Seaspan Reports Fourth Quarter and Full Year 2018 Results
Achieves record annual Revenue, Operating Earnings and Cash Flow from Operations,
Closes the Second Fairfax Investment of $500 million, and
Takes steps to increase the number of unencumbered vessels to 32
HONG KONG, March 5, 2019 /CNW/ - Seaspan Corporation ("Seaspan") (NYSE: SSW) announced today its financial results for the quarter and year ended December 31, 2018.
Highlights for the Fourth Quarter & Full Year 2018 & Year-to-Date 2019:
- Earnings per diluted share of $0.25 for the fourth quarter and $1.31 for the full year
- Record quarterly and annual operating earnings of $134.4 million for the fourth quarter and $469.9 million for the full year
- Record quarterly and annual cash flows from operations of $149.3 million for the fourth quarter and $483.9 million for the full year
- Achieved vessel utilization of 97.3% for the fourth quarter and 97.8% for the full year
- Executed plan to increase the pool of unencumbered assets from 18 to 32 vessels (eight of which are in the process of being unencumbered) through prepayment of two credit facilities, including one credit facility prepaid subsequent to quarter end
- Agreed to install scrubbers on ten large vessels with two leading charterers; Seaspan will be compensated i) as costs are incurred on five vessels and ii) through an increase in charter rates on the other five vessels
Comments from Management
Bing Chen, President and Chief Executive Officer of Seaspan, commented, "2018 has been a year of transformation for Seaspan. We started out the year with our largest acquisition to date – GCI – which was seamlessly integrated into Seaspan, and helped us grow 2018 revenue by 32% over the prior year. With continued commitment from our founding shareholders, the Washington Family, we have added Fairfax Financial Holdings as a strategic financial partner. As of January 2019, Fairfax has invested $1 billion into Seaspan, and in the process became our largest shareholder. Throughout 2018, we worked relentlessly to strengthen our trademark operational excellence; in fact, this year marked our safest year on record, as measured by lost time injury frequency. Finally, we established a new leadership team during the year which, in partnership with the board of directors, has done an outstanding job of guiding the organization to achieve our targets. This remarkable year would not have been possible without each of our 4,600+ employees, and the partnership of our customers. Together, we have set the stage for a prosperous future for Seaspan."
Ryan Courson, Chief Financial Officer, added, "Throughout 2018 and into 2019, we have made significant progress in strengthening our balance sheet. Since the beginning of 2018, we have raised approximately $1.5 billion of capital, and in the process have substantially increased our equity capital base and improved our flexibility via our growing unencumbered fleet and committed corporate revolving credit facility. We will continue to augment our financial strength, while focusing on thoughtful capital allocation to position the business for long-term value creation."
Significant Developments in the Fourth Quarter
Debt Repayment
In November 2018, Seaspan made a repayment of $36.5 million for the remaining principal balance of one of its secured credit facilities; as a result, six vessels were unencumbered subsequent to year-end.
Senior Unsecured Notes
In December 2018, Seaspan repurchased approximately $17.5 million aggregate principal amount of its 6.375% senior unsecured notes due 2019.
Investment in Swiber Holdings Limited
On October 3, 2018, Seaspan entered into a binding term sheet to invest up to $200.0 million in Swiber Holdings Limited ("Swiber"). Subject to the terms and conditions to be set forth in a definitive transaction agreement, upon closing, Seaspan anticipates acquiring an 80% post-restructured equity interest in Swiber for $20.0 million and, after meeting certain milestones, an additional $180.0 million would be invested in Swiber's LNG-to-power project in Vietnam.
Recent Additions to Senior Management
In October 2018, Seaspan appointed Torsten Holst Pedersen as Executive Vice-President, Ship Management.
Subsequent Events
Registration of Washington Family Class A Common Shares
On January 14, 2019, Seaspan entered into a registration rights agreement (the "Washington Registration Rights Agreement") with various affiliates of the Washington family (the "Washington Shareholders"). Pursuant to the Washington Registration Rights Agreement, Seaspan agreed to file a registration statement covering the resale of the Washington Shareholders' Class A Common Shares, and a registration statement on Form F-3 was filed with the U.S. Securities and Exchange Commission (the "SEC") on January 18, 2019. For additional information regarding the Washington Registration Rights Agreement, please read our Report on Form 6-K furnished to the SEC on January 15, 2019.
"The share registration noted was simply an administrative task. The Washington family is not selling any of its shares, and it remains one of the largest shareholders of Seaspan Corporation. I will continue to serve on Seaspan's Board of Directors and remain committed to the long-term strategy of the Company," said Larry Simkins, a member of the Board of Directors of Seaspan and President of The Washington Companies.
