GasLog Ltd. and its subsidiaries (“GasLog” or “Group”) (GLOG), an international owner, operator and manager of liquefied natural gas (“LNG”) carriers, yesterday reported its financial results for the quarter ended June 30, 2013.
Highlights
•                 Contracted 2 LNG newbuildings at Samsung Heavy Industries for delivery in 2016. Vessels chartered out to BG Group for minimum 7 years with charterer’s option to extend.
•             Delivery of GasLog Sydney in May and GasLog Skagen in July ahead of schedule with concurrent delivery to the charterer.
•             For the second quarter, GasLog reports Profit of $20.4 million, EBITDA(1) of $33.8 million and earnings per share (“EPS”) of $0.32.
•             Adjusted Profit of $7.1 million, Adjusted EBITDA of $20.4 million and Adjusted EPS was $0.11 for the second quarter.
•             Quarterly dividend of $0.11 per common share is payable on September 13, 2013.
•             GasLog issued a senior unsecured bond of NOK 500,000,000 ($83.2 million) that will mature on June 27, 2018.
•             Strong industry fundamentals, supported by recent positive developments for LNG exports from USA.
CEO Statement
Mr. Paul Wogan, Chief Executive Officer, stated “This has been yet another good quarter for GasLog. Not only did we continue to execute on our existing business plan that we outlined to investors at the time of our initial public offering (“IPO”), we have once again been able to add further growth at attractive returns. The latest 2 newbuildings that we have ordered from Samsung and which, on delivery, will commence 7 year charters to BG, clearly demonstrates the ability of GasLog’s LNG shipping platform to continue to add accretive growth in what we believe will be a positive long term secular trend for the LNG industry. In addition the successful placing of our first bond and the refinancing of our existing loan facility on GAS-two Ltd., demonstrates our ability to access funding from a variety of sources and at competitive rates enabling us to continue to take advantage of attractive opportunities within the sector.”
Dividend Declaration
On August 19, 2013, the Board of Directors declared a quarterly cash dividend of $0.11 per common share payable on September 13, 2013 to stockholders of record as of August 30, 2013.
Delivery of GasLog Sydney and GasLog Skagen ahead of schedule
On May 30, 2013 and July 25, 2013, GasLog took delivery of the GasLog Sydney and the GasLog Skagen, respectively, two LNG carriers of 155,000 cubic meters capacity with tri-fuel diesel electric propulsion constructed by Samsung Heavy Industries Co. Ltd. Both vessels are chartered out to a subsidiary of BG Group plc. The GasLog Sydney is chartered out from its delivery until 2019 with charterer’s option to extend the terms of the charter at specified rates. The GasLog Skagen is chartered out for three years followed by a subsequent five year seasonal charter under which the vessel is committed to BG Group for seven consecutive months for a fixed monthly charter hire and is available to accept other charters for the remaining five months.
Bond Issuance
On June 27, 2013, GasLog Ltd. issued a senior unsecured bond of NOK 500,000,000 ($83.2 million) that will mature on June 27, 2018. The bond bears interest at NIBOR plus margin. Interest payments shall be made in arrears on a quarterly basis. In June 2013, GasLog entered into three cross-currency swaps (“CCSs”) to exchange interest payments and principal on maturity and designated the CCSs as hedges of the variability of the USD functional currency equivalent cash flows on the bond. The effect of these hedges is that on each interest payment date, GasLog will pay fixed interest in U.S. dollars on a notional amount of USD 83,206,215.
Financial Summary
Profit was $20.4 million for the quarter ended June 30, 2013 ($3.6 million loss for the quarter ended June 30, 2012). This increase is mainly attributable to the delivery of the three newbuildings as well as the other factors mentioned below.
EPS was $0.32 for the quarter ended June 30, 2013 (loss per share of $0.06 for the quarter ended June 30, 2012). The increase in EPS is attributable to the increase in profit partially offset by the increase in the weighted average number of shares.
EBITDA(1) was $33.8 million for the quarter ended June 30, 2013 ($2.2 million for the quarter ended June 30, 2012).
