Fourth Quarter and Year Highlights
- Reported operating revenues of
- Reported net loss(1) of
- Generated
- Normalized net income (1)(2), excluding the costs and charges associated with the refinancing, was
- On
- On
- Reduced net debt to
- On
- On
Mr. Webber continued, “Over the course of 2017 and into early 2018, the overall container shipping industry has experienced a significant recovery, as continued strength in underlying freight demand has driven increasing supply/demand tension and upward pressure on both spot charter rates and asset values. Amid this promising market environment, we have been able to achieve satisfactory renewals at EBITDA positive levels with no down time for vessels that have come open. With our consistent long-term cashflows, balance sheet strength, and high-quality fleet,
SELECTED FINANCIAL DATA – UNAUDITED (thousands of U.S. dollars)
Three | Three | |||||||
months ended |
months ended |
Year ended |
Year ended |
|||||
December 31, 2017 |
December 31, 2016 |
December 31, 2017 |
December 31, 2016 |
|||||
Operating Revenues | 37,871 | 41,426 | 158,988 | 166,523 | ||||
Operating (Loss) | (72,183) | (44,902) | (15,324) | (20,480) | ||||
Net (Loss) (1) | (99,824) | (55,072) | (77,328) | (68,157) | ||||
Adjusted EBITDA (2) | 24,835 | 28,578 | 110,281 | 114,747 | ||||
Normalized Net Income (1)(2) | 2,190 | 6,140 | 25,206 | 22,441 |
(1) Net income (loss) and Normalized net income available to common shareholders
(2) 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
Operating Revenues and Utilization
The 18 vessel fleet generated operating revenues from fixed-rate, mainly long-term time charters of
For the year ended
The table below shows fleet utilization for the three months and years ended
Three months ended | Year ended | ||||||
Dec 31, | Dec 31, | Dec 31, | Dec 31, | Dec 31, | Dec 31, | Dec 31, | |
Days | 2017 | 2016 | 2017 | 2016 | 2015 | 2014 | 2013 |
Ownership days | 1,656 | 1,656 | 6,570 | 6,588 | 6,893 | 6,270 | 6,205 |
Planned offhire - scheduled drydock | 0 | (11) | (62) | (100) | (9) | (48) | (21) |
Unplanned offhire | (10) | (1) | (40) | (3) | (7) | (12) | (7) |
Idle time | 0 | 0 | 0 | 0 | (13) | (64) | 0 |
Operating days | 1,646 | 1,644 | 6,468 | 6,485 | 6,864 | 6,146 | 6,177 |
Utilization | 99.4% | 99.3% | 98.4% | 98.4% | 99.6% | 98.0% | 99.5% |
There were four regulatory drydockings in 2017 and six in 2016. Two regulatory drydockings are due in 2018.
Vessel Operating Expenses
Vessel operating expenses, which include costs of crew, lubricating oil, repairs, maintenance and insurance, were
For the year ended
Depreciation
Depreciation for the three months ended
Depreciation for the year ended
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.
In
Charter rates in the spot market and asset values saw improvements through 2017. Whilst market developments are encouraging, taking into account the seasonal as well as cyclical nature of the container shipping industry, we determined that it would nonetheless be appropriate under US GAAP to undertake a fleet-wide review for impairment as at
An impairment review was performed for the three months ended
Including a non-cash impairment charge of
General and Administrative Costs
General and administrative costs were
For the year ended
Other Operating Income
Other operating income in the three months ended
For the year ended
Adjusted EBITDA
As a result of the above, Adjusted EBITDA was
Adjusted EBITDA for the year ended
Interest Expense
Debt at
Debt at
Interest expense for the three months ended
For the year ended
Interest income for the three months ended
Taxation
Taxation for the three months ended
Taxation for the year ended
Earnings Allocated to Preferred Shares
The Series B Preferred Shares carry a coupon of 8.75%, the cost of which for the three months ended
The cost in the year ended
Net (Loss) Available to Common Shareholders and Normalized Net Income
Net loss for the three months ended
Normalized net income for the three months ended
Net loss was
Normalized net income for the year ended
Fleet
The following table provides information about the on-the-water fleet of 18 vessels as at
Remaining | Earliest | Daily | ||||
