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GSL - Global Ship Lease Inc News Story

$4.77 0.0  0.6%

Last Trade - 07/08/20

Sector
Industrials
Size
Small Cap
Market Cap £64.2m
Enterprise Value £649.0m
Revenue £205.0m
Position in Universe 4435th / 6395

Global Ship Lease Reports Results for the Fourth Quarter of 2019

Thu 5th March, 2020 1:48pm
Global Ship Lease Reports Results for the Fourth Quarter of 2019

LONDON, March 05, 2020 (GLOBE NEWSWIRE) -- Global Ship Lease, Inc. (NYSE:GSL) (the “Company” or “Global Ship Lease”), a containership owner, announced today its unaudited results for the three months and year ended December 31, 2019.

Full Year 2019 and Year to Date 2020 Highlights

- Reported operating revenue of $67.6 million for the fourth quarter 2019. Operating revenue for the year ended December 31, 2019 was $261.1 million.

- Reported net income available to common shareholders of $8.0 million for the fourth quarter 2019.  For the year ended December 31, 2019, net income available to common shareholders was $36.8 million.

- Generated $37.7 million of Adjusted EBITDA(3) for the fourth quarter 2019. Adjusted EBITDA for the year ended December 31, 2019 was $157.0 million.

- During the year we raised $365.5 million of secured finance.  By December 31, 2019, we had utilized $268.5 million to refinance existing debt and $59.0 million to partially finance the acquisition of ships.

- During the fourth quarter, we raised $50.7 million net proceeds from issuing Class A common shares and $29.6 million net proceeds from issuing 8.00% Senior Unsecured Notes due 2024 (“2024 Notes”). By December 31, 2019, a further $7.7 million net proceeds had been raised under our At The Market (“ATM”) program for the 2024 Notes and a further $0.9 million under our separate ATM program for our 8.75% Series B Preferred Shares (“Series B Preferred Shares”). Proceeds are to be used to facilitate the refinancing of our 9.875% Senior Secured Notes due 2022 (“2022 Notes”) and selective growth.

- During the year, we announced the acquisition of seven containerships, all with charters in place, adding an aggregate of approximately $109.0 million contracted revenue, $55.0 million of expected Adjusted EBITDA, and 21.1 years of contract cover (excluding option periods callable by the charterers). The acquisitions of four of these ships were announced in November 2019.

- In December 2019, following our Annual Mandatory Offer to purchase up to $20.0 million of our 2022 Notes, we purchased and cancelled $17.3 million of these notes on December 10, 2019 at a purchase price of 102%. The remaining $2.7 million of the offer was used to reduce our term loan facility provided by Citibank.  On February 10, 2020, we redeemed a further $46.0 million principal amount of the 2022 Notes, at a redemption price equal to 104.938%, reducing the amount outstanding under these notes to $276.7 million.

- Subsequent to the year end, our credit facility that matured on December 31, 2020 was fully refinanced through the utilization of the $38.0 million second tranche of the $268.0 million New Senior Loan, secured by Mary, and an additional facility of $9.0 million which we entered with an international bank, secured by Maira, Nikolas and Newyorker.

- Subsequent to the year end, up to March 4, 2020, a further $19.4 million net proceeds had been raised under the ATM program for the 2024 Notes and a further $3.9 million under the ATM program for the Series B Preferred Shares.

- Subsequent to the year end, up to February 28, 2020, we have agreed short charter extensions for six of our smaller ships: Manet, Maira, Nikolas, Newyorker, Athena, and GSL Valerie. The extensions are all at rates of $9,000 per day and range in duration from a few months to a year.

George Youroukos, Executive Chairman of Global Ship Lease, stated, “2019 was a year of transformation, execution, and profitability for Global Ship Lease. Following the late-2018 merger that saw GSL double its fleet and treble net asset value, the financial and strategic steps that we took throughout the year enabled us to benefit from improving market fundamentals and to enter 2020 stronger and better positioned to seize value-creative opportunities in the market. By acquiring low-slot-cost ships at attractive valuations, and securing prompt employment with top-tier counterparties, we have secured excellent risk-adjusted returns and substantially improved our cash flow generation while minimizing residual value risk.”

“Our contracted revenues of $767 million and TEU-weighted average forward contract cover of 2.5 years give us considerable comfort to overcome any short to medium-term demand turbulence caused by market disruption events such as coronavirus.  Looking forward, our high-quality fleet of mid-sized and smaller containerships will continue to benefit from its concentration in size segments where supply is set to contract in the coming years, while also being a good fit for the container trades with the strongest fundamentals. With a financial foundation that continues to grow stronger as we reduce our cost of debt, a proven ability to execute our growth strategy, and a successful track record as a platform for opportunistic growth, we believe that Global Ship Lease is well placed to create significant shareholder value for the long term.”

