Achieves record quarterly Revenue, Operating
Earnings and Cash Flow from Operations
Repays $225 million of secured debt,
part of which will unencumber 6 additional vessels, and
Closes $150 million corporate
revolving credit facility bringing total liquidity to $541 million
HONG KONG, Oct. 30, 2018 /PRNewswire/ - Seaspan Corporation
("Seaspan") (NYSE: SSW) announced today its financial results for
the three and nine months ended September
30, 2018.
Highlights for the Quarter:
- Earnings per diluted share of $0.36 for the third quarter and $1.07 for the nine months
- Cash Flow from Operations reached a quarterly record
$142.2 million for the third quarter
and $325.0 million for the nine
months
- Fairfax exercised its first tranche of 38.5 million warrants
for proceeds to Seaspan of $250.0
million
- Closed $150.0 million, two-year,
corporate revolving credit facility
- Redeemed 10.5% Series F Preferred Shares for an aggregate total
of $143.4 million, including accrued
dividends
- Issued 8.0% Fixed-to-Floating Rate Series I Preferred Shares
for gross proceeds of $150.0
million
- Achieved vessel utilization of 98.4% for the third quarter and
98.0% for the nine months ended September
30, 2018
- Entered into a binding term sheet for a potential investment of
up to $200.0 million in the
restructuring of Swiber Holdings Limited
Bing Chen, President and Chief Executive Officer of Seaspan,
commented, "I am pleased with our record operating results in the
third quarter, and the strategic milestones we have achieved so far
this year. We are realizing benefits from the full integration of
GCI, which is the main driver of our year-over-year growth, while
we continue to invest in and improve operations of our integrated
containership platform to provide best-in-class services. These
improvements are evidenced by our 98.4% utilization rate for the
quarter, as well as marking the lowest ever number of lost time
injuries since we began tracking in 2013."
Ryan Courson, Chief Financial
Officer, added, "Over the course of the third quarter, we have
improved our liquidity position with several strategic financings
including closing the first of Fairfax's two $250 million equity investments, a $150 million two-year corporate revolving credit
facility, and $150 million of
Preferred Series I Shares. Through prudent capital allocation we
have lowered our cost of capital while increasing our capital
structure flexibility."
Significant Developments
Fairfax Investments
On July 16, 2018, in accordance
with the May 2018 definitive
agreement, Seaspan issued warrants to Fairfax Financial Holdings
Ltd. and its affiliates ("Fairfax") to purchase 25.0 million Class
A common shares at an exercise price of $8.05 per share. In exchange for this, Fairfax
exercised its first tranche of 38.5 million warrants at an exercise
price of $6.50 per share in
July 2018, for total proceeds of
$250.0 million. Additionally, Fairfax
agreed to exercise its second tranche of 38.5 million warrants at
an exercise price of $6.50 per share,
upon issuance of the warrants in January
2019 on closing of the March
2018 definitive agreement, for proceeds to the Company of
$250.0 million. The two tranches of
debentures, the first $250.0 million
issued in February 2018, and the
second $250.0 million to be issued in
January 2019, were amended to allow
Fairfax to call for early redemption of some or all of the
debentures on each anniversary date of issuance. As the right
to put the debentures is solely within the control of Fairfax, the
February 2018 debentures were
reclassified from long-term liabilities to current liabilities as
of July 16, 2018. In September 2018, Fairfax waived the annual put
right of the February 2018
debentures, which caused the February
2018 debentures to be reclassified from current liabilities
to long-term liabilities. The February
2018 debentures will be reclassified from long-term
liabilities to current liabilities when such debentures become
puttable within one year from period end. Upon funding of the
January 2019 debentures and exercise
of the second tranche of warrants upon closing of the March 2018 definitive agreement in January 2019, the January
2019 debentures will be classified as a current liability,
as the debentures will be puttable within one year.
Following the exercise by Fairfax of its first tranche of
warrants on July 16, 2018 to purchase
38.5 million Class A common shares, and as of September 30, 2018, the Company had 176.7 million
Class A common shares outstanding.
Subsequent Events
Swiber Investment
As previously announced, on October 3,
2018, Seaspan entered into a binding term sheet for a
potential investment of up to $200.0
million in the restructured Swiber Holdings Limited. Seaspan
expects the investment to be funded in two tranches: i)
$20.0 million upon closing in
exchange for an 80% economic interest in the restructured Swiber
Group, and ii) an incremental $180.0
million to be invested in a $1.0
billion LNG-to-power project in Vietnam that is currently under development.
Closing of the first tranche is expected to occur in 2019.
