Why Is Global Ship Lease Stock Trading Lower Today?

Global Ship Lease Inc GSL shares are trading lower after the company reported fourth-quarter FY23 results.

Operating revenue grew 8.4% Y/Y to $178.9 million, beating the consensus of $172.0 million. Operating income declined to $78.9 million from $85.1 million a year ago. 

Revenue increased Y/Y due to charter renewals at higher rates on several vessels, the acquisition of four vessels (delivered in the second quarter of 2023), and a decrease in planned and unplanned off-hire days.

Adjusted EBITDA improved by 27.1% Y/Y to $127.1 million. Normalized EPS rose 16.4% Y/Y to $2.49, beating the consensus of $2.35.

Utilization for the quarter was 98.1% compared to 94.2% in the same period of the prior year. Time charter and voyage expenses were $5.4 million, compared to $6.6 million in the prior year quarter.

Vessel operating expenses increased by 3.1% to $47.0 million, with a 1.5% Y/Y decline in average cost per ownership day to $7,505.

As of December 31, 2023, the company had 68 containerships in its fleet. Global Ship Lease generated an operating cash flow of $105.5 million in the quarter.

Dividend: The company declared a dividend of $0.375 per Class A common share payable on March 6, 2024, to shareholders of record as of February 22, 2024.

George Youroukos, Executive Chairman, said, “Trade disruptions in the Red Sea significantly escalated towards the end of the fourth quarter of 2023, resulting in large-scale re-routing of containerships away from the Suez Canal and around the Cape of Good Hope, absorbing substantial effective supply.” 

“Meanwhile, water shortages in the Panama Canal have led to a reduction in the number of vessels that can transit that key waterway, adding further bottlenecks to the global supply chain. Taken together, these two developments have caused a meaningful tightening of containership supply and demand – arresting, and even reversing, the previous downward normalization of charter rates and asset values.”

“It is impossible to predict how long disruptions to the Red Sea and Panama will last, and significant macroeconomic, geopolitical, and regulatory uncertainty remain prominent features of the market outlook.”

Price Action: GSL shares are trading lower by 6.6% at $19.24 on the last check Monday.

Yemen Red Sea | Photo courtesy: Wikimedia