Global Ship Lease Reports Results for the Third Quarter of 2024
Forward contract cover locked in for 76% of 2025 days and 49% of 2026 days, and breakevens reduced to enhance through-cycle profitability and cashflow generation, supporting annualized dividend of $1.80 while also positioning for selective fleet renewal and growth
ATHENS, Greece, Nov. 11, 2024 (GLOBE NEWSWIRE) -- 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 nine months ended September 30, 2024.
Third Quarter of 2024 and Year to Date Highlights
- Reported operating revenue of $174.1 million for the third quarter of 2024, a decrease of 0.2% on operating revenue of $174.5 million for the prior year period. For the nine months ended September 30, 2024, operating revenue was $528.6 million, up 6.6% from $495.9 million in the prior year period.
- Reported net income available to common shareholders of $78.8 million for the third quarter of 2024, a decrease of 4.7% on net income of $82.7 million for the prior year period. Normalized net income (a non-U.S. GAAP financial measure, described below) for the same period was $86.6 million, up 5.1% on Normalized net income of $82.4 million for the prior year period. For the nine months ended September 30, 2024, net income available to common shareholders was $253.9 million, an increase of 10.2% on net income of $230.3 million for the prior year period. Normalized net income for the same period was $262.3 million, up 13.1% on Normalized net income for the prior year period of $231.9 million.
- Generated $123.3 million of Adjusted EBITDA (a non-U.S. GAAP financial measure, described below) for the third quarter of 2024, up 1.1% on Adjusted EBITDA of $121.9 million for the prior year period. Adjusted EBITDA for the nine months ended September 30, 2024 was $371.1 million, up 10.8% on Adjusted EBITDA of $334.9 million for the prior year period.
- Earnings per share for the third quarter of 2024 was $2.22, down 5.1% on the earnings per share of $2.34 for the prior year period. Normalized earnings per share (a non-U.S. GAAP financial measure, described below) for the third quarter of 2024 was $2.45, up 5.2% on the Normalized earnings per share of $2.33 for the prior year period. Earnings per share for the nine months ended September 30, 2024 was $7.20, up 10.9% on the earnings per share of $6.49 for the prior year period. Normalized earnings per share for the nine months ended September 30, 2024 was $7.44, up 13.8% on the Normalized earnings per share of $6.54 for the prior year period.
- Declared a dividend of $0.45 per Class A common share for the third quarter of 2024, to be paid on or about December 4, 2024 to common shareholders of record as of November 22, 2024. Paid a dividend of $0.45 per Class A common share for the second quarter of 2024 on September 4, 2024.
- On August 7, 2024, entered into a new $300.0 million senior secured term loan facility with Credit Agricole Corporate and Investment Bank, ABN AMRO Bank N.V. and Bank of America N.A. to refinance or prepay, in full or in part, a total of 10 existing debt facilities to (i) decrease the Company's weighted average cost of debt from 4.57% to 3.95% as of September 30, 2024, (ii) extend the Company's weighted average maturity of debt from 2.6 years to 4.0 years and (iii) increase the Company's unencumbered vessels from 5 to 16. The new facility is scheduled to mature in the third quarter of 2030 and bears interest of Term SOFR + 1.85%.
- On June 26, 2024, announced upgrades by three leading credit rating agencies. The Corporate Family Rating for Global Ship Lease was upgraded to Ba2 from Ba3, with a stable outlook, by Moody's Investor Service, S&P Global Ratings upgraded the long-term issuer credit rating to BB+ from BB, with a stable outlook and the Kroll Bond Rating Agency ("KBRA") upgraded the corporate rating to BB+ from BB, with a stable outlook. KBRA also affirmed the BBB/stable investment grade rating and outlook for the 5.69% Senior Secured Notes due July 15, 2027 (the "2027 Secured Notes").
- Between January 1, 2024 and September 30, 2024, added $596.6 million of contracted revenue to forward charter cover, calculated on the basis of the median firm periods of the respective charters, on a total of 32 new charters or extensions: 10 for ships between 2,200 and 3,500 TEU; 17 for ships between 5,000 TEU and 6,100 TEU; and, five for ships between 6,500 TEU and 8,000 TEU. Durations of these new charters and extensions for the median firm periods range between nine months and 40 months. A number of the vessels were forward fixed several months ahead of their expected availability in the market.