Distribution
The Board of Directors has declared a quarterly distribution in
the amount of $0.125 per share for
its Class A common shares, payable on October 30, 2018 to shareholders of record as at
the close of business on October 22,
2018. The regular quarterly dividends on the Preferred
Shares Series D, Series E, Series G, Series H and Series I have
also been declared.
Results for the Three and Nine Months Ended September 30, 2018
Financial Results
The following table summarizes Seaspan's consolidated financial
results for the three and nine months ended September 30, 2018 and 2017:
Financial
Summary
(in millions of US
dollars)
|
Three Months
Ended September 30,
|
|
Nine Months
Ended
September 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
295.0
|
|
$
|
211.0
|
|
$
|
801.4
|
|
$
|
616.9
|
Ship operating
expense
|
|
55.4
|
|
|
45.4
|
|
|
163.7
|
|
|
135.8
|
Depreciation and
amortization expense
|
|
65.1
|
|
|
49.8
|
|
|
181.1
|
|
|
149.6
|
General and
administrative expense
|
|
8.1
|
|
|
14.0
|
|
|
24.5
|
|
|
29.0
|
Operating lease
expense
|
|
33.0
|
|
|
30.3
|
|
|
96.6
|
|
|
85.0
|
Interest expense and
amortization of deferred financing fees
|
|
58.2
|
|
|
28.3
|
|
|
154.5
|
|
|
85.1
|
Net
earnings
|
|
80.0
|
|
|
48.4
|
|
|
215.7
|
|
|
116.7
|
Earnings per share,
diluted
|
|
0.36
|
|
|
0.26
|
|
|
1.07
|
|
|
0.60
|
Cash from operating
activities
|
|
142.2
|
|
|
95.1
|
|
|
325.0
|
|
|
234.3
|
Ownership Days, Operating Days and Vessel Utilization
Ownership days are the number of days a vessel is owned and
available for charter. Operating days are the number of days a
vessel is available to the charterer for use.
The primary driver of ownership days are the increases or
decreases in the number of vessels owned, while the drivers of
operating days are ownership days and the number of days the
vessels are off-hire.
Ownership days increased by 1,696 days and 3,318 days for the
three and nine months ended September 30,
2018, respectively, compared to the same periods in 2017,
primarily due to the addition of 16 vessels acquired through the
Greater China Intermodal Investments LLC ("GCI") acquisition, which
contributed 1,472 days and 3,216 days, respectively. The remainder
of the increase was due to 2018 vessel deliveries and acquisitions
and partially offset by vessel disposals.
Vessel utilization represents the number of operating days as a
percentage of ownership days.
The following table summarizes Seaspan's vessel utilization by
quarter and for the nine months ended September 30, 2018 and 2017:
|
|
Three Months
Ended
March
31,
|
|
Three Months
Ended
June
30,
|
|
Three
Months Ended
September
30,
|
|
Nine Months
Ended September 30,
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Vessel
Utilization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ownership
Days(1)
|
|
8,030
|
|
7,917
|
|
9,546
|
|
8,037
|
|
9,844
|
|
8,148
|
|
27,420
|
|
24,102
|
|
Less Off-hire
Days:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scheduled
Off-hire
|
|
(104)
|
|
—
|
|
—
|
|
—
|
|
(8)
|
|
—
|
|
(112)
|
|
—
|
|
|
Unscheduled
Off-hire(2)
|
|
(149)
|
|
(662)
|
|
(137)
|
|
(142)
|
|
(146)
|
|
(254)
|
|
(432)
|
|
(1,058)
|
|
Operating
Days(1)
|
|
7,777
|
|
7,255
|
|
9,409
|
|
7,895
|
|
9,690
|
|
7,894
|
|
26,876
|
|
23,044
|
|
Vessel
Utilization
|
|
96.8
|
%
|
91.6
|
%
|
98.6
|
%
|
98.2
|
%
|
98.4
|
%
|
96.9
|
%
|
98.0
|
%
|
95.6
|
%
|
_____________________________
(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, 2018, compared to the
same periods in 2017, primarily due to higher utilization of
vessels acquired from GCI, 2018 deliveries and acquisitions and a
decrease in off-hire days. During the nine months ended
September 30, 2018, Seaspan completed
dry-dockings for five 2500 TEU vessels, one 3500 TEU vessel and one
4250 TEU vessel, one of which occurred while the vessel was
off-charter.
Revenue
Revenue increased by 39.8% to $295.0
million and by 29.9% to $801.4
million for the three and nine months ended September 30, 2018, respectively, compared to the
same periods in 2017. The increases in revenue were primarily due
to the additional operating days from the vessel deliveries,
acquisition of new vessels from the GCI transaction and higher
average charter rates for vessels that were on short-term
charters.