Charter | Charter | Charter | ||||
Vessel | Capacity | Year | Purchase | Term (2) | Expiry | Rate |
Name | in TEUs (1) | Built | by GSL | (years) | Date | $ |
CMA CGM Matisse | 2,262 | 1999 | Dec 2007 | 2.0 | Sept 21, 2019 | 15,300 |
CMA CGM Utrillo | 2,262 | 1999 | Dec 2007 | 1.9 | Sept 11, 2019 | 15,300 |
Delmas Keta | 2,207 | 2003 | Dec 2007 | 0.7 | Aug 6, 2018 | 7,800 |
Julie Delmas | 2,207 | 2002 | Dec 2007 | 0.7 | Jul 28, 2018 | 7,800 |
Kumasi | 2,207 | 2002 | Dec 2007 | 1.0 - 3.0(3) | Nov 16, 2018 | 9,800 |
Marie Delmas | 2,207 | 2002 | Dec 2007 | 1.0 - 3.0(3) | Nov 16, 2018 | 9,800 |
CMA CGM La Tour | 2,272 | 2001 | Dec 2007 | 2.0 | Sept 20, 2019 | 15,300 |
CMA CGM Manet | 2,272 | 2001 | Dec 2007 | 1.9 | Sept 7, 2019 | 15,300 |
CMA CGM Alcazar | 5,089 | 2007 | Jan 2008 | 3.0 | Oct 18, 2020 | 33,750 |
CMA CGM Château d’If | 5,089 | 2007 | Jan 2008 | 3.0 | Oct 11, 2020 | 33,750 |
CMA CGM Thalassa | 11,040 | 2008 | Dec 2008 | 8.0 | Oct 1, 2025 | 47,200 |
CMA CGM Jamaica | 4,298 | 2006 | Dec 2008 | 5.0 | Sept 17, 2022 | 25,350 |
CMA CGM Sambhar | 4,045 | 2006 | Dec 2008 | 5.0 | Sept 16, 2022 | 25,350 |
CMA CGM America | 4,045 | 2006 | Dec 2008 | 5.0 | Sept 19, 2022 | 25,350 |
CMA CGM Berlioz | 6,621 | 2001 | Aug 2009 | 3.7 | May 28, 2021 | 34,000 |
GSL Tianjin(4) | 8,063 | 2005 | Oct 2014 | 0.9 | Sept 26, 2018 | 11,900 |
OOCL Qingdao(5) | 8,063 | 2004 | Mar 2015 | 1.1 | Jan 1, 2019 | 14,000 |
OOCL Ningbo | 8,063 | 2004 | Sep 2015 | 0.8 | Sep 17, 2018 | 34,500 |
(1) Twenty-foot Equivalent Units. | ||||||
(2) As at December 31, 2017 to mid-point of re-delivery period, updated for subsequent charter extensions. Plus or minus 90 days, other than (i) Julie Delmas and Delmas Keta which are plus or minus 45 days, (ii) Kumasi and Marie Delmas see footnote 3 below, (iii) GSL Tianjin which is now between September 26, 2018 and January 26, 2019 see footnote 4 below, (iv) OOCL Qingdao which is now between January 1, 2019 and March 15, 2019 see footnote 5 below and (v) OOCL Ningbo which is between September 17, 2018 and December 17, 2018, all at charterer’s option. | ||||||
(3) The charters for Kumasi and Marie Delmas were amended in July 2016 to, inter alia, provide us with three consecutive options to extend the charters at $9,800 per day. The first of these options was exercised in July 2017, extending the charters to end 2018. The two remaining options allow us to extend the charters to December 31, 2020 plus or minus 90 days at charterer’s option. The earliest possible re-delivery date, not taking into account our remaining options, is shown in the table. | ||||||
(4) A new time charter for GSL Tianjin, formerly named OOCL Tianjin, with CMA CGM commenced October 25, 2017, immediately upon re-delivery from its previous charter to OOCL, at a fixed rate of $13,000 per day for a period of three to eight months at the charterer’s option. The charter was extended with effect from January 26, 2018 at a fixed rate of $11,900 per day for a period of eight to 12 months, at charterer’s option. The new period is reflected in the table. | ||||||
(5) In February 2018 we agreed to an extension of our charter with OOCL for the OOCL Qingdao. The extension commences in direct continuation of the current charter with effect from March 11, 2018, at a fixed rate of $14,000 per day. Earliest redelivery is now January 1, 2019, with latest redelivery March 15, 2019, at charterer's option. The new period is reflected in the table. |
Conference Call and Webcast
(1) Dial-in: (877) 445-2556 or (908) 982-4670; Passcode: 4072849
Please dial in at least 10 minutes prior to
(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
Annual Report on Form 20F
The Company’s Annual Report for 2017 is on file with the
About
Reconciliation of Non-U.S. GAAP Financial Measures
A. Adjusted EBITDA
Adjusted EBITDA represents net income before interest income and expense including amortization of deferred finance costs, earnings allocated to preferred shares, income taxes, depreciation, amortization and impairment. 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. Our use of Adjusted EBITDA may vary from the use of similarly titled measures by others in our industry.
