Global Ship Lease(GSL) - 2023 Q2 - Quarterly Report

Filing Information This section outlines the Form 6-K filing details, registrant information, and official signatures for Global Ship Lease, Inc SEC Filing Details This chapter details the Form 6-K report filed by Global Ship Lease, Inc. for August 2023 as a foreign private issuer - The filing is a Form 6-K report for August 2023, submitted by Global Ship Lease, Inc. as a foreign private issuer[1][2] Registrant Information Global Ship Lease, Inc. is the registrant, headquartered in London, UK, filing annual reports under Form 20-F - Global Ship Lease, Inc. is the registrant, headquartered in London, UK, and files annual reports on Form 20-F[2][3] Signatures The report was signed by Ian J. Webber, CEO of Global Ship Lease, Inc., on August 3, 2023 - The report was signed by Ian J. Webber, CEO of Global Ship Lease, Inc., on August 3, 2023[11][12] Management's Discussion and Analysis of Financial Condition and Results of Operations This section discusses Global Ship Lease, Inc.'s financial condition, operational results, fleet, recent developments, and critical accounting policies Introduction and Forward-Looking Statements This section discusses H1 2023 and 2022 financial results, cautioning that actual outcomes may differ from forward-looking statements due to inherent risks - The discussion covers financial performance for the six months ended June 30, 2023 and 2022, with a cautionary note on forward-looking statements due to inherent risks[14][16][18] Company Overview and Industry Context Global Ship Lease, Inc. owns 68 containerships, with financial results influenced by volatile charter rates, utilization, and market conditions - Global Ship Lease, Inc. owns 68 containerships with a total capacity of 375,406 TEU and an average age of 16.7 years as of June 30, 2023[19] - The average remaining charter term was 2.3 years (TEU-weighted) as of June 30, 2023, with future rates dependent on market conditions[20] - The container shipping industry experienced a robust recovery from late 2020 through mid-2022, but now faces downward pressure on demand and charter rates due to macro uncertainty, the conflict in Ukraine, and elevated global inflation[23] Vessel Management Vessel technical and commercial management are outsourced to related parties, Technomar Shipping Inc. and Conchart Commercial Inc - Technomar Shipping Inc. provides day-to-day technical management for all vessels, with a daily management fee of Euro 750 per vessel from January 1, 2023 (up from Euro 715 in 2022)[25][26] - Conchart Commercial Inc. provides commercial management, including marketing and employment negotiation, receiving a 1.00% commission on vessel sale and purchase transactions[29][30] - Both Technomar and Conchart are related parties, with the Executive Chairman being the founder/majority owner of Technomar and sole owner of Conchart[25][29][31] Operating Fleet Details This section details the company's 68-vessel containership fleet as of June 30, 2023, including capacity, charterers, and expiry dates Fleet Overview (Selected Vessels) as of June 30, 2023 | Vessel Name | Capacity in TEUs | Year Built | Charterer | Earliest Charter Expiry Date | Latest Charter Expiry Date | Daily Charter Rate $ | |:---|:---|:---|:---|:---|:---|:---| | CMA CGM Thalassa | 11,040 | 2008 | CMA CGM | 4Q25 | 2Q26 | 47,200 | | ZIM Norfolk | 9,115 | 2015 | ZIM | 2Q27 | 4Q27 | 65,000 | | Anthea Y | 9,115 | 2015 | COSCO | 3Q25 | 4Q25 | 38,000 | | MSC Tianjin | 8,603 | 2005 | MSC | 2Q24 | 3Q24 | 19,000 | | Mary | 6,927 | 2013 | CMA CGM | 4Q28 | 1Q31 | 25,910 | | GSL Christen | 6,840 | 2002 | Maersk | 3Q23 | 1Q24 | 35,000 | | Tasman | 5,936 | 2000 | Maersk | 4Q23 | 2Q24 | 20,000 | | Dolphin II | 5,095 | 2007 | OOCL | 1Q25 | 3Q25 | 53,500 | | GSL Rossi | 3,421 | 2012 | ZIM | 1Q26 | 3Q26 | 38,875 | | GSL Elizabeth | 2,741 | 2006 | ONE | 3Q23 | 3Q23 | 18,750 | - Anthea Y was forward fixed for 24 months +/- 30 days, commencing upon expiry of the existing charter in 3Q or 4Q23[37] - Four 8,544 TEU vessels (tbr GSL Alexandra, tbr GSL Sofia, tbr GSL Effie, GSL Lydia) were delivered in 2Q23 with minimum firm periods of 24 months[38] Recent Developments Recent developments include four vessel acquisitions, a new credit facility, LIBOR to SOFR transition, and additional share repurchase authorization - Acquired four 8,544 TEU