Back

Seaspan Reports Third Quarter 2018 Results

30/10/18
PDF

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 /CNW/ - 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

SOURCE Seaspan Corporation

Back

Seaspan Reports Third Quarter 2018 Results

30/10/18
PDF

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 /CNW/ - 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

SOURCE Seaspan Corporation

To Top