Seaspan Reports Third Quarter 2019 Results
Achieves highest quarterly utilization rate since 2011 of 99.6%,
Closes $500 million accordion, increasing Portfolio Financing Program to $1.5 billion and finishes the quarter with over $912 million of liquidity
HONG KONG, Nov. 7, 2019 /CNW/ - Seaspan Corporation ("Seaspan") (NYSE: SSW) announced today its financial results for the three and nine months ended September 30, 2019.
Highlights for the Third Quarter and First Nine Months of 2019:
- Increased portfolio financing program by $500.0 million to $1.5 billion
- Agreed to acquire 9600 TEU vessel which Seaspan expects will enter into a three year time charter with Ocean Network Express ("ONE")
- Achieved vessel utilization of 99.6% for the third quarter, the highest quarterly utilization since 2011, and 98.8% for the first nine months
- Operating earnings of $116.1 million for the third quarter and $570.6 million for the first nine months
- Earnings per diluted share of $0.11 for the third quarter and $1.44 for the first nine months; changes in fair value of financial instruments contributed a loss of $0.10 per diluted share for the third quarter and a loss of $0.17 per diluted share for the first nine months
- Cash flow from operations of $145.9 million for the third quarter and $645.2 million for the first nine months
Comments from Management
Bing Chen, President and Chief Executive Officer, commented, "Our focus on Operational Excellence in quality, reliability, and scalability, together with Customer Partnership, as the preferred solution provider of our customers, has resulted in our highest quarterly utilization rate since 2011, of 99.6% for our 112 vessels fleet. We continue to strengthen our customer centric approach, which this quarter generated an attractive vessel acquisition to facilitate the growth needs of one of our customers, in addition to a tailored charter solution for another. We see growing opportunities to broaden and deepen our customer partnerships as our sector stabilizes into a new normal marked by consolidation, and we expect our momentum to continue throughout the remainder of the year."
Ryan Courson, Chief Financial Officer, said, "During the quarter we continued to execute across our business delivering, ahead of plan, a total of $645 million year-to-date cash flows from operations. We remain focused on the balance sheet as well, advancing our capital plan with the increase of our portfolio financing program to $1.5 billion of total commitments. The increased capacity provides room and flexibility to finance new acquisitions, including our recently acquired 9600 TEU vessel, which is expected to be delivered in April. The execution on our capital plan has significantly improved capital availability and flexibility, positioning us to execute on our next phase of growth."
Significant Developments During the Quarter Ended September 30, 2019
Portfolio Financing Program Increased to $1.5 billion
On May 15, 2019, Seaspan entered into a credit agreement with a syndicate of lenders for a $1.0 billion secured credit facility as part of a portfolio financing program (the "Program"). The Program is secured by a portfolio of vessels (the "Collateral Pool") and bears interest at LIBOR plus 2.25% per annum. Seaspan may add, substitute and remove vessels from the Collateral Pool during the term, subject to a borrowing base, portfolio concentration limits, absence of defaults and compliance with financial covenants and certain negative covenants.
On September 18, 2019, Seaspan increased the committed amount under the Program by $500.0 million to a total of $1.5 billion. The additional commitments are subject to the same terms, conditions and Collateral Pool security requirements as the initial tranche.
Series D Preferred Shares
In September 2019, Seaspan redeemed 1,923,585 shares of 7.95% Series D preferred shares for $47.8 million.
Purchase of 9600 TEU Vessel
On September 9, 2019, Seaspan closed an agreement to purchase a 2010-built 9600 TEU containership. The vessel is expected to be delivered by the end of April 2020, at which point Seaspan expects the vessel will enter into a 36 month fixed rate time charter with ONE. Subsequent to delivery of the vessel, Seaspan's fleet will expand to 113 vessels.
Unencumbered Vessels
As of November 7, 2019, Seaspan had 31 unencumbered vessels.
Subsequent Events
Debt Prepayment
In October 2019, Seaspan refinanced secured term loan facilities, totalling $180.1 million, using proceeds from the Program. As of September 30, 2019, this balance was classified as current liabilities due to the issuance of voluntary irrevocable prepayment notices by Seaspan.