The increase in operating days and the related financial impact
thereof for the three and nine months ended September 30, 2018, relative to the same periods
in 2017, is attributable to the following:
|
|
Three Months
Ended September 30,
|
|
Nine Months
Ended September 30,
|
|
|
Ownership
Day Impact
|
|
Operating
Days
Impact
|
|
$
Impact
(in
millions
of US
dollars)
|
|
Ownership
Day Impact
|
|
Operating
Days
Impact
|
|
$
Impact
(in
millions
of US
dollars)
|
Addition of 16
vessels from acquisition of GCI
|
|
1,472
|
|
1,472
|
$
|
54.1
|
|
3,216
|
|
3,216
|
$
|
115.7
|
Changes in daily
charter hire rates and re-charters
|
|
—
|
|
—
|
|
12.6
|
|
—
|
|
—
|
|
19.3
|
2018 vessel
deliveries and acquisitions
|
|
552
|
|
552
|
|
12.2
|
|
999
|
|
998
|
|
19.5
|
Full period
contribution for 2017 vessel deliveries
|
|
—
|
|
—
|
|
—
|
|
152
|
|
152
|
|
6.9
|
Unscheduled
off-hire
|
|
—
|
|
108
|
|
0.5
|
|
—
|
|
626
|
|
6.7
|
Scheduled
off-hire
|
|
—
|
|
(8)
|
|
(0.1)
|
|
—
|
|
(112)
|
|
(1.9)
|
Vessel
disposals
|
|
(328)
|
|
(328)
|
|
(1.3)
|
|
(1,049)
|
|
(1,048)
|
|
(3.3)
|
Interest income from
leasing
|
|
—
|
|
—
|
|
8.0
|
|
—
|
|
—
|
|
25.6
|
Other
|
|
—
|
|
—
|
|
(2.0)
|
|
—
|
|
—
|
|
(4.0)
|
Total
|
|
1,696
|
|
1,796
|
$
|
84.0
|
|
3,318
|
|
3,832
|
$
|
184.5
|
Ship Operating Expense
Ship operating expense increased by 22.0% to $55.4 million and by 20.5% to $163.7 million for the three and nine months
ended September 30, 2018,
respectively, compared to the same periods in 2017. The increases
were primarily due to an increase in ownership days from the
increase in the number of vessels in Seaspan's fleet. The increase
in ship operating expense for the nine months ended September 30, 2018 was also due to a higher bulk
purchasing of vessel stores and spare parts, and an increase in
planned maintenance required for certain vessels less than 8500 TEU
in size.
Depreciation and Amortization Expense
Depreciation and amortization expense increased by 30.5% to
$65.1 million and by 21.1% to
$181.1 million for the three and nine
months ended September 30, 2018,
respectively, compared to the same periods in 2017. The increases
were primarily due to an increase in ownership days from the
increase in the number of vessels in Seaspan's fleet.
General and Administrative Expense
General and administrative expense decreased by 41.9%, to
$8.1 million and by 15.6% to
$24.5 million for the three and nine
months ended September 30, 2018,
respectively, compared to the same periods in 2017. The decreases
were primarily due to share-based compensation expense to the
chairman of the board and the former chief executive officer,
partially offset by a transition payment to the former chief
financial officer in the second quarter of 2018.
Operating Lease Expense
Operating lease expense increased by 9.0% to $33.0 million and by 13.6% to $96.6 million for the three and nine months ended
September 30, 2018, respectively,
compared to the same periods in 2017. The increases were primarily
due to an increase in LIBOR. The increase to the nine months ended
September 30, 2018 was also due to
the delivery of one vessel in 2017 that was financed through a
sale-leaseback transaction.
Interest Expense and Amortization of Deferred Financing
Fees
The following table summarizes Seaspan's borrowings:
(in millions
of US dollars)
|
September 30,
|
|
2018
|
|
2017
|
Long-term debt,
excluding deferred financing fees:
|
|
|
|
|
|
|
Revolving credit
facilities
|
$
|
812.3
|
|
$
|
876.9
|
|
Term loan credit
facilities
|
|
2,243.8
|
|
|
1,358.8
|
|
Senior unsecured
notes
|
|
417.9
|
|
|
341.9
|
|
Senior notes due
2025
|
|
250.0
|
|
|
—
|
|
Discount and fair
value adjustment
|
|
(88.1)
|
|
|
—
|
Long-term obligations
under capital lease, excluding deferred financing fees
|
|
660.1
|
|
|
615.6
|
Total
borrowings
|
|
4,296.0
|
|
|
3,193.2
|
Less: Vessels under
construction
|
|
—
|
|
|
(136.6)
|
Operating
borrowings
|
$
|
4,296.0
|
|
$
|
3,056.6
|
Interest expense and amortization of deferred financing fees
increased by $29.9 million to
$58.2 million and by $69.4 million to $154.5
million for the three and nine months ended September 30, 2018, respectively, compared to the
same periods in 2017. The increases were primarily due to the debt
assumed as part of the acquisition of GCI, an increase in operating
debt for delivered vessels, the issuance of the February 2018 debentures to Fairfax and an
increase in LIBOR.
