Atlas Corp.
- Revenue growth of 36.6% to $386.2 million compared to the same period in 2019.
- Funds From Operations (FFO)(1) growth of 96.0% to $173.5 million compared to the same period in 2019.
- FFO, per diluted share growth of 70.0% to $0.68 compared to the same period in 2019.
- Adjusted EBITDA(1) growth of 38.8% to $249.8 million compared to the same period in 2019.
Seaspan Corporation
- Seaspan continues to execute quality growth during adversity, securing long-term contracted revenue
- Received delivery of four high-quality vessels, (2-12,000 TEU and 2-13,000 TEU)
- Seaspan closed $200 million sustainability-linked loan, expanding the company's innovative portfolio financing program to $1.8 billion
LONDON, Nov. 9, 2020 /CNW/ - Atlas Corp. ("Atlas or the "Company") (NYSE: ATCO) announced today its results for the three and nine months ended September 30, 2020.
Comments from Management
Bing Chen, President and CEO of Atlas, commented, "Our third quarter performance highlights the resiliency of Atlas' scalable platform and our focus on operational excellence, driving FFO per diluted share of $0.68. Through our creative customer partnerships and delivery of fully integrated solutions to generate quality growth, we have added four large vessels under long-term charters bringing our total fleet to 127 vessels with contracted revenue of $4.4 billion. Achieving year-over-year growth of 96.0% and 38.8% of FFO and Adjusted EBITDA, respectively, we are delivering consistent value creation for our stakeholders. With $427.6 million of liquidity, a strong balance sheet, and trusted customer partnership, Atlas is well positioned to drive continued enterprise growth through fluctuating economic and industry cycles. I am proud of how our team's consistent focus on operational excellence has resulted in solid performance and the delivery of best-in-class customer services."
(1) |
This is a non-GAAP financial measure. Refer to "Definitions and Non-GAAP Financial Measures" and the Appendices for a definition of this term and a reconciliation of this non-GAAP financial measure, as used in this release, to the financial measures under GAAP. |
Consolidated Results
The following tables summarize Atlas' consolidated results for the three months ended September 30, 2020, June 30, 2020, and September 30, 2019.
Three Months Ended |
||||||||
(in millions of US dollars, except per share |
September |
June 30, |
September |
|||||
GAAP Financial |
||||||||
Revenue |
$ |
386.2 |
$ |
363.8 |
$ |
282.7 |
||
Net earnings |
84.1 |
82.7 |
43.0 |
|||||
Earnings per share, diluted |
0.27 |
0.26 |
0.11 |
|||||
Non-GAAP Financial |
||||||||
Adjusted EBITDA(1) |
249.8 |
238.9 |
180.0 |
|||||
FFO(1) |
173.5 |
161.3 |
88.5 |
|||||
FFO per Share, Diluted(1) |
0.68 |
0.64 |
0.40 |
|||||
Net Debt to Adjusted EBITDA(1) |
4.8x |
5.2x |
3.5x |
|||||
Financial Position |
||||||||
Ending Liquidity(2) |
427.6 |
382.9 |
912.9 |
|||||
Ending Contracted Revenue(3) |
4,442.4 |
4,625.0 |
4,080.9 |
|||||
Total Borrowings(1) |
4,302.7 |
4,268.5 |
3,438.7 |
|||||
Operational |
||||||||
Vessel Utilization |
98.6% |
97.4% |
99.6% |
|||||
Power Fleet Utilization(4) |
80.0% |
68.4% |
81.0% |
|||||
(1) |
This is a non-GAAP financial measure. Refer to "Definitions and Non-GAAP Financial Measures" and the Appendices for a definition of this term and a reconciliation of this non-GAAP financial measure, as used in this release, to the financial measures under GAAP. |
(2) |
This is the total cash and cash equivalents balance plus the total available undrawn committed credit facilities at period end. |
(3) |
Ending contracted revenue is on a pro-forma basis including operating and sales-type leases on vessels delivered in October and November 2020. |
(4) |
Power fleet utilization in comparative periods has been adjusted to reflect average utilization during the quarter. |
(5) |
The financial information for September 30, 2019 does not include APR Energy performance. |
Guidance 2020
The following table is based on Atlas' current expectations for Seaspan and APR.
Operating Metrics (in millions of US dollars) |
Previous Guidance |
Updated Guidance |
|||||||||
Low |
High |
Low |
High |
||||||||
Seaspan |
|||||||||||
Revenue |
$ |
1,190.0 |
$ |
1,220.0 |
$ |
1,210.0 |
$ |
1,220.0 |
|||
Operating expense |
245.0 |
250.0 |
245.0 |
250.0 |
|||||||
G&A expense |
35.0 |
40.0 |
35.0 |
40.0 |
|||||||
Operating lease expense |
145.0 |
150.0 |
145.0 |
150.0 |
|||||||
Adjusted EBITDA(1) |
750.0 |
795.0 |
770.0 |
795.0 |
|||||||
APR (for period from February 29, |
|||||||||||
Revenue |
$ |
190.0 |
$ |
220.0 |
$ |
195.0 |
$ |
215.0 |
|||
Operating expense |
40.0 |
54.0 |
40.0 |
41.0 |
|||||||
G&A expense |
38.0 |
40.0 |
37.0 |
38.0 |
|||||||
Operating lease expense |
3.0 |
4.0 |
3.0 |
4.0 |
|||||||
Adjusted EBITDA(1) |
110.0 |
130.0 |
115.0 |
132.0 |
|||||||
Segmental Financial Results
The following table summarizes segmental financial results for the three months ended September 30, 2020.
