Global Ship Lease, Inc., a containership charter owner, announced yesterday its unaudited results for the three months and six months ended June 30, 2017.
Second Quarter and Year To Date Highlights
- Reported operating revenues of $40.3 million for the second quarter 2017. Revenue for the six months ended June 30, 2017 was $79.9 million
- Reported net income available to common shareholders of $6.8 million for the second quarter 2017. For the six months ended June 30, 2017, net income was $13.6 million
- Generated $28.1 million of Adjusted EBITDA(1) for the second quarter 2017. Adjusted EBITDA for the six months ended June 30, 2017 was $56.1 million
- Normalized net income(1) was $7.3 million for second quarter 2017. Normalized net income was $14.1 million for the six months ended June 30, 2017
- Purchased and cancelled on April 21, 2017, $19.5 million principal amount 10.0% First Priority Secured Notes due 2019. Net debt to last 12 months Adjusted EBITDA was 3.1 times at June 30, 2017, down from 3.3 times at December 31, 2016
Ian Webber, Chief Executive Officer of Global Ship Lease, stated, “During the second quarter of 2017, we remained focused on generating strong cashflows from stable, fixed-rate contracts with industry-leading counterparties. The value and consistency of this core strategy was once again evident in our financial results for the quarter.”
Mr. Webber added, “Looking forward, we expect continued firming in the charter market over time, driven by discipline in the placement of new orders, an orderbook heavily skewed towards the largest vessels, elevated scrapping consisting almost entirely of the mid-sized and smaller vessel classes where we focus, and better than expected demand growth. We remain encouraged by the upward movement of the spot charter market throughout 2017 and believe that this should benefit those of our vessels due to become open later this year and early next. By continuing to maximize vessel utilization with top-tier counterparties, actively manage costs, and opportunistically pursue further deleveraging of our stable balance sheet, we believe that Global Ship Lease is well positioned to create long-term value for our shareholders amidst an improving market environment.”
Revenue and Utilization
The 18-vessel fleet generated revenue from fixed-rate, mainly long-term time, charters of $40.3 million in the three months ended June 30, 2017, down $1.0 million (or 2.6%) on revenue of $41.3 million for the comparative period in 2016, due mainly to reduced revenue as a consequence of the amendments to the charters of Marie Delmas and Kumasi effective August 1, 2016, offset by an overall reduction in offhire from a total of 53 days in the three months ended June 30, 2016 to 42 days in the 2017 period. There were 1,638 ownership days in the quarter, the same as in the comparative period in 2016. The 42 days of offhire in the three months ended June 30, 2017 were attributable to 15 days for scheduled dry-dockings and 27 days unplanned offhire, primarily related to a vessel grounding in late March, giving an overall utilization of 97.4%. The affected vessel underwent repairs and was successfully returned to service. In the comparative period of 2016, there were 51 days of planned offhire for scheduled dry-dockings and two days of unplanned offhire, giving a utilization of 96.8%.
For the six months ended June 30, 2017, revenue was $79.9 million, down $4.0 million (or 4.8%) on revenue of $83.9 million in the comparative period, mainly due to the amendments to the charters of Marie Delmas and Kumasi effective August 1, 2016 and an increase in offhire to a total of 92 days in the six months ended June 30, 2017 from 53 in the comparative period.
In the three months ended June 30, 2017, we completed one regulatory dry-docking. There have been a total of four regulatory dry-dockings year to date. One further regulatory dry-docking is scheduled in 2017. Two dry-dockings were completed in the three months ended June 30, 2016, and one further dry-docking was substantially completed. There were a total of six dry-dockings in 2016.
Vessel Operating Expenses
Vessel operating expenses, which include costs of crew, lubricating oil, spares and insurance, as well as bunker fuel when a vessel is offhire or without a charter, were $10.9 million for the three months ended June 30, 2017. The average cost per ownership day in the quarter was $6,635, compared to $6,909 for the comparative period, down $274 or 4.0%. The reductions occurred across several cost categories, most prominently from lower consumption of lubricating oil, reduced insurance costs on renewals and lower expenditure on repairs and maintenance.
