Closes Holding Company Reorganization to Form
Atlas Corp., a Global Asset Manager
Seaspan Exceeds 1-Million TEU with
Acquisition of Four Young High-Quality Containerships
Seaspan Secures Charters for All 123
Vessels
Atlas Increases Seaspan Revenue Guidance Range
for Full Year 2020
Atlas Declares First Dividend, Following 58
Consecutive Dividends by Seaspan
Atlas Acquires APR Energy Ltd. in $750 Million Transaction
APR Announces Signing of 265MW of Peaking
Power Contracts in Mexico
LONDON, May 5, 2020 /CNW/ - Atlas Corp. ("Atlas")
(NYSE: ATCO) announced today its financial results for the quarter
ended March 31, 2020.
Financial Highlights
- Atlas increases Seaspan revenue guidance from $1,170 - $1,195
million to $1,185 -
$1,225 million for Full Year
2020
- Records revenue of $308.4 million
for the first quarter, a record high
- Records operating earnings of $127.5
million for the first quarter
- Achieves earnings per diluted share of $0.15 for the first quarter; loss on derivative
instruments contributed a loss of $0.10 per diluted share for the first
quarter
- Generates cash flow from operations of $130.7 million for the first quarter
- Liquidity of $393.7 million as of
March 31, 2020
- Declares Atlas' first dividend, of $0.125 per common share, following 58 consecutive
dividends by Seaspan
Operational Highlights
- Seaspan acquires four young 12000 TEU vessels, increasing the
total fleet to 123 vessels and surpassing 1 million TEU
- Seaspan achieved vessel utilization of 97.9%, 98.4%
TEU-weighted utilization for the first quarter
- Seaspan secured charters for all 123 vessels
- Completes holding company reorganization (the "Reorganization")
of Seaspan Corporation ("Seaspan") to form Atlas Corp., a leading
global asset owner and operator
- Atlas closes $750 million
acquisition of APR Energy Ltd. ("APR")
- APR announced the signing of 265MW of Peaking Power contracts
in Baja California, Mexico
Financial Outlook 2020
The following table is based on Atlas' current expectations.
Seaspan's revenue and operating expense guidance for 2020 has been
revised upwards compared to 2020 guidance provided on February 19, 2020. Atlas also today provided 2020
guidance for APR for the contribution period February 29, 2020 to December 31, 2020.
Operating
Metrics
(in millions of US
dollars)
|
Current
Guidance
|
|
Previous
Guidance(2)
|
|
Seaspan
|
|
APR(1)
|
|
Seaspan
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
Low
|
|
High
|
Revenue
|
|
1,185.0
|
|
|
1,225.0
|
|
|
190.0
|
|
|
220.0
|
|
|
1,170.0
|
|
|
1,195.0
|
Operating
expense
|
|
245.0
|
|
|
255.0
|
|
|
40.0
|
|
|
54.0
|
|
|
240.0
|
|
|
250.0
|
General and
administrative expense
|
|
35.0
|
|
|
40.0
|
|
|
38.0
|
|
|
40.0
|
|
|
35.0
|
|
|
40.0
|
Operating lease
expense
|
|
145.0
|
|
|
155.0
|
|
|
3.0
|
|
|
4.0
|
|
|
145.0
|
|
|
155.0
|
______________________
|
|
(1)
|
Contribution February
29, 2020 to December 31, 2020.
|
|
(2)
|
Previous 2020
guidance provided on February 19, 2020
|
Comments from Management
Bing Chen, Chief Executive Officer of Atlas, commented, "Despite
the unprecedented conditions, we delivered record quarterly revenue
of $308.4 million while consistently
executing on our resilient business model, deepening our customer
partnerships and growing our containership fleet to 123 vessels and
over 1 million TEU. While continuing to expand our sustained access
to global capital markets, we have concluded mutually beneficial
agreements extending the term of six charters from four to ten
years and signed contracts for 265MW of peaking power in
Mexico. The completion of our
Reorganization to form Atlas and the closing of the APR acquisition
further position Atlas as a leading owner and operator in two core
infrastructure verticals: maritime and power. Atlas' business model
is built upon long-term contracted cash flows of close to
$4.8 billion and a focus on
operational excellence that differentiates us as the solutions
provider of choice in both the maritime and power sectors."
Ryan Courson, Chief Financial
Officer of Atlas, said, "We have continued to execute on our
strategic priorities during the first quarter, maintaining our
strong balance sheet and credit profile while growing our fleet and
acquiring APR. Atlas' robust liquidity position of $393.7 million is supported by our access to
global capital markets in all market conditions as demonstrated
through the $340 million financing of
our recently acquired vessels and the closing of a $285 million senior secured financing program for
APR. Atlas' scale, diversified portfolio and financial strength
enable us to continue optimizing our companies' capital structures.
We remain focused on disciplined capital allocation towards new
growth opportunities while creating sustainable long-term value for
shareholders regardless of the current economic cycle."