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 October 30, 2019 to shareholders of record as at the close of business on October 21, 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 November 7, 2019, there were 215.7 million Class A Common Shares outstanding.
Results for the Three and Nine Months Ended September 30, 2019 and 2018
Financial Results
The following table summarizes Seaspan's consolidated financial results for the three and nine months ended September 30, 2019 and 2018:
Financial Summary (in millions of US dollars, except earnings per share |
Three Months Ended |
Nine Months Ended |
|||||||||
2019 |
2018 |
2019 |
2018 |
||||||||
Revenue |
$ |
282.7 |
$ |
295.0 |
$ |
843.5 |
$ |
801.4 |
|||
Ship operating expense |
56.8 |
55.4 |
170.4 |
163.7 |
|||||||
Depreciation and amortization expense |
63.9 |
65.1 |
189.8 |
181.1 |
|||||||
General and administrative expense |
7.7 |
8.1 |
23.3 |
24.5 |
|||||||
Operating lease expense |
38.3 |
33.0 |
116.3 |
96.6 |
|||||||
Income related to modification of time charters |
— |
— |
227.0 |
— |
|||||||
Operating earnings |
116.1 |
133.4 |
570.6 |
335.6 |
|||||||
Interest expense and amortization of deferred |
|||||||||||
financing fees |
45.0 |
56.0 |
151.5 |
149.4 |
|||||||
Net earnings |
43.0 |
80.0 |
368.2 |
215.7 |
|||||||
Net earnings to common shareholders |
25.0 |
63.5 |
314.0 |
162.6 |
|||||||
Earnings per share, diluted |
0.11 |
0.36 |
1.44 |
1.07 |
|||||||
Cash from operating activities |
145.9 |
150.6 |
645.2 |
355.9 |
|||||||
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 were unchanged for the three months ended September 30, 2019, and increased by 1,791 days for the nine months ended September 30, 2019, compared with the same periods in 2018. The increase for the nine months ended September 30, 2019 was primarily due to the full period contribution of the additional 16 vessels acquired through the acquisition of Greater China Intermodal Investments LLC ("GCI"), which contributed 1,152 days, with the remainder due to the 2018 vessel deliveries.Vessel utilization represents the number of operating days as a percentage of ownership days.
The following table summarizes Seaspan's vessel utilization for the nine months ended September 30, 2019 and 2018 and for each quarter for the 24 months ended September 30, 2019:
2017 |
2018 |
2019 |
Nine Months |
|||||||||||||||||
Q4 |
Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
Q3 |
2018 |
2019 |
|||||||||||
Vessel Utilization: |
||||||||||||||||||||
Ownership Days(1) |
7,905 |
8,030 |
9,546 |
9,844 |
9,844 |
9,630 |
9,737 |
9,844 |
27,420 |
29,211 |
||||||||||
Less Off-hire Days: |
||||||||||||||||||||
Scheduled Dry Docking |
— |
(104) |
— |
(8) |
(22) |
(13) |
(54) |
(36) |
(112) |
(103) |
||||||||||
Unscheduled Off-hire(2) |
(319) |
(149) |
(137) |
(146) |
(240) |
(166) |
(71) |
(3) |
(432) |
(240) |
||||||||||
Operating Days(1) |
7,586 |
7,777 |
9,409 |
9,690 |
9,582 |
9,451 |
9,612 |
9,805 |
26,876 |
28,868 |
||||||||||
Vessel Utilization |
96.0 |
% |
96.8 |
% |
98.6 |
% |
98.4 |
% |
97.3 |
% |
98.1 |
% |
98.7 |
% |
99.6 |
% |
98.0 |
% |
98.8 |
% |
____________________________ |
|
(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 three and nine months ended September 30, 2019, compared with the same periods in 2018. The increase for the nine months ended September 30, 2019 was primarily due to a decrease in the number of unscheduled off-hire days and scheduled off-hire days for dry-docking.