vessels in May and June 2023 for $123.3 million, financed partly by a new $76.0 million credit facility[47] - Loan agreements (except Neptune) and interest rate caps transitioned from LIBOR to 1-month Compounded SOFR at 0.64% on July 1, 2023[48] - Repurchased 967,242 Class A common shares for $17.0 million during H1 2023; an additional $40.0 million share buyback authorization was approved post-June 30, 2023[49] Critical Accounting Policies This section outlines critical accounting policies for vessel valuation, impairment, revenue recognition, leases, and fair value measurement of financial instruments Vessels in Operation and Impairment Vessels are depreciated over 30 years to a $400 per LWT residual value, with impairment tests performed when necessary; no triggers in H1 2023 - Vessels are depreciated over an estimated useful life of 30 years to a residual value of $400 per LWT[55][56] - No impairment test was performed for the six months ended June 30, 2023, as no triggering events were identified[62][75] - An impairment loss of $3.0 million was recorded for one vessel asset group in H2 2022, reducing its carrying value from $9.0 million to $6.0 million, due to pressure on spot market charter rates[76] Intangible Assets and Liabilities - Charter Agreements Intangible assets/liabilities from charter agreements are recorded at fair value and amortized over the lease term, based on market rates - Intangible assets/liabilities are recognized for above/below market charter rates on acquired vessels, amortized over the lease term[63] Revenue Recognition and Leases Time charter revenues are recognized straight-line, with the company acting as lessor and certain sale-leasebacks treated as financial liabilities - Time charter revenues are recognized on a straight-line basis over the charter period, including exercisable options, with differences between invoiced and recognized revenue classified as deferred revenue[64] - Six sale and leaseback transactions are accounted for as financial liabilities (failed sales) because the company is required to repurchase the vessels at the end of the lease term[69] Fair Value Measurement and Financial Instruments Financial instruments, including derivative assets like interest rate caps, are measured at fair value using a three-level hierarchy - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than active market prices), and Level 3 (unobservable inputs)[73][74] - Derivative assets, specifically interest rate caps, are valued using Level 2 inputs[79] Derivative Asset Value | Date | Derivative Asset (in millions USD) | |:---|:---| | June 30, 2023 | $56.9 | | December 31, 2022 | $63.5 | Derivative Instruments and Risk Management Interest rate caps are used as cash flow hedges for variable rate borrowings, with ongoing effectiveness assessment and management of other financial risks - Interest rate caps with an aggregate notional amount of $484.1 million (December 2021) and $507.9 million (February 2022) were purchased to hedge variable rate borrowings[86][90] - One interest rate cap ($253.9 million) is designated as a cash flow hedge, with fair value changes recorded in OCI and reclassified to interest expense as the hedged transaction affects earnings[88][90] - A portion of the hedge was deemed ineffective as of June 30, 2023, resulting in a reclassification of $176 thousand from OCI to the income statement[91] Results of Operations H1 2023 saw increased operating revenues and net income, driven by higher charter rates and fleet additions, despite rising operating expenses Consolidated Income Statement Summary The consolidated income statement shows significant increases in net income and EPS for H1 2023 compared to H1 2022 Consolidated Income Statement Summary (Six Months Ended June 30) | Metric (in millions USD) | 2023 | 2022 | |:---|:---|:---| | Total Operating Revenues | 321.4 | 308.1 | | Operating Income | 170.2 | 167.5 | | Net Income | 152.4 | 125.9 | | Net Income available to Common Shareholders | 147.6 | 121.2 | | Earnings per Share (Basic) | $4.15 | $3.31 | Revenue and Utilization Analysis H1 2023 operating revenues rose 4.3% to $321.4 million due to fleet growth and higher rates, despite slightly lower 94.6% utilization - Revenue from fixed-rate time-charters increased by $13.3 million (4.3%) to $321.4 million in H1 2023, driven by fleet additions and higher charter renewal