Closing of Second Fairfax Investment of $500 million
On January 15, 2019, Seaspan closed its previously announced transaction (the "Second Fairfax Investment") with Fairfax Financial Holdings Limited ("Fairfax"), whereby Seaspan received proceeds of $500 million in exchange for $250 million aggregate principal amount of 5.50% Senior Notes due 2026 (the "2026 Notes"), and 38.5 million Class A Common Shares, which were issued in exchange for Fairfax's immediate exercise of warrants (the "2019 Warrants"). The aggregate purchase price of the 2026 Notes and the 2019 Warrants was $250 million and the proceeds from exercise of the 2019 Warrants was an additional $250 million.
Summary of Fairfax Investments(1)
Investment |
Date Issued/Exercised |
Gross Proceeds to Seaspan |
2025 Notes |
February 14, 2018 |
$250 million |
2018 Warrants |
July 16, 2018 |
$250 million |
2026 Notes |
January 15, 2019 |
$250 million |
2019 Warrants |
January 15, 2019 |
$250 million |
(1) |
Does not include the 25 million seven year warrants outstanding as of the date hereof |
Debt Repayment
On January 16, 2019, Seaspan made a repayment of $147.0 million for the remaining principal balance on a secured credit facility. As a result of the repayment, eight vessels will be unencumbered, subject to the completion of the associated collateral release documentation. As of March 5, 2019, Seaspan has 32 unencumbered vessels (with collateral in the process of being released with respect to eight of these).
Distribution
The Board of Directors declared a quarterly distribution in the amount of $0.125 per share for its Class A Common Shares, paid on January 30, 2019 to shareholders of record as at the close of business on January 14, 2019. Regular quarterly dividends on the Preferred Shares Series D, Series E, Series G, Series H and Series I were also declared.
Class A Common Shares Outstanding
As of February 28, 2019, there were 215,474,629 Class A Common Shares outstanding.
Results for the Quarter and Year Ended December 31, 2018
Financial Results
The following table summarizes Seaspan's consolidated financial results for the quarter ended and year ended December 31, 2018 and 2017:
Financial Summary (in millions of US dollars, except |
Quarter Ended December 31, |
Year Ended December 31, |
|||||||||||||||
earnings per share amount) |
|||||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||||
Revenue |
$ |
294.9 |
$ |
214.4 |
$ |
1,096.3 |
$ |
831.3 |
|||||||||
Ship operating expense |
55.6 |
48.1 |
219.3 |
183.9 |
|||||||||||||
Depreciation and amortization expense |
64.7 |
50.4 |
245.8 |
199.9 |
|||||||||||||
General and administrative expense |
7.1 |
11.1 |
31.6 |
40.1 |
|||||||||||||
Operating lease expense |
33.2 |
30.6 |
129.7 |
115.5 |
|||||||||||||
Operating earnings |
134.4 |
80.6 |
469.9 |
303.1 |
|||||||||||||
Interest expense and amortization of deferred |
57.6 |
31.3 |
212.1 |
116.4 |
|||||||||||||
financing fees |
|||||||||||||||||
Net earnings |
63.1 |
58.6 |
278.8 |
175.2 |
|||||||||||||
Net earnings to common shareholders |
44.9 |
42.4 |
207.6 |
110.8 |
|||||||||||||
Earnings per share, diluted |
0.25 |
0.34 |
1.31 |
0.94 |
|||||||||||||
Cash from operating activities |
149.3 |
89.0 |
483.9 |
323.2 |
|||||||||||||
Ownership Days, Operating Days and Vessel Utilization
Ownership days are the number of days a vessel is owned and available for charter. Operating days are the number of days a vessel is available to the charterer for use.
The primary driver of ownership days are the increases or decreases in the number of vessels owned, while the drivers of operating days are ownership days and the number of days the vessels are off-hire.
Ownership days increased by 1,939 days and 5,257 days for the quarter and year ended December 31, 2018, respectively, compared to the same periods in 2017. These increases were primarily due to the addition of 16 vessels acquired through the acquisition of Greater China Intermodal Investments LLC ("GCI"), which contributed 1,472 days and 4,688 days, respectively. The remainder of the increase was due to 2018 vessel deliveries and acquisitions and partially offset by vessel disposals.
Vessel utilization represents the number of operating days as a percentage of ownership days.