ADJUSTED EBITDA - UNAUDITED
(thousands of U.S. dollars) | ||||||
Three | Three | |||||
months | months | Year | Year | |||
ended | ended | ended | ended | |||
Dec 31, | Dec 31, | Dec 31, | Dec 31, | |||
2017 | 2016 | 2017 | 2016 | |||
Net (loss) available to common shareholders | (99,824) | (55,072) | (77,328) | (68,157) | ||
Adjust: | Depreciation | 9,394 | 10,415 | 37,981 | 42,805 | |
Impairment | 87,624 | 63,065 | 87,624 | 92,422 | ||
Interest income | (154) | (59) | (489) | (198) | ||
Interest expense | 27,021 | 9,450 | 59,391 | 44,767 | ||
Earnings allocated to preferred shares | 765 | 765 | 3,062 | 3,062 | ||
Income tax | 9 | 14 | 40 | 46 | ||
Adjusted EBITDA | 24,835 | 28,578 | 110,281 | 114,747 | ||
B. Normalized net income
Normalized net income represents net income adjusted for the premium paid on the tender offer for the Notes and the gain made on open market purchases of the Notes, together with the related accelerated amortization of deferred financing costs and original issue discount, and for impairment charges. 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. 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) | |||||
Three | Three | ||||
months | months | Year | Year | ||
ended | ended | Ended | ended | ||
Dec 31, | Dec 31, | Dec 31, | Dec 31, | ||
2017 | 2016 | 2017 | 2016 | ||
Net (loss) available to common shareholders | (99,824) | (55,072) | (77,328) | (68,157) | |
Adjust: | Impairment charge | 87,624 | 63,065 | 87,624 | 92,422 |
Premium paid on redemption of 2019 Notes | 8,657 | --- | 9,047 | 533 | |
Accelerated write off of deferred financing charges related to 2019 Notes | 4,310 | 34 | 4,371 | 134 | |
Accelerated write off of original issue discount related to 2019 notes | 1,423 | 51 | 1,492 | 374 | |
Gain on purchase of 2019 Notes | --- | (1,938) | --- | (2,865) | |
Normalized net income | 2,190 | 6,140 | 25,206 | 22,441 | |
Safe Harbor Statement
This communication contains forward-looking statements. Forward-looking statements provide
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 charterhire in accordance with the charters; - Global Ship Lease’s financial condition and liquidity, including its ability to obtain additional waivers which might be necessary under the existing credit facility or obtain additional financing to fund capital expenditures, vessel 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;
- future acquisitions, business strategy and expected capital spending;
- operating expenses, availability of crew, number of off-hire 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 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 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;
- 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, Inc. | |||||||||||||
Interim Unaudited ConsolidatedStatements of Income | |||||||||||||
(Expressed in thousands of U.S. dollars except share data) | |||||||||||||
Three months ended December |
Year ended |
||||||||||||
31, | December 31, |
||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||
Operating Revenues | |||||||||||||
Time charter revenue | $ | 7,022 | $ | 9,444 | $ | 35,044 | $ | 37,567 | |||||
Time charter revenue – related party | 30,849 | 31,982 | 123,944 | 128,956 | |||||||||
37,871 | 41,426 | 158,988 | 166,523 | ||||||||||
Operating Expenses | |||||||||||||
Vessel operating expenses | 11,179 | 10,814 | 41,858 | 44,096 | |||||||||
Vessel operating expenses – related party | 400 | 400 | 1,599 | 1,599 | |||||||||
Depreciation | 9,394 | 10,415 | 37,981 | 42,805 | |||||||||
