Continuing to optimize business by increasing
contract duration, delivering on newbuild program and maintaining
robust liquidity
LONDON,
UK, Nov. 1, 2022 /PRNewswire/ - Atlas Corp.
("Atlas" or the "Company") (NYSE: ATCO) announced today its results
for the quarter ended September 30, 2022.
Financial Highlights:
- Third quarter 2022 financial performance compared to third
quarter 2021:
-
- Revenue decrease of 2.7% to $439.6
million
- Net earnings of $185.7 million
and Diluted EPS of $0.59
- Adjusted EBITDA(1) decrease of 9.7% to $291.1 million
- Robust balance sheet with liquidity of $1,294.3 million, total borrowings(1)
to total assets of 52.5%
- Approximately 70% of Seaspan's total borrowings and preferred
shares is fixed rate, protecting against the prevailing interest
rate environment
(1)
Non-GAAP financial measure. A reconciliation of each non-GAAP
financial measure to the most closely comparable GAAP measure is
included in this release beginning on page 14
|
Comments from
Management:
Bing Chen, President and CEO of Atlas, commented, "Our team
continued to deliver consistent performance and operational
excellence in the third quarter."
"Seaspan bolstered its customer partnership with leading global
liners by forward fixing 14 operating vessels in the quarter. We
continued diligently executing our newbuild program with four
deliveries since the beginning of the third quarter, all ahead of
schedule, with each successfully commencing their long-term
charters. Despite the unprecedented challenges, our dedicated and
experienced teams have proven again their reliable execution.
We have now successfully delivered 121 newbuilds since our IPO in
2005."
"APR Energy continued its pivot to quality and predictable cash
flow opportunities. Our team successfully completed its 4-month
power generation contract with Imperial Irrigation District in the
US in September and its Mexicali dry-lease contract in October,
with demobilization expected to be completed during the fourth
quarter. APR's 44-month contract in Brazil, effective since May 2022, successfully completed installation in
this quarter, and its Lifecycle dry-lease contract will continue
until early 2023. Lastly, all of APR's turbine assets in
Argentina have now been fully
demobilized from the country."
"With our focus on creative customer solutions, a dedicated team
and relentless pursuit of operational excellence, we remain well
positioned to offer predictable financial returns through all
market cycles."
Graham Talbot, CFO of Atlas,
commented, "Our third quarter performance reflects diligent
execution of our business plan."
"Seaspan revenue was maintained due to early delivery of
newbuild vessels and higher market rates, offset by planned vessel
sales. APR revenue declined due to relatively high utilization in
the third quarter of 2021."
"We have continued to grow our backlog by proactively extending
charters with customers, adding over $1.1
billion of gross contracted cash flow through 14 extensions
during the quarter. We enhanced our capital structure by upgrading
a $1.1 billion bank loan financing
for newbuild vessels into a $1.5
billion ECA-backed JOLCO financing on improved terms.
Alongside the current inflationary environment and macroeconomic
headwinds, we remain well positioned with approximately 70% of our
interest rate exposure fixed based on total borrowings and
preferred shares, and liquidity of $1.3
billion as at quarter end. The reported gain on our
derivative instruments is $126.6
million year to date 2022 which highlights the impact of our
proactive interest rate exposure management.
On the back of these enhancements, Atlas received its first
credit rating during the quarter, achieving a BB+ corporate rating
from Kroll Bond Rating Agency, and Seaspan maintained its corporate
ratings of BB-, BB, and BB+ after annual review from S&P,
Fitch, and Kroll, respectively."
"With a gross contracted cash flow balance of $18.6 billion and our fully financed newbuild
program, we are well positioned for through-cycle value
creation."
Significant Developments in the
Third Quarter of 2022 & Subsequent Events
The table below summarizes our Containership Leasing fleet as at
September 30, 2022:
|
Actual
|
Expected
|
Containership
Leasing (# of vessels)
|
Q3
2022
|
Remainder of
2022
|
2023
|
2024
|
Beginning of period
balance
|
127
|
129
|
132
|
154
|
Delivered/Acquired
|
2
|
—
|
—
|
—
|
Future scheduled
deliveries
|
—
|
3
|
22
|
36
|
Sold
|
—
|
—
|
—
|
—
|
End of period
balance
|
129
|
132
|
154
|
190
|
End of period
balance (managed)(1)
|
8
|
8
|
8
|
8
|
(1)
Represents vessels that are operated on behalf of other
owners.
|
Containership Leasing Developments
Seaspan entered into proactive lease extensions for 14 operating
vessels in the third quarter of 2022, adding approximately
$1.1 billion in gross contracted cash
flow.
In August and September of 2022, Seaspan accepted delivery of
its third and fourth 11,800 TEU vessels, each of which commenced a
5-year charter upon delivery, respectively. In October 2022, Seaspan also accepted delivery of
another 11,800 TEU vessel and its first 15,000 TEU vessel, each of
which commenced a 5-year charter upon delivery.
In May 2022, Seaspan entered into
shipbuilding contracts for four 7,700 TEU liquified natural gas
dual-fuel containerships which remained subject to certain closing
conditions. Due to certain conditions not being fulfilled by the
counterparty, the contracts have become null and void. No payments
were made by Seaspan in relation to the contract. Seaspan has
notified the relevant parties and has reserved its rights to claim
against the counterparty in relation to the contracts.
Mobile Power Generation Developments
In August 2022, the last of APR's
turbines based at its Matheu plant in Argentina were demobilized from the country.
This concludes the successful demobilization of all 14 turbines
previously deployed in Argentina.
APR is actively maturing opportunities to redeploy these turbines
on long-term contracts.
In September and October 2022, APR
successfully completed its 4-month Imperial Irrigation District and
Mexicali dry-lease contracts, with demobilization of both sites
currently underway.
Financing Developments
In October 2022, Seaspan completed
its planned upgrade of a previously signed $1.1 billion bank loan financing into a
$1.5 billion ECA-Backed JOLCO
financing (the "Financing Upgrade"). Proceeds remain intended to
finance Seaspan's package of 15 7,000 TEU newbuild vessels. This
marks Seaspan's third ECA-JOLCO transaction. The Financing Upgrade
increases the proceeds raised and significantly lowers the cost of
capital through partnership with Sinosure, a Chinese ECA, and a
tranche of fixed-rate capital from Japanese investors. The
financing carries a 12-year tenor.
In August 2022, Seaspan received
$500.0 million in proceeds pursuant
to a sustainability-linked U.S. private placement which was signed
in May 2022. The notes were issued on
August 3, 2022, and carry a weighted
average maturity of approximately 12 years, and a weighted average
fixed interest rate of approximately 5.3%. The financing is secured
by Seaspan's vessel portfolio financing program. During August,
Seaspan partially used proceeds from the financing to pay down
approximately $240 million of
existing debt under the portfolio financing program, with the
remaining proceeds intended to be used to fund capital
expenditures, transaction costs, and for other general corporate
purposes.
Credit Rating Developments
In the third quarter of 2022, Seaspan's credit ratings from
Fitch, S&P, and Kroll were reaffirmed at BB, BB-, and BB+,
respectively. Key drivers of reaffirming the ratings included
Seaspan's growing levels of unsecured debt and unencumbered
assets.
In September 2022, Atlas received
its first corporate credit rating of BB+ from Kroll.
Poseidon Acquisition of Atlas
On August 4, 2022, Atlas' Board of
Directors received a non-binding proposal letter from Poseidon
Acquisition Corp. ("Poseidon"), an entity formed by certain
affiliates of Fairfax, certain affiliates of the Washington Family
("Washington"), David Sokol,
Chairman of the Board of Atlas, and Ocean Network Express Pte.
Ltd., and certain of their respective affiliates, to acquire all of
the outstanding common shares of Atlas, other than common shares
owned by Fairfax, Washington, Mr.