The following table summarizes Seaspan's vessel utilization by quarter and for the year ended December 31, 2018 and 2017:
2017 |
2018 |
Year Ended |
|||||||||||||||||||||||||||||||||||
Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
Q3 |
Q4 |
2017 |
2018 |
||||||||||||||||||||||||||||
Vessel Utilization: |
|||||||||||||||||||||||||||||||||||||
Ownership Days(1) |
7,917 |
8,037 |
8,148 |
7,905 |
8,030 |
9,546 |
9,844 |
9,844 |
32,007 |
37,264 |
|||||||||||||||||||||||||||
Less Off-hire Days: |
|||||||||||||||||||||||||||||||||||||
Scheduled 5-Year |
— |
— |
— |
— |
(104) |
— |
(8) |
(22) |
— |
(134) |
|||||||||||||||||||||||||||
Survey |
|||||||||||||||||||||||||||||||||||||
Unscheduled Off- |
(662) |
(142) |
(254) |
(319) |
(149) |
(137) |
(146) |
(240) |
(1,377) |
(672) |
|||||||||||||||||||||||||||
hire(2) |
|||||||||||||||||||||||||||||||||||||
Operating Days(1) |
7,255 |
7,895 |
7,894 |
7,586 |
7,777 |
9,409 |
9,690 |
9,582 |
30,630 |
36,458 |
|||||||||||||||||||||||||||
Vessel Utilization |
91.6 |
% |
98.2 |
% |
96.9 |
% |
96.0 |
% |
96.8 |
% |
98.6 |
% |
98.4 |
% |
97.3 |
% |
95.7 |
% |
97.8 |
% |
|||||||||||||||||
(1) |
Operating and ownership days include leased vessels and exclude vessels under bareboat charter. |
(2) |
Unscheduled off-hire includes days related to vessels being off-charter. |
Vessel utilization increased for the quarter and year ended December 31, 2018, compared to the same periods in 2017. The increases in utilization were primarily due to a large decrease in the number of unscheduled off-hire days in combination with the higher utilization of vessels acquired from GCI. During the year ended December 31, 2018, Seaspan completed dry-dockings for seven 2500 TEU vessels, one 3500 TEU vessel and one 4250 TEU vessel, one of which occurred while the vessel was off-charter.
Revenue
Revenue increased by 37.6% to $294.9 million and by 31.9% to $1,096.3 million for the quarter and year ended December 31, 2018, respectively, compared to the same periods in 2017. The increases in revenue were primarily due to the additional operating days from the acquisition of vessels from the GCI transaction, 2018 vessel deliveries and higher average charter rates for vessels that were on short-term charters.
The increase in operating days and the related financial impact thereof for the quarter and year ended December 31, 2018, relative to the same periods in 2017, is attributable to the following:
Quarter Ended December 31, 2018 |
Year Ended December 31, 2018 |
||||||||||||||||||||||
Ownership |
Operating Days Impact |
$ Impact (in millions of US |
Ownership |
Operating Days Impact |
$ Impact (in millions |
||||||||||||||||||
Addition of 16 vessels from acquisition of GCI |
1,472 |
1,472 |
$ |
54.3 |
4,688 |
4,688 |
$ |
169.9 |
|||||||||||||||
2018 vessel deliveries and acquisitions |
552 |
552 |
12.2 |
1,551 |
1,551 |
31.7 |
|||||||||||||||||
Changes in daily charter hire rates and re-charters |
— |
— |
11.7 |
— |
— |
31.0 |
|||||||||||||||||
Full period contribution for 2017 vessel deliveries |
— |
— |
— |
152 |
152 |
6.9 |
|||||||||||||||||
Unscheduled off-hire |
— |
79 |
1.4 |
— |
705 |
8.1 |
|||||||||||||||||
Scheduled off-hire |
— |
(22) |
(0.2) |
— |
(134) |
(2.1) |
|||||||||||||||||
Vessel disposals |
(85) |
(85) |
(0.6) |
(1,134) |
(1,134) |
(3.9) |
|||||||||||||||||
Interest income from leasing |
— |
— |
3.3 |
— |
— |
28.9 |
|||||||||||||||||
Other |
— |
— |
(1.6) |
— |
— |
(5.5) |
|||||||||||||||||
Total |
1,939 |
1,996 |
$ |
80.5 |
5,257 |
5,828 |
$ |
265.0 |
|||||||||||||||
Ship Operating Expense
Ship operating expense increased by 15.6% to $55.6 million and by 19.2% to $219.3 million for the quarter and year ended December 31, 2018, respectively, compared to the same periods in 2017. The increases were primarily due to an increase in ownership days from the acquisition of vessels from the GCI transaction and 2018 vessel deliveries as well as higher bulk purchasing of vessel stores and spare parts. The increase in ship operating expense for the year ended December 31, 2018 was also due to the increase in planned maintenance required for certain vessels less than 8500 TEU in size.
