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Seaspan Reports Third Quarter 2019 Results

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Achieves highest quarterly utilization rate since 2011 of 99.6%,
Closes $500 million accordion, increasing Portfolio Financing Program to $1.5 billion and finishes the quarter with over $912 million of liquidity

HONG KONG, Nov. 7, 2019 /PRNewswire/ - Seaspan Corporation ("Seaspan") (NYSE:SSW) announced today its financial results for the three and nine months ended September 30, 2019.

Highlights for the Third Quarter and First Nine Months of 2019:

  • Increased portfolio financing program by $500.0 million to $1.5 billion
  • Agreed to acquire 9600 TEU vessel which Seaspan expects will enter into a three year time charter with Ocean Network Express ("ONE")
  • Achieved vessel utilization of 99.6% for the third quarter, the highest quarterly utilization since 2011, and 98.8% for the first nine months
  • Operating earnings of $116.1 million for the third quarter and $570.6 million for the first nine months
  • Earnings per diluted share of $0.11 for the third quarter and $1.44 for the first nine months; changes in fair value of financial instruments contributed a loss of $0.10 per diluted share for the third quarter and a loss of $0.17 per diluted share for the first nine months
  • Cash flow from operations of $145.9 million for the third quarter and $645.2 million for the first nine months

Comments from Management

Bing Chen, President and Chief Executive Officer, commented, "Our focus on Operational Excellence in quality, reliability, and scalability, together with Customer Partnership, as the preferred solution provider of our customers, has resulted in our highest quarterly utilization rate since 2011, of 99.6% for our 112 vessels fleet. We continue to strengthen our customer centric approach, which this quarter generated an attractive vessel acquisition to facilitate the growth needs of one of our customers, in addition to a tailored charter solution for another. We see growing opportunities to broaden and deepen our customer partnerships as our sector stabilizes into a new normal marked by consolidation, and we expect our momentum to continue throughout the remainder of the year."

Ryan Courson, Chief Financial Officer, said, "During the quarter we continued to execute across our business delivering, ahead of plan, a total of $645 million year-to-date cash flows from operations. We remain focused on the balance sheet as well, advancing our capital plan with the increase of our portfolio financing program to $1.5 billion of total commitments. The increased capacity provides room and flexibility to finance new acquisitions, including our recently acquired 9600 TEU vessel, which is expected to be delivered in April. The execution on our capital plan has significantly improved capital availability and flexibility, positioning us to execute on our next phase of growth."

Significant Developments During the Quarter Ended September 30, 2019

Portfolio Financing Program Increased to $1.5 billion

On May 15, 2019, Seaspan entered into a credit agreement with a syndicate of lenders for a $1.0 billion secured credit facility as part of a portfolio financing program (the "Program"). The Program is secured by a portfolio of vessels (the "Collateral Pool") and bears interest at LIBOR plus 2.25% per annum. Seaspan may add, substitute and remove vessels from the Collateral Pool during the term, subject to a borrowing base, portfolio concentration limits, absence of defaults and compliance with financial covenants and certain negative covenants.

On September 18, 2019, Seaspan increased the committed amount under the Program by $500.0 million to a total of $1.5 billion. The additional commitments are subject to the same terms, conditions and Collateral Pool security requirements as the initial tranche.

Series D Preferred Shares

In September 2019, Seaspan redeemed 1,923,585 shares of 7.95% Series D preferred shares for $47.8 million.

Purchase of 9600 TEU Vessel

On September 9, 2019, Seaspan closed an agreement to purchase a 2010-built 9600 TEU containership. The vessel is expected to be delivered by the end of April 2020, at which point Seaspan expects the vessel will enter into a 36 month fixed rate time charter with ONE. Subsequent to delivery of the vessel, Seaspan's fleet will expand to 113 vessels.

Unencumbered Vessels

As of November 7, 2019, Seaspan had 31 unencumbered vessels.

Subsequent Events

Debt Prepayment

In October 2019, Seaspan refinanced secured term loan facilities, totalling $180.1 million, using proceeds from the Program. As of September 30, 2019, this balance was classified as current liabilities due to the issuance of voluntary irrevocable prepayment notices by Seaspan.

Distribution

The Board of Directors declared a quarterly distribution in the amount of $0.125 per share for its Class A Common Shares, paid on October 30, 2019 to shareholders of record as at the close of business on October 21, 2019. Regular quarterly dividends on the Preferred Shares Series D, Series E, Series G, Series H and Series I were also declared.

Class A Common Shares Outstanding

As of November 7, 2019, there were 215.7 million Class A Common Shares outstanding.

Results for the Three and Nine Months Ended September 30, 2019 and 2018

Financial Results

The following table summarizes Seaspan's consolidated financial results for the three and nine months ended September 30, 2019 and 2018:

Financial Summary

(in millions of US dollars, except earnings per share
amount)

Three Months Ended
September 30,


Nine Months Ended
September 30,


2019


2018


2019


2018













Revenue

$

282.7


$

295.0


$

843.5


$

801.4

Ship operating expense


56.8



55.4



170.4



163.7

Depreciation and amortization expense


63.9



65.1



189.8



181.1

General and administrative expense


7.7



8.1



23.3



24.5

Operating lease expense


38.3



33.0



116.3



96.6

Income related to modification of time charters






227.0



Operating earnings


116.1



133.4



570.6



335.6

Interest expense and amortization of deferred












financing fees


45.0



56.0



151.5


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