rates[96] - The increase was partially offset by an $18.4 million credit from amortization of intangible liabilities and a net increase in off-hire and idle days (630 days in H1 2023 vs. 575 in H1 2022)[96] Fleet Utilization (Six Months Ended June 30) | Metric | 2023 | 2022 | |:---|:---|:---| | Ownership days | 11,773 | 11,765 | | Operating days | 11,143 | 11,190 | | Utilization | 94.6% | 95.1% | Operating Expenses Analysis Vessel operating expenses increased 6.6% to $86.2 million in H1 2023 due to inflation and higher costs, with time charter expenses also rising - Vessel operating expenses increased by 6.6% to $86.2 million in H1 2023, with average cost per ownership day rising 6.5% to $7,319[99] - Key drivers for increased vessel operating expenses include inflation, higher repair/maintenance costs, increased crew salaries and travel, higher lubricant consumption, and increased management fees[99] - Time charter and voyage expenses increased by 28.2% to $12.1 million in H1 2023, primarily due to higher commissions on charter renewals and increased bunker fuel costs for off-hire days[100] - Depreciation and amortization increased to $43.4 million (from $40.1 million) due to net additions of three vessels and 14 drydockings[101] - General and administrative expenses decreased to $9.5 million (from $10.3 million) due to lower stock-based compensation and a one-off expense in the prior year[102] Non-Operating Income and Expenses H1 2023 saw a significant decrease in interest and other finance expenses due to fewer one-off costs, alongside increased interest income - Interest and other finance expenses decreased from $48.7 million in H1 2022 to $22.0 million in H1 2023, mainly due to the absence of $19.1 million in prepayment fees and deferred financing cost write-offs from prior year debt repayments[105] - Interest income increased from $0.5 million in H1 2022 to $4.4 million in H1 2023[106] - Fair value adjustment on derivative assets was a negative $1.4 million in H1 2023, compared to a positive $6.6 million in H1 2022, for the interest rate cap not designated as a cash flow hedge[108] Net Income and EPS Net income available to common shareholders increased 21.8% to $147.6 million, with basic EPS rising 25.4% to $4.15 in H1 2023 - Net income available to common shareholders increased to $147.6 million in H1 2023, up from $121.2 million in H1 2022[110] - Basic earnings per share increased by 25.4% to $4.15 in H1 2023, compared to $3.31 in H1 2022[111] Liquidity and Capital Resources This section analyzes the company's liquidity, cash flow drivers, detailed cash flow statements, debt structure, and market risk exposures Liquidity Overview and Cash Flow Drivers Operating cash flow is driven by predictable charter revenues, with $259.0 million in cash and equivalents as of June 30, 2023 - Operating cash flow is primarily derived from charter contracts, less operating expenses, drydocking costs, interest, and debt amortization[113][114] - The company maintains a minimum group liquidity of $20.0 million and intends to pay quarterly dividends of approximately $2.4 million on Series B Preferred Shares[115] Cash and Cash Equivalents (as of June 30, 2023) | Category | Amount (in millions USD) | |:---|:---| | Cash and cash equivalents | $259.0 | | Restricted cash | $161.9 | | Time deposits | $12.6 | | Free available cash (associated with covenants) | $23.0 | Cash Flow Statement The cash flow statement shows increased net cash from operating activities and substantially more cash used in investing activities for H1 2023 Consolidated Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity (in millions USD) | 2023 | 2022 | |:---|:---|:---|\n| Net cash provided by operating activities | $200.5 | $143.1 | | Net cash used in investing activities | $(150.1) | $(20.7) | | Net cash used in financing activities | $(73.9) | $(17.7) | | Net (decrease)/increase in cash and cash equivalents and restricted cash | $(23.5) | $104.7 | | Cash and cash equivalents and restricted cash at end of period | $246.4 | $300.3 | Analysis of Cash Flows Operating cash flow increased due to higher net income, investing cash flow rose for vessel acquisitions, and financing cash flow increased from debt and share repurchases Operating Activities Net cash from operating activities increased to $200.5 million in H1 2023, driven by higher net income and deferred