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Global Ship Lease Reports Results for the First Quarter of 2016

LONDON, April 28, 2016 (GLOBE NEWSWIRE) -- Global Ship Lease, Inc. (NYSE:GSL) (the “Company”), a containership charter owner, announced today its unaudited results for the three months ended March 31, 2016.

First Quarter Highlights

  • Reported revenue of $42.6 million for the first quarter 2016
  • Reported net income for common shareholders for the first quarter 2016 of $4.6 million and normalized net income of $5.4 million, up from net income and normalized net income of $24,000 in the first quarter of 2015, in line with fleet growth
  • Generated $29.3 million of Adjusted EBITDA(1) for the first quarter 2016
  • Purchased and cancelled on March 16, 2016, $26.7 million principal amount 10.0% First Priority Secured Notes due 2019, reducing net debt to last 12 months Adjusted EBITDA from 4.0 times at December 31, 2015 to 3.8 times at March 31, 2016

Ian Webber, Chief Executive Officer of Global Ship Lease, stated, “Our results for the first quarter of 2016 once again demonstrate the stability of our long-term, fixed-rate contracts with high-quality counterparties. Our business model, in conjunction with our focus on performance and operational efficiency, has enabled us to continue to generate strong cash flows throughout the difficult market environment currently facing the containership industry. Going forward, we intend to continue to delever while also opportunistically capitalizing on attractive acquisitions aimed at further expanding our earnings power and creating long-term value for our shareholders.”

SELECTED FINANCIAL DATA – UNAUDITED

(thousands of U.S. dollars)

ThreeThree
months endedmonths ended
March 31, 2016March 31, 2015
Revenue 42,61037,719
Operating Income18,38512,652
Net Income for common shareholders4,55724
Adjusted EBITDA (1)29,31923,630
Normalized Net Income (1)5,42924

(1) 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 interim unaudited financial information are provided in this Earnings Release.

Revenue and Utilization

The fleet generated revenue from fixed-rate time charters of $42.6 million in the three months ended March 31, 2016, up $4.9 million or 13.0% on revenue of $37.7 million for the comparative quarter in 2015. The increase in revenue is mainly due to the addition of OOCL Qingdao from March 11, 2015 and OOCL Ningbo from September 17, 2015, each at a daily charter rate of $34,500, offset by reduced revenue from the disposals of Ville d’Aquarius and Ville d’Orion in fourth quarter 2015. There were 1,638 ownership days in the quarter, down slightly on 1,641 ownership days in the comparative quarter. With no offhire in the three months ended March 31, 2016, utilization was 100.0%. In the comparable quarter of 2015, there were 12 days offhire, including nine for a planned dry-docking, giving a utilization of 99.3%.

The table below shows fleet utilization for the three months ended March 31, 2016 and 2015 and for the years ended December 31, 2015, 2014, 2013, 2012 and 2011.

Three months ended
Mar 31,Mar 31, Dec 31,Dec 31,Dec 31,Dec 31,Dec 31,
Days 2016 2015 2015 2014 2013 2012 2011
Ownership days 1,638 1,641 6,893 6,270 6,205 6,222 6,205
Planned offhire - drydock 0 (9) (9) (48) (21) (82) (95)
Unplanned offhire 0 (3) (7) (12) (7) (16) (11)
Idle time 0 0 (13) (64) 0 0 0
Operating days 1,638 1,629 6,864 6,146 6,177 6,124 6,099
Utilization 100.0% 99.3% 99.6% 98.0% 99.5% 98.4% 98.3%

There were no regulatory dry-dockings in the three months ended March 31, 2016; a total of six dry-dockings are planned for 2016. There was one drydocking in 2015.

Vessel Operating Expenses

Vessel operating expenses, which include costs of crew, lubricating oil, spares and insurance, were $11.4 million for the three months ended March 31, 2016, down 8.1% from $12.4 million for the three months ended March 31, 2015. With approximately the same number of ownership days in each quarter, the average cost per ownership day fell $620 per day, or 8.2% from $7,581 in the three months ended March 31, 2015 to $6,961 for the three months ended March 31, 2016. The reduction is due to lower lubricating oil costs from unit price reductions, lower repairs and maintenance, in part from the disposal of Ville d’Aquarius and Ville d’Orion, and lower cost of insurances on renewals.