Ian Webber, Chief Executive Officer of Global Ship Lease, commented, “Our improved cashflow generation and profitability have opened a number of avenues for Global Ship Lease to pursue a materially reduced cost of debt. Having successfully issued both public debt and equity in 2019, and refinanced all of our near-term debt maturities, we have made good progress in our efforts to diversify our balance sheet and improve our credit quality as we look to refinance our 2022 Notes. By continuing to reduce our cost of debt and strengthen our balance sheet, we are seizing a critical advantage in a highly competitive market where unique, countercyclical opportunities exist for those few players who have consistent access to attractively priced capital.”

SELECTED FINANCIAL DATA – UNAUDITED

(thousands of U.S. dollars)

 ThreeThree  
 months
ended
months
ended
Year
 ended
Year
 ended
 Dec 31,
2019
Dec 31,
2018
Dec 31,
2019
Dec 31,
2018
     
Operating Revenue (1)67,55450,021261,102157,097
Operating Income/(Loss)27,345(56,205)111,567(10,260)
Net Income/(Loss) (2)7,961(72,503)36,757(60,426)
Adjusted EBITDA (3)37,73426,577156,95697,241
Normalized Net Income (3)8,3071,69837,10313,775
     

The results for the three months and year ended December 31, 2019 include the results of the 19 Poseidon Containers containerships acquired on November 15, 2018 (the “Poseidon Containers Fleet”). 

(1) Operating Revenue is net of address commissions which represent a discount provided directly to a charterer based on a fixed percentage of the agreed upon charter rate. Brokerage commissions are included in Time charter and voyage expenses.

(2) Net Income available to common shareholders.

(3) Adjusted EBITDA and Normalized Net Income are non-US GAAP measures which we consider to be a useful measure of our performance.  A reconciliation of these non-GAAP measure to net income, the most directly comparable US GAAP financial measure, is provided below.

Following the Poseidon Transaction, minor reclassifications of expenses and balance sheet items have been made.

Revenue and Utilization

Our fleet of 43 ships as of December 31, 2019, including GSL Christel Elizabeth and Verdi, which were delivered to us on December 12, 2019, generated revenue from fixed rate time-charters of $67.6 million in the three months ended December 31, 2019, up $17.5 million (or 35.1%) on revenue of $50.0 million for the comparative period in 2018. There were 3,804 ownership days in the fourth quarter 2019, an increase of 43.2% compared to 2,656 in the fourth quarter 2018, due to the purchase of the Poseidon Containers Fleet in November 2018 and the acquisition of five additional ships during 2019, GSL Eleni, GSL Grania, GSL Kalliopi, GSL Christel Elizabeth and Verdi. The increase in revenue for the three months ended December 31, 2019, is principally due to the additional ownership days, offset by reduced revenue from CMA CGM Utrillo and GSL La Tour on legacy charter renewals at lower rates and increased offhire and idle days. The 195 days of offhire for dry-dockings in the fourth quarter 2019 were for five regulatory dry-dockings, two of which remained in progress at December 31, 2019, with extended completion times due to congestion in shipyards. With 114 days idle time for CMA CGM Matisse and ballast time for CMA CGM Manet and Dolphin II prior to their delivery to their new charterers and 75 days of unplanned offhire, including 45 days for repairs to the stern tube of one ship, utilization for the fourth quarter was 89.9%. In the comparative period of 2018, there were seven days of unplanned offhire and 30 idle days for one ship, which was between charters, for overall utilization of 98.6%.

For the year ended December 31, 2019, revenue was $261.1 million, up $104.0 million (or 66.2%) on revenue of $157.1 million in 2018, mainly due to additional ships as ownership days at 14,326 were up 86.7% on 7,675 in 2018, offset by increased offhire and idle days.

The table below shows fleet utilization for the three months ended December 31, 2019 and 2018, and for the years ended December 31, 2019, 2018, 2017, 2016 and 2015.

         
 Three months ended Year ended
 Dec 31,Dec 31, Dec 31,Dec 31,Dec 31,Dec 31,Dec 31,
Days20192018 20192018201720162015
         
Ownership days3,8042,656 14,3267,6756,5706,5886,893
Planned offhire - dry-dockings(195)0 (537)(34)(62)(100)(9)
Unplanned offhire(75)(7) (105)(17)(40)(3)(7)
Idle time(114)(30) (164)(47)00(13)
Operating days3,4202,619 13,5207,5776,4686,4856,864
         
Utilization89.9%98.6% 94.4%98.7%98.4%98.4%99.6%
         

Vessel Operating Expenses

Vessel operating expenses, which include costs of crew, lubricating oil, repairs, maintenance, insurance and technical management fees, were $24.5 million for the three months ended December 31, 2019, compared to $18.1 million in the prior year period. The increase was due to 1,148 (up 43.2%) additional ownership days as a result of the acquisition of the Poseidon Containers Fleet and the additions of five ships. The average cost per ownership day in the quarter was $6,436, compared to $6,818 for the prior year period, down $382 per day, or 5.6%.

