$5.0 Billion in
Contracted Future Revenue Provides Stable Foundation with
Significant Upside to a Containership Market Recovery
HONG KONG, China, April 26, 2017 /PRNewswire/ - Seaspan Corporation
("Seaspan") (NYSE: SSW) announced today its financial results for
the quarter ended March 31, 2017.
Key Financial Metrics for the First Quarter
- Total revenue of $201.3
million.
- Earnings per diluted share of $0.22.
- Normalized earnings per diluted share(1) of
$0.15.
- Cash available for distribution to common
shareholders(1) of $60.3
million.
- Adjusted EBITDA(1) of $119.3
million.
_________________________
(1) Refer to the
selected financial information accompanying this press release for
definition of these Non-GAAP measures and reconciliations of U.S.
generally accepted accounting principles (GAAP) and Non-GAAP
figures.
|
Highlights
- Achieved reductions of 10.8% in ship operating expense per
ownership day during the quarter ended March
31, 2017, compared to the same period in 2016.
- Achieved vessel utilization of 91.6% for the quarter ended
March 31, 2017. At March 31, 2017, all of Seaspan's operating fleet
were on charter or committed to a future charter.
- Raised gross proceeds of $24.7
million through common equity sales in "at-the-market"
offerings during the quarter ended March 31,
2017.
- In April 2017, declared a
quarterly dividend of $0.125 per
common share for the first quarter of 2017.
Gerry Wang, Chief Executive
Officer, Co-Chairman and Co-Founder of Seaspan, commented, "During
the first quarter, our modern fleet on long-term time charters
continued to provide Seaspan with a solid and stable foundation.
Complementing our $5.0 billion
contracted revenue backlog, Seaspan's short-term fleet allows the
company to benefit from a containership market recovery, which we
believe has begun."
Mr. Wang added, "We have seen significant improvement in charter
rates over the past two months. In particular, Panamax charter
rates have more than doubled to approximately $10,000 per day. As we progress through the year,
our focus remains on seeking opportunities to further solidify the
company's industry leadership for the long-term value of
shareholders."
Summary of Key Financial Results (in thousands of US
dollars):
|
|
Quarter
Ended
March
31,
|
|
|
2017
|
|
|
2016
|
Revenue
|
|
$
|
201,321
|
|
|
$
|
215,523
|
|
|
|
|
|
|
|
|
Reported net
earnings
|
|
$
|
40,023
|
|
|
$
|
7,128
|
|
|
|
|
|
|
|
|
Normalized net
earnings(1)
|
|
$
|
31,829
|
|
|
$
|
46,004
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share, basic and diluted
|
|
$
|
0.22
|
|
|
$
|
(0.06)
|
|
|
|
|
|
|
|
|
Normalized earnings
per share, diluted(1)
|
|
$
|
0.15
|
|
|
$
|
0.33
|
|
|
|
|
|
|
|
|
Cash available for
distribution to common
|
|
|
|
|
|
|
|
|
shareholders(1)
|
|
$
|
60,312
|
|
|
$
|
100,527
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
|
$
|
119,336
|
|
|
$
|
163,655
|
__________________
|
|
|
(1)
|
These are Non-GAAP
financial measures. Please read "Description of Non-GAAP Financial
Measures" for (a) descriptions of Normalized net earnings and
Normalized earnings per share, Cash available for distribution to
common shareholders, and Adjusted EBITDA and (b) reconciliations of
these Non-GAAP financial measures as used in this release to the
most directly comparable financial measures under GAAP.
|
First Quarter Developments
Vessel Acquisition
In January 2017, Seaspan accepted
delivery of one 4250 TEU vessel, the Seaspan Alps, that it
purchased in December 2016.
At-the-Market Offering of Class A Common Shares
In March 2017, Seaspan entered
into an equity distribution agreement under which it may, from time
to time, issue Class A common shares in at-the-market ("ATM")
offerings for up to an aggregate of $75.0
million. During March 2017,
Seaspan issued a total of 3,700,000 Class A common shares under the
ATM offerings for gross proceeds of approximately $24.7 million.
Deferral of Newbuilds
In the first quarter of 2017, Seaspan entered into an amendment
agreement with Jiangsu New Yangzi Shipbuilding Co., Ltd. and
Jiangsu Yangzi Xinfu Shipbuilding Co., Ltd. to defer the delivery
of two 10000 TEU newbuilding containerships from the first and
third quarters of 2017, respectively, to the first and second
quarters of 2018.
Subsequent Events
Changes to the Board of Directors
In April 2017, Seaspan's Board of
Directors appointed Larry Simkins,
Chief Executive Officer and Director of the Washington Companies
("WashCo"), to the Board to replace Graham
Porter, who resigned as a Director to focus on other
personal and professional commitments. In addition, after Seaspan's
2017 Annual General Meeting of shareholders, the Board expanded
from eight to nine members and David
Sokol, also a Director of WashCo and an experienced
executive, was appointed to the Board.