Three Months Ended September 30, 2020 (unaudited) |
|||||||||||
(in millions of US dollars, |
Containership |
Mobile Power |
Elimination and |
Total |
|||||||
Revenue |
$ |
305.9 |
$ |
80.3 |
$ |
- |
$ |
386.2 |
|||
Operating expense |
67.3 |
10.9 |
- |
78.2 |
|||||||
G&A expense |
6.4 |
13.5 |
1.2 |
21.1 |
|||||||
Operating lease expense |
36.0 |
1.0 |
- |
37.0 |
|||||||
Adjusted EBITDA(1) |
196.3 |
55.0 |
(1.5) |
249.8 |
|||||||
FFO(1) |
148.0 |
42.8 |
(17.3) |
173.5 |
|||||||
Net earnings |
79.0 |
5.4 |
(0.3) |
84.1 |
|||||||
Ending Contracted Revenue(2) |
4,118.0 |
324.4 |
- |
4,442.4 |
|||||||
(1) |
This is a non-GAAP financial measure. Refer to "Definitions and Non-GAAP Financial Measures" and the Appendices for a definition of this term and a reconciliation of this non-GAAP financial measure, as used in this release, to the financial measures under GAAP. |
(2) |
Ending contracted revenue is on a pro-forma basis including operating and sales-types leases on vessels delivered in October and November 2020. |
(3) |
Elimination and other include amounts relating to preferred shares, corporate headquarters and elimination of intercompany transactions. |
Financial Results Summary
Revenue increased by 36.6% to $386.2 million for the three months ended September 30, 2020, compared with the same period in 2019. APR represented 77.6% and Seaspan represented 22.4% of the total increase compared to the third quarter of 2019. Revenue increase was driven primarily from thirteen vessels delivered between December 2019 and September 2020, and the contribution from APR.
Adjusted EBITDA was $249.8 million for the three months ended September 30, 2020, an increase of 38.8% compared to the same period in 2019. This was driven by the contribution of APR and increased Seaspan contribution from the delivery of thirteen vessels, in addition to lower operating lease expense due to lower LIBOR.
FFO increased by 96.0% to $173.5 million for the three months ended September 30, 2020, compared with the same period in 2019. This reflects revenue contributions from APR and new vessels, and lower interest expense.
Liquidity
As of September 30, 2020, Atlas had total liquidity of $427.6 million, consisting of $220.6 million of cash and cash equivalents and $207.0 million of availability under undrawn committed revolving credit facilities. As of September 30, 2020, Atlas had an unencumbered asset base including 30 vessels with a book value of $1.03 billion(1).
Seaspan Corporate Developments
In August and September 2020, Seaspan received delivery of two 13,000 TEU containerships that are on long-term charters with leading global liners.
In October and November 2020, Seaspan received delivery of two high-quality 12,000 TEU containerships, built in 2018, both with committed long-term charters with leading global liners.
In October 2020, Seaspan closed a $200.0 million sustainability-linked loan, increasing the capacity of the company's innovative portfolio financing program to $1.8 billion.
APR Corporate Developments
APR commenced an operational realignment program to enhance its fast power solutions and focus on developing and building longer-term power projects.
On September 30, 2020 APR concluded the term of its contract for three peaking power gas-fired plants in Mexicali, Baja California, Mexico.
Distribution
The Board of Directors of Atlas has declared a quarterly distribution in the amount of $0.125 per common share, payable on October 30, 2020, unchanged from the prior quarter. Regular quarterly dividends on the Preferred Shares Series D, Series E, Series G, Series H and Series I were also declared.
(1) |
Balance Sheet value as at September 30, 2020. |
Common Shares Outstanding
As of November 9, 2020, there were 246.0 million common shares outstanding, excluding 6.7 million shares reserved for future issuance to the sellers of APR in accordance with the terms and conditions of the APR acquisition agreement.
Conference Call and Webcast
Atlas will host a conference call and webcast presentation for investors, analysts, and interested parties to discuss its third quarter results on November 10, 2020 at 8:30 a.m. ET. Participants should call 1-877-246-9875 (US/Canada) or 1-707-287-9353 (International) and request the Atlas call (conference ID: 1678510). The live webcast and slide presentation are available under "Events & Presentations" at www.atlascorporation.com.
A replay will be available until November 25, 2020. The replay telephone numbers are: US/Canada 1-855-859-2056 and International 1-404-537-3406 and the replay passcode is: 1678510.