For the year ended December 31, 2019, vessel operating expenses were $87.8 million, or an average of $6,128 per day, compared to $49.3 million in the comparative period, or $6,420 per day, a reduction of 4.6%.

Time Charter and Voyage Expenses

Time charter and voyage expenses comprise mainly commission paid to ship brokers, the cost of bunker fuel for owner’s account when a ship is offhire or idle, and miscellaneous costs associated with a ship’s voyage. Time charter and voyage expenses were $3.0 million for the three months ended December 31, 2019, compared to $1.0 million in the prior year period. The increase was mainly due to the addition of the Poseidon Containers Fleet, all of which incur such commission, compared to our legacy ships, where commission is paid only for those which have completed their initial charters to CMA CGM and which have been employed on a new charter obtained with the assistance of brokers.

For the year ended December 31, 2019, time charter and voyage expenses were $9.0 million, compared to $1.6 million in the comparative period.

Depreciation and Amortization

Depreciation and amortization for the three-month period ended December 31, 2019 was $11.0 million, compared to $10.8 million in the fourth quarter of 2018.  The increase was mainly due to the addition of the Poseidon Containers Fleet, and five additional ships during 2019, offset by the effect of lower book values for a number of ships following an impairment charge in December 2018 as well as a change in estimated scrap value per LWT with effect from January 1, 2019 from $250 to $400.

Depreciation and amortization for the year ended December 31, 2019 was $43.9 million, compared to $35.5 million in the comparative period, with the increase being due to the reasons noted above.

Impairment

The Company’s accounting policies require that tangible fixed assets, such as vessels, are reviewed for impairment when events or changes in circumstances indicate that their carrying amounts may not be recoverable.

Whilst charter rates in the spot market and asset values saw overall improvements through 2019, taking into account the seasonal as well as cyclical nature of the container shipping industry, the recovery was not considered to have been sufficiently sustained not to undertake a review for impairment of vessel groups where the carrying value as at December 31, 2019 might not be recoverable. Consequently, the Company performed an impairment analysis (step one) to estimate the future undiscounted cash flows for each of the relevant vessel groups. The assessment concluded that no impairment of vessels existed as of December 31, 2019, as the undiscounted projected net operating cash flows exceeded the carrying values. Step two of the impairment analysis was not required.

The impairment review for fourth quarter of 2018, gave rise to a non-cash charge of $71.8 million, as the sum of the expected undiscounted future cash flows from three vessels over their estimated remaining useful lives was less than the carrying amounts.  The impairment charge was equal to the amount by which the vessels’ carrying amounts exceed their fair values.  Fair value was assessed, on a vessel by vessel basis, at third party broker assessed charter attached valuations.

General and Administrative Expenses

General and administrative expenses were $1.7 million in the three months ended December 31, 2019, compared to $4.6 million in the fourth quarter of 2018.  The decrease was mainly due to retention and severance costs of $2.0 million and other costs associated with the Poseidon Transaction incurred in fourth quarter 2018.

For the year ended December 31, 2019, general and administrative expenses were $8.8 million, including $1.7 million non-cash expense for stock-based compensation, compared to $9.2 million in 2018, which included $0.1 million non-cash expense for stock-based compensation. The average cost per ownership day was $615 for the year ended December 31, 2019, compared to $1,201 per day for the year ended December 31, 2018.

Adjusted EBITDA

As a result of the above, Adjusted EBITDA was $37.7 million for the three months ended December 31, 2019, up from $26.6 million for the three months ended December 31, 2018, with the increase being mainly due to the addition of the Poseidon Containers Fleet on November 15, 2018 and the acquisition of five additional ships during the year.

Adjusted EBITDA for the year ended December 31, 2019 was $157.0 million, compared to $97.2 million for the comparative period, with the increase being due to the reasons noted above.

Interest and Other Finance Expenses and Interest Income

Debt as at December 31, 2019 totaled $912.8 million, comprising $322.7 million of indebtedness under our 2022 Notes, $12.1 million of indebtedness under the Citi secured term loan, both cross collateralized by 18 ships in the legacy GSL fleet, $538.3 million of bank debt collateralized by the rest of the fleet and $39.8 million of indebtedness under our 2024 Notes. Three vessels were unencumbered as at December 31, 2019.

Debt at December 31, 2018 totaled $889.3 million.