Impairment of vessels | 87,624 | 63,065 | 87,624 | 92,422 | |||||||||
General and administrative | 1,458 | 1,675 | 5,301 | 6,297 | |||||||||
Other operating income | (1) | (41) | (51) | (216) | |||||||||
Total operating expenses | 110,054 | 86,328 | 174,312 | 187,003 | |||||||||
Operating Loss | (72,183) | (44,902) | (15,324) | (20,480) | |||||||||
Non Operating Income (Expense) | |||||||||||||
Interest income | 154 | 59 | 489 | 198 | |||||||||
Interest expense | (27,021) | (9,450) | (59,391) | (44,767) | |||||||||
Loss before Income Taxes | (99,050) | (54,293) | (74,226) | (65,049) | |||||||||
Income taxes | (9) | (14) | (40) | (46) | |||||||||
Net Loss | $ | (99,059) | $ | (54,307) | $ | (74,266) | $ | (65,095) | |||||
Earnings allocated to Series B Preferred Shares | (765) | (765) | (3,062) | (3,062) | |||||||||
Net Loss | |||||||||||||
available to Common Shareholders | $ | (99,824) | $ | (55,072) | $ | (77,328) | $ | (68,157) | |||||
Earnings per Share | |||||||||||||
Weighted average number of Class A common shares outstanding | |||||||||||||
Basic (including RSUs without service conditions) | 47,976,722 | 47,867,266 | 47,975,889 | 47,854,351 | |||||||||
Diluted | 47,976,722 | 47,867,266 | 47,975,889 | 47,854,351 | |||||||||
Net loss per Class A common share | |||||||||||||
Basic (including RSUs without service conditions) | $ | (2.08) | $ | (1.15) | $ | (1.61) | $ | (1.42) | |||||
Diluted | $ | (2.08) | $ | (1.15) | $ | (1.61) | $ | (1.42) | |||||
Weighted average number of Class B common shares outstanding | |||||||||||||
Basic and diluted | 7,405,956 | 7,405,956 | 7,405,956 | 7,405,956 | |||||||||
Net income per Class B common share | |||||||||||||
Basic and diluted | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 |
Global Ship Lease, Inc. | ||||||||
Interim Unaudited Consolidated Balance Sheets | ||||||||
(Expressed in thousands of U.S. dollars) | ||||||||
December 31, 2017 |
December 31, 2016 |
|||||||
Assets | ||||||||
Cash and cash equivalents | $ | 73,266 | $ | 54,243 | ||||
Accounts receivable | 72 | 29 | ||||||
Due from related party | 1,932 | 906 | ||||||
Prepaid expenses | 918 | 1,146 | ||||||
Other receivables | 458 | 52 | ||||||
Inventory | 742 | 553 | ||||||
Total current assets | 77,388 | 56,929 | ||||||
Vessels in operation | 597,779 | 719,110 | ||||||
Other fixed assets | 10 | 7 | ||||||
Intangible assets | 7 | 16 | ||||||
Other long term assets | - | 195 | ||||||
Total non-current assets | 597,796 | 719,328 | ||||||
Total Assets | $ | 675,184 | $ | 776,257 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Liabilities | ||||||||
Current portion of long term debt | $ | 40,000 | $ | 31,026 | ||||
Intangible liability – charter agreements | 1,771 | 1,807 | ||||||
Deferred revenue | 2,178 | 1,940 | ||||||
Accounts payable | 1,486 | 963 | ||||||
Due to related party | 2,813 | 1,315 | ||||||
Accrued expenses | 8,788 | 11,664 | ||||||
Total current liabilities | 57,036 | 48,715 | ||||||
Long term debt | 358,515 | 388,847 | ||||||
Intangible liability – charter agreements | 8,011 | 9,782 | ||||||
Deferred tax liability | 17 | 20 | ||||||
Total long term liabilities | 366,543 | 398,649 | ||||||
Total Liabilities | $ | 423,579 | $ | 447,364 | ||||
Commitments and contingencies | - | - | ||||||
Stockholders’ Equity | ||||||||
Class A Common stock – authorized 214,000,000 shares with a $0.01 par value; 47,609,734 shares issued and outstanding (2016 – 47,541,484) |
$ | 476 | $ | 476 | ||||
Class B Common stock – authorized 20,000,000 shares with a $0.01 par value; 7,405,956 shares issued and outstanding (2016 – 7,405,956) |