- During the first quarter of 2024, repurchased an aggregate of 251,772 Class A common shares for a total consideration of approximately $5.0 million. Repurchase prices ranged between $18.98 and $20.83 per share, with an average price of $19.84 per share. There were no such repurchases in the second and third quarter of 2024. Approximately $33.0 million of capacity remains under the Company's opportunistic share buy-back authorization.
- On August 16, 2024, entered into a new equity distribution agreement with Evercore Group L.L.C. to opportunistically offer and sell Class A common shares having an aggregate offering price of up to $100.0 million. As of the date of this press release, 27,106 Class A common shares have been issued at an average price of $27.02 (compared to an average price of $18.52 for the repurchase of a total of $57.0 million Class A common shares since the inception of the opportunistic share repurchase program in 3Q2021). We expect to be highly disciplined in the issuance of shares under this agreement going forward.
George Youroukos, our Executive Chairman, stated: "Despite an uncertain macro environment, the factors that have driven significant containership charter market strength throughout 2024 remain firmly intact. Growth in container volumes has been healthy, and materially extended average voyage lengths due to re-routings around the Cape of Good Hope continue to stretch the global fleet to its limits, with idle capacity close to zero - forcing the liner operators to speed up their fleets to offset capacity constraints. With supply limited, and high-quality tonnage at a premium, we are continuing to lock in the current market strength with attractive multi-year charters for even some of the oldest vessels in our fleet, adding almost $600 million of contracted revenues year-to-date, including just under $200 million during the third quarter. Looking forward, the limited orderbook for mid-sized and smaller containerships like those in the GSL fleet is further counterbalanced by relatively lower quality, less efficient vessels that will increasingly struggle to compete and will likely be scrapped out over time. Our fleet of highly efficient mid-size and smaller containerships purpose-built or retrofitted to meet the needs of our liner customers positions us to generate attractive returns on our existing assets, while we also position ourselves for selective growth and fleet renewal, with the goal of continuing to power strong cashflows for our shareholders in the future."
Thomas Lister, our Chief Executive Officer, stated: "Container shipping is a cyclical market which can generate exceptional returns, but also requires prudent risk management and patience. Our goal at GSL is to provide a stable platform from which investors can access those returns. The combination of supportive market conditions, our longstanding focus on building and maintaining a mid-sized and smaller fleet oriented towards the evolving needs of the liner industry, and our consistent financial discipline have put us in a position to return material capital to our shareholders and generate a Total Shareholder Return1 of more than 350% over the last five year period through September 30, 2024, approximately 3x that of a historically strong S&P 500. We have simultaneously built crucial optionality in a cyclical market, and we are ready to act quickly if an acquisition opportunity emerges that meets our strict criteria, consistent with our disciplined track record. We nevertheless appreciate that the greatest opportunities often become available on a countercyclical basis, when capital available to the industry is far harder to come by, and where those with strong balance sheets and financial flexibility can achieve outsized returns. With this in mind, we are very pleased to have opportunistically re-financed $300 million of debt during the quarter, bringing our weighted average cost of debt down to 3.95%, and extending the weighted average maturity to four years. Our commitment to building long term shareholder value through the cycle is well-established, and we will continue to balance patience and discipline with the ability and capacity to act decisively at the right time."
____________________________1 Source, FactSet. Total Shareholder Returns (TSR) for the five year period through September 30, 2024. TSR is the sum of share price appreciation for the period (ending share price minus starting share price) and dividends paid during the period (assuming re-investment of those dividends), with that sum divided by the starting share price; expressed as a percentage.
SELECTED FINANCIAL DATA, UNAUDITED
(thousands of U.S. dollars)
Three
Three
Nine
Nine
months ended
months ended
months ended
months ended
September 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
Operating Revenues (1)
174,064
174,530
528,622
495,901
Operating Income
92,189
94,157
283,130
264,364
Net Income (2)
78,763
82,687
253,912
230,299
Adjusted EBITDA (3)
123,349
121,850
371,061
334,922
Normalized Net Income (3)
86,583
82,356
262,295
231,895
(1) Operating Revenues are net of address commissions which represent a discount provided directly to a charterer based on a fixed percentage of the agreed upon charter rate and also includes the amortization of intangible liabilities, the effect of the straight lining of time charter modifications and the compensation from charterers for drydock and for other capitalized expenses installation. Brokerage commissions are included in "Time charter and voyage expenses" (see below).