Interest and other finance expenses for the three months ended December 31, 2019 were $18.5 million, an increase of $2.3 million, or 14.4%, on the interest and other finance expenses for the prior year period of $16.2 million, due to the assumption of debt associated with the Poseidon Transaction and the issuance of our 2024 Notes.

For the year ended December 31, 2019, interest and other finance expenses were $75.0 million, compared to $48.7 million for the year ended December 31, 2018, with the increase mainly for the reason noted above. Weighted average interest rate for the year ended December 31, 2019 was 6.8%, compared to 7.7% for the year ended December 31, 2018.

Interest income for the three months ended December 31, 2019 was $0.6 million, compared to $0.4 million for the three months ended December 31, 2018.

Interest income for the year ended December 31, 2019 was $1.8 million, compared to $1.4 million for the year ended December 31, 2018.

Other Income/(Expenses), net

Other income/(expenses), net is mainly comprised of gains/losses in bunkers following deliveries and redeliveries of ships from charterers and passenger income. Other expenses, net was $0.6 million in the three months ended December 31, 2019, compared to $0.2 million of other income, net in the prior year period.

Other income, net was $1.5 million in the year ended December 31, 2019, compared to $0.2 million in the prior year; the increase was mainly due to the addition of the Poseidon Fleet.

Taxation

Taxation for the three months ended December 31, 2019 was a debit of $43,000, compared to a credit of $4,000 in the prior year period.

Taxation for the year ended December 31, 2019 was a charge of $3,000, compared to a charge of $55,000 in the prior year. 

Earnings Allocated to Preferred Shares

The Series B Preferred Shares, carry a dividend of 8.75%, the cost of which for the three months ended December 31, 2019 was $0.8 million, the same as in the comparative period. The cost was $3.1 million in the year ended December 31, 2019, the same as in the comparative period. 
Net Income / (Loss) Available to Common Shareholders

Net income available to common shareholders for the three months ended December 31, 2019 was $8.0 million, compared to a loss of $72.5 million in the fourth quarter of 2018 after the non-cash impairment charge of $71.8 million.

Normalized net income for the three months ended December 31, 2019 was $8.3 million, adjusting for the premium paid on redemption of our 2022 Notes and was $1.7 million for the three months ended December 31, 2018, adjusting for a non-cash impairment charge, costs associated with the Poseidon Transaction, and premium paid on redemption of our 2022 Notes.

Net income available to common shareholders was $36.8 million for the year ended December 31, 2019, compared to $60.4 million loss in the prior year, after the non-cash impairment charge of $71.8 million.

Normalized net income for the year ended December 31, 2019 was $37.1 million and was $13.8 million for the year ended December 31, 2018.   

Issuance of Class A common shares and 8.00% Senior Unsecured Notes due 2024

On October 1, 2019, we closed our upsized underwritten public offering of 7,613,788 Class A common shares, at a public offering price of $7.25 per share, for gross proceeds of approximately $55.2 million.  This includes the exercise in full by the underwriter of its option to purchase additional shares. The net proceeds, after underwriting discounts, commissions and expenses, were $50.7 million and were to be used for general corporate purposes including the acquisition of containerships or the prepayment of debt.

In November, we closed on our underwritten public offering of 2024 Notes, issuing $31.6 million principal amount of the 2024 Notes, including the exercise in full by the underwriters of their option to purchase additional notes, for net proceeds of $29.6 million, after the payment of underwriting discounts, commissions and offering expenses.  Use of the net proceeds of the 2024 Notes offering was to repay a portion of our 2022 Notes. In connection with the 2024 Notes, we entered into an “At Market Issuance Sales Agreement” with B. Riley, FBR. (the “Agent”) under which the Agent may, in accordance with our instructions, offer and sell from time to time new 2024 Notes. In 2019, we issued 325,593 2024 Notes under this program, for net proceeds of $7.7 million.

In December, 2019, we entered into a similar agreement with the Agent under which the Agent may, in accordance with our instructions, offer and sell from time to time, depositary shares, each of which represents 1/100th of one share of our Series B Preferred Shares. In 2019, we issued 428 Series B Preferred Shares for net proceeds of $0.9 million.

Subsequent to the year end, up to March 4, 2020, a further $19.4 million net proceeds had been raised under the ATM program for the 2024 Notes and a further $3.9 million under the ATM program for the Series B Preferred Shares.

Fleet

The following table provides information about our fleet of 45 ships, of which 43 were owned as at December 31, 2019.  One ship was delivered in January 2020 and the final ship was delivered in February 2020. The table includes charters agreed up to February 28, 2020.