In April 2017, the Board also
created an Executive Committee, which consists of Messrs. Simkins
and Sokol and Seaspan's CEO, Gerry
Wang. The Executive Committee will work closely with
management, and provide advice to the Board on Seaspan's
activities, including financings, budgeting and operations.
Contract Changes
In April 2017, Seaspan and
Gerry Wang amended his employment
agreement to eliminate transaction fees for Mr. Wang under the
agreement for any containership orders, purchases or sales by
Seaspan that are entered into after April 9,
2017, and agreed to enter into discussions about further
amendments to his employment agreement and compensation package. In
addition, Seaspan and Seaspan Financial Services Ltd. ("SFSL"), an
entity controlled by former Director Graham
Porter, terminated the financial services agreement between
the parties effective April 10, 2017.
Seaspan has paid to SFSL the applicable termination fee and will
pay additional financing fees earned for financings in process as
of April 10, 2017 that are completed
prior to the end of the year, with all such payments being made in
shares of Seaspan's Class A common stock.
Dividends
In April 2017, Seaspan declared
quarterly cash dividends on its common and preferred shares.
Results for the Quarter Ended March
31, 2017
At the beginning of 2017, Seaspan had 87 vessels in operation.
Seaspan acquired one 4250 TEU vessel during the quarter ended
March 31, 2017, bringing its
operating fleet to a total of 88 vessels as at March 31, 2017. Revenue is determined primarily
by the number of operating days, and ship operating expense is
determined primarily by the number of ownership days.
|
|
Quarter
Ended
March
31,
|
|
Increase
|
|
|
|
2017
|
|
|
2016
|
|
Days
|
|
|
%
|
|
Operating
days(1)
|
|
|
7,255
|
|
|
|
7,172
|
|
|
83
|
|
|
|
1.2
|
%
|
Ownership
days(1)
|
|
|
7,917
|
|
|
|
7,375
|
|
|
542
|
|
|
|
7.3
|
%
|
The following table summarizes Seaspan's vessel utilization for
the quarters ended March 31, 2017 and
2016:
|
|
First
Quarter
|
|
|
|
2017
|
|
|
2016
|
|
Vessel
Utilization:
|
|
|
|
|
|
|
|
|
Ownership
Days(1)
|
|
|
7,917
|
|
|
|
7,375
|
|
Less Off-hire
Days:
|
|
|
|
|
|
|
|
|
|
Scheduled 5-Year
Survey
|
|
|
-
|
|
|
|
(75)
|
|
|
Unscheduled
Off-hire(2)
|
|
|
(662)
|
|
|
|
(128)
|
|
Operating
Days(1)
|
|
|
7,255
|
|
|
|
7,172
|
|
Vessel
Utilization
|
|
|
91.6
|
%
|
|
|
97.2
|
%
|
____________________
|
(1)
|
Operating and
ownership days include leased vessels and exclude vessels under
bareboat charter.
|
(2)
|
Unscheduled off-hire
includes days related to vessels off-charter.
|
The following table summarizes Seaspan's consolidated financial
results for the quarters ended March 31,
2017 and 2016:
Financial
Summary
(in millions of US
dollars)
|
|
Quarter
Ended
March
31,
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
201.3
|
|
|
$
|
215.5
|
Ship operating
expense
|
|
|
45.6
|
|
|
|
47.6
|
Depreciation and
amortization expense
|
|
|
49.9
|
|
|
|
58.8
|
General and
administrative expense
|
|
|
7.5
|
|
|
|
7.8
|
Operating lease
expense
|
|
|
26.5
|
|
|
|
14.9
|
Interest expense and
amortization of deferred financing fees
|
|
|
28.5
|
|
|
|
30.1
|
Change in fair value
of financial instruments
|
|
|
3.4
|
|
|
|
52.2
|
Revenue
Revenue decreased by 6.6% to $201.3
million for the quarter ended March
31, 2017, compared to the same period in 2016, primarily due
to lower average charter rates for vessels that were on short-term
charters and an increase in unscheduled off-hire, primarily
relating to vessels being off-charter. A total of 190 of the
off-charter days related to three vessels that were previously
chartered to Hanjin Shipping Co., Ltd. ("Hanjin"), and the
remaining off-charter days primarily related to Panamax vessels,
including four secondhand vessels purchased in December 2016. The decrease was partially offset
by the delivery of newbuilding vessels and the addition of two
leased in vessels in 2016.
The increase in operating days and the related financial impact
thereof for the quarter ended March 31,
2017, relative to the same period in 2016, is attributable
to the following:
|
|
Quarter
Ended
March 31,
2017
|
|
|
Operating
Days
Impact
|
|
|
$
Impact
(in millions of
US
dollars)
|
2017 vessel
delivery
|
|
|
87
|
|
|
|
0.3
|
Full period
contribution for 2016 vessel deliveries
|
|
|
716
|
|
|
|
17.9
|
Change in daily
charter hire rate and re-charters
|
|
|
-
|
|
|
|
(19.6)
|
Fewer days due to
leap year
|
|
|
(81)
|
|
|
|
(2.4)
|
Unscheduled
off-hire
|
|
|
(534)
|
|
|
|
(11.0)
|
Scheduled
off-hire
|
|
|
75
|
|
|
|
3.7
|
Supervision fee
revenue
|
|
|
-
|
|
|
|
(1.3)
|
Vessel
disposals
|
|
|
(180)
|
|
|
|
(1.8)
|
Total
|
|
|
83
|
|
|
$
|
(14.2)
|
Vessel utilization decreased due to an increase in off-charter
days as previously described.