About Atlas
Atlas is a leading global asset management company, differentiated by its position as a best-in class owner and operator with a focus on deploying capital to create sustainable shareholder value. We target long-term, risk adjusted returns across high quality infrastructure assets in the maritime sector, energy sector and other infrastructure verticals. For more information visit atlascorporation.com.
About Seaspan
Seaspan is a leading independent owner and operator of containerships. We charter our vessels primarily pursuant to long-term, fixed-rate time charters to the world's largest container shipping liners. Seaspan's fleet consists of 127 containerships, representing total capacity of approximately 1,073,000 TEU. Seaspan's operating fleet of vessels has an average age of approximately 7 years and an average remaining lease period of approximately 4 years, on a TEU-weighted basis. For more information visit seaspancorp.com.
About APR
APR provides rapidly deployable, large-scale power and fast-track mobile power to underserved markets and industries. APR's mobile, turnkey power plants help run industries, cities and countries globally in both developed and developing markets. For more information, please visit aprenergy.com.
ATLAS CORP. |
|||||
UNAUDITED CONSOLIDATED BALANCE SHEETS |
|||||
(IN MILLIONS OF US DOLLARS) |
|||||
September 30, 2020 |
December 31, 2019 |
||||
Assets |
|||||
Current assets: |
|||||
Cash and cash equivalents |
$ |
220.6 |
$ |
195.0 |
|
Accounts receivable |
86.2 |
18.7 |
|||
Inventories |
72.0 |
14.2 |
|||
Prepaid expenses and other |
29.9 |
17.6 |
|||
Net investment in lease |
10.5 |
35.2 |
|||
Acquisition related assets |
65.0 |
- |
|||
484.2 |
280.7 |
||||
Property, plant and equipment |
7,029.8 |
5,707.7 |
|||
Right-of-use assets |
872.0 |
957.2 |
|||
Net investment in lease |
421.6 |
723.6 |
|||
Goodwill |
84.1 |
75.3 |
|||
Deferred tax assets |
13.0 |
- |
|||
Other assets |
305.4 |
172.5 |
|||
$ |
9,210.1 |
$ |
7,917.0 |
||
Liabilities and shareholders' equity |
|||||
Current liabilities: |
|||||
Accounts payable and accrued liabilities |
$ |
151.5 |
$ |
83.4 |
|
Deferred revenue |
20.7 |
20.3 |
|||
Income tax payable |
84.8 |
- |
|||
Long-term debt - current |
246.7 |
363.7 |
|||
Operating lease liabilities - current |
160.3 |
159.7 |
|||
Other financing arrangements - current |
57.7 |
134.6 |
|||
Other liabilities - current |
32.1 |
7.8 |
|||
753.8 |
769.5 |
||||
Long-term debt |
3,207.7 |
2,696.9 |
|||
Operating lease liabilities |
699.4 |
782.6 |
|||
Other financing arrangements |
738.9 |
373.9 |
|||
Deferred tax liabilities |
7.5 |
- |
|||
Derivative instruments |
68.3 |
50.2 |
|||
Other liabilities |
42.3 |
11.2 |
|||
5,517.9 |
4,684.3 |
||||
Shareholders' equity: |
|||||
Share capital |
2.4 |
2.1 |
|||
Additional paid in capital |
3,834.9 |
3,452.9 |
|||
Deficit |
(124.5) |
(200.7) |
|||
Accumulated other comprehensive loss |
(20.6) |
(21.6) |
|||
3,692.2 |
3,232.7 |
||||
$ |
9,210.1 |
$ |
7,917.0 |
||
ATLAS CORP. |
|||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||
(IN MILLIONS OF US DOLLARS, EXCEPT SHARES IN THOUSANDS AND PER SHARE AMOUNTS) |
|||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||
2020 |
2019 |
2020 |
2019 |
||||||||
Revenue |
$ |
386.2 |
$ |
282.7 |
$ |
1,058.4 |
$ |
843.5 |
|||
Operating expenses (income): |
|||||||||||
Operating expenses |
78.2 |
56.8 |
205.0 |
170.4 |
|||||||
Depreciation and amortization |
103.9 |
63.9 |
264.6 |
189.9 |
|||||||
General and administrative |
21.1 |
7.7 |
51.3 |
23.3 |
|||||||
Operating leases |
37.0 |
38.2 |
113.7 |
116.3 |
|||||||
Income related to modification of time charters |
- |
- |
- |
(227.0) |
|||||||
240.2 |
166.6 |
634.6 |
272.9 |
||||||||
Operating earnings |
146.0 |
116.1 |
423.8 |
570.6 |
|||||||
Other expenses (income): |
|||||||||||
Interest expense |
45.3 |
52.4 |
145.7 |
170.5 |
|||||||
Interest income |
(0.9) |
(2.0) |
(3.4) |
(8.2) |
|||||||
Loss on derivative instruments |
2.2 |
22.1 |
34.0 |
37.7 |
|||||||
Other expenses |
10.8 |
0.5 |
16.3 |
1.7 |
|||||||
57.4 |
73.0 |
192.6 |
201.7 |
||||||||
Income tax expense |
4.5 |
0.1 |
12.5 |
0.7 |
|||||||
Net earnings |
$ |
84.1 |
$ |
43.0 |
$ |
218.7 |
$ |
368.2 |
|||
Dividends - preferred shares |
(16.8) |
(18.0) |
(50.3) |
(54.2) |
|||||||