        
Vessel NameCapacity
in TEUs
Lightweight
(tons)
Year
Built
ChartererEarliest Charter
Expiry Date
Latest Charter
Expiry Date
Daily Charter
Rate $
        
CMA CGM Thalassa11,04038,5772008CMA CGM4Q251Q2647,200
UASC Al Khor(1)9,11531,7642015Hapag-Lloyd1Q222Q2234,000
Anthea Y(1)9,11531,8902015COSCO2Q203Q2039,200
Maira XL(1)9,11531,8202015COSCO2Q203Q2039,200
MSC Tianjin8,66734,3252005MSC2Q243Q24(2)(2)
MSC Qingdao8,66734,3052004MSC2Q243Q24(2)(2)
GSL Ningbo8,66734,34032004Maersk3Q204Q2018,000
GSL Eleni7,84729,2612004Maersk3Q244Q24(3)(3)
GSL Kalliopi7,84729,1052004Maersk4Q224Q24(3)(3)
GSL Grania7,84729,1902004Maersk3Q224Q24(3)(3)
Mary(1)6,92723,4242013CMA CGM3Q234Q2325,910
Kristina(1)6,92723,4212013CMA CGM2Q243Q2425,910
Katherine(1)6,92723,4032013CMA CGM1Q242Q2425,910
Alexandra(1)6,92723,3482013CMA CGM1Q242Q2425,910
Alexis6,88223,9192015CMA CGM1Q242Q2425,910
Olivia I6,88223,8642015CMA CGM1Q242Q2425,910
New Purchase One6,42227,9542002Confidential1Q202Q20(4)
New Purchase Two6,42228.0702002Confidential2Q204Q20(4)
CMA CGM Berlioz6,62126,7762001CMA CGM2Q214Q2134,000
Agios Dimitrios6,57224,7462011MSC4Q231Q2420,000
Verdi6,08023,7372004Confidential2Q241Q25(5)
GSL Christel Elisabeth6,08023,7452004Confidential2Q241Q25(5)
Tasman5,93625,0102000Maersk1Q223Q23(5)12,500(6)
Dimitris Y5,93625,0102000ZIM2Q213Q2114,500
Ian H5,93625,1282000ZIM2Q212Q2114,500
Dolphin II5,09520,5962007Feedertech3Q204Q2012,500
Orca I5,09520,6332006Maersk2Q20(6)2Q21(6)9,000(7)
CMA CGM Alcazar5,08920,0872007CMA CGM4Q202Q2133,750
CMA CGM Château d’If5,08919.9942007CMA CGM4Q202Q2133,750
CMA CGM Jamaica4,29817,2722006CMA CGM3Q221Q2325,350
CMA CGM Sambhar4,04517,4292006CMA CGM3Q221Q2325,350
CMA CGM America4,04517,4282006CMA CGM3Q221Q2325,350
GSL Valerie2,82411,9712005MSC3Q203Q209,000
Athena2,76213,5382003MSC1Q211Q219,000
Maira2,50611,4532000MSC3Q203Q208,250 (8)
Nikolas2,50611,3702000MSC3Q203Q209,000
Newyorker2,50611,4632001MSC4Q201Q219,000
GSL La Tour2,27211,7422001MSC4Q204Q208,800
Manet2,27211,7272001COSCO2Q202Q209,900
GSL Matisse2,26211,6761999
Utrillo2,26211,6761999CMA CGM1Q201Q208,500
GSL Keta2,20711,7312003OOCL1Q201Q209,400
GSL Julie2,20711,7312002CMA CGM1Q202Q208,500
Kumasi2,20711,7912002CMA CGM4Q201Q219,800
Marie Delmas2,20711,7312002CMA CGM4Q201Q219,800
        
(1) Modern design, high reefer capacity fuel efficient vessels
(2) Five-year charters which commenced 2Q2019 and are expected to generate Adjusted EBITDA of approximately $25.6 million per ship for the median period.
(3) GSL Eleni delivered 3Q2019 and is chartered for five years; GSL Kalliopi (delivered 4Q2019) and GSL Grania (delivered 3Q2019) are chartered for three years plus two successive periods of one year at the option of the charterer. Aggregate Adjusted EBITDA of $32.0 million expected to be generated for the median firm periods, increasing to $47.0 million if all options are exercised.
(4) New Purchase One was delivered in late January 2020 and New Purchase Two was delivered in February 2020. The ships are expected to generate aggregate Adjusted EBITDA of approximately $2.1 million for the median periods of their initial charters.
(5) 52 – 60 months charters, expected to generate Adjusted EBITDA of approximately $10.5 million per ship for the median period.
(6) 12-month extension at charterer’s option callable in 2Q2022, at an increased rate of $20,000 per day.
(7) 12-month extension at charterer’s option callable in 2Q2020, at an increased rate of$10,000 per day;
(8) Rate increases to $9,000 per day from April 1, 2020;
 

Conference Call and Webcast

Global Ship Lease will hold a conference call to discuss the Company's results for the three months ended December 31, 2019 today, Thursday March 5, 2019 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: 9278676
  
 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, March 21, 2020 at (855) 859-2056 or (404) 537-3406. Enter the code 9278676 to access the audio replay. The webcast will also be archived on the Company’s website: http://www.globalshiplease.com.
  