74 | 74 | ||||||
Series B Preferred shares – authorized 16,100 shares with $0.01 par value; 14,000 shares issued and outstanding (2016 – 14,000) |
- | - | ||||||
Additional paid in capital | 386,748 | 386,708 | ||||||
Accumulated deficit | (135,693 | ) | (58,365 | ) | ||||
Total Stockholders’ Equity | 251,605 | 328,893 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 675,184 | $ | 776,257 | ||||
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, |
||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||
Cash Flows from Operating Activities | |||||||||||||
Net loss | $ | (99,059) | $ | (54,307) | $ | (74,266) | $ | (65,095) | |||||
Adjustments to Reconcile Net loss to Net Cash Provided by Operating Activities | |||||||||||||
Depreciation | 9,394 | 10,415 | 37,981 | 42,805 | |||||||||
Vessel impairment | 87,624 | 63,065 | 87,624 | 92,422 | |||||||||
Amortization of deferred financing costs | 5,159 | 941 | 7,772 | 3,622 | |||||||||
Amortization of original issue discount | 1,640 | 402 | 2,523 | 1,651 | |||||||||
Amortization of intangible liability | (451) | (515) | (1,807) | (2,104) | |||||||||
Share based compensation | 272 | 83 | 272 | 283 | |||||||||
Gain on repurchase of secured notes | - | (1,938) | - | (2,865) | |||||||||
Decrease (increase) in accounts receivable and other assets | 1,464 | 681 | (441) | 219 | |||||||||
(Increase) decrease in inventory | (113) | 37 | (188) | 57 | |||||||||
Increase (decrease) in accounts payable and other liabilities | 5,465 | 9,330 | (3,030) | (1,751) | |||||||||
(Decrease) increase in unearned revenue | (670) | 233 | 238 | 1,144 | |||||||||
Increase (decrease) in related party balances | 465 | (699) | 1,138 | 738 | |||||||||
Unrealized foreign exchange (gain) loss | (4) | 33 | 2 | 26 | |||||||||
Net Cash Provided by Operating Activities | 11,186 | 27,761 | 57,818 | 71,152 | |||||||||
Cash Flows from Investing Activities | |||||||||||||
Net proceeds from sale of vessels | - | - | - | (254) | |||||||||
Cash paid for vessel improvements | (155) | - | (255) | - | |||||||||
Cash paid for other assets | - | - | (8) | (6) | |||||||||
Cash paid for drydockings | - | (2,513) | (4,632) | (6,681) | |||||||||
Net Cash Used in Investing Activities | (155) | (2,513) | (4,895) | (6,941) | |||||||||
Cash Flows from Financing Activities | |||||||||||||
Repurchase of secured notes | (346,287) | (16,061) | (365,788) | (50,997) | |||||||||
Proceeds from issue of secured notes | 356,400 | - | 356,400 | - | |||||||||
Proceeds from drawdown of term loan | 54,800 | - | 54,800 | - | |||||||||
Deferred financing costs incurred | (12,675) | - | (12,675) | - | |||||||||
Repayment of credit facilities | (54,800) | (2,925) | (63,575) | (9,500) | |||||||||
Series B Preferred Shares – dividends paid | (765) | (765) | (3,062) | (3,062) | |||||||||
Net Cash Used in Financing Activities | (3,327) | (19,751) | (33,900) | (63,559) | |||||||||
Net increase in Cash and Cash Equivalents | 7,704 | 5,497 | 19,023 | 652 | |||||||||
Cash and Cash Equivalents at Start of Period | 65,562 | 48,746 | 54,243 | 53,591 | |||||||||
Cash and Cash Equivalents at End of Period | $ | 73,266 | $ | 54,243 | $ | 73,266 | $ | 54,243 | |||||
Supplemental information | |||||||||||||
Total interest paid | $ | 5,161 | $ | 881 | $ | 43,152 | $ | 43,134 | |||||
Income tax paid | $ | 10 | $ | 13 | $ | 46 | $ | 50 | |||||
Investor and Media Contacts:The IGB Group Bryan Degnan 646-673-9701 orLeon Berman 212-477-8438
Source: Global Ship Lease, Inc.