusing on secondhand containerships with cash flow visibility, attractive upside potential, and limited downside risk. Our strong balance sheet and contracted cash flows provide us with a strong platform from which to selectively pursue value-accretive growth opportunities, while also supporting our attractive dividend and active share buy-back program."
Ian Webber, Chief Executive Officer, commented: "As evidenced by the recent upgrades and supportive commentary from the credit ratings agencies, our efforts to deleverage, reduce our cost of debt, and increase our overall financial strength and resilience have borne fruit, both in terms of our credit profile and our core business as a containership owner and lessor. Our recent acquisitions have reinforced these positive trends, as we raised debt at a margin of just 3.50%, and made use of the headroom under our existing 0.64% SOFR interest rate cap to conclude our recent vessel acquisitions at a highly competitive cost of capital. With long-term visibility on our contracted cash flows, a diversified portfolio of financially strong counterparties, floating interest rate exposure fully capped, and our proven ability to identify and execute accretive transactions, we remain well positioned to continue creating value for our shareholders through our disciplined and dynamic allocation of capital, including the use of the recently authorized additional $40 million of share buy-back capacity."
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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 June 30, 2023, Global Ship Lease owned 68 containerships ranging from 2,207 to 11,040 TEU, with an aggregate capacity of 375,406 TEU. 36 ships are wide-beam Post-Panamax.
As at June 30, 2023, the average remaining term of the Company's charters, to the mid-point of redelivery, including options under the Company's control and other than if a redelivery notice has been received, was 2.3 years on a TEU-weighted basis. Contracted revenue on the same basis was $1.97 billion. Contracted revenue was $2.39 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