Revenue
Revenue decreased by 4.2% to $282.7 million and increased by 5.3% to $843.5 million for the three and nine months ended September 30, 2019, respectively, compared with the same periods in 2018. The decrease in revenue for the three months ended September 30, 2019 was primarily due to the changes in the daily charter hire rates of seven time charters which were modified in the first quarter of 2019, offset by higher operating days. Seaspan recognized $227.0 million of income from modification, and these seven charters were subsequently rechartered to other customers at market rates. The increase in revenue for the nine months ended September 30, 2019 was primarily due to the contribution of additional operating days from the acquisition of vessels from the GCI transaction and 2018 vessel deliveries.
The increase in operating days and the related financial impact thereof for the three and nine months ended September 30, 2019, respectively, compared to the same periods in 2018, is attributable to the following:
Three Months Ended |
Nine Months Ended |
||||||||||||
Ownership |
Operating |
$ Impact |
Ownership |
Operating |
$ Impact |
||||||||
Full period contribution from 2018 vessel |
|||||||||||||
deliveries |
— |
— |
$ |
— |
639 |
639 |
$ |
17.3 |
|||||
Addition of 16 vessels from acquisition of GCI |
— |
— |
— |
1,152 |
1,152 |
42.9 |
|||||||
Changes in daily charter hire rates and recharters |
— |
— |
— |
— |
— |
5.8 |
|||||||
Changes in daily charter hire rates on modified |
— |
— |
(12.7) |
— |
— |
(24.4) |
|||||||
Unscheduled Off-hire(2) |
— |
143 |
1.2 |
— |
192 |
2.4 |
|||||||
Scheduled off-hire |
— |
(28) |
(0.8) |
— |
9 |
(0.7) |
|||||||
Other |
— |
— |
— |
— |
— |
(1.2) |
|||||||
Total |
— |
115 |
$ |
(12.3) |
1,791 |
1,992 |
$ |
42.1 |
|||||
_______________________________ |
|
(1) |
Seven time charters were modified in the first quarter of 2019 and Seaspan recognized $227.0 million of income from modification; these seven charters have been rechartered to other customers at market rates. |
(2) |
Unscheduled off-hire includes days related to vessels being off-charter. |
Ship Operating Expense
Ship operating expense increased by 2.6% to $56.8 million and by 4.1% to $170.4 million for the three and nine months ended September 30, 2019, respectively, compared with the same periods in 2018. The increase for the three months ended September 30, 2019 is primarily due to an increase in maintenance expenses. The increase for the nine months ended September 30, 2019 was primarily due to an increase in ownership days from the period contribution of the acquisition of vessels from the GCI transaction and 2018 vessel deliveries.
The following table summarizes Seaspan's operating cost per operating day for the nine months ended September 30, 2019 and 2018 and for each quarter for the 24 months ended September 30, 2019:
2017 |
2018 |
2019 |
Nine Months |
|||||||||||||||||||||||||||
Q4 |
Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
Q3 |
2018 |
2019 |
|||||||||||||||||||||
Operating Cost: |
||||||||||||||||||||||||||||||
Ownership Days(1) |
7,905 |
8,030 |
9,546 |
9,844 |
9,844 |
9,630 |
9,737 |
9,844 |
27,420 |
29,211 |
||||||||||||||||||||
Vessel Operating Costs |
||||||||||||||||||||||||||||||
(in millions of US dollars) |
$ |
48.1 |
$ |
49.5 |
$ |
58.8 |
$ |
55.4 |
$ |
55.6 |
$ |
57.7 |
$ |
55.9 |
$ |
56.8 |
163.7 |
170.4 |
||||||||||||
Operating Cost per |
$ |
6,086 |
$ |
6,170 |
$ |
6,156 |
$ |
5,624 |
$ |
5,648 |
$ |
5,993 |
$ |
5,743 |
$ |
5,770 |
$ |
5,969 |
$ |
5,833 |
||||||||||
________________________________ |
|
(1) |
Ownership days include leased vessels and exclude vessels under bareboat charter. |
Ship operating cost per ownership day increased by 2.6% to $5,770 and decreased by 2.3% to $5,833 for the three and nine months ended September 30, 2019, respectively, compared to the same periods in 2018.