Net earnings attributable to common shares |
$ |
67.3 |
$ |
25.0 |
$ |
168.4 |
$ |
314.0 |
|||
Weighted average number of shares, basic |
245,924 |
216,142 |
240,120 |
213,938 |
|||||||
Effect of dilutive securities: |
|||||||||||
Share-based compensation |
474 |
697 |
290 |
460 |
|||||||
Fairfax warrants |
210 |
5,696 |
2,322 |
3,841 |
|||||||
Holdback shares |
6,734 |
- |
5,002 |
- |
|||||||
Weighted average number of shares, diluted |
253,342 |
222,535 |
247,734 |
218,239 |
|||||||
Earnings per share, basic |
$ |
0.27 |
$ |
0.12 |
$ |
0.70 |
$ |
1.47 |
|||
Earnings per share, diluted |
$ |
0.27 |
$ |
0.11 |
$ |
0.68 |
$ |
1.44 |
|||
ATLAS CORP. |
||||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||||||
(IN MILLIONS OF US DOLLARS) |
||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||
Cash from (used in): |
||||||||||||
Operating activities: |
||||||||||||
Net earnings |
$ |
84.1 |
$ |
43.0 |
$ |
218.7 |
$ |
368.2 |
||||
Items not involving cash: |
||||||||||||
Depreciation and amortization |
103.9 |
63.9 |
264.6 |
189.9 |
||||||||
Change in right-of-use asset |
30.7 |
28.0 |
90.2 |
83.4 |
||||||||
Non-cash interest expense and accretion |
10.6 |
7.7 |
29.5 |
22.6 |
||||||||
Unrealized change in derivative instruments |
(4.6) |
(0.4) |
18.3 |
(13.7) |
||||||||
Amortization of acquired revenue contracts |
4.6 |
4.0 |
12.7 |
9.8 |
||||||||
Other |
3.4 |
3.1 |
5.4 |
7.8 |
||||||||
Change in other operating assets and liabilities |
(39.6) |
(3.4) |
(156.8) |
(22.8) |
||||||||
Cash from operating activities(1) |
193.1 |
145.9 |
482.6 |
645.2 |
||||||||
Investing activities: |
||||||||||||
Expenditures for property, plant and equipment |
(154.6) |
(3.5) |
(607.7) |
(10.5) |
||||||||
Short-term investments |
- |
0.1 |
- |
2.5 |
||||||||
Prepayment of vessel purchase |
(4.4) |
(6.6) |
(40.2) |
(6.6) |
||||||||
Payment on settlement of interest swap agreements |
(5.4) |
(104.8) |
(13.5) |
(122.1) |
||||||||
Cash and restricted cash acquired from APR Energy |
- |
- |
50.6 |
- |
||||||||
Loss on cash repatriation |
(7.0) |
- |
(11.6) |
- |
||||||||
Receipt from contingent consideration asset |
3.2 |
- |
3.2 |
- |
||||||||
Other assets |
(2.0) |
(1.2) |
(11.7) |
(6.1) |
||||||||
Cash used in investing activities |
(170.2) |
(116.0) |
(630.9) |
(142.8) |
||||||||
Financing activities: |
||||||||||||
Repayments of long-term debt and other financing |
(159.8) |
(379.8) |
(951.1) |
(1,635.2) |
||||||||
Issuance of long-term debt and other financing arrangements |
188.2 |
115.9 |
1,225.1 |
734.9 |
||||||||
Notes and warrants issued |
- |
- |
100.0 |
250.0 |
||||||||
Proceeds from exercise of warrants |
- |
- |
- |
250.0 |
||||||||
Redemption of preferred shares |
- |
(47.8) |
- |
(47.8) |
||||||||
Financing fees |
(5.9) |
(7.9) |
(24.9) |
(23.6) |
||||||||
Dividends on common shares |
(31.2) |
(26.7) |
(88.9) |
(75.1) |
||||||||
Dividends on preferred shares |
(16.8) |
(18.2) |
(50.3) |
(53.7) |
||||||||
Cash from (used in) financing activities |
(25.5) |
(364.5) |
209.9 |
(600.5) |
||||||||
(Decrease) increase in cash, cash equivalents and restricted cash |
(2.6) |
(334.6) |
61.6 |
(98.1) |
||||||||
Cash, cash equivalents and restricted cash, beginning of period |
261.5 |
607.9 |
197.3 |
371.4 |
||||||||
Cash, cash equivalents and restricted cash, end of period |
$ |
258.9 |
$ |
273.3 |
$ |
258.9 |
$ |
273.3 |
||||
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance |
||||||||||||
September 30, |
September 30, |
|||||||||||
2020 |
2019 |
|||||||||||
Cash and cash equivalents |
$ |
220.6 |
$ |
258.9 |
||||||||
Restricted cash |
38.3 |
14.4 |
||||||||||
Total cash, cash equivalents and restricted cash shown in the |
||||||||||||
consolidated statements of cash flows |
$ |
258.9 |
$ |
273.3 |
||||||||
(1) Cash from operating activities for the nine months ended September 30, 2019 includes $227.0 million received in connection with modification of time charters. |
||||||||||||
ATLAS CORP. |
||||||||
FUNDS FROM OPERATIONS |
||||||||
Three Months Ended |
||||||||
(in millions of U.S. dollars, except shares in |
September 30, 2020 |
June 30, 2020 |
September 30, 2019 |
|||||
GAAP Net Earnings |
$ |
84.1 |
$ |
82.7 |
$ |
43.0 |
||
Preferred share dividends |
(16.8) |
(16.7) |
(18.0) |
|||||
Loss (gain) on sale |
0.1 |
(0.6) |
- |