Sokol and certain executive officers of the Company, for
$14.45 cash per common share. The
Board of Directors established a Special Committee consisting of
independent directors to consider and negotiate the proposal.
In a separate press release issued on November 1, 2022, Atlas announced that,
following the recommendation of the Special Committee and unanimous
approval of the Board of Directors, Atlas had entered into a merger
agreement with Poseidon pursuant to which Poseidon will acquire
Atlas for cash consideration of $15.50 per common share. The transaction, which
is subject to approval of holders of a majority of the common
shares not owned by affiliates of Poseidon, regulatory approvals
and receipt of consents, is expected to close in the first half of
2023.
Distribution
On July 7, 2022, the Board of
Directors of Atlas declared a quarterly distribution in the amount
of $0.125 per common share. Regular
quarterly dividends on the Series D, Series H, Series I and Series
J preferred shares were also declared. All dividends were paid on
August 1, 2022.
On October 6, 2022, the Board of
Directors of Atlas declared a quarterly distribution in the amount
of $0.125 per common share. Regular
quarterly dividends on the Series D, Series H, Series I and Series
J preferred shares were also declared. All dividends were paid on
October 31, 2022.
Common Shares Outstanding
As of November 1, 2022, there were
281.3 million common shares outstanding.
Consolidated Results:
The following table summarizes Atlas' consolidated results for
the three months ended September 30, 2022, June 30, 2022
and September 30, 2021.
|
Three Months
Ended
|
(in millions of U.S.
dollars, except per share
amounts, percentages and ratios, unaudited)
|
September 30,
2022
|
|
June 30,
2022
|
|
September 30,
2021
|
Key
Metrics
|
|
|
|
|
|
Revenue
|
$
439.6
|
|
$
413.3
|
|
$
451.9
|
Net earnings
|
185.7
|
|
140.0
|
|
94.6
|
Adjusted
EBITDA(1)
|
291.1
|
|
279.5
|
|
322.2
|
FFO(1)
|
205.4
|
|
201.7
|
|
248.0
|
FFO per Share,
diluted(1)
|
0.71
|
|
0.70
|
|
0.93
|
Adjusted EPS,
diluted(1)
|
0.39
|
|
0.35
|
|
0.54
|
Diluted EPS
|
0.59
|
|
0.43
|
|
0.30
|
|
|
|
|
|
|
Financial
Position
|
|
|
|
|
|
Operating Net Debt to
Adjusted EBITDA(1)
|
3.6x
|
|
3.4x
|
|
4.0x
|
Ending
Liquidity(2)
|
1,294.3
|
|
1,100.7
|
|
957.1
|
Gross Contracted Cash
Flow(3)
|
18,603.2
|
|
17,754.0
|
|
17,850.6
|
Total
Borrowings(1)(4)
|
5,982.2
|
|
5,538.6
|
|
5,605.8
|
Total Borrowings to
Assets (%)
|
52.5 %
|
|
51.2 %
|
|
53.9 %
|
|
|
|
|
|
|
Operational
|
|
|
|
|
|
Containership Leasing
Utilization
|
98.6 %
|
|
98.3 %
|
|
98.6 %
|
Mobile Power Generation
Utilization
|
80.0 %
|
|
68.8 %
|
|
91.9 %
|
|
|
(1)
|
Non-GAAP financial
measure. A reconciliation of each non-GAAP financial measure to the
most closely comparable GAAP measure is included in this release
beginning on page 14.
|
(2)
|
This is the total cash
and cash equivalents balance plus the total available undrawn
committed credit facilities at period end, excluding committed and
undrawn newbuild financings.
|
(3)
|
Gross contracted cash
flow as at September 30, 2022 includes $6.6 billion of lease
payments receivable from operating leases, $1.8 billion of gross
lease receivable from finance leases and $10.2 billion of gross
lease payments from newbuild vessels with signed charter agreements
that are undelivered as at September 30, 2022. Gross
contracted cash flow as at September 30, 2021, includes $5.7
billion of lease payments receivable from operating leases, $1.0
billion of gross lease receivable from financing leases and $11.2
billion of gross lease payments for acquired vessels with signed
charter agreements that are undelivered as at September 30,
2021. Gross contracted cash flow includes purchase obligations and
excludes purchase options, extension options, higher charter rate
options and profit-sharing components.
|
(4)
|
Total borrowings do not
include debt to be incurred in connection with certain undelivered
vessels.
|
Financial Results
Summary:
Revenue decrease of 2.7% to $439.6
million for the three months ended September 30, 2022,
compared to the same period in 2021. The decrease in revenue is
primarily related to the Mobile Power Generation segment due to
lower asset utilization. Revenue from the Containership Leasing
segment increased 2.2% due to vessel deliveries and higher market
rates which was partially offset by lower revenue from the
sale of 11 vessels since the fourth quarter of 2021.
Adjusted EBITDA decrease of 9.7% to $291.1 million for the three months ended
September 30, 2022, compared to the same period in 2021. The
decrease in adjusted EBITDA is primarily due to lower revenue and
increased general and administrative expenses related to higher
share based compensation and professional fees compared to the
prior period, primarily related to the take private proposal.
In 2021 through to May 2022, the Company recognized a
recovery relating to an indemnity claim under acquisition agreement
which ended in May 2022. The recovery
recognized in the 2021 comparative period was $13.6 million.
FFO Per Share decrease of 23.7% to $0.71 for the three months ended
September 30, 2022, compared to the same period in 2021. Funds
from operations were lower due to decreased revenue, higher
interest and general and administrative expenses and a recovery
recognized in the comparative 2021 period related to an indemnity
claim made by Atlas relating to its acquisition of APR
Energy. The decrease was partially driven by an increase in
diluted share count from the issuance of 25 million shares from the
exercise of warrants in April 2022
and the impact of the maximum dilutive effect of the exchangeable
notes based on the if-converted method.
Diluted EPS was $0.59 for
the three months ended September 30, 2022, compared to
$0.30 for the same period in
2021. The increase in diluted EPS was primarily driven by a
non-cash gain on derivative instruments during the 2022 period
related to changes in the forward interest rate curve, as well as a
loss on debt extinguishment that was recognized in the 2021
comparative period primarily related to the repayment of Fairfax
notes.
Adjusted Diluted EPS decrease of 27.8% to $0.39 for the quarter ended September 30,
2022, compared to $0.54 for the
same period in 2021. The decrease in adjusted diluted EPS was
primarily due to the increase diluted share count.
Liquidity
As of September 30, 2022, Atlas had total liquidity of
$1,294.3 million, consisting of
$594.3 million of cash and cash
equivalents and $700.0 million of
availability under undrawn committed credit facilities. As of
September 30, 2022, we also had $6.0
billion of undrawn committed financing related to our
newbuild vessels and an unencumbered asset base including 30
vessels with a book value of $1.2
billion.