revenue - Net cash provided by operating activities was $200.5 million in H1 2023, an increase from $143.1 million in H1 2022[125][126] - This increase was mainly due to higher net income ($152.4 million vs. $125.9 million) and an increase in deferred revenue ($12.2 million vs. $0.6 million)[125][126] Investing Activities Cash used in investing activities significantly increased to $150.1 million in H1 2023, primarily for four vessel acquisitions - Cash used in investing activities increased from $20.7 million in H1 2022 to $150.1 million in H1 2023[127][128] - The primary driver was the acquisition of four vessels for $123.3 million, in addition to $10.4 million for vessel improvements and $18.3 million for drydockings[127] Financing Activities Cash used in financing activities increased to $73.9 million in H1 2023, driven by debt amortization, share repurchases, and dividends - Cash used in financing activities was $73.9 million in H1 2023, compared to $17.7 million in H1 2022[129][130] - Key uses of cash included $100.3 million in debt amortization, $17.0 million for Class A common share repurchases, and $31.5 million in total dividend payments[129] - A $76.0 million drawdown from a new credit facility partially offset these uses[129] Indebtedness Total debt was $925.3 million as of June 30, 2023, with most loans transitioned to SOFR, and the company remains covenant compliant Debt Structure and Transition to SOFR Total debt was $925.3 million as of June 30, 2023, with most loan agreements and interest rate caps transitioned from LIBOR to SOFR Debt Breakdown (as of June 30, 2023) | Category | Amount (in millions USD) | |:---|:---|\n| Secured bank debt | $491.3 | | 2027 USPP Notes | $310.6 | | Sale and leaseback financing | $123.4 | | Total Debt | $925.3 | - All loan agreements (except Neptune sale and leaseback) have transitioned from LIBOR to SOFR, and interest rate caps moved to 1-month Compounded SOFR at 0.64% on July 1, 2023[134] Specific Credit Facilities and Sale & Leaseback Agreements This section details various credit facilities and sale-leaseback agreements, including the new Macquarie facility and 2027 USPP Notes, with their terms - A new $76.0 million Macquarie Credit Facility was entered into in May 2023 to finance four 8,544 TEU vessels, with a SOFR + 3.5% interest rate and maturity in May 2026[135][137] - The 2027 USPP Notes have an outstanding balance of $310.6 million as of June 30, 2023, with a fixed interest rate of 5.69% and maturity in July 2027, secured by 20 vessels[139][142] - Other significant facilities include the Syndicated Senior Secured Credit Facility ($165.2 million outstanding, SOFR + 3.0%), and various facilities with E.SUN, MICB, Cathay, Taishin, Sinopac, Deutsche Bank, and HCOB, as well as sale and leaseback agreements with CMBFL and Neptune[133][145][147][152][154][157][160][164][170][173][177][179] Covenants and Security Debt agreements include financial covenants for liquidity and collateral value, plus restrictive covenants, all of which were met as of June 30, 2023 - Financial covenants require maintaining minimum liquidity ($20.0 million at group level) and collateral vessel market value (120%-143% of outstanding debt)[181] - Restrictive covenants limit additional indebtedness, dividend payments, and changes in business nature or vessel management[181] - As of June 30, 2023, the company was in compliance with all financial covenants[181] Debt Repayment A $2.8 million debt repayment occurred in March 2023 following a vessel sale, with sufficient funds expected for future obligations - Repaid $2.8 million on the $140.0 Million HCOB, CACIB, ESUN, CTBC, Taishin Credit Facility in March 2023 following the sale of GSL Amstel[182] - The company expects funds generated and retained to be sufficient for operating needs, working capital, drydocking, interest, and debt repayment for the next twelve months[184] Market Risks and Off-Balance Sheet Arrangements The company hedges interest rate risk, faces minimal foreign exchange risk, notes inflationary pressures, and has no material off-balance sheet arrangements - All $614.7 million of floating rate debt is currently hedged with interest rate caps, mitigating interest rate risk[186][188] - Foreign currency exchange risk is not significant as the functional currency is USD, and most revenues and costs are denominated in USD[189] - Inflationary