|||||
Unrealized change in fair value of derivative |
(4.6) |
2.1 |
(0.4) |
|||||
Change in contingent consideration asset(1) |
(0.2) |
0.7 |
- |
|||||
Loss on foreign currency repatriation(2) |
7.0 |
4.6 |
- |
|||||
Depreciation and amortization |
103.9 |
88.5 |
63.9 |
|||||
FFO |
$ |
173.5 |
$ |
161.3 |
$ |
88.5 |
||
Weighted average shares outstanding, diluted |
253,342 |
253,365 |
222,535 |
|||||
FFO per Share, Diluted |
$ |
0.68 |
$ |
0.64 |
$ |
0.40 |
||
Three Months Ended September 30, 2020 |
|||||||||||
(in millions of U.S. dollars) |
Containership |
Mobile Power |
Elimination and |
Total |
|||||||
GAAP Net Earnings |
$ |
79.0 |
$ |
5.4 |
$ |
(0.3) |
$ |
84.1 |
|||
Preferred share dividends |
- |
- |
(16.8) |
(16.8) |
|||||||
Loss on sale |
- |
0.1 |
- |
0.1 |
|||||||
Unrealized change in fair value of |
(4.6) |
- |
- |
(4.6) |
|||||||
Change in contingent consideration |
- |
- |
(0.2) |
(0.2) |
|||||||
Loss on foreign currency repatriation(2) |
- |
7.0 |
- |
7.0 |
|||||||
Depreciation and amortization |
73.6 |
30.3 |
- |
103.9 |
|||||||
FFO |
$ |
148.0 |
$ |
42.8 |
$ |
(17.3) |
$ |
173.5 |
|||
(1) |
The change in contingent consideration asset relates to the mark to market impact of contingent consideration related to the acquisition of APR Energy. Pursuant to the acquisition agreement, the sellers of APR Energy agreed to compensate the Company for losses on cash repatriation from a foreign jurisdiction related to cash generated from specified contracts less relevant costs (the "Contingent Asset Arrangement"). The indemnification will end on April 30, 2022 or earlier if certain other conditions in the agreement are met. The value of compensation receivable from the sellers is accounted for as a contingent consideration asset. |
(2) |
Loss on foreign currency repatriation relates to losses recognized on cash repatriation from a foreign jurisdiction, where compensation is receivable through the Contingent Asset Arrangement. Compensation is made by the sellers in cash or return of previously issued equity, which is offset against the contingent consideration asset when received and therefore, is not reflected in the income statement. |
(3) |
Elimination and other include amounts relating to preferred shares, corporate headquarters and elimination of intercompany transactions. |
ATLAS CORP. |
||||||||
ADJUSTED EBITDA |
||||||||
Three Months Ended |
||||||||
(in millions of U.S. dollars, unaudited) |
September 30, 2020 |
June 30, 2020 |
September 30, 2019 |
|||||
GAAP Net Earnings |
$ |
84.1 |
$ |
82.7 |
$ |
43.0 |
||
Interest expense |
45.3 |
50.8 |
52.4 |
|||||
Interest income |
(0.9) |
(1.1) |
(2.0) |
|||||
Income tax expense |
4.5 |
6.1 |
0.1 |
|||||
Depreciation and amortization |
103.9 |
88.5 |
63.9 |
|||||
Loss (gain) on sale |
0.1 |
(0.6) |
- |
|||||
Loss on derivative instruments |
2.2 |
7.0 |
22.1 |
|||||
Change in contingent consideration |
(0.2) |
0.7 |
- |
|||||
Loss on foreign currency repatriation(2) |
7.0 |
4.6 |
- |
|||||
Other expenses |
3.8 |
0.2 |
0.5 |
|||||
Adjusted EBITDA |
$ |
249.8 |
$ |
238.9 |
$ |
180.0 |
||
Three Months Ended September 30, 2020 |
|||||||||||
(in millions of U.S. dollars, unaudited) |
Containership |
Mobile Power |
Elimination and |
Total |
|||||||
GAAP Net Earnings |
$ |
79.0 |
$ |
5.4 |
$ |
(0.3) |
$ |
84.1 |
|||
Interest expense |
40.7 |
5.6 |
(1.0) |
45.3 |
|||||||
Interest income |
(0.1) |
(0.8) |
- |
(0.9) |
|||||||
Income tax expense |
0.4 |
4.1 |
- |
4.5 |
|||||||
Depreciation and amortization |
73.6 |
30.3 |
- |
103.9 |
|||||||
Loss on sale |
- |
0.1 |
- |
0.1 |
|||||||
Loss on derivative instruments |
2.2 |
- |
- |
2.2 |
|||||||
Change in contingent consideration asset(1) |
- |
- |
(0.2) |
(0.2) |
|||||||
Loss on foreign currency repatriation(2) |
- |
7.0 |
- |
7.0 |
|||||||
Other expenses (income) |
0.5 |
3.3 |
- |
3.8 |
|||||||
Adjusted EBITDA |
$ |
196.3 |
$ |
55.0 |
$ |
(1.5) |
$ |
249.8 |
|||
(1) |
The change in contingent consideration asset relates to the mark to market impact of contingent consideration related to the acquisition of APR Energy. Pursuant to the acquisition agreement, the sellers of APR Energy agreed to compensate the Company for losses on cash repatriation from a foreign jurisdiction related to cash generated from specified contracts less relevant costs (the "Contingent Asset Arrangement"). The indemnification will end on April 30, 2022 or earlier if certain other conditions in the agreement are met. The value of compensation receivable from the sellers is accounted for as a contingent consideration asset. |