Segmented Financial
Results:
The following table summarizes selected segmented financial
results for the three months ended September 30, 2022.
|
Three Months Ended
September 30, 2022
|
(in millions of U.S.
dollars, unaudited)
|
Containership
Leasing
|
|
Mobile Power
Generation
|
|
Elimination
and Other(3)
|
|
Total
|
Revenue
|
$
384.9
|
|
$
54.7
|
|
$
—
|
|
$
439.6
|
Operating
expense
|
77.6
|
|
6.7
|
|
—
|
|
84.3
|
G&A
expense
|
23.0
|
|
9.2
|
|
(1.0)
|
|
31.2
|
Operating lease
expense
|
29.1
|
|
0.8
|
|
—
|
|
29.9
|
Adjusted
EBITDA(1)
|
255.2
|
|
38.0
|
|
(2.1)
|
|
291.1
|
FFO(1)
|
193.4
|
|
29.2
|
|
(17.2)
|
|
205.4
|
Gross Contracted Cash
Flow(2)
|
18,329.6
|
|
273.6
|
|
—
|
|
18,603.2
|
|
|
(1)
|
Non-GAAP financial
measure. A reconciliation of each non-GAAP financial measure to the
most closely comparable GAAP measure is included in this release
beginning on page 14.
|
(2)
|
Gross contracted cash
flow as at September 30, 2022, includes $6.6 billion of lease
payments receivable from operating leases, $1.8 billion of gross
lease receivable from finance leases and $10.2 billion of gross
lease payments from newbuild vessels with signed charter agreements
that are undelivered as at September 30, 2022. Gross
contracted cash flow includes purchase obligations and excludes
purchase options, extension options, higher charter rate options
and profit-sharing components.
|
(3)
|
Elimination and Other
includes amounts relating to preferred shares, change in contingent
consideration asset, elimination of intercompany transactions and
unallocated amounts.
|
Conference Call and
Webcast:
Atlas plans to host a conference call for all shareholders and
interested parties at 8:30 a.m. Eastern Time
on Wednesday, November 2, 2022, to discuss the results.
To attend the conference call or webcast, participants should
register online at
ir.atlascorporation.com/events-and-presentations, and you will be
provided with details to access the event. To avoid delays,
participants are encouraged to register a day in advance or at a
minimum 15 minutes before the start of the call. A replay of the
call will also be available approximately two hours following the
conclusion of the call and accessible until November 2, 2023, on the same webpage.
Date of Conference
Call:
|
Wednesday, November 2,
2022
|
Scheduled
Time:
|
8:30 a.m. ET
|
Direct Link to
Dial-In Registration Webpage:
|
Click Here
|
Direct Link to
Webcast Registration Webpage:
|
Click Here
|
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 disciplined capital deployment 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 the largest global containership lessor, primarily
focused on long-term, fixed-rate leases with the world's largest
container shipping liners. As at September 30, 2022, Seaspan's
operating fleet consisted of 129 vessels with a total capacity of
1,180,230 TEU, and an additional 61 vessels under construction,
increasing total fleet capacity to 1,919,230 TEU, on a fully
delivered 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, visit aprenergy.com.
ATLAS CORP.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS OF U.S. DOLLARS)
|
|
September 30,
2022
|
|
December 31,
2021
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
594.3
|
|
$
288.6
|
Accounts
receivable
|
|
87.2
|
|
56.2
|
Inventories
|
|
52.0
|
|
46.4
|
Prepaid expenses and
other
|
|
32.1
|
|
35.7
|
Net investment in
lease
|
|
20.7
|
|
16.8
|
Acquisition related
assets
|
|
108.8
|
|
104.0
|
|
|
895.1
|
|
547.7
|
|
|
|
|
|
Property, plant and
equipment
|
|
6,889.8
|
|
6,952.2
|
Vessels under
construction
|
|
1,337.6
|
|
1,095.6
|
Right-of-use
assets
|
|
770.0
|
|
724.9
|
Net investment in
lease
|
|
893.4
|
|
741.5
|
Goodwill
|
|
75.3
|
|
75.3
|
Deferred tax
assets
|
|
0.6
|
|
1.9
|
Derivative
instruments
|
|
119.5
|
|
6.1
|
Other assets
|
|
402.9
|
|
424.4
|
|
|
$
11,384.2
|
|
$
10,569.6
|
Liabilities and
shareholders' equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
180.4
|
|
$
183.4
|
Deferred
revenue
|
|
46.7
|
|
46.6
|
Income tax
payable
|
|
92.1
|
|
96.9
|
Long-term debt -
current
|
|
531.4
|
|
551.0
|
Operating lease
liabilities - current
|
|
114.6
|
|
155.1
|
Finance lease
liabilities - current
|
|
229.1
|
|
—
|
Other financing
arrangements - current
|
|
123.1
|
|
100.5
|
Other liabilities -
current
|
|
40.0
|
|
42.0
|
|
|
1,357.4
|
|
1,175.5
|
|
|
|
|
|
Long-term
debt
|
|
3,623.6
|
|
3,731.8
|
Operating lease
liabilities
|
|
412.0
|
|
562.3
|
Other financing
arrangements
|
|
1,630.7
|
|
1,239.3
|
Derivative
instruments
|
|
3.6
|
|
28.5
|
Other
liabilities
|
|
14.4
|
|
17.7
|
Total
liabilities
|
|
7,041.7
|
|
6,755.1
|
|
|
|
|
|
Cumulative redeemable
preferred shares
|
|
296.9
|
|
296.9
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
Share
capital
|
|
2.8
|
|
2.4
|
Additional paid in
capital
|
|
3,717.7
|
|
3,526.8
|
Retained
earnings
|
|
343.5
|
|
7.5
|
Accumulated other
comprehensive loss
|
|
(18.4)
|
|
(19.1)
|
|
|
4,045.6
|
|
3,517.6
|
|
|
$
11,384.2
|
|
$
10,569.6
|
ATLAS CORP.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS OF U.S. DOLLARS, EXCEPT SHARES IN THOUSANDS AND PER
SHARE AMOUNTS)
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
439.6
|
|
$
451.9
|
|
$
1,261.0
|
|
$ 1,218.4
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
84.3
|
|
86.9
|
|
257.3
|
|
253.2
|
Depreciation and
amortization
|
|
93.0
|
|
106.6
|
|
282.9
|
|
284.7
|
General and
administrative
|
|
31.2
|
|
15.9
|
|
83.7
|
|
48.6
|
Indemnity claim under
acquisition agreement
|
|
—
|
|
(13.6)
|
|
(21.3)
|
|
(29.1)
|
Operating
leases
|
|
29.9
|
|
36.5
|
|
93.1
|
|
109.4
|
(Gain) Loss on
sale
|
|
(0.6)
|
|
(0.1)
|
|
3.7
|
|
(1.0)
|
|
|
237.8
|
|
232.2
|
|
699.4
|
|
665.8
|
|
|
|
|
|
|
|
|
|
Operating
earnings
|
|
201.8
|
|
219.7
|
|
561.6
|
|
552.6
|
|
|
|
|
|
|
|
|
|
Other expenses
(income):
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
61.5
|
|
50.0
|
|
158.9
|
|
151.4
|
Interest
income
|
|
(2.3)
|
|
(0.6)
|
|
(2.9)
|
|
(2.8)
|
Loss on equity
investment
|
|
2.3
|
|
—
|
|
2.3
|
|
—
|
(Gain) Loss on
derivative instruments
|
|
(58.1)
|
|
0.2
|
|
(126.6)
|
|
(6.8)
|
Loss on debt
extinguishment
|
|
2.2
|
|
70.9
|
|
9.4
|
|
127.0
|
Other
expenses
|
|
1.9
|
|
4.5
|
|
15.3
|
|
17.2
|
|
|
7.5
|
|
125.0
|
|
56.4
|
|
286.0
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
8.6
|
|
0.1
|
|
10.1
|
|
8.4
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
185.7
|
|
$
94.6
|
|
$
495.1
|
|
$
258.2
|
|
|
|
|
|
|
|
|
|
Dividends - preferred
shares
|
|
(15.2)
|
|
(15.2)
|
|
(45.6)
|
|
(49.9)
|
Net earnings
attributable to common shares
|
|
$
170.5
|
|
$
79.4
|
|
$
449.5
|
|
$
208.3
|
|
|
|
|
|
|
|
|
|
Interest on senior
unsecured exchangeable notes(1)
|
|
1.9
|
|
—
|
|
5.7
|
|
—
|
Net earnings
attributable to diluted shares
|
|
$
172.4
|
|
$
79.4
|
|
$
455.2
|
|
$
208.3
|
|
|
|
|
|
|
|
|
|
Weighted average number
of shares, basic
|
|
275,189
|
|
246,411
|
|
264,463
|
|
246,251
|
Effect of dilutive
securities:
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
|
2,446
|
|
2,590
|
|
2,340
|
|
2,041
|
Fairfax
warrants
|
|
9
|
|
11,419
|
|
4,266
|
|
10,466
|
Holdback
shares
|
|
727
|
|
6,153
|
|
2,436
|
|
6,239
|
Senior unsecured
exchangeable notes(1)
|
|
15,475
|
|
1,399
|
|
15,475
|
|
790
|
Weighted average number
of shares, diluted
|
|
293,846
|
|
267,972
|
|
288,980
|
|
265,787
|
|
|
|
|
|
|
|
|
|
Earnings per share,
basic
|
|
$
0.62
|
|
$
0.32
|
|
$
1.70
|
|
$
0.85
|
Earnings per share,
diluted(1)
|
|
$
0.59
|
|
$
0.30
|
|
$
1.58
|
|
$
0.78
|
|
|
(1)
|
Effective January 1,
2022, the Company adopted ASU 2020-06, "Debt – Debt with Conversion
and Other Options (Subtopic 470-20)", using the modified
retrospective method. As a result of this adoption, the
Company recognizes the maximum potential dilutive effect of its
exchangeable notes in the calculation of diluted EPS using the
if-converted method.