pressure, partly due to the conflict in Ukraine, may increase operating expenses such as spares, supplies, transportation, drydocking, and general & administrative costs[190] - The company has no material off-balance sheet arrangements[191] Interim Unaudited Condensed Consolidated Financial Statements This section presents the interim unaudited condensed consolidated financial statements, including balance sheets, income, cash flows, equity changes, and comprehensive notes Index to Financial Statements This section provides an index to the interim unaudited condensed consolidated financial statements and their accompanying notes - The index lists the unaudited condensed consolidated financial statements and their corresponding page numbers[194] Condensed Consolidated Balance Sheets The balance sheets present the company's financial position as of June 30, 2023, with total assets of $2,192.9 million and total liabilities of $1,120.6 million Condensed Consolidated Balance Sheet Highlights (in thousands USD) | Metric | June 30, 2023 | December 31, 2022 | |:---|:---|:---|\n| Total Current Assets | $223,220 | $237,047 | | Total Non-Current Assets | $1,969,649 | $1,869,168 | | TOTAL ASSETS | $2,192,869 | $2,106,215 | | Total Current Liabilities | $289,926 | $261,766 | | Total Long-Term Liabilities | $830,701 | $877,958 | | TOTAL LIABILITIES | $1,120,627 | $1,139,724 | | Total Shareholders' Equity | $1,072,242 | $966,491 | Condensed Consolidated Statements of Income The income statements detail H1 2023 and 2022 revenues and expenses, showing $152.4 million net income and $4.15 basic EPS for H1 2023 Condensed Consolidated Statements of Income (in thousands USD) | Metric | Six months ended June 30, 2023 | Six months ended June 30, 2022 | |:---|:---|:---|\n| Time charter revenues | $316,300 | $288,100 | | Amortization of intangible liabilities-charter agreements | $5,100 | $20,000 | | Total Operating Revenues | $321,400 | $308,100 | | Vessel operating expenses | $86,200 | $80,900 | | Time charter and voyage expenses | $12,100 | $9,500 | | Depreciation and amortization | $43,400 | $40,100 | | General and administrative expenses | $9,500 | $10,300 | | Operating Income | $170,200 | $167,500 | | Interest income | $4,400 | $500 | | Interest and other finance expenses | $(22,000) | $(48,700) | | Fair value adjustment on derivative asset | $(1,400) | $6,600 | | Net Income | $152,400 | $125,900 | | Net Income available to Common Shareholders | $147,600 | $121,200 | | Basic Earnings per Class A common share | $4.15 | $3.31 | | Diluted Earnings per Class A common share | $4.08 | $3.25 | Condensed Consolidated Statements of Comprehensive Income The comprehensive income statements show total comprehensive income of $144.1 million for H1 2023, including an unrealized loss on derivative assets Condensed Consolidated Statements of Comprehensive Income (in thousands USD) | Metric | Six months ended June 30, 2023 | Six months ended June 30, 2022 | |:---|:---|:---|\n| Net Income available to Common Shareholders | $147,612 | $121,157 | | Unrealized (loss)/gain on derivative assets (Cash Flow Hedge) | $(5,231) | $22,914 | | Amortization of interest rate cap premium | $1,936 | $129 | | Amounts reclassified to earnings | $(176) | - | | Total Other Comprehensive (Loss)/Income | $(3,471) | $23,043 | | Total Comprehensive Income | $144,141 | $144,200 | Condensed Consolidated Statements of Cash Flows The cash flow statements detail cash generated from operating, used in investing, and used in financing activities for H1 2023 and 2022 Condensed Consolidated Statements of Cash Flows (in thousands USD) | Cash Flow Activity | Six months ended June 30, 2023 | Six months ended June 30, 2022 | |:---|:---|:---|\n| Net cash provided by operating activities | $200,528 | $143,070 | | Net cash used in investing activities | $(150,206) | $(20,702) | | Net cash used in financing activities | $(73,850) | $(17,709) | | Net (decrease)/increase in cash and cash equivalents and restricted cash | $(23,528) | $104,659 | | Cash and cash equivalents and restricted cash at end of period | $246,402 | $300,301 | | Cash paid for interest | $33,329 | $25,297 | | Cash received from interest rate caps | $15,916 | $254 | Condensed Consolidated Statements of Changes in Shareholders' Equity The statements of changes in shareholders' equity detail movements in common