During the quarter ended March 31,
2017, Seaspan completed dry-dockings for two 4250 TEU
vessels, which were completed between their time charters.
Ship Operating Expense
Ship operating expense decreased by 4.2% to $45.6 million for the quarter ended March 31, 2017 compared to the same period in
2016, primarily due to cost savings initiatives. These decreases
were achieved even though ownership days increased by 7.3% for the
quarter ended March 31, 2017. As a
result, ship operating expense per ownership day declined by 10.8%
for the quarter ended March 31, 2017,
compared to the same period in 2016.
Depreciation and Amortization Expense
Depreciation and amortization expense decreased by 15.1% to
$49.9 million for the quarter ended
March 31, 2017, compared to the same
period in 2016, primarily due to lower depreciation on 16 vessels
that were impaired as of December 31,
2016 and the disposal of two 4600 TEU vessels in the second
half of 2016. The decrease was partially offset by an increase in
dry-dock amortization.
General and Administrative Expense
General and administrative expense decreased by 3.9% to
$7.5 million for the quarter ended
March 31, 2017, compared to the same
period in 2016. The decrease was primarily due to higher
professional fees and other expenses incurred in 2016, partially
offset by an increase in non-cash stock based compensation expense
related to grants of restricted and performance stock units in
2016.
Operating Lease Expense
Operating lease expense increased to $26.5 million for the quarter ended March 31, 2017, from $14.9
million for the same period in 2016. The increase was
primarily due to the delivery of three vessels in 2016 that were
financed through sale-leaseback transactions and two operating
leases entered into in 2016 for a 10000 TEU vessel and a 14000 TEU
vessel, respectively.
Interest Expense and Amortization of Deferred Financing
Fees
The following table summarizes Seaspan's borrowings:
(in millions
of US dollars)
|
|
As at March
31,
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Long-term debt,
excluding deferred financing fees
|
|
$
|
2,807.4
|
|
|
$
|
3,436.7
|
Long-term obligations
under capital lease, excluding deferred financing fees
|
|
|
492.4
|
|
|
|
336.7
|
Total
borrowings
|
|
|
3,299.8
|
|
|
|
3,773.4
|
Less: Vessels under
construction
|
|
|
(310.4)
|
|
|
|
(218.7)
|
Operating
borrowings
|
|
$
|
2,989.4
|
|
|
$
|
3,554.7
|
Interest expense and amortization of deferred financing fees
decreased by $1.7 million to
$28.5 million for the quarter ended
March 31, 2017, compared to the same
period in 2016.
For the quarter ended March 31,
2017, the decrease in interest expense was primarily due to
repayments made on existing operating borrowings in 2016, partially
offset by an increase in LIBOR.
Change in Fair Value of Financial Instruments
The change in fair value of financial instruments resulted in a
loss of $3.4 million for the quarter
ended March 31, 2017 and was
primarily due to the impact of swap settlements, partially offset
by an increase in the forward LIBOR curve.
About Seaspan
Seaspan provides many of the world's major shipping lines with
creative outsourcing alternatives to vessel ownership by offering
long-term leases on large, modern containerships combined with
industry-leading ship management services. Seaspan's managed fleet
consists of 114 containerships representing a total capacity of
over 915,000 TEU, including 11 newbuilding containerships on order
scheduled for delivery to Seaspan and third parties by the end of
2018. Seaspan's current operating fleet of 88 vessels has 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
|
SSWN
|
|
6.375% senior
unsecured notes due 2019
|
Conference Call and Webcast
Seaspan will host a conference call and webcast presentation for
investors and analysts to discuss its results for the quarter ended
March 31, 2017 on April 27, 2017 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. A telephonic replay will be available for
anyone unable to participate in the live call. To access the
replay, call 1-855-859-2056 or 1-404-537-3406 and enter the replay
passcode 7170157. The recording will be available from April 27, 2017 at 8:30
a.m. PT / 11:30 p.m. ET
through 8:30 p.m. PT / 11:30 p.m. ET on May 11,
2017. The conference call will also be broadcast live over
the Internet and will include a slide presentation. To access the
live webcast of the conference call, go to www.seaspancorp.com and
click on "News & Events" then "Events & Presentations" for
the link. The webcast will be archived on the site for one
year.