|
ATLAS CORP.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS OF U.S. DOLLARS)
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Cash from (used
in):
|
|
|
|
|
|
|
|
Operating
activities:
|
|
|
|
|
|
|
|
Net
earnings
|
$
185.7
|
|
$
94.6
|
|
$
495.1
|
|
$
258.2
|
Items not involving
cash:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
91.7
|
|
106.6
|
|
282.9
|
|
284.7
|
Change in right-of-use
asset
|
26.4
|
|
31.9
|
|
82.5
|
|
94.3
|
Non-cash interest
expense and accretion
|
5.2
|
|
8.0
|
|
16.2
|
|
31.5
|
Unrealized change in
derivative instruments
|
(58.9)
|
|
(6.3)
|
|
(138.4)
|
|
(26.8)
|
Amortization of
acquired revenue contracts
|
3.2
|
|
3.7
|
|
9.6
|
|
11.8
|
Loss on debt
extinguishment
|
2.2
|
|
70.9
|
|
9.4
|
|
127.0
|
Loss on equity
investment
|
2.3
|
|
—
|
|
2.3
|
|
—
|
(Gain) Loss on
sale
|
(0.6)
|
|
(0.1)
|
|
3.7
|
|
(1.0)
|
Other
|
2.4
|
|
9.4
|
|
12.4
|
|
12.3
|
Change in other
operating assets and liabilities
|
(33.8)
|
|
(64.6)
|
|
(146.4)
|
|
(138.4)
|
Cash from operating
activities
|
225.8
|
|
254.1
|
|
629.3
|
|
653.6
|
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
|
|
Expenditures for
property, plant and equipment and vessels under
construction
|
(333.4)
|
|
(622.6)
|
|
(805.8)
|
|
(1,331.9)
|
Prepayment on vessel
purchase
|
—
|
|
—
|
|
—
|
|
(132.3)
|
Payment on settlement
of interest swap agreements
|
(2.9)
|
|
(5.6)
|
|
(14.2)
|
|
(19.0)
|
Gain (Loss) on foreign
currency repatriation
|
3.1
|
|
(1.4)
|
|
2.7
|
|
(10.6)
|
Receipt from
contingent consideration asset
|
—
|
|
11.9
|
|
12.5
|
|
25.2
|
Other assets and
liabilities
|
72.9
|
|
11.4
|
|
179.5
|
|
11.1
|
Capitalized interest
relating to newbuilds
|
(12.2)
|
|
(4.5)
|
|
(32.3)
|
|
(8.0)
|
Cash used in investing
activities
|
(418.3)
|
|
(610.8)
|
|
(657.6)
|
|
(1,465.5)
|
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
|
|
Repayments of
long-term debt and other financing arrangements
|
(314.5)
|
|
(244.2)
|
|
(805.2)
|
|
(1,217.0)
|
Issuance of long-term
debt and other financing arrangements
|
757.6
|
|
958.7
|
|
1,077.6
|
|
2,797.7
|
Redemption of Fairfax
Notes
|
—
|
|
(300.0)
|
|
—
|
|
(300.0)
|
Redemption of
preferred shares
|
—
|
|
(330.4)
|
|
—
|
|
(330.4)
|
Financing
fees
|
(5.3)
|
|
(12.3)
|
|
(16.6)
|
|
(40.6)
|
Share issuance
cost
|
—
|
|
—
|
|
—
|
|
(0.1)
|
Dividends on common
shares
|
(35.1)
|
|
(31.1)
|
|
(101.5)
|
|
(93.4)
|
Dividends on preferred
shares
|
(15.2)
|
|
(17.4)
|
|
(45.6)
|
|
(51.0)
|
Proceeds from exercise
of warrants
|
—
|
|
—
|
|
201.3
|
|
—
|
Cash from financing
activities
|
387.5
|
|
23.3
|
|
310.0
|
|
765.2
|
|
|
|
|
|
|
|
|
Increase (decrease) in
cash and cash equivalents
|
195.0
|
|
(333.4)
|
|
281.7
|
|
(46.7)
|
Cash and cash
equivalents and restricted cash, beginning of period
|
413.5
|
|
629.2
|
|
326.8
|
|
342.5
|
Cash and cash
equivalents and restricted cash, end of period
|
$
608.5
|
|
$
295.8
|
|
$
608.5
|
|
$
295.8
|
ATLAS CORP.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS OF U.S. DOLLARS)
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,
2022
|
|
September 30,
2021
|
Cash and cash
equivalents
|
$
594.3
|
|
$
257.6
|
Restricted
cash
|
14.2
|
|
38.2
|
Total cash, cash
equivalents and restricted cash shown in the consolidated
statements of cash flows
|
$
608.5
|
|
$
295.8
|
ATLAS CORP.
NON-GAAP RECONCILIATIONS
NET EARNINGS TO FUNDS FROM OPERATIONS
|
Three Months
Ended
|
(in millions of U.S.
dollars, except shares in thousands and per share amounts,
unaudited)
|
September 30,
2022
|
|
June 30, 2022
|
|
September 30,
2021
|
|
|
|
|
|
|
GAAP Net
earnings
|
$
185.7
|
|
$
140.0
|
|
$
94.6
|
|
|
|
|
|
|
Preferred share
dividends
|
(15.2)
|
|
(15.2)
|
|
(15.2)
|
(Gain) Loss on
sale
|
(0.6)
|
|
1.9
|
|
(0.1)
|
Loss on debt
extinguishment
|
2.2
|
|
7.2
|
|
70.9
|
Unrealized change in
fair value on derivative instruments
|
(58.9)
|
|
(32.7)
|
|
(6.3)
|
Change in contingent
consideration asset (1)
|
(0.8)
|
|
(2.1)
|
|
(3.9)
|
Loss on foreign
currency repatriation (2)
|
—
|
|
0.8
|
|
1.4
|
Depreciation and
amortization
|
93.0
|
|
101.8
|
|
106.6
|
FFO
|
205.4
|
|
201.7
|
|
248.0
|
|
|
|
|
|
|
Interest on senior
unsecured exchangeable notes(3)
|
1.9
|
|
1.9
|
|
—
|
FFO attributable to
diluted shares
|
$
207.3
|
|
$
203.6
|
|
$
248.0
|
|
|
|
|
|
|
Weighted average number
of shares, basic
|
275,189
|
|
270,871
|
|
246,411
|
Effect of dilutive
securities:
|
|
|
|
|
|
Share-based
compensation
|
2,446
|
|
2,182
|
|
2,590
|
Fairfax
warrants
|
9
|
|
691
|
|
11,419
|
Holdback
shares
|
727
|
|
3,060
|
|
6,153
|
Senior unsecured
exchangeable notes(3)
|
15,475
|
|
15,475
|
|
1,399
|
Weighted average
shares outstanding, diluted
|
293,846
|
|
292,279
|
|
267,972
|
|
|
|
|
|
|
FFO per share,
diluted(3)
|
$
0.71
|
|
$
0.70
|
|
$
0.93
|
|
|
(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
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 sellers'
indemnification obligations ended on April 30, 2022. The
sellers of APR further agreed to compensate the Company for losses
on sale or disposal of certain fixed asset and inventory items. 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 peso 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)
|
Effective January 1,
2022, the Company adopted ASU 2020-06, "Debt – Debt with Conversion
and Other Options (Subtopic 470-20)", using the modified
retrospective method. As a result of this adoption, the
Company recognizes the maximum potential dilutive effect of its
exchangeable notes in the calculation of diluted EPS using the
if-converted method.
