Global Ship Lease (GSL) Q4 2024 Earnings Call March 05, 2025 05:14 PM ET Company Participants Thomas A. Lister - Chief Executive OfficerGeorge Youroukos - Executive ChairmanTassos Psaropoulos - CFO & TreasurerLiam Burke - Managing Director Operator Thank you for standing by and good day everyone. My name is Argy and I will be your conference operator today. At this time, I would like to welcome everyone to the Global Ship Please Q4 twenty twenty four Earnings Conference Call. All lines have been placed on m ...

Global Ship Lease, Inc. (NYSE:GSL) Q4 2024 Earnings Conference Call March 5, 2025 10:30 AM ET Company Participants Thomas Lister - Chief Executive Officer George Youroukos - Executive Chairman Tassos Psaropoulos - Chief Financial Officer Conference Call Participants Liam Burke - B. Riley Operator Thank you for standing by, and good day, everyone. My name is Argy, and I will be your conference operator today. At this time, I would like to welcome everyone to the Global Ship Lease, Inc. 2024Q4 earnings confer ...

4 th Quarter 2024 Results Presentation | 4Q 2024 Results 1 Disclaimer | 4Q 2024 Results 2 This presentation does not constitute or form part of, and should not be construed as, an offer to sell or an invitation, solicitation, or inducement to purchase or subscribe for securities with respect to any transaction, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. This presentation does not constitute either advice or a recommendation re ...

Core Insights - Global Ship Lease, Inc. reported a strong financial performance for the year ended December 31, 2024, with significant increases in both revenue and net income, driven by higher charter rates and fleet expansion [2][3][11]. Financial Performance - 4Q 2024 operating revenue reached $182.4 million, while full year operating revenue totaled $711.1 million, marking a 5.4% increase from 2023 [2][17]. - Net income available to common shareholders for 4Q 2024 was $90.2 million, translating to $2.54 EPS, and for the full year, net income was $344.1 million, or $9.74 EPS, reflecting a 16.6% increase from 2023 [2][38]. - Normalized net income for 4Q 2024 was $90.4 million, with a normalized EPS of $2.55, and for the full year, normalized net income was $352.7 million, or $9.99 normalized EPS, up 10.3% from 2023 [3][39]. Operational Highlights - The company added $884.8 million in contracted revenues during 2024 and early 2025, bringing total contracted revenues to $1.88 billion as of December 31, 2024 [6][11]. - Fleet utilization for 4Q 2024 was 94.5%, down from 98.1% in the prior year, primarily due to increased off-hire days for scheduled drydockings [16][17]. Fleet Management - The company acquired four high-reefer, ECO-9,000 TEU containerships for $274 million, with financing terms set at SOFR + 2.50% [4][11]. - Three older vessels were sold for a total of $54.5 million, significantly above their book value of $24.9 million, as part of the fleet renewal strategy [5][11]. Dividend and Shareholder Returns - The Board of Directors announced a quarterly supplemental dividend increase of $0.075 per share, raising the total annualized dividend to $2.10 per share, a 40% increase from the previous year [7][11]. - The company repurchased 251,772 Class A common shares for approximately $5.0 million in 2024, with a total of $57.0 million spent on share repurchases since Q3 2021 [8][11]. Debt and Financing - As of December 31, 2024, total debt was $691.1 million, down from $823.2 million in the previous year, with a significant reduction in interest expenses due to refinancing [31][34]. - Interest expense for 4Q 2024 was $7.8 million, a decrease from $11.2 million in the prior year, attributed to a lower blended cost of debt [33][34]. Market Outlook - The company expressed confidence in sustaining shareholder value through operational excellence and capital allocation discipline, despite a volatile geopolitical environment [11][10].

Core Viewpoint - Global Ship Lease, Inc. will hold a conference call on March 5, 2025, to discuss its financial results for the fourth quarter and full year 2024, with results to be released before market trading on the same day [1][2]. Company Overview - Global Ship Lease is an independent owner of containerships, operating a diversified fleet of mid-sized and smaller containerships since its inception in December 2007 [3]. - The company was listed on the New York Stock Exchange in August 2008 [3]. Fleet and Capacity - As of September 30, 2024, Global Ship Lease owned 68 containerships with capacities ranging from 2,207 to 11,040 TEU, totaling an aggregate capacity of 376,723 TEU [4]. - Among these, 36 ships are classified as wide-beam Post-Panamax [4]. Chartering and Revenue - The average remaining term of the company's charters, on a TEU-weighted basis, was 2.3 years as of September 30, 2024 [5]. - Contracted revenue, based on the same basis, was reported at $1.78 billion, while total contracted revenue, including options under charterers' control, was $2.15 billion, with a weighted average remaining term of 2.8 years [5].

