I started a thread on Global Ship Lease (GSL) back in July 2021, and provided a couple of updates over the rest of 2021.
GSL announced Q4 2021 results earlier this week (03/02/22).
High level items
- Operating rev of $153.5M (2021 FY: $448M)
- Net income of of $66.1M (2021 FY: $163.2M)
- Announced dividend of 25c/sh (bumps up 50% to 37.5c/sh in Q1 2022)
- Announced multiple charter agreements or extensions, including new 5-year charters on two of their largest vessels.
Charter rate on each vessel doubles/nearly doubles to $65K daily
- Significant charter backlog added across entire fleet.
The positives I originally outlined
- Revenue growth
- Improved capital structure
- Credit rating upgrade
still hold true.
For #2, the company added a new share repurchase authorization of $40M to be used on an opportunistic basis. If the preferreds are callable, and I’m GSL mgmt, I think buying back the preferred is a better option.
For #3, lower costs on refinanced debt facilities.
A risk I see for GSL is the age of a portion of the fleet. Next year (2023), tougher emission standards go into effect and about 35% of
GSL’s fleet will be 20 years or older. So while 20-yo vessel Kumasi recently snagged a 3-year charter at an elevated rate,
I don’t see that situation repeating as easily next year. In addition, during the 2nd half of 2023 and beyond, newer vessels will have
started delivering. This will put additional pressure on recycling of older tonnage.
Added to my GSL stake in early Dec 2021 @ $22.50/sh. The two motivating factors were
a. Staggered revenue growth model. Two vessels secured 5-year charters. Those qualify as long charters with GSL. Most of the fleet has shorter
charters (1-3 years) which provides GSL the ability to capture good rates during these “roaring” times
b. Steady progression in tackling issues e.g. debt, while rewarding investors (dividend, share buybacks). Don’t expect GSL to be a Dividend
Champion or Dividend Contender. But, if GSL handle operational issues, manage debt, and still manage to have a 4-6% yield, we are good.
Will wait for their 2021 20F (Annual Report) before attempting a fleet valuation update.