Current Material Development – Uncertain Impact of COVID-19
Pandemic
A novel strain of coronavirus, COVID-19, was identified in late
2019 and has spread globally. Government authorities in
affected regions are taking increasingly dramatic actions and
mandating restrictions in an effort to slow the spread of the
virus, such as travel bans and restrictions, quarantines,
shelter-in-place orders, advisories and shutdowns. In our
containership business, if the pandemic persists, it may impact our
liner customers and thus impact the demand for the services of our
containerships, which could reduce the price and number of our time
charters in 2020. Furthermore, completion of repairs on our
vessels may be delayed as a result of restrictions on workers'
access to the shipyards where the repairs are taking place, and
quarantining of workers may affect seafarers serving on our
vessels, including a disruption in crew changes in ports. In
our APR business, we may experience operational challenges
transporting our turbines and balance of plant equipment, as well
as our personnel, to project sites as countries close borders and
restrict travel. Demand for our mobile power solutions may be
negatively impacted.
In addition, the COVID-19 pandemic has caused, and is likely to
continue to cause economic, market and other disruptions worldwide.
Such volatility in the global capital markets could increase the
cost of capital and adversely impact access to capital. Risks
related to negative economic conditions are described in our risk
factor titled "Adverse economic conditions, especially in the
Asia Pacific region, the European
Union or the United States, could
harm our business, results of operations and financial condition"
under "Item 3. Key Information -D. Risk Factors - Risks Related to
Macroeconomic Conditions and the Shipping Industry" in our Annual
Report on Form 20-F filed with the U.S. Securities and Exchange
Commission on April 13, 2020.
To date, the Company has not yet experienced any material
negative impacts to its business as a result of
COVID-19. However, given the unprecedented uncertainty
and fluidity of this situation, we are unable to forecast the full
impact on our business. We can provide no assurance that the
COVID-19 pandemic and the related economic disruption will not have
a future material adverse impact on our consolidated results of
operations, consolidated financial position, and consolidated cash
flows in fiscal 2020.
Atlas Corporate Developments
Reorganization to form Atlas Corp., a leading global asset
management company
In February
2020, Seaspan completed the Reorganization whereupon Seaspan
became a wholly owned subsidiary of Atlas. Holders
of Seaspan common and preferred shares became
holders of Atlas common and preferred shares, as applicable, on a
one-for-one basis, maintaining the same number of shares, ownership
percentage and associated rights and privileges as they held of
Seaspan immediately prior to the Reorganization. The Reorganization
advances the commitment of the Board of Directors and management to
thoughtful capital allocation and diversification of cash flows
through professional asset management.
Closing of APR Acquisition
In February 2020, Atlas acquired APR,
a global leader in fast-track, mobile power solutions, in an
all-stock transaction valued at $750.0
million, including the assumption of debt, for equity
consideration of approximately $337.9
million, after purchase price adjustments identified to date
and before considering contingent considerations of $41.5 million. APR is a global leasing business
that owns and operates a fleet of specialty assets (gas turbines
and other power generation equipment) that provide power solutions
to customers including large corporations and/or government backed
utilities. APR focuses on maintaining high asset utilization
through medium-to-long-term contracts to optimize cash flows across
its asset portfolio.
Distribution
In March
2020, the Board of Directors declared a quarterly
distribution in the amount of $0.125
per share for its common shares, to be paid on April 30, 2020 to shareholders of record as at
the close of business on April 20,
2020. Regular quarterly dividends on the Preferred Shares
Series D, Series E, Series G, Series H and Series I were also
declared.
Subsequent Event - Common Shares Outstanding
As
of May 5, 2020, there were 246.7 million common shares
outstanding. This includes 29.9 million common shares issued on
February 28, 2020 as consideration
for the acquisition of APR. There are also 6.7 million shares
("Holdback Shares") reserved for future issuance. The amount of
Holdback Shares to be issued to the APR sellers will be determined
upon settlement of certain purchase price adjustments and specified
indemnification obligations over a period of between 90 days to
five years after the date of acquisition. On the closing date of
the acquisition, Atlas further issued 775,139 common shares to
Fairfax Financial Holdings Limited ("Fairfax") to settle APR's
indebtedness to it at closing.
Seaspan Corporate Developments
Vessel Acquisitions and Deliveries
- Purchase of Six Vessels for $380
million
In November
2019, Seaspan entered into agreements to purchase three
10700 TEU vessels and three 9200 TEU vessels (the "Six Vessels")
for approximately $380.0 million in
cash. Five vessels were delivered in December 2019 and the sixth vessel was delivered
in January 2020. Upon delivery,
Seaspan assumed the rights and obligations of the sellers under
existing bareboat charter agreements for the vessels. In
February 2020, these bareboat charter
agreements were modified, such that the daily fixed rate was
reduced, and the charter term was extended by six years, from a
four-year charter term to a ten-year charter term.
- Purchase of Four Vessels for $367
million
In February
2020, Seaspan entered into agreements to purchase four 12000
TEU vessels for an aggregate $367
million in cash. The four vessels, two of which were
delivered in March and two of which were delivered in April 2020, are comprised of three 2018-built
vessels and one 2017-built vessel. In connection with these
deliveries, Seaspan has closed four innovative financing
arrangements with total proceeds of approximately $340 million, in partnership with a leading
financial institution. Each financing has an initial term of ten
years.