Change in Fair Value of Financial Instruments
The change in fair value of financial instruments resulted in a
gain of $4.5 million and $29.8 million for the three and nine months ended
September 30, 2018, respectively. The
gains for these periods were primarily due to an increase in the
forward LIBOR curve as it relates to interest swaps. Included in
the gain is unrealized change in fair value of $13.9 million and $62.8
million for the three and nine months ended September 30, 2018, respectively, compared to
$11.5 million and $24.7 million for the comparative periods in the
prior year.
Working Capital
At September 30, 2018 Seaspan had
a working capital deficiency of $465.5
million which includes $337.9
million of senior unsecured notes maturing in April 2019. In order to alleviate this deficiency
Seaspan will rely, in part, upon the funding of the $250.0 million January
2019 Fairfax debentures and concurrent exercise of the
second tranche of 38.5 million warrants in January 2019 for proceeds of $250.0 million, both of which are subject to
limited closing conditions, including that there has not been a
material adverse change with respect to Seaspan. In the event
that these closing conditions are not satisfied, which Seaspan does
not expect to occur, Seaspan's plans to alleviate this deficiency
would include entering into secured financing for its 18
unencumbered vessels (six of which are in the process of being
unencumbered), selling vessels, or drawing on its $150.0 million corporate revolver. Seaspan
also expects to further address this deficiency through cash
generated from operations, existing sources of funds and additional
sources of funds in the capital markets to the extent
available.
About Seaspan
Seaspan is the leading independent charter owner of
containerships with industry leading ship management services.
Seaspan charters its vessels primarily pursuant to long-term,
fixed-rate, time charters from the world's largest container
shipping liners. Seaspan's operating fleet consists of 112
containerships with a total capacity of more than 900,000 TEU, an
average age of approximately six years and an average remaining
lease period of approximately five 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
SSW PR G
SSW PR H
|
|
Series E preferred
shares
Series G preferred
shares
Series H preferred
shares
|
SSW PR I
|
|
Series I preferred
shares
|
SSWN
|
|
6.375% senior
unsecured notes due 2019
|
SSWA
|
|
7.125% senior
unsecured notes due 2027
|
SSW25
|
|
5.500% senior notes
due 2025
|
Conference Call and Webcast
Seaspan will host a conference call and webcast presentation for
investors, analysts, and interested parties to discuss its third
quarter results on October 31, 2018
at 5:30 a.m. PT / 8:30 a.m. ET. Participants should call
1-877-246-9875 (US/Canada) or
1-707-287-9353 (International) and request the Seaspan call. The
live webcast and slide presentation are available under "Events
& Presentations" at www.seaspancorp.com.
A recording will be available at 1-855-859-2056 or
1-404-537-3406 (Conference passcode: 8095029).