2017 |
2018 |
Year Ended |
|||||||||||||||||||||||||||||
Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
Q3 |
Q4 |
2017 |
2018 |
||||||||||||||||||||||
Operating Cost: |
|||||||||||||||||||||||||||||||
Ownership Days(1) |
7,917 |
8,037 |
8,148 |
7,905 |
8,030 |
9,546 |
9,844 |
9,844 |
32,007 |
37,264 |
|||||||||||||||||||||
Vessel Operating Costs |
$ |
45.6 |
$ |
44.8 |
$ |
45.4 |
$ |
48.1 |
$ |
49.5 |
$ |
58.8 |
$ |
55.4 |
$ |
55.6 |
$ |
183.9 |
$ |
219.3 |
|||||||||||
(in millions of US dollars) |
|||||||||||||||||||||||||||||||
Operating Cost per Ownership Day |
$ |
5,761 |
$ |
5,577 |
$ |
5,569 |
$ |
6,086 |
$ |
6,170 |
$ |
6,156 |
$ |
5,624 |
$ |
5,648 |
$ |
5,746 |
$ |
5,884 |
|||||||||||
__________________________ |
|
(1) |
Ownership days include leased vessels and exclude vessels under bareboat charter. |
Depreciation and Amortization Expense
Depreciation and amortization expense increased by 28.5% to $64.7 million and by 22.9% to $245.8 million for the quarter and year ended December 31, 2018, respectively, compared to the same periods in 2017. The increases were primarily due to an increase in ownership days from the acquisition of vessels from the GCI transaction and 2018 vessel deliveries.
General and Administrative Expense
General and administrative expense decreased by 36.2%, to $7.1 million and by 21.3% to $31.6 million for the quarter and year ended December 31, 2018, respectively, compared to the same periods in 2017. For the quarter ended December 31, 2018, the decrease was primarily due to share-based compensation expense relating to the accelerated vesting of restricted shares and cancellation of performance share units in 2017. For the year ended December 31, 2018, the decrease was primarily due to share-based compensation expense to the chairman of the board and the former chief executive officer, partially offset by a transition payment to the former chief financial officer in 2018.
Operating Lease Expense
Operating lease expense increased by 8.6% to $33.2 million and by 12.3% to $129.7 million for the quarter and year ended December 31, 2018, respectively, compared to the same periods in 2017. The increases were primarily due to an increase in LIBOR.
Interest Expense and Amortization of Deferred Financing Fees
The following table summarizes Seaspan's borrowings:
(in millions of US dollars) |
As at December 31, |
|||||
2018 |
2017 |
|||||
Long-term debt, excluding deferred financing fees: |
||||||
Revolving credit facilities |
$ |
788.2 |
$ |
854.1 |
||
Term loan credit facilities |
2,158.7 |
1,196.0 |
||||
Senior unsecured notes |
400.4 |
418.0 |
||||
2025 Notes |
250.0 |
— |
||||
Discount and fair value adjustment |
(85.7) |
— |
||||
Long-term obligations under capital lease, excluding |
647.7 |
648.8 |
||||
deferred financing fees |
||||||
Total borrowings |
4,159.3 |
3,116.9 |
||||
Less: Vessels under construction |
— |
(146.4) |
||||
Operating borrowings |
$ |
4,159.3 |
$ |
2,970.5 |
||
Interest expense and amortization of deferred financing fees increased by $26.3 million to $57.6 million and by $95.7 million to $212.1 million for the quarter and year ended December 31, 2018, respectively, compared to the same periods in 2017. The increases were primarily due to the debt assumed as part of the acquisition of GCI, an increase in operating debt for delivered vessels, the issuance of the February 2018 debentures to Fairfax and an increase in LIBOR.
Change in Fair Value of Financial Instruments
The change in fair value of financial instruments resulted in a loss of $14.3 million for the quarter ended and a gain of $15.5 million year ended December 31, 2018, respectively. The loss for the quarter ended December 31, 2018 was primarily due to a decrease in the forward LIBOR curve as it relates to the interest rate swaps during the period. The gain for the year ended December 31, 2018 was primarily due to an increase in the forward LIBOR curve as it relates to interest rate swaps during the period. Included in the change in fair value is the unrealized change in fair value of $5.4 million loss and $57.4 million gain for the quarter and year ended December 31, 2018, respectively, compared to a gain of $19.4 million and $44.1 million for the comparative periods in the prior year.