Depreciation and Amortization Expense
Depreciation and amortization expense decreased by 1.8% to $63.9 million and increased by 4.8% to $189.8 million for the three and nine months ended September 30, 2019, respectively, compared with the same periods in 2018. The decrease for the three months ended was primarily due to asset write-offs in 2018. The increase for the nine months ended September 30, 2019 was primarily due to an increase in ownership days from the period contribution of the acquisition of vessels from the GCI transaction and 2018 vessel deliveries.
General and Administrative Expense
General and administrative expense decreased by 4.9% to $7.7 million and by 4.9% to $23.3 million for the three and nine months ended September 30, 2019, respectively, compared with the same periods in 2018. The decrease for the three months ended was primarily due to a decrease in professional fees and share-based compensation expenses. For the nine months ended September 30, 2019, this decrease was primarily due to transition payments paid to the former CFO in 2018.
Operating Lease Expense
Operating lease expense increased by 16.1% to $38.3 million and by 20.4% to $116.3 million for the three and nine months ended September 30, 2019, respectively, compared with the same periods in 2018. The increase was primarily due to the amortization of deferred gains related to Seaspan's vessel sale-leaseback transactions, which are no longer recognized through operating leases. Upon adoption of Accounting Standards Update 2016-02 "Leases" on January 1, 2019, the remaining balance of these deferred gains were recognized through opening deficit as a cumulative adjustment.
Interest Expense and Amortization of Deferred Financing Fees
The following table summarizes Seaspan's borrowings:
(in millions of US dollars) |
September 30, |
||||
2019 |
2018 |
||||
Long-term debt, excluding deferred financing fees: |
|||||
Revolving credit facilities |
$ |
756.0 |
$ |
812.3 |
|
Term loan credit facilities |
1,648.8 |
2,243.8 |
|||
Senior unsecured notes |
80.0 |
417.9 |
|||
Fairfax Notes |
500.0 |
250.0 |
|||
Debt discount and fair value adjustment |
(155.8) |
(88.1) |
|||
Long-term obligations under other financing arrangements, excluding |
|||||
deferred financing fees |
609.7 |
660.1 |
|||
Total borrowings |
$ |
3,438.7 |
$ |
4,296.0 |
|
Interest expense and amortization of deferred financing fees decreased by $11.0 million to $45.0 million and increased by $2.1 million to $151.5 million for the three and nine months ended September 30, 2019, respectively, compared with the same periods in 2018. The decrease for the three months ended September 30, 2019 was primarily due to the early prepayments of long-term debt. The increase for the nine months ended September 30, 2019 was primarily due to the issuance of the Fairfax Notes and debt assumed in connection with the acquisition of GCI.
Change in Fair Value of Financial Instruments
The change in fair value of financial instruments resulted in a loss of $22.1 million and $37.7 million for the three and nine months ended September 30, 2019, respectively. The losses for this period were primarily due to the impact of swap settlements and a decrease in the LIBOR forward curve.
Liquidity and Unencumbered Vessels
As of September 30, 2019, Seaspan had total liquidity of $912.9 million, consisting of $258.9 million of cash and cash equivalents and $654.0 million available under its revolving credit facilities and term loan credit facilities.
As of September 30, 2019 |
||
TEU Class |
Vessel Count |
|
2500 |
4 |
|
3500 |
2 |
|
4250 |
18 |
|
8500 |
2 |
|
10000 |
2 |
|
13100 |
1 |
|
14000 |
2 |
|
Total |
31 |
|
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 seven 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 |
|
SSWA |
7.125% Senior Unsecured Notes due 2027 |
|
SSW25 |
5.500% Senior Notes due 2025 |
|
SSW26 |
5.500% Senior Notes due 2026 |
Conference Call and Webcast
Seaspan will host a conference call and webcast presentation for investors, analysts, and interested parties to discuss its third quarter results on November 7, 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 (conference ID: 8690787). 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: 8690787).