Depreciation

Depreciation for the three months ended March 31, 2016 was $10.9 million, compared to $11.0 million in the three months ended March 31, 2015, with additional depreciation related to OOCL Qingdao and OOCL Ningbo offset by reduced depreciation following the disposals of Ville d’Aquarius and Ville d’Orion.

General and Administrative Costs

General and administrative costs incurred were $2.0 million in the three months ended March 31, 2016, compared to $1.8 million in the three months ended March 31, 2015. The increase is due to higher legal fees.

Other Operating Income

Other operating income in the three months ended March 31, 2016 was $81,000, compared to $109,000 for the three months ended March 31, 2015.

Adjusted EBITDA

As a result of the above, Adjusted EBITDA was $29.3 million for the three months ended March 31, 2016, up from $23.6 million for the three months ended March 31, 2015.

Interest Expense

Debt at March 31, 2016 comprises amounts outstanding on our Notes, the revolving credit facility which was drawn March 11, 2015, and the secured term loan which was drawn September 10, 2015.

Interest expense for the three months ended March 31, 2016, was $13.1 million, up $1.2 million on the interest expense for the three months ended March 31, 2015 of $11.9 million. The increase is due to $0.5 million premium paid in March 2016 in relation to the tender offer which retired approximately $26.7 million of Notes, accelerated write off of that portion of the original issue discount attributable to the Notes which were retired, a full quarter’s interest and amortization of deferred financing charges on the revolving credit facility and on the secured term loan.

Interest income for the three months ended March 31, 2016 and 2015 was not material.

Taxation

Taxation for the three months ended March 31, 2016 and 2015 was not material.

Earnings Allocated to Preferred Shares

The Series B preferred shares, issued on August 20, 2014, carry a coupon of 8.75%, the cost of which for the three months ended March 31, 2016 was $0.8 million.

Net Income Available to Common Shareholders

Net income available to common shareholders for the three months ended March 31, 2016 was $4.6 million. For the three months ended March 31, 2015, net income was $24,000. This year-over-year increase is mainly due to the addition of OOCL Qingdao from March 11, 2015 and OOCL Ningbo from September 17, 2015.

Normalized net income for the three months ended March 31, 2016, which excludes the charges associated with the tender offer for bonds completed in the quarter, was $5.4 million.

Normalized net income for the three months ended March 31, 2015 was the same as reported net income at $24,000.

Fleet

The following table provides information about the on-the-water fleet of 18 vessels as at March 31, 2016. 15 vessels are chartered to CMA CGM, and three are chartered to OOCL.

RemainingEarliestDaily
CharterCharterCharter
VesselCapacityYearPurchaseTerm (2)ExpiryRate
Name in TEUs (1)Builtby GSL(years)Date$
CMA CGM Matisse2,2621999Dec 20073.7Sept 21, 201915,300
CMA CGM Utrillo2,2621999Dec 20073.7Sept 11, 201915,300
Delmas Keta2,2072003Dec 20071.7Sept 20, 201718,465
Julie Delmas2,2072002Dec 20071.7Sept 11, 201718,465
Kumasi2,2072002Dec 20071.7Sept 21, 201718,465
Marie Delmas2,2072002Dec 20071.7Sept 14, 201718,465
CMA CGM La Tour2,2722001Dec 20073.7Sept 20, 201915,300
CMA CGM Manet2,2722001Dec 20073.7Sept 7, 201915,300
CMA CGM Alcazar5,0892007Jan 20084.7Oct 18, 202033,750
CMA CGM Château d’If5,0892007Jan 20084.7Oct 11, 202033,750
CMA CGM Thalassa11,0402008Dec 20089.7Oct 1, 202547,200
CMA CGM Jamaica4,2982006Dec 20086.7Sept 17, 202225,350
CMA CGM Sambhar4,0452006Dec 20086.7Sept 16, 202225,350
CMA CGM America4,0452006Dec 20086.7Sept 19, 202225,350
CMA CGM Berlioz6,6212001Aug 20095.5May 28, 202134,000
OOCL Tianjin8,0632005Oct 20141.7Oct 28, 201734,500
OOCL Qingdao8,0632004Mar 20152.0Mar 11, 201834,500
OOCL Ningbo8,0632004Sep 20152.5Sep 17, 201834,500
(1) Twenty-foot Equivalent Units.
(2) As at March 31, 2016. Plus or minus 90 days, other than (i) OOCL Tianjin which is between October 28, 2017 and January 28, 2018, (ii) OOCL Qingdao which is between March 11, 2018 and June 11, 2018, and (iii) OOCL Ningbo which is between September 17, 2018 and December 17, 2018, all at charterer’s option.