Adjusted Profit(1) was $7.1 million for the quarter ended June 30, 2013 ($2.6 million for the quarter ended June 30, 2012), after excluding the effects of the unrealized gain/(loss) on swaps and foreign exchange gains/(losses).
Adjusted EPS(1) was $0.11 for the quarter ended June 30, 2013 ($0.04 for the quarter ended June 30, 2012).
Adjusted EBITDA(1) was $20.4 million for the quarter ended June 30, 2013 ($8.3 million for the quarter ended June 30, 2012).
Revenues were $32.9 million for the quarter ended June 30, 2013 ($16.7 million for the quarter ended June 30, 2012). The increase is mainly attributable to the delivery of the GasLog Shanghai, the GasLog Santiago and the GasLog Sydney on January 28, 2013, March 25, 2013 and May 30, 2013, respectively and the commencement of their charter party agreements with the BG Group.
Vessel operating and supervision costs were $7.6 million for the quarter ended June 30, 2013 ($3.2 million for the quarter ended June 30, 2012). The increase is mainly attributable to the vessel operating costs of the three newbuildings.
Depreciation of fixed assets was $6.4 million for the quarter ended June 30, 2013 ($3.2 million for the quarter ended June 30, 2012). The increase is mainly attributable to the depreciation of the three newbuildings.
General and administrative expenses were $4.8 million for the quarter ended June 30, 2013 ($6.3 million for the quarter ended June 30, 2012). The decrease is mainly attributable to a decrease in equity-settled compensation expense and a decrease in net foreign exchange losses, partially offset by an increase in employee related expenses and legal and professional fees in line with GasLog’s planned growth.
Financial (costs)/gain and gain/(loss) on swaps, net were $5.8 million gain for the quarter ended June 30, 2013 ($8.3 million loss for the quarter ended June 30, 2012). The decrease in losses is attributable to an increase of $18.2 million in unrealized gain on swaps partially offset by an increase of $4.1 million in other financial costs.
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(1) EBITDA, Adjusted EBITDA, Adjusted Profit and Adjusted EPS are non-GAAP financial measures, and should not be used in isolation or as a substitute for GasLog’s financial results presented in accordance with IFRS. For definitions and reconciliations of these measurements to the most directly comparable financial measures calculated and presented in accordance with International Financial Reporting Standards (“IFRS”), please refer to Exhibit II at the end of this press release.
For a detailed discussion of GasLog’s financial results for the quarter ended June 30, 2013, please refer to the Financial Report for the Three Months and Six Months Ended June 30, 2013, furnished on Form 6-K to the United States Securities and Exchange Commission (the “Q2 6-K”).
http://www.gaslogltd.com/investor-relations/sec-filings
Contracted Charter Revenues
GasLog’s contracted charter revenues are estimated to increase from $56.28 million for the fiscal year 2012 to $234.36 million for the fiscal year 2016, based on contracts in effect as of June 30, 2013 for the ten ships in GasLog’s owned fleet for which time charters have been secured. These include contracts for four newbuildings that are scheduled to be delivered on various dates in 2013, 2014 and 2016, but does not include extensions options. For further details please refer to the Q2 6-K.
Liquidity and Financing
As of June 30, 2013, GasLog had cash and cash equivalents of $211.75 million of which $187.86 million was held in time deposits.
As of June 30, 2013, GasLog had an aggregate of $657.27 million of indebtedness outstanding under four credit agreements, of which $42.44 million is repayable within one year. As of June 30, 2013, GasLog had $82.45 million outstanding under the bond agreement that is payable in June 2018.
As of June 30, 2013 there is an undrawn revolving facility of $50.00 million. In addition, there are three loan facilities with an aggregate undrawn amount of $717.50 million available that will be used to finance a portion of the contract prices of five of our newbuildings on their deliveries of which $138.5 million was drawn in July 2013 with the delivery of the GasLog Skagen.