SEASPAN
CORPORATION
UNAUDITED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2018
(IN THOUSANDS OF US DOLLARS)
|
|
|
|
|
|
|
|
September 30,
2018
|
|
December 31,
2017
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
391,030
|
|
$
|
253,176
|
|
Short-term
investments
|
|
|
2,505
|
|
|
104
|
|
Accounts
receivable
|
|
|
7,714
|
|
|
11,678
|
|
Loans to
affiliate
|
|
|
—
|
|
|
36,100
|
|
Prepaid expenses and
other
|
|
|
42,208
|
|
|
44,869
|
|
Fair value of
financial
instruments
|
|
|
187
|
|
|
—
|
|
Gross investment in
lease
|
|
|
44,348
|
|
|
35,478
|
|
|
|
487,992
|
|
|
381,405
|
|
|
|
|
|
|
|
Vessels
|
|
|
5,982,857
|
|
|
4,390,854
|
Vessels under
construction
|
|
|
—
|
|
|
146,362
|
Deferred
charges
|
|
|
56,120
|
|
|
62,020
|
Gross investment in
lease
|
|
|
828,809
|
|
|
687,896
|
Goodwill
|
|
|
75,321
|
|
|
75,321
|
Other
assets
|
|
|
161,155
|
|
|
134,284
|
|
|
$
|
7,592,254
|
|
$
|
5,878,142
|
Liabilities, puttable
preferred shares and shareholders' equity
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
70,568
|
|
$
|
63,220
|
|
Current portion of
deferred revenue
|
|
|
52,094
|
|
|
55,367
|
|
Current portion of
long-term debt
|
|
|
745,540
|
|
|
257,800
|
|
Current portion of
long-term obligations under capital lease
|
|
|
47,996
|
|
|
43,912
|
|
Current portion of
other long-term liabilities
|
|
|
37,292
|
|
|
23,635
|
|
|
|
953,490
|
|
|
443,934
|
|
|
|
|
|
|
|
Deferred
revenue
|
|
|
385,315
|
|
|
328,681
|
Long-term
debt
|
|
|
2,864,158
|
|
|
2,192,833
|
Long-term obligations
under capital lease
|
|
|
603,734
|
|
|
595,016
|
Other long-term
liabilities
|
|
|
182,391
|
|
|
199,386
|
Fair value of
financial instruments
|
|
|
121,858
|
|
|
168,860
|
|
|
|
5,110,946
|
|
|
3,928,710
|
|
|
|
|
|
|
|
Puttable preferred
shares
|
|
|
47,695
|
|
|
—
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
|
Share
capital
|
|
|
2,100
|
|
|
1,646
|
|
Treasury
shares
|
|
|
(371)
|
|
|
(377)
|
|
Additional paid in
capital
|
|
|
3,124,759
|
|
|
2,752,988
|
|
Deficit
|
|
|
(670,034)
|
|
|
(781,137)
|
|
Accumulated other
comprehensive loss
|
|
|
(22,841)
|
|
|
(23,688)
|
|
|
|
2,433,613
|
|
|
1,949,432
|
|
|
$
|
7,592,254
|
|
$
|
5,878,142
|
SEASPAN
CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018
AND 2017
(IN THOUSANDS OF US DOLLARS, EXCEPT SHARE AND PER SHARE
AMOUNTS)
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
294,981
|
|
$
|
211,013
|
|
$
|
801,419
|
|
$
|
616,943
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Ship
operating
|
|
55,360
|
|
|
45,378
|
|
|
163,676
|
|
|
135,808
|
|
Cost of services,
supervision fees
|
|
—
|
|
|
650
|
|
|
—
|
|
|
650
|
|
Depreciation and
amortization
|
|
65,053
|
|
|
49,835
|
|
|
181,085
|
|
|
149,579
|
|
General and
administrative
|
|
8,148
|
|
|
14,034
|
|
|
24,494
|
|
|
29,009
|
|
Operating
leases
|
|
33,048
|
|
|
30,332
|
|
|
96,571
|
|
|
84,990
|
|
Expenses related to
customer bankruptcy
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,013
|
|
Gain on
disposals
|
|
—
|
|
|
(6,606)
|
|
|
—
|
|
|
(6,606)
|
|
|
161,609
|
|
|
133,623
|
|
|
465,826
|
|
|
394,443
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
earnings
|
|
133,372
|
|
|
77,390
|
|
|
335,593
|
|
|
222,500
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses
(income):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense and
amortization of deferred financing fees
|
|
58,231
|
|
|
28,332
|
|
|
154,478
|
|
|
85,061
|
|
Interest
income
|
|
(1,128)
|
|
|
(1,080)
|
|
|
(2,893)
|
|
|
(3,445)
|
|
Undrawn credit
facility fees
|
|
64
|
|
|
584
|
|
|
359