Annual Report on Form 20-F

The Company’s Annual Report for 2018 is on file 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 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.

Including the two Post-Panamax containerships delivered in early 2020, Global Ship Lease owns 45 ships, ranging from 2,207 to 11,040 TEU, of which nine are fuel efficient new-design wide beam, with a total capacity of 249,160 TEU and an average age, weighted by TEU capacity, of 12.8 years as at December 31, 2019.

Adjusted to include all charters agreed up to February 28, 2020, the average remaining term of the Company’s charters at December 31, 2019, to the mid-point of redelivery, including options under the Company’s control, was 2.5 years on a TEU-weighted basis. Contracted revenue on the same basis was $767 million. Contracted revenue was $852 million, including options under charterers’ control and with latest redelivery date, representing a weighted average remaining term of 2.8 years.

Reconciliation of Non-U.S. GAAP Financial Measures

A. Adjusted EBITDA

Adjusted EBITDA represents net income available to common shareholders before interest income and expense, income taxes, depreciation and amortization and earnings allocated to preferred shares.  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.  The Company believes 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 is presented herein on a forward-looking basis in certain instances. The Company has not provided a reconciliation of any such forward looking non-US GAAP financial measure to the most directly comparable US GAAP measure because such US GAAP financial measures on a forward-looking basis are not available to the Company without unreasonable effort.

ADJUSTED EBITDA - UNAUDITED

 

(thousands of U.S. dollars)

      
 ThreeThree  
 monthsmonthsYearYear
 endedendedendedended
 Dec 31,Dec 31,Dec 31,Dec 31,
 2019201820192018
     
Net income (loss) available to common shareholders
7,961(72,503)36,757(60,426)
      
Adjust:Depreciation and amortization11,02810,75243,91235,455
 Impairment-71,834-71,834
 Interest income(593)(441)(1,791)(1,425)
 Interest expense18,51016,17474,99448,686
 Earnings allocated to preferred shares7857653,0813,062
 Income taxes43(4)355
      
Adjusted EBITDA
37,73426,577156,95697,241


B.Normalized net income
  
 Normalized net income represents net income (loss) adjusted for the premium paid on redemption of 2022 notes, impairment charges and the staff retention and severance costs associated with the Poseidon Transaction. Normalized net income is a non-GAAP quantitative measure which we believe will assist investors and analysts who often adjust reported net loss for 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.  Our use of Normalized net income may vary from the use of similarly titled measures by others in our industry.
  


NORMALIZED NET INCOME - UNAUDITED
(thousands of U.S. dollars)
  ThreeThree  
  monthsmonthsYearYear
  endedendedEndedended
  Dec 31,Dec 31,Dec 31,Dec 31,
  2019201820192018
      
Net income (loss) available to common shareholders7,961(72,503)36,757(60,426)
      
Adjust:Impairment charges-71,834-71,834
 Staff retention and severance costs associated with the Poseidon transaction-1,967-1,967
 Premium paid on redemption of 2022 Notes346400346400
Normalized net income8,3071,69837,10313,775
     

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 future growth of the container shipping industry, including the rates of annual demand and supply growth;

  • the financial condition of our charterers, particularly CMA CGM, our principal charterer and main source of operating revenue, and their ability to pay charter hire in accordance with the charters;

  • Global Ship Lease’s financial condition and liquidity, including its level of indebtedness or ability to obtain additional financing to fund capital expenditures, ship acquisitions and other general corporate purposes;

  • Global Ship Lease’s ability to meet its financial covenants and repay its credit facilities;

  • 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 credit facility;

  • risks relating to the acquisition of Poseidon Containers and Global Ship Lease’s ability to realize the anticipated benefits of the acquisition;

  • future acquisitions, business strategy and expected capital spending;

  • operating expenses, availability of crew, number of offhire days, drydocking and survey requirements and insurance costs;

  • general market conditions and shipping industry trends, including charter rates and factors affecting supply and demand;

  • assumptions regarding interest rates and inflation;

  • changes in the rate of growth of global and various regional economies;

  • risks incidental to ship operation, including piracy, discharge of pollutants and ship accidents and damage including total or constructive total loss;

  • estimated future capital expenditures needed to preserve its capital base;

  • Global Ship Lease’s expectations about the availability of ships to purchase, the time that it may take to construct new ships, or the useful lives of its ships;