Liquidity and Unencumbered Vessels(1)
As of December 31, 2018, Seaspan had total liquidity of $507.3 million, consisting of $357.3 million of cash and cash equivalents and $150.0 million available under our committed two year revolving credit facility. Additionally, as of March 5, 2019, Seaspan's unencumbered asset pool included 32 vessels (eight of which are in the process of being unencumbered).
TEU Class |
Vessel Count |
||
2500 |
10 |
||
3500 |
2 |
||
4250 |
14 |
||
8500 |
2 |
||
9600 |
2 |
||
10000 |
2 |
||
Total |
32 |
||
____________ |
|
(1) |
Includes vessels securing debt which was repaid in January 2019, pending completion of collateral release documentation. |
Working Capital
At December 31, 2018, Seaspan had a working capital deficiency of $475.6 million, which includes $320.4 million of senior unsecured notes maturing in April 2019. This deficiency is addressed by the closing of the Second Fairfax Investment on January 15, 2019 in which Seaspan received gross proceeds of $500.0 million.
About Seaspan
Seaspan is the leading independent charter owner of containerships with industry leading ship management services. Seaspan charters its vessels primarily pursuant to long-term, fixed-rate, time charters from the world's largest container shipping liners. Seaspan's operating fleet consists of 112 containerships with a total capacity of more than 900,000 TEU, an average age of approximately six years and an average remaining lease period of approximately four years, on a TEU weighted basis.
Seaspan has the following securities listed on The New York Stock Exchange:
Symbol |
Description |
|
SSW |
Class A Common Shares |
|
SSW PR D |
Series D Preferred Shares |
|
SSW PR E |
Series E Preferred Shares |
|
SSW PR G |
Series G Preferred Shares |
|
SSW PR H |
Series H Preferred Shares |
|
SSW PR I |
Series I Preferred Shares |
|
SSWN |
6.375% Senior Unsecured Notes due 2019 |
|
SSWA |
7.125% Senior Unsecured Notes due 2027 |
|
SSW25 |
5.500% Senior Notes due 2025 |
Conference Call and Webcast
Seaspan will host a conference call and webcast presentation for investors, analysts, and interested parties to discuss its fourth quarter and full year results on March 6, 2019 at 8:30 a.m. ET. Participants should call 1-877-246-9875 (US/Canada) or 1-707-287-9353 (International) and request the Seaspan call. The live webcast and slide presentation are available under "Events & Presentations" at www.seaspancorp.com.
A recording will be available at 1-855-859-2056 or 1-404-537-3406 (Conference passcode: 4980867).
SEASPAN CORPORATION |
|||||||
December 31, 2018 |
December 31, 2017 |
||||||
Assets |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
357,327 |
$ |
253,176 |
|||
Short-term investments |
2,532 |
104 |
|||||
Accounts receivable |
13,001 |
11,678 |
|||||
Loans to affiliate |
— |
36,100 |
|||||
Prepaid expenses and other |
36,519 |
44,869 |
|||||
Gross investment in lease |
44,348 |
35,478 |
|||||
Fair value of financial instruments |
113 |
— |
|||||
453,840 |
381,405 |
||||||
Vessels |
5,926,274 |
4,390,854 |
|||||
Vessels under construction |
— |
146,362 |
|||||
Gross investment in lease |
817,631 |
687,896 |
|||||
Goodwill |
75,321 |
75,321 |
|||||
Other assets |
204,931 |
196,304 |
|||||
$ |
7,477,997 |
$ |
5,878,142 |
||||
Liabilities, Puttable Preferred Shares and Shareholders' Equity |
|||||||
Current liabilities: |
|||||||
Accounts payable and accrued liabilities |
$ |
70,211 |
$ |
63,220 |
|||
Current portion of deferred revenue |
55,915 |
55,367 |
|||||
Current portion of long-term debt |
722,641 |
257,800 |
|||||
Current portion of long-term obligations under capital lease |
48,384 |
43,912 |
|||||
Current portion of other long-term liabilities |
32,243 |
23,635 |
|||||
929,394 |
443,934 |
||||||
Deferred revenue |
376,884 |
328,681 |
|||||
Long-term debt |
2,764,900 |
2,192,833 |
|||||
Long-term obligations under capital lease |
591,372 |
595,016 |
|||||
Other long-term liabilities |
180,157 |
199,386 |
|||||
Fair value of financial instruments |
127,172 |
168,860 |
|||||
4,969,879 |
3,928,710 |
||||||
Puttable preferred shares |
48,139 |
— |
|||||
Shareholders' equity: |
|||||||
Share capital |
2,102 |
1,646 |
|||||
Treasury shares |
(371) |