SEASPAN
CORPORATION
UNAUDITED CONSOLIDATED BALANCE
SHEET
AS OF MARCH 31, 2017
(IN THOUSANDS OF US
DOLLARS)
|
|
|
|
|
|
|
|
|
March 31,
2017
|
|
|
December 31,
2016
|
Assets
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
295,648
|
|
|
$
|
367,901
|
|
Short-term
investments
|
|
|
103
|
|
|
|
411
|
|
Accounts
receivable
|
|
|
22,831
|
|
|
|
30,793
|
|
Loans to
affiliate
|
|
|
57,266
|
|
|
|
62,414
|
|
Prepaid expenses and
other
|
|
|
42,448
|
|
|
|
37,252
|
|
Fair value of
financial instruments
|
|
|
—
|
|
|
|
11,338
|
|
|
|
418,296
|
|
|
|
510,109
|
|
|
|
|
|
|
|
|
Vessels
|
|
|
4,541,213
|
|
|
|
4,577,667
|
Vessels under
construction
|
|
|
310,444
|
|
|
|
306,182
|
Deferred
charges
|
|
|
66,472
|
|
|
|
68,099
|
Goodwill
|
|
|
75,321
|
|
|
|
75,321
|
Other
assets
|
|
|
132,800
|
|
|
|
120,451
|
|
|
$
|
5,544,546
|
|
|
$
|
5,657,829
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
64,722
|
|
|
$
|
62,157
|
|
Current portion of
deferred revenue
|
|
|
26,880
|
|
|
|
28,179
|
|
Current portion of
long-term debt
|
|
|
370,354
|
|
|
|
314,817
|
|
Current portion of
long-term obligations under capital lease
|
|
|
30,535
|
|
|
|
27,824
|
|
Current portion of
other long-term liabilities
|
|
|
21,089
|
|
|
|
21,115
|
|
Fair value of
financial instruments
|
|
|
12,209
|
|
|
|
30,752
|
|
|
|
525,789
|
|
|
|
484,844
|
|
|
|
|
|
|
|
|
Deferred
revenue
|
|
|
1,528
|
|
|
|
1,528
|
Long-term
debt
|
|
|
2,420,389
|
|
|
|
2,569,697
|
Long-term obligations
under capital lease
|
|
|
450,924
|
|
|
|
459,395
|
Other long-term
liabilities
|
|
|
191,682
|
|
|
|
195,104
|
Fair value of
financial instruments
|
|
|
195,380
|
|
|
|
200,012
|
|
|
|
3,785,692
|
|
|
|
3,910,580
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
|
|
Share
capital
|
|
|
1,424
|
|
|
|
1,385
|
|
Treasury
shares
|
|
|
(377)
|
|
|
|
(367)
|
|
Additional paid in
capital
|
|
|
2,606,568
|
|
|
|
2,580,274
|
|
Deficit
|
|
|
(823,690)
|
|
|
|
(807,496)
|
|
Accumulated other
comprehensive loss
|
|
|
(25,071)
|
|
|
|
(26,547)
|
|
|
|
1,758,854
|
|
|
|
1,747,249
|
|
|
$
|
5,544,546
|
|
|
$
|
5,657,829
|
SEASPAN
CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF
OPERATIONS AND DEFICIT
FOR THE QUARTERS ENDED MARCH 31, 2017
AND 2016
(IN THOUSANDS OF US DOLLARS, EXCEPT
SHARE AND PER SHARE AMOUNTS)
|
|
|
|
|
|
Quarter
Ended
March
31,
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
201,321
|
|
|
$
|
215,523
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Ship
operating
|
|
|
45,607
|
|
|
|
47,607
|
|
Cost of services,
supervision fees
|
|
|
—
|
|
|
|
1,300
|
|
Depreciation and
amortization
|
|
|
49,946
|
|
|
|
58,837
|
|
General and
administrative
|
|
|
7,489
|
|
|
|
7,793
|
|
Operating
leases
|
|
|
26,510
|
|
|
|
14,851
|
|
Expenses related to
customer bankruptcy
|
|
|
1,013
|
|
|
|
—
|
|
|
|
130,565
|
|
|
|
130,388
|
|
|
|
|
|
|
|
|
Operating
earnings
|
|
|
70,756
|
|
|
|
85,135
|
|
|
|
|
|
|
|
|
Other expenses
(income):
|
|
|
|
|
|
|
|
|
Interest expense and
amortization of deferred financing fees
|
|
|
28,468
|
|
|
|
30,143
|
|
Interest
income
|
|
|
(1,172)
|
|
|
|
(3,077)
|
|
Undrawn credit
facility fees
|
|
|
630
|
|
|
|
412
|
|
Change in fair value
of financial instruments
|
|
|
3,417
|
|
|
|
52,151
|
|
Equity income on
investment
|
|
|
(887)
|
|
|
|
(1,800)
|
|
Other
expenses
|
|
|
277
|
|
|
|
178
|
|
|
|
30,733
|
|
|
|
78,007
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
$
|
40,023
|
|
|
$
|
7,128
|
|
|
|
|
|
|
|
|
Deficit, beginning of
period
|
|
|
(807,496)
|
|
|
|
(460,425)
|
Dividends - common
shares
|
|
|
(39,695)
|
|
|
|
(36,880)
|
Dividends - preferred
shares
|
|
|
(16,105)
|
|
|
|
(13,154)
|
Other
|
|
|
(417)
|
|
|
|
(359)
|
Deficit, end of
period
|
|
$
|
(823,690)
|
|
|
$
|
(503,690)
|
|
|
|
|
|
|
|
|
Weighted average
number of shares, basic
|
|
|
106,721
|
|
|
|
97,752
|
Weighted average
number of shares, diluted
|
|
|
106,792
|
|
|
|
97,789
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share, basic and diluted