Conference Call and Webcast

Global Ship Lease will hold a conference call to discuss the Company's results for the three months ended March 31, 2016 today, Thursday, April 28, 2016 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: 93430773

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 Saturday, May 14, 2016 at (855) 859-2056 or (404) 537-3406. Enter the code 93430773 to access the audio replay. The webcast will also be archived on the Company's: http://www.globalshiplease.com.

Annual Report on Form 20-F

Global Ship Lease, Inc has filed its Annual Report for 2015 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 March 31, 2016 of 11.3 years. All 18 vessels are currently fixed on time charters, 15 of which are with CMA CGM. The average remaining term of the charters at March 31, 2016 is 4.3 years or 4.6 years on a weighted basis.

Reconciliation of Non-U.S. GAAP Financial Measure

A. ADJUSTED EBITDA

Adjusted EBITDA represents net income before interest income and expense including amortization of deferred finance costs, realized and unrealized gain (loss) on derivatives, income taxes, depreciation and amortization. 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.

ADJUSTED EBITDA - UNAUDITED

(thousands of U.S. dollars)
ThreeThree
monthsmonths
endedended
Mar 31,Mar 31,
2016 2015
Net income available to common shareholders 4,557 24
Adjust:Depreciation 10,934 10,978
Interest income (44) (14)
Interest expense 13,100 11,865
Income tax 6 11
Earnings allocated to preferred shares 766 766
Adjusted EBITDA 29,319 23,630

B. Normalized net income

Normalized net income represents net income adjusted for the premium paid on the tender offer together with the related accelerated amortization of deferred financing costs and original issue discount. 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.

NORMALIZED NET INCOME - UNAUDITED
(thousands of U.S. dollars)
ThreeThree
monthsmonths
endedended
Mar 31,Mar 31,
20162015
Net income available to common shareholders4,55724
Adjust:Premium paid on tender offer for bonds533-
Accelerated write off of deferred financing costs related to tender offer80-
Accelerated write off of original issue discount related to tender offer259-
Normalized net income5,42924

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 strength of future growth of the container shipping industry, including the rates of annual demand and supply growth;
  • the financial condition of CMA CGM (the company’s principal charterer and main source of operating revenue) and other charterers and their ability to pay charterhire in accordance with the charters;
  • the overall health and condition of the U.S. and global financial markets;
  • Global Ship Lease’s financial condition and liquidity, including its ability to obtain additional financing to fund capital expenditures, vessel acquisitions and for other general corporate purposes and its ability to meet its financial covenants and repay its borrowings;
  • 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 first priority secured notes;
  • future acquisitions, business strategy and expected capital spending;
  • operating expenses, availability of key employees, crew, number of off-hire days, drydocking and survey requirements, costs of regulatory compliance, insurance costs and general and administrative costs;
  • general market conditions and shipping industry trends, including charter rates and factors affecting supply and demand;
  • assumptions regarding interest rates and inflation;
  • change 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 Global Ship Lease’s capital base;
  • Global Ship Lease’s expectations about the availability of vessels to purchase, the time that it may take to construct new vessels, or the useful lives of its vessels;
  • Global Ship Lease’s continued ability to enter into or renew charters including the re-chartering of vessels on the expiry of existing charters, or to secure profitable employment for its vessels in the spot market;
  • the continued performance of existing charters;
  • Global Ship Lease’s ability to capitalize on management’s and 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; and
  • 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 Consolidated Statements of Income

(Expressed in thousands of U.S. dollars except share data)

Three months ended March 31,
2016 2015
Operating Revenues
Time charter revenue $ 42,610 $ 37,719
Operating Expenses
Vessel operating expenses 11,402 12,441
Depreciation 10,934 10,978
General and administrative 1,970 1,757
Other operating income (81) (109)
Total operating expenses 24,225 25,067
Operating Income 18,385 12,652
Non Operating Income (Expense)
Interest income 44 14
Interest expense (13,100) (11,865)
Income before Income Taxes 5,329 801
Income taxes (6) (11)
Net Income $ 5,323 $ 790
Earnings allocated to Series B Preferred Shares (766) (766)
Net Income available to Common Shareholders $ 4,557 $ 24