Portfolio Financing Program Increased to $1.755 billion
In February and
March 2020, Seaspan increased the
committed amount under the vessel portfolio financing by
$100 million to a total size of
$1.755 billion. Proceeds from
borrowings thereunder are to be used for general corporate
purposes.
Fairfax Investment
In February
2020, Seaspan issued to Fairfax, $100.0 million principal amount of 5.50% senior
notes maturing on March 1, 2027 (the
"2027 Fairfax Notes"), proceeds to be used for general corporate
purposes. As with Seaspan's 5.50% senior notes due 2025 (the "2025
Notes") and 5.50% senior notes due 2026 (the "2026 Notes"), the
indebtedness under the 2027 Fairfax Notes is secured by Seaspan's
equity interest in Greater China
Intermodal LLC and its subsidiaries.
Delisting of Seaspan Securities in Connection with
Reorganization
In announcements made on January 17 and February
14, 2020, Seaspan announced its intention to delist its
outstanding 2025 Notes, 2026 Notes and 7.125% senior unsecured
notes due 2027 (the "2027 7.125% Notes" and together with the 2025
Notes and 2026 Notes, the "Notes") from the New York Stock Exchange
(the "NYSE") and to deregister the Notes under the Securities
Exchange Act of 1934, as amended. The last day of trading of the
Notes on the NYSE was Monday, March 9,
2020.
Subsequent Event - Vessel Acquisitions and
Deliveries
Seaspan took delivery of a 2010-built 9600 TEU
containership on April 2, 2020, at
which time it commenced a 36-month fixed-rate time charter. Seaspan
entered into an agreement to purchase this vessel in September 2019, for a purchase price of
$33.1 million.
APR Corporate Developments
APR Signs 265MW Peaking Power Contracts in Mexico
In March
2020, APR signed contracts for 265MW of peaking power
gas-fired plants in Mexicali, Baja
California, Mexico. In addition to supporting high demand
needs during peak hours, the eight mobile gas turbines installed at
the plants will help ensure grid stability as the region adjusts to
a recent decrease in energy imports received from California. The associated projects are
designed to be environmentally friendly and to stabilize energy
supplies as several plants in the Mexicali area are brought offline for
scheduled maintenance.
APR Refinancing
In February
2020, APR entered into a credit agreement with a syndicate
of lenders for a $185.0 million
credit facility, comprised of a revolving credit facility of
$50.0 million and a term loan
facility of $135.0 million. This
facility is secured by certain mobile power generation assets and
the proceeds of borrowings thereunder were used to refinance
existing debt.
In March 2020, APR entered into a
$100 million fixed rate term loan
credit facility with BlackRock. This facility is secured by certain
mobile power generation assets and the proceeds of the term loan
were used to refinance existing debt.
Subsequent Event – APR CEO Resignation
In April 2020, Charles
Ferry resigned as Chief Executive Officer of APR.
Results for the Quarter Ended March
31, 2020
Consolidated Financial Results
The following tables summarize Atlas' consolidated financial
results, as well as the segmental financial results, for the three
months ended March 31, 2020 and
2019(1). The Company's containership leasing business
owns and operates a fleet of containerships that are chartered
primarily pursuant to long-term, fixed-rate time charters. The
Company's mobile power generation business owns and operates a
fleet of power generation assets, including gas turbines and other
equipment, and provides power solutions to customers through medium
to long-term contracts.
Consolidated
Financial Summary
|
Quarter
Ended
|
(in millions of US
dollars, except earnings per share amount)
|
March
31,
|
|
2020
|
|
2019
|
|
|
|
|
|
|
Revenue
|
|
308.4
|
|
|
285.3
|
Operating
expense
|
|
59.8
|
|
|
57.7
|
Depreciation and
amortization expense
|
|
72.2
|
|
|
62.5
|
General and
administrative expense
|
|
10.4
|
|
|
8.8
|
Operating lease
expense
|
|
38.5
|
|
|
39.2
|
Income related to
modification of time charters
|
|
-
|
|
|
227.0
|
Operating
earnings
|
|
127.5
|
|
|
344.1
|
Net earnings to
common shareholders
|
|
35.1
|
|
|
267.1
|
Earnings per share,
diluted
|
|
0.15
|
|
|
1.26
|
Cash from operating
activities
|
|
130.7
|
|
|
129.3
|
Segmental
Financial Summary
(in
millions of US dollars)
|
Quarter Ended
March 31, 2020
|
|
Containership
Leasing
|
|
Mobile
Power
Generation(2)
|
|
Elimination
and
Other
|
|
Total
|
Revenue
|
|
292.5
|
|
|
15.9
|
|
|
-
|
|
|
308.4
|
Operating
expense
|
|
56.8
|
|
|
3.0
|
|
|
-
|
|
|
59.8
|
Depreciation and
amortization expense
|
|
66.6
|
|
|
5.6
|
|
|
-
|
|
|
72.2
|
General and
administrative expense
|
|
8.5
|
|
|
3.8
|
|
|
(1.9)
|
|
|
10.4
|
Operating lease
expense
|
|
38.1
|
|
|
0.4
|
|
|
-
|
|
|
38.5
|
Operating
earnings
|
|
122.5
|
|
|
3.1
|
|
|
1.9
|
|
|
127.5
|
(1) For the three
months ended March 31, 2019, our results were attributable to one
segment only, containership leasing. Atlas acquired APR on February
28, 2020. After the acquisition, another business segment was
added.