|
|
$
|
0.22
|
|
|
$
|
(0.06)
|
SEASPAN
CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
FOR THE QUARTERS ENDED MARCH 31, 2017
AND 2016
(IN THOUSANDS OF US
DOLLARS)
|
|
|
|
|
|
Quarter
Ended
March
31,
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
$
|
40,023
|
|
|
$
|
7,128
|
|
|
|
|
|
|
|
|
Other comprehensive
income:
|
|
|
|
|
|
|
|
Amounts reclassified
to net earnings during the period
relating to cash flow hedging instruments
|
|
|
1,476
|
|
|
|
1,061
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
$
|
41,499
|
|
|
$
|
8,189
|
SEASPAN
CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF
CASH FLOWS
FOR THE QUARTERS ENDED MARCH 31, 2017
AND 2016
(IN THOUSANDS OF US
DOLLARS)
|
|
|
|
|
|
Quarter
Ended
March
31,
|
|
|
|
2017
|
|
|
|
2016
|
Cash from (used
in):
|
|
|
|
|
|
|
|
Operating
activities:
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
$
|
40,023
|
|
|
$
|
7,128
|
|
Items not involving
cash:
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
49,946
|
|
|
|
58,837
|
|
|
Share-based
compensation
|
|
|
1,881
|
|
|
|
946
|
|
|
Amortization of
deferred financing fees
|
|
|
3,028
|
|
|
|
3,311
|
|
|
Amounts reclassified
from other comprehensive loss to interest expense
|
|
|
1,279
|
|
|
|
811
|
|
|
Unrealized change in
fair value of financial instruments
|
|
|
(12,148)
|
|
|
|
28,859
|
|
|
Equity income on
investment
|
|
|
(887)
|
|
|
|
(1,800)
|
|
|
Operating
leases
|
|
|
(5,267)
|
|
|
|
(3,866)
|
|
|
Other
|
|
|
78
|
|
|
|
24
|
Changes in assets and
liabilities
|
|
|
(1,015)
|
|
|
|
(16,348)
|
Cash from operating
activities
|
|
|
76,918
|
|
|
|
77,902
|
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
|
|
|
|
Common shares issued,
net of issuance costs
|
|
|
23,904
|
|
|
|
—
|
|
|
Draws on credit
facilities
|
|
|
—
|
|
|
|
140,000
|
|
|
Repayment of credit
facilities
|
|
|
(95,530)
|
|
|
|
(90,520)
|
|
|
Repayment of
long-term obligations under capital lease
|
|
|
(6,365)
|
|
|
|
(6,041)
|
|
|
Common shares
repurchased, including related expenses
|
|
|
—
|
|
|
|
(8,269)
|
|
|
Senior unsecured
notes repurchased, including related expenses
|
|
|
(457)
|
|
|
|
—
|
|
|
Financing
fees
|
|
|
—
|
|
|
|
(1,610)
|
|
|
Dividends on common
shares
|
|
|
(39,278)
|
|
|
|
(35,570)
|
|
|
Dividends on
preferred shares
|
|
|
(16,105)
|
|
|
|
(13,154)
|
|
|
Proceeds from
sale-leaseback of vessel
|
|
|
—
|
|
|
|
110,000
|
Cash from (used in)
financing activities
|
|
|
(133,831)
|
|
|
|
94,836
|
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
|
|
|
|
Expenditures for
vessels
|
|
|
(11,908)
|
|
|
|
(117,424)
|
|
|
Short-term
investments
|
|
|
308
|
|
|
|
1,054
|
|
|
Restricted
cash
|
|
|
(6,207)
|
|
|
|
—
|
|
|
Loans to
affiliate
|
|
|
(795)
|
|
|
|
(13,550)
|
|
|
Repayment of loans to
affiliate
|
|
|
3,165
|
|
|
|
—
|
|
|
Other
assets
|
|
|
97
|
|
|
|
(87)
|
Cash used in
investing activities
|
|
|
(15,340)
|
|
|
|
(130,007)
|
|
|
|
|
|
|
|
|
Increase (decrease)
in cash and cash equivalents
|
|
|
(72,253)
|
|
|
|
42,731
|
Cash and cash
equivalents, beginning of period
|
|
|
367,901
|
|
|
|
215,520
|
Cash and cash
equivalents, end of period
|
|
$
|
295,648
|
|
|
$
|
258,251
|
SEASPAN CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
FOR THE QUARTERS ENDED MARCH 31, 2017 AND
2016
(IN THOUSANDS OF US DOLLARS)
Description of Non-GAAP Financial Measures
A. Cash Available for Distribution to Common
Shareholders
Cash available for distribution to common shareholders is
defined as net earnings adjusted for depreciation and amortization,
interest expense and amortization of deferred financing fees,
share-based compensation, change in fair value of financial
instruments, bareboat charter adjustment, gain on sale, expenses
related to customer bankruptcy, amortization of deferred gain,
dry-dock reserve adjustment, cash dividends paid on preferred
shares, interest expense at the hedged rate and certain other items
that Seaspan believes are not representative of its operating
performance.