|
ATLAS CORP.
NON-GAAP RECONCILIATIONS
NET EARNINGS TO FUNDS FROM OPERATIONS
|
Three Months Ended
September 30, 2022
|
(in millions of U.S.
dollars, unaudited)
|
Containership
Leasing
|
|
Mobile Power
Generation
|
|
Elimination
and Other (3)
|
|
Total
|
|
|
|
|
|
|
|
|
GAAP Net
earnings
|
$
167.1
|
|
$
19.8
|
|
$
(1.2)
|
|
$
185.7
|
|
|
|
|
|
|
|
|
Preferred share
dividends
|
—
|
|
—
|
|
(15.2)
|
|
(15.2)
|
Gain on sale
|
—
|
|
(0.6)
|
|
—
|
|
(0.6)
|
Loss on debt
extinguishment
|
2.2
|
|
—
|
|
—
|
|
2.2
|
Unrealized change in
fair value on derivative instruments
|
(58.9)
|
|
—
|
|
—
|
|
(58.9)
|
Change in contingent
consideration asset (1)
|
—
|
|
—
|
|
(0.8)
|
|
(0.8)
|
Depreciation and
amortization
|
83.0
|
|
10.0
|
|
—
|
|
93.0
|
|
|
|
|
|
|
|
|
FFO
|
$
193.4
|
|
$
29.2
|
|
$
(17.2)
|
|
$
205.4
|
|
Nine Months Ended
September 30, 2022
|
(in millions of U.S.
dollars, unaudited)
|
Containership
Leasing
|
|
Mobile Power
Generation
|
|
Elimination
and Other (3)
|
|
Total
|
|
|
|
|
|
|
|
|
GAAP Net
earnings
|
$
484.2
|
|
$
12.6
|
|
$
(1.7)
|
|
$
495.1
|
|
|
|
|
|
|
|
|
Preferred share
dividends
|
—
|
|
—
|
|
(45.6)
|
|
(45.6)
|
Loss (Gain) on
sale
|
4.0
|
|
(0.3)
|
|
—
|
|
3.7
|
Loss on debt
extinguishment
|
4.6
|
|
4.8
|
|
—
|
|
9.4
|
Unrealized change in
fair value on derivative instruments
|
(138.4)
|
|
—
|
|
—
|
|
(138.4)
|
Loss on foreign
currency repatriation (2)
|
—
|
|
4.0
|
|
—
|
|
4.0
|
Depreciation and
amortization
|
242.9
|
|
40.0
|
|
—
|
|
282.9
|
|
|
|
|
|
|
|
|
FFO
|
$
597.3
|
|
$
61.1
|
|
$
(47.3)
|
|
$
611.1
|
|
|
(1)
|
The change in
contingent consideration asset relates to the mark to market impact
of contingent consideration related to the acquisition of APR.
Pursuant to the acquisition agreement, the sellers of APR 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 sellers' indemnification
obligations expired on April 30, 2022. The sellers of APR further
agreed to compensate the Company for losses on sale or disposal of
certain fixed asset and inventory items. 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 peso 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
includes amounts relating to preferred shares, change in contingent
consideration asset, elimination of intercompany transactions and
unallocated amounts.
|
ATLAS CORP.
NON-GAAP RECONCILIATIONS
NET EARNINGS TO ADJUSTED EPS
|
Three Months
Ended
|
|
Nine Months
Ended
|
(in millions of U.S.
dollars, except shares in thousands and per share amounts,
unaudited)
|
September 30,
2022
|
|
September 30,
2021
|
|
September 30,
2022
|
|
September 30,
2021
|
|
|
|
|
|
|
|
|
GAAP Net
earnings
|
$
185.7
|
|
$
94.6
|
|
$
495.1
|
|
$
258.2
|
|
|
|
|
|
|
|
|
Preferred share
dividends
|
(15.2)
|
|
(15.2)
|
|
(45.6)
|
|
(49.9)
|
Loss on debt
extinguishment
|
2.2
|
|
70.9
|
|
9.4
|
|
127.0
|
Unrealized change in
fair value on derivative instruments
|
(58.9)
|
|
(6.3)
|
|
(138.4)
|
|
(26.8)
|
Adjusted
Earnings
|
113.8
|
|
144.0
|
|
320.5
|
|
308.5
|
|
|
|
|
|
|
|
|
Interest on senior
unsecured exchangeable notes(1)
|
1.9
|
|
—
|
|
5.7
|
|
—
|
Adjusted Earnings
attributable to diluted shares
|
$
115.7
|
|
$
144.0
|
|
$
326.2
|
|
$
308.5
|
|
|
|
|
|
|
|
|
Weighted average
number of shares, basic
|
275,189
|
|
246,411
|
|
264,463
|
|
246,251
|
Effect of dilutive
securities:
|
|
|
|
|
|
|
|
Share-based
compensation
|
2,446
|
|
2,590
|
|
2,340
|
|
2,041
|
Fairfax
warrants
|
9
|
|
11,419
|
|
4,266
|
|
10,466
|
Holdback
shares
|
727
|
|
6,153
|
|
2,436
|
|
6,239
|
Senior unsecured
exchangeable notes(1)
|
15,475
|
|
1,399
|
|
15,475
|
|
790
|
Weighted average
shares outstanding, diluted
|
293,846
|
|
267,972
|
|
288,980
|
|
265,787
|
|
|
|
|
|
|
|
|
Adjusted EPS,
diluted(1)
|
$
0.39
|
|
$
0.54
|
|
$
1.13
|
|
$
1.16
|
|
|
(1)
|
Effective January 1,
2022, the Company adopted ASU 2020-06, "Debt – Debt with Conversion
and Other Options (Subtopic 470-20)", using the modified
retrospective method. As a result of this adoption, the
Company recognizes the maximum potential dilutive effect of its
exchangeable notes in the calculation of diluted EPS using the
if-converted method.
|
ATLAS CORP.
