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ZIM reports financial results and generates record quarterly Net Income of $590 Million

Generates Record Quarterly Net Income of $590 Million and Adjusted EBITDA of $821 Million

Increases 2021 Guidance to Between $2.5 Billion and $2.8 Billion of Adjusted EBITDA and Between $1.85 Billion to $2.15 Billion of Adjusted EBIT

Announces Special Dividend of Approximately $238 Million, or $2.00 Per Share, on Top of 2021 Annual Dividend

ZIM, a global container liner shipping company, announced today its consolidated results for the three months ended March 31, 2021.

First Quarter 2021 Highlights

  • Net income for the first quarter was $589.6 million (compared to a loss of $11.9 million in the first quarter of 2020), or $5.35 per share1
  • Adjusted EBITDA2 for the first quarter was $820.5 million, a year-over-year increase of 744%
  • Operating income (EBIT) for the first quarter was $683.5 million, a year-over-year increase of 2,645%
  • Adjusted EBIT for the first quarter was $687.8 million, a year-over-year increase of 2,430%
  • Revenues for the first quarter were $1.74 billion, a year-over-year increase of 112%
  • ZIM carried 818 thousand TEUs in the first quarter of 2021, a year-over-year increase of 28%
  • The average freight rate per TEU in the first quarter of 2021 was $1,925, a year-over-year increase of 76%
  • Net leverage ratio3 of 0.5x at March 31, 2021, compared to 1.2x at December 31, 2020
  • Completed IPO, raising $204 million in net proceeds
  • Announced strategic long-term chartering agreement with Seaspan for ten “green” LNG-fueled vessels demonstrating ZIM’s commitment to reducing its carbon footprint and leading environmentally friendly practices in the shipping industry
  • Subsequent to quarter end, announced full early redemption of $349 million principal amount of Series 1 and 2 Notes due 2023 payable in June 2021
  • Declared a special cash dividend of approximately $238 million, or $2.00 per ordinary share, to be paid on September 15, 2021, to holders of the ordinary shares as of August 25, 2021; reiterated plan to distribute annual dividend of 30-50% of 2021 net income in 2022

Eli Glickman, ZIM President & CEO, stated, “This is truly a momentous time in ZIM’s 75-year history. Following our successful IPO to become the first global container liner to list in the U.S., we are proud of our demonstrated accomplishments based on seamless execution aligned with our stated objectives. Driven by ZIM’s differentiated approach and proactive strategies, we generated our highest ever quarterly net profit, EBITDA, and cash flow, while continuing to deliver industry leading margins. We also significantly strengthened our balance sheet, with shareholder equity now in excess of $1 billion. In a short time since going public, we have also achieved important milestones for shareholders. Specifically, we significantly strengthened our position in the growing and strategic Pacific and Intra Asia trades, with our long-term chartering agreement for large LNG dual-fuel container vessels and the launch of new services to address unmet need in profitable routes to generate superior growth. We also drew on our strong cash flow to redeem ZIM’s $349 million outstanding Series 1 and 2 Notes sooner than expected and earlier than the stated maturity by two years.”

Mr. Glickman added, “Based on our success further strengthening our balance sheet, we are pleased to allocate capital to invest in new equipment to continue to best serve customers while returning capital to shareholders. With today’s declaration of a special dividend, we will be distributing approximately $238 million, or $2.00 per share, in line with our commitment to unlock significant value. Importantly, this dividend is over and above our 2021 annual dividend guidance, supplementing the 30-50% of 2021 net income we expect to distribute in 2022.”

Mr. Glickman concluded, “As a result of our outstanding execution and the full completion of freight contracts at higher rates, we have substantially raised our full year outlook, with 2021 Adjusted EBITDA now expected to be between $2.5 billion and $2.8 billion, more than 75% higher than the midpoint of our previous guidance range. Going forward, we remain poised to continue leveraging our agility to maximize profitability and advance ZIM’s position as an innovative digital leader of seaborne transportation and logistics services with attractive growth engines.”

Summary of Key Financial and Operational Results (Q1’21 vs. Q1’20 unless otherwise noted)

Q1’21

Q1’20

Carried volume (K-TEUs) ……………………………………………………….

818

638

Average freight rate ($/TEU) …………………………………………………..

1,925

1,091

Revenue ($ in millions) …………………………………………………………..

1,744

823

Operating income (EBIT) ($ in millions) …………………………………….

683

25

Profit (loss) before income taxes ($ in millions) ……………………………..

644

(9)

Net income (loss) ($ in millions) ……………………………………………….

590

(12)

Adjusted EBITDA ($ in millions) ……………………………………………….