Cash available for distribution to common shareholders is a
non-GAAP measure used to assist in evaluating Seaspan's ability to
make quarterly cash dividends before reserves for replacement
capital expenditures. Cash available for distribution to common
shareholders is not defined by GAAP and should not be considered as
an alternative to net earnings or any other indicator of Seaspan's
performance required to be reported by GAAP. In addition, this
measure may not be comparable to similar measures presented by
other companies.
|
|
Quarter
Ended
March
31,
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
$
|
40,023
|
|
|
$
|
7,128
|
Add:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
49,946
|
|
|
|
58,837
|
|
Interest expense and
amortization of deferred financing fees
|
|
|
28,468
|
|
|
|
30,143
|
|
Share-based
compensation
|
|
|
1,844
|
|
|
|
946
|
|
Change in fair value
of financial instruments(1)
|
|
|
3,503
|
|
|
|
52,029
|
|
Bareboat charter
adjustment, net(2)
|
|
|
—
|
|
|
|
4,770
|
|
Gain on
sale(3)
|
|
|
—
|
|
|
|
16,333
|
|
Expenses related to
customer bankruptcy(4)
|
|
|
1,013
|
|
|
|
—
|
Less:
|
|
|
|
|
|
|
|
|
Amortization of
deferred gain(5)
|
|
|
(4,919)
|
|
|
|
(3,866)
|
|
Dry-dock reserve
adjustment
|
|
|
(5,311)
|
|
|
|
(5,849)
|
Cash dividends paid
on preferred shares:
|
|
|
|
|
|
|
|
|
Series C
|
|
|
—
|
|
|
|
(7,910)
|
|
Series D
|
|
|
(2,475)
|
|
|
|
(2,475)
|
|
Series E
|
|
|
(2,769)
|
|
|
|
(2,769)
|
|
Series F
|
|
|
(2,433)
|
|
|
|
—
|
|
Series G
|
|
|
(3,998)
|
|
|
|
—
|
|
Series H
|
|
|
(4,430)
|
|
|
|
—
|
Net cash flows before
interest payments
|
|
|
98,462
|
|
|
|
147,317
|
Less:
|
|
|
|
|
|
|
|
|
Interest expense at
the hedged rate(6)
|
|
|
(38,150)
|
|
|
|
(46,790)
|
|
|
|
|
|
|
|
|
Cash available for
distribution to common shareholders
|
|
$
|
60,312
|
|
|
$
|
100,527
|
B. Normalized Net Earnings and Normalized Earnings per
Share
Normalized net earnings is defined as net earnings adjusted for
interest expense, excluding amortization of deferred financing
fees, expenses related to customer bankruptcy, change in fair value
of financial instruments, interest expense at the hedged rate,
write-off of vessel equipment and certain other items Seaspan
believes affect the comparability of operating results. Normalized
net earnings is a useful measure because it excludes those items
that Seaspan believes are not representative of its operating
performance.
Normalized net earnings and normalized earnings 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
Seaspan's performance required to be reported by GAAP. In addition,
this measure may not be comparable to similar measures presented by
other companies.