|
|
(2) APR's
contribution for the quarter ended March 31, 2020 is limited to the
period from and including February 29, 2020, the day after the
closing of the acquisition, to March 31, 2020.
|
Operating Results by Segment
Containership Leasing Segment
Ownership Days are the number of days a vessel is owned and
available for charter. Ownership Days On-Hire are the number of
days a vessel is available to the charterer for use. The primary
driver of Ownership Days is the increase or decrease in the number
of vessels in the fleet.
Total Ownership Days increased by 635 days for the quarter ended
March 31, 2020, compared with the
same period in 2019. The increase for the three months ended
March 31, 2020 was primarily due to
the delivery of the Six Vessels, which contributed 523 days, with
the remainder due to the additional Leap Year day gained in
February 2020.
Vessel Utilization represents the number of Ownership Days
On-Hire as a percentage of Total Ownership Days. The following
table summarizes Seaspan's Vessel Utilization for the quarter ended
March 31, 2020, and its comparative
quarters:
|
2018
|
|
2019
|
|
2020
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Q1
|
Vessel
Utilization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time Charter
Ownership Days(1)
|
|
9,546
|
|
|
9,844
|
|
|
9,844
|
|
|
9,630
|
|
|
9,737
|
|
|
9,844
|
|
|
9,791
|
|
|
9,646
|
Bareboat Ownership
Days(1)
|
|
455
|
|
|
460
|
|
|
460
|
|
|
450
|
|
|
455
|
|
|
460
|
|
|
523
|
|
|
1,069
|
Total Ownership
Days
|
|
10,001
|
|
|
10,304
|
|
|
10,304
|
|
|
10,080
|
|
|
10,192
|
|
|
10,304
|
|
|
10,314
|
|
|
10,715
|
Less Off-Hire
Days:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scheduled Dry
Docking
|
|
-
|
|
|
(8)
|
|
|
(22)
|
|
|
(13)
|
|
|
(54)
|
|
|
(36)
|
|
|
(59)
|
|
|
(131)
|
Unscheduled
Off-Hire(2)
|
|
(137)
|
|
|
(146)
|
|
|
(240)
|
|
|
(166)
|
|
|
(71)
|
|
|
(3)
|
|
|
(36)
|
|
|
(90)
|
Ownership Days
On-Hire
|
|
9,864
|
|
|
10,150
|
|
|
10,042
|
|
|
9,901
|
|
|
10,067
|
|
|
10,265
|
|
|
10,219
|
|
|
10,494
|
Vessel
Utilization
|
|
98.6%
|
|
|
98.5%
|
|
|
97.5%
|
|
|
98.2%
|
|
|
98.8%
|
|
|
99.6%
|
|
|
99.1%
|
|
|
97.9%
|
___________________________
|
(1)
|
Ownership Days for
time charters and bareboat charters exclude days prior to the
initial charter hire date
|
(2)
|
Unscheduled off-hire
includes days related to vessels being off-charter
|
Vessel Utilization decreased for the quarter ended March 31, 2020, compared with the same period in
2019. The decrease was primarily due to an increase in the number
of Scheduled Dry-Docking days.
Power Generation Segment
Average Megawatt Capacity is the average maximum megawatts that
can be generated by the power fleet. The primary driver of Average
Megawatt Capacity is the increase or decrease in the number of
power generating units in the power fleet. Average Megawatt On-Hire
is the amount of capacity that is under contract and available to
the customer for use. Power Fleet Utilization represents Average
Megawatt On-Hire as a percentage of Average Megawatt Capacity.
For the quarter ended March 31,
2020, the Average Megawatt Capacity was 1,416MW, on a
weighted average basis. During this period 63.6% of the power
fleet was under contract.
The following table summarizes the Power Fleet Utilization for
the quarter ended March 31, 2020, and
its comparative quarters:
|
2019
|
|
2020
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Q1
|
Power
Fleet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Megawatt
On-Hire
|
|
1,156
|
|
|
1,192
|
|
|
1,327
|
|
|
936
|
|
|
901
|
Average Megawatt
Capacity
|
|
1,653
|
|
|
1,623
|
|
|
1,589
|
|
|
1,477
|
|
|
1,416
|
Power Fleet
Utilization
|
|
69.9%
|
|
|
73.4%
|
|
|
83.5%
|
|
|
63.4%
|
|
|
63.6%
|
Financial Results Summary
Revenue
Revenue increased by 8.1% to $308.4 million for the quarter ended March 31, 2020, compared with the same period in
2019. The increase in revenue was due to the addition of power
generation revenue resulting from the acquisition of APR on
February 28, 2020. The remainder of
the increase was primarily due to the revenue contribution from the
delivery of the Six Vessels.