(2) |
Loss on foreign currency repatriation relates to losses recognized on cash repatriation from a foreign jurisdiction, where compensation is receivable through the Contingent Asset Arrangement. Compensation is made by the sellers in cash or return of previously issued equity, which is offset against the contingent consideration asset when received and therefore, is not reflected in the income statement. |
(3) |
Elimination and other include amounts relating to preferred shares, corporate headquarters and elimination of intercompany transactions. |
ATLAS CORP. |
||||||||
NET DEBT TO ADJUSTED EBITDA |
||||||||
(in millions of U.S. dollars, unaudited) |
September 30, 2020 |
June 30, 2020 |
September 30, 2019 |
|||||
Long-term debt (1) |
$ |
3,454.4 |
$ |
3,546.5 |
$ |
2,799.3 |
||
Other financing arrangements (1) |
796.6 |
671.2 |
603.1 |
|||||
Deferred financing fee |
51.7 |
50.8 |
36.3 |
|||||
Total Borrowings |
4,302.7 |
4,268.5 |
3,438.7 |
|||||
Debt discount and fair value adjustment |
136.0 |
141.1 |
155.8 |
|||||
Cash and cash equivalents |
(220.6) |
(221.8) |
(258.9) |
|||||
Restricted cash |
(38.3) |
(39.7) |
(14.4) |
|||||
Net Debt |
$ |
4,179.8 |
$ |
4,148.1 |
$ |
3,321.2 |
||
Twelve Months Ended |
||||||||
(in millions of U.S. dollars, unaudited) |
September 30, 2020 |
June 30, 2020 |
September 30, 2019 |
|||||
Net Earnings |
$ |
289.5 |
$ |
248.4 |
$ |
431.4 |
||
Interest expense |
194.1 |
201.2 |
228.0 |
|||||
Interest income |
(4.5) |
(5.5) |
(9.5) |
|||||
Income tax expense |
13.0 |
8.6 |
0.7 |
|||||
Depreciation and amortization |
329.1 |
289.0 |
254.5 |
|||||
Gain on sale |
(0.5) |
(0.6) |
- |
|||||
Loss on derivative instruments |
31.6 |
51.4 |
51.9 |
|||||
Change in contingent consideration asset(2) |
(2.8) |
(2.6) |
- |
|||||
Loss on foreign currency repatriation(3) |
11.6 |
4.6 |
- |
|||||
Other expenses |
5.0 |
1.8 |
2.2 |
|||||
Adjusted EBITDA |
$ |
866.1 |
$ |
796.3 |
$ |
959.2 |
||
Net Debt to Adjusted EBITDA |
4.8x |
5.2x |
3.5x |
|||||
(1) |
Debt and other financial arrangements include both current and long-term portions. |
(2) |
The change in contingent consideration asset relates to the mark to market impact of contingent consideration related to the acquisition of APR Energy. Pursuant to the acquisition agreement, the sellers of APR Energy agreed to compensate the Company for losses on cash repatriation from a foreign jurisdiction related to cash generated from specified contracts less relevant costs (the "Contingent Asset Arrangement"). The indemnification will end on April 30, 2022 or earlier if certain other conditions in the agreement are met. The value of compensation receivable from the sellers is accounted for as a contingent consideration asset. |
(3) |
Loss on foreign currency repatriation relates to losses recognized on cash repatriation from a foreign jurisdiction, where compensation is receivable through the Contingent Asset Arrangement. Compensation is made by the sellers in cash or return of previously issued equity, which is offset against the contingent consideration asset when received and therefore, is not reflected in the income statement. |
ATLAS CORP. |
|||||||||
BORROWINGS |
|||||||||
(in millions of U.S. dollars, unaudited) |
As at September 30, |
||||||||
2019 |
2020 |
||||||||
Total Outstanding |
Total |
Interest |
Years to |
||||||
Credit facilities(1)(5) |
$ |
2,404.8 |
$ |
2,950.4 |
2.5 |
% |
3.71 |
||
Senior unsecured notes(3)(5) |
80.0 |
80.0 |
7.1 |
% |
7.07 |
||||
Fairfax notes(4)(5) |
500.0 |
600.0 |
5.5 |
% |
5.09 |
||||
Debt discount and fair value adjustment |
(155.8) |
(136.0) |
|||||||
Other financing arrangements(5) |
609.7 |
808.3 |
3.2 |
% |
11.53 |
||||
Total borrowings |
$ |
3,438.7 |
$ |
4,302.7 |
|||||
(1) |
As of September 30, 2020, $2,708.7 million was secured by vessels. |
(2) |
As at September 30, 2020, three month average LIBOR on the revolving facilities and term loan credit facilities were 0.2% and 0.3% respectively. |
(3) |
These are the 7.125% senior unsecured notes due 2027. |
(4) |