|
|
|
1,849
|
|
Acquisition related
gain on contract settlement
|
|
—
|
|
|
—
|
|
|
(2,430)
|
|
|
—
|
|
Change in fair value
of financial instruments
|
|
(4,526)
|
|
|
2,444
|
|
|
(29,775)
|
|
|
19,471
|
|
Equity income on
investment
|
|
—
|
|
|
(1,510)
|
|
|
(1,216)
|
|
|
(4,039)
|
|
Other
expenses
|
|
758
|
|
|
243
|
|
|
1,369
|
|
|
6,919
|
|
|
53,399
|
|
|
29,013
|
|
|
119,892
|
|
|
105,816
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
$
|
79,973
|
|
$
|
48,377
|
|
$
|
215,701
|
|
$
|
116,684
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit, beginning of
period
|
|
(749,752)
|
|
|
(825,359)
|
|
|
(781,137)
|
|
|
(807,496)
|
Dividends - common
shares
|
|
—
|
|
|
(14,744)
|
|
|
(50,658)
|
|
|
(68,137)
|
Dividends - preferred
shares
|
|
245
|
|
|
(16,104)
|
|
|
(52,627)
|
|
|
(48,313)
|
Other
|
|
(500)
|
|
|
(140)
|
|
|
(1,313)
|
|
|
(708)
|
Deficit, end of
period
|
$
|
(670,034)
|
|
$
|
(807,970)
|
|
$
|
(670,034)
|
|
$
|
(807,970)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares, basic
|
|
170,232
|
|
|
121,752
|
|
|
147,292
|
|
|
114,201
|
Weighted average
number of shares, diluted
|
|
174,030
|
|
|
121,831
|
|
|
151,533
|
|
|
114,260
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share,
basic
|
$
|
0.37
|
|
$
|
0.27
|
|
$
|
1.10
|
|
$
|
0.60
|
Earnings per share,
diluted
|
$
|
0.36
|
|
$
|
0.26
|
|
$
|
1.07
|
|
$
|
0.60
|
SEASPAN
CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018
AND 2017
(IN THOUSANDS OF US DOLLARS)
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
$
|
79,973
|
|
$
|
48,377
|
|
$
|
215,701
|
|
$
|
116,684
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts reclassified
to net earnings during the period relating to cash flow hedging
instruments
|
|
271
|
|
|
342
|
|
|
847
|
|
|
2,479
|
Comprehensive
income
|
$
|
80,244
|
|
$
|
48,719
|
|
$
|
216,548
|
|
$
|
119,163
|
SEASPAN
CORPORATION UNAUDITED CONSOLIDATED STATEMENTS OF CASH
FLOWS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER
30, 2018 AND 2017 (IN THOUSANDS OF US
DOLLARS)
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
|
Nine Months
Ended
September 30,
|
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
2018
|
|
|
2017
|
Cash from (used
in):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
$
|
79,973
|
|
|
$
|
48,377
|
|
|
$
|
215,701
|
|
|
$
|
116,684
|
|
Items not involving
cash:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
65,053
|
|
|
|
49,835
|
|
|
|
181,085
|
|
|
|
149,579
|
|
Share-based
compensation
|
|
|
355
|
|
|
|
8,507
|
|
|
|
1,905
|
|
|
|
12,377
|
|
Amortization of
deferred financing fees, debt discount and fair value of long term
debt
|
|
|
5,726
|
|
|
|
2,605
|
|
|
|
14,283
|
|
|
|
8,818
|
|
Amounts reclassified
from other comprehensive loss to interest expense
|
|
|
80
|
|
|
|
144
|
|
|
|
254
|
|
|
|
1,824
|
|
Unrealized change in
fair value of financial instruments
|
|
|
(13,925)
|
|
|
|
(11,483)
|
|
|
|
(62,834)
|
|
|
|
(24,668)
|
|
Acquisition related
gain on contract settlement
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,430)
|
|
|
|
—
|
|
Equity income on
investment
|
|
|
—
|
|
|
|
(1,510)
|
|
|
|
(1,216)
|
|
|
|
(4,039)
|
|
Operating
leases
|
|
|
(5,883)
|
|
|
|
(5,911)
|
|
|
|
(17,692)
|
|
|
|
(16,678)
|
|
Amortization of
revenue contracts
|
|
|
1,902
|
|
|
|
1,133
|
|
|
|
5,461
|
|
|
|
3,182
|
|
Gain on
disposals
|
|
|
—
|
|
|
|
(6,606)
|
|
|
|
—
|
|
|
|
(6,606)
|
|
Other
|
|
|
1
|
|
|
|
107
|
|
|
|
12
|
|
|
|
6,574
|
Changes in assets and
liabilities
|
|
|
8,917
|
|
|
|
9,853
|
|
|
|
(9,578)
|
|
|
|
(12,779)