Operating Expense
Operating expense increased by 3.6%
to $59.8 million for the quarter
ended March 31, 2020, compared with the same period in 2019.
The increase was primarily due to expenses relating to mobile power
generating equipment from the APR acquisition, offset by Seaspan's
lower maintenance and repair costs in the quarter ended
March 31, 2020.
Depreciation and Amortization Expense
Depreciation and
amortization expense increased by 15.5% to $72.2 million for the quarter ended
March 31, 2020, compared with the same period in 2019. The
increase was primarily due to the acquisition of mobile power
generating equipment from the APR acquisition. The remainder of the
increase was due to a larger Seaspan operating fleet.
General and Administrative Expense
General and
administrative expense increased by 18.2% to $10.4 million for the quarter ended
March 31, 2020, compared with the same period in 2019. The
increase was primarily due to the inclusion of APR's general and
administrative expenses from the date of acquisition. The remainder
of the increase was costs arising as part of the APR
acquisition.
Operating Lease Expense
Operating lease expense
decreased by 1.8% to $38.5 million
for the quarter ended March 31, 2020, compared with the same
period in 2019. The decrease was primarily due to a decrease in
LIBOR.
Interest Expense and Amortization of Deferred Financing
Fees
The following table summarizes Atlas' borrowings:
(in millions of US
dollars)
|
As at March
31,
|
|
2020
|
|
2019
|
Long-term debt,
excluding deferred financing fees:
|
|
|
|
|
|
Credit
facilities
|
$
|
3,098.5
|
|
$
|
2,658.5
|
Senior unsecured
notes
|
|
80.0
|
|
|
391.4
|
2025 Notes, 2026 Notes
and 2027 Fairfax Notes
|
|
600.0
|
|
|
500.0
|
Debt discount and fair
value adjustment
|
|
(146.2)
|
|
|
(166.4)
|
Other financing
arrangements, excluding
|
|
|
|
|
|
deferred financing
fees
|
|
525.3
|
|
|
635.1
|
Total
borrowings
|
$
|
4,157.6
|
|
$
|
4,018.6
|
Increase in
borrowings
|
|
139.0
|
|
|
|
Interest expense and amortization of deferred financing fees
decreased by $11.8 million to
$44.3 million for the three months
ended March 31, 2020, compared with
the same period in 2019. The decrease is primarily due to a
decrease in LIBOR, the early repayments of long-term debt during
2019, partially offset by the issuance of the 2027 Fairfax Notes
and the inclusion of APR's interest expense.
Loss on Fair Value of Derivative Instruments
The
change in fair value of derivative instruments resulted in a loss
of $24.8 million for the quarter
ended March 31, 2020, $20.8 million of which relates to non-cash
movements in the mark-to-market value of the derivative
instruments. The loss for this period was primarily due to a
decrease in the LIBOR forward curve and the impact of swap
settlements.
Liquidity
As of March 31, 2020, Atlas had total
liquidity of $393.7 million,
consisting of $213.7 million of cash
and cash equivalents and $180.0
million of availability under undrawn committed revolving
credit facilities.
Unencumbered Vessels
As of March 31, 2020, Seaspan's
unencumbered asset pool included 30 vessels.
TEU
Class
|
|
Vessel
Count
|
2500
|
|
4
|
3500
|
|
2
|
4250
|
|
15
|
4500
|
|
3
|
8500
|
|
2
|
10000
|
|
2
|
14000
|
|
2
|
Total
|
|
30
|
About Atlas
Atlas is a leading global asset management company,
differentiated by its position as a best-in class owner and
operator with a focus on deploying capital to create sustainable
shareholder value. Atlas brings together an experienced asset
management team with deep operational and capital allocation
experience. We target long-term, risk adjusted returns across high
quality infrastructure assets in the maritime sector, energy sector
and other infrastructure verticals. Our two portfolio companies,
Seaspan and APR, are unique, industry-leading operating platforms
in the global maritime and energy spaces, respectively.
For more information visit atlascorporation.com
About Seaspan
Seaspan is a leading independent owner and operator of
containerships with industry leading ship management services. We
charter our vessels primarily pursuant to long-term, fixed-rate
time charters to the world's largest container shipping liners.
Seaspan's fleet consists of 123 containerships, representing total
capacity of approximately 1,023,000 TEU. Seaspan's current
operating fleet has an average age of approximately seven years and
an average remaining lease period of approximately four years, on a
TEU-weighted basis.
For more information visit seaspancorp.com
About APR
APR provides rapidly deployable, large-scale power and
fast-track mobile power to underserved markets and industries.
APR's mobile, turnkey power plants help run industries, cities and
countries globally in both developed and developing markets. APR
creates unique value through delivering large-scale power projects
anywhere in the world in less time than the typical 2-5 years
required to plan, finance, construct and commission a permanent
power plant, and offers customized turnkey solutions including
flexible plant design, fast-track installation, balance of plant,
and decommissioning.
For more information, please visit aprenergy.com.