NON-GAAP RECONCILIATIONS
NET EARNINGS TO ADJUSTED EPS
|
Three Months Ended
September 30, 2022
|
(in millions of U.S.
dollars, unaudited)
|
Containership
Leasing
|
|
Mobile Power
Generation
|
|
Elimination
and Other (1)
|
|
Total
|
|
|
|
|
|
|
|
|
GAAP Net
earnings
|
$
167.1
|
|
$
19.8
|
|
$
(1.2)
|
|
$
185.7
|
|
|
|
|
|
|
|
|
Preferred share
dividends
|
—
|
|
—
|
|
(15.2)
|
|
(15.2)
|
Loss on debt
extinguishment
|
2.2
|
|
—
|
|
—
|
|
2.2
|
Unrealized change in
fair value on derivative instruments
|
(58.9)
|
|
—
|
|
—
|
|
(58.9)
|
|
|
|
|
|
|
|
|
Adjusted
Earnings
|
$
110.4
|
|
$
19.8
|
|
$
(16.4)
|
|
$
113.8
|
|
Nine Months Ended
September 30, 2022
|
(in millions of U.S.
dollars, unaudited)
|
Containership
Leasing
|
|
Mobile Power
Generation
|
|
Elimination
and Other (1)
|
|
Total
|
|
|
|
|
|
|
|
|
GAAP Net
earnings
|
$
484.2
|
|
$
12.6
|
|
$
(1.7)
|
|
$
495.1
|
|
|
|
|
|
|
|
|
Preferred share
dividends
|
—
|
|
—
|
|
(45.6)
|
|
(45.6)
|
Loss on debt
extinguishment
|
4.6
|
|
4.8
|
|
—
|
|
9.4
|
Unrealized change in
fair value on derivative instruments
|
(138.4)
|
|
—
|
|
—
|
|
(138.4)
|
|
|
|
|
|
|
|
|
Adjusted
Earnings
|
$
350.4
|
|
$
17.4
|
|
$
(47.3)
|
|
$
320.5
|
|
(1)
Elimination and Other includes amounts relating to preferred
shares, elimination of intercompany transactions and unallocated
amounts.
|
ATLAS CORP.
NON-GAAP RECONCILIATIONS
NET EARNINGS TO ADJUSTED EBITDA
|
Three Months
Ended
|
(in millions of U.S.
dollars, unaudited)
|
September 30,
2022
|
|
June 30,
2022
|
|
September 30,
2021
|
|
|
|
|
|
|
GAAP Net
earnings
|
$
185.7
|
|
$
140.0
|
|
$
94.6
|
|
|
|
|
|
|
Interest
expense
|
61.5
|
|
51.6
|
|
50.0
|
Interest
income
|
(2.3)
|
|
(0.4)
|
|
(0.6)
|
Income tax
expense
|
8.6
|
|
1.2
|
|
0.1
|
Depreciation and
amortization
|
93.0
|
|
101.8
|
|
106.6
|
Loss on debt
extinguishment
|
2.2
|
|
7.2
|
|
70.9
|
(Gain) Loss on
sale
|
(0.6)
|
|
1.9
|
|
(0.1)
|
(Gain) Loss on
derivative instruments
|
(58.1)
|
|
(27.8)
|
|
0.2
|
Change in contingent
consideration asset (1)
|
(0.8)
|
|
(2.1)
|
|
(3.9)
|
Loss on foreign
currency repatriation (2)
|
—
|
|
0.8
|
|
1.4
|
Other
expenses
|
1.9
|
|
5.3
|
|
3.0
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
291.1
|
|
$
279.5
|
|
$
322.2
|
|
|
(1)
|
The change in
contingent consideration asset relates to the mark to market impact
of contingent consideration related to the acquisition of APR.
Pursuant to the acquisition agreement, the sellers of APR 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 sellers' indemnification
obligations expired April 30, 2022. The sellers of APR further
agreed to compensate the Company for losses on sale or disposal of
certain fixed asset and inventory items. 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 peso 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.
NON-GAAP RECONCILIATIONS
NET EARNINGS TO ADJUSTED EBITDA
|
Three Months Ended
September 30, 2022
|
(in millions of U.S.
dollars, unaudited)
|
Containership
Leasing
|
|
Mobile Power
Generation
|
|
Elimination
and Other (3)
|
|
Total
|
|
|
|
|
|
|
|
|
GAAP Net
earnings
|
$
167.1
|
|
$
19.8
|
|
$
(1.2)
|
|
$
185.7
|
|
|
|
|
|
|
|
|
Interest
expense
|
58.7
|
|
3.1
|
|
(0.3)
|
|
61.5
|
Interest
income
|
(2.2)
|
|
(0.1)
|
|
—
|
|
(2.3)
|
Income tax
expense
|
0.4
|
|
8.2
|
|
—
|
|
8.6
|
Depreciation and
amortization
|
83.0
|
|
10.0
|
|
—
|
|
93.0
|
Loss on debt
extinguishment
|
2.2
|
|
—
|
|
—
|
|
2.2
|
Gain on sale
|
—
|
|
(0.6)
|
|
—
|
|
(0.6)
|
Gain on derivative
instruments
|
(58.1)
|
|
—
|
|
—
|
|
(58.1)
|
Change in contingent
consideration asset (1)
|
—
|
|
—
|
|
(0.8)
|
|
(0.8)
|
Other expenses
(income)
|
4.1
|
|
(2.4)
|
|
0.2
|
|
1.9
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
255.2
|
|
$
38.0
|
|
$
(2.1)
|
|
$
291.1
|
|
Nine Months Ended September 30, 2022
|
(in millions of U.S.
dollars, unaudited)
|
Containership
Leasing
|
|
Mobile Power
Generation
|
|
Elimination
and Other (3)
|
|
Total
|
|
|
|
|
|
|
|
|
GAAP Net
earnings
|
$
484.2
|
|
$
12.6
|
|
$
(1.7)
|
|
$
495.1
|
|
|
|
|
|
|
|
|
Interest
expense
|
146.1
|
|
13.4
|
|
(0.6)
|
|
158.9
|
Interest
income
|
(2.4)
|
|
(0.5)
|
|
—
|
|
(2.9)
|
Income tax
expense
|
0.9
|
|
9.2
|
|
—
|
|
10.1
|
Depreciation and
amortization
|
242.9
|
|
40.0
|
|
—
|
|
282.9
|
Loss on debt
extinguishment
|
4.6
|
|
4.8
|
|
—
|
|
9.4
|
Loss (Gain) on
sale
|
4.0
|
|
(0.3)
|
|
—
|
|
3.7
|
Gain on derivative
instruments
|
(126.6)
|
|
—
|
|
—
|
|
(126.6)
|
Loss on foreign
currency repatriation(2)
|
—
|
|
4.0
|
|
—
|
|
4.0
|
Other expenses
(income)
|
16.7
|
|
(4.4)
|
|
0.8
|
|
13.1
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
770.4
|
|
$
78.8
|
|
$
(1.5)
|
|
$
847.7
|
|
|
(1)
|
The change in
contingent consideration asset relates to the mark to market impact
of contingent consideration related to the acquisition of APR.
Pursuant to the acquisition agreement, the sellers of APR 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 sellers' indemnification
obligations expired on April 30, 2022. The sellers of APR further
agreed to compensate the Company for losses on sale or disposal of
certain fixed asset and inventory items. 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 peso 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
includes amounts relating to preferred shares, change in contingent
consideration asset, elimination of intercompany transactions and
unallocated amounts.
|
ATLAS CORP.