Earnings per Share
Weighted average number of Class A common shares outstanding
Basic (including RSUs without service conditions) 47,841,578
47,766,484
Diluted 47,841,578 47,831,661
Net income per Class A common share
Basic (including RSUs without service conditions) $0.10 $nil
Diluted $
0.10 $nil
Weighted average number of Class B common shares outstanding
Basic and diluted 7,405,956 7,405,956
Net income per Class B common share
Basic and diluted $nil $nil

Global Ship Lease, Inc.

Interim Unaudited Consolidated Balance Sheets

(Expressed in thousands of U.S. dollars except share data)

March 31, 2016 December 31, 2015
Assets
Cash and cash equivalents $ 30,522 $ 53,591
Accounts receivable 926 1,621
Prepaid expenses 1,632 1,101
Other receivables 132 708
Inventory 576 610
Total current assets 33,788 57,631
Vessels in operation 836,013 846,939
Other fixed assets 6 5
Intangible assets 32 39
Other long term assets 279 306
Total non-current assets 836,330 847,289
Total Assets $ 870,118 $ 904,920
Liabilities and Stockholders’ Equity
Liabilities
Current portion of long term debt $ 26,465 $ 35,160
Intangible liability – charter agreements 2,073 2,104
Deferred revenue 692 796
Accounts payable 957 622
Accrued expenses 3,742 14,950
Total current liabilities 33,929 53,632
Long term debt 423,728 442,913
Intangible liability – charter agreements 11,091 11,589
Deferred tax liability 13 20
Total long-term liabilities 434,832 454,522
Total Liabilities $ 468,761 $ 508,154
Stockholders’ Equity
Class A Common stock – authorized 214,000,000 shares with a $0.01 par value; 47,550,013 shares issued and outstanding (2015 – 47,541,484) $ 476 $ 475
Class B Common stock – authorized 20,000,000 shares with a $0.01 par value; 7,405,956 shares issued and outstanding (2015 – 7,405,956) 74 74
Series B Preferred shares – authorized 16,100 shares with a $0.01 par value; 14,000 shares issued and outstanding (2015 – 14,000) - -
Additional paid in capital 386,458 386,425
Retained earnings 14,349 9,792
Total Stockholders’ Equity 401,357 396,766
Total Liabilities and Stockholders’ Equity $ 870,118 $ 904,920

Global Ship Lease, Inc.

Interim Unaudited Consolidated Statements of Cash Flows

(Expressed in thousands of U.S. dollars)



Three months ended March 31,
2016 2015
Cash Flows from Operating Activities
Net income $ 5,323 $ 790
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities
Depreciation 10,934 10,978
Amortization of deferred financing costs 952 791
Amortization of original issue discount 582 346
Amortization of intangible liability (529) (529)
Share based compensation 33 25
Decrease in accounts receivable and other assets 699 647
Decrease (increase) in inventory 34 (71)
Decrease in accounts payable and other liabilities (10,714) (11,291)
(Decrease) increase in unearned revenue (104) 205
Unrealized foreign exchange loss (gain) 32 (21)
Net Cash Provided by Operating Activities 7,242 1,870
Cash Flows from Investing Activities
Cash paid for vessel acquisition - (54,220)
Costs paid in respect of sale of vessels (157) -
Cash paid for other assets (1) -
Cash paid for drydockings - (1,485)
Net Cash Used in Investing Activities (158) (55,705)
Cash Flows from Financing Activities
Repurchase of secured notes (26,662) -
Proceeds from drawdown of credit facilities - 40,000
Repayment of credit facilities (2,725) -
Series B Preferred Shares – dividends paid (766) (766)
Net Cash (Used in) Provided by Financing Activities (30,153) 39,234
Net Decrease in Cash and Cash Equivalents (23,069) (14,601)
Cash and Cash Equivalents at Start of Period 53,591 33,295
Cash and Cash Equivalents at End of Period $ 30,522 $ 18,694


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

Source:Global Ship Lease, Inc.