  • Global Ship Lease’s continued ability to enter into or renew long-term, fixed-rate charters or other ship employment arrangements;

  • the continued performance of existing long-term, fixed-rate time charters;

  • Global Ship Lease’s ability to capitalize on its management’s and board of 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 including taxation;

  • 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 U.S Securities and Exchange Commission (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 Balance Sheets

(Expressed in thousands of U.S dollars)

  As of,
 December 31, 2019 December 31, 2018
ASSETS     
CURRENT ASSETS     
Cash and cash equivalents$138,024  $82,059 
Restricted cash 3,909   2,186 
Accounts receivable, net 2,350   1,927 
Inventories 5,595   5,769 
Prepaid expenses and other current assets 8,132   6,214 
Due from related parties 3,860   817 
Total current assets$161,870  $98,972 
NON - CURRENT ASSETS     
Vessels in operation$1,155,586  $1,112,766 
Advances for vessels acquisitions and other additions 10,791   - 
Other fixed assets -   5 
Intangible assets - charter agreements 1,467   5,400 
Deferred charges, net 16,408   9,569 
Other non - current assets -   948 
Restricted cash, net of current portion 5,703   5,827 
Total non - current assets 1,189,955   1,134,515 
TOTAL ASSETS$1,351,825  $1,233,487 
LIABILITIES AND SHAREHOLDERS' EQUITY     
CURRENT LIABILITIES     
Accounts payable$9,052  $9,586 
Accrued liabilities 22,916   15,407 
Current portion of long - term debt 87,532   64,088 
Deferred revenue 9,987   3,118 
Due to related parties 109   3,317 
Total current liabilities$129,596  $95,516 
LONG-TERM LIABILITIES     
Long - term debt, net of current portion and deferred financing costs$809,357  $813,130 
Intangible liability-charter agreements 6,470   8,470 
Deferred tax liability -   9 
Total non - current liabilities 815,827   821,609 
Total liabilities  945,423   917,125 
Commitments and Contingencies      
SHAREHOLDERS' EQUITY     
Class A common shares - authorized
214,000,000 shares with a $0.01 par value
17,556,738 shares issued and outstanding (2018 – 9,017,205 shares)
 175   90 
Class B common shares - authorized
20,000,000 shares with a $0.01 par value
nil shares issued and outstanding (2018 – 925,745 shares)
 -   9 
Series B Preferred Shares - authorized
44,000 shares with a $0.01 par value
14,428 shares issued and outstanding (2018 – 14,000 shares)
 -   - 
Series C Preferred Shares - authorized
250,000 shares with a $0.01 par value
250,000 shares issued and outstanding (2018 - 250,000 shares)
 3   3 
Additional paid in capital 565,586   512,379 
Accumulated deficit (159,362)   (196,119) 
Total shareholders' equity 406,402   316,362 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,351,825   1,233,487 
        

Global Ship Lease, Inc.

Interim Unaudited Consolidated Statements of Operations

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

 Three months ended December 31, Year ended December 31,
 2019  2018  2019  2018 
OPERATING REVENUES               
Time charter revenue$26,780  $16,667  $107,441  $30,890 
Time charter revenue - related parties 40,774   33,354   153,661   126,207 
  67,554   50,021   261,102   157,097 
OPERATING EXPENSES:               
Vessels operating expenses 21,609   17,170   77,906   47,584 
Vessels operating expenses-related parties 2,874   938   9,880   1,689 
Time charter and voyage expenses 2,449   739   7,177   1,352 
Time charter and voyage expenses-related parties 517   222   1,845   222 
Depreciation and amortization 11,028   10,752   43,912   35,455 
Impairment of vessels -   71,834   -   71,834 
General and administrative expenses 1,732   4,571   8,815   9,221 
Operating Income / (Loss) 27,345   (56,205)   111,567   (10,260) 
                
NON OPERATING INCOME/(EXPENSES)               
Interest income 593   441   1,791   1,425 
Interest and other finance expenses (18,510)   (16,174)   (74,994)   (48,686) 
Other income/(expenses), net (639)   196   1,477   212 
Total non operating expenses (18,556)   (15,537)   (71,726)   (47,049) 
Income / (Loss) before income taxes 8,789   (71,742)   39,841   (57,309) 
Income taxes (43)   4   (3)   (55) 
Net Income / (Loss) 8,746   (71,738)   39,838   (57,364) 
Earnings allocated to Series B Preferred Shares (785)   (765)   (3,081)   (3,062) 
Net Income / (Loss) available to Common Shareholders$7,961  $(72,503)  $36,757  $(60,426) 
Earnings / (Loss) per Share               
                
Weighted average number of Class A common shares outstanding               
Basic 17,556,738   7,613,495   11,859,506   6,514,391 
Diluted 17,630,765   7,613,495   11,906,906   6,514,391 
                
Net Gain / (Loss) per Class A common share$              
Basic 0.26   (5.09)   1.48   (7.42) 
Diluted 0.26   (5.09)   1.48   (7.42) 
                
Weighted average number of Class B common shares outstanding nil   925,745   nil   925,745 
Basic and diluted               
                
Net Gain per Class B common shares$n/a   nil   n/a   nil 
Basic and diluted n/a   nil   n/a   nil 
                

Global Ship Lease, Inc.