|
|
Quarter
Ended
March
31,
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
$
|
40,023
|
|
|
$
|
7,128
|
Adjust:
|
|
|
|
|
|
|
|
|
Interest expense,
excluding amortization of deferred financing fees
|
|
|
25,440
|
|
|
|
26,832
|
|
Expenses related to
customer bankruptcy(4)
|
|
|
1,013
|
|
|
|
—
|
|
Change in fair value
of financial instruments(1)
|
|
|
3,503
|
|
|
|
52,029
|
|
Interest expense at
the hedged rate(6)
|
|
|
(38,150)
|
|
|
|
(46,790)
|
|
Write-off of vessel
equipment(7)
|
|
|
—
|
|
|
|
6,805
|
Normalized net
earnings
|
|
$
|
31,829
|
|
|
$
|
46,004
|
|
|
|
|
|
|
|
|
Less:
preferred share dividends
|
|
|
|
|
|
|
|
|
Series C (including
amortization of issuance costs)
|
|
|
—
|
|
|
|
8,026
|
|
Series D
|
|
|
2,475
|
|
|
|
2,475
|
|
Series E
|
|
|
2,769
|
|
|
|
2,769
|
|
Series F
|
|
|
2,433
|
|
|
|
—
|
|
Series G
|
|
|
3,998
|
|
|
|
—
|
|
Series H
|
|
|
4,430
|
|
|
|
—
|
|
|
|
16,105
|
|
|
|
13,270
|
|
|
|
|
|
|
|
|
Normalized net
earnings attributable to common shareholders
|
|
$
|
15,724
|
|
|
$
|
32,734
|
|
|
|
|
|
|
|
|
Weighted average
number of shares used to compute earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported,
basic
|
|
|
106,721
|
|
|
|
97,752
|
|
Share-based
compensation
|
|
|
71
|
|
|
|
37
|
Reported and
normalized, diluted(8)
|
|
|
106,792
|
|
|
|
97,789
|
|
|
|
|
|
|
|
|
Earnings (loss)
per share:
|
|
|
|
|
|
|
|
|
Reported, basic
and diluted
|
|
$
|
0.22
|
|
|
$
|
(0.06)
|
|
Normalized,
diluted(9)
|
|
$
|
0.15
|
|
|
$
|
0.33
|
|
C. Adjusted EBITDA
Adjusted EBITDA is defined as net earnings adjusted for interest
expense and amortization of deferred financing fees, interest
income, undrawn credit facility fees, depreciation and
amortization, share-based compensation, gain on sale, expenses
related to customer bankruptcy, amortization of deferred gain,
bareboat charter adjustment, change in fair value of financial
instruments and certain other items that Seaspan believes are not
representative of its operating performance.
Adjusted EBITDA provides useful information to investors in
assessing Seaspan's results of operations. Seaspan believes that
this measure is useful in assessing performance and highlighting
trends on an overall basis. Seaspan also believes that this 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 as Seaspan. 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 Seaspan's performance
required to be reported by GAAP.
|
|
Quarter
Ended
March
31,
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
$
|
40,023
|
|
|
$
|
7,128
|
Adjust:
|
|
|
|
|
|
|
|
|
Interest expense and
amortization of deferred financing fees
|
|
|
28,468
|
|
|
|
30,143
|
|
Interest
income
|
|
|
(1,172)
|
|
|
|
(3,077)
|
|
Undrawn credit
facility fees
|
|
|
630
|
|
|
|
412
|
|
Depreciation and
amortization
|
|
|
49,946
|
|
|
|
58,837
|
|
Share-based
compensation
|
|
|
1,844
|
|
|
|
946
|
|
Gain on
sale(3)
|
|
|
—
|
|
|
|
16,333
|
|
Expenses related to
customer bankruptcy(4)
|
|
|
1,013
|
|
|
|
—
|
|
Amortization of
deferred gain(5)
|
|
|
(4,919)
|
|
|
|
(3,866)
|
|
Bareboat charter
adjustment, net(2)
|
|
|
—
|
|
|
|
4,770
|
|
Change in fair value
of financial instruments(1)
|
|
|
3,503
|
|
|
|
52,029
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
|
119,336
|
|
|
$
|
163,655
|
Notes to Non-GAAP Financial Measures
(1) Change in fair value of financial instruments
includes realized and unrealized losses (gains) on Seaspan's
interest rate swaps, unrealized losses (gains) on Seaspan's foreign
currency forward contracts and unrealized losses (gains) on
interest rate swaps included in equity income on investment.
(2) In the second half of 2011, Seaspan
entered into agreements to bareboat charter four 4800 TEU vessels
to MSC Mediterranean Shipping Company S.A. ("MSC") for a five-year
term, beginning from vessel delivery dates that occurred in 2011.
Upon delivery of the vessels to MSC, the transactions were
accounted for as sales-type leases. The vessels were disposed of
and a gross investment in lease was recorded, which is being
amortized to income through revenue. The bareboat charter
adjustment in the applicable non-GAAP measures is included to
reverse the GAAP accounting treatment and reflect the transaction
as if the vessels had not been disposed of. Therefore, the bareboat
charter fees are added back and the interest income from leasing,
which is recorded in revenue, is deducted resulting in a net
bareboat charter adjustment. During the fourth quarter of 2016,
Seaspan sold these vessels to MSC pursuant to the agreements
entered into in 2011.
(3) The gain on sale relates to the
proceeds received in excess of vessel cost upon the sale and
leaseback transaction of one 10000 TEU vessel during the quarter
ended March 31, 2016. Under this
transaction, Seaspan sold the vessel to a special purpose company
and is leasing the vessel back. For accounting purposes, the gain
is deferred and amortized as a reduction of operating lease expense
over the term of the lease.
(4) Expenses related to customer bankruptcy
primarily relates to costs and expenses related to the Hanjin
bankruptcy in 2016. As of September 1,
2016, after Hanjin declared bankruptcy, no revenue was
recognized on the Hanjin charters.
(5) As of March 31,
2017, ten vessels have been sold and leased back by Seaspan.