(2) Net Income available to common shareholders.
(3) Adjusted EBITDA and Normalized Net Income are non-U.S. Generally Accepted Accounting Principles ("U.S. GAAP") financial measures, as explained further in this press release, and are considered by Global Ship Lease to be useful measures of its performance. For reconciliations of these non-U.S. GAAP financial measures to net income, the most directly comparable U.S. GAAP financial measure, please see "Reconciliation of Non-U.S. GAAP Financial Measures" below.
Operating Revenues and Utilization
Operating revenues derived from fixed-rate, mainly long-term, time-charters were $174.1 million in the third quarter of 2024, down $0.4 million (or 0.2%) on operating revenues of $174.5 million in the prior year period. The period-on-period decrease in operating revenues was principally due to an increase in off hire days plus a non-cash $1.6 million decrease in the effect from straight lining time charter modifications offset, almost entirely, by charter renewals at higher rates on a number of vessels. There were 362 days of offhire in the third quarter of 2024 of which 333 were for scheduled drydockings, compared to 246 days of offhire and idle time in the prior year period of which 191 were for scheduled drydockings. Utilization for the third quarter of 2024 was 94.2% compared to utilization of 96.1% in the prior year period.
For the nine months ended September 30, 2024, operating revenues were $528.6 million, up $32.7 million (or 6.6%) on operating revenues of $495.9 million in the comparative period, mainly due to our acquisition of four vessels which were delivered to us in the second quarter of 2023 (the "Four Vessels") and a decrease in off hire days and idle time, partially offset by a non-cash $7.6 million decrease in the effect from straight lining time charter modifications. There were 619 days of offhire and idle time in the nine months ended September 30, 2024 of which 519 were for scheduled drydockings, compared to 876 days of offhire and idle time in the prior year period of which 627 were for scheduled drydockings. Utilization for the nine months ended September 30, 2024 was 96.7% compared to utilization of 95.1% in the prior year period.
The table below shows fleet utilization for the three and nine months ended September 30, 2024 and 2023, and for the years ended December 31, 2023, 2022, 2021 and 2020.
Three months ended
Nine months ended
Year ended
Sep 30,
Sep 30,
Sep 30,
Sep 30,
Dec 31,
Dec 31,
Dec 31,
Dec 31,
Days
2024
2023
2024
2023
2023
2022
2021
2020
Ownership days
6,256
6,256
18,632
18,029
24,285
23,725
19,427
16,044
Planned offhire - scheduled drydock
(333
)
(191
)
(519
)
(627
)
(701
)
(581
)
(752
)
(687
)
Unplanned offhire
(29
)
(33
)
(98
)
(207
)
(233
)
(460
)
(260
)
(95
)
Idle time
(nil
)
(22
)
(2
)
(42
)
(62
)
(30
)
(88
)
(338
)
Operating days
5,894
6,010
18,014
17,153
23,289
22,654
18,327
14,924
Utilization
94.2
%
96.1
%
96.7
%
95.1
%
95.9
%
95.5
%
94.3
%
93.0
%
As of September 30, 2024, one regulatory drydocking was in progress. During the fourth quarter of 2024, six further regulatory drydockings are anticipated.
Vessel Operating Expenses
Vessel operating expenses, which are primarily the costs of crew, lubricating oil, repairs, maintenance, insurance and technical management fees, were up 1.1% to $46.6 million for the third quarter of 2024, compared to $46.1 million in the prior year period. The increase of $0.5 million was mainly due to (i) an increase in repairs, spares and maintenance expenses for planned main engine maintenance and overhaul of diesel generators as well as main engine annual spares delivery due to timing of planned schedule and (ii) the impact of inflation on fees and expenses, including management fees. The average cost per ownership day in the quarter was $7,447, compared to $7,369 for the prior year period, up $78 per day, or 1.1%.