Conference Call and Webcast
Atlas will host a conference call and webcast presentation for
investors, analysts, and interested parties to discuss its first
quarter results on May 5, 2020 at
8:30 a.m. ET. Participants should
call 1-877-246-9875 (US/Canada) or
1-707-287-9353 (International) and request the Atlas call
(conference ID: 3648204). The live webcast and slide presentation
are available under "Events & Presentations" at
www.atlascorporation.com.
A recording will be available from 11:30 ET on Tuesday May 5, 2020 through to Wednesday, May 20, 2020. The replay telephone
numbers are: US/Canada:
1-855-859-2056 and International: 1-404-537-3406 (Conference
passcode: 3648204).
ATLAS
CORP.
|
PRELIMINARY
UNAUDITED CONSOLIDATED BALANCE SHEETS
|
AS OF MARCH 31,
2020 AND DECEMBER 31, 2019
|
(IN MILLIONS OF US
DOLLARS)
|
|
|
March 31,
2020
|
|
December 31,
2019
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
213.7
|
|
$
|
195.0
|
Accounts
receivable
|
|
108.3
|
|
|
18.7
|
Inventories
|
|
69.5
|
|
|
14.2
|
Prepaid expenses and
other
|
|
36.9
|
|
|
17.6
|
Net investment in
lease
|
|
10.0
|
|
|
35.2
|
Acquisition related
assets
|
|
65.0
|
|
|
-
|
|
|
503.4
|
|
|
280.7
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
6,809.3
|
|
|
5,709.6
|
Right-of-use
assets
|
|
932.8
|
|
|
957.2
|
Net investment in
lease
|
|
427.5
|
|
|
723.6
|
Goodwill
|
|
75.3
|
|
|
75.3
|
Deferred tax
assets
|
|
23.5
|
|
|
-
|
Other
assets
|
|
339.3
|
|
|
170.6
|
|
$
|
9,111.1
|
|
$
|
7,917.0
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
205.9
|
|
|
83.4
|
Deferred
revenue
|
|
16.8
|
|
|
20.3
|
Income tax
payable
|
|
103.6
|
|
|
-
|
Long-term debt -
current
|
|
241.6
|
|
|
363.7
|
Operating lease
liabilities - current
|
|
160.9
|
|
|
159.7
|
Other financing
arrangements - current
|
|
34.3
|
|
|
134.6
|
Other liabilities -
current
|
|
31.3
|
|
|
7.8
|
|
|
794.4
|
|
|
769.5
|
|
|
|
|
|
|
Long-term
debt
|
|
3,346.7
|
|
|
2,696.9
|
Operating lease
liabilities
|
|
757.9
|
|
|
782.6
|
Other financing
arrangements
|
|
486.4
|
|
|
373.9
|
Deferred tax
liabilities
|
|
7.0
|
|
|
-
|
Derivative
instruments
|
|
70.9
|
|
|
50.2
|
Other
liabilities
|
|
58.3
|
|
|
11.2
|
|
|
5,521.6
|
|
|
4,684.3
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
Share
capital
|
|
2.4
|
|
|
2.5
|
Treasury
shares
|
|
-
|
|
|
(0.4)
|
Additional paid in
capital
|
|
3,850.6
|
|
|
3,452.9
|
Deficit
|
|
(242.2)
|
|
|
(200.7)
|
Accumulated other
comprehensive loss
|
|
(21.3)
|
|
|
(21.6)
|
|
|
3,589.5
|
|
|
3,232.7
|
|
$
|
9,111.1
|
|
$
|
7,917.0
|
ATLAS
CORP.
|
PRELIMINARY
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
|
FOR THE QUARTER ENDED MARCH 31, 2020 AND
2019
|
(IN MILLIONS OF US
DOLLARS, EXCEPT SHARES IN THOUSANDS AND PER SHARE
AMOUNTS)
|
|
|
Quarter
Ended
March 31,
|
|
2020
|
|
2019
|
|
|
|
|
|
|
Revenue
|
$
|
308.4
|
|
$
|
285.3
|
|
|
|
|
|
|
Operating expenses
(income):
|
|
|
|
|
|
Operating
expenses
|
|
59.8
|
|
|
57.7
|
Depreciation and
amortization
|
|
72.2
|
|
|
62.5
|
General and
administrative
|
|
10.4
|
|
|
8.8
|
Operating
leases
|
|
38.5
|
|
|
39.2
|
Income related to
modification of time charters
|
|
-
|
|
|
(227.0)
|
|
|
180.9
|
|
|
(58.8)
|
|
|
|
|
|
|
Operating
earnings
|
|
127.5
|
|
|
344.1
|
|
|
|
|
|
|
Other expenses
(income):
|
|
|
|
|
|
Interest expense and
amortization of deferred financing fees
|
|
44.3
|
|
|
56.1
|
Interest expense
related to amortization of debt discount
|
|
4.8
|
|
|
4.0
|
Interest
income
|
|
(1.4)
|
|
|
(3.1)
|
Refinancing
expenses
|
|
0.4
|
|
|
-
|
Loss on derivative
instruments
|
|
24.8
|
|
|
1.1
|
Other
expenses
|
|
0.8
|
|
|
0.4
|
|
|
73.7
|
|
|
58.5
|
|
|
|
|
|
|
Income tax
expense
|
|
1.9
|
|
|
0.3
|
|
|
|
|
|
|
Net
earnings
|
$
|
51.9
|
|
$
|
285.3
|
|
|
|
|
|
|
Dividends - preferred
shares
|
|
(16.8)
|
|
|
(18.2)
|
Net earnings
attributable to common shares
|
$
|
35.1
|
|
$
|
267.1
|
|
|
|
|
|
|
Weighted average
number of shares, basic
|
|
227,145
|
|
|
209,560
|
Effect of dilutive
securities:
|
|
|
|
|
|
Share-based
compensation
|
|
328
|
|
|
111
|
Fairfax
warrants
|
|
6,755
|
|
|
1,733
|
Holdback
Shares
|
|
2,185
|
|
|
-
|
Weighted average
number of shares, diluted
|
|
236,413
|
|
|
211,404
|
|
|
|
|
|
|
Earnings per share,
basic
|
$
|
0.15
|
|
$
|
1.27
|
Earnings per share,
diluted
|
$
|
0.15
|
|
$
|
1.26
|
ATLAS
CORP.