SEASPAN CORPORATION |
|||||
UNAUDITED CONSOLIDATED BALANCE SHEETS |
|||||
AS OF SEPTEMBER 30, 2019 AND DECEMBER 31, 2018 |
|||||
(IN THOUSANDS OF US DOLLARS) |
|||||
September 30, 2019 |
December 31, 2018 |
||||
Assets |
|||||
Current assets: |
|||||
Cash and cash equivalents |
$ |
258,901 |
$ |
357,327 |
|
Short-term investments |
— |
2,532 |
|||
Accounts receivable |
11,790 |
13,001 |
|||
Prepaid expenses and other |
32,129 |
36,519 |
|||
Gross investment in lease |
44,469 |
44,348 |
|||
Fair value of financial instruments |
— |
113 |
|||
347,289 |
453,840 |
||||
Vessels |
5,761,779 |
5,926,274 |
|||
Right-of-use assets |
985,563 |
— |
|||
Gross investment in lease |
784,340 |
817,631 |
|||
Goodwill |
75,321 |
75,321 |
|||
Other assets |
185,416 |
204,931 |
|||
$ |
8,139,708 |
$ |
7,477,997 |
||
Liabilities, puttable preferred shares and shareholders' equity |
|||||
Current liabilities: |
|||||
Accounts payable and accrued liabilities |
71,735 |
70,211 |
|||
Current portion of deferred revenue |
61,538 |
55,915 |
|||
Current portion of long-term debt |
361,882 |
722,641 |
|||
Current portion of operating lease liabilities |
159,757 |
— |
|||
Current portion of long-term obligations under other financing |
|||||
arrangements |
144,328 |
48,384 |
|||
Current portion of other long-term liabilities |
7,124 |
32,243 |
|||
806,364 |
929,394 |
||||
Deferred revenue |
351,889 |
376,884 |
|||
Long-term debt |
2,437,433 |
2,764,900 |
|||
Operating lease liabilities |
810,764 |
— |
|||
Long-term obligations under other financing arrangements |
458,770 |
591,372 |
|||
Other long-term liabilities |
12,968 |
180,157 |
|||
Fair value of financial instruments |
56,323 |
127,172 |
|||
4,934,511 |
4,969,879 |
||||
Puttable preferred shares |
— |
48,139 |
|||
Shareholders' equity: |
|||||
Share capital |
2,491 |
2,102 |
|||
Treasury shares |
(374) |
(371) |
|||
Additional paid in capital |
3,452,511 |
3,126,457 |
|||
Deficit |
(227,632) |
(645,638) |
|||
Accumulated other comprehensive loss |
(21,799) |
(22,571) |
|||
3,205,197 |
2,459,979 |
||||
$ |
8,139,708 |
$ |
7,477,997 |
||
SEASPAN CORPORATION |
|||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018 |
|||||||||||
(IN THOUSANDS OF US DOLLARS, EXCEPT PER SHARE AMOUNTS) |
|||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||
Revenue |
$ |
282,716 |
$ |
294,981 |
$ |
843,459 |
$ |
801,419 |
|||
Operating expenses (income): |
|||||||||||
Ship operating |
56,789 |
55,360 |
170,419 |
163,676 |
|||||||
Depreciation and amortization |
63,917 |
65,053 |
189,841 |
181,085 |
|||||||
General and administrative |
7,673 |
8,148 |
23,335 |
24,494 |
|||||||
Operating leases |
38,268 |
33,048 |
116,304 |
96,571 |
|||||||
Income related to modification of time charters |
— |
— |
(227,000) |
— |
|||||||
166,647 |
161,609 |
272,899 |
465,826 |
||||||||
Operating earnings |
116,069 |
133,372 |
570,560 |
335,593 |
|||||||
Other expenses (income): |
|||||||||||
Interest expense and amortization of deferred |
|||||||||||
financing fees |
44,999 |
56,038 |
151,464 |
149,387 |
|||||||
Interest expense related to amortization of debt |
|||||||||||
discount |
4,439 |
2,193 |
12,910 |
5,091 |
|||||||
Interest income |
(1,958) |
(1,128) |
(8,239) |
(2,893) |
|||||||
Refinancing expenses |