For the nine months ended September 30, 2024, vessel operating expenses were $141.6 million, or an average of $7,601 per day, compared to $132.3 million in the comparative period, or $7,337 per day, an increase of $264 per ownership day, or 3.6%. The increase of $9.3 million was mainly due to (i) the acquisition of the Four Vessels in the second quarter of 2023, (ii) an increase in repairs, spares and maintenance expenses for planned main engine maintenance and overhaul of diesel generators as well as main engine annual spares delivery due to timing of planned schedule, (iii) increased cost of insurance due to increased premiums as asset values rose over the period, and (iv) impact of inflation on fees and expenses, including management fees.
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 off-hire or idle and miscellaneous owner's costs associated with a ship's voyage. Time charter and voyage expenses were $6.4 million for the third quarter of 2024, compared to $6.0 million in the prior year period. The increase was mainly due to an increase in bunkering expenses due to higher off hire days partially offset by a decrease in other voyage expenses.
For the nine months ended September 30, 2024, time charter and voyage expenses were $17.1 million, or an average of $915 per day, compared to $18.2 million in the comparative period, or $1,009 per day, a decrease of $94 per ownership day, or 9.3% mainly to (i) a decrease in bunkering expenses due to fewer off hire days, and (ii) a decrease in voyage administration costs and operational requests from charterers offset by increased commissions on charter renewals at higher rates.
Depreciation and Amortization
Depreciation and amortization for the third quarter of 2024 was $25.0 million, compared to $24.0 million in the prior year period. The increase was mainly due to the 10 drydockings completed after September 30, 2023.
Depreciation and amortization for the nine months ended September 30, 2024 was $73.8 million, compared to $67.3 million in the comparative period, mainly due to the factor noted above plus the acquisition of the Four Vessels in the second quarter of 2023.
General and Administrative Expenses
General and administrative expenses were $3.9 million in the third quarter of 2024, compared to $4.2 million in the prior year period. The movement was mainly due to the decrease in payroll expenses following the retirement of our former CEO effective March 31, 2024 plus a reduction in the non-cash charge for stock-based compensation expense. The average general and administrative expenses per ownership day for the third quarter of 2024 was $623, compared to $679 in the prior year period, a decrease of $56 or 8.2%.
For the nine months ended September 30, 2024, general and administrative expenses were $13.0 million, compared to $13.7 million in the comparative period. The movement was mainly due to the decrease in the non-cash charge for stock-based compensation expense offset by an increase in bonuses paid to our employees. The average general and administrative expense per ownership day for the nine-month period ended September 30, 2024 was $700, compared to $763 in the comparative period, a decrease of $63 or 8.3%.
Adjusted EBITDA
Adjusted EBITDA (a non-GAAP financial measure) was $123.3 million for the third quarter of 2024, up from $121.9 million for the prior year period, with the net increase being mainly due to charter renewals at higher rates on a number of vessels.
Adjusted EBITDA for the nine months ended September 30, 2024 was $371.1 million, compared to $334.9 million for the comparative period, an increase of $36.2 million or 10.8% mainly due to our acquisition of the Four Vessels which were delivered to us in the second quarter of 2023 and a decrease in off hire days and idle time.
Interest Expense and Interest Income
Debt as at September 30, 2024 totaled $688.0 million, comprising $397.6 million of secured bank debt collateralized by vessels, $245.0 million of 2027 Secured Notes collateralized by vessels, and $45.4 million under sale and leaseback financing transactions. As of September 30, 2024, 16 vessels were unencumbered.
Debt as at September 30, 2023 totaled $874.3 million, comprising $461.5 million of secured bank debt collateralized by vessels, $297.5 million of 2027 Secured Notes collateralized by vessels, and $115.3 million under sale and leaseback financing transactions. As of September 30, 2023, five vessels were unencumbered.