|
PRELIMINARY
UNAUDITED CONSOLIDATED STATEMENTS OF
|
COMPREHENSIVE
INCOME
|
FOR THE QUARTER ENDED MARCH 31, 2020 AND
2019
|
(IN MILLIONS OF US
DOLLARS)
|
|
|
Quarter
Ended
March
31,
|
|
2020
|
|
2019
|
|
|
|
|
|
|
Net
earnings
|
$
|
51.9
|
|
$
|
285.3
|
|
|
|
|
|
|
Other comprehensive
income:
|
|
|
|
|
|
Amounts reclassified
to net earnings during the period
|
|
|
|
|
|
relating to cash flow
hedging instruments
|
|
0.3
|
|
|
0.3
|
|
|
|
|
|
|
Comprehensive
income
|
$
|
52.2
|
|
$
|
285.6
|
ATLAS
CORP.
|
PRELIMINARY
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
FOR THE QUARTER ENDED MARCH 31, 2020 AND
2019
|
(IN MILLIONS OF US
DOLLARS)
|
|
|
Quarter
Ended
March 31,
|
|
2020
|
|
2019
|
Cash from (used
in):
|
|
|
|
|
|
Operating
activities:
|
|
|
|
|
|
Net
earnings
|
$
|
51.9
|
|
$
|
285.3
|
Items not involving
cash:
|
|
|
|
|
|
Depreciation and
amortization
|
|
72.2
|
|
|
62.5
|
Change in right-of-use
asset
|
|
29.3
|
|
|
27.5
|
Non-cash interest
expense and accretion
|
|
8.9
|
|
|
7.1
|
Unrealized change in
derivative instruments
|
|
20.8
|
|
|
(6.5)
|
Operating
leases
|
|
0.2
|
|
|
-
|
Amortization of
acquired revenue contracts
|
|
3.9
|
|
|
2.0
|
Other
|
|
(0.3)
|
|
|
0.9
|
Change in other
operating assets and liabilities
|
|
(56.2)
|
|
|
(249.5)
|
Cash from operating
activities
|
|
130.7
|
|
|
129.3
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
Repayments on
long-term debt and other financing arrangements
|
|
(658.6)
|
|
|
(300.9)
|
Issuance of long-term
debt and other financing arrangements
|
|
798.8
|
|
|
-
|
Notes and warrants
issued
|
|
100.0
|
|
|
250.0
|
Senior unsecured notes
repurchased including related expenses
|
|
-
|
|
|
(9.0)
|
Proceeds from exercise
of warrants
|
|
-
|
|
|
250.0
|
Financing
fees
|
|
(12.9)
|
|
|
(1.1)
|
Dividends on common
shares
|
|
(26.9)
|
|
|
(21.8)
|
Dividends on preferred
shares
|
|
(16.8)
|
|
|
(17.7)
|
Cash from financing
activities
|
|
183.6
|
|
|
149.5
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
Expenditures for
property, plant and equipment
|
|
(248.2)
|
|
|
(1.5)
|
Short-term
investments
|
|
(0.8)
|
|
|
2.4
|
Payments on settlement
of interest swap agreements
|
|
(2.8)
|
|
|
(6.7)
|
Cash and restricted
cash acquired from APR acquisition
|
|
50.6
|
|
|
-
|
Other
assets
|
|
(37.9)
|
|
|
(4.1)
|
Cash used in
investing activities
|
|
(239.1)
|
|
|
(9.9)
|
|
|
|
|
|
|
Increase in cash,
cash equivalents and restricted cash
|
|
75.2
|
|
|
268.9
|
Cash, cash
equivalents and restricted cash, beginning of period
|
|
197.3
|
|
|
371.4
|
Cash, cash
equivalents and restricted cash, end of period
|
$
|
272.5
|
|
$
|
640.3
|
|
|
|
|
|
|
|
|
|
|
|
|
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:
|
|
March 31,
|
|
March 31,
|
|
2020
|
|
2019
|
Cash and cash
equivalents
|
$
|
213.7
|
|
$
|
626.2
|
Restricted
cash
|
|
58.8
|
|
|
14.1
|
Total cash, cash
equivalents and restricted cash shown in the
|
|
|
|
|
|
consolidated
statements of cash flows
|
$
|
272.5
|
|
$
|
640.3
|
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 Atlas' operations,
cash flows, and financial position, including, without limitation,
Atlas' financial guidance and its ability to grow its business over
the near and long-term. Statements that are predictive in nature,
that depend upon or refer to future events or conditions, or that
include words such as "continue," "expects," "anticipates,"
"intends," "plans," "believes," "estimates," "projects,"
"forecasts," "will," "may," "potential," "should" and similar
expressions are forward‑looking statements. These forward-looking
statements represent Atlas' estimates and assumptions only as of
the date of this release and are not intended to give any assurance
as to future results. As a result, you are cautioned not to rely on
any forward-looking statements. Forward-looking statements appear
in a number of places in this release. Although these statements
are based upon assumptions Atlas believes to be reasonable based
upon available information, they are subject to risks and
uncertainties. These risks and uncertainties include, but are not
limited to:
- Atlas' future operating and financial results;
- Atlas' growth prospects and ability to expand into new business
lines;
- Atlas' business strategy and capital allocation plans, and
other plans and objectives for future operations;
- Atlas' primary sources of funds for short, medium and long-term
liquidity needs;
- potential acquisitions, financing arrangements and other