2,921 |
— |
6,136 |
— |
|||||||
Acquisition related gain on contract settlement |
— |
— |
— |
(2,430) |
|||||||
Change in fair value of financial instruments |
22,068 |
(4,526) |
37,661 |
(29,775) |
|||||||
Equity income on investment |
— |
— |
— |
(1,216) |
|||||||
Other expenses |
637 |
822 |
2,386 |
1,728 |
|||||||
73,106 |
53,399 |
202,318 |
119,892 |
||||||||
Net earnings |
$ |
42,963 |
$ |
79,973 |
$ |
368,242 |
$ |
215,701 |
|||
Dividends - preferred shares |
(17,917) |
(16,498) |
(54,254) |
(53,066) |
|||||||
Net earnings attributable to common shares |
$ |
25,046 |
$ |
63,475 |
$ |
313,988 |
$ |
162,635 |
|||
Weighted average number of shares, basic |
216,142 |
170,232 |
213,938 |
147,292 |
|||||||
Effect of dilutive securities: |
|||||||||||
Share-based compensation |
697 |
543 |
460 |
381 |
|||||||
Fairfax warrants |
5,696 |
3,255 |
3,841 |
3,860 |
|||||||
Weighted average number of shares, diluted |
222,535 |
174,030 |
218,239 |
151,533 |
|||||||
Earnings per share, basic |
$ |
0.12 |
$ |
0.37 |
$ |
1.47 |
$ |
1.10 |
|||
Earnings per share, diluted |
$ |
0.11 |
$ |
0.36 |
$ |
1.44 |
$ |
1.07 |
|||
SEASPAN CORPORATION |
|||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
|||||||||||
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018 |
|||||||||||
(IN THOUSANDS OF US DOLLARS) |
|||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||
Net earnings |
$ |
42,963 |
$ |
79,973 |
$ |
368,242 |
$ |
215,701 |
|||
Other comprehensive income: |
|||||||||||
Amounts reclassified to net earnings during the period |
|||||||||||
relating to cash flow hedging instruments |
254 |
271 |
772 |
847 |
|||||||
Comprehensive income |
$ |
43,217 |
$ |
80,244 |
$ |
369,014 |
$ |
216,548 |
|||
SEASPAN CORPORATION |
|||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||||||
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018 |
|||||||||||
(IN THOUSANDS OF US DOLLARS) |
|||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||
Cash from (used in): |
|||||||||||
Operating activities: |
|||||||||||
Net earnings |
$ |
42,963 |
$ |
79,973 |
$ |
368,242 |
$ |
215,701 |
|||
Items not involving cash: |
|||||||||||
Depreciation and amortization |
63,917 |
65,053 |
189,841 |
181,085 |
|||||||
Amortization of right-of-use assets |
28,036 |
— |
83,443 |
— |
|||||||
Share-based compensation |
693 |
355 |
2,655 |
1,905 |
|||||||
Amortization of deferred financing fees, debt discount |
|||||||||||
and fair value of long-term debt |
7,743 |
5,726 |
22,629 |
14,283 |
|||||||
Amounts reclassified from other comprehensive income |
|||||||||||
to interest expense |
70 |
80 |
219 |
254 |
|||||||
Unrealized change in fair value of financial instruments |
(406) |
(13,925) |
(13,724) |
(62,834) |
|||||||
Acquisition related gain on contract settlement |
— |
— |
— |
(2,430) |
|||||||
Equity income on investment |
— |
— |
— |
(1,216) |
|||||||
Deferred gain on sale-leasebacks |
— |
(5,527) |
— |
(16,636) |
|||||||
Amortization of acquired revenue contracts |
3,977 |
1,902 |
9,796 |
5,461 |
|||||||
Refinancing expenses |
2,921 |
— |
6,136 |
— |
|||||||
Other |
(576) |
(355) |
(1,313) |
(1,044) |
|||||||
Changes in assets and liabilities |
(3,425) |
17,307 |
(22,763) |
21,414 |
|||||||
Cash from operating activities |
145,913 |
150,589 |