|
Cash from operating
activities
|
|
|
142,199
|
|
|
|
95,051
|
|
|
|
324,951
|
|
|
|
234,268
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued,
net of issuance costs
|
|
|
—
|
|
|
|
22,102
|
|
|
|
—
|
|
|
|
79,368
|
|
Preferred shares
issued, net of issuance costs
|
|
|
144,416
|
|
|
|
—
|
|
|
|
144,416
|
|
|
|
—
|
|
Repayment of credit
facilities
|
|
|
(225,916)
|
|
|
|
(98,295)
|
|
|
|
(360,660)
|
|
|
|
(269,452)
|
|
Draws on credit
facilities
|
|
|
—
|
|
|
|
—
|
|
|
|
325,600
|
|
|
|
—
|
|
Fairfax notes and
warrants issued
|
|
|
—
|
|
|
|
—
|
|
|
|
250,000
|
|
|
|
—
|
|
Draws on long-term
obligations under capital lease
|
|
|
—
|
|
|
|
136,331
|
|
|
|
46,964
|
|
|
|
136,331
|
|
Repayment of
long-term obligations under capital lease
|
|
|
(12,365)
|
|
|
|
(6,619)
|
|
|
|
(35,672)
|
|
|
|
(19,492)
|
|
Senior unsecured
notes repurchased, including related expenses
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,122)
|
|
Proceeds from
exercise of Fairfax warrants
|
|
|
250,000
|
|
|
|
—
|
|
|
|
250,000
|
|
|
|
—
|
|
Redemption of Series
F preferred shares
|
|
|
(143,430)
|
|
|
|
—
|
|
|
|
(143,430)
|
|
|
|
—
|
|
Financing
fees
|
|
|
(2,753)
|
|
|
|
(858)
|
|
|
|
(15,868)
|
|
|
|
(3,172)
|
|
Dividends on common
shares
|
|
|
(9,549)
|
|
|
|
(7,701)
|
|
|
|
(28,358)
|
|
|
|
(53,411)
|
|
Dividends on
preferred shares
|
|
|
(14,720)
|
|
|
|
(16,104)
|
|
|
|
(49,680)
|
|
|
|
(48,313)
|
|
Net proceeds from
sale-leaseback of vessels
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
90,753
|
Cash from (used in)
financing activities
|
|
|
(14,317)
|
|
|
|
28,856
|
|
|
|
383,312
|
|
|
|
(90,510)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenditures for
vessels
|
|
|
(5,613)
|
|
|
|
(139,364)
|
|
|
|
(306,626)
|
|
|
|
(235,725)
|
|
Short-term
investments
|
|
|
(105)
|
|
|
|
(1)
|
|
|
|
(2,401)
|
|
|
|
307
|
|
Net proceeds from
vessel disposal
|
|
|
—
|
|
|
|
18,338
|
|
|
|
—
|
|
|
|
18,338
|
|
Other
assets
|
|
|
(201)
|
|
|
|
60
|
|
|
|
2,510
|
|
|
|
104
|
|
Loans to
affiliate
|
|
|
—
|
|
|
|
(546)
|
|
|
|
(427)
|
|
|
|
(2,131)
|
|
Repayment of loans to
affiliate
|
|
|
—
|
|
|
|
546
|
|
|
|
—
|
|
|
|
21,779
|
|
Acquisition of
GCI
|
|
|
—
|
|
|
|
—
|
|
|
|
(333,581)
|
|
|
|
—
|
|
Cash acquired from
GCI acquisition
|
|
|
—
|
|
|
|
—
|
|
|
|
70,121
|
|
|
|
—
|
Cash used in
investing activities
|
|
|
(5,919)
|
|
|
|
(120,967)
|
|
|
|
(570,404)
|
|
|
|
(197,328)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease)
in cash, cash equivalents and restricted cash
|
|
|
121,963
|
|
|
|
2,940
|
|
|
|
137,859
|
|
|
|
(53,570)
|
Cash, cash
equivalents and restricted cash, beginning of period
|
|
|
283,132
|
|
|
|
325,450
|
|
|
|
267,236
|
|
|
|
381,960
|
Cash, cash
equivalents and restricted cash, end of period
|
|
$
|
405,095
|
|
|
$
|
328,390
|
|
|
$
|
405,095
|
|
|
$
|
328,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
391,030
|
|
|
$
|
308,927
|
|
|
|
|
|
|
|
|
Restricted cash
included in other assets
|
|
|
14,065
|
|
|
|
19,463
|
|
|
|
|
|
|
|
|
Total cash, cash
equivalents and restricted cash shown in the consolidated
statements of cash flows
|
|
$
|
405,095
|
|
|
$
|
328,390
|
|
|
|
|
|
|
|
|
STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
This release contains forward-looking statements (as such term
is defined in Section 21E of the Securities Exchange Act of 1934,
as amended, or the Exchange Act) concerning Seaspan's operations,
cash flows, and financial position, including, in particular, the
likelihood of its success in developing and expanding its business.