(377) |
|||||
Additional paid in capital |
3,126,457 |
2,752,988 |
|||||
Deficit |
(645,638) |
(781,137) |
|||||
Accumulated other comprehensive loss |
(22,571) |
(23,688) |
|||||
2,459,979 |
1,949,432 |
||||||
$ |
7,477,997 |
$ |
5,878,142 |
||||
SEASPAN CORPORATION |
|||||||||||||
Quarter Ended December 31, |
Year Ended December 31, |
||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||
Revenue |
$ |
294,912 |
$ |
214,381 |
$ |
1,096,331 |
$ |
831,324 |
|||||
Operating expenses: |
|||||||||||||
Ship operating |
55,594 |
48,108 |
219,270 |
183,916 |
|||||||||
Cost of services, supervision fees |
— |
650 |
— |
1,300 |
|||||||||
Depreciation and amortization |
64,716 |
50,359 |
245,801 |
199,938 |
|||||||||
General and administrative |
7,071 |
11,082 |
31,565 |
40,091 |
|||||||||
Operating leases |
33,176 |
30,554 |
129,747 |
115,544 |
|||||||||
Expenses related to customer bankruptcy |
— |
— |
— |
1,013 |
|||||||||
Gain on disposals |
— |
(6,998) |
— |
(13,604) |
|||||||||
160,557 |
133,755 |
626,383 |
528,198 |
||||||||||
Operating earnings |
134,355 |
80,626 |
469,948 |
303,126 |
|||||||||
Other expenses (income): |
|||||||||||||
Interest expense and amortization of deferred |
57,587 |
31,328 |
212,065 |
116,389 |
|||||||||
Interest income |
(1,304) |
(1,113) |
(4,197) |
(4,558) |
|||||||||
Acquisition related gain on contract settlement |
— |
— |
(2,430) |
— |
|||||||||
Change in fair value of financial instruments |
14,285 |
(6,840) |
(15,490) |
12,631 |
|||||||||
Equity income on investment |
— |
(1,796) |
(1,216) |
(5,835) |
|||||||||
Other expenses |
690 |
494 |
2,418 |
9,262 |
|||||||||
71,258 |
22,073 |
191,150 |
127,889 |
||||||||||
Net earnings |
$ |
63,097 |
$ |
58,553 |
$ |
278,798 |
$ |
175,237 |
|||||
Dividends - preferred shares |
(18,163) |
(16,163) |
(71,229) |
(64,476) |
|||||||||
Net earnings attributable to common shares |
$ |
44,934 |
$ |
42,390 |
$ |
207,569 |
$ |
110,761 |
|||||
Weighted average number of shares, basic |
177,269 |
127,385 |
154,848 |
117,524 |
|||||||||
Effect of dilutive securities: |
|||||||||||||
Share-based compensation |
132 |
127 |
91 |
81 |
|||||||||
Fairfax warrants |
937 |
— |
3,129 |
— |
|||||||||
Weighted average number of shares, diluted |
178,338 |
127,512 |
158,068 |
117,605 |
|||||||||
Earnings per share, basic |
$ |
0.25 |
$ |
0.34 |
$ |
1.34 |
$ |
0.94 |
|||||
Earnings per share, diluted |
$ |
0.25 |
$ |
0.34 |
$ |
1.31 |
$ |
0.94 |
|||||
SEASPAN CORPORATION |
||||||||||||||
Quarter Ended December 31, |
Year Ended December 31, |
|||||||||||||
2018 |
2017 |
2018 |
2017 |
|||||||||||
Net earnings |
$ |
63,097 |
$ |
58,553 |
$ |
278,798 |
$ |
175,237 |
||||||
Other comprehensive income: |
||||||||||||||
Amounts reclassified to net earnings during the period |
270 |
380 |
1,117 |
2,859 |
||||||||||
relating to cash flow hedging instruments |
||||||||||||||
Comprehensive income |
$ |
63,367 |
$ |
58,933 |
$ |
279,915 |
$ |
178,096 |
||||||
SEASPAN CORPORATION |
|||||||||||||
Quarter Ended December 31, |
Year Ended December 31, |
||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||
Cash from (used in): |
|||||||||||||
Operating activities: |
|||||||||||||
Net earnings |
$ |
63,097 |
$ |
58,553 |
$ |
278,798 |
$ |
175,237 |
|||||
Items not involving cash: |
|||||||||||||
Depreciation and amortization |
64,716 |
50,359 |
245,801 |
199,938 |
|||||||||
Share-based compensation |
1,229 |
5,149 |
3,134 |
17,526 |
|||||||||
Amortization of deferred financing fees, debt discount |
5,664 |
3,081 |
19,947 |
11,899 |
|||||||||
and fair value of long-term debt |
|||||||||||||
Amounts reclassified from other comprehensive |
79 |
103 |
333 |
1,927 |
|||||||||
loss to interest expense |
|||||||||||||
Unrealized change in fair value of financial instruments |
5,389 |
(19,392) |
(57,445) |
(44,060) |
|||||||||
Acquisition related gain on contract settlement |
— |
— |
(2,430) |
— |
|||||||||
Equity income on investment |
— |
(1,796) |
(1,216) |
(5,835) |
|||||||||
Amortization of acquired revenue contracts |
2,656 |
1,329 |
8,117 |
4,511 |
|||||||||
Operating leases |
(5,902) |
(5,911) |
(23,594) |
(22,589) |
|||||||||
Gain on disposals |
— |
(6,998) |
— |
(13,604) |
|||||||||
Other |
4 |
116 |
16 |
6,690 |