Core Viewpoint - Global Ship Lease, Inc. has declared a dividend of $0.45 per Class A common share for Q4 2024, to be paid on March 6, 2025, to shareholders of record as of February 24, 2025 [1] Company Overview - Global Ship Lease is a leading independent owner of containerships with a diversified fleet of mid-sized and smaller containerships [2] - The company was incorporated in the Marshall Islands and commenced operations in December 2007, focusing on owning and chartering containerships under fixed-rate charters to top-tier container liner companies [2] - It was listed on the New York Stock Exchange in August 2008 [2] Fleet and Capacity - As of September 30, 2024, Global Ship Lease owned 68 containerships, with capacities ranging from 2,207 to 11,040 TEU, totaling an aggregate capacity of 376,723 TEU [3] - Among these, 36 ships are classified as wide-beam Post-Panamax [3] Charter Terms and Revenue - The average remaining term of the company's charters, on a TEU-weighted basis, was 2.3 years as of September 30, 2024 [4] - Contracted revenue on the same basis was reported at $1.78 billion [4] - Including options under charterers' control and with the latest redelivery date, contracted revenue was $2.15 billion, representing a weighted average remaining term of 2.8 years [4]

Core Insights - Global Ship Lease (GSL) is positioned to continue its earnings-beat streak, particularly in the upcoming report, supported by a history of positive earnings surprises [1][3] - The company reported earnings of $2.45 per share for the most recent quarter, exceeding the expected $2.43, resulting in a surprise of 0.82% [2] - For the previous quarter, GSL's earnings were $2.46 per share against an expectation of $2.27, leading to a surprise of 8.37% [2] Earnings Estimates and Predictions - Recent estimates for Global Ship Lease have been increasing, with a positive Earnings ESP of +1.96%, indicating bullish sentiment among analysts regarding the company's earnings prospects [3][6] - The combination of a positive Earnings ESP and a Zacks Rank 1 (Strong Buy) suggests a high likelihood of another earnings beat [6] - Stocks with a positive Earnings ESP and a Zacks Rank of 3 or better have historically produced positive surprises nearly 70% of the time [4] Earnings ESP Explanation - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions [5] - A positive Earnings ESP enhances the predictive power of earnings surprises, while a negative value does not necessarily indicate an earnings miss [6][7]

Core Viewpoint - The article emphasizes the importance of value investing and highlights specific stocks, Global Ship Lease (GSL) and KNOT Offshore Partners (KNOP), as attractive investment opportunities based on their valuation metrics and earnings outlook. Group 1: Value Investing Trends - Value investing remains a preferred strategy for identifying strong stocks across various market conditions, utilizing fundamental analysis to find undervalued companies [2] - The Zacks Rank system and Style Scores are tools that help investors identify stocks with specific traits, particularly in the "Value" category [3] Group 2: Global Ship Lease (GSL) Metrics - GSL has a Zacks Rank of 1 (Strong Buy) and an A grade for Value, with a current P/E ratio of 2.27, significantly lower than the industry average of 6.57 [4] - The stock's P/B ratio is 0.57, compared to the industry's average of 1.55, indicating it is undervalued [5] - GSL's P/CF ratio stands at 1.76, well below the industry average of 4.27, further supporting its undervaluation [6] Group 3: KNOT Offshore Partners (KNOP) Metrics - KNOP is rated 2 (Buy) with a Value score of A, featuring a P/B ratio of 0.39 against the industry's 1.55 [7] - Over the past year, KNOP's P/B ratio has fluctuated between 0.32 and 0.57, with a median of 0.40, indicating potential undervaluation [7] Group 4: Overall Investment Outlook - Both GSL and KNOP are highlighted as impressive value stocks, supported by their strong earnings outlook and attractive valuation metrics [8]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Global Ship Lease (GSL) as a strong candidate for value investors due to its favorable financial metrics and strong Zacks Rank [1][2][7]. Group 1: Company Overview - Global Ship Lease (GSL) currently holds a Zacks Rank of 1 (Strong Buy) and an A for Value, indicating strong potential for value investors [4]. - GSL has a P/E ratio of 2.34, significantly lower than its industry's average P/E of 6.19, suggesting it may be undervalued [4]. - The stock's Forward P/E has fluctuated between 2.13 and 3.34 over the past year, with a median of 2.68, further indicating its valuation status [4]. Group 2: Financial Metrics - GSL's P/S ratio stands at 1.17, which is slightly below the industry's average P/S of 1.22, reinforcing its value proposition [5]. - The company has a P/CF ratio of 1.81, compared to the industry's average P/CF of 4.71, indicating a strong cash flow outlook relative to its peers [6]. - Over the past year, GSL's P/CF has ranged from 1.66 to 2.53, with a median of 1.94, highlighting its consistent cash performance [6]. Group 3: Investment Outlook - The combination of GSL's strong earnings outlook and favorable valuation metrics positions it as an impressive value stock at the moment [7].