Statements that are predictive in nature, that depend upon or refer
to future events or conditions, or that include words such as
"continue," "expects," "anticipates," "intends," "plans,"
"believes," "estimates," "projects," "forecasts," "will," "may,"
"potential," "should" and similar expressions are forward‑looking
statements. These forward-looking statements represent Seaspan's
estimates and assumptions only as of the date of this release and
are not intended to give any assurance as to future results. As a
result, you are cautioned not to rely on any forward-looking
statements. Forward-looking statements appear in a number of places
in this release. Although these statements are based upon
assumptions Seaspan believes to be reasonable based upon available
information, they are subject to risks and uncertainties. These
risks and uncertainties include, but are not limited to:
- future growth prospects and ability to expand Seaspan's
business;
- Seaspan's expectations as to impairments of its vessels,
including the timing and amount of currently anticipated
impairments;
- the future valuation of Seaspan's vessels and goodwill;
- potential acquisitions, vessel financing arrangements and other
investments, and Seaspan's expected risks and benefits from such
transactions;
- future time charters and vessel deliveries, including future
long-term charters for certain existing vessels;
- estimated future capital expenditures needed to preserve the
operating capacity of Seaspan's fleet including, its capital base,
and comply with regulatory standards, its expectations regarding
future dry-docking and operating expenses, including ship operating
expense and general and administrative expenses;
- Seaspan's expectations about the availability of vessels to
purchase, the time it may take to construct new vessels, the
delivery dates of new vessels, the commencement of service of new
vessels under long-term time charter contracts and the useful lives
of its vessels;
- availability of crew, number of off-hire days and dry-docking
requirements;
- general market conditions and shipping market trends, including
charter rates, increased technological innovation in competing
vessels and other factors affecting supply and demand;
- Seaspan's financial condition and liquidity, including its
ability to borrow and repay funds under its credit facilities, to
refinance its existing facilities and to obtain additional
financing in the future to fund capital expenditures, acquisitions
and other general corporate activities;
- Seaspan's continued ability to meet its current liabilities as
they become due;
- Seaspan's continued ability to maintain, enter into or renew
primarily long-term, fixed-rate time charters with its existing
customers or new customers;
- the potential for early termination of long-term contracts and
Seaspan's potential inability to enter into, renew or replace
long-term contracts;
- the introduction of new accounting rules for leasing and
exposure to currency exchange rates and interest rate
fluctuations;
- conditions inherent in the operation of ocean-going vessels,
including acts of piracy;
- acts of terrorism or government requisition of Seaspan's
containerships during periods of war or emergency;
- adequacy of Seaspan's insurance to cover losses that result
from the inherent operational risks of the shipping industry;
- lack of diversity in Seaspan's operations and in the type of
vessels in its fleet;
- conditions in the public equity market and the price of
Seaspan's shares;
- Seaspan's ability to leverage to its advantage its
relationships and reputation in the containership industry;
- compliance with and 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;
- some of Seaspan's directors and investors may have separate
interests which may conflict with those of its shareholders and
they may be difficult to replace given the anti-takeover provisions
in Seaspan's organizational documents;
- taxation of Seaspan's earnings and of distributions to its
shareholders;
- Seaspan's exemption from tax on U.S. source international
transportation income;
- the ability to bring claims in China and Marshall
Island, where the legal systems are not well-developed;
- potential liability from future litigation; and
- other factors detailed from time to time in Seaspan's periodic
reports.
Forward-looking statements in this release are estimates and
assumptions reflecting the judgment of senior management and
involve known and unknown risks and uncertainties. These
forward-looking statements are based upon a number of assumptions
and estimates that are inherently subject to significant
uncertainties and contingencies, many of which are beyond Seaspan's
control. Actual results may differ materially from those expressed
or implied by such forward-looking statements. Accordingly, these
forward-looking statements should be considered in light of various
important factors listed above and including, but not limited to,
those set forth in "Item 3. Key Information—D. Risk Factors" in
Seaspan's Annual Report for the year ended December 31, 2017 on Form 20-F filed on
March 6, 2018 and in the "Risk
Factors" in Reports on Form 6-K that are filed with the Securities
and Exchange Commission from time to time relating to its quarterly
financial results.
Seaspan does not intend to revise any forward-looking statements
in order to reflect any change in Seaspan's expectations or events
or circumstances that may subsequently arise. Seaspan expressly
disclaims any obligation to update or revise any of these
forward-looking statements, whether because of future events, new
information, a change in Seaspan's views or expectations, or
otherwise. You should carefully review and consider the various
disclosures included in this 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
Investor Relations
Seaspan Corporation
Tel. 604-347-9184
Email: mborys@seaspanltd.ca
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SOURCE Seaspan Corporation