GSL Q1 2023 results

Industry Discussions Shipping News
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05/10
Global Ship Lease (GSL) announced their Q1 2023 results earlier today.

  • Rev of $159.3M (improvement of comparable qtr in 2022)
  • Net income of $72.2M
  • Declared a div of 37.5c/sh for Q1
  • Used their buyback authorization to purchase company shares
  • Subsequent to qtr end, acquired 4 older vessels (2003 or 2004 builds) for $123.3M , but also include 2-years of remaining charters.

Global Ship Lease Reports Results for the First Quarter of 2023 | Seeking Alpha

Vessel acquisitions?
Somewhat of a wash. Charters are decent, but seller also transferred maintenance and eventual disposal responsibilities to GSL. Older vessels generally have higher maintenance costs.

Share buybacks & debt pay-down- both positives. Contract backlog also a positive.

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Perused the presentation slides and read through the CC transcript. I had noticed an item (regarding three of the newly acquired vessels), and it seems like one analyst likely noticed too. At least, he asked a question regarding maintenance of the four vessels. GSL mgmt downplayed the item. You acquire vessels the first half of 2023, then pay for dry dockings in the second half of 2023? Initially, I said “Meh” as in not impressed. Now, I’m even less impressed with the deal.
Revenue side:

  • $76.6M of firm EBITDA over two years, $95.3M IF all options are exercised (Note the step down for the optional period)
  • Scrap value maybe $70M today, but uncertain in 2.5 years time

Cost:

  • Acquisition cost of $123.3M
  • Dry docking: At least $2.1M * 3 = $6.3M
  • Financing costs
  • G&A costs

The payoff on the deal seems to hinge on whether GSL can secure employment for the vessel beyond year two. GSL mgmt talk up the merits of the four vessels, but they will still be 21-to-22 year old vessels in two years time.

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I did some research on GSL and got some in the $18.50 range. Its tracking nicely on the chart so far…doc

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@physician - Don’t get me wrong, I do like GSL as a company. However, my above point is just to suggest one does have to filter the data provided by mgmt.

As far as valuation, I would suggest higher than $18.50 as GSL repurchased some shares @ $18.69 My own analysis says BV $20 - $23