Global Ship Lease, an owner of containerships, announced 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.”