821

97

Adjusted EBIT ($ in millions) ……………………………………………………

688

27

Adjusted EBITDA margin (%) …………………………………………………..

47

12

Adjusted EBIT margin (%) ……………………………………………………….

39

3

Net cash generated from operating activities ($ in millions) ………….

777

102

Earnings (loss) per share (fully diluted) ($) …………………………………

5.13

(0.14)

Free cash flow ($ in millions) ……………………………………………………

643

98

Net debt ($ in millions) (Q1’21 vs. Q4’20) …………………………………..

915

1,236

Financial and Operating Results for the First Quarter Ended March 31, 2021
Total revenues were $1.74 billion for the first quarter of 2021, compared to $823.2 million for the first quarter of 2020, primarily driven by an increase in revenues from containerized cargo, reflecting increases in both freight rates and carried volume.

Operating income (EBIT) for the first quarter of 2021 was $683.5 million, compared to $24.9 million for the first quarter of 2020.

Net income for the first quarter of 2021 was $589.6 million, compared to a net loss of $11.9 million for the first quarter of 2020.

Adjusted EBITDA was $820.5 million for the first quarter of 2021, compared to $97.2 million for the first quarter of 2020.  Adjusted EBIT was $687.8 million for the first quarter of 2021, compared to $27.2 million for the first quarter of 2020. Adjusted EBITDA and Adjusted EBIT margins for the first quarter of 2021 were 47% and 39%, respectively. This compares to 12% and 3% for the first quarter of 2020, respectively.

Net cash generated from operating activities was $777.4 million for the first quarter of 2021, compared to $101.6 million for the first quarter of 2020.

ZIM carried 818 thousand TEUs for the first quarter of 2021, compared to 638 thousand TEUs in the first quarter of 2020. The average freight rate per TEU was $1,925 for the first quarter of 2021, compared to $1,091 for the first quarter of 2020.

Liquidity and Cash Flows
ZIM’s cash and cash equivalents increased by $618 million from $570 million at December 31, 2020 to $1.19 billion at March 31, 2021. Capital expenditures totaled $133.0 million for the first quarter of 2021, compared to $3.6 million for the first quarter of 2020. Net debt decreased by $321 million from $1.24 billion as of December 31, 2020 to $915 million as of March 31, 2021. ZIM’s net leverage ratio as of March 31, 2021 was 0.5x, compared to 1.2x as of December 31, 2020.

Early Redemption of Notes
In April 2021, the Company announced the early redemption of 100% of its Series 1 and 100% of its Series 2 unsecured notes due 2023 at an aggregate principal amount of $349 million, payable on June 21, 2021, in accordance with the terms of the indenture governing the notes.

Long-Term Chartering Agreement
In February 2021, the Company announced a strategic agreement for the long-term charter of ten 15,000 TEU liquefied natural gas (LNG) dual-fuel container vessels to serve ZIM’s Asia – US East Coast trade.

Special Dividend
On May 19, 2021, the Company’s Board of Directors declared a special cash dividend of approximately $238 million, or $2.00 per ordinary share. The special cash dividend will be paid on September 15, 2021, to all holders of record of ordinary shares as of August 25, 2021. The special dividend is supplemental to ZIM’s previously communicated 2021 annual dividend guidance, whereby the Company expects to distribute 30-50% of 2021 net income in 2022, subject to Board approval.

Updated Full-Year 2021 Guidance
The Company increased its full-year guidance and expects to generate in 2021 Adjusted EBITDA of between $2.5 billion and $2.8 billion and Adjusted EBIT of between $1.85 billion to $2.15 billion.

Use of Non-IFRS Measures in the Company’s 2021 Guidance
A reconciliation of the Company’s non-IFRS financial measures included in its full-year 2021 guidance to corresponding IFRS measures is not available on a forward-looking basis. In particular, the Company has not reconciled its Adjusted EBITDA and Adjusted EBIT because the various reconciling items between such non-IFRS financial measures and such corresponding IFRS measures cannot be determined without unreasonable effort due to the uncertainty regarding, and the potential variability of, the future costs and expenses for which the Company adjusts, the effect of which may be significant, and all of which are difficult to predict and are subject to frequent change.

Conference Call Details
Management will host a conference call and webcast (along with a slide presentation) to review the results and provide a corporate update today at 8:00 AM ET.

To access the live conference call by telephone, please dial the following numbers: United States +1-855-265-6958 or +1-718-705-8796; Israel +972-3-721-9662; or UK/international +44-121-281-8004. The call (and slide presentation) will be available via live webcast through ZIM’s website, located at the following link. Following the conclusion of the call, a replay of the conference call will be available on the Company’s website.