These are the 5.50% senior notes due 2025, 2026 and 2027. |
(5) |
These exclude deferred financing fees and include both current and long-term portions. |
ATLAS CORP.
Definitions and Non-GAAP Financial Measures
This release includes various financial measures that are non-GAAP financial measures as defined under the rules of the SEC. These non-GAAP financial measures, which include FFO, FFO Per Share, Diluted (FFO Per Share), Adjusted EBITDA, Net Debt and Total Borrowings, are intended to provide additional information and should not be considered substitutes for measures of performance prepared in accordance with GAAP.
FFO and FFO Per Share represent net earnings adjusted for depreciation and amortization, gains/losses on sale, unrealized change in fair value of derivative instruments, loss on foreign currency repatriation, change in contingent consideration asset, preferred share dividends accumulated and certain other items that the Company believes are not representative of its operating performance. FFO and FFO Per Share are useful performance measures because they exclude those items that the Company believes are not representative of its performance. Please refer to the Funds From Operation section of this release for a reconciliation of these non-GAAP financial measures to net earnings.
FFO and FFO Per Share are not defined by GAAP and should not be considered as an alternative to net earnings, earnings per share or any other indicator of the Company's performance required to be reported by GAAP. In addition, this measure may not be comparable to similar measures presented by other companies.
Adjusted EBITDA represents net income before interest, taxes, depreciation and amortization, impairments, write-down and gains/losses on sale, gains/losses on derivative instruments, loss on foreign currency repatriation change in contingent consideration asset and other expenses.
Adjusted EBITDA provides useful information to investors in assessing the Company's results of operations. The Company believes that this measure is useful in assessing performance and highlighting trends on an overall basis. The Company also believes that this performance measure can be useful in comparing its results with those of other companies, even though other companies may not calculate this measure in the same way. The GAAP measure most directly comparable to Adjusted EBITDA is net earnings. Adjusted EBITDA is not defined by GAAP and should not be considered as an alternative to net earnings or any other indicator of the Company's performance required to be reported by GAAP.
The Company is unable to provide reconciliations of forward-looking Adjusted EBITDA to their most directly comparable GAAP financial measures on a forward-looking basis without unreasonable effort because items that impact those GAAP financial measures are out of the Company's control and/or cannot be reasonably predicted. These items include, but are not limited to, income tax expense, gains/losses on sale, loss on derivative instruments, change in contingent consideration asset and loss on foreign currency repatriation. Such information may have a significant, and potentially unpredictable, impact on our future financial results.
Net Debt represents total borrowings before debt discount and fair value adjustments, net of cash and cash equivalents and restricted cash. Total Borrowings represents long-term debt and other financing arrangements, excluding deferred financing fees.
Net Debt and Total Borrowings provide useful information to investors in assessing the Company's leverage. The Company believes this measure is useful in assessing the Company's ability to settle contracted debt payments. The Company also believes that this leverage measurement can be useful in comparing its position with those of other companies, even though other companies may not calculate this measure in the same way. The GAAP measure most directly comparable to Net Debt and Total Borrowings is the total of long-term debt and other financing arrangements. Net debt and Total Borrowings are not defined by GAAP and should not be considered as an alternative to long-term debt and other financing arrangements or any other indicator of the Company's financial position required to be reported by GAAP.