Interim Unaudited Consolidated Statements of Cash Flows

(Expressed in thousands of U.S. dollars)

  Three months ended December 31,  Year ended December 31,
  2019   2018   2019   2018 
Cash flows from operating activities:               
Net income / (Loss)$8,746  $(71,738)  $39,838  $(57,364) 
Adjustments to reconcile net income to net cash provided by operating activities:               
Depreciation and amortization$11,028  $10,752  $43,912  $35,455 
Vessel Impairment -   71,834   -   71,834 
Amortization of deferred financing costs 864   1,498   3,108   4,629 
Amortization of original issue discount/premium on repurchase of notes 533   605   1,140   1,207 
Amortization of intangible liability/asset-charter agreements 497   24   1,933   (1,305) 
Share based compensation 429   (86)   1,717   50 
Changes in operating assets and liabilities:               
(Increase)/decrease in accounts receivable and other assets$(1,151)  $7,361  $(1,393)  $5,019 
(Increase)/decrease in inventories (282)   331   174   (2,250) 
(Decrease)/increase in accounts payable and other liabilities (4,528)   (15,252)   2,284   (9,117) 
Increase/(decrease) in related parties' balances, net 626   (22)   (6,251)   (625) 
Increase in deferred revenue 3,152   972   6,869   214 
Unrealized foreign exchange loss/(gain) 61   (9)   50   (5) 
Net cash provided by operating activities$19,975  $6,270  $93,381  $47,742 
Cash flows from investing activities:               
Acquisition of vessels$(39,500)  $-  $(72,997)  $(11,436) 
Cash paid for vessel expenditure (24)   (89)   (9,528)   (239) 
Advances for vessel acquisitions and other additions (3,281)   -   (9,184)   - 
Net proceeds from sale of vessels -   14,504   -   14,504 
Cash paid for drydockings (4,208)   (532)   (7,390)   (2,636) 
Cash acquired in Poseidon Transaction, net of capitalized expenses (826)   24,037   (826)   24,037 
Net cash (used in)/provided by investing activities$(47,839)  $37,920  $(99,925)  $24,230 
Cash flows from financing activities:               
Proceeds from issuance of 2024 Notes$39,765  $-  $39,765  $- 
Repurchase of 2022 Notes, including premium (17,623)   (20,400)   (17,623)   (20,400) 
Proceeds from drawdown of credit facilities 34,000   -   327,500   8,125 
Repayment of credit facilities (25,686)   (27,771)   (63,505)   (37,771) 
Repayment of refinanced debt -   -   (262,810)   - 
Deferred financing costs paid (3,692)   (246)   (7,904)   (2,058) 
Proceeds from offering of Class A common shares, net of offering costs 50,710   -   50,710   - 
Proceeds from offering of Series B preferred shares, net of offering costs 1,056   -   1,056   - 
Series B Preferred Shares-dividends paid (784)   (765)   (3,081)   (3,062) 
Net cash provided by/(used in) financing activities$77,746  $(49,182)  $64,108  $(55,166) 
Net increase/(decrease) in cash and cash equivalents and restricted cash 49,882   (4,992)   57,564   16,806 
Cash and cash equivalents and restricted cash at beginning of the period 97,754   95,064   90,072   73,266 
Cash and cash equivalents and restricted cash at end of the period$147,636  $90,072  $147,636  $90,072 
Supplementary Cash Flow Information:               
Cash paid for interest 25,536   18,931   70,630   42,390 
Cash paid for income taxes -   26   -   84 
Non-cash Investing activities:               
Unpaid capitalized expenses -   (826)   -   (826) 
Unpaid drydocking expenses 1,217       3,676     
Unpaid vessel additions 3,567   -   1,641   - 
Working capital acquired -   (11,331)   -   (11,331) 
Vessels and other intangibles acquired -   622,925   -   622,925 
Debt acquired -   (509,673)   -   (509,673) 
Non-cash financing activities:               
Issuance of Class A common shares -   (23,564)   -   (23,564) 
Issuance of Series C preferred shares -   (101,569)   -   (101,569) 
Unpaid offering costs 200   -   200   - 
                

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

 

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