|||||||||
Changes in assets and liabilities |
12,416 |
4,358 |
12,390 |
(8,421) |
|||||||||
Cash from operating activities |
149,348 |
88,951 |
483,851 |
323,219 |
|||||||||
Financing activities: |
|||||||||||||
Common shares issued, net of issuance costs |
— |
39,598 |
— |
118,966 |
|||||||||
Preferred shares issued, net of issuance costs |
(40) |
2,690 |
144,375 |
2,690 |
|||||||||
Draws on credit facilities |
— |
— |
325,600 |
— |
|||||||||
Repayment of credit facilities |
(109,002) |
(185,553) |
(469,662) |
(455,005) |
|||||||||
2025 Notes and 2018 Warrants issued |
— |
— |
250,000 |
— |
|||||||||
Senior unsecured notes issued |
— |
80,000 |
— |
80,000 |
|||||||||
Draws on long-term obligations under capital lease |
— |
39,923 |
46,964 |
176,254 |
|||||||||
Repayment of long-term obligations under |
(12,468) |
(6,706) |
(48,140) |
(26,198) |
|||||||||
capital lease |
|||||||||||||
Common shares repurchased, including |
— |
— |
— |
— |
|||||||||
related expenses |
|||||||||||||
Senior unsecured notes repurchased, including |
(17,529) |
(3,953) |
(17,529) |
(7,075) |
|||||||||
related expenses |
|||||||||||||
Proceeds from exercise of 2018 Warrants |
— |
— |
250,000 |
— |
|||||||||
Redemption of Series F preferred shares |
— |
— |
(143,430) |
— |
|||||||||
Financing fees |
(254) |
(5,054) |
(16,122) |
(8,226) |
|||||||||
Dividends on common shares |
(21,580) |
(8,419) |
(49,937) |
(61,830) |
|||||||||
Dividends on preferred shares |
(16,085) |
(16,103) |
(65,765) |
(64,416) |
|||||||||
Net proceeds from sale-leaseback of vessels |
— |
— |
— |
90,753 |
|||||||||
Cash from (used in) financing activities |
(176,958) |
(63,577) |
206,354 |
(154,087) |
|||||||||
Investing activities: |
|||||||||||||
Expenditures for vessels |
(2,562) |
(102,793) |
(318,740) |
(338,518) |
|||||||||
Short-term investments |
(27) |
— |
(2,428) |
307 |
|||||||||
Net proceeds from vessel disposals |
— |
18,753 |
— |
37,091 |
|||||||||
Loans to affiliate |
427 |
(546) |
— |
(2,677) |
|||||||||
Repayment of loans to affiliate |
— |
546 |
— |
22,325 |
|||||||||
Other assets |
(3,927) |
(2,488) |
(1,417) |
(2,384) |
|||||||||
Acquisition of GCI |
— |
— |
(333,581) |
— |
|||||||||
Cash acquired from GCI acquisition |
— |
— |
70,121 |
— |
|||||||||
Cash used in investing activities |
(6,089) |
(86,528) |
(586,045) |
(283,856) |
|||||||||
Increase (decrease) in cash, cash equivalents and restricted cash |
(33,699) |
(61,154) |
104,160 |
(114,724) |
|||||||||
Cash, cash equivalents and restricted cash, beginning of period |
405,095 |
328,390 |
267,236 |
381,960 |
|||||||||
Cash, cash equivalents and restricted cash, end of period |
$ |
371,396 |
$ |
267,236 |
$ |
371,396 |
$ |
267,236 |
|||||
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the amounts shown in the consolidated statements of cash flows: |
|||||||||||||
December 31, |
|||||||||||||
2018 |
2017 |
||||||||||||
Cash and cash equivalents |
$ |
357,327 |
$ |
253,176 |
|||||||||
Restricted cash included in other assets |
14,069 |
14,060 |
|||||||||||
Total cash, cash equivalents and restricted cash shown in the |
$ |
371,396 |
$ |
267,236 |
|||||||||
consolidated statements of cash flows |
|||||||||||||
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 Seaspan's operations, cash flows, and financial position, including, in particular, the likelihood of its success in developing and expanding its business. 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 Seaspan's 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 Seaspan 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:
- future growth prospects and ability to expand Seaspan's business;
- Seaspan's expectations as to impairments of its vessels, including the timing and amount of currently anticipated impairments;
- the future valuation of Seaspan's vessels and goodwill;
- potential acquisitions, vessel financing arrangements and other investments, and Seaspan's expected risks and benefits from such transactions;
- 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 fleet including, its capital base, and comply with regulatory standards, its expectations regarding future dry-docking and operating expenses, including ship operating expense and general and administrative expenses;