645,161 |
355,943 |
|||||||
Financing activities: |
|||||||||||
Preferred shares issued, net of issuance costs |
— |
144,416 |
— |
144,416 |
|||||||
Repayment of credit facilities |
(367,040) |
(225,916) |
(1,276,755) |
(360,660) |
|||||||
Draws on credit facilities |
115,900 |
— |
734,893 |
325,600 |
|||||||
Fairfax notes and warrants issued |
— |
— |
250,000 |
250,000 |
|||||||
Draws on long-term obligations under other financing |
|||||||||||
arrangements |
— |
— |
— |
46,964 |
|||||||
Repayments on long-term obligations under other |
|||||||||||
financing arrangements |
(12,787) |
(12,365) |
(38,004) |
(35,672) |
|||||||
Senior unsecured notes repurchased, including related |
|||||||||||
expenses |
— |
— |
(8,998) |
— |
|||||||
Redemption of preferred shares |
(47,782) |
(143,430) |
(47,782) |
(143,430) |
|||||||
Repayments on senior unsecured notes |
— |
— |
(311,398) |
— |
|||||||
Proceeds from exercise of warrants |
— |
250,000 |
250,000 |
250,000 |
|||||||
Financing fees |
(7,890) |
(2,753) |
(23,619) |
(15,868) |
|||||||
Dividends on common shares |
(26,656) |
(9,549) |
(75,115) |
(28,358) |
|||||||
Dividends on preferred shares |
(18,247) |
(14,720) |
(53,685) |
(49,680) |
|||||||
Cash from (used in) financing activities |
(364,502) |
(14,317) |
(600,463) |
383,312 |
|||||||
Investing activities: |
|||||||||||
Expenditures for vessels |
(3,532) |
(5,613) |
(9,810) |
(306,626) |
|||||||
Short-term investments |
106 |
(105) |
2,532 |
(2,401) |
|||||||
Prepayment on vessel purchase |
(6,620) |
— |
(6,620) |
— |
|||||||
Other assets |
(1,100) |
(201) |
(6,806) |
2,510 |
|||||||
Loans to affiliate |
— |
— |
— |
(427) |
|||||||
Payments on settlement of interest swap agreements |
(104,825) |
(8,390) |
(122,054) |
(30,992) |
|||||||
Acquisition of GCI |
— |
— |
— |
(333,581) |
|||||||
Cash acquired from GCI acquisition |
— |
— |
— |
70,121 |
|||||||
Cash used in investing activities |
(115,971) |
(14,309) |
(142,758) |
(601,396) |
|||||||
Increase (decrease) in cash, cash equivalents and restricted cash |
(334,560) |
121,963 |
(98,060) |
137,859 |
|||||||
Cash, cash equivalents and restricted cash, beginning of period |
607,896 |
283,132 |
371,396 |
267,236 |
|||||||
Cash, cash equivalents and restricted cash, end of period |
$ |
273,336 |
$ |
405,095 |
$ |
273,336 |
$ |
405,095 |
|||
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: |
|||||||||||
September 30, |
|||||||||||
2019 |
2018 |
||||||||||
Cash and cash equivalents |
$ |
258,901 |
$ |
391,030 |
|||||||
Restricted cash included in other assets |
14,435 |
14,065 |
|||||||||
Total cash, cash equivalents and restricted cash shown in the |
|||||||||||
consolidated statements of cash flows |
$ |
273,336 |
$ |
405,095 |
|||||||
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, without limitation, 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 as well as the likelihood of consummating any such transaction;
- 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 and exemption from tax on China-sourced international transportation service 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, 2018 on Form 20-F filed on March 26, 2019 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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