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This release contains forward-looking statements (as such term is defined in Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act) concerning Atlas' operations, cash flows, and financial position, including, without limitation, Atlas' financial guidance and its ability to grow its business over the near and long-term. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as "continue," "expects," "anticipates," "intends," "plans," "believes," "estimates," "projects," "forecasts," "will," "may," "potential," "should" and similar expressions are forward–looking statements. These forward-looking statements represent Atlas' estimates and assumptions only as of the date of this release and are not intended to give any assurance as to future results. As a result, you are cautioned not to rely on any forward-looking statements. Forward-looking statements appear in a number of places in this release. Although these statements are based upon assumptions Atlas believes to be reasonable based upon available information, they are subject to risks and uncertainties. These risks and uncertainties include, but are not limited to:
- Atlas' future operating and financial results;
- Atlas' growth prospects;
- Atlas' business strategy and capital allocation plans, and other plans and objectives for future operations;
- Atlas' primary sources of funds for short, medium and long-term liquidity needs;
- potential acquisitions, financing arrangements and other investments, and the expected benefits from such transactions;
- Atlas' financial condition and liquidity, including its ability to borrow and repay funds under its credit facilities, its ability to obtain waivers or secure acceptable replacement charters under the credit facilities, its ability to refinance existing facilities and notes and to obtain additional financing in the future to fund capital expenditures, acquisitions and other general corporate activities;
- conditions in the public equity market and the price of Atlas' shares;
- changes in governmental rules and regulations or actions taken by regulatory authorities, and the effect of governmental regulations on Atlas' business;
- the financial condition of Seaspan's and APR's customers, lenders and other counterparties and their ability to perform their obligations under their agreements with Seaspan and APR, respectively;
- the continued ability to meet specified restrictive covenants in Atlas' and its subsidiaries' financing and lease arrangements, notes and preferred shares;
- any economic downturn in the global financial markets and potential negative effects of any recurrence of such disruptions on the demand for the services of Seaspan's containerships or APR's mobile power solutions or on our customers' ability to charter our vessels, lease our power generation assets and pay for our services;
- the length and severity of the recent novel coronavirus (COVID-19) outbreak and its impact on Atlas' business;
- a major customer experiencing financial distress, particularly related to the COVID-19 pandemic;
- disruptions in global credit and financial markets as the result of the COVID-19 pandemic;
- Atlas' expectations as to impairments of Seaspan's vessels and power generation assets, including the timing and amount of potential impairments;
- the future valuation of Seaspan's vessels, APR's power generation assets and goodwill;
- future time charters and vessel deliveries, including future long-term charters for certain existing vessels;
- estimated future capital expenditures needed to preserve the operating capacity of Seaspan's containership fleet and comply with regulatory standards, as well as Atlas' expectations regarding future dry-docking and operating expenses, including ship operating expense and expenses related to performance under our contracts for the supply of power generation capacity, and general and administrative expenses;
- expectations about the availability of vessels to purchase and the useful lives of Seaspan's vessels;
- availability of crew, number of off-hire days and dry-docking requirements;
- general market conditions and shipping market trends, including charter rates and other factors affecting supply and demand;
- Seaspan's continued ability to maintain, enter into or renew primarily long-term, fixed-rate time charters for its vessels and leases of our power generation assets;
- the potential for early termination of long-term time charters and Seaspan's potential inability to enter into, renew or replace long-term time charters;
- Seaspan's ability to leverage to its advantage its relationships and reputation in the containership industry;
- the values of Seaspan's vessels and other factors or events that trigger impairment assessments or results;
- taxation of Atlas and of distributions to its shareholders;
- Atlas' exemption from tax on U.S. source international transportation income;
- the continued availability of services, equipment and software from subcontractors or third-party suppliers required to provide APR's power generation solutions;
- APR's ability to protect its intellectual property and defend against possible third-party infringement claims relating to its power generation solutions;
- potential liability from future litigation; and
- other factors detailed from time to time in Atlas' periodic reports.
Forward-looking statements in this release are estimates and assumptions reflecting the judgment of senior management and involve known and unknown risks and uncertainties. These forward-looking statements are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond Atlas' control. Actual results may differ materially from those expressed or implied by such forward-looking statements. Accordingly, these forward-looking statements should be considered in light of various important factors listed above and including, but not limited to, those set forth in "Item 3. Key Information—D. Risk Factors" in Atlas' Annual Report for the year ended December 31, 2019 on Form 20-F filed on April 13, 2020 and in the "Risk Factors" in Reports on Form 6-K that are filed with the Securities and Exchange Commission from time to time relating to its quarterly financial results.
Atlas does not intend to revise any forward-looking statements in order to reflect any change in its expectations or events or circumstances that may subsequently arise. Atlas expressly disclaims any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in Atlas' views or expectations, or otherwise. You should carefully review and consider the various disclosures included in Atlas' Annual Report and in Atlas' other filings made with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect Atlas' businesses, prospects and results of operations.
SOURCE Atlas Corp.
Investor Inquiries: Robert Weiner, Investor Relations, Atlas Corp., Tel. +1-904-345-4939, Email: [email protected]
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