- Seaspan's expectations about the availability of vessels to purchase, the time it may take to construct new vessels, the delivery dates of new vessels, the commencement of service of new vessels under long-term time charter contracts and the useful lives of its vessels;
- availability of crew, number of off-hire days and dry-docking requirements;
- general market conditions and shipping market trends, including charter rates, increased technological innovation in competing vessels and other factors affecting supply and demand;
- Seaspan's financial condition and liquidity, including its ability to borrow and repay funds under its credit facilities, to refinance its existing facilities and to obtain additional financing in the future to fund capital expenditures, acquisitions and other general corporate activities;
- Seaspan's continued ability to meet its current liabilities as they become due;
- Seaspan's continued ability to maintain, enter into or renew primarily long-term, fixed-rate time charters with its existing customers or new customers;
- the potential for early termination of long-term contracts and Seaspan's potential inability to enter into, renew or replace long-term contracts;
- the introduction of new accounting rules for leasing and exposure to currency exchange rates and interest rate fluctuations;
- conditions inherent in the operation of ocean-going vessels, including acts of piracy;
- acts of terrorism or government requisition of Seaspan's containerships during periods of war or emergency;
- adequacy of Seaspan's insurance to cover losses that result from the inherent operational risks of the shipping industry;
- lack of diversity in Seaspan's operations and in the type of vessels in its fleet;
- conditions in the public equity market and the price of Seaspan's shares;
- Seaspan's ability to leverage to its advantage its relationships and reputation in the containership industry;
- changes in governmental rules and regulations or actions taken by regulatory authorities, and the effect of governmental regulations on Seaspan's business;
- the financial condition of Seaspan's customers, lenders, and other counterparties and their ability to perform their obligations under their agreements with us;
- Seaspan's continued ability to meet specified restrictive covenants and other conditions in its financing and lease arrangements, its notes and its preferred shares;
- any economic downturn in the global financial markets and export trade and increase in trade protectionism and potential negative effects of any recurrence of such disruptions on Seaspan's customers' ability to charter Seaspan's vessels and pay for Seaspan's services;
- the value of Seaspan's vessels and other factors or events that trigger impairment assessments or results;
- taxation of Seaspan's earnings and of distributions to its shareholders;
- Seaspan's exemption from tax on U.S. source international transportation income;
- the ability to bring claims in China and Marshall Islands, where the legal systems are not well-developed;
- potential liability from future litigation; and
- other factors detailed from time to time in Seaspan's 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 Seaspan's 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 Seaspan's Annual Report for the year ended December 31, 2017 on Form 20-F filed on March 6, 2018 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.
Seaspan does not intend to revise any forward-looking statements in order to reflect any change in Seaspan's expectations or events or circumstances that may subsequently arise. Seaspan expressly disclaims any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in Seaspan's views or expectations, or otherwise. You should carefully review and consider the various disclosures included in Seaspan's Annual Report and in Seaspan's other filings made with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect Seaspan's business, prospects and results of operations.
Investor Inquiries:
Mr. Matt Borys
Seaspan Corporation
Tel. +1-778-328-5340
Email: [email protected]
SOURCE Seaspan Corporation
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