Interest and other finance expenses for the third quarter of 2024 was $12.6 million, up from $11.6 million for the prior year period. The increase was mainly due to (i) the non-cash write off of deferred financing costs of $2.7 million on the full repayments of six of our credit facilities and two of our sale and leaseback agreements, (ii) a prepayment fee of $0.7 million on the full repayment of the sale and leaseback agreement with CMBFL and (iii) a prepayment fee of $0.2 million on the partial repayment of the Macquarie Credit Facility. The blended cost of debt, taking into account our interest rate caps, has significantly decreased from approximately 4.55% for the third quarter of 2023 to 3.95% for the third quarter of 2024 mainly due to our recent refinancing activity.
Interest and other finance expenses for the nine months ended September 30, 2024 was $32.9 million, down from $33.6 million for the comparative period mainly due to the factors noted above.
Interest income for the third quarter of 2024 was $4.7 million, up from $2.5 million for the prior year period mainly due to higher invested amounts.
Interest income for the nine months period ended September 30, 2024 was $12.5 million, compared to $6.9 million for the comparative period.
Other income/(expenses), net
Other income, net was $1.0 million in the third quarter of 2024, compared to other expenses, net of $0.3 million in the prior year period.
Other income, net was $3.2 million for the nine month period ended September 30, 2024, compared to $0.9 million for the comparative period.
Fair value adjustment on derivatives
In December 2021, we entered into a USD 1 month LIBOR interest rate cap of 0.75% through the fourth quarter of 2026 on $484.1 million of floating rate debt, which reduces over time in line with anticipated debt amortization and represented approximately half of the outstanding floating rate debt. In February 2022, we entered into two additional USD 1-month LIBOR interest rate caps of 0.75% through the fourth quarter of 2026 on the remaining balance of $507.9 million of floating rate debt. As a result of the discontinuation of LIBOR, on July 1, 2023, our interest rate caps have automatically transited to 1 month Compounded SOFR at a net rate of 0.64%. A negative fair value adjustment of $4.2 million for the third quarter of 2024 was recorded through the statement of income. The negative fair value adjustment for the nine month period ended September 30, 2024 was $5.0 million.
Earnings Allocated to Preferred Shares
The Series B Preferred Shares carry a coupon of 8.75%, the cost of which for the third quarter of 2024 was $2.4 million, the same as in the prior year period.
The cost for the nine months ended September 2024 was $7.2 million, the same as for the nine months ended September 30, 2023.
Net Income Available to Common Shareholders
Net income available to common shareholders for the third quarter of 2024 was $78.8 million. Net income available to common shareholders for the prior year period was $82.7 million.
Earnings per share for the third quarter of 2024 was $2.22, a decrease of 5.1% from the earnings per share for the prior year period, which was $2.34.
For the nine months ended September 30, 2024, net income available to common shareholders was $253.9 million. Net income available to common shareholders for the nine months ended September 30, 2023 was $230.3 million.
Earnings per share for the nine months ended September 30, 2024 was $7.20, an increase of 10.9% from the earnings per share for the comparative period, which was $6.49.
Normalized net income (a non-GAAP financial measure) for the third quarter of 2024, was $86.6 million. Normalized net income for the prior year period was $82.4 million.
Normalized net income for the nine months ended September 30, 2024 was $262.3 million, as compared to $231.9 for the comparative period.
Normalized earnings per share (a non-GAAP financial measure) for the third quarter of 2024 was $2.45, an increase of 5.2% from Normalized earnings per share for the prior year period, which was $2.33.
Normalized earnings per share for the nine months ended September 30, 2024 was $7.44, an increase of 13.8% from Normalized earnings per share for the comparative period, which was $6.54.
Fleet
As of September 30, 2024, there were 68 containerships in the fleet.