As of June 30, 2013, GasLog’s commitments for capital expenditures are related to the six LNG carriers on order and the GasLog Skagen, which have a gross aggregate contract price with the shipyard of approximately $1.38 billion. As of June 30, 2013, the total remaining balance of the contract prices of the above vessels was $1.25 billion, that will be funded with available cash, cash from operations, existing debt and other financings.
GasLog’s expected floating interest rate exposure has been hedged at a weighted average interest rate of approximately 4.6% (including margin) as of June 30, 2013.
On June 21, 2013, GasLog entered into three CCSs to exchange interest payments and principal on maturity on the same terms as the bond signed on June 27, 2013 and designated the CCSs as hedges of the variability of the USD functional currency equivalent cash flows on the bond.
Business Update
As of June 30, 2013 GasLog has seven newbuildings on order at Samsung Heavy Industries. Our vessels presently under construction were on schedule and within budget. The GasLog Skagen was delivered on July 25, 2013 and another vessel under construction is scheduled to be delivered within 2013.
The five on-the-water ships in GasLog’s fleet as of June 30, 2013, currently on multi-year charters to a subsidiary of BG Group plc, performed without any off-hire during the quarter ended June 30, 2013, thereby achieving full utilization for the period.
In August 2013, GasLog announced the ordering of two 174,000 cubic meters LNG carriers from Samsung Heavy Industries. The ships are scheduled to be delivered in the second half of 2016, and will each commence a 7 year firm charter to a subsidiary of BG Group plc., with charterer’s option to extend the duration of the charter at specified rates.
GasLog has secured a total of six options for the construction of up to six (4 priced and 2 unpriced) additional LNG carriers (174,000 cubic meters each) from Samsung Heavy Industries Co. Ltd. that expire on December 31, 2013.
LNG Industry Update
GasLog believes the current supply and demand dynamics of the LNG industry are positive for LNG shipping. There continues to be progress on new LNG production projects, and the new volumes and potentially greater voyage distances should create increased requirements for LNG carriers.
The second quarter of 2013 saw the short term rates for LNG carriers decline slightly before finishing the quarter higher than at the start. This end of quarter strength has been attributed by observers to the start-up of the Angola LNG project taking vessels off the market and a mismatch between available LNG carriers and cargo requirements.
The long-term fundamentals for LNG production continue to look strong. Further positive news has come out of the USA, where Sabine Pass has taken Final Investment Decision on trains 3 and 4, and Freeport LNG has become the second US project to receive approval from the Department of Energy (“DOE”) to export to non-Free Trade Agreement (“FTA”) countries. It is widely expected that the DOE will approve additional projects’ exports to non-FTA nations. Further moves were made in the second quarter to develop large export facilities on the west coast of Canada. Prospects for LNG production in East Africa continue to improve with further progress offshore Tanzania and continuing investment momentum from Chinese and Indian buyers in gas reserves offshore Mozambique.
We have seen some older technology ships continue to experience idle time. However, on a historical basis LNG shipping rates remain firm, and we expect this firmness to be reflected in the longer-term charter market.
GasLog believes the robust development of new LNG supply projects and growing global demand for natural gas is likely to drive the need for more LNG carriers. LNG project developers are typically large multinational oil and gas companies with exacting standards for safety and reliability. In addition, we continue to expect a preference for the latest technology in ship design and propulsion. GasLog believes first class charterers will continue to engage experienced LNG shipowners to provide high quality LNG carriers for multi-year charter requirements.
Outlook
GasLog believes the strong fundamentals of the LNG industry will provide significant opportunities for GasLog’s high quality LNG shipping operations. We will continue to focus on delivering on our business plan ,through the on-time delivery of the newbuilding fleet, while ensuring full utilization of the existing ships. GasLog’s strategy of leveraging its established platform and customer relationships will facilitate its qualification for charter possibilities for the two uncommitted newbuildings as well as the six vessel options it holds at Samsung. GasLog’s experience and contract coverage also provides us with the ability to be more opportunistic from a vessel acquisition and charter perspective.
Source: GasLog Ltd.