For the six months ended June 30, 2017, vessel operating expenses were $21.3 million, or an average of $6,531 per day, compared to $22.7 million in the comparative period, or $6,935 per day.
Depreciation
Depreciation for the three months ended June 30, 2017 was $9.5 million, compared to $10.9 million in the second quarter 2016, with the reduction being due to the effect of lower book values for a number of vessels following impairment write downs taken in the third and fourth quarters 2016.
Depreciation for the six months ended June 30, 2017 was $19.1 million, compared to $21.8 million in the comparative period, with the reduction being due to the reason noted above.
General and Administrative Costs
General and administrative costs were $1.3 million in the three months ended June 30, 2017, the same as in the second quarter of 2016.
For the six months ended June 30, 2017, general and administrative costs were $2.6 million, compared to $3.3 million in the comparative period in 2016, which includes higher legal and professional fees in the three months ended March 31, 2016.
Other Operating Income
Other operating income in the three months ended June 30, 2017 was $6,000, compared to $63,000 in the second quarter of 2016.
For the six months ended June 30, 2017, other operating income was $48,000, compared to $144,000 in the comparative period.
Adjusted EBITDA
As a result of the above, Adjusted EBITDA was $28.1 million for the three months ended June 30, 2017, down from $28.8 million for the three months ended June 30, 2016.
Adjusted EBITDA for the six months ended June 30, 2017 was $56.1 million, compared to $58.1 million for the comparative period.
Interest Expense
Debt at June 30, 2017 comprised amounts outstanding on our Notes, the revolving credit facility and the secured term loan.
Interest expense for the three months ended June 30, 2017, was $11.0 million, compared to $11.1 million for the three months ended June 30, 2016. The reduction of $1.0 million interest paid on our 10.0% Notes on lower amounts outstanding was offset by $0.5 million charges, including premium paid, associated with the excess cashflow offer which retired $19.5 million principal amount of our 10% Notes on April 21, 2017, whereas second quarter 2016 included a $0.5 million gain realized in May 2016 on the purchase in the open market of $4.2 million principal amount of the Notes.
For the six months ended June 30, 2017, interest expense was $22.0 million, compared to $24.2 million for the six months ended June 30, 2016. The reduction is mainly due to lower interest on the lower amount outstanding of our 10% Notes.
Interest income for the three months ended June 30, 2017 was $0.1 million, compared to $38,000 in the comparative quarter in 2016.
Interest income for the six months ended June 30, 2017 was $0.2 million, compared to $0.1 million in the comparative period in 2016.
Taxation
Taxation for the three months ended June 30, 2017 was $6,000, compared to $9,000 in the second quarter of 2016.
Taxation for the six months ended June 30, 2017 was $16,000, compared to $15,000 for the comparative period in 2016.
Earnings Allocated to Preferred Shares
The Series B preferred shares, issued on August 20, 2014, carry a coupon of 8.75%, the cost of which for the three months ended June 30, 2017 was $0.8 million, the same as in the comparative period. The cost was $1.5 million in the six months ended June 30, 2017, again the same as in the comparative period.
Net Income Available to Common Shareholders
Net income available to common shareholders for the three months ended June 30, 2017 was $6.8 million, compared to $6.0 million in the second quarter 2016.
Normalized net income, which excludes the premium paid on the purchase of our 10% Notes in April 2017 under the excess cashflow offer and associated charges, was $7.3 million for the three months ended June 30, 2017, compared to $5.6 million in the second quarter of 2016.
Net income available to common shareholders was $13.6 million for the six months ended June 30, 2017, compared to $10.6 million in the comparative period. Normalized net income for the six months ended June 30, 2017, was $14.1 million. Normalized net income for the six months ended June 30, 2016 which excludes the gain on the purchase of 10% Notes in May 2016 and the premium associated with the tender offer for 10% Notes completed in March 2016, and associated charges, was $11.1 million.
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Source: Global Ship Lease