shares, preferred shares, capital, retained earnings, and AOCI for H1 2023 and 2022 Shareholders' Equity Changes (in thousands USD, except share data) | Metric | Balance at Dec 31, 2022 | H1 2023 Changes | Balance at Jun 30, 2023 | |:---|:---|:---|:---|\n| Number of Common Shares | 35,990,288 | (824,374) | 35,165,914 | | Common Shares (par value) | $359 | $(8) | $351 | | Additional paid in capital | $688,262 | $(11,691) | $676,571 | | Retained Earnings | $246,390 | $120,921 | $367,311 | | Accumulated other comprehensive income | $31,480 | $(3,471) | $28,009 | | Total Shareholders' Equity | $966,491 | $105,751 | $1,072,242 | Notes to the Interim Unaudited Condensed Consolidated Financial Statements These notes provide detailed disclosures on business, accounting policies, vessel operations, intangible liabilities, debt, related parties, and share capital Description of Business Global Ship Lease, Inc. owns and charters 68 containerships, with recent Q2 2023 acquisitions and one vessel sale - The company's business is owning and chartering out containerships to liner companies[211] - During Q2 2023, the company purchased four 8,544 TEU vessels for $123.3 million and sold one vessel (GSL Amstel)[215][216] - As of June 30, 2023, the fleet consisted of 68 containerships with an average TEU-weighted age of 16.7 years[216] Summary of Significant Accounting Policies and Disclosures This section outlines significant accounting policies, including basis of presentation, estimates, vessel accounting, revenue, leases, fair value, and derivative instruments - The financial statements are unaudited and prepared in accordance with U.S. GAAP, requiring management estimates[223][233] - ASU 2022-06 defers the sunset date for LIBOR transition accounting relief to December 31, 2024; the company applied modification accounting for one contract with no material impact[228] - The COVID-19 pandemic's long-term economic impact remains uncertain, potentially affecting vessel rates, operations, and cash flows, requiring increased judgment in estimates[230][231] Vessels in Operation This section details vessel cost, depreciation, and net book value, including H1 2023 acquisitions and disposals, with 63 vessels collateralized Vessels in Operation (in thousands USD) | Metric | As of Dec 31, 2022 | H1 2023 Changes | As of Jun 30, 2023 | |:---|:---|:---|:---|\n| Vessel Cost, as adjusted for Impairment | $1,886,158 | $128,150 | $2,014,308 | | Accumulated Depreciation | $(262,851) | $(34,679) | $(297,530) | | Net Book Value | $1,623,307 | $92,471 | $1,716,778 | - Acquired four 8,544 TEU vessels in May and June 2023 for an aggregate purchase price of $123.3 million[285] - Sold GSL Amstel on March 23, 2023, for net proceeds of $5.94 million[286] - As of June 30, 2023, 20 vessels were collateralized under 2027 Secured Notes, 43 under loan facilities, and five vessels were unencumbered[289] Intangible Liabilities - Charter Agreements Intangible liabilities from below-market charter agreements decreased to $8.7 million as of June 30, 2023, due to amortization and disposals Intangible Liabilities - Charter Agreements (in thousands USD) | Metric | June 30, 2023 | December 31, 2022 | |:---|:---|:---|\n| Opening balance | $14,218 | $55,376 | | Disposals | $(476) | - | | Amortization | $(5,045) | $(41,158) | | Total | $8,697 | $14,218 | - Amortization income from intangible liabilities was $5.0 million in H1 2023, significantly lower than $23.4 million in H1 2022[293] - The weighted average useful life for remaining intangible liabilities is 1.46 years[295] Derivative Asset The derivative asset, mainly interest rate caps, decreased to $56.9 million as of June 30, 2023, reflecting an unrealized loss and fair value adjustment Derivative Asset (in thousands USD) | Metric | June 30, 2023 | December 31, 2022 | |:---|:---|:---|\n| Opening balance | $63,503 | $7,227 | | Unrealized (loss)/gain on derivative assets | $(5,231) | $31,221 | | Fair value adjustment on derivative asset | $(1,368) | $9,685 | | Closing balance | $56,904 | $63,503 | | Cash received from interest rate caps (H1) | $15,916 | $0 | - A negative fair value adjustment of $1.4 million was recorded in H1 2023 for the interest rate cap not designated as a cash flow hedge[297] Long-Term Debt Total borrowings decreased to $925.3 million as of June 30, 2023, with detailed breakdowns of credit