NON-GAAP RECONCILIATIONS
OPERATING NET DEBT TO ADJUSTED EBITDA
|
As at
September 30, 2022
|
(in millions of U.S.
dollars, unaudited)
|
Containership
Leasing
|
|
Mobile Power
Generation
|
|
Elimination
and Other (4)
|
|
Total
|
|
|
|
|
|
|
|
|
Long-term
debt(1)
|
$
4,053.0
|
|
$
158.1
|
|
$
(56.1)
|
|
$
4,155.0
|
Other financing
arrangements(1)
|
1,753.8
|
|
—
|
|
—
|
|
1,753.8
|
Deferred financing
fees
|
71.1
|
|
2.3
|
|
—
|
|
73.4
|
Total
Borrowings
|
5,877.9
|
|
160.4
|
|
(56.1)
|
|
5,982.2
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
(477.2)
|
|
(117.1)
|
|
—
|
|
(594.3)
|
Restricted
cash
|
—
|
|
(14.2)
|
|
—
|
|
(14.2)
|
Net
Debt
|
5,400.7
|
|
29.1
|
|
(56.1)
|
|
5,373.7
|
|
|
|
|
|
|
|
|
Vessels under
construction
|
(1,337.6)
|
|
—
|
|
—
|
|
(1,337.6)
|
Operating Net
Debt
|
$
4,063.1
|
|
$
29.1
|
|
$
(56.1)
|
|
$
4,036.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
September 30, 2022
|
(in millions of U.S.
dollars, unaudited)
|
Containership
Leasing
|
|
Mobile Power
Generation
|
|
Elimination
and Other (4)
|
|
Total
|
|
|
|
|
|
|
|
|
GAAP Net earnings
(loss)
|
$
662.9
|
|
$
(16.5)
|
|
$
(9.0)
|
|
$
637.4
|
|
|
|
|
|
|
|
|
Interest
expense
|
186.9
|
|
18.4
|
|
(0.7)
|
|
204.6
|
Interest
income
|
(2.4)
|
|
(0.8)
|
|
—
|
|
(3.2)
|
Income tax
expense
|
1.0
|
|
33.7
|
|
—
|
|
34.7
|
Depreciation and
amortization
|
322.2
|
|
42.7
|
|
—
|
|
364.9
|
Loss on debt
extinguishment
|
4.6
|
|
4.8
|
|
—
|
|
9.4
|
(Gain) Loss on
sale
|
(11.9)
|
|
0.2
|
|
—
|
|
(11.7)
|
Gain on derivative
instruments
|
(133.9)
|
|
—
|
|
—
|
|
(133.9)
|
Change in contingent
consideration asset (2)
|
—
|
|
—
|
|
7.3
|
|
7.3
|
Loss on foreign
currency repatriation (3)
|
—
|
|
7.3
|
|
—
|
|
7.3
|
Other expenses
(income)
|
20.5
|
|
(7.3)
|
|
1.2
|
|
14.4
|
Adjusted
EBITDA
|
$
1,049.9
|
|
$
82.5
|
|
$
(1.2)
|
|
$
1,131.2
|
|
|
|
|
|
|
|
|
Net Debt to Adjusted
EBITDA
|
5.1x
|
|
0.4x
|
|
|
|
4.8x
|
Operating Net Debt
to Adjusted EBITDA
|
3.9x
|
|
0.4x
|
|
|
|
3.6x
|
|
|
(1)
|
Debt and other
financing 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.
Pursuant to the acquisition agreement, the sellers of APR 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 sellers' indemnification
obligations expired on April 30, 2022. The sellers of APR further
agreed to compensate the Company for losses on sale or disposal of
certain fixed asset and inventory items. 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 peso 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.
|
(4)
|
Elimination and Other
includes amounts relating to preferred shares, change in contingent
consideration asset, elimination of intercompany transactions and
unallocated amounts.
|
ATLAS CORP.
NON-GAAP RECONCILIATIONS
OPERATING NET DEBT TO ADJUSTED EBITDA
|
As at
September 30, 2021
|
(in millions of U.S.
dollars, unaudited)
|
Containership
Leasing
|
|
Mobile Power
Generation
|
|
Elimination
and Other (4)
|
|
Total
|
|
|
|
|
|
|
|
|
Long-term
debt(1)
|
$
4,126.7
|
|
$
258.5
|
|
$
(51.9)
|
|
$
4,333.3
|
Other financing
arrangements(1)
|
1,189.6
|
|
—
|
|
—
|
|
1,189.6
|
Deferred financing
fees
|
76.4
|
|
6.5
|
|
—
|
|
82.9
|
Total
Borrowings
|
5,392.7
|
|
265.0
|
|
(51.9)
|
|
5,605.8
|
|
|
|
|
|
|
|
|
Debt discount and fair
value adjustment
|
5.4
|
|
—
|
|
—
|
|
5.4
|
Cash and cash
equivalents
|
(160.4)
|
|
(97.2)
|
|
—
|
|
(257.6)
|
Restricted
cash
|
—
|
|
(38.2)
|
|
—
|
|
(38.2)
|
Net
Debt
|
5,237.7
|
|
129.6
|
|
(51.9)
|
|
5,315.4
|
|
|
|
|
|
|
|
|
Vessels under
construction
|
(1,019.9)
|
|
—
|
|
—
|
|
(1,019.9)
|
Operating Net
Debt
|
$
4,217.8
|
|
$
129.6
|
|
$
(51.9)
|
|
$
4,295.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
September 30, 2021
|
(in millions of U.S.
dollars, unaudited)
|
Containership
Leasing
|
|
Mobile Power
Generation
|
|
Elimination
and Other (4)
|
|
Total
|
|
|
|
|
|
|
|
|
GAAP Net earnings
(losses)
|
$
297.5
|
|
$
(79.9)
|
|
$
14.5
|
|
$
232.1
|
|
|
|
|
|
|
|
|
Interest
expense
|
179.5
|
|
20.6
|
|
(2.8)
|
|
197.3
|
Interest
income
|
(0.5)
|
|
(3.9)
|
|
—
|
|
(4.4)
|
Income tax
expense
|
0.7
|
|
11.8
|
|
—
|
|
12.5
|
Depreciation and
amortization
|
303.8
|
|
70.2
|
|
—
|
|
374.0
|
Loss on debt
extinguishment
|
127.0
|
|
—
|
|
—
|
|
127.0
|
Gain on sale
|
—
|
|
(0.3)
|
|
—
|
|
(0.3)
|
Gain on derivative
instruments
|
(5.2)
|
|
—
|
|
—
|
|
(5.2)
|
Change in contingent
consideration asset (2)
|
—
|
|
—
|
|
(6.2)
|
|
(6.2)
|
Loss on foreign
currency repatriation (3)
|
—
|
|
17.8
|
|
—
|
|
17.8
|
Goodwill
impairment
|
—
|
|
117.9
|
|
—
|
|
117.9
|
Other
expenses
|
2.8
|
|
3.8
|
|
2.2
|
|
8.8
|
Adjusted
EBITDA
|
$
905.6
|
|
$
158.0
|
|
$
7.7
|
|
$
1,071.3
|
|
|
|
|
|
|
|
|
Net Debt to Adjusted
EBITDA
|
5.8x
|
|
0.8x
|
|
|
|
5.0x
|
Operating Net Debt
to Adjusted EBITDA
|
4.7x
|
|
0.8x
|
|
|
|
4.0x
|
|
|
(1)
|
Debt and other
financing 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.
Pursuant to the acquisition agreement, the sellers of APR 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 sellers' indemnification
obligations ended on April 30, 2022. The sellers of APR further
agreed to compensate the Company for losses on sale or disposal of
certain fixed asset and inventory items. 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 Peso 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.
|
(4)
|
Elimination and Other
includes amounts relating to preferred shares, change in contingent
consideration asset, elimination of intercompany transactions and
unallocated amounts.
|
ATLAS CORP.