Vessel Name
Capacityin TEUs
Lightweight(tons)
YearBuilt
Charterer
Earliest CharterExpiry Date
Latest CharterExpiry Date (2)
Daily CharterRate $
CMA CGM Thalassa
11,040
38,577
2008
CMA CGM
4Q25
2Q26
47,200
ZIM Norfolk (1)
9,115
31,764
2015
ZIM
2Q27
4Q27
65,000
Anthea Y (1)
9,115
31,890
2015
MSC
3Q25
4Q25
Footnote (3)
ZIM Xiamen (1)
9,115
31,820
2015
ZIM
3Q27
4Q27
65,000
MSC Tianjin
8,603
34,243
2005
MSC (4)
3Q27
4Q27
Footnote (4)
MSC Qingdao
8,603
34,609
2004
MSC (4)
3Q27
4Q27
Footnote (4)
GSL Ningbo
8,603
34,340
2004
MSC
3Q27
1Q28
Footnote (5)
GSL Alexandra
8,544
37,809
2004
Maersk
3Q25
3Q26
Footnote (6)
GSL Sofia
8,544
37,777
2003
Maersk
3Q25
3Q26
Footnote (6)
GSL Effie
8,544
37,777
2003
Maersk
3Q25
3Q26
Footnote (6)
GSL Lydia
8,544
37,777
2003
Maersk
2Q25
3Q26
Footnote (6)
GSL Eleni
7,847
29,261
2004
Maersk
4Q27
2Q29
16,500 (7)
GSL Kalliopi
7,847
29,261
2004
Maersk
4Q27
2Q29
18,900 (7)
GSL Grania
7,847
29,261
2004
Maersk
4Q27
2Q29
17,750 (7)
Colombia Express (1) (18)
7,072
23,424
2013
Hapag-Lloyd (8)
4Q28
1Q31
Footnote (8)
Kristina (1)
7,072
23,421
2013
CMA CGM (8)
4Q29
4Q31
25,910 (8)
Costa Rica Express (ex Katherine) (1) (18)
7,072
23,403
2013
Hapag-Lloyd (8)
2Q29
3Q31
Footnote (8)
Alexandra (1)
7,072
23,348
2013
Hapag-Lloyd (8)
2Q29
3Q31
Footnote (8)
Mexico Express (ex Alexis) (1)(18)
6,910
23,919
2015
Footnote (8)
3Q29
4Q31
Footnote (8)
Jamaica Express (ex Olivia I) (1)(18)
6,910
23,864
2015
Hapag-Lloyd (8)
3Q29
4Q31
Footnote (8)
GSL Christen
6,840
27,954
2002
OOCL(9)
4Q27
1Q28
20,500 (9)
GSL Nicoletta
6,840
28,070
2002
Maersk
1Q28
2Q28
35,750 (9)
CMA CGM Berlioz
7,023
26,776
2001
CMA CGM
4Q25
2Q26
37,750
Agios Dimitrios
6,572
24,931
2011
MSC (4)
2Q27
3Q27
Footnote (4)
GSL Vinia
6,080
23,737
2004
Maersk
1Q28
4Q29
13,250 (10)
GSL Christel Elisabeth
6,080
23,745
2004
Maersk
1Q28
3Q29
13,250 (10)
GSL Dorothea
5,992
24,243
2001
Maersk
2Q25
3Q26
12,900 (11)
GSL Arcadia
6,008
24,858
2000
Maersk
1Q25
1Q26
12,900 (11)
GSL Violetta
6,008
24,873
2000
Maersk
2Q25
4Q25
18,600 (11)
GSL Maria
6,008
24,414
2001
Maersk
4Q25
1Q27
18,600 (11)
GSL MYNY
6,008
24,876
2000
Maersk
2Q25
1Q26
12,900 (11)
GSL Melita
6,008
24,848
2001
Maersk
3Q25
3Q26
12,900 (11)
GSL Tegea
5,994
24,308
2001
Maersk
3Q25
3Q26
12,900 (11)
Tasman
5,936
25,010
2000
Maersk
1Q25
1Q25
21,500
Dimitris Y (18)
5,936
25,010
2000
ONE
2Q25
3Q25
33,900
Ian H
5,936
25,128
2000
Footnote (12)
4Q27
4Q27
Footnote (12)
GSL Tripoli
5,470
22,109
2009
Maersk
3Q27
4Q27
36,500 (13)
GSL Kithira
5,470
22,259
2009
Maersk
4Q27
1Q28
36,500 (13)
GSL Tinos
5,470
22,068
2010
Maersk
3Q27
4Q27
36,500 (13)
GSL Syros
5,470
22,099
2010
Maersk
4Q27
4Q27
36,500 (13)
Dolphin II
5,095
20,596
2007
OOCL
1Q25
3Q25
53,500
Orca I