Financial Performance - Operating revenues for the nine months ended September 30, 2024, were $528,622 thousand, up from $495,901 thousand in the same period of 2023, reflecting an increase of about 6.65%[10] - Net income available to common shareholders for the nine months ended September 30, 2024, was $253,912 thousand, compared to $230,299 thousand in 2023, marking a rise of approximately 10.27%[12] - The company reported a basic earnings per share of $7.20 for the nine months ended September 30, 2024, compared to $6.49 for the same period in 2023, indicating an increase of about 10.92%[10] - Total comprehensive income for the nine months ended September 30, 2024, was $243,301 thousand, up from $227,693 thousand in 2023, reflecting an increase of about 6.85%[12] - Net income for 2024 was $261,064, an increase of 9.95% compared to $237,451 in 2023[15] - Net cash provided by operating activities increased to $324,307, up from $269,549, representing a growth of 20.27%[15] Assets and Liabilities - Total assets increased to $2,238,005 thousand as of September 30, 2024, compared to $2,171,780 thousand as of December 31, 2023, representing a growth of approximately 3.06%[7] - Cash and cash equivalents rose to $260,456 thousand as of September 30, 2024, from $138,640 thousand as of December 31, 2023, showing a significant increase of approximately 88%[7] - Total current liabilities decreased to $255,508 thousand as of September 30, 2024, from $280,440 thousand as of December 31, 2023, a reduction of about 8.87%[7] - Long-term debt, net of current portion, decreased to $528,015 thousand as of September 30, 2024, from $619,175 thousand as of December 31, 2023, a decline of approximately 14.69%[7] - Total shareholders' equity increased to $1,387,380 thousand as of September 30, 2024, compared to $1,184,388 thousand as of December 31, 2023, representing a growth of about 17.14%[7] Cash Flow and Financing Activities - Cash flows used in investing activities decreased significantly to $(33,793) from $(142,165), indicating improved cash management[15] - Proceeds from drawdown of credit facilities amounted to $300,000, a substantial increase from $76,000 in the previous year[15] - Net cash used in financing activities increased to $(192,608) compared to $(143,971) in 2023, reflecting higher repayment of credit facilities[15] - The Company entered into a $300 million senior secured term loan facility on August 7, 2024, to refinance existing debt facilities[118] - The total borrowings as of September 30, 2024, amounted to $687,992, a decrease from $823,178 as of December 31, 2023[111] Fleet and Vessel Management - The fleet comprises 68 containerships with an average age of 18.0 years as of September 30, 2024[25] - The company purchased four 8,544 TEU vessels during Q2 2023 for a total price of $123,300,000[24] - The company completed the sale of GSL Amstel on March 23, 2023, as part of its fleet management strategy[25] - The company has made significant investments in vessels with capacities ranging from 2,207 TEUs to 6,008 TEUs, enhancing its operational capabilities[29] - The company has options for charter extensions for several vessels, providing flexibility in fleet management[31] Impairment and Valuation - The company recorded an impairment loss of $18,830 for two vessel groups as of December 31, 2023, with a total aggregate carrying amount of $43,830, which was written down to their fair value of $25,000[54] - The company performed step one of the impairment assessment for all vessel groups and determined no impairment tests were necessary for the nine months ended September 30, 2024, and 2023[53] - The estimated residual values of the company's vessels are based on a scrap rate of $400 per lightweight ton (LWT)[42] Debt and Covenants - The repayment schedule for long-term debt includes $152,522 thousand due by September 30, 2025, and a total of $687,992 thousand due by September 30, 2029[188] - The company was in compliance with its debt covenants as of September 30, 2024[192] Other Financial Information - The company recognized $16,289 thousand in management fees charged by Technomar for the nine months ended September 30, 2024, compared to $14,072 thousand for the same period in 2023[196] - The company incurred total costs of $2,625 thousand related to the 2024 Senior Secured Term Loan Facility for the nine-month period ended September 30, 2024[189] - The minimum contracted future charter hire receivable for the 68 vessels as of September 30, 2024, totals $1,666,885 thousand[200]