investments, and the expected benefits from such transactions;
- Atlas' financial condition and liquidity, including its ability
to borrow and repay funds under Seaspan's and APR's credit
facilities, its ability to obtain waivers or secure acceptable
replacement charters under the credit facilities, its ability to
refinance existing facilities and notes and to obtain additional
financing in the future to fund capital expenditures, acquisitions
and other general corporate activities;
- conditions in the public equity market and the price of Atlas'
shares;
- changes in governmental rules and regulations or actions taken
by regulatory authorities, and the effect of governmental
regulations on Atlas' business;
- the financial condition of Seaspan's and APR's customers,
lenders and other counterparties and their ability to perform their
obligations under their agreements with Seaspan and APR,
respectively;
- the continued ability to meet specified restrictive covenants
in Atlas' and its subsidiaries' financing and lease arrangements,
notes and preferred shares;
- any economic downturn in the global financial markets and
potential negative effects of any recurrence of such disruptions on
the demand for the services of Seaspan's containerships or APR's
mobile power solutions;
- the length and severity of the recent novel coronavirus
(COVID-19) outbreak and its impact on Atlas' business;
- Atlas' expectations as to impairments of Seaspan's vessels,
including the timing and amount of potential impairments;
- the future valuation of Seaspan's vessels and goodwill;
- future time charters and vessel deliveries, including future
long-term charters for certain existing vessels;
- estimated future capital expenditures needed to preserve the
operating capacity of Seaspan's containership fleet and comply with
regulatory standards, as well as Atlas' expectations regarding
future dry-docking and operating expenses, including ship operating
expense and general and administrative expenses;
- expectations about the availability of vessels to purchase and
the useful lives of Seaspan's vessels;
- availability of crew, number of off-hire days and dry-docking
requirements;
- general market conditions and shipping market trends, including
charter rates and other factors affecting supply and demand;
- Seaspan's continued ability to maintain, enter into or renew
primarily long-term, fixed-rate time charters for its vessels;
- the potential for early termination of long-term time charters
and Seaspan's potential inability to enter into, renew or replace
long-term time charters;
- Seaspan's ability to leverage to its advantage its
relationships and reputation in the containership industry;
- the values of Seaspan's vessels and other factors or events
that trigger impairment assessments or results;
- taxation of Atlas and of distributions to its shareholders;
- Atlas' exemption from tax on U.S. source international
transportation income;
- the continued availability of services, equipment and software
from subcontractors or third-party suppliers required to provide
APR's power generation solutions;
- APR's ability to protect its intellectual property and defend
against possible third-party infringement claims relating to its
power generation solutions;
- potential liability from future litigation; and
- other factors detailed from time to time in Atlas' 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 Atlas'
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
Atlas' Annual Report for the year ended December 31, 2019 on Form 20-F filed on
April 13, 2020 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.
Atlas does not intend to revise any forward-looking statements
in order to reflect any change in its expectations or events or
circumstances that may subsequently arise. Atlas expressly
disclaims any obligation to update or revise any of these
forward-looking statements, whether because of future events, new
information, a change in Atlas' views or expectations, or
otherwise. You should carefully review and consider the various
disclosures included in Atlas' Annual Report and in Atlas' other
filings made with the Securities and Exchange Commission that
attempt to advise interested parties of the risks and factors that
may affect Atlas' businesses, prospects and results of
operations.
Investor Inquiries:
Bill Stormont
Investor Relations
Atlas Corp.
Tel. +1-604-638-7240
Email: IR@atlascorporation.com
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SOURCE Atlas Corp.