facilities, sale-leasebacks, and repayment schedules Long-Term Debt Summary (in thousands USD) | Category | June 30, 2023 | December 31, 2022 | |:---|:---|:---|\n| Total credit facilities | $801,932 | $807,866 | | Total Sale and Leaseback Agreements | $123,321 | $141,659 | | Total borrowings | $925,253 | $949,525 | | Current portion of long-term debt | $(204,140) | $(189,832) | | Deferred financing costs | $(13,440) | $(15,136) | | Non-current portion of Long-Term Debt | $707,673 | $744,557 | Maturities of Long-Term Debt (subsequent to June 30, 2023, in thousands USD) | Period ending | Amount | |:---|:---|\n| June 30, 2024 | $204,140 | | June 30, 2025 | $173,677 | | June 30, 2026 | $200,629 | | June 30, 2027 | $192,992 | | June 30, 2028 and thereafter | $153,815 | | Total | $925,253 | - The company was in compliance with all debt covenants as of June 30, 2023, and December 31, 2022[376] Related Party Transactions Related party transactions involve ship management services from Technomar and Conchart, both controlled by the Executive Chairman; CMA CGM is no longer a related party - Technomar Shipping Inc. (Executive Chairman is significant shareholder) provided $8.9 million in technical management fees in H1 2023 (vs. $8.6 million in H1 2022)[381] - Conchart Commercial Inc. (Executive Chairman is sole owner) provided $3.7 million in commercial management fees in H1 2023 (vs. $3.0 million in H1 2022)[383] - CMA CGM was no longer a related party after selling its shares on May 27, 2022[377] Commitments and Contingencies Minimum contracted future charter hire receivables totaled $1,827.8 million as of June 30, 2023, based on earliest expiry dates Minimum Contracted Future Charter Hire Receivable (as of June 30, 2023, in thousands USD) | Period ending | Amount | |:---|:---|\n| June 30, 2024 | $653,311 | | June 30, 2025 | $481,418 | | June 30, 2026 | $271,997 | | June 30, 2027 | $220,782 | | Thereafter | $200,244 | | Total | $1,827,752 | Share Capital As of June 30, 2023, 35,165,914 Class A common shares were outstanding after H1 2023 repurchases, alongside 4,359,190 Depositary Shares - As of June 30, 2023, 35,165,914 Class A common shares were outstanding[386][389] - The company repurchased 967,242 Class A common shares during H1 2023[389] - 4,359,190 Depositary Shares (representing 43,592 Series B Preferred Shares) were outstanding as of June 30, 2023, with an 8.75% cumulative perpetual dividend[390][394] Share-Based Compensation The 2019 Omnibus Incentive Plan provides awards to directors, officers, and employees, with $5.2 million in stock-based compensation expense in H1 2023 - The 2019 Plan provides incentive awards to directors, officers, and employees, with vesting conditioned on service and stock price thresholds[398][401][402] - In March 2023, amendments were approved for senior management and non-employee director awards, including a 10% forfeiture of the second tranche and a revised vesting price of $21.00 for the third tranche[404] - Stock-based compensation expense was $5.2 million in H1 2023 (including a $451 thousand effect from the amendment), compared to $5.7 million in H1 2022[407] Earnings per Share Basic earnings per share for Class A common shares was $4.15 for H1 2023, calculated using the two-class method Earnings per Share (Six Months Ended June 30) | Metric | 2023 | 2022 | |:---|:---|:---|\n| Net income available to common shareholders | $147,612 | $121,157 | | Basic weighted average number of common shares outstanding | 35,533,273 | 36,578,297 | | Basic earnings per share (Class A) | $4.15 | $3.31 | | Diluted earnings per share (Class A) | $4.08 | $3.25 | Subsequent Events This section details key events after June 30, 2023, including share repurchase authorizations, dividend declarations, and the LIBOR to SOFR transition Post-Period End Activities Post-period activities include an additional $40.0 million share repurchase authorization, a Q2 2023 dividend declaration, and the LIBOR to SOFR transition - Board authorized an additional $40.0 million for share repurchases, totaling approximately $43.0 million in remaining capacity[412] - A dividend of $0.375 per Class A common share for Q2 2023 was announced on August 3, 2023, payable on September 4, 2023[413] - All loan agreements (except Neptune) and interest rate caps automatically transitioned from LIBOR to 1-month Compounded SOFR at 0.64% on July 1, 2023[414]