For GAAP accounting purposes, the gain on sales was deferred and is
being amortized as a reduction of operating lease expense over the
term of the lease.
(6) Interest expense at the hedged rate is
calculated as the interest incurred on operating debt at the fixed
rate on the related interest rate swaps plus the applicable margin
on the related variable rate credit facilities and leases, on an
accrual basis. Interest expense on fixed rate borrowings is
calculated using the effective interest rate.
(7) Commencing in May 2015, Seaspan installed upgrades on certain
of its vessels to enhance fuel efficiency. As a result, Seaspan
incurred non-cash write-offs related to the original vessel
equipment of $6.8 million for the
quarter ended March 31, 2016. These
write-offs are included in depreciation and amortization expense.
The costs of the vessel upgrades are recoverable from the
charterer.
(8) Seaspan's shares of common stock issuable
upon conversion of its convertible Series F preferred shares are
not included in the computation of diluted earnings per share
because their effect is anti-dilutive for the period.
(9) The decrease in normalized earnings per share for
the quarter ended March 31, 2017 is
detailed in the table below:
|
|
|
|
Normalized
earnings per share, diluted- March 31, 2016
|
|
$
|
0.33
|
|
|
|
|
Excluding share count
changes:
|
|
|
|
|
Decrease in
normalized earnings(a)
|
|
|
(0.15)
|
|
Decrease from impact
of preferred shares
|
|
|
(0.02)
|
|
|
|
|
Share count
changes:
|
|
|
|
|
Increase in diluted
share count (from 97,788,868 shares to
106,792,099 shares
for the quarter ended)
|
|
|
(0.01)
|
|
|
|
|
Normalized
earnings per share, diluted- March 31, 2017
|
|
$
|
0.15
|
_____________________
|
(a)
|
The decrease in
normalized earnings for the quarter ended March 31, 2017 is
primarily due to a decrease in revenue of $14.2 million and an
increase in operating lease expense of $11.7 million, compared to
the same period in 2016. The decrease in normalized earnings was
partially offset by decreases in interest at the hedged rate of
$8.6 million, ship operating expense of $2.0 million and
depreciation and amortization expense of $2.1 million. Please read
"Results for the Quarter Ended March 31, 2017" for a description of
these changes.
|
STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
This release contains certain forward-looking statements (as
such term is defined in Section 21E of the Securities Exchange Act
of 1934, as amended), which reflect management's current views with
respect to certain future events and performance, including, in
particular, statements regarding: future operating or financial
results; time charters; industry fundamentals, including estimated
supply and demand for containerships; ship operating expense;
vessel dry-docking schedules; future contracted revenues; Seaspan's
capital requirements; Seaspan's access to capital and financial
strength and flexibility; Seaspan's belief that a containership
recovery is beginning and the company's ability to benefit from any
such recovery; vessel deliveries and vessel financing arrangements,
including expected financing; and dividends, including the amount
and timing of payment thereof for 2017. Although these statements
are based upon assumptions Seaspan believes to be reasonable, they
are subject to risks and uncertainties. These risks and
uncertainties include, but are not limited to: the availability to
Seaspan of containership acquisition or construction opportunities;
the availability and cost to Seaspan of financing, including to
refinance existing debt and to pursue growth opportunities; the
number of additional vessels managed by the our manager, Seaspan
Management Services Limited, in the future; the availability of
crew; number of off-hire days; dry-docking requirements; general
market conditions and shipping market trends, including chartering
rates, scrapping rates and newbuild orders, and the sustainability
of any recent rate improvements or other signs of a potential
market recovery; conditions in the containership market; increased
operating expenses; Seaspan's future cash flows and its ability to
make dividend and other payments; the time that it may take to
construct new ships; Seaspan's continued ability to enter into
primarily long-term, fixed-rate time charters with customers;
changes in governmental rules and regulations or actions taken by
regulatory authorities; the financial condition of shipyards,
charterers, customers, lenders, refund guarantors and other
counterparties and their ability to perform their obligations under
their agreements with Seaspan; the potential for newbuilding
delivery delays; the potential for early termination of long-term
contracts and Seaspan's potential inability to enter into, renew or
replace long-term contracts; changes in accounting rules or
treatment; working capital needs; conditions in the public capital
markets and the price of Seaspan's shares; the declaration of
dividends and related payment dates by Seaspan's board of
directors; our ability to maintain our reputation as a leading
containership owner and operator; and other factors detailed from
time-to-time in Seaspan's periodic reports and filings with the
Securities and Exchange Commission, including Seaspan's Annual
Report on Form 20-F for the year ended December 31, 2016. 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.
For Investor Relations Inquiries:
Mr. David Spivak
Chief Financial Officer
Seaspan Corporation
Tel. 604-638-2580
Mr. Michael
Sieffert
Director, Corporate Finance
Seaspan Corporation
Tel. 778-328-6490
For Media Inquiries:
Mr. Leon Berman
The IGB Group
Tel. 212-477-8438
SOURCE Seaspan Corporation