NON-GAAP RECONCILIATIONS
OPERATING BORROWINGS
|
As at
September 30,
|
|
2022
|
|
2021
|
(in millions of U.S.
dollars, unaudited)
|
Total
outstanding
|
|
Interest
rate
|
|
Years to
maturity
|
|
Total
outstanding
|
|
|
|
|
|
|
|
|
Revolving credit
facilities(2)
|
$
—
|
|
—
|
|
—
|
|
$
80.0
|
Term loan credit
facilities(1)(2)
|
1,698.7
|
|
4.6 %
|
|
3.34
|
|
2,316.5
|
Senior unsecured
notes(2)(3)
|
1,302.4
|
|
5.9 %
|
|
5.17
|
|
1,302.2
|
Senior unsecured
exchangeable notes (2)(4)
|
201.3
|
|
3.8 %
|
|
3.21
|
|
201.3
|
Senior secured
notes(1)(2)(5)
|
1,000.0
|
|
4.7 %
|
|
11.12
|
|
500.0
|
Debt discount and fair
value adjustment
|
—
|
|
—
|
|
—
|
|
(5.4)
|
Deferred financing
fees on long term debt
|
(47.4)
|
|
—
|
|
—
|
|
(61.3)
|
Long term
debt
|
4,155.0
|
|
|
|
|
|
4,333.3
|
|
|
|
|
|
|
|
|
Other financing
arrangements(2)
|
1,779.8
|
|
5.3 %
|
|
9.65
|
|
1,211.2
|
Deferred financing
fees on other financing arrangements
|
(26.0)
|
|
—
|
|
—
|
|
(21.6)
|
Other financing
arrangement
|
1,753.8
|
|
|
|
|
|
1,189.6
|
|
|
|
|
|
|
|
|
Total deferred
financing fees
|
73.4
|
|
—
|
|
—
|
|
82.9
|
Total
borrowings
|
5,982.2
|
|
|
|
|
|
5,605.8
|
|
|
|
|
|
|
|
|
Vessels under
construction(6)
|
(1,337.6)
|
|
—
|
|
—
|
|
(1,019.9)
|
Operating
borrowings
|
$
4,644.6
|
|
|
|
|
|
$
4,585.9
|
|
|
(1)
|
As at
September 30, 2022, $2,512.8 million of the Company's term
loan credit facilities and notes was secured by vessels.
|
(2)
|
These exclude deferred
financing fees and include both current and long-term
portions.
|
(3)
|
Corresponds to the
following: (i) 7.125% senior unsecured notes due in 2027, (ii) 6.5%
senior unsecured sustainability-linked bonds issued in the Nordic
bond market, due in 2024 and 2026, and (iii) 5.5% senior unsecured
notes due 2029.
|
(4)
|
Corresponds to the
3.75% senior unsecured notes where the holder has the option to
exchange into Atlas common shares, cash or combination of Atlas
common shares or cash, at Seaspan's discretion, on or after
September 2025 or earlier upon the occurrence of certain
conditions. The notes are due in December 2025.
|
(5)
|
Corresponds to
Sustainability-Linked Senior Secured Notes with fixed interest
rates ranging from 3.91% to 5.49% and maturities between 2031 and
2037.
|
(6)
|
As at
September 30, 2022, this represents the installment payments
and other capitalized costs related to 61 vessels under
construction.
|
Definitions of Non-GAAP Financial
Measures
This release includes various financial measures that are
non-GAAP financial measures as defined under the rules of the
United States Securities and Exchange Commission ("SEC"). These
non-GAAP financial measures, which include FFO, FFO Per Share,
Diluted ("FFO Per Share"), Adjusted Earnings, Adjusted Earnings Per
Share, Diluted ("Adjusted EPS"), Adjusted EBITDA, Net Debt,
Operating Net Debt and Total Borrowings, are intended to provide
additional information and are not prepared in accordance with, and
should not be considered substitutes for financial measures
prepared in accordance with U.S. generally accepted accounting
principles ("GAAP"). Investors are cautioned that there are
material limitations associated with the use of the non-GAAP
financial measures as an analytical tool.
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,
impairment, loss on debt extinguishment and certain other items
that management believes are not representative of its operating
performance. FFO and FFO Per Share are useful performance measures
because they exclude those items that management believes are not
representative of its performance.
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, these measures may not be comparable
to similar measures presented by other companies.
Adjusted Earnings and Adjusted EPS represent net
earnings adjusted for preferred share dividends accumulated,
impairment, loss on debt extinguishment, unrealized change in fair
value on derivative instruments and certain other items that
management believes are not representative of its ongoing
performance.
Adjusted Earnings and Adjusted EPS are not defined by GAAP and
should not be considered as an alternative to net earnings, net
earnings per share or any other indicator of the Company's
performance required to be reported by GAAP. In addition, these
measures may not be comparable to similar measures presented by
other companies and the closest measure is net earnings. Management
believes that these metrics are helpful in providing investors with
information to assess the ongoing operations of the business.
Adjusted EBITDA represents net earnings before interest
expense and income, tax expense, depreciation and amortization,
impairment, write-down and gains/losses on sale, gains/losses on
derivative instruments, loss on foreign currency repatriation,
change in contingent consideration asset, loss on debt
extinguishment, other expenses and certain other items that
management believes are not representative of its operating
performance.
Adjusted EBITDA provides useful information to investors in
assessing the Company's results from operations. Management
believes that this measure is useful in assessing performance and
highlighting trends on an overall basis. Management 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.
Total Borrowings represents long-term
debt and other financing arrangements, excluding deferred
financing fees. Operating borrowings represents Total
Borrowings less amounts related to vessels under construction.
Net Debt represents Total Borrowings before debt discount
and fair value adjustments, net of cash and cash equivalents and
restricted cash. Operating Net Debt represents Net Debt less
amounts related to vessels under construction.
Net Debt and Total Borrowings provide useful information to
investors in assessing the Company's leverage. Management believes
these measures are useful in assessing the Company's ability to
settle contracted debt payments. Management also believes that
these leverage measurements can be useful in comparing the
Company's position with those of other companies, even though other
companies may not calculate these measures 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.
CAUTIONARY 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). 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:
- the impact and timing of the pending transaction between Atlas
and Poseidon;
- Atlas' future operating and financial results;
- Atlas' future 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 realize the benefits of recent financing activities, 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 COVID-19 pandemic, including as
a result of new variants of the virus, and its impact on Atlas'
business;
- a major customer experiencing financial distress or bankruptcy
due to the COVID-19 pandemic, the Ukraine-Russia conflict or otherwise;
- global economic and market conditions and shipping industry
trends, including charter rates and other factors affecting supply
and demand for our containerships and power generation
solutions;
- disruptions in global credit and financial markets as the
result of the COVID-19 pandemic, the Ukraine-Russian conflict or otherwise;
- the impact of inflation, recession or other actual or
anticipated economic pressures;
- Atlas' expectations as to impairments of its vessels and power
generation assets, including the timing and amount of potential
impairments;
- the future valuation of Atlas' vessels, 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;
- availability of crew, number of off-hire days and dry-docking
requirements;
- 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;
- changes in technology, prices, industry standards,
environmental regulation and other factors which could affect
Atlas' competitive position, revenues and asset values;
- disruptions and security threats to our technology
systems;
- 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;
- Atlas' ability to achieve or realize expected benefits from ESG
initiatives;
- potential liability from future litigation;
- other factors detailed from time to time in Atlas' periodic
reports; and
- other risks that are not currently material or known to
us.
Certain participants in the pending transaction described herein
will prepare and file with the SEC a Schedule 13E-3 Transaction
Statement, which will contain important information on Atlas,
Poseidon, the transaction and related matters, including the terms
and conditions of the transaction. Shareholders of Atlas are urged
to carefully read these documents, as they may be amended from time
to time, before making any decision with respect to the
transaction. The Schedule 13E-3 and all other documents filed with
the SEC in connection with the transaction will be available when
filed, free of charge, on the SEC's website at www.sec.gov. In
addition, these documents will be made available, free of charge,
to shareholders of Atlas who make a written request to the investor
contacts named in this release. This announcement is neither a
solicitation of a proxy, an offer to purchase nor a solicitation of
an offer to sell any securities and it is not a substitute for any
filings that may be made with the SEC should the transaction
proceed.
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, all
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, 2021 on Form 20-F filed with the SEC
on March 24, 2022.
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 SEC that attempt to advise interested parties
of the risks and factors that may affect Atlas' businesses,
prospects and results of operations.
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SOURCE Atlas Corp.